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    CAH
    Earnings call· Jun 2025(Q4 FY25)

    CARDINAL HEALTH INC CAH

    Aug 12, 2025 Source

    Executive summary

    Cardinal Health Q4 FY25 — Strong Performance Across Segments and Strategic Acquisitions Drive Growth

    Cardinal Health closed FY25 with strong momentum, achieving double-digit profit growth across all segments and exceeding free cash flow targets. The company is strategically expanding its Specialty Alliances platform through acquisitions like Solaris Health, while also driving operational efficiencies in its core businesses. Management is confident in its resilient business model and ability to deliver continued growth in FY26, despite some minor Q4 Pharma headwinds and anticipated Q2 FY26 tariff impacts in GMPD.

    Highlights

    5

    • Enterprise operating earnings grew 19% in Q4 and 15% for FY25.

    • Adjusted free cash flow reached $2.5 billion for FY25, exceeding expectations by $500 million.

    • All 5 operating segments delivered double-digit profit growth for both Q4 and FY25.

    • Acquisition of Solaris Health significantly expands the Specialty Alliances multi-specialty MSO platform.

    • GMPD segment profit reached $70 million in Q4, its highest profit quarter, driven by improvement plan initiatives.

    Concerns

    2

    • Q4 Pharma segment profit was "a touch lighter" than expected due to individually immaterial expenses like bad debt adjustments and contractual resolutions.

    • Q2 FY26 GMPD segment profit is expected to be the lowest in absolute dollar terms due to the realization of earlier rounds of tariff expenses.

    Guidance & targets

    20
    CategoryTargetConfidence
    Fiscal Year 2026 Adjusted EPS
    $9.30 to $9.50
    high materiality
    High
    Fiscal Year 2026 Pharma Revenue Growth
    11% to 13%
    high materiality
    High
    Fiscal Year 2026 Pharma Segment Profit Growth
    11% to 13%
    high materiality
    High
    Fiscal Year 2026 Generics Market Volume Growth
    2% to 3%
    medium materiality
    Medium
    Fiscal Year 2026 Specialty Revenue Growth
    double-digit
    medium materiality
    High
    Fiscal Year 2026 Biopharma Solutions Revenue Growth
    at least 20%
    medium materiality
    High
    Fiscal Year 2026 GMPD Revenue Growth
    2% to 4%
    medium materiality
    High
    Fiscal Year 2026 GMPD Segment Profit
    at least $140 million
    medium materiality
    High
    Fiscal Year 2026 Other Growth Businesses Revenue Growth
    26% to 28%
    medium materiality
    High
    Fiscal Year 2026 Other Growth Businesses Profit Growth
    25% to 27%
    medium materiality
    High
    Fiscal Year 2026 Interest and Other Expense
    about $275 million
    low materiality
    High
    Fiscal Year 2026 Effective Tax Rate
    22% to 24%
    low materiality
    High
    Fiscal Year 2026 Annual Share Repurchases
    $750 million
    medium materiality
    High
    Fiscal Year 2026 Diluted Weighted Average Shares Outstanding
    238 million and 240 million
    low materiality
    High
    Fiscal Year 2026 Adjusted Free Cash Flow
    $2.75 billion and $3.25 billion
    high materiality
    High
    Target Leverage Ratio
    2.75x to 3.25x adjusted gross debt to EBITDA
    high materiality
    High
    Solaris Health Acquisition Accretion
    slightly accretive to EPS
    medium materiality
    High
    Sonexus Patient Access Business Launches
    40 expected launches
    low materiality
    High
    Sonexus Patient Access Business Growth
    over 30%
    low materiality
    High
    Biopharma Solutions Revenue
    about $1 billion
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Pharmaceutical and Specialty Solutions
    Revenue growth driven by brand and specialty pharmaceutical sales from existing and new customers, including GLP-1 sales. Segment profit growth driven by MSO platforms and brand/specialty products, partially offset by customer contract expiration. Q4 profit was slightly below expectations due to individually immaterial expenses (bad debt, contractual resolutions).
    GLP-1 sales revenue growth: 6 percentage pointsMSO platforms contribution: positiveBrand and specialty products contribution: positiveGenerics program performance: positiveGenerics volume growth: strong
    		$55.4 billionrelatively flat—$535 million
    Global Medical Products and Distribution (GMPD)
    Revenue growth driven by volume growth from existing customers. Segment profit was its highest quarter, reflecting progress against the GMPD improvement plan and cost containment efforts. Continued progress on mitigating tariff impacts.
    Cardinal Health Brand revenue growth (U.S.): over 6%
    		$3.2 billion3%—$70 million
    Other Growth Businesses
    Revenue and segment profit driven by strong growth across at-Home Solutions (including ADS acquisition), Nuclear and Precision Health Solutions, and OptiFreight Logistics. These businesses contributed over 40% of the enterprise operating earnings growth for the quarter. Strong organic growth across all three.
    		$1.6 billion37%—$160 million

    Operational metrics

    38
    Enterprise Operating Earnings Growth
    19%YoY
    Q4 FY25
    Enterprise Operating Earnings Growth
    15%YoY
    FY25
    Adjusted EPS Growth
    13%YoY
    Q4 FY25
    Adjusted EPS Growth
    over 9%YoY
    FY25

    Despite large customer contract expiration and significant investments.

    Capital Expenditure
    nearly $550 million
    FY25
    Dividends Returned to Shareholders
    nearly $500 million
    FY25

    For growing dividend.

    Share Repurchases
    $750 million
    FY25
    Total Company Revenue
    $60.2 billionrelatively flat
    Q4 FY25

    Increased 21% versus prior year adjusted for contract expiration. Led by strong demand across Pharma and growth businesses in Other.

    Gross Profit
    $2.2 billiongrew 17%
    Q4 FY25

    Gross profit growth outpaced consolidated SG&A growth.

    SG&A
    $1.5 billionincreased 16%
    Q4 FY25

    Organic growth reflects investments for future and focus on efficiency.

    Total Company Operating Earnings
    $719 millionup 19% versus last year
    Q4 FY25
    Interest and Other Expense
    $44 millionincreased by $34 million versus prior year
    Q4 FY25

    Finished better than expectations.

    Effective Tax Rate
    26.3%1.7 percentage points higher than previous year
    Q4 FY25

    Modestly higher than expectations.

    Average Diluted Shares Outstanding
    240 million2% lower than a year ago
    Q4 FY25
    EPS Contribution from Specialty Alliance
    approximately $0.05 more than anticipatedhigher than expected
    FY25

    Due to liability classification of minority equity positions.

    Pharma Revenue Growth (excluding contract expiration)
    22%
    Q4 FY25
    GLP-1 Sales Revenue Growth Contribution
    approximately 6 percentage points
    Q4 FY25

    Included in overall Pharma revenue growth.

    Cardinal Health Brand Revenue Growth
    over 6%
    Q4 FY25

    Continued positive trend.

    Other Growth Businesses Contribution to Enterprise Operating Earnings Growth
    over 40%
    Q4 FY25

    Highlighted as an increasingly important part of overall growth.

    Total Company Revenue
    $223 billiondecreased 2%
    FY25

    Increased 18% excluding contract expiration.

    Gross Margin
    $8.2 billionincreased 10%
    FY25
    SG&A
    $5.4 billionincreased 8%
    FY25
    Total Operating Earnings
    $2.8 billiongrowth of 15%
    FY25
    Interest and Other Expense
    $174 millionincreased $174 million
    FY25
    Annual Effective Tax Rate
    23.3%
    FY25
    Average Diluted Shares Outstanding
    242 million2% lower than a year ago
    FY25
    Ending Cash Balance
    $3.9 billion
    FY25

    Reflecting $2.5 billion adjusted free cash flow.

    New Customer Wins Revenue Tailwaind
    approximate $7 billion
    FY26
    GMPD Tariff Headwind
    net $50 million to $75 million
    FY26

    Assumed in segment profit guidance.

    Other Growth Businesses Organic Profit Growth
    approximately 10%
    FY26

    Normalized.

    Nuclear PET and Theranostics Growth
    approximately 20%
    FY26

    Above-market core growth.

    Nuclear Theranostics Revenue Growth
    over 30%
    FY25

    Even greater growth in urology portfolio products.

    at-Home Solutions Revenue Growth
    nearly 50%
    Q4 FY25

    Significantly outpacing increase in freight and warehousing costs.

    at-Home Solutions Urology Products Revenue Growth
    over 20%
    FY25
    New Business Onboarded
    approximately $10 billion
    FY25

    Successfully onboarded new customers.

    MSO Providers
    approximately 3,000
    post-Solaris transaction completion

    Includes Specialty Alliance and Navista.

    Biopharma Solutions Revenue
    $550 million
    FY25

    Base for future growth.

    at-Home Solutions Medicare CGM Revenue
    less than 15%
    current

    Of total at-Home Solutions revenue.

    Industry KPIs

    4
    MetricValueDetails
    Utilization trendslow single-digit%
    Pharmacy scripts specialty2% to 3%%
    Segment revenue operating income2% to 4%%
    Adjusted EPS EBITDA leverage guidance$9.30 to $9.50USD

    Product announcements

    1
    ProductTypeDetails
    Kendall DL Multi Systemlaunch

    Deals & partnerships

    8
    Solaris HealthAcquisition of the country's leading urology managed services organization (MSO).$1.9 billion cash out for 75% stake (enterprise value $2.4 billion)

    Greatly accelerates progress in building the Specialty Alliances multi-specialty MSO platform, significantly expanding the reach of the urology alliance physician network. Adds over 750 providers across 14 states. Less than 1/3 of Solaris revenue is drug spend, with diverse revenue streams from ancillary services.

    GI AllianceAcquired majority position in GI Alliance and other physician support organizations.

    Now part of the Specialty Alliance.

    IONAcquisition of oncology distribution business.

    Oncology distribution transitioning, with majority of volume shifting during Q2 FY26.

    ADSAcquisition in at-Home Solutions.

    Closed at the start of Q4 FY25. Integration and synergy capture efforts underway. Volume transitioning into DC network, full conversion expected by end of Q1 FY26.

    Urology AmericaAcquisition to bolster urology Alliance team.

    Part of expanding urology MSO platform.

    Potomac UrologyAcquisition to bolster urology Alliance team.

    Part of expanding urology MSO platform.

    Academic Urology & UrogynecologyAcquisition to bolster urology Alliance team.

    Part of expanding urology MSO platform.

    Specialty AllianceCardinal Health picking up distribution for the Specialty Alliance gastroenterology portfolio.

    Starting in April 2026.

    Risks & headwinds

    6
    Customer Contract ExpirationFY25

    "relatively flat" total revenue in Q4 FY25 (reported); "decreased 2%" total revenue in FY25 (reported); "partially offset Pharma segment profit growth" in Q4 FY25.

    Mitigation: onboarding of new customers (contributing $10 billion in new business in FY25); annualizing new customer wins (driving FY26 Pharma revenue growth).

    Individually Immaterial Expenses in PharmaQ4 FY25

    Q4 Pharma segment profit was a touch lighter than we expected

    Mitigation: not terribly exceptional and individually immaterial (management downplayed impact); focus on strong demand going forward.

    TariffsFY26

    net $50 million to $75 million headwind to our results in fiscal '26 for GMPD; overall aggregate gross impact as it relates to the tariffs remains in that around $450 million with mitigation $250 million to $300 million.

    Mitigation: increasing U.S. manufacturing capacity, diversifying the supplier network, reducing dependency on higher-risk jurisdictions, implemented pricing adjustments, working with customers to identify win-win opportunities to help offset the impact of tariffs by growing Cardinal Health Brand penetration.

    Regulatory Uncertainty and Policy Environmentongoing

    null

    Mitigation: confident in our resilient business model, creates tremendous value for the U.S. health care system, aligned with our goals of increasing access, affordability and innovation in health care, uniquely positioned to support these efforts.

    Interest Expense IncreaseQ4 FY25, FY25, FY26

    interest and other increased by $34 million versus prior year to $44 million in Q4 FY25; interest and other increased $174 million in FY25; expect interest and other of about $275 million in FY26.

    Mitigation: strong cash performance, strong cash flow generation will enable us to delever back to our targeted leverage range of 2.75x to 3.25x adjusted gross debt to EBITDA by the end of fiscal year '26, even with the Solaris acquisition.

    Potential Changes in Reimbursement Environment (at-Home Solutions)future

    null

    Mitigation: strong operational foundation will support ADS, manage through potential changes, uniquely positioned to help support administration goals, advocating for them with the administration, focus on compliance and running strong processes.

    What to watch in Q1 FY26

    5

    Solaris Health Acquisition Close

    by end of CY25
    Currentannounced
    Targetclosed

    Why it matters

    The acquisition significantly expands the Specialty Alliances MSO platform and is expected to be slightly accretive to EPS, with updated guidance to follow its close.

    While we expect the acquisition to be slightly accretive to EPS within the first 12 months post close, as is our practice, we will update guidance following the close of that acquisition.

    Q&A highlights

    6

    Lisa asked about the 100 bps increase in Pharma and if $0.05 of the $0.20 EPS increase was from NCI, implying half the Pharma increase.

    Aaron confirmed that roughly half of the $0.20 EPS increase is from the liability classification (NCI change) and the other half from higher expectations for Pharma and Other businesses. He noted strong demand across the business.

    “You're right to call out that we did raise our guide for the year by $0.20, and roughly half of that is tied to the liability classification and roughly half of that is tied to higher expectations for both Pharma and the Other business.”

    asked by Lisa Gill · answered by Aaron Alt

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Progress and Operational Excellence

    Cardinal Health concluded FY25 with strong performance across all five operating segments, each achieving double-digit profit growth. This reflects disciplined execution against strategic priorities, including simplification, operational efficiencies, and strategic investments for growth. The company's focus on evolving to meet customer needs and driving long-term value creation is evident in its consistent results.

    02

    Expansion in Specialty and MSO Platforms

    The acquisition of Solaris Health, a leading urology managed services organization, significantly accelerates Cardinal Health's progress in building its Specialty Alliances multi-specialty MSO platform. This expands the urology alliance physician network, adding over 750 providers across 14 states. The company aims to be a multi-specialty leader, leveraging diverse revenue streams from ancillary services like pathology and diagnostic imaging in therapeutic areas such as autoimmune, urology, and oncology.

    03

    GMPD Improvement Plan Success

    The GMPD segment delivered its highest profit quarter in Q4 FY25, reaching $70 million, driven by improvement plan initiatives and cost containment efforts. The team continues to optimize its global footprint, increase supply chain resiliency, and mitigate tariff impact🌐s through actions like increasing U.S. manufacturing capacity and diversifying supplier networks. Cardinal Health Brand products also showed positive trends with over 6% revenue growth in the U.S.

    04

    Growth Businesses Momentum

    The "Other" growth businesses, including at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics, made substantial contributions, driving over 40% of the enterprise operating earnings growth in Q4. These businesses benefit from leading value propositions, efficient operations, and alignment with long-term secular trends, with strong organic growth and successful integration of acquisitions like ADS.

    05

    Infrastructure Investments and Customer Experience

    Cardinal Health is making significant investments in its distribution infrastructure, including a new fully automated pharma distribution center and a new Consumer Health Logistics Center, which is now fully operational. Modernization of core technology platforms, such as the Vantus HQ ordering platform, enhances service capabilities. The company also reinforces its commitment to independent pharmacies through initiatives like the One Voice Initiative for state advocacy.

    06

    Biopharma Solutions and Data Insights

    The Biopharma Solutions business, including the Sonexus patient access business, is experiencing strong demand with 40 expected launches in CY25 and over 30% growth. This success is attributed to a next-generation hub digitizing and automating patient support. Additionally, Specialty Networks' data insights platforms, PPS Analytics and SoNaR, leverage AI to create comprehensive patient views, recently securing its first oncology customer agreement.

    AI-generated summary of the company’s earnings call. Not investment advice.