Cardinal Health Backs FY24 View, Not To Renew OptumRx Contracts; Sees Adj. Earnings Growth In FY25

(RTTNews) - Cardinal Health (CAH) on Monday maintained its fiscal 2024 earnings outlook, and said its pharmaceutical distribution contracts with OptumRx, which expire at the end of June 2024, will not be renewed.

For fiscal 2024, the company continues to expect adjusted earnings per share of $7.20 to $7.35. Analysts on average expect the company to report earnings of $7.29 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Despite the nonrenewal of the OptumRx contracts, the company also reiterated its Pharmaceutical and Specialty Solutions long-term segment profit CAGR target of 4% to 6% for fiscal years 2024 to 2026. The company also continues to expect consolidated adjusted earnings per share CAGR of 12% to 14% for fiscal years 2024 to 2026, relative to a fiscal 2023 baseline.

According to the firm, maintaining the outlook reflects its ability to achieve sustained growth over the long term and deliver attractive returns through an ongoing focus on value creation.

Further ahead for fiscal 2025, the company expects growth in adjusted earnings per share as well as in Pharmaceutical and Specialty Solutions segment profit. The company expects to partially offset the impact of OptumRx through a combination of new customer wins, specialty growth and other actions.

Furthermore, Cardinal Health continues to expect to generate adjusted free cash flow of approximately $2 billion on average from fiscal 2024 to 2026.

Jason Hollar, CEO of Cardinal Health, said, "We have plans in place to continue delivering profitable growth in fiscal 2025, and we are pleased to reaffirm our long-term targets for the Pharmaceutical and Specialty Solutions segment and enterprise, despite this nonrenewal. We remain confident in the resiliency and strong value proposition of our business and look forward to updating you on our continued progress on our upcoming earnings call."