Cardinal Health Reports Better than Expected Earnings in First Quarter FY25
Cardinal Health, Inc. (NYSE: CAH) reported its first-quarter results for the fiscal year 2025, showcasing a mixed performance across its segments. The company’s total revenue for Q1 FY25 was $52.3 billion, marking a 4% decline compared to the same period last year. Despite this decline, Cardinal Health managed to improve its gross margin by 9%, reaching $1.9 billion.
The selling, general, and administrative expenses (SG&A) also saw an 8% increase, amounting to $1.3 billion. Operating earnings on a non-GAAP basis rose by 12% to $625 million, indicating a robust operational performance despite the revenue drop.
The Pharmaceutical and Specialty Solutions segment experienced a 5% decline in revenue, totaling $47.99 billion. However, the segment’s profit grew significantly by 16%, reaching $530 million, which improved the profit margin by 20 basis points to 1.10%. This growth was primarily driven by brand and specialty pharmaceutical sales from existing customers, despite the expiration of a large customer contract.
Meanwhile, the Global Medical Products and Distribution segment reported a 3% increase in revenue to $3.12 billion, although the segment profit saw a non-meaningful decline from $12 million to $8 million.
Cardinal Health’s Q1 FY25 Performance Beats Expectations
Cardinal Health’s Q1 FY25 performance surpassed the expectations set for the quarter. The company reported a diluted earnings per share (EPS) of $1.70 on a GAAP basis and $1.88 on a non-GAAP basis, both exceeding the anticipated EPS of $1.62. This reflects a notable 9% increase in non-GAAP diluted EPS compared to the previous year. The reported revenue of $52.3 billion also surpassed the expected $50.9 billion, despite the year-over-year decline.
The Pharmaceutical and Specialty Solutions segment’s performance was a key contributor to exceeding expectations. While revenue fell short of last year’s figures, the segment’s profit growth of 16% was a significant upside. The improvement in net inflationary impacts and successful mitigation initiatives played a crucial role in this outcome. In contrast, the Global Medical Products and Distribution segment faced challenges with higher manufacturing and health costs, affecting its profitability despite revenue growth.
Cardinal Health Revises Guidance Upwards for Full Year 2025 to a Range of $7.75 to $7.90
Cardinal Health has revised its guidance for FY25, reflecting a more optimistic outlook. The company now projects a non-GAAP EPS range of $7.75 to $7.90, up from the previous guidance of $7.55 to $7.70. This revision is indicative of Cardinal Health’s confidence in its ability to navigate the current economic environment and leverage its strategic initiatives to drive growth.
The company has also updated its segment guidance. For the Pharmaceutical and Specialty Solutions segment, revenue is expected to decline by 2% to 4%, an improvement from the previously anticipated 4% to 6% decline. Segment profit growth is now projected at 4% to 6%, up from the prior 1% to 3% range.
The Global Medical Products and Distribution segment is expected to see revenue growth of 2% to 4%, slightly lower than the earlier forecast of 3% to 5%. Segment profit is anticipated to range between $140 million to $175 million, adjusted from the previous estimate of around $175 million.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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