Core Insights - Cardinal Health reported better-than-expected second-quarter financial results, with adjusted earnings of $1.93 per share, surpassing market estimates of $1.76 per share, and sales of $55.3 billion, exceeding expectations of $54.915 billion [1][2]. Financial Performance - The company delivered strong second-quarter results, driven by robust demand in the Pharmaceutical and Specialty Solutions segment [2]. - Cardinal Health raised its fiscal year 2025 non-GAAP earnings guidance from a range of $7.75-$7.90 per share to $7.85-$8.00 per share [2]. Stock Performance - Following the earnings announcement, Cardinal Health shares gained 1.3%, trading at $126.92 [3]. - Analysts adjusted their price targets for Cardinal Health, with Wells Fargo raising it from $135 to $136 and JP Morgan increasing it from $142 to $145 [5].

Core Viewpoint - Cardinal Health, Inc. reported strong second-quarter fiscal 2025 results, with adjusted earnings per share (EPS) of $1.93, exceeding estimates and showing year-over-year growth [1][12] Revenue Details - Total sales decreased by 3.8% year-over-year to $55.26 billion, but still surpassed consensus estimates by 0.7% [2] Segmental Analysis - **Pharmaceutical and Specialty Solutions**: Revenues fell 4.4% to $50.85 billion, primarily due to the expiration of a customer contract with OptumRx. Excluding this impact, sales increased by 17% [3] - **Pharmaceutical Profit**: Increased by 7% to $531 million, driven by growth in BioPharma Solutions and brand products, partially offset by the contract expiration [4] - **Global Medical Products and Distribution**: Revenues rose by 0.9% to $3.15 billion, supported by growth from existing customers [4] - **Other Segment**: Sales grew by 13% to $1.28 billion, with profits increasing by 11% to $118 million, driven by strong performance in OptiFreight Logistics and Nuclear and Precision Health Solutions [5][6] Margin Analysis - Gross profit increased by 4.7% year-over-year to $1.94 billion, with a gross margin of 3.5%, up 30 basis points [7] - Operating income rose by 8.7% to $549 million, with adjusted operating income increasing by 8.5% to $635 million [7] Financial Update - The company ended the quarter with cash and cash equivalents of $3.81 billion, up from $2.87 billion in the previous quarter [8] - Net cash used in operating activities was $400 million, a significant decrease from $1.18 billion in the prior year [9] 2025 Outlook - Cardinal Health raised its fiscal 2025 earnings guidance, now expecting adjusted EPS between $7.85 and $8.00, up from $7.75-$7.90 [10] - Pharmaceutical segment revenues are projected to decline by 1-3%, while segment profit is expected to increase by 10-12% [10] - Medical segment revenues are estimated to grow by 2-4%, with segment profit expected between $130-$150 million [11] - Other segment revenues are likely to grow by 10-12%, with segment profit expected to grow nearly 10% [11] Conclusion - Cardinal Health exited the fiscal second quarter positively, with earnings and revenues exceeding estimates, although sales may face pressure from the OptumRx contract expiration [12] - The company anticipates continued growth from its medical products and other segments, with an optimistic outlook for segmental profit and gross margin expansion [13] - The completion of the acquisition of a majority stake in GI Alliance supports Cardinal Health's multi-specialty growth strategy [14]

• Q2 FY25 Earnings Cautions Concerning Forward-Looking Statements Q2 FY25 Earnings Cardinal Health, Inc. January 30, 2025 © 2025 Cardinal Health. All Rights Reserved. 1 © 2025 Cardinal Health. All Rights Reserved. This presentation contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "c ...

Core Insights - Cardinal Health reported $55.26 billion in revenue for the quarter ended December 2024, a year-over-year decline of 3.8%, with an EPS of $1.93 compared to $1.82 a year ago, indicating a positive surprise of +10.29% over the consensus estimate [1] Revenue Performance - Revenue from Pharmaceutical and Specialty Solutions was $50.85 billion, slightly above the average estimate of $50.76 billion, but down 4.4% year-over-year [4] - Revenue from Other segments reached $1.28 billion, exceeding the average estimate of $1.23 billion [4] - Revenue from Medical Products and Distribution was $3.15 billion, slightly below the average estimate of $3.18 billion, reflecting a year-over-year change of -0.4% [4] Segment Profitability - Segment profit for Pharmaceutical and Specialty Solutions was $531 million, surpassing the average estimate of $496.49 million [4] - Segment profit for Other segments was $118 million, exceeding the average estimate of $110.67 million [4] - Segment profit for Global Medical Products and Distribution was $18 million, below the average estimate of $25.77 million [4] Stock Performance - Cardinal Health's shares have returned +8% over the past month, outperforming the Zacks S&P 500 composite's +1.2% change, with a Zacks Rank 2 (Buy) indicating potential for further outperformance [3]

Group 1 - Cardinal Health (CAH) has an average brokerage recommendation (ABR) of 1.67, indicating a consensus between Strong Buy and Buy, with 66.7% of recommendations being Strong Buy from 15 brokerage firms [2][4] - The ABR should not be the sole basis for investment decisions, as studies suggest brokerage recommendations often lack success in guiding investors towards stocks with significant price appreciation potential [4][9] - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, issuing five "Strong Buy" recommendations for every "Strong Sell," which may mislead investors [5][9] Group 2 - The Zacks Rank, a proprietary stock rating tool, is a reliable indicator of near-term price performance, classifying stocks from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) [7][10] - The Zacks Rank is based on earnings estimate revisions, which are strongly correlated with near-term stock price movements, providing a more timely indication of future price trends compared to the ABR [10][11] - For Cardinal Health, the Zacks Consensus Estimate for the current year has increased by 0.2% to $7.84, reflecting analysts' growing optimism and resulting in a Zacks Rank 2 (Buy) [12][13]

Core Viewpoint - Cardinal Health reported quarterly earnings of $1.93 per share, exceeding the Zacks Consensus Estimate of $1.75 per share, and showing an increase from $1.82 per share a year ago, representing an earnings surprise of 10.29% [1][2] Financial Performance - The company achieved revenues of $55.26 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.69%, although this is a decline from $57.45 billion in the same quarter last year [2] - Over the last four quarters, Cardinal has consistently surpassed consensus EPS estimates [2] Stock Performance - Cardinal shares have increased approximately 8% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.15 on revenues of $54.28 billion, and for the current fiscal year, it is $7.84 on revenues of $220.88 billion [7] - The estimate revisions trend for Cardinal is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Medical - Dental Supplies industry, to which Cardinal belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8]

Revenue and Earnings - Revenue for the three and six months ended December 31, 2024 decreased 4 percent to $55.3 billion and $107.5 billion, respectively, primarily due to the expiration of the OptumRx contracts[13] - GAAP operating earnings for the three months ended December 31, 2024 increased 9 percent to $549 million, while for the six months, it increased to $1.1 billion from the prior-year period[15] - Non-GAAP operating earnings increased 9 percent to $635 million for the three months ended December 31, 2024, and increased 10 percent to $1.3 billion for the six months[16] - GAAP diluted EPS for the three and six months ended December 31, 2024 increased to $1.65 and $3.35, respectively[20] - Non-GAAP diluted EPS for the three and six months ended December 31, 2024 increased 2 percent to $1.93 and 6 percent to $3.81, respectively[21] Cash and Debt - Cash and equivalents balance was $3.8 billion at December 31, 2024, down from $5.1 billion at June 30, 2024[22] - Total long-term obligations increased to $7.6 billion at December 31, 2024, from $5.1 billion at June 30, 2024[82] - The company issued $2.9 billion in additional debt in November 2024 to fund acquisitions and general purposes, including various notes with interest rates ranging from 4.7% to 5.75%[184][186] - The company has a consolidated net leverage ratio requirement of no more than 3.75-to-1, and it was in compliance as of December 31, 2024[191] Acquisitions - The acquisition of Integrated Oncology Network (ION) was completed for a purchase price of $1.1 billion in cash[26] - The acquisition of a 73 percent ownership interest in GI Alliance (GIA) was completed for approximately $2.8 billion in cash[27] - Cardinal Health announced the acquisition of Advanced Diabetes Supply Group (ADSG) for approximately $1.1 billion in cash[28] - Specialty Networks was acquired for $1.2 billion in cash, contributing to the Pharma segment and creating value across multiple specialty group purchasing organizations[165] Segment Performance - Pharmaceutical and Specialty Solutions segment revenue decreased 4% to $50.8 billion for the three months ended December 31, 2024, and 5% to $98.8 billion for the six months ended December 31, 2024, primarily due to the expiration of OptumRx contracts[44] - Global Medical Products and Distribution segment revenue increased 1% to $3.2 billion for the three months ended December 31, 2024, and 2% to $6.3 billion for the six months ended December 31, 2024, driven by higher volumes from existing customers[45] - Total segment profit increased 9% to $667 million for the three months ended December 31, 2024, and 11% to $1.3 billion for the six months ended December 31, 2024, compared to the prior-year periods[53] Expenses and Costs - SG&A expenses increased 3% to $1.3 billion for the three months ended December 31, 2024, and 5% to $2.6 billion for the six months ended December 31, 2024, mainly due to the ION acquisition and higher costs to support sales growth[50] - Interest expense increased significantly to $35 million for the three months ended December 31, 2024, and $67 million for the six months ended December 31, 2024, primarily due to new debt financing[65] - Restructuring and employee severance costs for the three months ended December 31, 2024, amounted to $9 million, while amortization and other acquisition-related costs were $105 million[116] Tax and Goodwill - The effective tax rate for the three months ended December 31, 2024, was 21.4%, down from 27.9% in the same period of 2023[66] - A pre-tax goodwill impairment charge of $585 million was recognized during the six months ended December 31, 2023, with a net tax benefit of $45 million for fiscal 2024[68] - Goodwill increased to $5.488 billion as of December 31, 2024, primarily due to the acquisition of ION, reflecting expected growth and synergies[176] Litigation and Contingencies - The company accrued $4.9 billion related to opioid litigation settlements as of December 31, 2024, with expected payments continuing through 2038[85] - The company is involved in lawsuits related to the distribution of opioid pain medications, seeking equitable relief and monetary damages based on various legal theories[203] - Plaintiffs in opioid-related lawsuits include governmental entities, unions, healthcare providers, and private individuals[204] Market and Operational Risks - Cardinal Health is entering new lines of business, including physician practice support and management services, which involve various risks and uncertainties[126] - The company faces potential disruptions in global operations due to changes in U.S. or international trade policies, tariffs, and other economic factors[127] Financial Position - Total assets as of December 31, 2024, were $47,002 million, an increase from $45,121 million as of June 30, 2024[141] - Cardinal Health's total current liabilities decreased slightly to $35,223 million as of December 31, 2024, from $35,640 million as of June 30, 2024[141] - The balance of shareholders' deficit at December 31, 2024, was $(2,921) million, compared to $(3,547) million at December 31, 2023[143]

Revenue Performance - Second quarter fiscal year 2025 revenues were $55.3 billion, a decrease of 4% from the same period in fiscal year 2024, but a 16% increase when excluding the impact of a large customer contract expiration[2][5] - Revenue for Q2 2025 was $55,264 million, a decrease of 4% compared to $57,442 million in Q2 2024[23] - Revenue for the Pharmaceutical and Specialty segment decreased by 4% to $50,849 million in Q2 2025, while the Global Medical Products and Solutions segment grew by 12% to $3,154 million[30] - Total revenue excluding OptumRx for Q2 2025 was $55.3 million, a 16% increase from $47.6 million in Q2 2024[42] - Year-to-date total revenue excluding OptumRx for 2025 was $107.5 million, a 16% increase from $93.0 million in 2024[44] Earnings and Profitability - GAAP operating earnings increased by 9% to $549 million, while GAAP diluted earnings per share (EPS) rose by 10% to $1.65[4][5] - Non-GAAP operating earnings also increased by 9% to $635 million, driven primarily by the Pharmaceutical and Specialty Solutions segment, with non-GAAP diluted EPS increasing by 2% to $1.93[4][5] - Segment profit for Pharmaceutical and Specialty Solutions increased by 7% to $531 million, supported by growth in BioPharma Solutions and brand products[7] - The Global Medical Products and Distribution segment saw a revenue increase of 1% to $3.2 billion, with segment profit rising to $18 million due to cost optimization initiatives[8][9] - Other segment revenue increased by 13% to $1.3 billion, with segment profit rising by 11% to $118 million, driven by growth in at-Home Solutions and Nuclear and Precision Health Solutions[9][10] - Net earnings attributable to Cardinal Health, Inc. increased by 9% to $400 million in Q2 2025 from $368 million in Q2 2024[23] - Basic earnings per share increased by 10% to $1.65 in Q2 2025, compared to $1.50 in Q2 2024[23] Guidance and Future Outlook - The fiscal year 2025 non-GAAP EPS guidance was raised to a range of $7.85 to $8.00, up from the previous range of $7.75 to $7.90[5][11] - Fiscal year 2025 guidance for Pharmaceutical and Specialty Solutions segment profit was updated to 10% to 12% growth, up from 4% to 6% growth, reflecting stronger organic growth and contributions from recent acquisitions[12] Assets and Cash Flow - Total current assets increased to $35,756 million as of December 31, 2024, up from $34,884 million as of June 30, 2024[26] - Total assets rose to $47,002 million as of December 31, 2024, compared to $45,121 million as of June 30, 2024[26] - Cash and equivalents at the end of the period were $3,810 million, a decrease from $4,597 million at the end of Q2 2024[28] - The company reported a net cash used in operating activities of $(400) million for Q2 2025, compared to $1,179 million in Q2 2024[39] - Non-GAAP adjusted free cash flow for Q2 2025 was $(254) million, compared to $1,038 million in Q2 2024[39] Acquisitions and Strategic Initiatives - The company completed its acquisition of a 73% stake in GI Alliance, enhancing its multi-specialty growth strategy, and also acquired Integrated Oncology Network to support its Navista oncology platform[3][17] Impairments and Charges - The company reported a goodwill impairment charge of $585 million related to the GMPD segment for the six months ended December 31, 2023[23] - The company incurred $179 million in amortization and other acquisition-related costs in the year-to-date 2025[37] Non-GAAP Metrics and Adjustments - Non-GAAP operating earnings exclude several items, including LIFO charges, state opioid assessments, and restructuring costs, to reflect ongoing business operations[55] - Non-GAAP adjusted free cash flow is provided as a supplemental metric to indicate cash flow available for working capital needs, debt repayments, and strategic acquisitions[50] - Non-GAAP gross margin excludes LIFO charges, providing a clearer view of operational performance[54] - Non-GAAP net earnings attributable to Cardinal Health exclude various non-recurring items, enhancing the clarity of financial performance[57] - The tax effect for excluded items is determined using applicable tax rates, impacting the overall financial results[49] - Non-GAAP effective tax rate adjusts for the tax impacts of several excluded items, providing a more accurate measure of tax efficiency[58] Other Financial Metrics - Gross margin increased by 5% to $1,941 million in Q2 2025 from $1,854 million in Q2 2024[23] - Year-to-date GAAP total revenue for 2025 was $3,843 million, a 7% increase from $3,597 million in 2024[37] - The effective tax rate for Q2 2025 was 21.4%, consistent with the rate in Q2 2024[34] - The company did not recognize any LIFO charges or credits during the periods presented, facilitating comparison of current financial results to historical results[48] - Over the past five fiscal years, excluded items have impacted the company's EPS from $3.49 to $18.06, including a $17.54 charge related to opioid litigation recognized in fiscal 2020[52]

Core Insights - Cardinal Health reported second quarter fiscal year 2025 revenues of $55.3 billion, a decrease of 4% from the same period in fiscal year 2024, but a 16% increase when excluding the impact of a large customer contract expiration [1][14] - GAAP operating earnings increased by 9% to $549 million, with GAAP diluted earnings per share (EPS) at $1.65, reflecting a 10% increase from $1.50 in the prior year [1][26] - The company raised its fiscal 2025 guidance for non-GAAP diluted EPS to a range of $7.85 to $8.00, up from $7.75 to $7.90, indicating confidence in future performance [10][14] Financial Performance - Total revenue for Q2 FY25 was $55.3 billion, down from $57.4 billion in Q2 FY24, marking a 4% decline [3] - Non-GAAP operating earnings rose by 9% to $635 million, driven primarily by the Pharmaceutical and Specialty Solutions segment [1][3] - Non-GAAP diluted EPS increased by 2% to $1.93, supported by a lower share count and increased operating earnings [1][3] Segment Performance - The Pharmaceutical and Specialty Solutions segment reported revenues of $50.8 billion, a 4% decrease from $53.2 billion in Q2 FY24, but a 17% increase when excluding the impact of the customer contract expiration [4][5] - Segment profit for Pharmaceutical and Specialty Solutions increased by 7% to $531 million, driven by growth in BioPharma Solutions and brand products [5] - The Global Medical Products and Distribution segment saw a 1% revenue increase to $3.2 billion, with segment profit rising to $18 million due to cost optimization initiatives [6][7] Strategic Developments - Cardinal Health completed its acquisition of a majority stake in GI Alliance, enhancing its specialty growth strategy and expanding its service offerings [2][13] - The company also finalized its acquisition of Integrated Oncology Network, which supports its Navista oncology platform [2][25] - Cardinal Health announced the start of routine production of actinium-225, increasing access to new cancer therapies [25] Fiscal Year 2025 Outlook - The company updated its guidance for the Pharmaceutical and Specialty Solutions segment profit growth to 10% to 12%, up from a previous estimate of 4% to 6% [11] - Guidance for the Global Medical Products and Distribution segment profit was adjusted to a range of $130 million to $150 million, down from $140 million to $175 million [11] - Expectations for interest and other expenses were revised to a range of $200 million to $230 million, reflecting new debt financing impacts [12]

Core Viewpoint - Cardinal Health, Inc. is set to report its fiscal second-quarter 2025 results on January 30, with expectations of a decline in earnings and revenues compared to the previous year, despite a history of earnings surprises in recent quarters [1][2]. Group 1: Earnings and Revenue Estimates - The Zacks Consensus Estimate for earnings in the fiscal second quarter is $1.74 per share, reflecting a 4.4% decline from the prior year's figure [2]. - Revenue estimates for the same quarter are pegged at $54.97 billion, indicating a 4.3% year-over-year decline [2]. Group 2: Segment Performance - Cardinal Health began reporting results under new operating segments from the fiscal third quarter of 2024, which include Pharmaceutical and Specialty solutions, Global Medical Products and Distribution (GMPD), nuclear at-home, and OptiFreight [3]. - In the first quarter of fiscal 2025, Pharmaceutical revenues decreased by 5% year over year to $48 billion, primarily due to a contract expiration with OptumRx. Excluding this impact, sales rose by 16% year over year [4]. - The GMPD segment reported revenues of $3.1 billion, up 3% year over year, but profits decreased from $12 million to $8 million due to higher costs [6]. Group 3: Strategic Initiatives - In November 2024, Cardinal Health announced two strategic acquisitions: a majority stake in GI Alliance for approximately $2.8 billion and the Advanced Diabetes Supply Group for about $1.1 billion, aimed at enhancing specialty and at-home care services [8]. - The company opened a new 350,000-square-foot warehouse in South Carolina, which is expected to improve operational efficiency and drive growth [9]. Group 4: Earnings Prediction - The company's earnings prediction model indicates a potential earnings beat, supported by a positive Earnings ESP of +0.42% and a Zacks Rank of 2 [11][12].