• Operating Earnings Growth: Increased by 21% year-over-year.
• Earnings Per Share (EPS): $2.35 for the quarter, a growth of 13%.
• Revenue: Nearly $55 billion, flat on a reported basis; adjusted for contract expiration, revenue increased 19% year-over-year.
• Gross Profit: Increased by 10% year-over-year.
• SG&A Expenses: Increased by 4%, with a slight decrease when normalizing for acquisitions.
• Pharmaceutical Segment Profit: $662 million, a growth of 14%.
• GMPD Segment Revenue: Increased by 2% to $3.2 billion.
• GMPD Segment Profit: Increased to $39 million.
• Other Segment Revenue: Increased by 13% to $1.3 billion.
• Other Segment Profit Growth: Increased by 22% to $134 million.
• Cash Position: $3.3 billion at the end of the quarter.
• Adjusted Free Cash Flow: $1.2 billion year-to-date.
• Share Repurchases: $750 million in shares repurchased year-to-date.
• Full Year EPS Guidance: Raised to a range of $8.05 to $8.15.
• Adjusted Free Cash Flow Guidance: Expected at the high end of approximately $1.5 billion.
• Interest and Other Expenses: Increased by $38 million to $65 million in the quarter.
• Effective Tax Rate: 22.4% for the quarter.

• Warning! GuruFocus has detected 6 Warning Signs with CAH.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cardinal Health Inc (NYSE:CAH) reported strong third-quarter results with a 21% increase in operating earnings and a 13% rise in EPS.
• The company raised its fiscal '25 EPS guidance to a range of $8.05 to $8.15, reflecting confidence in sustainable long-term growth.
• Significant growth was observed in the Pharmaceutical and Specialty Solutions segment, driven by strong utilization trends and execution.
• The acquisition of GI Alliance and Integrated Oncology Network is performing well, contributing positively to the company's results.
• Cardinal Health Inc (NYSE:CAH) completed the acquisition of Advanced Diabetes Supply Group, which is expected to be accretive to EPS immediately.

Negative Points

• The company faces potential tariff impacts, with an estimated $200 million to $300 million in gross tariff costs anticipated in fiscal '26.
• Despite mitigation efforts, the GMPD segment continues to face challenges, with guidance narrowed to the lower end of the prior range.
• Interest and other expenses increased by $38 million due to acquisition-related financing costs.
• The effective tax rate increased by 2.5 percentage points from the prior year, impacting net results.
• The company is navigating a complex macro environment, which could pose risks to future performance.

Q & A Highlights

Q: Can you discuss the strong brand and specialty sales growth this quarter and its sustainability moving into 2026? A: Jason Hollar, CEO, explained that the growth is broad-based across various categories, including generics and branded products, with significant contributions from specialty distribution. The growth is driven by both organic factors and recent acquisitions like GI Alliance and Integrated Oncology Network. The company anticipates continued positive utilization and market dynamics into 2026.

Q: Are there any script headwinds from consumer weakness related to tariffs or macroeconomic conditions? A: Jason Hollar, CEO, stated that there are no significant headwinds observed. Historically, pharmaceutical demand has remained resilient even during major macroeconomic events, and the industry benefits from favorable secular trends such as demographics and innovation.

Q: What is the impact of tariffs on Cardinal Health's GMPD segment, and how are you mitigating these costs? A: Jason Hollar, CEO, noted that the company has implemented several mitigation strategies, including increasing US manufacturing capacity and diversifying the supplier network. The remaining $200 million to $300 million of gross tariff costs in fiscal 2026 will be addressed through operational actions and price adjustments.

Q: How is Cardinal Health managing potential pharma tariffs, and what impact could they have on the business? A: Jason Hollar, CEO, explained that as a distributor with a 1% margin, Cardinal Health typically passes through costs like tariffs. The company is confident in its business model and contracts, which have historically adapted to changes in pricing dynamics.

Q: Can you elaborate on the customer onboarding process and its impact on pharma growth? A: Jason Hollar, CEO, confirmed that the company is on track with its $10 billion new customer revenue target for the year. The onboarding began in the second quarter, with the most significant impact expected in the third and fourth quarters, aligning with expectations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.