10-QPeriod: Q1 FY2025

CARDINAL HEALTH INC Quarterly Report for Q1 Ended Sep 30, 2024

Filed November 1, 2024For Securities:CAH

Summary

Cardinal Health Inc. (CAH) reported its first quarter fiscal year 2025 results, demonstrating resilience and strategic execution despite the significant impact of the OptumRx contract expiration. While consolidated revenue saw a 4% decrease to $52.3 billion, primarily due to the OptumRx contract loss, the company achieved a 12% increase in non-GAAP operating earnings to $625 million, driven by strong performance in branded and specialty pharmaceuticals, including the favorable impact of early COVID-19 vaccine distribution. Operationally, the company navigated the loss of OptumRx revenue by focusing on growth from existing customers and cost-saving measures. The acquisition of Integrated Oncology Network (ION) for $1.1 billion was announced, signaling a strategic move to expand its oncology services. Despite a net cash used in operating activities of $1.6 billion, largely due to working capital unwinding from OptumRx and opioid settlement payments, Cardinal Health maintained a solid liquidity position and continued its capital deployment strategy through share repurchases and dividend payments.

Financial Highlights

48 data points
Beta

Revenue

$52.28B

3.6% Gross Margin

Net Income

$416.00M

0.8% Net Margin

EPS (Diluted)

$1.70

Total Assets

$43.06B

Cash & Equivalents

$2.87B

Free Cash Flow

-$1.74B

Financial Statements
Beta
Revenue$52.28B
Cost of Revenue$50.38B
Gross Profit$1.90B
SG&A Expenses$1.28B
Operating Income$568.00M
Interest Expense$32.00M
Net Income$416.00M
EPS (Basic)$1.71
EPS (Diluted)$1.70
Shares Outstanding (Basic)243.00M
Shares Outstanding (Diluted)245.00M

Key Highlights

  • 1Consolidated revenue decreased 4% to $52.3 billion, primarily impacted by the expiration of OptumRx contracts.
  • 2Non-GAAP operating earnings increased 12% to $625 million, driven by growth in branded and specialty pharmaceuticals and COVID-19 vaccine distribution.
  • 3Non-GAAP diluted EPS rose 9% to $1.88.
  • 4The company announced a $1.1 billion acquisition of Integrated Oncology Network (ION) to expand its oncology offerings.
  • 5Net cash used in operating activities was $1.6 billion, impacted by OptumRx contract unwinding and opioid settlement payments.
  • 6The company has $3.2 billion remaining under its share repurchase authorization, and repurchased $375 million in the quarter.
  • 7The company reported compliance with its net leverage ratio covenant of no more than 3.75-to-1.

Frequently Asked Questions

The primary driver for the 4% decrease in consolidated revenue to $52.3 billion was the expiration of the pharmaceutical distribution contracts with OptumRx at the end of June 2024. Sales to OptumRx represented 17% of consolidated revenue in fiscal year 2024.

Cardinal Health is offsetting the impact through a combination of onboarding new customers, growth from existing customers, and implementing cost-saving measures. The company also benefited from increased contributions from branded and specialty pharmaceutical products and the early seasonal launch of COVID-19 vaccine distribution.

Cardinal Health announced an agreement to acquire ION for $1.1 billion in cash. This acquisition is expected to expand its suite of clinical and practice management solutions for independent community oncology practices. The transaction is subject to customary closing conditions, including regulatory approvals.

At September 30, 2024, Cardinal Health had $2.9 billion in cash and equivalents. The company reported net cash used in operating activities of $1.6 billion for the quarter, largely due to the unwinding of net working capital from the OptumRx contracts and opioid settlement payments. Cardinal Health believes it has adequate capital resources to fund its operations and future needs, with additional liquidity available through its commercial paper program and revolving credit facility.