Cardinal Health Inc. Reports Strong Start to Fiscal Year 2025

Overview
Cardinal Health Inc. (NYSE:CAH), a global healthcare services and products company, reported a solid start to fiscal year 2025 with increased earnings per share (EPS) and adjusted free cash flow expectations. Despite a decline in total revenue, the company's operational performance, particularly in its Pharmaceutical and Specialty Solutions segment, led to a raised EPS guidance to $7.75-$7.90 and an improved cash flow forecast.

Key Takeaways

• Cardinal Health reports a 16% increase in Pharma and Specialty Solutions segment profit.
• Operating earnings and EPS grew by 12% and 9%, reaching EPS of $1.88.
• Total revenue decreased by 4% to $52 billion, but organic growth adjusted for customer transitions was 15%.
• The company raised its EPS guidance to $7.75-$7.90 and adjusted free cash flow expectations to $1 billion-$1.5 billion.
• Plans to acquire Integrated Oncology Network for $1.1 billion announced.
• Pharma revenue expected to decline 2%-4%, with Cardinal Health Brand revenues in GMPD projected to grow.
• Full-year COVID-19 vaccine revenue growth forecast remains at 18%-20%.
• Theranostics products in oncology and at-home solutions saw over 20% revenue growth.

Company Outlook

• Cardinal Health remains positive about its long-term profit goals and confident in its growth strategies and operational improvements.
• The acquisition of Integrated Oncology Network is expected to close by the end of the calendar year.
• The company focuses on specialty and at-home solutions and is exploring further M&A opportunities.

Bearish Highlights

• GMPD segment profits dropped to $8 million due to unexpected health and welfare costs.
• Increased manufacturing costs due to upcoming tariffs on products sourced from China.

Bullish Highlights

• Strong demand across various pharmaceutical categories, notably GLP-1 drugs, contributed to revenue growth.
• Investments in distribution capacity and automation are driving double-digit growth in at-home solutions.
• The company's disciplined capital allocation strategy and ongoing investments aim to enhance shareholder value.

Misses

• Total revenue saw a 4% decrease due primarily to customer transitions.
• The GMPD segment experienced profit declines and faced challenges from recent hurricanes.

Q&A Highlights

• Management discussed efforts to manage increased manufacturing costs without fully passing them on to customers.
• The company emphasized its diversified supply chain and is working to mitigate the impact of tariffs.
• Executives remain confident in the recovery efforts for the GMPD segment and are making improvements in safety metrics.

Cardinal Health has started fiscal year 2025 strong, with significant growth in its Pharmaceutical and Specialty Solutions segment driving overall performance. While total revenue has slightly declined, strategic initiatives, including a planned acquisition, bolster Cardinal Health's position in the healthcare industry. The company emphasizes operational excellence and resilience in navigating macroeconomic challenges and remains committed to growth.

InvestingPro Insights

Cardinal Health's strong start to fiscal year 2025 is reflected in key metrics. The company's revenue growth of 10.66% aligns with reported organic growth of 15%, and net income is expected to grow this year, reinforcing a positive outlook and raised EPS guidance. Notably, Cardinal Health has raised its dividend for 36 consecutive years, demonstrating a long-term commitment to shareholder returns.

Full Transcript – Cardinal Health (CAH) Q1 2025

Operator: Hello, and welcome to the First Quarter Fiscal Year 2025 Cardinal Health, Incorporated Earnings Conference Call.

Matt Sims: Welcome to this morning's Cardinal Health first quarter fiscal '25 earnings conference call, and thank you for joining us…

Jason Hollar: Thanks, Matt. Good morning, everyone. Overall, Cardinal Health delivered a terrific start to fiscal '25 with strong operational and financial performance…

Aaron Alt: Thanks, Jason, and good morning. Q1 delivered an excellent start to Cardinal Health's fiscal 2025 with outstanding results from the Pharma segment…

Questions and Answers: Management answered various questions regarding segment performance, market dynamics, and provided additional insights into their strategy moving forward.

Closing Remarks: Thank you for joining us this morning. Again, an excellent start to the year, showing our broad strength, resiliency, and momentum…