Cardinal Health(CAH) - 2025 Q2 - Quarterly Report

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$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$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$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$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$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]