01—Abstract
Summary
Summary of the 8-K filed August 14, 2024. Cited figures are marked; the original filing is the authoritative source.
Cardinal Health reported fourth-quarter fiscal 2024 (quarter ended June 30, 2024) revenue of $59.9 billiona, up 12% year over year, with GAAP operating earnings of $401 million and GAAP diluted EPS of $0.96.
Non-GAAP operating earnings rose 14% to $605 millionb and non-GAAP diluted EPS rose 29% to $1.84, helped by segment profit growth in Global Medical Products and Distribution (GMPD) and Pharmaceutical and Specialty Solutions (PSS), lower interest and other expense, a lower non-GAAP tax rate, and a smaller share count. For full fiscal 2024, revenue reached $226.8 billion (up 11%), GAAP diluted EPS was $3.45, and non-GAAP diluted EPS was $7.53 (up 29%). Operating cash flow ($3.8 billion) and adjusted free cash flow ($3.9 billion) both hit record levels.
Management raised its fiscal 2025 non-GAAP EPS guidance to $7.55 to $7.70c, from a preliminary floor of at least $7.50, and lifted the PSS segment profit growth outlook to 1% to 3%. Guidance also reflects a roughly $39 billion revenue headwind from the OptumRx contract expiration, which is expected to cut PSS revenue by 4% to 6%. Share repurchases for fiscal 2025 were increased by $250 million to $750 million, tied to at least $500 million of near-term value creation from GMPD through simplification and working-capital actions.
The company reiterated a fiscal 2026 GMPD segment profit target of about $300 milliond. Investors should note that GAAP results remain depressed by $675 million of GMPD goodwill impairments in fiscal 2024, and that the company disclosed immaterial revisions to prior-period financials tied to a revenue recognition error in the at-Home Solutions segment. Other items to watch include ongoing opioid-related litigation and the DOJ investigations referenced in the forward-looking statements.
02—Key points
Key Highlights
- Q4 FY24 revenue rose 12% to $59.9 billion; non-GAAP diluted EPS rose 29% to $1.84 versus $1.43 a year earlier, while GAAP diluted EPS was $0.96.
- FY24 non-GAAP diluted EPS grew 29% to $7.53 and GAAP diluted EPS was $3.45; FY24 revenue was $226.8 billion (up 11%).
- Operating cash flow ($3.8 billion) and adjusted free cash flow ($3.9 billion) reached all-time highs for fiscal 2024.
- FY25 non-GAAP EPS guidance raised to $7.55–$7.70 from at least $7.50; PSS segment profit growth outlook raised to 1%–3%.
- FY25 share repurchases raised by $250 million to $750 million, backed by at least $500 million of targeted GMPD near-term value creation.
- FY25 PSS revenue is expected to decline 4%–6% due to the $39 billion OptumRx contract expiration, a known headwind.
- GMPD recorded $675 million of goodwill impairments in FY24, and prior periods were immaterially revised for an at-Home Solutions revenue recognition error.
03—Questions
Frequently Asked Questions
Why did Cardinal Health's GAAP earnings lag its non-GAAP results?
GAAP results include restructuring, amortization of acquisition intangibles, litigation charges, and especially $675 million of pre-tax goodwill impairments related to the GMPD segment in fiscal 2024. These items are excluded from non-GAAP measures, which is why GAAP diluted EPS was $3.45 versus non-GAAP EPS of $7.53.
What drove the raised fiscal 2025 outlook?
Management raised non-GAAP EPS guidance to $7.55–$7.70 from at least $7.50, citing improved outlooks for interest and other expense, diluted share count, and share repurchases, plus a higher PSS segment profit growth expectation of 1%–3%.
What is the impact of the OptumRx contract expiration?
The OptumRx expiration is a roughly $39 billion revenue headwind, expected to reduce PSS segment revenue by 4%–6% in fiscal 2025. Management also flagged a one-time unwinding of negative net working capital tied to this expiration, which affects adjusted free cash flow guidance of about $1.0 billion for fiscal 2025.
What is happening with the GMPD segment?
GMPD remains a weak spot, with fiscal 2024 segment profit of just $92 million and repeated goodwill impairments. Management reiterated a fiscal 2026 segment profit target of about $300 million and expects at least $500 million of near-term value creation through simplification and working-capital improvements. The Business Review Committee concluded on July 15, with oversight shifting to the Board.
Were prior financial statements restated?
Not as a formal restatement. Cardinal Health revised prior-period results to correct a revenue recognition error with third-party payors in the at-Home Solutions segment and other unrelated immaterial items. The company determined the impacts were not material to any prior period, and the revisions are reflected in the fiscal 2024 Form 10-K.
04—Continue