Distributing pharmaceuticals and medical supplies might not seem like a very exciting business. But Cardinal Health (CAH -1.80%) has delivered some excitement for investors so far in 2019, with its stock rising 15% year to date. And it appears that more gains are on the way.
The company announced its fiscal 2020 first-quarter results before the market opened on Thursday, giving investors some good news. Here are the highlights from Cardinal Health's Q1 update.
By the numbers
Cardinal Health announced Q1 revenue of $37.3 billion, a 6% increase from the $35.2 billion reported in the same quarter of the previous year. The company's reported revenue was also higher than the average analysts' revenue estimate of $36.75 billion.
The company reported a net loss in the first quarter of $4.9 billion, or $16.65 per share, based on generally accepted accounting principles (GAAP). Cardinal's bottom line reflected significant deterioration from the prior-year period GAAP net income of $593 million, or $1.94 per share.
Cardinal posted adjusted non-GAAP net income of $378 million, or $1.27 per share. This was lower than the adjusted earnings of $396 million, or $1.29 per share, achieved in the same period in 2018. However, the company's adjusted earnings per share (EPS) handily beat the average analysts' adjusted EPS estimate of $1.09.
Behind the numbers
Nearly 90% of Cardinal Health's total revenue comes from its pharmaceutical segment. Sales for this segment rose 6% year over year to $33.4 billion as the company's wholesale pharmaceutical distribution and specialty solutions customers increased their spending.
Cardinal's medical segment grew at a slower pace. Revenue for the segment increased by 3% year over year to $3.9 billion. Year-over-year comparisons were negatively impacted, however, by the sale of the company's stake in naviHealth last year.
The big net loss in Q1 resulted primarily from litigation charges of $5.67 billion. Cardinal Health set aside $5.63 billion as an estimate of what it could pay for opioid-related litigation. The company announced in October that it had agreed in principle on a settlement framework with a multistate task force. This deal hasn't been finalized yet, however. It also only addresses opioid-related litigation and claims by states and other government entities but doesn't address private lawsuits and claims.
Cardinal Health reaffirmed its previous full-year 2020 guidance. The company continues to expect adjusted non-GAAP EPS to come in between $4.85 and $5.10.
Healthcare stocks could be in for an interesting ride next year with the U.S. presidential campaign in full swing. Any company that has been caught up in the opioid lawsuits could come under even greater attacks.