An overview of how Cardinal Health's earnings forecast affects its investment story, focusing on the long-term financial outlook, including revenue growth and margin expectations through 2029 and the expected boost to EPS from share-count reductions.
Cardinal Health's investment story is built around the scale of its pharmaceutical distribution business, the expansion of higher-value-added services and a recovery in its underperforming medical products segment. Results in the next quarter could affect the profitability of this structure. The pharmaceuticals and specialty healthcare segment may provide a near-term tailwind, although costs in the medical distribution segment remain a variable factor.
As a long-term assumption, revenue is expected to grow at an annual rate of approximately 5.4% over the next 3 years, while the profit margin is forecast to rise from 0.7% to 1.0% by around 2029. On this basis, profit is projected to increase from approximately $1.7 billion currently to approximately $3.0 billion. EPS is expected to benefit from an assumed annual reduction of approximately 2.11% in shares outstanding.
Revenue in 2029 is expected to reach approximately $297.6 billion and profit approximately $3.0 billion, while the price/earnings ratio is expected to decline to approximately 24.7x on a 2029 forecast basis. These assumptions depend on improved profitability in the global healthcare distribution segment and growth in higher-margin services.