Losing a Major Contract: Cardinal Health Inc.’s Stock Price Declines by 5.2% after Losing Optum Rx Contract

Cardinal Health Inc.’s stock price took a significant hit after losing a major contract with UnitedHealth Group Inc.’s pharmacy benefits subsidiary, Optum Rx. The contract, which accounted for 16% of Cardinal’s revenue for fiscal 2023, will expire in June and not be renewed. This loss had a significant impact on Cardinal’s shares, causing a 5.2% decline in New York trading on Monday.

The contract with Optum involved primarily bulk shipments to supply Optum’s mail-order pharmacy. Although Cardinal affirmed its fiscal 2024 adjusted earnings forecast, the loss of the contract will have a negative impact on their earnings in fiscal 2025. McKesson Corp., another major drug wholesaler, won the contract that Cardinal lost, which is set to begin in July.

According to analysts at Evercore ISI, the loss of the Optum contract will result in a 45 to 50 cent impact on Cardinal’s earnings in fiscal 2025. The contract with Optum began in fiscal 2016 and has been a significant source of revenue for Cardinal since then.

McKesson Corp.’s shares rose as much as 1.2% in New York trading following the announcement of winning the contract, but later erased the gains. Cardinal declined to comment further on the matter beyond the initial statement they released.