(Reuters) – Cardinal Health raised its annual profit forecast on Thursday, betting on strength in its pharmaceutical unit selling costly specialty drugs used to treat complex conditions such as cancer.
Drug distributors, including rival Cencora, have been benefiting from growing sales of specialty medicines at a time when prices of generic, or copycat, versions have been falling due to intense competition.
Cardinal now expects 2024 adjusted earnings in the range of $7.30 to $7.40 per share, compared with $7.20 to $7.35 per share forecast previously. According to LSEG data, analysts were expecting an annual profit of $7.28 per share.
The company also announced its preliminary outlook for 2025 adjusted profit, expecting at least $7.50 per share, compared with estimates of $7.87.
Cardinal sources a substantial amount of its revenue from the pharmaceutical and specialty solutions unit through which it distributes branded and generic drugs, specialty medicines and over-the-counter healthcare and consumer products. The unit generated revenues of $50.7 billion, up 9% year-over-year, in the third quarter ended March 31.
Total sales came in at $54.91 billion, missing analysts’ estimates of $56.06 billion.
Cardinal Health said last month its contracts with UnitedHealth Group’s OptumRx, one of its largest customers, will not be renewed after they expire at the end of June.
The Optum contracts, signed in 2015, contributed 16% of Cardinal’s total revenue in fiscal year 2023, but the bulk of the shipments mainly comprised non-specialty medicines, according to the company.
On an adjusted basis, Cardinal Health reported a profit of $2.08 per share, beating expectations of $1.95 per share.
(Reporting by Mariam Sunny in Bengaluru; Editing by Devika Syamnath)
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