CAH Q2 Earnings and Sales Beat Estimates, 2025 EPS View Raised

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]