Cardinal Health ((CAH)) has held its Q3 earnings call. Read on for the main highlights of the call.
Cardinal Health’s recent earnings call conveyed an overall positive sentiment, driven by strong financial performance and strategic growth initiatives. The company reported impressive growth metrics, including a significant rise in operating earnings and EPS, alongside successful customer onboarding and acquisitions. However, challenges in the GMPD segment due to tariff impacts were noted, which the company is actively addressing.
Strong Financial Performance in Q3 FY 2025
Cardinal Health showcased robust financial results for the third quarter of fiscal year 2025, with operating earnings growing by 21% and EPS increasing by 13% compared to the previous year. This growth was largely fueled by the Pharmaceutical and Specialty Solutions segments, which have been pivotal in driving the company’s overall success.
Record Customer Onboarding
The company successfully onboarded $10 billion in new customer revenue during FY 2025, marking a significant milestone in its revenue growth journey. This achievement underscores Cardinal Health’s strategic focus on expanding its customer base and enhancing its market presence.
Strategic Acquisitions and Expansions
Cardinal Health completed the acquisition of Advanced Diabetes Supply Group and benefited from previous acquisitions such as GI Alliance and Integrated Oncology Network. These strategic moves have positively impacted the company’s growth trajectory, reinforcing its position in the healthcare sector.
Pharmaceutical Segment Growth
The Pharmaceutical segment saw a 14% profit increase, driven by strong brand and specialty pharmaceutical sales. The successful onboarding of Publix further contributed to this segment’s robust performance, highlighting the effectiveness of Cardinal Health’s strategic initiatives.
Robust Cash Flow and Shareholder Returns
Year-to-date, Cardinal Health reported an adjusted free cash flow of $1.2 billion, with $750 million allocated to share repurchases and $2.8 billion deployed for acquisitions. These figures demonstrate the company’s commitment to delivering value to shareholders while maintaining financial flexibility.
Impact of Tariffs on GMPD Segment
The company anticipates gross tariff costs between $200 million and $300 million for FY 2026, posing challenges to the GMPD segment. While mitigation efforts are underway, some pricing adjustments are expected to address these impacts.
Challenges in GMPD Segment
The GMPD segment profit guidance has been narrowed to the lower end of the range due to ongoing challenges and the impact of tariffs. This highlights the segment’s vulnerability to external economic factors and the need for strategic adjustments.
Interest and Other Costs Increase
Interest and other costs rose by $38 million to $65 million in the quarter, primarily due to acquisition-related financing costs. This increase reflects the financial implications of Cardinal Health’s aggressive growth strategy.
Forward-Looking Guidance
Looking ahead, Cardinal Health has raised its EPS guidance for the full year to a range of $8.05 to $8.15, with expectations of adjusted free cash flow reaching approximately $1.5 billion. The company remains confident in achieving sustainable long-term growth, anticipating double-digit non-GAAP EPS growth for fiscal year 2026, supported by its diverse business segments and strategic initiatives.
In summary, Cardinal Health’s earnings call painted a picture of a company on a strong growth trajectory, underpinned by strategic acquisitions, robust customer onboarding, and solid financial performance. While challenges in the GMPD segment due to tariffs present hurdles, the company’s proactive measures and forward-looking guidance suggest a positive outlook for sustained growth.