Cardinal Health Q4 FY25 slides: Strong profit growth, raised guidance for FY26

Introduction & Market Context

Cardinal Health (NYSE:CAH) released its fourth quarter and full-year fiscal 2025 results on August 12, 2025, showing strong profit growth across all segments despite flat revenue. The healthcare services and products company reported Q4 non-GAAP earnings per share of $2.08, representing a 13% year-over-year increase, while maintaining steady revenue of $60.2 billion.

Despite the positive results and raised guidance, Cardinal Health’s stock was down 8.66% in premarket trading to $144, following a previous close of $157.66. This reaction comes despite the company raising its fiscal 2026 non-GAAP EPS guidance to $9.30-$9.50, up from its preliminary outlook of $9.10-$9.30 provided at its June 2025 Investor Day.

Quarterly Performance Highlights

Cardinal Health’s Q4 FY25 results demonstrated significant profit improvement across all business segments, even as overall revenue remained flat at $60.2 billion. Non-GAAP operating earnings increased by 19% to $719 million, while non-GAAP net earnings rose 11% to $501 million.

As shown in the following financial summary, the company achieved substantial margin expansion in Q4:

The Pharmaceutical (TADAWUL:2070) and Specialty Solutions segment, which accounts for the bulk of Cardinal Health’s revenue, maintained steady performance with segment profit growing 11% to $535 million despite flat revenue of $55.4 billion. The company noted that this growth was driven by positive contributions from MSO platforms and brand/specialty products, partially offset by a previously communicated customer contract expiration.

The Global Medical (TASE:BLWV) Products and Distribution segment showed particularly impressive improvement with segment profit increasing 49% year-over-year to $70 million on a 3% revenue increase to $3.2 billion. This significant profit growth was attributed to volume increases from existing customers.

Cardinal Health’s "Other" segment, which includes Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight Logistics, delivered exceptional results with 37% revenue growth to $1.6 billion and 44% segment profit growth to $160 million. The company highlighted growth across all three operating segments within this category.

Full-Year Results

For the full fiscal year 2025, Cardinal Health reported revenue of $222.6 billion, a 2% decrease from the previous year. However, non-GAAP operating earnings grew 15% to $2.8 billion, while non-GAAP diluted EPS increased 9% to $8.24.

The company’s full-year financial summary shows substantial improvement in profitability metrics:

Similar to the quarterly results, all three business segments showed profit growth for the full year. The Pharmaceutical and Specialty Solutions segment saw a 12% increase in segment profit to $2.3 billion despite a 3% revenue decline. The Global Medical Products and Distribution segment achieved a 47% increase in segment profit to $135 million on a 2% revenue increase. The "Other" segment delivered 19% revenue growth and 22% profit growth for the full year.

Strategic Initiatives

Cardinal Health outlined three strategic priorities focused on growth and operational improvement:

A key element of the company’s strategy is expanding its support for community-based physicians, particularly in specialty care. Cardinal Health announced the addition of Solaris Health to The Specialty Alliance, describing it as the country’s leading urology managed service organization with 750+ providers across 250 practice locations in 14 states.

The acquisition strengthens Cardinal Health’s multi-specialty platform and extends its reach to new markets. Upon transaction close, the company’s MSO platforms will reach approximately 3,000 community providers across 32 states.

Cardinal Health also highlighted its approach to revenue stream diversification across different medical specialties:

Forward-Looking Statements

Cardinal Health raised its fiscal 2026 non-GAAP EPS guidance to $9.30-$9.50, up from its previous outlook of $9.10-$9.30. The company also provided detailed segment guidance, with Pharmaceutical and Specialty Solutions expected to deliver 11-13% revenue and profit growth, up from the previous 10-12% profit growth outlook.

The segment guidance shows particularly strong expected growth in the "Other" segment, with revenue projected to increase 26-28% and segment profit expected to grow 25-27% in fiscal 2026:

Capital Allocation

Cardinal Health outlined its disciplined capital allocation framework, balancing investments in the business with shareholder returns. The company plans to increase capital expenditures from $547 million in FY25 to approximately $600 million in FY26, while maintaining its investment grade balance sheet.

The company is also increasing its baseline return of capital to shareholders from approximately $1 billion in FY25 to approximately $1.25 billion in FY26, including $750 million in share repurchases and approximately $500 million in dividend payments.

Cardinal Health completed four strategic acquisitions in FY25 (Integrated Oncology Network, Advanced Diabetes Supply, GI Alliance, and Urology America) and announced the acquisition of Solaris Health. The company indicated it will continue to evaluate opportunistic acquisitions in FY26 while targeting a long-term non-GAAP EPS CAGR of 12-14%.

Investment Thesis

Cardinal Health summarized its investment case through ten key strengths, emphasizing its consistent track record, unique capabilities, resilient business model, and growth opportunities in specialty healthcare:

With strong performance across all segments in fiscal 2025 and raised guidance for fiscal 2026, Cardinal Health continues to position itself as a leader in healthcare distribution and services, with particular emphasis on high-growth specialty areas and support for community-based physicians.

Full presentation:

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