Group 1: Earnings Performance - Cardinal Health reported quarterly earnings of $2.08 per share, exceeding the Zacks Consensus Estimate of $2.03 per share, and up from $1.84 per share a year ago, representing an earnings surprise of +2.46% [1] - The company posted revenues of $60.16 billion for the quarter ended June 2025, slightly missing the Zacks Consensus Estimate by 0.84%, but up from $59.87 billion year-over-year [2] Group 2: Stock Performance and Outlook - Cardinal shares have increased by approximately 33.3% since the beginning of the year, significantly outperforming the S&P 500's gain of 8.4% [3] - The current consensus EPS estimate for the upcoming quarter is $2.17 on revenues of $57.99 billion, and for the current fiscal year, it is $9.21 on revenues of $248.27 billion [7] Group 3: Industry Context - The Medical - Dental Supplies industry, to which Cardinal belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Pro-Dex, Inc., another company in the same industry, is expected to report quarterly earnings of $0.47 per share, reflecting a year-over-year change of +2.2% [9]

Core Insights - Cardinal Health's multi-specialty management services organization (MSO), The Specialty Alliance, is set to acquire urology MSO Solaris Health, enhancing its capabilities in the urology sector [1][3] - The acquisition will be financed by Cardinal Health providing approximately $1.9 billion in cash, resulting in Cardinal Health owning about 75% of The Specialty Alliance post-acquisition [2] - The transaction is anticipated to close by the end of the year [2] Company Expansion - The acquisition of Solaris Health will expand The Specialty Alliance's reach, building on previous acquisitions including Urology America, Potomac Urology, and Academic Urology & Urogynecology [3] - Solaris Health currently supports over 750 providers across 250 practice locations in 14 states, which will increase Cardinal Health's MSO platforms to approximately 3,000 providers in 32 states [3] Strategic Focus - Cardinal Health's CEO emphasized that accelerating specialty growth is a top priority, particularly in the urology specialty, which is viewed as attractive for the company [4] - The partnership with Solaris Health aims to enhance patient-centered care through a physician-led national platform, optimizing care delivery and improving patient access to specialized services [4] Financial Performance - Cardinal Health reported fourth quarter revenues of $60.2 billion, which remained relatively flat year over year, while fiscal year 2025 revenues were reported at $222.6 billion, reflecting a 2% decline from the previous fiscal year [5] - The company previously announced its GI Alliance MSO platform's agreements to acquire Urology America and Potomac Urology, furthering its strategy to support physician-led practices and improve patient outcomes [6]

Core Insights - Cardinal Health, Inc. reported fourth-quarter fiscal 2025 adjusted earnings per share (EPS) of $2.08, exceeding the Zacks Consensus Estimate of $2.03 by 2.5% and reflecting a 13% year-over-year improvement [1] - The company raised its fiscal 2026 earnings guidance, anticipating adjusted EPS between $9.30 and $9.50, up from a previous outlook of $9.10-$9.30 [9] Revenue Details - Total sales for the quarter were flat year-over-year at $60.2 billion, missing the Zacks Consensus Estimate by 0.8% [2] Segmental Analysis - **Pharmaceutical and Specialty Solutions**: Revenues were nearly flat at $55.4 billion year-over-year, but excluding the impact of a customer contract expiration, sales increased by 22% [3] - **Pharmaceutical Profit**: Totaled $535 million, an 11% increase from the previous year, driven by growth in brand and specialty products [4] - **Global Medical Products and Distribution**: Revenues reached $3.2 billion, up 3% year-over-year, with profits increasing from $47 million to $70 million [4] - **Other Segment**: Sales grew by 37% year-over-year to $1.6 billion, with profits rising 44% to $160 million [5] Margin Analysis - Gross profit increased by 17% year-over-year to $2.2 billion, with a gross margin of 3.7%, expanding approximately 50 basis points [6] Financial Update - The company ended the quarter with cash and cash equivalents of $3.33 billion, down from $3.81 billion in the previous quarter, while net cash provided by operating activities was $2.91 billion compared to a net cash usage of $27 million in the prior year [8] 2026 Outlook - The company expects revenues from the Pharmaceutical segment to grow by 11-13% year-over-year, with segmental profit also anticipated to increase by 11-13% [9] - Medical segment revenues are estimated to grow by 2-4%, while the Other segment is projected to see revenue growth of 26-28% [10] Conclusion - Cardinal Health's fourth-quarter results showed mixed performance, with earnings exceeding estimates but revenues falling short. Profit growth was observed across all segments, particularly in Pharmaceutical and Specialty Solutions, Global Medical Products, and the Other segment [11]

Financial Data and Key Metrics Changes - The company reported a 19% increase in operating earnings for Q4 and a 15% increase for the year [10] - EPS grew by 13% in Q4 and over 9% for the year [10] - Adjusted free cash flow for the year was $2.5 billion, exceeding expectations by $500 million [11] - Total company revenue was relatively flat at $60.2 billion, but increased by 21% when adjusting for contract expiration [12] - Gross profit grew 17% to $2.2 billion, with a gross margin improvement of approximately 50 basis points [12] Business Line Data and Key Metrics Changes - Pharmaceutical segment revenue was flat at $55.4 billion, but increased by 22% excluding customer contract expiration [16] - The Pharma segment profit increased by 11% to $535 million, driven by brand and specialty pharmaceutical sales [16] - GMPD revenue grew 3% to $3.2 billion, with segment profit reaching $70 million, its highest quarter [18] - Other growth businesses reported a 37% revenue increase to $1.6 billion and a 44% profit increase to $160 million [19] Market Data and Key Metrics Changes - The company saw strong pharmaceutical demand across all business areas, including brand, specialty, generics, and consumer health [16] - The At Home Solutions segment, including the ADS acquisition, experienced significant growth, contributing to overall revenue increases [20] - The nuclear and precision health solutions segment outpaced the market, with revenue growth over 30% [44] Company Strategy and Development Direction - The company is focused on driving simplification and operational efficiencies while making strategic investments for growth [6] - The acquisition of Solaris Health is expected to enhance the company's position in the specialty market, particularly in urology [7][38] - The company aims to expand its distribution capabilities and modernize its technology platforms to enhance customer service [35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for fiscal year 2026, expecting EPS growth of 13% to 15% [23] - The company anticipates continued strong demand across its business segments, with a focus on customer experience as a key differentiator [34] - Management remains confident in the company's resilient business model amid regulatory changes and market dynamics [49] Other Important Information - The company completed four strategic acquisitions during the year, including Green Specialty and ADS [11] - The effective tax rate for the fourth quarter was 26.3%, slightly higher than the previous year [13] - The company plans to maintain a baseline of annual share repurchases at $750 million [32] Q&A Session Summary Question: Can you discuss the updated guidance for the Pharmaceutical and Specialty Solutions division? - Management confirmed that the guidance was raised by $0.20, with half attributed to liability classification and the other half to higher expectations for Pharma and other businesses [54] Question: What are the drivers behind the increase in SG&A? - Management indicated that the majority of the SG&A increase is tied to recent acquisitions, with ongoing efforts to simplify and optimize operating costs [58] Question: Can you elaborate on the gross profit performance and margin expansion? - Management noted that the emphasis on specialty distribution and additional revenue streams from MSO acquisitions contributed positively to the overall gross profit profile [68] Question: What are the utilization trends in the GMPD segment? - Management stated that utilization remains consistent, with ongoing efforts to increase penetration of Cardinal Health branded products [73] Question: Can you provide insights on the Solaris acquisition and its impact? - Management highlighted that Solaris Health adds significant capabilities and revenue streams, enhancing the company's position in the urology market [81][84]

Financial Data and Key Metrics Changes - The company reported a 19% increase in operating earnings for Q4 and a 15% increase for the year [9] - EPS grew by 13% in Q4 and over 9% for the year [9] - Adjusted free cash flow for the year was $2.5 billion, exceeding expectations by $500 million [10] - Total company revenue was $60.2 billion, relatively flat on a reported basis, but increased by 21% when adjusting for contract expiration [10][11] - Gross profit grew 17% to $2.2 billion, with a gross margin improvement of approximately 50 basis points [11] Business Line Data and Key Metrics Changes - Pharmaceutical segment revenue was flat at $55.4 billion, but increased by 22% excluding customer contract expiration, driven by brand and specialty pharmaceutical sales [14] - The GMPD segment saw a 3% revenue increase to $3.2 billion, with segment profit reaching $70 million, its highest profit quarter [16] - Other growth businesses reported a 37% revenue increase to $1.6 billion, with segment profit increasing 44% to $160 million [17] Market Data and Key Metrics Changes - The company experienced strong pharmaceutical demand across all business areas, including brand, specialty, generics, and consumer health [14] - The At Home Solutions segment, including the ADS acquisition, saw significant growth, contributing to the overall revenue increase [18] Company Strategy and Development Direction - The company is focused on driving simplification and operational efficiencies while making strategic investments for growth [5] - The acquisition of Solaris Health is expected to enhance the company's position in the specialty market, particularly in urology [6][35] - The company aims to expand its distribution capabilities and modernize its technology platforms to support long-term growth [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for fiscal year 2026, expecting EPS growth of 13% to 15% [21] - The company remains confident in its resilient business model and ability to navigate regulatory changes [46] - Management highlighted strong demand across the business and a positive outlook for the upcoming fiscal year [62] Other Important Information - The company completed four strategic acquisitions during the year, including Green Specialty and At Home Solutions [10] - The ending cash balance for fiscal year 2025 was $3.9 billion, reflecting strong cash flow generation [20] Q&A Session Summary Question: Can you discuss the updated guidance for the Pharmaceutical and Specialty Solutions division? - Management confirmed that the guidance was raised by $0.20, with half attributed to liability classification and the other half to higher expectations for Pharma and other businesses [50] Question: What are the drivers of the SG&A increase quarter over quarter? - Management indicated that the increase in SG&A was primarily due to recent acquisitions, with ongoing efforts to simplify and optimize operating costs [55] Question: Can you elaborate on the gross profit performance in the quarter? - Management noted that the margin expansion was driven by a favorable mix, particularly from specialty distribution and MSO acquisitions [66] Question: What are the utilization trends across the GMPD segment? - Management stated that utilization remains consistent, with ongoing efforts to increase penetration of Cardinal Health branded products [72] Question: What capabilities does Solaris Health bring to the company? - Management highlighted that Solaris Health adds over 750 providers and diverse revenue streams, enhancing the company's MSO structure [81]

Management's Discussion and Analysis of Financial Condition and Results of Operations [About Cardinal Health](index=6&type=section&id=About%20Cardinal%20Health) Cardinal Health is a global healthcare company operating through its Pharmaceutical (Pharma) and Medical Products (GMPD) segments, with a third "Other" category for smaller units - The company reports its financial results in two main segments: **Pharmaceutical and Specialty Solutions ("Pharma")** and **Global Medical Products and Distribution ("GMPD")**[19](index=19&type=chunk) - The Pharma segment distributes branded, generic, and specialty pharmaceuticals in the United States and provides related services to manufacturers and healthcare providers[19](index=19&type=chunk) - The GMPD segment manufactures, sources, and distributes Cardinal Health brand and national brand medical, surgical, and laboratory products across the U.S., Canada, Europe, and Asia[20](index=20&type=chunk) - The "Other" category comprises operating segments not large enough for separate disclosure, including Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight Logistics[19](index=19&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) [Consolidated Results](index=7&type=section&id=Consolidated%20Results) Fiscal 2025 revenue decreased 2% to $222.6 billion, while GAAP operating earnings surged 83% and non-GAAP operating earnings grew 15% - Revenue for fiscal 2025 decreased by **2% to $222.6 billion**, mainly due to the expiration of the OptumRx contracts, though this was partially offset by growth in branded and specialty pharmaceutical sales[23](index=23&type=chunk) Fiscal 2025 vs. 2024 Operating Earnings (GAAP and Non-GAAP) | (in millions) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | **GAAP operating earnings** | **$2,275** | **$1,243** | **83%** | | **Non-GAAP operating earnings** | **$2,786** | **$2,414** | **15%** | - The increase in GAAP operating earnings was significantly driven by a favorable comparison to the prior year, which included **$675 million in goodwill impairment charges**, and by recognizing **$171 million in net litigation recoveries** in fiscal 2025[25](index=25&type=chunk) Fiscal 2025 vs. 2024 Diluted EPS (GAAP and Non-GAAP) | ($ per share) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | **GAAP diluted EPS** | **$6.45** | **$3.45** | **87%** | | **Non-GAAP diluted EPS** | **$8.24** | **$7.53** | **9%** | - Cash and equivalents decreased from **$5.1 billion** at June 30, 2024, to **$3.9 billion** at June 30, 2025, with net cash from operations of **$2.4 billion** impacted by the OptumRx contract unwind and **$798 million** in opioid litigation payments[30](index=30&type=chunk) [Significant Developments in Fiscal 2025 and Trends](index=10&type=section&id=Significant%20Developments%20in%20Fiscal%202025%20and%20Trends) Fiscal 2025 was marked by strategic acquisitions totaling $5.3 billion, strong GLP-1 demand, and the adverse impact of the OptumRx contract expiration Key Acquisitions in Fiscal 2025 | Company | Closing Date | Purchase Price (in billions) | Business Description | | :--- | :--- | :--- | :--- | | **Advanced Diabetes Supply (ADS)** | Apr 1, 2025 | $1.1 | Diabetic medical supplies provider | | **GI Alliance (GIA)** | Jan 30, 2025 | $2.8 | Gastroenterology management services organization (MSO) | | **Urology America** | May 30, 2025 | $0.36 | Urology MSO (acquired through GIA) | | **Integrated Oncology Network (ION)** | Dec 2, 2024 | $1.1 | Independent community oncology network (MSO) | - The expiration of the OptumRx contracts, which accounted for **17% of consolidated revenue in fiscal 2024**, adversely impacted results of operations, financial condition, and cash flows in fiscal 2025[42](index=42&type=chunk) - Sales of **GLP-1 pharmaceuticals increased significantly**, positively impacting revenue but not meaningfully contributing to segment profit[43](index=43&type=chunk) - The company faces risks from potential U.S. tariffs on goods from countries where it operates, which could lead to substantial additional costs, price increases, and supply disruptions[40](index=40&type=chunk)[41](index=41&type=chunk) [Results of Operations](index=14&type=section&id=Results%20of%20Operations) Total revenue decreased 2% to $222.6 billion, while gross margin grew 10% and total segment profit increased 15% to $2.9 billion [Revenue](index=14&type=section&id=Revenue) Total revenue decreased 2% to $222.6 billion, driven by a 3% decline in the Pharma segment due to the OptumRx contract loss Revenue by Segment (in millions) | Segment | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Pharmaceutical and Specialty Solutions | $204,644 | $210,019 | (3)% | | Global Medical Products and Distribution | $12,636 | $12,381 | 2% | | Other | $5,382 | $4,512 | 19% | | **Total Segment Revenue** | **$222,662** | **$226,912** | **(2)%** | [Gross Margin](index=15&type=section&id=Gross%20Margin) Gross margin increased 10% to $8.2 billion, driven by acquisitions and a favorable product mix Gross Margin (in millions) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Margin | $8,168 | $7,414 | 10% | - The increase in gross margin was primarily due to acquisitions (MSO platforms, ADS), increased contribution from branded and specialty pharmaceuticals, and BioPharma Solutions, partially offset by the OptumRx contract expiration[57](index=57&type=chunk) [Distribution, Selling, General, and Administrative ("SG&A") Expenses](index=15&type=section&id=Distribution%2C%20Selling%2C%20General%2C%20and%20Administrative%20%28%22SG%26A%22%29%20Expenses) SG&A expenses increased 8% to $5.4 billion, primarily due to the integration of recent acquisitions and higher operational costs SG&A Expenses (in millions) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | SG&A Expenses | $5,382 | $5,000 | 8% | [Segment Profit](index=16&type=section&id=Segment%20Profit) Total segment profit grew 15% to $2.9 billion, with strong performance across all segments Segment Profit (in millions) | Segment | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Pharmaceutical and Specialty Solutions | $2,258 | $2,015 | 12% | | Global Medical Products and Distribution | $135 | $92 | 47% | | Other | $516 | $423 | 22% | | **Total Segment Profit** | **$2,909** | **$2,530** | **15%** | [Provision for Income Taxes](index=18&type=section&id=Provision%20for%20Income%20Taxes) The effective income tax rate decreased to 25.3% from 28.9%, mainly due to the absence of a prior-year goodwill impairment charge Effective Income Tax Rate Reconciliation | | 2025 | 2024 | | :--- | :--- | :--- | | Provision at Federal statutory rate | 21.0% | 21.0% | | Goodwill Impairment | — | 8.7% | | Specialty Alliance Share-based Compensation | 1.4% | — | | Other items, net | 2.9% | (1.8)% | | **Effective income tax rate** | **25.3%** | **28.9%** | [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased to $3.9 billion as the company deployed $5.3 billion for acquisitions and returned capital to shareholders, funded partly by new debt - Cash and equivalents decreased to **$3.9 billion** at June 30, 2025, from **$5.1 billion** at June 30, 2024[80](index=80&type=chunk) - Net cash provided by operating activities was **$2.4 billion** in fiscal 2025, which includes the impact of unwinding the OptumRx contracts and **$798 million** in opioid litigation payments[81](index=81&type=chunk) - Major uses of cash in fiscal 2025 included **$5.3 billion for acquisitions**, **$765 million for share repurchases**, **$547 million for capital expenditures**, and **$494 million for dividends**[82](index=82&type=chunk) - The company issued new long-term debt with net proceeds of **$2.9 billion** and borrowed **$800 million** from a term loan to fund acquisitions and for general purposes[82](index=82&type=chunk)[89](index=89&type=chunk) Contractual Obligations and Cash Requirements as of June 30, 2025 (in millions) | Obligation | Total | | :--- | :--- | | Long-term debt and short-term borrowings | $8,314 | | Interest on long term debt | $4,032 | | Lease obligations (Finance & Operating) | $1,157 | | Purchase obligations and other payments | $1,510 | | Opioid litigation settlement agreements | $4,829 | | **Total** | **$19,842** | [Critical Accounting Policies and Sensitive Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Policies%20and%20Sensitive%20Accounting%20Estimates) This section details key accounting policies requiring significant management judgment, including goodwill impairment, litigation contingencies, and inventory valuation Allowance for Doubtful Accounts Activity (in millions) | | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Beginning Balance | $233 | $240 | $207 | | Charged to costs and expenses | $89 | $108 | $165 | | Reductions/Write-offs | ($109) | ($115) | ($132) | | **Ending Balance** | **$213** | **$233** | **$240** | - **52% of inventories** at June 30, 2025, are valued using the last-in, first-out (LIFO) method, primarily for merchandise at core pharmaceutical distribution facilities[113](index=113&type=chunk) - In fiscal 2024, the company recognized a **$675 million goodwill impairment charge** related to the GMPD segment; no impairments were recorded for other reporting units in fiscal 2025[123](index=123&type=chunk)[124](index=124&type=chunk) - The company has accrued **$56 million** for losses and legal defense costs related to IVC filter product liability lawsuits as of June 30, 2025[132](index=132&type=chunk) - A new tax law, the One Big Beautiful Bill Act (OBBBA), was signed in July 2025, and the company is currently evaluating its impact on the consolidated financial statements[145](index=145&type=chunk) Explanation and Reconciliation of Non-GAAP Financial Measures [GAAP to Non-GAAP Reconciliations](index=35&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) This section reconciles GAAP to non-GAAP financial measures, adjusting for items like restructuring, amortization, and litigation to reflect underlying business performance - Management uses non-GAAP financial measures internally to evaluate performance, for financial planning, and to determine incentive compensation, believing they better reflect the performance of the underlying, ongoing business[148](index=148&type=chunk) - Key exclusions from non-GAAP measures include LIFO charges/credits, restructuring and severance costs, amortization and other acquisition-related costs, impairments, and litigation charges/recoveries[149](index=149&type=chunk)[158](index=158&type=chunk) Fiscal Year 2025 GAAP to Non-GAAP Reconciliation Summary (in millions, except EPS) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | **Operating Earnings** | $2,275 | $511 | $2,786 | | **Net Earnings** | $1,561 | $434 | $1,995 | | **Diluted EPS** | $6.45 | $1.79 | $8.24 | Quantitative and Qualitative Disclosures about Market Risk [Market Risk Disclosures](index=36&type=section&id=Market%20Risk%20Disclosures) The company is exposed to market risks from foreign exchange, interest rates, and commodity prices, which it manages through a hedging program - The company's primary market risks are related to foreign exchange, interest rates, and commodity prices, which are managed through a hedging program[162](index=162&type=chunk) - Using a Value-At-Risk (VAR) model, the potential maximum loss in earnings from transactional foreign exchange exposure is estimated at **$13 million** for the upcoming fiscal year[165](index=165&type=chunk) - A hypothetical **50 basis point** increase/decrease in interest rates would result in a **$12 million** increase/decrease in interest expense and a **$14 million** increase/decrease in interest income, respectively[168](index=168&type=chunk)[169](index=169&type=chunk) - The company has a forecasted direct commodity exposure of **$491 million** for the upcoming fiscal year; a hypothetical **10%** fluctuation in commodity prices could result in a potential gain/loss of **$49 million**[172](index=172&type=chunk) Business [Business Overview](index=38&type=section&id=Business%20Overview) Cardinal Health is a global healthcare company distributing pharmaceuticals and medical products, recently expanding its specialty and at-home offerings through acquisitions - The Pharmaceutical and Specialty Solutions segment distributes a wide range of pharmaceutical products to retailers and hospitals, provides specialty pharma services, and operates MSO platforms[181](index=181&type=chunk) - The GMPD segment manufactures and sources Cardinal Health branded medical products and distributes a broad range of national brand medical, surgical, and laboratory products[182](index=182&type=chunk)[184](index=184&type=chunk) - The company operates Red Oak Sourcing, a generic pharmaceutical sourcing venture with CVS Health, with a term extending through June 2029[182](index=182&type=chunk)[183](index=183&type=chunk) Recent Major Acquisitions | Date | Company | Business | Acquisition Price (in billions) | | :--- | :--- | :--- | :--- | | 05/30/25 | Urology America | Urology MSO | $0.4 | | 04/01/25 | ADS | Diabetic medical supplies | $1.1 | | 01/30/25 | GI Alliance (GIA) | Gastroenterology MSO | $2.8 | | 12/02/24 | ION | Oncology MSO | $1.1 | | 03/18/24 | Specialty Networks | Multi-specialty GPO | $1.2 | [Customers, Suppliers, and Competition](index=43&type=section&id=Customers%2C%20Suppliers%2C%20and%20Competition) The company has significant customer and supplier concentration and operates in a highly competitive market against national and regional distributors - Customer concentration is high: **CVS Health accounted for 30% of fiscal 2025 revenue**, and the top five customers accounted for 43%[194](index=194&type=chunk) - The five largest suppliers accounted for **37% of revenue** in fiscal 2025, with the single largest supplier representing 9%[195](index=195&type=chunk) - Key competitors in the Pharma segment include **McKesson Corporation** and **Cencora, Inc**; in the GMPD segment, competitors include **Medline Industries, Inc** and **Owens & Minor, Inc**[197](index=197&type=chunk)[198](index=198&type=chunk) [Human Capital Management](index=43&type=section&id=Human%20Capital%20Management) As of June 30, 2025, the company employed approximately 57,700 people globally, with a strategy focused on culture, talent, and safety - The company had approximately **57,700 employees** globally as of June 30, 2025[201](index=201&type=chunk) - **35,000 employees** work in distribution centers, manufacturing facilities, or pharmacies, while **21,000** work in other functions like finance, IT, and sales[202](index=202&type=chunk) - The Human Resources and Compensation Committee of the Board oversees human capital management strategies, including talent attraction, development, retention, and succession planning[204](index=204&type=chunk) [Regulatory Matters](index=46&type=section&id=Regulatory%20Matters) The business is highly regulated by numerous U.S. and foreign agencies, covering areas from controlled substances and medical devices to data privacy - The business is subject to extensive regulation by agencies such as the **FDA, DEA, NRC, and FTC** in the U.S., as well as comparable agencies abroad[215](index=215&type=chunk)[224](index=224&type=chunk) - Distribution of controlled substances is governed by the Controlled Substances Act (CSA), and the **National Opioid Settlement Agreement (NOSA)** imposes specific injunctive relief terms on anti-diversion programs until 2027[216](index=216&type=chunk)[217](index=217&type=chunk) - Manufacturing and marketing of medical devices require clearance or approval, such as the **510(k) or PMA process** in the U.S. and **CE Mark Certification** under the new Medical Device Regulation (MDR) in the EU[219](index=219&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - The company is subject to evolving privacy laws, including **HIPAA** in the U.S. and **GDPR** in the EU, due to its handling of patient-identifiable health information[223](index=223&type=chunk)[226](index=226&type=chunk) - The **Drug Supply Chain Security Act (DSCSA)** requires a national system for tracing prescription drugs, with compliance deadlines extended into 2025[228](index=228&type=chunk) Risk Factors [Legal, Regulatory, & Compliance Risks](index=54&type=section&id=Legal%2C%20Regulatory%2C%20%26%20Compliance%20Risks) The company faces significant risks from complex regulations, potential litigation, changes in tax laws, and ongoing opioid-related compliance obligations - The business is subject to rigorous regulatory and licensing requirements; failure to comply could result in suspension of operations, recalls, or sanctions[242](index=242&type=chunk) - The Department of Justice is investigating potential violations of the **Anti-Kickback Statute** and **False Claims Act** related to a 2022 GPO acquisition[244](index=244&type=chunk) - The company faces risks from potential adverse changes in tax laws and challenges by the IRS to its tax positions, including the deductibility of opioid litigation accruals and a self-insurance loss carryback under the CARES Act[254](index=254&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk) - Opioid-related legal proceedings, including compliance with the **National Opioid Settlement Agreement (NOSA)** and lawsuits from private plaintiffs, could have additional negative effects on operations and financial results[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) [Industry & Economic Risks](index=62&type=section&id=Industry%20%26%20Economic%20Risks) The company is exposed to risks from international trade policies, generic drug market volatility, supply chain disruptions, and intense competitive pressure - Changes in U.S. or international trade policies, including **tariffs**, could disrupt global operations and negatively impact financial results by increasing costs and causing supply shortages[275](index=275&type=chunk)[277](index=277&type=chunk) - The Pharma segment's profit margin is subject to volatility from **generic pharmaceutical pricing**, launches, and customer purchasing volumes, which may not be offset by sourcing ventures like Red Oak[279](index=279&type=chunk) - The company is subject to fluctuations in the cost and availability of raw materials (e.g., oil-based resins, cotton) and has experienced higher supply chain costs that negatively impacted **GMPD segment profit**[284](index=284&type=chunk) - **Consolidation in the U.S. healthcare industry** among distributors, manufacturers, and providers could create larger enterprises with greater negotiating power, potentially harming the company's results[292](index=292&type=chunk) [Business & Operational Risks](index=68&type=section&id=Business%20%26%20Operational%20Risks) Key operational risks include dependency on information systems, cybersecurity threats, significant customer concentration, and challenges in integrating large acquisitions - Operations depend on the proper functioning of information systems and distribution networks, which are vulnerable to physical disruptions and **cybersecurity incidents**[295](index=295&type=chunk) - A material **cyber-attack** poses a significant risk, as unauthorized parties continuously attempt to gain access to systems, and the sophistication of these threats is increasing[297](index=297&type=chunk)[298](index=298&type=chunk) - The company has significant customer concentration, with **CVS Health accounting for 30% of fiscal 2025 revenue** and 26% of gross trade receivables at year-end[305](index=305&type=chunk) - Integrating recent large acquisitions (ION, GIA, ADS) and entering new business lines like physician practice management present numerous risks, including regulatory challenges, unforeseen liabilities, and difficulties in retaining key personnel and customers[306](index=306&type=chunk)[308](index=308&type=chunk)[310](index=310&type=chunk) - The company recorded goodwill impairment charges of **$675 million** and **$1.2 billion** in fiscal 2024 and 2023, respectively, related to the GMPD segment; future impairments of goodwill or other long-lived assets remain a risk[321](index=321&type=chunk) Cybersecurity [Cybersecurity Risk Management, Strategy, and Governance](index=75&type=section&id=Cybersecurity%20Risk%20Management%2C%20Strategy%2C%20and%20Governance) The company integrates cybersecurity into its enterprise risk management, using the NIST framework and providing Board-level oversight through the Audit Committee - The company's cybersecurity risk management strategy is benchmarked to industry standards like the **NIST framework** and includes measures such as penetration testing and tabletop exercises[322](index=322&type=chunk) - The **Chief Information Security Officer (CISO)**, reporting to the CIO, leads the assessment and management of cybersecurity risks[324](index=324&type=chunk) - The Board's **Audit Committee** has primary responsibility for overseeing cybersecurity risks, receiving at least quarterly updates from the CISO and CIO[326](index=326&type=chunk) - To date, the company is not aware of any cybersecurity incidents that have **materially affected** or are reasonably likely to materially affect its business[324](index=324&type=chunk) Financial Statements and Supplementary Data [Consolidated Financial Statements](index=84&type=section&id=Consolidated%20Financial%20Statements) For fiscal 2025, the company reported revenue of $222.6 billion, net earnings of $1.56 billion, and total assets of $53.1 billion Consolidated Statement of Earnings Highlights (in millions) | Metric | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Revenue | $222,578 | $226,827 | $204,979 | | Gross Margin | $8,168 | $7,414 | $6,874 | | Operating Earnings | $2,275 | $1,243 | $752 | | Net Earnings Attributable to Cardinal Health, Inc. | $1,561 | $852 | $330 | Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $3,874 | $5,133 | | Total Current Assets | $36,373 | $34,884 | | Total Assets | $53,122 | $45,121 | | Total Current Liabilities | $38,897 | $35,640 | | Total Liabilities | $55,756 | $48,333 | | Total Shareholders' Deficit | ($2,634) | ($3,212) | Consolidated Statement of Cash Flows Highlights (in millions) | Metric | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $2,397 | $3,762 | $2,844 | | Net cash used in investing activities | ($5,593) | ($1,849) | ($454) | | Net cash provided by/(used in) financing activities | $1,940 | ($847) | ($3,051) | [Notes to Consolidated Financial Statements](index=89&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and provide further information on acquisitions, goodwill, debt, litigation, and subsequent events - **Note 2 (Acquisitions):** Details the acquisitions of ADS ($1.1B), GIA (73% for $2.8B), and ION ($1.1B) in fiscal 2025, which significantly increased goodwill and intangible assets[476](index=476&type=chunk)[478](index=478&type=chunk)[481](index=481&type=chunk) - **Note 5 (Goodwill):** Goodwill increased from **$4.7 billion to $9.7 billion**, primarily due to the GIA and ION acquisitions in the Pharma segment and the ADS acquisition in the Other segment[503](index=503&type=chunk)[504](index=504&type=chunk) - **Note 7 (Debt):** Total long-term obligations and other short-term borrowings increased to **$8.5 billion from $5.1 billion**, mainly from issuing **$2.9 billion** in new notes and borrowing **$800 million** under a term loan to fund acquisitions[513](index=513&type=chunk)[516](index=516&type=chunk)[522](index=522&type=chunk) - **Note 8 (Litigation):** As of June 30, 2025, the company has accrued **$4.9 billion** for opioid-related matters; during fiscal 2025, it made payments totaling **$798 million** related to these settlements[540](index=540&type=chunk) - **Note 16 (Subsequent Events):** On August 12, 2025, the company announced a definitive agreement to acquire Solaris Health, a urology MSO, for approximately **$1.9 billion** in cash[640](index=640&type=chunk)

Acquisition Details - Cardinal Health agreed to acquire Solaris Health for $1.9 billion [1] - The acquisition expands Cardinal Health's multispecialty strategy [1] Industry Focus - The deal represents Cardinal Health's latest acquisition in the urology category [1]

Financial Performance - Q4 FY25 - Revenue remained flat at $60.159 billion[9] - Gross margin increased by 17% to $2.202 billion[9] - Operating earnings increased by 7% to $428 million on a GAAP basis and 19% to $719 million on a non-GAAP basis[9] - Net earnings increased by 2% to $239 million on a GAAP basis and 11% to $501 million on a non-GAAP basis[9] - Diluted EPS increased by 4% to $1.00 on a GAAP basis and 13% to $2.08 on a non-GAAP basis[9] Segment Performance - Q4 FY25 - Pharmaceutical and Specialty Solutions revenue decreased by 0% to $55.372 billion, while segment profit increased by 11% to $535 million[11] - Global Medical Products and Distribution revenue increased by 3% to $3.199 billion, and segment profit increased significantly by 49% to $70 million[15] - Other (NPHS, at-Home Solutions, and OptiFreight) revenue increased by 37% to $1.609 billion, with segment profit increasing by 44% to $160 million[20] Financial Performance - FY25 - Revenue decreased by 2% to $222.578 billion[28] - Gross margin increased by 10% to $8.168 billion[28] - Operating earnings increased significantly by 83% to $2.275 billion on a GAAP basis and 15% to $2.786 billion on a non-GAAP basis[28] - Net earnings increased significantly by 83% to $1.561 billion on a GAAP basis and 7% to $1.995 billion on a non-GAAP basis[28] - Diluted EPS increased significantly by 87% to $6.45 on a GAAP basis and 9% to $8.24 on a non-GAAP basis[28] Segment Performance - FY25 - Pharmaceutical and Specialty Solutions revenue decreased by 3% to $204.644 billion, but segment profit increased by 12% to $2.258 billion[30] - Global Medical Products and Distribution revenue increased by 2% to $12.636 billion, with segment profit increasing significantly by 47% to $135 million[35] - Other (NPHS, at-Home Solutions, and OptiFreight) revenue increased by 19% to $5.382 billion, and segment profit increased by 22% to $516 million[40] FY26 Outlook - Non-GAAP EPS is expected to be in the range of $9.30 - $9.50, revised from the previous outlook of $9.10 to $9.30[48] - Interest and Other expenses are projected to be approximately $275 million[48] - Non-GAAP adjusted free cash flow is expected to be between $2.75 billion and $3.25 billion[48]

FOR IMMEDIATE RELEASE Exhibit 99.1 Cardinal Health Reports Fourth Quarter and Fiscal Year 2025 Results and Raises Fiscal Year 2026 Guidance DUBLIN, Ohio, August 12, 2025 – Cardinal Health (NYSE: CAH) today reported fourth quarter fiscal year 2025 revenues of $60.2 billion, relatively flat to the fourth quarter of fiscal year 2024. Fourth quarter revenue increased 21% excluding the impact of a previously communicated customer contract expiration. GAAP operating earnings were $428 million and GAAP diluted ear ...

Core Insights - Cardinal Health reported fourth quarter fiscal year 2025 revenues of $60.2 billion, which is relatively flat compared to the same period in fiscal year 2024. Excluding the impact of a customer contract expiration, revenue increased by 21% [1][12] - The company achieved GAAP operating earnings of $428 million and GAAP diluted earnings per share (EPS) of $1.00 for the fourth quarter. Non-GAAP operating earnings rose by 19% to $719 million, with non-GAAP diluted EPS increasing by 13% to $2.08 [1][12] - For the full fiscal year 2025, revenues totaled $222.6 billion, a 2% decrease from fiscal year 2024. However, revenue increased by 18% when excluding the impact of the customer contract expiration [2][12] - Cardinal Health's CEO highlighted the operational strength across all five operating segments, which experienced double-digit profit growth, indicating effective execution of the company's growth strategy [3][12] Financial Performance - Fourth quarter fiscal year 2025 summary: - Revenue: $60.2 billion (Q4 FY24: $59.9 billion) - GAAP operating earnings: $428 million (Q4 FY24: $401 million, 7% increase) - Non-GAAP operating earnings: $719 million (Q4 FY24: $605 million, 19% increase) - Non-GAAP diluted EPS: $2.08 (Q4 FY24: $1.84, 13% increase) [4][12] - Full year fiscal year 2025 summary: - Revenue: $222.6 billion (FY24: $226.8 billion, 2% decrease) - GAAP operating earnings: $2.3 billion (FY24: $1.2 billion, 83% increase) - Non-GAAP operating earnings: $2.8 billion (FY24: $2.4 billion, 15% increase) - Non-GAAP diluted EPS: $8.24 (FY24: $7.53, 9% increase) [2][4] Segment Performance - Pharmaceutical and Specialty Solutions segment: - Q4 FY25 revenue: $55.4 billion (Q4 FY24: $55.6 billion) - Segment profit increased by 11% to $535 million in Q4 FY25 [5][6] - Global Medical Products and Distribution segment: - Q4 FY25 revenue: $3.2 billion (Q4 FY24: $3.1 billion, 3% increase) - Segment profit increased by 49% to $70 million in Q4 FY25 [7][8] - Other segment: - Q4 FY25 revenue: $1.6 billion (Q4 FY24: $1.2 billion, 37% increase) - Segment profit increased by 44% to $160 million in Q4 FY25 [9][10] Future Outlook - Cardinal Health raised its fiscal year 2026 outlook for non-GAAP diluted EPS to a range of $9.30 to $9.50, reflecting a growth of 13% to 15% [10][12] - The company anticipates revenue growth of 11% to 13% in the Pharmaceutical and Specialty Solutions segment and 2% to 4% in the Global Medical Products and Distribution segment for fiscal year 2026 [11][12]