By Siddhi Mahatole
(Reuters) -Drug distributor Cardinal Health raised its annual adjusted profit forecast on Thursday after beating estimates for first-quarter profit on strong demand for costly specialty medicines and branded drugs at its pharmaceuticals unit.
Shares of the Dublin, Ohio-based company rose 17.7% in early trading.
Drug distributors have been benefiting from sales of specialty medicines, which are used to treat complex conditions like rheumatoid arthritis and cancer, due to their high profit margins.
They have also benefited from sales of cheaper versions of complex biotech drugs called biosimilars at a time when prices of generic medicines have been falling due to intense competition.
Cardinal now expects adjusted profit per share in a range of $9.65 to $9.85 for fiscal 2026, up from its prior range of $9.30 to $9.50.
The company said the 35-cent increase reflects its strong first-quarter performance. It anticipates contributions from its pending acquisition of Solaris Health that is expected to close in early November.
“We expect M&A to contribute about 8 percentage points to pharma profit growth in fiscal 2026,” said CFO Aaron Alt, adding the company expects the first half to be stronger than the second half, driven by new customers.
Cardinal Health said in August it would buy healthcare management firm Solaris Health for $1.9 billion in cash.
Cardinal reported quarterly adjusted profit of $2.55 per share, beating analysts’ estimate of $2.18 per share, according to LSEG data.
Its quarterly revenue came in at $64 billion, above the $59.20 billion estimate.
Leerink Partners analyst Michael Cherny said pre-quarter concerns around the company’s first quarter – largely stemming from its comments about the timing of vaccine shipments – were “overblown”.
“Even with that dynamic, we did not see this magnitude of beat across the enterprise coming,” Cherny said.
The company’s Pharmaceutical and Specialty Solutions segment generated $59.2 billion in revenue for the quarter ended September 30, up 23% year-over-year.
(Reporting by Siddhi Mahatole in Bengaluru; Editing by Pooja Desai)
