![]() However, this growth has stalled meaningfully in the last few years. Since 2010 Cardinal Health has grown both earnings and dividends by a mid-single-digit rate. Still, Cardinal Health remains profitable and the dividend continues to be covered. But Amazon’s potential entry into the space is a significant threat to the established players. the razor-thin margins protected the “Big 3” drug distributors from outside competitors. Moreover, this could continue to be a challenge if political and competitive pressure on drug prices remain.Īdding to this concern is the potential for new entrants to the space, such as Amazon (AMZN) which acquired PillPack for $753 million. One of the biggest challenges for Cardinal is drug price deflation, which negatively impacts margins in the company’s core pharmaceutical segment. The business climate for Cardinal Health is difficult right now, as it has been for the past few years. Meanwhile, the medical segment distributes medical, surgical, and laboratory products to hospitals, surgery centers, clinical laboratories, and other service centers. It distributes these products to hospitals and other healthcare providers. The pharmaceutical segment distributes branded and generic drugs and consumer products. The Pharmaceutical segment is by far the company’s largest, as it represents nearly 90% of total revenue. The company has two operating segments: Pharmaceutical and Medical. ![]() ![]() Cardinal Health serves over 24,000 United States pharmacies and more than 80% of the country’s hospitals. Business OverviewĬardinal Health, founded in 1971, is one of the “Big 3” drug distribution companies along with McKesson (MKC) and AmerisourceBergen (ABC). Cardinal Health is an attractive dividend stock, due to its 3.7% dividend yield and annual dividend increases. The company is still highly profitable and is making progress in its turnaround initiatives. This track record speaks to the resilience of Cardinal Health’s business model. As a result, shares are trading ~42% lower than where they were seven years ago.Īt the same time, the company has increased its dividend for over 25 years in a row. One of the Dividend Aristocrats battling through a tough climate is healthcare distributor Cardinal Health (CAH).Ĭardinal Health is currently challenged by falling drug prices, the fallout from the opioid crisis, and the threat of new competition in pharmaceutical distribution. Click here to download your Dividend Aristocrats Excel Spreadsheet List now.īut even Dividend Aristocrats can encounter challenges from time to time.
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