Cardinal Health (CAH) Reports Double-A Win in Fiscal Q4, Raises Outlook

Cardinal Health (NYSE: CAH) reported fourth quarter and full-year fiscal 2024 results. The results indicate solid performance that exceeded expectations in several key areas.

With fourth-quarter revenue up 12% to $59.9 billion, the company demonstrated strong operational execution across all of its business segments. GAAP operating income for the quarter was $401 million and GAAP diluted earnings per share (EPS) was $0.96.

On a non-GAAP basis, the company reported a 14% increase in operating earnings to $605 million, and non-GAAP diluted EPS increased 29% to $1.84. The increase was driven by significant contributions from the Global Medical Products and Distribution (GMPD) and Pharmaceutical and Specialty Solutions segments.

For the full fiscal year 2024, Cardinal Health reported revenue of $226.8 billion, up 11% from the prior year. GAAP operating income for the year was $1.2 billion, while GAAP diluted earnings per share reached $3.45. Non-GAAP operating income increased 16% to $2.4 billion, and non-GAAP diluted earnings per share increased 29% to $7.53.

The company attributed this performance to continued earnings growth in its Pharmaceutical and Specialty Solutions segment and improvements from its GMPD turnaround plan. Cardinal Health also achieved record operating cash flow and adjusted free cash flow of $3.8 billion and $3.9 billion, respectively.

Cardinal Health Beats Fiscal Fourth-Quarter Earnings Per Share and Revenue Expectations

Comparing current results to expectations, Cardinal Health beat market forecasts. Analysts were predicting earnings per share of $1.73 and revenue of $58.64 billion for the quarter.

However, the company reported non-GAAP diluted EPS of $1.84 and revenue of $59.9 billion, beating both estimates. This is a significant achievement, reflecting the company’s ability to deliver results that exceed market expectations. Of particular note is the 29% increase in non-GAAP diluted EPS compared to the fourth quarter of the previous year, indicating strong profitability and effective cost management.

The Pharmaceutical and Specialty Solutions segment was a key contributor to this success, with fourth-quarter revenue up 13% to $55.6 billion. Segment profit for the division increased 8% to $482 million, driven by growth in brand and specialty pharmaceutical sales from existing customers.

Similarly, the Global Medical Products and Distribution segment saw revenue grow 2% to $3.1 billion and profit increase significantly by $40 million to $47 million, attributed to improved net inflation impact and mitigation initiatives.

Cardinal Health raises full-year guidance, expects earnings per share between $7.55 and $7.70

Cardinal Health raised its fiscal 2025 guidance, reflecting confidence in continued growth and operational efficiency. The company now expects non-GAAP diluted earnings per share to be between $7.55 and $7.70, up from a previously communicated expectation of at least $7.50.

This upward revision is supported by an updated outlook for the Pharmaceutical and Specialty Solutions segment, which is now expected to post earnings growth of 1% to 3%. The Global Medical Products and Distribution segment is expected to post approximately $175 million in segment earnings, with revenue growth forecasted to be between 3% and 5%.

In addition to these financial outlooks, Cardinal Health outlined its strategic initiatives for fiscal year 2025. The company plans to increase its share repurchase program by $250 million, for a total of $750 million. The move underscores Cardinal Health’s commitment to maximizing shareholder value through disciplined capital allocation.

The company also aims to generate at least $500 million of near-term value from the GMPD segment by fiscal year 2026 through continued simplification efforts and working capital improvements. This strategic focus is expected to drive sustained profitability and operational excellence.

Disclaimer: The author does not own or have a position in any of the securities discussed in the article.

About the author

Tim Fries is the co-founder of The Tokenist. He holds a BS in Mechanical Engineering from the University of Michigan and an MBA from the University of Chicago Booth School of Business. Tim was a senior associate in the investment team at RW Baird’s US Private Equity practice and is a co-founder of Protective Technologies Capital, an investment firm specializing in sensor, protection and control solutions.