Cardinal Health Reports Q2 FY25 Results, Raises Outlook
Cardinal Health Reports Strong Q2 FY25 Results and Strategic Growth Moves
Revenue and Earnings Overview
Cardinal Health (NYSE: CAH) has reported a revenue of $55.3 billion for the second quarter of fiscal year 2025, a decrease of 4% from the same quarter in fiscal year 2024. Despite the overall decline, revenue increased by 16% when excluding the effects of a significant customer contract expiration previously announced by the company. This highlights the robust performance in core business operations.
The company’s GAAP operating earnings for the quarter increased by 9%, reaching $549 million, with GAAP diluted earnings per share (EPS) at $1.65. Non-GAAP operating earnings, which exclude certain items, also increased by 9%, reaching $635 million, driven largely by the strong performance in the Pharmaceutical and Specialty Solutions segment. Non-GAAP diluted EPS rose by 2%, reaching $1.93, fueled by the growth in non-GAAP operating earnings, a reduction in shares outstanding, and the impact of a lower effective tax rate.
Jason Hollar, CEO of Cardinal Health, expressed satisfaction with the company’s second-quarter financial performance, emphasizing strong demand in the Pharmaceutical and Specialty Solutions segment and noting that the results reflect the positive steps taken by the company for long-term growth. The announcement of the closing of two significant acquisitions—GI Alliance and Integrated Oncology Network (ION)—further bolstered the company’s position in its specialty businesses, providing new avenues for continued expansion.
Segment Performance Highlights
- Pharmaceutical and Specialty Solutions Segment
The Pharmaceutical and Specialty Solutions segment generated $50.8 billion in revenue during Q2 FY25, a 4% decrease compared to the previous year. However, revenue would have increased by 17% excluding the customer contract expiration, driven by growth in brand and specialty pharmaceutical sales from both existing and new customers.Segment profit in this division grew by 7%, reaching $531 million, aided by strong performance in BioPharma Solutions, Specialty Networks, and brand and specialty products. Despite the negative impact of the customer contract expiration, the segment showed resilience and growth. - Global Medical Products and Distribution Segment
The Global Medical Products and Distribution segment saw a modest 1% increase in revenue, reaching $3.2 billion. This growth was primarily driven by higher volume from existing customers. The segment’s profit grew to $18 million, a notable improvement from the $11 million in Q2 FY24. This improvement was attributed to cost optimization initiatives, although partially offset by a write-off of uncollectible receivables from the WaveMark business. - Other Segment
The Other segment, which encompasses several operations, saw impressive growth with a 13% increase in revenue, totaling $1.3 billion. This was driven by growth across the company’s diverse operating units, including at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics. Segment profit grew by 11%, reaching $118 million, due to strong performance in OptiFreight Logistics and Nuclear and Precision Health Solutions.
Fiscal Year 2025 Outlook
Based on the positive results from the second quarter and the successful completion of key acquisitions, Cardinal Health has raised its fiscal 2025 non-GAAP diluted EPS guidance to a range of $7.85 to $8.00, up from the previous range of $7.75 to $7.90. This revised guidance reflects the contributions from the recently completed acquisitions of GI Alliance and ION, further solidifying Cardinal Health’s position in the specialty healthcare market.
Additionally, the company has updated its guidance for Pharmaceutical and Specialty Solutions segment profit to reflect 10% to 12% growth, up from the earlier estimate of 4% to 6% growth. This positive revision is driven by stronger organic growth within the segment, complemented by contributions from the new acquisitions. On the other hand, the guidance for the Global Medical Products and Distribution (GMPD) segment profit has been adjusted to a range of $130 million to $150 million, down from the previous forecast of $140 million to $175 million. This change is primarily due to the second-quarter write-off of uncollectible receivables in the WaveMark business.
The company has also updated its expectations for interest and other expense to a range of $200 million to $230 million, up from the previous range of $140 million to $170 million. This increase reflects the early completion of $2.9 billion in new debt financing and the impact of foregone interest income from acquisitions.
Strategic Acquisitions and Investments
Cardinal Health’s strategic acquisitions have played a pivotal role in its growth trajectory. In addition to its strong organic growth, the company recently closed its acquisition of a majority stake in GI Alliance, the nation’s leading gastroenterology management services organization. This acquisition significantly enhances Cardinal Health’s specialty offerings, expanding its capabilities in the gastroenterology space. With more than 900 physicians and 345 practice locations across 20 states, GI Alliance provides a substantial boost to Cardinal Health’s multi-specialty growth strategy.
Furthermore, Cardinal Health completed the acquisition of Integrated Oncology Network (ION) in December 2024. ION, a physician-led network supporting independent oncology practices, will accelerate the development of Cardinal Health’s Navista oncology platform, which is designed to support independent community oncology practices. This acquisition adds over 100 providers and expands the company’s reach across 10 states, offering a broader portfolio of oncology and urology services.
The company also made a significant investment in advancing its theranostics capabilities. Cardinal Health has announced the start of routine production of actinium-225 (Ac-225) through its Center for Theranostics Advancement in collaboration with TerraPower Isotopes. This marks a major step in increasing access to theranostic treatments, which offer promising new cancer therapies.
Additionally, Cardinal Health is investing in infrastructure to support its at-home healthcare services. Construction is underway for a new at-Home Solutions distribution center in Fort Worth, Texas, which is set to incorporate advanced robotics and automation technologies. The facility is expected to be fully operational by the summer of 2025, enhancing Cardinal Health’s ability to meet the growing demand for at-home healthcare solutions.
Product Innovations and Launches
Cardinal Health continues to innovate in its product offerings, as seen with the U.S. launch of the Kendall SCD SmartFlow™ Compression System. This next-generation product in the Kendall™ Compression Series is designed to improve both clinician and patient experience, reinforcing Cardinal Health’s commitment to providing cutting-edge medical solutions.
Recognition and Industry Leadership
In recognition of its continued strong performance and trustworthiness, Cardinal Health was named to Forbes’ 2025 list of Most Trusted Companies in America. This accolade reflects the company’s commitment to maintaining high standards of integrity and trust across all its business operations.
