Why did Cardinal Health raise its FY25 earnings and cash flow guidance?

The company raised FY25 non-GAAP diluted EPS guidance to $8.15 to $8.20 and increased its adjusted free cash flow outlook to approximately $2 billion. Higher segment profit outlooks for Pharmaceutical and Specialty Solutions (12% to 13% growth) and Other (19% to 21% growth) drove the increase, partly offset by a narrowed GMPD profit outlook of approximately $130 million.

What does the preliminary FY26 guidance imply for growth?

Preliminary FY26 non-GAAP diluted EPS guidance of $9.10 to $9.30 implies roughly 13% growth at the midpoint. Pharmaceutical and Specialty Solutions revenue is expected to grow 11% to 13%, with reported segment profit growth of 10% to 12%. Adjusted free cash flow is projected at $2.75 billion to $3.25 billion.

How is Cardinal Health changing its capital return policy?

The company raised its baseline share repurchase expectation to at least $750 million per year, above the prior $500 million annual baseline, and expects at least $2.25 billion in repurchases over FY26 to FY28. It also plans capital expenditures of at least $600 million per year to support organic growth, while keeping its disciplined capital allocation framework unchanged.

What are the main risks highlighted in the filing?

The forward-looking statements flag several risks, including a Department of Justice investigation into potential Anti-Kickback Statute and False Claims Act violations, generic drug deflation, tariffs on sourced or manufactured products, branded drug pricing pressures from legislative or executive action, customer contract pressure, and risks from recent acquisitions such as GI Alliance and Advanced Diabetes Supply. Investors should also note that the normalized segment targets exclude acquisition contributions, so reported results may differ.

CAH 8-K: Regulation FD — Jun 12, 2025

01—Abstract

Summary

Summary of the 8-K filed June 12, 2025. Cited figures are marked; the original filing is the authoritative source.

Cardinal Health (CAH) used its June 12, 2025 Investor Day to raise its fiscal 2025 non-GAAP diluted EPS guidance to $8.15 to $8.20^a (from $8.05 to $8.15), narrow several segment outlooks, and raise adjusted free cash flow guidance to approximately $2 billion (from approximately $1.5 billion).

The company also issued preliminary FY26 guidance calling for non-GAAP diluted EPS of $9.10 to $9.30^b, about 13% growth at the midpoint, and reaffirmed its long-term target of 12% to 14% non-GAAP EPS CAGR for FY26 to FY28. The long-term plan raises the normalized profit growth targets for Pharmaceutical and Specialty Solutions (PSS) to 5% to 7% and for the Other segment to roughly 10%. It also expects at least $10 billion of cumulative adjusted free cash flow over FY26 to FY28, and it raises baseline share repurchases to at least $750 million per year, up from $500 million previously.

Capital expenditures are expected to be at least $600 million^c per year to support growth investments in distribution automation, the Consumer Health Logistics Center, and theranostics. For investors, the key takeaways are the upward revisions to earnings and cash flow, the higher capital return commitment, and a strategic emphasis on higher-margin specialty businesses such as The Specialty Alliance, while the GMPD segment remains a turnaround story with a more modest profit target of $50M+ of annual growth after FY26. The release also notes ongoing risks, including a Department of Justice investigation tied to the Anti-Kickback Statute and False Claims Act, generic drug deflation, and tariff exposure.

02—Key points

Key Highlights

FY25 non-GAAP diluted EPS guidance raised and narrowed to $8.15 to $8.20 (9% growth at midpoint), from $8.05 to $8.15.
Preliminary FY26 non-GAAP diluted EPS guidance of $9.10 to $9.30, representing approximately 13% growth at the midpoints.
FY25 adjusted free cash flow guidance raised to approximately $2 billion, up from approximately $1.5 billion.
Long-term targets: 12% to 14% non-GAAP EPS CAGR (FY26 to FY28) reaffirmed; at least $10 billion of adjusted FCF and at least $2.25 billion of share repurchases over FY26 to FY28.
Baseline annual share repurchases increased to at least $750 million, up from the prior $500 million baseline.
Pharmaceutical and Specialty Solutions normalized profit growth target raised to 5% to 7%; Other segment normalized profit growth target raised to approximately 10%.
GMPD long-term target set at $50M+ of annual profit growth after FY26, with a FY26 segment profit floor of $140M+; the business continues its improvement plan.

03—Questions

Frequently Asked Questions

Why did Cardinal Health raise its FY25 earnings and cash flow guidance?
The company raised FY25 non-GAAP diluted EPS guidance to $8.15 to $8.20 and increased its adjusted free cash flow outlook to approximately $2 billion. Higher segment profit outlooks for Pharmaceutical and Specialty Solutions (12% to 13% growth) and Other (19% to 21% growth) drove the increase, partly offset by a narrowed GMPD profit outlook of approximately $130 million.
What does the preliminary FY26 guidance imply for growth?
Preliminary FY26 non-GAAP diluted EPS guidance of $9.10 to $9.30 implies roughly 13% growth at the midpoint. Pharmaceutical and Specialty Solutions revenue is expected to grow 11% to 13%, with reported segment profit growth of 10% to 12%. Adjusted free cash flow is projected at $2.75 billion to $3.25 billion.
How is Cardinal Health changing its capital return policy?
The company raised its baseline share repurchase expectation to at least $750 million per year, above the prior $500 million annual baseline, and expects at least $2.25 billion in repurchases over FY26 to FY28. It also plans capital expenditures of at least $600 million per year to support organic growth, while keeping its disciplined capital allocation framework unchanged.
What are the main risks highlighted in the filing?
The forward-looking statements flag several risks, including a Department of Justice investigation into potential Anti-Kickback Statute and False Claims Act violations, generic drug deflation, tariffs on sourced or manufactured products, branded drug pricing pressures from legislative or executive action, customer contract pressure, and risks from recent acquisitions such as GI Alliance and Advanced Diabetes Supply. Investors should also note that the normalized segment targets exclude acquisition contributions, so reported results may differ.

04—Continue

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