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Cardinal Health, Inc.CAH reported first-quarter fiscal 2025 adjusted earnings per share (EPS) of $1.88, which beat the Zacks Consensus Estimate of $1.64 by 9.8%. The bottom line also improved 9.3% year over year.

GAAP EPS in the quarter was $1.70 against a loss of 5 cents per share in the year-ago period.

Revenue Details

Sales declined 4.3% on a year-over-year basis to $52.28 billion. However, the top line beat the Zacks Consensus Estimate by 2%.

Segmental Analysis

Pharmaceutical and Specialty Solutions

Pharmaceutical revenues decreased 5% to $48 billion on a year-over-year basis. The decline was due to the unfavorable impact of the customer contract expiration with OptumRx in June 2024. Excluding this impact, sales were up 16%, driven by branded and specialty pharmaceutical sales growth from existing Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical profit totaled $530 million, up 16% from the year-ago level. The upside was driven by higher contributions from brand and specialty products, including the earlier seasonal launch of COVID-19 vaccine distribution. This was also aided by positive generics program performance. However, the growth was partially offset by the customer contract expiration.

Global Medical Products and Distribution

Revenues in this segment totaled $3.1 billion, up 3% year over year, driven by growth volume from existing customers.

The segment reported a profit of $8 million compared with $12 million in the year-ago quarter. This upside was primarily driven by higher manufacturing and health and welfare costs, largely offset by an improvement in net inflationary impacts and growth from existing customers.

Other

This segment includes three operating segments — at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics. Sales totaled $1.2 billion, up 13% year over year.

The segment’s profit amounted to $104 million, up 8% from the year-ago level. The upside was driven by robust performance in OptiFreight Logistics.

Cardinal Health, Inc. Price, Consensus and EPS Surprise

Cardinal Health, Inc. price-consensus-eps-surprise-chart | Cardinal Health, Inc. Quote

Margin Analysis

Gross profit increased 9.1% year over year to $1.9 billion.

As a percentage of revenues, the gross margin in the reported quarter was 3.6%, expanding 60 basis points year over year.

Distribution, selling, general and administrative expenses totaled $1.28 billion, up 7.7% year over year.

Operating income amounted to $568 million against an operating loss of $32 million in the year-ago quarter. Adjusted operating income increased 12.2% year over year to $625 million.

Financial Update

The company exited the reported quarter with cash and cash equivalents of $2.87 billion compared with $5.13 billion in the fiscal fourth quarter of 2024.

Cumulative net cash used in operating activities totaled $1.65 billion against $871 million in cumulative net cash provided in the year-ago period.

2025 View Updated

Cardinal Health raised its fiscal 2025 guidance for earnings. The company now anticipates adjusted EPS to be between $7.75 and $7.90, up from the previous guidance of $7.55-$7.70. The Zacks Consensus Estimate for the same is pegged at $7.61.

The company expects revenues from its Pharmaceutical segment to decline 4-6% year over year. The anticipated decline reflects a $39 billion revenue headwind due to the OptumRx contract expiration in June 2024. Segmental profit is likely to increase 4-6% from the previous guidance of 1-3%.

Revenues from the Medical segment are estimated to grow 3-5%. Segmental profit is expected to be in the range of $140-$175 million compared with the previous guidance of $175 million.

Revenues from the Other segment are likely to grow 10-12% from the previous projection of 10%. Segmental profit is likely to grow nearly 10%.

Conclusion

Cardinal Health exited the fiscal first quarter on a positive note, wherein both earnings and revenues beat their respective Zacks Consensus Estimate. The company continued to witness strong demand for its Pharmaceutical and Specialty solutions. However, sales are likely to be under pressure due to OptumRx contract expiration.

Meanwhile, CAH’s medical products, and at-Home Solutions, Nuclear and Precision Health Solutions and OptiFreight Logistics are likely to support top-line growth going forward. Improvement in segmental profit looks promising. The expansion of gross margin also bodes well.

Shares of the company were up 3.8% in pre-market trading following better-than-expected results and improved EPS outlook. The company’s shares have risen 7.7% year to date against the industry’s decline of 2.3%. The broader S&P 500 Index has moved up 20% during the same period.

However, intense competition and customer concentration are concerning.

Zacks Rank and Other Stocks to Consider

Cardinal Health carries a Zacks Rank #2 (Buy) at present.

Some other top-ranked stocks from the medical industry are AngioDynamics ANGO, Avanos Medical AVNS and Globus Medical GMED.

AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.

Avanos, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 31.2% for 2025. AVNS’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.7%.

Avanos’ shares have risen 5.3% year to date compared with the industry’s 5.1% growth.

Globus Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.

Zacks Investment Research

CONMED Corporation CNMD delivered third-quarter 2024 adjusted earnings per share (EPS) of $1.05, which beat the Zacks Consensus Estimate of 99 cents by 6.1%. The bottom line improved 16.7% from the year-ago level.

GAAP EPS for the quarter was $1.57 compared with 50 cents in the year-ago period.

The company’s shares have lost 40.4% so far this years compared with the industry’s decline of 1.5%. The broader S&P 500 Index has gained 22.9% in the same time frame.

Revenues in Detail

CONMED’s revenues totaled $317 million, up 4% year over year. The top line missed the Zacks Consensus Estimate by 0.6%. At constant exchange rate (CER), revenues increased 4.3%.

The top line was driven by strong growth of AirSeal insufflator in the United States and international markets.

Segmental Details

Revenues in the Orthopedic Surgery segment totaled $130.5 million, up 4.7% from the year-ago level on a reported basis. At CER, revenues increased 5.2%.

Sales improved 7.4% on a reported basis in the United States. The figure increased 3.1% (up 3.9% at CER) year over year in international markets.

Revenues in the General Surgery segment amounted to $186.2 million, up 3.5% year over year on a reported basis and 3.6% at CER. U.S. sales increased 7.4% year over year. International sales declined 5.3% on a reported basis (down 5% at CER).

Sales by Geography

Sales in the United States totaled $183.2 million, up 7.4% year over year. International sales amounted to $133.5 million, down 0.4% year over year on a reported basis but up 0.2% at CER.

Margins

CONMED’s gross profit improved 6.5% to $179 million. The gross margin improved 130 basis points to 56.5%.

Selling & administrative expenses decreased 20.4% to $99.7 million. Research and development expenses increased 8.8% year over year to $13.6 million.

The company recorded an operating income of $65.7 million compared with $30.3 million in the prior-year quarter. The operating margin was 20.7%, up 1080 basis points.

Financial Position

CNMD exited the third quarter with cash, cash equivalents and investments of $28.9 million compared with $33.9 million in the previous quarter.

Total assets decreased to $2.29 billion from $2.31 billion on a sequential basis.

2024 Guidance Revised

CONMED lowered its revenue guidance for 2024 based on incremental foreign currency headwinds. However, the earnings outlook improved.

The company now expects revenues to be between $1.3 billion and $1.305 billion for 2024 compared with the prior guidance of $1.305-$1.315 billion. The Zacks Consensus Estimate is currently pegged at $1.31 billion.

Adjusted EPS is now expected to be in the range of $4.00-$4.05 compared with the prior guided range of $3.95-$4.02. The Zacks Consensus Estimate is currently pegged at $3.99.

The company also provided guidance for the fourth quarter. Revenues are expected to be between $339 million and $344 million. EPS is projected to be in the range of $1.18-$1.23.

CONMED Corporation Price, Consensus and EPS Surprise

CONMED Corporation price-consensus-eps-surprise-chart | CONMED Corporation Quote

Our Take

CONMED exited the third quarter of 2024 on a mixed note, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. The third quarter witnessed the positive impact of strong demand for CNMD’s AirSeal insufflator. The product is expected to continue to drive the top line in the upcoming quarter as well.

However, the U.S. foot and ankle business sales are likely to be unfavorably impacted as Hurricanes Helene and Milton hit the Southeast region of the United States during the end of September and early October. The storms disrupted manufacturing at CNMD’s facility at Largo, responsible for its orthopedic products, including the shutdown of the facility for four days. This may affect the supply of products during the fourth quarter. Several procedures were rescheduled during the storms, which may hurt sales in the upcoming quarter. The affected region generates 35% of the company’s U.S. foot and ankle business.

Meanwhile, Hurricane Helene’s devastation in North Carolina affected a key medtech player that supplies IV solutions, leading to delayed surgical procedures. This will likely affect the procedure volume in the fourth quarter.

The storms have also led the company to lower its revenue outlook for 2024. However, improving earnings expectation looks promising.

Zacks Rank and Stocks to Consider

CNMD carries a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the same medical industry are AngioDynamics ANGO, Avanos Medical AVNS and Globus Medical GMED.

AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.

Avanos, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 31.2% for 2025. AVNS’ earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.7%.

Avanos’ shares have risen 5.3% year to date compared with the industry’s 5.1% growth.

Globus Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.

Zacks Investment Research

Avanos Medical, Inc. AVNS reported third-quarter 2024 adjusted earnings per share (EPS) from continuing operations of 36 cents, up 20% year over year. The bottom line met the Zacks Consensus Estimate.

GAAP EPS from continuing operations in the quarter under review was 12 cents against the year-ago reported loss of 19 cents per share.

Revenues

Revenues totaled $170.4 million, down 0.5% year over year. The metric missed the Zacks Consensus Estimate by 2.7%.

Organic sales were up 1.1% year over year.

Per management, the top line was hurt by lower demand for AVNS’ surgical pain and hyaluronic acid (HA) products and lower pricing on HA products. This was partially offset by continued strong demand and volume in Avanos's Digestive Health portfolio, primarily from the NeoMed neonatal and pediatric feeding solutions. Strong demand for Game Ready and Trident further supported growth.

The company’s shares have lost 17.1% iso far this year against the industry’s growth of 5.4%. The broader S&P 500 Index has gained 22.5% in the same time frame.

Segmental Analysis

Avanos provides a portfolio of innovative product offerings that focus on Pain Management and Recovery and Digestive Health.

Pain Management and Recovery’s net revenues of $72.2 million decreased 5.4% year over year on a reported basis. Our third-quarter projection for the metric was $74.2 million.

Digestive Health’s net revenues of $98.2 million improved 3.4% year over year. Organically, revenues were up almost 3%. Our third-quarter projection for the metric was $100.4 million.

The normalized organic sales for the segment were up 1%, excluding HA and inorganic sales related to Avanos’ Diros acquisition. Per management, the segment performance was hurt by the unfavorable impact of the ON-Q product line due to the effect of transient execution and supply issues stemming from backorder challenges at one of AVNS’ pre-fillers early in the third quarter. However, this was partially offset by the strong performance of its ENFit products, capitalizing on the procedural shift to the ASC. Interventional Pain (IVP) business also posted double-digit growth on the back of higher procedural volumes, especially within the company’s Semtech and Trident product lines. Game Ready portfolio continued its double-digit growth for the third consecutive quarter.

Margin Analysis

In the quarter under review, Avanos’ gross profit fell 2.7% to $92.9 million. The gross margin contracted 130 basis points (bps) to 54.5%. Our projection for the metric was 66.9%.

Selling and general expenses declined 5.6% to $74.3 million. Research and development expenses increased 18% year over year to $7.2 million. Operating expenses of $80.9 million decreased 14.2% year over year.

Adjusted operating profit totaled $23.1 million, down 24.3% year over year. The decline was primarily due to loss of sales from divested business.

Financial Update

The company exited the third quarter with cash and cash equivalents worth $89 million compared with $92.2 million at the end of the second quarter. Total debt was $162 million compared with $175.1 million at the end of the second quarter.

Cumulative net cash provided by operating activities totaled $42.8 million compared with $19.7 million a year ago.

Guidance

Avanos has provided an updated outlook for 2024.

The company expects net sales from continuing operations for the full year to be in the range of $683-$688 million. The Zacks Consensus Estimate is currently pegged at $695.1 million.

Avanos anticipates 2024 adjusted EPS from continuing operations to lie between $1.30 and $1.45. The Zacks Consensus Estimate is currently pinned at $1.39.

AVANOS MEDICAL, INC. Price, Consensus and EPS Surprise

AVANOS MEDICAL, INC. price-consensus-eps-surprise-chart | AVANOS MEDICAL, INC. Quote

Our Take

Avanos ended the third quarter of 2024 with lower-than-expected sales. Weakness in overall revenues was led by lower demand and pricing for HA products. However, continued strength in the Digestive Health segment in the quarter was encouraging. The robust growth in NeoMed and continued demand for Game Ready were promising. Strength in the legacy Enteral Feeding business during the quarter was another positive.

On the earnings call, management confirmed that the strong demand for ENFit conversions in North America continues to aid the company. Management also commented that its IVP business continued its growth trend in the third quarter, with Avanos’ combined Radio Frequency Ablation portfolio increasing mid-single-digits year over year. Management was also encouraged by the continued momentum in the IVP generator sales, accompanied by higher procedural volumes. These raise our optimism about the stock.

The contraction of the gross margin does not bode well.

Zacks Rank and Stocks to Consider

AVNS carries a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the same medical industry are AngioDynamics ANGO, Fresenius Medical FMS and Globus Medical GMED.

AngioDynamics, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 38.2% for 2025. You can seethe complete list of today’s Zacks #1 Rank stocks here.

ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.

AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.

Fresenius Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 13.6%. FMS’ earnings surpassed estimates in two of the trailing four quarters, met once and missed in the other, delivering an average surprise of 13.2%.

Fresenius Medical’s shares have risen 5.3% year to date compared with the industry’s 5.1% growth.

Globus Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.

Zacks Investment Research