Cardinal Health(US:CAH)2025-10-30 12:48Revenue and Earnings Growth - Revenue for the three months ended September 30, 2025, increased 22 percent to $64.0 billion from the prior-year quarter due to branded and specialty pharmaceutical sales growth[13] - GAAP operating earnings for the same period increased 18 percent to $668 million, primarily due to the acquisition of management services organization platforms and increased contribution from branded and specialty pharmaceutical products[15] - Non-GAAP operating earnings for the three months ended September 30, 2025, increased 37 percent to $857 million, driven by the impact of acquisitions and growth from existing customers within the GMPD segment[16] - GAAP diluted EPS increased 11 percent to $1.88, while non-GAAP diluted EPS increased 36 percent to $2.55 from the prior-year quarter[18] - Pharmaceutical and Specialty Solutions segment revenue increased 23 percent to $59.2 billion, primarily due to sales growth from existing and new customers[33] - The company reported a 12% increase in non-GAAP earnings for the same quarter last year, totaling $625 million[88] - Net earnings attributable to Cardinal Health, Inc. for Q1 Fiscal 2026 were $450 million, compared to $416 million in Q1 Fiscal 2025, representing an 8.2% increase[106] Acquisitions and Investments - The company announced the acquisition of Solaris Health for approximately $1.9 billion, which is expected to enhance its MSO capabilities[20] - The company announced the acquisition of Solaris Health for approximately $1.9 billion in cash, with additional common units issued to physicians and management valued at around $500 million[70] - The acquisition of Advanced Diabetes Supply Group was completed for approximately $1.0 billion in cash[131] - The company completed the acquisition of GI Alliance for approximately $2.8 billion in cash, with a 73% ownership interest acquired[132] - Total identifiable net assets acquired from Urology America, ADS, GIA, and ION were valued at $381 million, $1.049 billion, $2.785 billion, and $1.069 billion respectively[136] - The company plans to finance the Solaris Health acquisition with cash proceeds from recent debt financing and cash on hand[130] Financial Performance and Margins - Gross margin increased 22 percent to $2.3 billion, primarily due to the acquisition of MSO platforms and increased contributions from branded pharmaceutical products[38] - Total segment profit rose by 37% to $879 million, with Pharmaceutical and Specialty Solutions profit increasing by 26% to $667 million[42][43] - Global Medical Products and Distribution segment profit increased to $46 million, driven by growth from existing customers[44] - Other segment profit surged by 60% to $166 million, attributed to the performance of at-Home Solutions and the acquisition of ADS[45] - Cash flows from operating activities provided $973 million, a significant recovery from a cash outflow of $1,647 million in the prior year[113] Expenses and Liabilities - SG&A expenses increased by 14% to $1.5 billion from the prior-year quarter, primarily due to the acquisition of MSO platforms and ADS[40] - Interest expense increased to $80 million from $32 million in the prior-year quarter, primarily due to additional debt financing for recent acquisitions[53] - Total current liabilities increased to $40,268 million as of September 30, 2025, compared to $38,897 million at June 30, 2025[110] - Long-term obligations increased to $9.0 billion as of September 30, 2025, up from $8.5 billion at June 30, 2025[154] Tax and Legal Matters - The effective tax rate for the three months ended September 30, 2025, was 24.1%, compared to 23.0% in the prior year[54] - The company had $894 million of unrecognized tax benefits as of September 30, 2025, which could impact the effective tax rate if recognized[192] - The company is cooperating with a Department of Justice investigation regarding potential violations of the Anti-Kickback Statute and False Claims Act[184] Cash and Liquidity - Cash and equivalents balance was $4.6 billion at September 30, 2025, up from $3.9 billion at June 30, 2025[56] - The company deployed $500 million for debt repayment and $375 million for share repurchases during the three months ended September 30, 2025[57][69] - Cash and equivalents rose to $4,593 million as of September 30, 2025, compared to $3,874 million at June 30, 2025, reflecting improved liquidity[110] Share Repurchase and Dividends - The company has $2.4 billion remaining under its $3.5 billion share repurchase program approved on June 7, 2023, which is set to expire on December 31, 2027[103] - The company declared cash dividends of $0.5107 per common share, slightly up from $0.5056 per share in the previous year[106] Risk Factors - The company faces risks related to tariffs that may impact costs and supply chain dynamics, potentially affecting financial results[27] - The company accrued $4.3 billion for opioid-related matters as of September 30, 2025, with payments totaling $403 million and $798 million made during the three months and fiscal year 2025, respectively[173] Derivative Instruments and Hedging - The company utilizes derivative financial instruments primarily to manage interest rate risk and currency exchange risk, without engaging in trading or speculative purposes[197] - During the three months ended September 30, 2025, the company entered into pay-floating interest rate swaps with total notional amounts of $300 million, designated as fair value hedges[203] - In September 2025, the company entered into ¥18 billion ($120 million) cross-currency swaps maturing in September 2027 to hedge foreign currency risk associated with net investment positions[206]