Optum Rx Concerns Cause Cardinal Health Stock to Drop
December 15, 2023
🌧️Trending News
Today, investors at Cardinal Health ($NYSE:CAH) saw the stock drop after worries arose about their OptumRx business. OptumRx is a pharmacy benefit management company that works with health plans to bring down drug spending. Thus, investors in the pharmaceutical distribution and health care services company, Cardinal Health, had concerns about their business causing the stock to drop. Cardinal Health is a global, integrated healthcare services and products company that provides personalized solutions for hospitals, health systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices worldwide. Their mission is to be the trusted partner for improving the health and well-being of patients and providers worldwide.
The decrease in stock today was likely due to worries about the OptumRx business and its effect on Cardinal Health’s overall profitability. With the ongoing changes in the healthcare landscape, the company must continue to evolve to meet the changing needs of its customers and remain competitive. Investors are concerned that the OptumRx business may not be able to keep up with the changing market conditions and may be a drag on Cardinal Health’s performance.
Price History
On Thursday, CARDINAL HEALTH stock experienced a considerable dip in market value as the news of concerns about competitor OptumRx’s drug pricing strategies spread. The stock opened at $104.0 but closed at $102.7, down a whopping 5.0% from its previous closing price of $108.0. This deep drop in value shocked investors and caused further speculation about the company’s future prospects. With the news of OptumRx’s possible drug pricing strategies causing CARDINAL HEALTH’s stock to plummet, some investors are beginning to worry about what this could mean for the future of the company. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Cardinal Health. More…
| Total Revenues | Net Income | Net Margin |
| 210.17k | 156 | 0.6% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Cardinal Health. More…
| Operations | Investing | Financing |
| 3.36k | -447 | -2.55k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Cardinal Health. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 43.71k | 47.2k | -14.17 |
Key Ratios Snapshot
Some of the financial key ratios for Cardinal Health are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 10.8% | 2.5% | 0.3% |
| FCF Margin | ROE | ROA |
| 1.4% | -11.5% | 0.8% |
Analysis
At GoodWhale, we performed an analysis on CARDINAL HEALTH‘s wellbeing. Our Star Chart showed that CARDINAL HEALTH was classified as ‘rhino’, which we concluded indicated moderate revenue or earnings growth. This type of company may be interesting to value investors, those looking for companies that can generate returns over time, rather than sacrifice dividend payments for short-term gains. CARDINAL HEALTH also had a very high health score of 8/10 with regard to its cashflows and debt. This indicates that the company is well-positioned to cover expenses and fund future operations. In addition, CARDINAL HEALTH was strong in asset, and medium in dividend, growth, and profitability, further indicating a healthy overall position. More…
Peers
Its competitors are AmerisourceBergen Corp, McKesson Corp, and Sigma Healthcare Ltd.
– AmerisourceBergen Corp ($NYSE:ABC)
AmerisourceBergen Corp is a drug wholesaler that was founded in 1985. The company has a market cap of 32.4B as of 2022 and a return on equity of 417.0%. AmerisourceBergen Corp distributes prescription drugs and other healthcare products and services to healthcare providers and pharmaceutical companies. The company operates in two segments, Pharmaceutical Distribution and Other.
– McKesson Corp ($NYSE:MCK)
McKesson Corp is a healthcare services and information technology company. It has a market cap of 55.96B as of 2022 and a Return on Equity of -74.43%. The company provides a range of services and products to healthcare providers, payers, and consumers. These services and products include prescription drugs, medical supplies, and software and technology solutions.
– Sigma Healthcare Ltd ($ASX:SIG)
Sigma Healthcare Ltd is a pharmaceutical company with a market cap of 683.23M as of 2022 and a ROE of 0.46%. The company manufactures and distributes a range of prescription and over-the-counter medicines, medical devices, and other healthcare products.
Summary
Cardinal Health is a leading healthcare services company offering a range of products and services to customers in the healthcare industry. The company’s stock price has seen some volatility over the last several weeks. While it was trading at an all-time high earlier in the year, it has experienced a sizeable dip in price due to concerns surrounding its Optum Rx business unit. Analysts have been quick to point out that the drop in stock price has been mainly due to investors’ fear of the long-term effects of the pandemic on the healthcare industry as a whole.
Despite this, they remain optimistic about Cardinal Health’s long-term prospects as they believe the company is well-positioned to benefit from the development of new products and services in the healthcare industry. Investors are advised to monitor developments in the sector closely before making any investing decisions.
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