Cardinal Health Reports First Quarter Fiscal Year 2025 Results and Raises Fiscal Year 2025 Outlook
Cardinal Health (CAH) reported Q1 FY2025 results with revenue decreasing 4% to $52.3 billion, though showing 15% growth excluding a large customer contract expiration. Non-GAAP operating earnings increased 12% to $625 million, driven by Pharmaceutical and Specialty Solutions segment growth. Non-GAAP diluted EPS rose 9% to $1.88. The company raised its FY2025 non-GAAP EPS guidance to $7.75-$7.90. Notable developments include a $1.1B agreement to acquire Integrated Oncology Network and completion of a $375M accelerated share repurchase program.
Cardinal Health (CAH) ha riportato i risultati del primo trimestre dell'anno fiscale 2025, con un fatturato in diminuzione del 4%, pari a 52,3 miliardi di dollari, sebbene si registri una crescita del 15% escludendo l'esclusione di un contratto importante con un cliente. Gli utili operativi non-GAAP sono aumentati del 12% a 625 milioni di dollari, sostenuti dalla crescita del segmento Farmaceutico e Soluzioni Speciali. L'utile per azione diluito non-GAAP è salito del 9% a 1,88 dollari. L'azienda ha alzato le previsioni per l'utile per azione non-GAAP per l'anno fiscale 2025 a un intervallo compreso tra 7,75 e 7,90 dollari. Tra gli sviluppi significativi c'è un accordo di 1,1 miliardi di dollari per acquisire l'Integrated Oncology Network e il completamento di un programma di riacquisto accelerato di azioni da 375 milioni di dollari.
Cardinal Health (CAH) informó los resultados del primer trimestre del año fiscal 2025, con ingresos disminuyendo un 4% a 52.3 mil millones de dólares, aunque mostrando un crecimiento del 15% excluyendo la expiración de un gran contrato con un cliente. Las ganancias operativas no-GAAP aumentaron un 12% a 625 millones de dólares, impulsadas por el crecimiento del segmento de Soluciones Farmacéuticas y Especializadas. La utilidad por acción diluida no-GAAP subió un 9% a 1.88 dólares. La compañía elevó su guía de EPS no-GAAP para el año fiscal 2025 a un rango de 7.75 a 7.90 dólares. Desarrollos notables incluyen un acuerdo de 1.1 mil millones de dólares para adquirir la Integrated Oncology Network y la finalización de un programa de recompra acelerada de acciones de 375 millones de dólares.
카디널 헬스 (CAH)는 2025 회계연도 1분기 결과를 발표하였으며, 매출이 4% 감소하여 523억 달러에 이르렀습니다. 그러나 주요 고객 계약 만기를 제외하면 15% 성장세를 보였습니다. 비 GAAP 운영 수익은 12% 증가하여 6억 2500만 달러가 되었으며, 이는 제약 및 전문 솔루션 부문의 성장에 힘입은 결과입니다. 비 GAAP 희석 EPS는 9% 증가하여 1.88달러에 달했습니다. 회사는 2025 회계연도 비 GAAP EPS 가이드를 7.75~7.90달러로 상향 조정했습니다. notable developments에는 11억 달러 규모의 통합 종양학 네트워크 인수 계약과 3억 7500만 달러 규모의 가속 주식 매입 프로그램 완료가 포함됩니다.
Cardinal Health (CAH) a annoncé les résultats du premier trimestre de l'exercice fiscal 2025, avec un chiffre d'affaires en baisse de 4% à 52,3 milliards de dollars, bien qu'une croissance de 15% ait été observée en excluant l'expiration d'un important contrat client. Les bénéfices d'exploitation non-GAAP ont augmenté de 12% pour atteindre 625 millions de dollars, soutenus par la croissance du segment des Solutions Pharmaceutiques et Spécialisées. Le bénéfice par action dilué non-GAAP a augmenté de 9% pour atteindre 1,88 dollar. L'entreprise a relevé ses prévisions de bénéfice par action non-GAAP pour l'exercice fiscal 2025 à une fourchette de 7,75 à 7,90 dollars. Parmi les développements notables, citons un accord de 1,1 milliard de dollars pour acquérir le Integrated Oncology Network et l'achèvement d'un programme de rachat d'actions accéléré de 375 millions de dollars.
Cardinal Health (CAH) hat die Ergebnisse des ersten Quartals des Geschäftsjahres 2025 veröffentlicht, mit einem Umsatzrückgang von 4% auf 52,3 Milliarden US-Dollar. Trotz dessen wurde ein Wachstum von 15% ohne einen wichtigen Kundenvertrag verzeichnet. Die Non-GAAP-Betriebseinnahmen stiegen um 12% auf 625 Millionen US-Dollar, was durch das Wachstum des Bereichs Pharmazeutische und Speziallösungen gefördert wurde. Der verwässerte Non-GAAP-Gewinn pro Aktie stieg um 9% auf 1,88 US-Dollar. Das Unternehmen hat die Prognose für den Non-GAAP-Gewinn pro Aktie im Geschäftsjahr 2025 auf 7,75 bis 7,90 US-Dollar angehoben. Zu den bemerkenswerten Entwicklungen gehört eine Vereinbarung über 1,1 Milliarden US-Dollar zur Übernahme des Integrated Oncology Network und der Abschluss eines beschleunigten Aktienrückkaufprogramms im Wert von 375 Millionen US-Dollar.
- Non-GAAP operating earnings increased 12% to $625 million
- Non-GAAP diluted EPS grew 9% to $1.88
- Pharmaceutical segment profit increased 16% to $530 million
- Revenue grew 15% excluding customer contract expiration
- Raised FY2025 non-GAAP EPS guidance to $7.75-$7.90
- Overall revenue decreased 4% to $52.3 billion
- Global Medical Products segment profit declined to $8 million from $12 million
- Lowered Global Medical Products segment profit outlook to $140-175M from ~$175M
Insights
Cardinal Health's Q1 FY25 results demonstrate robust operational performance despite top-line pressure. The
- Non-GAAP operating earnings grew
12% to$625M - Pharmaceutical segment profit increased
16% to$530M - EPS guidance raised to
$7.75-$7.90 - Strategic
$1.1B acquisition of ION strengthens oncology presence
The improved outlook and
The ION acquisition marks a strategic expansion in the high-growth oncology sector. Adding 100+ providers across 10 states significantly enhances Cardinal's Navista oncology platform and strengthens its position in community-based care delivery. The investment aligns with industry trends toward integrated care models and value-based healthcare. The earlier seasonal COVID-19 vaccine distribution and strong specialty pharmaceutical performance demonstrate Cardinal's important role in healthcare supply chains. However, rising health and welfare costs impacting the Medical segment warrant monitoring.
- Revenue decreased
4% to$52.3 billion 15% excluding the impact of the previously communicated large customer contract expiration - GAAP1 operating earnings were
$568 million $1.70 - Non-GAAP operating earnings increased
12% to$625 million - Non-GAAP diluted EPS increased
9% to$1.88 - Fiscal year 2025 non-GAAP EPS guidance2 raised to
$7.75 $7.90 $7.55 $7.70
"We began fiscal 2025 by delivering strong operational and financial performance, led by the Pharmaceutical and Specialty Solutions segment," said Jason Hollar, CEO of Cardinal Health. "The strength and resiliency of our largest and most significant business continues to shine, giving us confidence to raise our fiscal 2025 enterprise guidance only a quarter into the year. Across the business, we remain focused on executing our plan to best serve our customers and create value for our shareholders."
Q1 FY25 summary
Q1 FY25 | Q1 FY243 | Y/Y | |||
Revenue | (4) % | ||||
Operating earnings/(loss) | N.M. | ||||
Non-GAAP operating earnings | 12 % | ||||
Net earnings/(loss) attributable to Cardinal Health, Inc. | N.M. | ||||
Non-GAAP net earnings attributable to Cardinal Health, Inc. | 7 % | ||||
Effective Tax Rate | 23.0 % | 75.1 % | |||
Non-GAAP Effective Tax Rate | 23.0 % | 20.9 % | |||
Diluted EPS attributable to Cardinal Health, Inc. | N.M. | ||||
Non-GAAP diluted EPS attributable to Cardinal Health, Inc. | 9 % |
Segment results
Pharmaceutical and Specialty Solutions segment
Q1 FY25 | Q1 FY24 | Y/Y | |||
Revenue | (5) % | ||||
Segment profit | 16 % |
First quarter revenue for the Pharmaceutical and Specialty Solutions segment decreased
Pharmaceutical and Specialty Solutions segment profit increased
Global Medical Products and Distribution segment
Q1 FY25 | Q1 FY24 | Y/Y | |||
Revenue | 3 % | ||||
Segment profit | N.M. |
First quarter revenue for the Global Medical Products and Distribution segment increased
Global Medical Products and Distribution segment profit decreased to
Other4
Q1 FY25 | Q1 FY24 | Y/Y | |||
Revenue | 13 % | ||||
Segment profit | 8 % |
First quarter revenue for Other increased
Other segment profit increased
Fiscal year 2025 outlook2
The company raised its fiscal 2025 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to
This guidance includes an update to the company's Pharmaceutical and Specialty Solutions segment profit outlook to
Recent highlights
- Cardinal Health announced in September that the company entered into a definitive agreement to acquire Integrated Oncology Network (ION), a physician-led independent community oncology network, for
$1.1B - Cardinal Health initiated a
$375M - Cardinal Health announced plans to open a new, modernized distribution center in
Walton Hills, Ohio , supporting its Global Medical Products and Distribution business, in spring 2025 - Cardinal Health was ranked 17th on World's Best Companies of 2024 list by TIME
Upcoming webcasted investor events
- UBS Global Healthcare Conference at 11:00 a.m. EST, November 12, 2024
- Citi Global Healthcare Crossroads Conference at 8:00 a.m. EST, December 3, 2024
- Evercore ISI Healthcare Conference at 1:30 p.m. EST, December 3, 2024
- J.P. Morgan Healthcare Conference, January 13-16, 2025
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. EDT to discuss first quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required.
Presentation slides and a webcast replay will be available on the Investor Relations page for 12 months.
About Cardinal Health
Cardinal Health is a distributor of pharmaceuticals and specialty products; a global manufacturer and distributor of medical and laboratory products; a supplier of home-health and direct-to-patient products and services; an operator of nuclear pharmacies and manufacturing facilities; and a provider of performance and data solutions. Our company's customer-centric focus drives continuous improvement and leads to innovative solutions that improve people's lives every day. Learn more about Cardinal Health at cardinalhealth.com and in our Newsroom.
Contacts
Media: Erich Timmerman, Erich.Timmerman@cardinalhealth.com and 614.757.8231
Investors: Matt Sims, Matt.Sims@cardinalhealth.com and 614.553.3661
1GAAP refers to
2The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.
3The first quarter fiscal 2024 GAAP results reflect the effects of a pre-tax goodwill impairment charge related to the Global Medical Products and Distribution segment of
4Other includes the following three operating segments: Nuclear and Precision Health Solutions (NPHS), at-Home Solutions and OptiFreight Logistics, which are not significant enough individually to require reportable segment disclosure.
Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, financial information, earnings and analyst presentations, and information about upcoming presentations and events is routinely posted and accessible on the Investor Relations page at ir.cardinalhealth.com. In addition, the website allows investors and other interested persons to sign up automatically to receive email alerts when the company posts news releases, SEC filings and certain other information on its website.
Cautions Concerning Forward-Looking Statements
This release 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," "could," "would," "project," "continue," "likely," and similar expressions, and include statements reflecting future results or guidance, statements of outlook and various accruals and estimates. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include the risk that we may fail to achieve our strategic objectives, including the continued execution of the GMPD Improvement Plan, whether as a result of our expectations for Cardinal Health Brand sales or ongoing inflationary pressures; competitive pressures in Cardinal Health's various lines of business, including the risk that customers may reduce purchases made under their contracts with us or terminate or not renew their contracts or the risk that we may fail to offset the impact of a recent significant customer loss; our ability to manage uncertainties associated with the pricing of branded pharmaceuticals, including as a result of possible legislative action; risks arising from our ongoing audits with the IRS, including the risk that the IRS may disagree with certain positions we have taken, which may result in an increase to our effective tax rate or other costs; risks associated with litigation matters, including an Department of Justice investigation focused on potential violations of the Anti-Kickback Statute and False Claims Act; the risk that events outside of our control, such as weather or geopolitical events, may impact demand for our products or may cause supply shortages that impact our ability to fulfill customer demand; the performance of our generics program, including the amount or rate of generic deflation and our ability to offset generic deflation and maintain other financial and strategic benefits through our generic sourcing venture or other components of our generics programs; the possibility that our At-Home unit goodwill could become impaired due to changes to our long-term financial plan, increases in global interest rates or unfavorable changes in the
Schedule 1 | |||||
Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings/(Loss) (Unaudited) | |||||
First Quarter | |||||
(in millions, except per common share amounts) | 2025 | 2024 | % Change | ||
Revenue | $ 52,277 | $ 54,650 | (4) % | ||
Cost of products sold | 50,375 | 52,907 | (5) % | ||
Gross margin | 1,902 | 1,743 | 9 % | ||
Operating expenses: | |||||
Distribution, selling, general and administrative expenses | 1,277 | 1,186 | 8 % | ||
Restructuring and employee severance | 24 | 25 | |||
Amortization and other acquisition-related costs | 74 | 64 | |||
Impairments and (gain)/loss on disposal of assets, net 1 | (1) | 541 | |||
Litigation (recoveries)/charges, net | (40) | (41) | |||
Operating earnings/(loss) | 568 | (32) | N.M. | ||
Other (income)/expense, net | (5) | 1 | |||
Interest expense, net | 32 | 11 | N.M. | ||
Earnings/(loss) before income taxes | 541 | (44) | N.M. | ||
Provision for/(benefit from) income taxes 2 | 124 | (33) | N.M. | ||
Net earnings/(loss) | 417 | (11) | N.M. | ||
Less: Net earnings attributable to noncontrolling interests | (1) | (1) | |||
Net earnings/(loss) attributable to Cardinal Health, Inc. | $ 416 | $ (12) | N.M. | ||
Earnings/(loss) per common share attributable to Cardinal Health, Inc.: | |||||
Basic | $ 1.71 | $ (0.05) | N.M. | ||
Diluted | 1.70 | (0.05) | N.M. | ||
Weighted-average number of common shares outstanding: | |||||
Basic | 243 | 249 | |||
Diluted | 245 | 249 | |||
1 For the three months ended September 30, 2023, impairments and (gain)/loss on disposal of assets, net include pre-tax goodwill impairment charges of |
2 For fiscal 2024, the net tax benefits related to this impairment charge was |
Schedule 2 | |||
Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Balance Sheets | |||
(in millions) | September 30, | June 30, | |
(Unaudited) | |||
Assets | |||
Current assets: | |||
Cash and equivalents | $ 2,867 | $ 5,133 | |
Trade receivables, net | 11,781 | 12,084 | |
Inventories, net | 15,619 | 14,957 | |
Prepaid expenses and other | 2,591 | 2,663 | |
Assets held for sale | 47 | 47 | |
Total current assets | 32,905 | 34,884 | |
Property and equipment, net | 2,535 | 2,529 | |
Goodwill and other intangibles, net | 6,388 | 6,450 | |
Other assets | 1,231 | 1,258 | |
Total assets | $ 43,059 | $ 45,121 | |
Liabilities and Shareholders' Deficit | |||
Current liabilities: | |||
Accounts payable | $ 30,365 | $ 31,759 | |
Current portion of long-term obligations and other short-term borrowings | 940 | 434 | |
Other accrued liabilities | 3,373 | 3,447 | |
Total current liabilities | 34,678 | 35,640 | |
Long-term obligations, less current portion | 4,224 | 4,658 | |
Deferred income taxes and other liabilities | 7,433 | 8,035 | |
Total shareholders' deficit | (3,276) | (3,212) | |
Total liabilities and shareholders' deficit | $ 43,059 | $ 45,121 | |
Schedule 3 | |||
Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) | |||
First Quarter | |||
(in millions) | 2025 | 2024 | |
Cash flows from operating activities: | |||
Net earnings/(loss) | $ 417 | $ (11) | |
Adjustments to reconcile net earnings/(loss) to net cash provided by/(used in) operating activities: | |||
Depreciation and amortization | 182 | 172 | |
Impairments and (gain)/loss on sale of other investments | 1 | — | |
Impairments and (gain)/loss on disposal of assets, net | (1) | 541 | |
Share-based compensation | 30 | 29 | |
Provision for bad debts | 16 | 9 | |
Change in operating assets and liabilities, net of effects from acquisitions and divestitures: | |||
Decrease in trade receivables | 288 | 58 | |
Increase in inventories | (678) | (1,073) | |
Increase/(decrease) in accounts payable | (1,394) | 1,762 | |
Other accrued liabilities and operating items, net | (508) | (959) | |
Net cash provided by/(used in) operating activities | (1,647) | 528 | |
Cash flows from investing activities: | |||
Proceeds from divestitures, net of cash sold | 2 | — | |
Additions to property and equipment | (90) | (92) | |
Proceeds from disposal of property and equipment | — | 1 | |
Proceeds from net investment hedge terminations | — | 28 | |
Net cash used in investing activities | (88) | (63) | |
Cash flows from financing activities: | |||
Reduction of long-term obligations | (9) | (7) | |
Net tax withholdings from share-based compensation | (28) | (28) | |
Dividends on common shares | (128) | (131) | |
Purchase of treasury shares | (375) | (500) | |
Net cash used in financing activities | (540) | (666) | |
Effect of exchange rates changes on cash and equivalents | 9 | (5) | |
Net decrease in cash and equivalents | (2,266) | (206) | |
Cash and equivalents at beginning of period | 5,133 | 4,076 | |
Cash and equivalents at end of period | $ 2,867 | $ 3,870 | |
Schedule 4 | |||||||||||
Cardinal Health, Inc. and Subsidiaries Segment Information | |||||||||||
First Quarter | |||||||||||
Pharmaceutical and Specialty Solutions | Global Medical Products and Distribution | Other | |||||||||
(in millions) | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||
Revenue | |||||||||||
Amount | $ 47,990 | $ 50,588 | $ 3,123 | $ 3,032 | $ 1,186 | $ 1,051 | |||||
Growth rate | (5) % | 11 % | 3 % | (2) % | 13 % | 9 % | |||||
Segment profit | |||||||||||
Amount | $ 530 | $ 456 | $ 8 | $ 12 | $ 104 | $ 96 | |||||
Growth rate | 16 % | 14 % | N.M. | N.M. | 8 % | (3) % | |||||
Segment profit margin | 1.10 % | 0.90 % | 0.26 % | 0.40 % | 8.77 % | 9.13 % | |||||
The sum of the components and certain computations may reflect rounding adjustments. |
Schedule 5 | |||||||||||||
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation1 | |||||||||||||
Earnings/ | |||||||||||||
Gross | Operating | (Loss) | Provision for/ | Net | Diluted | ||||||||
Margin | SG&A2 | Operating | Earnings | Before | (Benefit from) | Net | Earnings3 | Effective | EPS3 | ||||
Gross | Growth | Growth | Earnings/ | Growth | Income | Income | Earnings/ | Growth | Tax | Diluted | Growth | ||
(in millions, except per common share amounts) | Margin | Rate | SG&A2 | Rate | (Loss) | Rate | Taxes | Taxes | (Loss)3 | Rate | Rate | EPS3,4 | Rate |
First Quarter 2025 | |||||||||||||
GAAP | $ 1,902 | 9 % | $ 1,277 | 8 % | $ 568 | N.M. | $ 541 | $ 124 | $ 416 | N.M. | 23.0 % | $ 1.70 | N.M. |
Restructuring and employee severance | — | — | 24 | 24 | 6 | 18 | 0.07 | ||||||
Amortization and other acquisition-related costs | — | — | 74 | 74 | 20 | 54 | 0.22 | ||||||
Impairments and (gain)/loss on disposal of assets, net | — | — | (1) | (1) | — | (1) | — | ||||||
Litigation (recoveries)/charges, net | — | — | (40) | (40) | (12) | (28) | (0.11) | ||||||
Non-GAAP | $ 1,902 | 9 % | $ 1,277 | 8 % | $ 625 | 12 % | $ 598 | $ 138 | $ 460 | 7 % | 23.0 % | $ 1.88 | 9 % |
First Quarter 2024 | |||||||||||||
GAAP | $ 1,743 | 9 % | $ 1,186 | (1) % | $ (32) | N.M. | $ (44) | $ (33) | $ (12) | N.M. | 75.1 % | $ (0.05) | N.M. |
Restructuring and employee severance | — | — | 25 | 25 | 7 | 18 | 0.07 | ||||||
Amortization and other acquisition-related costs | — | — | 64 | 64 | 17 | 47 | 0.19 | ||||||
Impairments and (gain)/loss on disposal of assets, net 5 | — | — | 541 | 541 | 135 | 406 | 1.63 | ||||||
Litigation (recoveries)/charges, net | — | — | (41) | (41) | (12) | (29) | (0.12) | ||||||
Non-GAAP | $ 1,743 | 9 % | $ 1,186 | — % | $ 557 | 37 % | $ 545 | $ 114 | $ 430 | 37 % | 20.9 % | $ 1.72 | 50 % |
1 For more information on these measures, refer to the Use of Non-GAAP Measures and Definitions schedules. |
2 Distribution, selling, general and administrative expenses. |
3 Attributable to Cardinal Health, Inc. |
4 For the three months ended September 30, 2023, GAAP diluted EPS and the EPS impact from the GAAP to non-GAAP per share reconciling items are calculated using a weighted average of 249 million common shares, which excludes potentially dilutive securities from the denominator due to their anti-dilutive effects resulting from our GAAP net loss for the period. For the three months ended September 30, 2023, non-GAAP diluted EPS is calculated using a weighted average of 250 million common shares, which includes potentially dilutive shares. |
5 For the three months ended September 30, 2023, impairments and (gain)/loss on disposals of assets, net includes a pre-tax goodwill impairment charge of |
The sum of the components and certain computations may reflect rounding adjustments. |
We generally apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred. |
Schedule 6 | |||
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation - GAAP Cash Flow to Non-GAAP Adjusted Free Cash Flow | |||
First Quarter | |||
(in millions) | 2025 | 2024 | |
GAAP - Cash Flow Categories | |||
Net cash provided by/(used in) operating activities | $ (1,647) | $ 528 | |
Net cash used in investing activities | (88) | (63) | |
Net cash used in financing activities | (540) | (666) | |
Effect of exchange rates changes on cash and equivalents | 9 | (5) | |
Net decrease in cash and equivalents | $ (2,266) | $ (206) | |
Non-GAAP Adjusted Free Cash Flow | |||
Net cash provided by/(used in) operating activities | $ (1,647) | $ 528 | |
Additions to property and equipment | (90) | (92) | |
Payments related to matters included in litigation (recoveries)/charges, net | 376 | 542 | |
Non-GAAP adjusted free cash flow | $ (1,361) | $ 978 | |
For more information on these measures, refer to the Use of Non-GAAP Measures and Definitions schedules. |
Schedule 7 | ||||||||||||
Cardinal Health, Inc. and Subsidiaries Revenue Growth Rates Excluding OptumRx | ||||||||||||
Consolidated | Pharmaceutical and Specialty Solutions | |||||||||||
(in millions) | FY25 Q1 | FY24 Q1 | Growth Rate | (in millions) | FY25 Q1 | FY24 Q1 | Growth Rate | |||||
Total Revenue | $ 52.3 | $ 54.7 | (4) % | Total Pharmaceutical and Specialty Solutions Revenue | $ 48.0 | $ 50.6 | (5) % | |||||
less: OptumRx Revenue | — | 9.3 | less: OptumRx Revenue | — | 9.3 | |||||||
Revenue, excluding OptumRx | $ 52.3 | $ 45.4 | 15 % | Pharmaceutical and Specialty Solutions Revenue, excluding OptumRx | $ 48.0 | $ 41.3 | 16 % | |||||
Cardinal Health, Inc. and Subsidiaries
Use of Non-GAAP Measures
This earnings release contains financial measures that are not calculated in accordance with
In addition to analyzing our business based on financial information prepared in accordance with GAAP, we use these non-GAAP financial measures internally to evaluate our performance, engage in financial and operational planning, and determine incentive compensation because we believe that these measures provide additional perspective on and, in some circumstances are more closely correlated to, the performance of our underlying, ongoing business. We provide these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on our financial and operating results on a year-over-year basis and in comparing our performance to that of our competitors. However, the non-GAAP financial measures that we use may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The non-GAAP financial measures disclosed by us should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth below should be carefully evaluated.
Exclusions from Non-GAAP Financial Measures
Management believes it is useful to exclude the following items from the non-GAAP measures presented in this report for its own and for investors' assessment of the business for the reasons identified below:
- LIFO charges and credits are excluded because the factors that drive last-in first-out ("LIFO") inventory charges or credits, such as pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels (which can be meaningfully influenced by customer buying behavior immediately preceding our fiscal year-end), are largely out of our control and cannot be accurately predicted. The exclusion of LIFO charges and credits from non-GAAP metrics facilitates comparison of our current financial results to our historical financial results and to our peer group companies' financial results. We did not recognize any LIFO charges or credits during the periods presented.
- State opioid assessments related to prior fiscal years is the portion of state assessments for prescription opioid medications that were sold or distributed in periods prior to the period in which the expense is incurred. This portion is excluded from non-GAAP financial measures because it is retrospectively applied to sales in prior fiscal years and inclusion would obscure analysis of the current fiscal year results of our underlying, ongoing business. Additionally, while states' laws may require us to make payments on an ongoing basis, the portion of the assessment related to sales in prior periods are contemplated to be one-time, nonrecurring items. Income from state opioid assessments related to prior fiscal years represents reversals of accruals due to changes in estimates or when the underlying assessments were invalidated by a Court or reimbursed by manufacturers.
- Shareholder cooperation agreement costs includes costs such as legal, consulting, and other expenses incurred in relation to the agreement (the "Cooperation Agreement") entered into among Elliott Associates, L.P., Elliott International, L.P. (together, "Elliott") and Cardinal Health. These include costs incurred to negotiate and finalize the Cooperation Agreement and costs incurred by the Business Review Committee of the Board of Directors formed under this Cooperation Agreement, tasked with undertaking a comprehensive review of our strategy, portfolio, capital-allocation framework, and operations. We have excluded these costs from our non-GAAP metrics because they do not occur in or reflect the ordinary course of our ongoing business operations and may obscure analysis of trends and financial performance.
- Restructuring and employee severance costs are excluded because they are not part of the ongoing operations of our underlying business and include, but are not limited to, costs related to divestitures, closing and consolidating facilities, changing the way we manufacture or distribute our products, moving manufacturing of a product to another location, changes in production or business process outsourcing or insourcing, employee severance, and realigning operations.
- Amortization and other acquisition-related costs, which include transaction costs, integration costs, and changes in the fair value of contingent consideration obligations, are excluded because they are not part of the ongoing operations of our underlying business and to facilitate comparison of our current financial results to our historical financial results and to our peer group companies' financial results. Additionally, costs for amortization of acquisition-related intangible assets are non-cash amounts, which are variable in amount and frequency and are significantly impacted by the timing and size of acquisitions, so their exclusion facilitates comparison of historical, current and forecasted financial results. We also exclude other acquisition-related costs, which are directly related to an acquisition but do not meet the criteria to be recognized on the acquired entity's initial balance sheet as part of the purchase price allocation. These costs are also significantly impacted by the timing, complexity and size of acquisitions.
- Impairments and gain or loss on disposal of assets, net are excluded because they do not occur in or reflect the ordinary course of our ongoing business operations and are inherently unpredictable in timing and amount, and in the case of impairments, are non-cash amounts, so their exclusion facilitates comparison of historical, current, and forecasted financial results.
- Litigation recoveries or charges, net are excluded because they often relate to events that may have occurred in prior or multiple periods, do not occur in or reflect the ordinary course of our business and are inherently unpredictable in timing and amount.
- Loss on early extinguishment of debt is excluded because it does not typically occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of this type of charge is not consistent and is significantly impacted by the timing and size of debt extinguishment transactions.
The tax effect for each of the items listed above is determined using the tax rate and other tax attributes applicable to the item and the jurisdiction(s) in which the item is recorded. The gross, tax and net impact of each item are presented with our GAAP to non-GAAP reconciliations.
Non-GAAP adjusted free cash flow: We provide this non-GAAP financial measure as a supplemental metric to assist readers in assessing the effects of items and events on our cash flow on a year-over-year basis and in comparing our performance to that of our peer group companies. In calculating this non-GAAP metric, certain items are excluded from net cash provided by operating activities because they relate to significant and unusual or non-recurring events and are inherently unpredictable in timing and amount. We believe adjusted free cash flow is important to management and useful to investors as a supplemental measure as it indicates the cash flow available for working capital needs, debt repayments, dividend payments, share repurchases, strategic acquisitions, or other strategic uses of cash. A reconciliation of our GAAP financial results to Non-GAAP adjusted free cash flow is provided in Schedule 6 of the financial statement tables included with this release.
Forward Looking Non-GAAP Measures
In this document, the Company presents certain forward-looking non-GAAP metrics. The Company does not provide outlook on a GAAP basis because the items that the Company excludes from GAAP to calculate the comparable non-GAAP measure can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of the Company's routine operating activities. Additionally, management does not forecast many of the excluded items for internal use and therefore cannot create or rely on outlook done on a GAAP basis.
The occurrence, timing and amount of any of the items excluded from GAAP to calculate non-GAAP could significantly impact the Company's fiscal 2024 GAAP results. Over the past five fiscal years, the excluded items have impacted the Company's EPS from
Definitions
Growth rate calculation: growth rates in this report are determined by dividing the difference between current-period results and prior-period results by prior-period results.
Interest and Other, net: other (income)/expense, net plus interest expense, net.
Segment Profit: segment revenue minus (segment cost of products sold and segment distribution, selling, general, and administrative expenses).
Segment Profit margin: segment profit divided by segment revenue.
Non-GAAP gross margin: gross margin, excluding LIFO charges/(credits).
Non-GAAP distribution, selling, general and administrative expenses or Non-GAAP SG&A: distribution, selling, general and administrative expenses, excluding state opioid assessment related to prior fiscal years and shareholder cooperation agreement costs.
Non-GAAP operating earnings: operating earnings/(loss) excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, net, and (7) litigation (recoveries)/charges, net.
Non-GAAP earnings before income taxes: earnings/(loss) before income taxes excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, net, (7) litigation (recoveries)/charges, net and (8) loss on early extinguishment of debt.
Non-GAAP net earnings attributable to Cardinal Health, Inc.: net earnings/(loss) attributable to Cardinal Health, Inc. excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, net, (7) litigation (recoveries)/charges, net and (8) loss on early extinguishment of debt.
Non-GAAP effective tax rate: provision for/(benefit from) income taxes adjusted for the tax impacts of (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, net, (7) litigation (recoveries)/charges, net and (8) loss on early extinguishment of debt divided by (earnings before income taxes adjusted for the eight items above).
Non-GAAP diluted earnings per share attributable to Cardinal Health, Inc.: non-GAAP net earnings attributable to Cardinal Health, Inc. divided by diluted weighted-average shares outstanding.
Non-GAAP adjusted free cash flow: net cash provided by operating activities less payments related to additions to property and equipment, excluding settlement payments and receipts related to matters included in litigation (recoveries)/charges, net, as defined above, or other significant and unusual or non-recurring cash payments or receipts.
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SOURCE Cardinal Health, Inc.
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