Aug 14 (Reuters) - Cardinal Health ( CAH ) raised its

2025 profit forecast on Wednesday betting on strong demand for

branded and specialty medicines at its pharmaceuticals unit.

Drug distributors have been benefiting from sales of

specialty medicines used to treat complex conditions such as

rheumatoid arthritis and cancer, along with cheaper versions of

complex biotech drugs called biosimilars. This comes at a time

when prices of generic medicines keep falling due to intense

competition.

Cardinal Health ( CAH ) also beat Wall Street estimates for

fourth-quarter profit and revenue, driven by strength in its

pharmaceutical and specialty solutions unit.

"This quarter and outlook was much better than many feared,"

EvercoreISI analyst Elizabeth Anderson said in a note.

Shares of the Ohio-based company were up 7% at $109.85 in

premarket trading.

The company now expects 2025 adjusted earnings per share of

$7.55 to $7.70, compared with its previous forecast of at least

$7.50. According to LSEG data, analysts were expecting an annual

profit of $7.53 per share.

Cardinal Health ( CAH ), however, expects pharmaceutical unit

revenue to decline 4% to 6% in fiscal 2025, anticipating a hit

from the loss of contracts with UnitedHealth Group's ( UNH )

pharmacy benefit management unit OptumRx, one of its largest

customers.

The Optum contracts, signed in 2015, contributed 16% of

Cardinal's total revenue in fiscal year 2023.

Last month, rival Cencora raised its annual profit forecast

for the fourth time this year, betting on strong demand for

high-priced specialty medicines.

The company sources a substantial amount of its revenue from

the pharmaceutical and specialty solutions unit, through which

it distributes branded and generic drugs, specialty medicines

and over-the-counter healthcare and consumer products.

The unit brought in sales of $55.61 billion, up 13%

year-over-year, in the fourth quarter ended June 30.

Total sales came in at $59.87 billion, beating estimates of

$58.64 billion.

On an adjusted basis, Cardinal Health ( CAH ) reported a profit of

$1.84 per share, topping expectations of $1.73 apiece.