Cardinal Health reports revenue hike in Q3
Continued momentum and growth in the pharmaceutical segment drove Cardinal Health's third quarter fiscal year 2023 revenues to $50.5 billion, an increase of 13% from the prior year period. Third-quarter GAAP operating earnings were $572 million and GAAP diluted earnings per share were $1.34.
The Dublin, Ohio-based company’s third-quarter non-GAAP operating earnings increased 11% to $606 million due to a significant increase in pharmaceutical segment profit. However, the increase was partially offset by a decline in medical segment profit. Non-GAAP diluted EPS increased 20% to $1.74, reflecting the improvement in non-GAAP operating earnings, a lower share count and lower interest expense, partially offset by a higher non-GAAP effective tax rate, Cardinal Health said.
[Read more: Cardinal Health posts revenue growth in Q1]
"Our third quarter results were led by continued momentum and growth in the pharmaceutical segment," said Jason Hollar, CEO of Cardinal Health. "With the strong overall performance in the quarter, we are pleased to raise our full year non-GAAP EPS guidance by 35 cents at the midpoint. In medical, we continue to see improvement in underlying performance and remain confident in our Medical Improvement Plan initiatives. Across the enterprise, we continue to operate with urgency to drive our businesses forward and create value for our shareholders."
Third-quarter revenue for the pharmaceutical segment increased 14% to $46.8 billion, driven by brand and specialty pharmaceutical sales growth from existing customers.
Cardinal's pharmaceutical segment profit increased 23% to $600 million in the third quarter, driven by positive generics program performance and a higher contribution from brand and specialty products.
The company's third-quarter revenue for the medical segment decreased 5% to $3.7 billion, driven by lower product and distribution sales, primarily due to PPE volumes and pricing.
Medical segment profit decreased 66% to $20 million in the third quarter, primarily due to lower products and distribution volumes and unfavorable sales mix. Additionally, these results reflect both net unfavorable non-recurring adjustments, including simplification actions, and an improvement in PPE margins, Cardinal said.
[Read more: Cardinal Health launches Outcomes]
The company raised and narrowed its fiscal year 2023 guidance range for non-GAAP diluted earnings per share to $5.60 to $5.80, from $5.20 to $5.50.
This guidance includes an update to fiscal year 2023 pharmaceutical segment profit outlook to 10.5% to 12% growth, from 4% to 6.5% growth and medical segment profit outlook to a decline of approximately 50%, from flat to a decline of 20%, Cardinal noted.
Additionally, the company now expects interest and other in the range of $95 to $105 million, a non-GAAP effective tax rate of 22% to 23%, diluted weighted average shares outstanding of 262 to 263 million, capital expenditures of ~$450 million and adjusted free cash flow of $2 to $2.3 billion.