Cardinal Health(CAH) - 2025 Q3 - Quarterly Report

Revenue and Earnings - Revenue for Q3 Fiscal 2025 was flat at $54.9 billion and decreased 3$162.4 billion for the nine months, primarily due to the expiration of OptumRx contracts[14]. - GAAP operating earnings increased to $730 million for Q3 and$1.8 billion for the nine months, while non-GAAP operating earnings rose 21% to $807 million and 14$2.1 billion, driven by branded pharmaceutical sales growth[16]. - GAAP diluted EPS for Q3 increased 96% to $2.10 and 118$5.44 for the nine months, primarily due to improved operating earnings and absence of prior goodwill impairment charges[20]. - Non-GAAP operating earnings for Q3 Fiscal 2025 were $807 million, representing a 21$1,326 million, compared to $620 million for the same period in 2024, representing a 113$3.3 billion at March 31, 2025, from $5.1 billion at June 30, 2024, with net cash provided by operating activities at$870 million[22]. - Cash flows from operating activities for the nine months ended March 31, 2025, were $870 million, down from$1,680 million in 2024, indicating a decrease of 48%[145]. - Total cash and equivalents at the end of the period was $3,326 million, down from$3,746 million at the end of the same period in 2024, marking a decrease of 11%[145]. - The company had $4.9 billion accrued related to opioid litigation settlements as of March 31, 2025, with payments totaling$797 million made during the nine months ended March 31, 2025[87]. Acquisitions and Investments - Cardinal Health deployed $1.1 billion for the Integrated Oncology Network acquisition and$2.8 billion for a 73% ownership interest in GI Alliance during the nine months ended March 31, 2025[23]. - The acquisition of GI Alliance is expected to positively impact segment revenue and profit while increasing amortization and acquisition-related costs[29]. - Cardinal Health completed the acquisition of Advanced Diabetes Supply Group for $1.1 billion, which will be reported in the at-Home Solutions segment[28]. - The acquisition of Integrated Oncology Network (ION) was completed for$1.1 billion in cash, supporting over 50 practice sites across 10 states[165]. - The acquisition of GI Alliance (GIA) was completed for approximately $2.8 billion in cash, with a 73$50.4 billion, relatively flat compared to the prior year, while revenue for the nine months decreased 3% to $149.3 billion due to the expiration of OptumRx contracts[46]. - Global Medical Products and Distribution segment revenue increased 2$3.2 billion for the three months and $9.4 billion for the nine months ended March 31, 2025, primarily due to higher volumes from existing customers[47]. - Total segment profit for the three months ended March 31, 2025 increased 17$835 million, and for the nine months, it increased 13% to 2.1 billion, reflecting strong performance across segments[54]. Costs and Expenses - SG&A expenses for the three months ended March 31, 2025 increased 4% to 1.3 billion, and for the nine months, they increased 5% to $3.9 billion, primarily due to MSO platform acquisitions and higher costs to support sales growth[51]. - Interest expense for the three months ended March 31, 2025 increased to$74 million, and for the nine months, it increased to $141 million, primarily due to new debt financing[68]. - Restructuring and employee severance costs for Q3 Fiscal 2025 amounted to$28 million, while amortization and other acquisition-related costs were $152 million[119]. Tax and Goodwill - The effective tax rate for the three months ended March 31, 2025, was 23.6$675 million related to the GMPD segment, resulting in a net tax benefit of $56 million for fiscal 2024[70]. - Goodwill increased from$4.725 billion at June 30, 2024, to $8.906 billion at March 31, 2025, primarily due to the acquisitions of ION and GIA[187]. Shareholder Returns - The company approved a quarterly dividend of$0.5056 per share, amounting to an annualized rate of $2.02 per share, paid to shareholders on specified dates[89]. - The company has$2.7 billion authorized for share repurchases remaining under the program approved on June 7, 2023[135]. - The company’s share repurchase program activity resulted in a net cash outflow of $765 million for the nine months ended March 31, 2025, compared to$750 million in 2024, indicating ongoing commitment to returning capital to shareholders[145]. Risks and Uncertainties - Cardinal Health is facing potential additional costs and supply disruptions due to recent U.S. tariffs imposed on various countries[31]. - The company faces risks associated with entering new lines of business, including regulatory changes and competition from other healthcare organizations[128]. - The New York Opioid Stewardship Act created a $100 million annual assessment on manufacturers and distributors, with ongoing litigation regarding its constitutionality[204].