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CARDINAL HEALTH INC (CAH)·Q4 2025 Earnings Summary

Executive Summary

  • CAH delivered a solid Q4 FY25: non-GAAP EPS $2.08 (+13% y/y), GAAP EPS $1.00, revenue $60.2B (flat y/y reported; +21% ex-OptumRx contract expiration), and raised FY26 non-GAAP EPS guidance to $9.30–$9.50 from $9.10–$9.30, citing Specialty Alliance accounting classification and stronger Pharma/“Other” contributions .
  • Results vs S&P Global consensus: EPS beat ($2.08 vs $2.03*) while revenue was modestly below ($60.16B vs $60.92B*). FY25 finished above on EPS ($8.24 vs $8.19*) and slightly below on revenue ($222.58B vs $223.30B*) (Values retrieved from S&P Global).*
  • Pharma momentum continued (segment profit +11% y/y) with robust specialty demand and ~6 pts of Q4 revenue growth contribution from GLP-1s; GMPD delivered its best quarter ($70M profit) amidst ongoing tariff mitigation; “Other” (NPHS, at-Home, OptiFreight) grew revenue +37% and profit +44% .
  • Strategic/catalyst: announced agreement to acquire Solaris Health (leading urology MSO; ~$1.5B revenue and modeled ~$125M EBITDA), further accelerating the Specialty strategy; management expects slight EPS accretion in the first 12 months post-close, delevering to target by FY26 .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based profit growth: all five operating segments delivered double-digit profit growth in Q4 and FY25; Q4 non-GAAP operating earnings +19% to $719M and non-GAAP EPS +13% to $2.08 .
    • Pharma strength and mix: strong brand/specialty demand (including new customers) and GLP‑1 contribution (~6 pts of Q4 Pharma revenue growth) supported profitability; segment profit +11% y/y to $535M .
    • GMPD turnaround: best quarter to date with $70M profit (+49% y/y), reflecting cost optimization and Cardinal brand penetration; tariff headwind managed with mitigation plans (targeting back‑half weighted profit cadence) .
    • Quote (CEO): “We closed the year with momentum… all five of our operating segments growing profit double-digits,” underscoring confidence entering FY26 with a raised outlook .

  • What Went Wrong

    • Reported top-line optics: consolidated revenue was flat y/y due to the previously communicated OptumRx contract expiration, obscuring underlying +21% growth ex-OptumRx .
    • Pharma AOI slightly below internal expectations: CFO cited several “individually immaterial” items (bad-debt adjustments and routine contract resolutions) that pressured Q4 Pharma profit versus guidance cadence .
    • Tariffs remain a headwind: management still expects a net $50–$75M GMPD profit headwind in FY26 despite mitigation, with Q2 FY26 likely the low profit quarter for the segment .

Financial Results

  • Consolidated results vs prior year/quarters
MetricQ4 FY24 (oldest)Q2 FY25Q3 FY25Q4 FY25 (newest)
Revenue ($B)$59.867 $55.264 $54.878 $60.159
GAAP Diluted EPS ($)$0.96 $1.65 $2.10 $1.00
Non-GAAP Diluted EPS ($)$1.84 $1.93 $2.35 $2.08
Gross Margin ($B)$1.882 $1.941 $2.123 $2.202
Non-GAAP Operating Earnings ($M)$605 $635 $807 $719
Non-GAAP Effective Tax Rate (%)24.6% 21.4% 22.4% 26.3%
  • Segment breakdown – Q4 FY25 vs Q4 FY24
SegmentRevenue Q4 FY24 ($B)Revenue Q4 FY25 ($B)Segment Profit Q4 FY24 ($M)Segment Profit Q4 FY25 ($M)Profit Margin Q4 FY24Profit Margin Q4 FY25
Pharmaceutical & Specialty Solutions$55.608 $55.372 $482 $535 0.87% 0.97%
Global Medical Products & Distribution (GMPD)$3.109 $3.199 $47 $70 1.51% 2.19%
Other (NPHS, at-Home, OptiFreight)$1.172 $1.609 $111 $160 9.47% 9.94%
  • KPIs and cash metrics
KPIQ2 FY25Q3 FY25Q4 FY25
Cash from Operations ($M)(400) 2,917 1,527
Diluted Weighted Avg Shares (M)243 241 240
FY25 Cash Flow MetricsFY25
Adjusted Free Cash Flow ($B)$2.469
Net Cash from Operating Activities ($B)$2.397
Capital Expenditures ($B)$0.547
  • Consensus vs Actual (S&P Global)
MetricQ2 FY25Q3 FY25Q4 FY25
Revenue – Actual ($B)$55.264 $54.878 $60.159
Revenue – Consensus ($B)$55.017*$55.309*$60.921*
EPS – Actual ($)$1.93 $2.35 $2.08
EPS – Consensus ($)$1.764*$2.149*$2.032*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Non-GAAP EPSFY26$9.10–$9.30 (Investor Day preliminary) $9.30–$9.50 Raised
Pharma & Specialty – Revenue GrowthFY26Investor Day preliminary (not quantified here)11%–13% Updated
Pharma & Specialty – Segment Profit GrowthFY26Prior lower; CFO: raised11%–13% (raised) Raised
GMPD – Revenue GrowthFY26Investor Day preliminary (not quantified here)2%–4% Maintained
GMPD – Segment ProfitFY26“At least consistent” with FY25 at Investor DayAt least $140M Maintained/Specified
Other – Revenue GrowthFY26Investor Day preliminary (not quantified here)26%–28% Maintained
Other – Segment Profit GrowthFY26Investor Day preliminary (not quantified here)25%–27% Maintained
Interest & OtherFY26—~$275M Set
Non-GAAP Effective Tax RateFY26—22%–24% Set
Diluted SharesFY26—238–240M Set
Share RepurchasesFY26—~$750M Set
Capital ExpendituresFY26—~$600M Set
Adjusted Free Cash FlowFY26—$2.75B–$3.25B Set

Note: CFO attributed the FY26 EPS raise (~$0.20) roughly half to the Specialty Alliance accounting classification and half to stronger Pharma/Other outlook .

Earnings Call Themes & Trends

TopicQ2 FY25 (Prior-2)Q3 FY25 (Prior-1)Q4 FY25 (Current)Trend
Specialty/MSO expansionClosed 73% GI Alliance; acquired ION (Navista) GI Alliance expanded into urology (Urology America, Potomac) Solaris Health acquisition announced; Specialty Alliance scale to ~3,000 providers post-close Accelerating
Pharma growth driversStrong brand/specialty; updated Pharma profit growth to 10–12% FY25 Pharma profit +14% y/y; demand broad-based GLP‑1 added ~6 pts to Q4 growth; new customers ramp; strong specialty Improving mix
GMPD improvement & tariffsProfit $18M; cost optimization; WaveMark write-off noted Profit $39M; improvement plan progressing Record $70M profit; FY26 headwind $50–$75M; back-half weighted profit Improving, mitigations ongoing
Biopharma solutions / SynexisTerraPower Ac‑225; platform build-out At-least 20% growth outlook signaled at Investor Day SYNNEXIS next-gen hub; ~40 launches CY25; 20%+ revenue growth expected Strong momentum
At-Home SolutionsDC investment (TX); platform scaling Growth across “Other” businesses Q4 revenue nearly +50%; organic double-digit; ADS integration on track Accelerating
Regulatory/policyMonitoring brand pricing/policy Macro uncertainty acknowledged Confident in resilient model; tariff mitigation actions ongoing Managed risk

Management Commentary

  • CEO: “Fiscal 2025 was a transformative year… all five of our operating segments growing profit double-digits… We enter Fiscal 2026 with confidence, evidenced by our increased financial outlook” .
  • CFO on mix and margin: “Gross profit grew 17%… rate improving by ~50 bps reflecting favorable product, customer and business mix,” with non-GAAP operating earnings +19% y/y to $719M .
  • CFO on Pharma cadence and drivers: “Excluding the customer contract expiration, revenue increased a robust 22%… including approximately six percentage points of revenue growth from GLP-1 sales” .
  • CEO on Specialty strategy: Solaris “greatly accelerates” building a multi-specialty MSO platform; positioning CAH as a leader across autoimmune, urology, oncology .
  • CFO on FY26 raise: ~$0.20 EPS raise vs Investor Day split roughly half from Specialty Alliance liability classification, half from higher Pharma/Other expectations .

Q&A Highlights

  • Specialty Alliance accounting: Liability classification (vs prior NCI assumption) lifts EPS; no effect “above the line” AOI; FY26 EPS raise split roughly half classification/half business strength .
  • Pharma variance: Q4 Pharma profit slightly light due to “individually immaterial” items (bad debt, routine contract resolutions), not underlying demand; overall demand remains strong .
  • GLP-1 momentum: ~6 pts of Q4 Pharma revenue growth from GLP‑1s .
  • GMPD tariffs cadence: Expect FY26 segment profit at least $140M; back‑half weighted (1/3 in H1, 2/3 in H2), Q2 likely trough due to tariff timing; FY26 tariff net headwind $50–$75M .
  • Solaris modeling: ~$1.5B revenue, ~$125M EBITDA (modeling), $1.9B cash outlay for ~75% stake; EV ~$2.4B; slightly accretive within 12 months post-close .
  • At-Home policy: Medicare CGMs <15% of at-Home revenue; diversified payer/product mix; CAH’s combined distributor/provider scale supports access and compliance .

Estimates Context

  • Q4 FY25: EPS beat ($2.08 vs $2.03*), revenue modest miss ($60.16B vs $60.92B*). Q3 FY25: EPS beat ($2.35 vs $2.15*), revenue slight miss ($54.88B vs $55.31B*). Q2 FY25: EPS beat ($1.93 vs $1.76*), revenue beat ($55.26B vs $55.02B*) (Values retrieved from S&P Global).* .
  • FY25: EPS $8.24 vs $8.19*; revenue $222.58B vs $223.30B* (Values retrieved from S&P Global).* .
  • Implications: Estimate revisions likely up for FY26 EPS and Pharma/Other segment profit given raised outlook and Specialty Alliance accounting tailwind; GMPD path remains back-half weighted with tariff risk bounded in guidance .

Key Takeaways for Investors

  • Underlying growth is stronger than reported revenue suggests; ex-OptumRx, Q4 consolidated revenue grew 21%, reflecting new customer wins and GLP‑1/specialty strength .
  • Mix shift enhances profitability: higher specialty exposure, MSO platforms, NPHS/Theranostics, and at‑Home scaling supported gross profit +17% and non-GAAP AOI +19% in Q4 .
  • FY26 outlook raised; EPS range now $9.30–$9.50 with defined building blocks (Pharma 11%–13% profit growth; Other 25%–27% profit growth), while absorbing ~$275M interest & other and tariff headwinds .
  • Specialty strategy is a core long-term thesis: Solaris expands urology scale and revenue diversity; management expects slight EPS accretion within 12 months, with deleveraging to target by FY26 .
  • Watch near-term cadence: GMPD profit back-half weighted (Q2 FY26 trough), Pharma first-half stronger on new wins; Q3 remains the highest dollar profit quarter seasonally .
  • Cash generation remains a strength (FY25 adj. FCF $2.47B) enabling $750M buybacks in FY26 and capex for distribution automation and NPHS capacity expansion .
  • Risk checks: tariffs (mitigation on track), policy/regulatory for distribution/MSOs, and integration execution across acquisitions; management reiterated resilience and confidence .

Additional Q4 FY25 Press Releases

  • Solaris Health acquisition announcement: adds >750 providers; CAH to own ~75% of Specialty Alliance post-close; financing via cash/debt; slight first-12-months EPS accretion expected .