Cardinal Health Reports First Quarter Fiscal Year 2025 Results and Raises Fiscal Year 2025 Outlook

Revenue decreased 4% to $52.3 billion; revenue increased 15% excluding the impact of the previously communicated large customer contract expiration

GAAP1 operating earnings were $568 million; GAAP diluted EPS was $1.70

Non-GAAP operating earnings increased 12% to $625 million, driven by significant growth in Pharmaceutical and Specialty Solutions segment profit

Non-GAAP diluted EPS increased 9% to $1.88

Fiscal year 2025 non-GAAP EPS guidance2 raised to $7.75 to $7.90, from $7.55 to $7.70

DUBLIN, Ohio, Nov. 1, 2024 /PRNewswire/ -- Cardinal Health (NYSE: CAH) today reported first quarter fiscal year 2025 revenue of $52.3 billion, a decrease of 4% from the first quarter of fiscal year 2024. First quarter revenue increased 15% excluding the impact of the previously communicated large customer contract expiration. First quarter GAAP operating earnings were $568 million and GAAP diluted earnings per share (EPS) were $1.70. First quarter non-GAAP operating earnings increased 12% to $625 million, driven by significant growth in  Pharmaceutical and Specialty Solutions segment profit. Non-GAAP diluted EPS increased 9% to $1.88, due to the increase in non-GAAP operating earnings and a lower share count following share repurchase activity, partially offset by an increase in interest and other expense and a higher non-GAAP effective tax rate.

"We began fiscal 2025 by delivering strong operational and financial performance, led by the Pharmaceutical and Specialty Solutions segment," said Jason Hollar, CEO of Cardinal Health. "The strength and resiliency of our largest and most significant business continues to shine, giving us confidence to raise our fiscal 2025 enterprise guidance only a quarter into the year. Across the business, we remain focused on executing our plan to best serve our customers and create value for our shareholders."

Q1 FY25 summary

Q1 FY25

Q1 FY243

Y/Y

Revenue

$52.3 billion

$54.7 billion

(4) %

Operating earnings/(loss)

$568 million

$(32) million

N.M.

Non-GAAP operating earnings

$625 million

$557 million

12 %

Net earnings/(loss) attributable to Cardinal Health, Inc.

$416 million

$(12) million

N.M.

Non-GAAP net earnings attributable to Cardinal Health, Inc.

$460 million

$430 million

7 %

Effective Tax Rate

23.0 %

75.1 %

Non-GAAP Effective Tax Rate

23.0 %

20.9 %

Diluted EPS attributable to Cardinal Health, Inc.

$1.70

$(0.05)

N.M.

Non-GAAP diluted EPS attributable to Cardinal Health, Inc.

$1.88

$1.72

9 %

Segment results

Pharmaceutical and Specialty Solutions segment 

Q1 FY25

Q1 FY24

Y/Y

Revenue

$48.0 billion

$50.6 billion

(5) %

Segment profit

$530 million

$456 million

16 %

First quarter revenue for the Pharmaceutical and Specialty Solutions segment decreased 5% to $48.0 billion. First quarter revenue increased 16% excluding the impact of the customer contract expiration, driven by brand and specialty pharmaceutical sales growth from existing customers.

Pharmaceutical and Specialty Solutions segment profit increased 16% to $530 million in the first quarter, driven by a higher contribution from brand and specialty products, including the earlier seasonal launch of COVID-19 vaccine distribution, and positive generics program performance. This growth was partially offset by the customer contract expiration.

Global Medical Products and Distribution segment

Q1 FY25

Q1 FY24

Y/Y

Revenue

$3.1 billion

$3.0 billion

3 %

Segment profit

$8 million

$12 million

N.M.

First quarter revenue for the Global Medical Products and Distribution segment increased 3% to $3.1 billion, driven by volume growth from existing customers.

Global Medical Products and Distribution segment profit decreased to $8 million in the first quarter, primarily due to higher manufacturing and health and welfare costs, largely offset by an improvement in net inflationary impacts, including mitigation initiatives, and growth from existing customers.

Other4

Q1 FY25

Q1 FY24

Y/Y

Revenue

$1.2 billion

$1.1 billion

13 %

Segment profit

$104 million

$96 million

8 %

First quarter revenue for Other increased 13% to $1.2 billion, driven by growth across the three operating segments: at-Home Solutions, Nuclear and Precision Health Solutions and OptiFreight Logistics.

Other segment profit increased 8% to $104 million in the first quarter, driven by the performance of OptiFreight Logistics.

Fiscal year 2025 outlook2

The company raised its fiscal 2025 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $7.75 to $7.90, from $7.55 to $7.70.

This guidance includes an update to the company's Pharmaceutical and Specialty Solutions segment profit outlook to 4% to 6% growth, from 1% to 3% growth. The company also updated its Global Medical Products and Distribution segment profit outlook to $140 million to $175 million, from approximately $175 million, primarily due to the impact of higher health and welfare costs. Additionally, the company updated expectations for its adjusted free cash flow to $1.0 billion to $1.5 billion, from approximately $1.0 billion.

Recent highlights

Cardinal Health announced in September that the company entered into a definitive agreement to acquire Integrated Oncology Network (ION), a physician-led independent community oncology network, for $1.1B in cash. The acquisition accelerates the development of Navista oncology alliance, providing additional capabilities supporting independent community practices and adding more than 100 providers delivering broad-reaching oncology and urology care across 10 states.

Cardinal Health initiated a $375M accelerated share repurchase program in the first quarter, which was completed in October

Cardinal Health announced plans to open a new, modernized distribution center in Walton Hills, Ohio, supporting its Global Medical Products and Distribution business, in spring 2025

Cardinal Health was ranked 17th on World's Best Companies of 2024 list by TIME

Upcoming webcasted investor events

UBS Global Healthcare Conference at 11:00 a.m. EST, November 12, 2024

Citi Global Healthcare Crossroads Conference at 8:00 a.m. EST, December 3, 2024

Evercore ISI Healthcare Conference at 1:30 p.m. EST, December 3, 2024

J.P. Morgan Healthcare Conference, January 13-16, 2025

WebcastCardinal Health will host a webcast today at 8:30 a.m. EDT to discuss first quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required. 

Presentation slides and a webcast replay will be available on the Investor Relations page for 12 months.

About Cardinal HealthCardinal Health is a distributor of pharmaceuticals and specialty products; a global manufacturer and distributor of medical and laboratory products; a supplier of home-health and direct-to-patient products and services; an operator of nuclear pharmacies and manufacturing facilities; and a provider of performance and data solutions. Our company's customer-centric focus drives continuous improvement and leads to innovative solutions that improve people's lives every day. Learn more about Cardinal Health at cardinalhealth.com and in our Newsroom.

ContactsMedia: Erich Timmerman, and 614.757.8231Investors: Matt and 614.553.3661

1GAAP refers to U.S. generally accepted accounting principles. This news release includes GAAP financial measures as well as non-GAAP financial measures, which are financial measures not calculated in accordance with GAAP. See "Use of Non-GAAP Measures" following the attached schedules for definitions of the non-GAAP financial measures presented in this news release and see the attached schedules for reconciliations of the differences between the non-GAAP financial measures and their most directly comparable GAAP financial measures.2The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.3The first quarter fiscal 2024 GAAP results reflect the effects of a pre-tax goodwill impairment charge related to the Global Medical Products and Distribution segment of $585 million.4Other includes the following three operating segments: Nuclear and Precision Health Solutions (NPHS), at-Home Solutions and OptiFreight Logistics, which are not significant enough individually to require reportable segment disclosure.

Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, financial information, earnings and analyst presentations, and information about upcoming presentations and events is routinely posted and accessible on the Investor Relations page at ir.cardinalhealth.com. In addition, the website allows investors and other interested persons to sign up automatically to receive email alerts when the company posts news releases, SEC filings and certain other information on its website.

Cautions Concerning Forward-Looking StatementsThis release contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue," "likely," and similar expressions, and include statements reflecting future results or guidance, statements of outlook and various accruals and estimates. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include the risk that we may fail to achieve our strategic objectives, including the continued execution of the GMPD Improvement Plan, whether as a result of our expectations for Cardinal Health Brand sales or ongoing inflationary pressures; competitive pressures in Cardinal Health's various lines of business, including the risk that customers may reduce purchases made under their contracts with us or terminate or not renew their contracts or the risk that we may fail to offset the impact of a recent significant customer loss; our ability to manage uncertainties associated with the pricing of branded pharmaceuticals, including as a result of possible legislative action; risks arising from our ongoing audits with the IRS, including the risk that the IRS may disagree with certain positions we have taken, which may result in an increase to our effective tax rate or other costs; risks associated with litigation matters, including an Department of Justice investigation focused on potential violations of the Anti-Kickback Statute and False Claims Act; the risk that events outside of our control, such as weather or geopolitical events, may impact demand for our products or may cause supply shortages that impact our ability to fulfill customer demand; the performance of our generics program, including the amount or rate of generic deflation and our ability to offset generic deflation and maintain other financial and strategic benefits through our generic sourcing venture or other components of our generics programs; the possibility that our At-Home unit goodwill could become impaired due to changes to our long-term financial plan, increases in global interest rates or unfavorable changes in the U.S. statutory tax rate. Cardinal Health is subject to additional risks and uncertainties described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports and exhibits to those reports. This release reflects management's views as of November 1, 2024. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement. Forward-looking statements are aspirational and not guarantees or promises that goals, targets or projections will be met, and no assurance can be given that any commitment, expectation, initiative or plan in this report can or will be achieved or completed. Cardinal Health provides definitions and reconciliations of non-GAAP financial measures and their most directly comparable GAAP financial measures at ir.cardinalhealth.com.

 

Schedule 1

Cardinal Health, Inc. and Subsidiaries 

Condensed Consolidated Statements of Earnings/(Loss) (Unaudited)

First Quarter

(in millions, except per common share amounts)

2025

2024

% Change

Revenue

$        52,277

$        54,650

(4) %

Cost of products sold

50,375

52,907

(5) %

Gross margin

1,902

1,743

9 %

Operating expenses:

Distribution, selling, general and administrative expenses

1,277

1,186

8 %

Restructuring and employee severance

24

25

Amortization and other acquisition-related costs

74

64

Impairments and (gain)/loss on disposal of assets, net 1

(1)

541

Litigation (recoveries)/charges, net

(40)

(41)

Operating earnings/(loss)

568

(32)

N.M.

Other (income)/expense, net

(5)

1

Interest expense, net

32

11

N.M.

Earnings/(loss) before income taxes

541

(44)

N.M.

Provision for/(benefit from) income taxes 2

124

(33)

N.M.

Net earnings/(loss)

417

(11)

N.M.

Less: Net earnings attributable to noncontrolling interests

(1)

(1)

Net earnings/(loss) attributable to Cardinal Health, Inc.

$            416

$             (12)