Covid-19 vaccine distribution boosts Cardinal Health’s pharma profits

Profits from medical distributor Cardinal Health’s reformulated Covid-19 vaccine rollout made up about a third of the company’s pharmaceutical segment growth during the first quarter of fiscal year 2024, Cardinal CEO Jason Hollar told Healthcare Brew.

Distribution of new Covid boosters helped push Cardinal’s pharmaceutical segment revenues up 11% to $51 billion in Q1 FY2024 compared to $45.8 billion during the same period last year, executives told investors during an earnings call last Friday. This is the company’s first Covid vaccine distribution after the May 11 ending of the public health emergency moved the rollout to the commercial side, Hollar said.

“This is new for us to distribute this vaccine,” Hollar said after the Q1 2024 earnings call. “As a part of the government-led initiatives the last few years, they sole-sourced that elsewhere […] so our prior financial condition was never benefiting from that.”

This fall, the FDA greenlit reformulated Covid boosters from Moderna and Pfizer–BioNTech as well as an updated vaccine from Novavax. A Centers for Disease Control and Prevention (CDC) advisory committee recommended that all eligible patients get vaccinated ahead of fall and winter, Healthcare Brew previously reported.

Ahead of the rollout, Cardinal invested in its cold chain so that it would be prepared to “immediately start pushing a lot of products out the door” after the September 11 FDA approval, Hollar said. A cold chain is a temperature-controlled supply chain that stores vaccines at a proper temperature during the whole process from manufacturing to when the shot is administered, according to the CDC.

Profits from the Covid vaccine distribution were “higher than what we had assumed in our original plans just based on the timing of when the approvals came through,” Cardinal’s CFO Aaron Alt said during the earnings call. Vaccine distribution most likely peaked in October, and demand is expected to wind down, Hollar added. (A national survey conducted in mid-October found that only 7% of US adults had gotten the updated booster, PBS NewsHour reported.)

“We’re now in the stage of where [healthcare facilities are] starting to use the inventory that we provided. And we’ll have a better read on this type of question [about demand] in the next month or two as they start to work through that inventory that has been put towards them,” Hollar said.