Cardinal Health (CAH) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue was $52.3B, down 4% year-over-year, mainly due to a major customer contract expiration, but up 15% excluding this impact.

• Non-GAAP operating earnings rose 12% to $625M; non-GAAP diluted EPS increased 9% to $1.88.

• Segment profit growth was led by Pharmaceutical and Specialty Solutions, with strong performance in Other, while GMPD faced margin pressure from higher health and welfare costs.

• Cash and equivalents declined to $2.9B, reflecting working capital changes and opioid settlement payments.

• Announced a definitive agreement to acquire Integrated Oncology Network for $1.1B, expected to close by year-end.

Financial highlights

• GAAP net earnings were $416M, reversing a prior-year loss; non-GAAP net earnings increased 7% to $460M.

• Gross margin increased 9% to $1.9B, with gross margin rate up 45 bps to 3.64%.

• SG&A expenses rose 8% to $1.3B, driven by higher health and welfare costs.

• Adjusted free cash flow for Q1 was $(1.36)B, reflecting working capital changes and opioid settlement payments.

• Pharma and Specialty Solutions revenue fell 5% to $48.0B (contract expiration), but segment profit rose 16% to $530M.

• GMPD revenue up 3% to $3.1B; segment profit down to $8M due to higher costs.

• Other segment revenue up 13% to $1.2B; segment profit up 8% to $104M.

Outlook and guidance

• FY25 non-GAAP EPS guidance raised to $7.75–$7.90; adjusted free cash flow guidance updated to $1.0B–$1.5B.

• Pharma and Specialty Solutions segment profit growth outlook increased to 4–6%; revenue expected to decline 2–4% due to contract expiration.

• GMPD segment profit outlook revised to $140M–$175M, with a $300M target for FY26 unchanged.

• Other segment guidance: 10–12% revenue growth, ~10% segment profit growth; Q2 to be impacted by a temporary raw material shortage in Nuclear.