Cardinal Health, Inc. (CAH) recently posted better-than-estimated performance for the second quarter on both its top-line and bottom-line fronts. The company distributes pharmaceuticals, and manufactures and distributes medical and laboratory products. CAH also provides performance and data solutions for health care facilities.
Revenue increased 9.4% year-over-year to $45.46 billion, outperforming estimates by $115.4 million. Earnings per share at $1.27 came in ahead of expectations by $0.04. This performance was driven by growth in the Pharma segment, initiatives to achieve $750 million enterprise cost savings, and efficient capital deployment.
Management noted that while the company is seeing the impact of inflation and global supply chain challenges in its US Medical products and Distribution business, it is taking steps in the Medical segment to simplify its operating model, evolve commercial contract strategies, and drive mix.
Further, on February 8, CAH announced a quarterly dividend of $0.4908 per share. The dividend is payable on April 15 to investors on record as of April 1.
With these developments in mind, let us take a look at the changes in CAH’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Cardinal Health’s top risk category is Legal & Regulatory, contributing 5 of the total 18 risks identified for the stock, compared to a sector average of 11 risk factors under the same category.
In its recent report, the company has added one key risk factor under the Legal & Regulatory risk category.
CAH highlighted that it depends on direct and indirect suppliers to source products and raw materials. It uses different raw materials in many products and experienced higher supply chain costs at the beginning of the fourth quarter of fiscal 2021.
These constraints have also impacted sales in the Medical segment. CAH expects these cost and supply challenges to continue to have an adverse impact on segment profit, mainly in its Medical segment, in fiscal 2022.
Hedge Fund Activity
According to TipRanks data, the Wall Street’s top hedge funds have decreased holdings in Cardinal Health by 391 thousand shares in the last quarter, indicating a very negative hedge fund confidence signal in the stock based on activities of 11 hedge funds.
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