Cardinal Health, Inc. operates as an integrated healthcare services and products company worldwide. The company's Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare, and consumer products to retailers, hospitals, and other healthcare providers. It offers distribution, inventory management, data reporting, new product launch support, and chargeback administration services to pharmaceutical manufacturers; pharmacy and medication therapy management, and patient outcomes services to hospitals, other healthcare providers, and payers; and consulting, patient support, and other services to pharmaceutical manufacturers and healthcare providers. This segment also operates nuclear pharmacies and manufacturing facilities that manufacture, prepare, and deliver radiopharmaceuticals, as well as operates direct-to-patient specialty pharmacies; offers logistics, marketing, and other services; and repackages generic pharmaceuticals and over-the-counter healthcare products. The company's Medical segment manufactures and sources medical, surgical, and laboratory products, including cardiovascular and endovascular products; wound care products; surgical drapes, gowns, and apparel; exam and surgical gloves; fluid suction and collection systems; and incontinence, enteral feeding, urology, operating room supply, electrode and needle, and syringe and sharps disposal product lines. It also distributes medical, surgical, and laboratory products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers, as well as to patients in the home; and assembles and sells sterile and non-sterile procedure kits. In addition, it offers supply chain services to healthcare providers; and post-acute care management, and transition services and software to hospitals, other healthcare providers, and payers. Cardinal Health, Inc. was founded in 1979 and is headquartered in Dublin, Ohio.
Business Analysis of Cardinal Health
The Healthcare Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Cardinal Health compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Cardinal Health to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Cardinal Health with an interactive chart.
- Revenue Growth: Cardinal Health reported a revenue growth of 18.5% year-on-year during 2016. Drug Stores, PBM and Distributors Industry grew at 10.3% in the same period
- COGS share of Revenues: As a percentage of revenue, Cardinal Health spent 94.6% of its total revenues on COGS. Drug Stores, PBM and Distributors industry average (COGS share of revenue) in the same period was 88.6%
- R&D share of Revenues: Cardinal Health R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Cardinal Health spent 3.0% of its total revenues on Sales, Marketing, and General Administration (SG&A). Drug Stores, PBM and Distributors industry average SG&A spending in the same period was 7.8%
- Inventory share of Revenues: As a percentage of revenue, Cardinal Health spent 8.7% of its total revenues on Inventories. Drug Stores, PBM and Distributors industry average Inventory spending in the same period was 7.5%
- Accounts Payable share of Revenues: As a percentage of revenue, Cardinal Health invested 14.2% of its total revenues on Accounts Payable (A/P) Drug Stores, PBM and Distributors industry average Accounts Payable investment in the same period was 12.5%
- Accounts Receivable share of Revenues: As a percentage of revenue, Cardinal Health invested 6.1% of its total revenues on Accounts Receivable (A/R). Drug Stores, PBM and Distributors industry average Accounts Receivable investment in the same period was 7.1%
- PP&E share of Revenues: As a percentage of revenue, Cardinal Health invested 1.5% of its total revenues on Property, Plants, and Equipments (PP&E). Drug Stores, PBM and Distributors industry average PPE investment in the same period was 3.8%
- Intangibles share of Revenues: As a percentage of revenue, Cardinal Health invested 7.8% of its total revenues on Intangibles. Drug Stores, PBM and Distributors industry average Intangibles investment in the same period was 17.2%
- Net Margins: Cardinal Health Net Margins in the year 2016 were 1.2%. Drug Stores, PBM and Distributors industry average Net Margins in the same period were 2.1%
Sector and Industry Association of Cardinal Health
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Cardinal Health is associated with Healthcare Sector Group, Healthcare Services Sector, and Drug Stores, PBM and Distributors Industry.
Healthcare Services sector is comprised of the following industries: Drug Stores, PBM and Distributors; Healthcare Payers; Healthcare Providers; Medical Software; Healthcare Research Services. The definitions for each of the industries is as follows:
- Drug Stores, PBM and Distributors industry includes nationwide drugstore chains, pharmacy benefit management (PBM) companies, and drug distributors. Drug stores also offer walk-in clinics and related pharmacy services. Distributors distribute branded and generic pharmaceutical and other healthcare products to hospitals, pharmacies and other healthcare providers. PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims.
- Healthcare Payers industry includes healthcare insurance companies that finance or reimburse the cost of health services. These companies also offer collaborative care, population health management, healthcare technology, Pharmacy Benefit Management, analytics, consulting and administrative services.
- Healthcare Providers industry consist primarily of hospitals but recent changes in the health services industry have contributed to both increasing numbers of other types of facility providers. Companies in this industry include traditional healthcare providers and emerging healthcare facility providers like ambulatory surgery centers, behavioral healthcare facilities, dialysis clinics, home health care companies and others.
- Medical Software industry includes companies that offer any software item or system used within a healthcare context. These companies offer standalone software used for diagnostic, therapeutic purposes, clinical financial and operational purposes.
- Healthcare Research Services industry includes companies that offer biopharmaceutical development services, commercial outsourcing services; commercial pharmaceutical sales and service organizations, consulting, health information analytics and technology consulting.
Industry Ranking of Cardinal Health
With $121.5 billion revenues, Cardinal Health ranked number 4 of all the companies in the US Drug Stores, PBM and Distributors industry. There were a total of 14 public companies in the US Drug Stores, PBM and Distributors industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Drug Stores, PBM and Distributors industry by revenues during 2016 were:
- McKesson ($190.9 billion)
- CVS Health ($177.5 billion)
- AmerisourceBergen ($146.8 billion)
- Cardinal Health ($121.5 billion)
- Walgreens Boots Alliance ($117.4 billion)
- Express Scripts Holding ($100.3 billion)
- Rite Aid ($30.7 billion)
- Henry Schein ($11.6 billion)
- Owens & Minor ($9.7 billion)
- Patterson Companies ($5.4 billion)
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.
- Conduct a holistic benchmarking; to identify and target additional sources of value
- Get in touch with us to learn more about Business Model Analysis Framework
- Get free data, charts, and analysis of Cardinal Healthand its peers on select key performance indicators by clicking the reports provided below