CAH · Q4 2025 Earnings

Q: Asked about the 100 basis points guidance raise for pharmaceutical and specialty solutions division, specifically the breakdown between NCI change (5 cents) and operational performance.

Management confirmed 20 cent guidance raise for full year, with roughly half (~10 cents) tied to liability classification change (NCI reclassification) and half tied to higher expectations for pharma on lower base and other business on higher base. Strong demand across business drove the raise.

Q: Asked about pricing headwinds in at-home solutions, particularly competitive bidding returning in future years, percentage of revenue subject to competitive bidding, and potential inclusion of CGMs and pumps.

Management expressed confidence in diverse payer portfolio and product offerings. Positioned company as uniquely scaled distributor-provider enabling compliance and fraud reduction. CGMs likely to face competitive bidding but already at low rates in concentrated two-manufacturer environment. CGMs represent <15% of Medicare at-home solutions revenue. Company expects to maintain leadership role given operational rigor.

Q: Asked for confirmation on total net earnings or loss attributable to non-controlling interest on P&L for FY26 post-liability classification change and whether it should be close to zero.

Management declined to provide specific guidance on NCI line items for FY26, instead referencing that details would be in the 10-K and directing to overall guidance raise reflecting both liability classification and underlying business improvements. Did not confirm whether NCI impact would be near zero.

Bullish

Cardinal Health

Reported August 12, 2025

30-second summary

Cardinal closed FY25 with Q4 non-GAAP EPS of $2.08 and non-GAAP operating earnings of $719M, up 19% YoY, on essentially flat revenue of $60.2B as the segment mix did the heavy lifting. The story this quarter is twofold: GMPD posted its highest quarterly profit ever ($70M) and management guided FY26 segment profit to "at least $140M," signaling the turnaround is real; and the "Other" growth bucket (at-home, nuclear, OptiFreight) is now contributing over 40% of enterprise operating earnings growth. FY26 non-GAAP EPS guide of $9.30–$9.50 (+13–15%) was raised, though roughly half the 20-cent raise reflects an NCI reclassification rather than pure operational upside.

Headline numbers

EPS

Q4 FY2025

$2.08

Revenue

Q4 FY2025

$60.20B

+0.5% YoY

Gross margin

Q4 FY2025

3.7%

Operating margin

Q4 FY2025

0.7%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY
Revenue	$60.20B	+0.5%
EPS	$2.08	—
Gross margin	3.7%	—
Operating margin	0.7%	—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment KPIs

Q4 FY2025

Segment	Q4 FY2025	YoY
Pharmaceutical and Specialty Solutions	$55.4B	—
Global Medical Products and Distribution	$3.2B	+3.0%
Other	$1.6B	+37.0%
Pharmaceutical and Specialty Solutions Segment Profit	$535 million	—
Pharmaceutical and Specialty Solutions Segment Profit Growth	11%	—
GMPD Segment Profit Growth	49%	—
Other Segment Profit Growth	44%	—

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Non-GAAP Operating Earnings	$719 million
Non-GAAP Operating Earnings Growth	19%
Non-GAAP Gross Margin	3.66%
Non-GAAP Effective Tax Rate	26.3%

Management tone

GMPD has graduated from "fix-it" project to operating asset. Three quarters ago this segment was Cardinal's primary investor pain point; this quarter management called out Q4 as GMPD's "highest profit quarter" and guided to "at least $140M" of segment profit in FY26 — a floor that implies normalized operational health, not rescue. "We made notable progress against the GMPD improvement plan." The signal: GMPD is no longer a tail risk that compresses the multiple; it is a contributor to the FY26 EPS bridge.

Specialty has been re-framed from growth optionality to a core strategic pillar. The Solaris Health acquisition ($1.9B cash for 75% of a $2.4B EV business, ~$1.5B revenue, ~$125M EBITDA) takes Cardinal to ~1,000 urology providers across a five-MSO footprint. Management described being "well positioned to grow the impact of our MSO platforms across three related high-priority areas, autoimmune, urology, and oncology" — language that signals therapeutic-area clustering rather than opportunistic roll-up. The economic substance: <1/3 of Solaris revenue is drug spend, so this is platform fee income, not distribution arbitrage.

The "Other" bucket has been promoted from diversification narrative to growth engine. Management explicitly stated these businesses "contributed over 40% of the growth in our enterprise operating earnings for the quarter" and guided FY26 to 26–28% revenue and 25–27% profit growth. Nuclear/theranostics is growing >30%. The implication for the SOTP: a meaningful share of CAH's earnings growth now comes from businesses with profile and multiple unlike traditional drug distribution.

Tariffs were de-risked verbally. Management framed the $450M gross exposure as two-thirds mitigatable through operational actions, with only $50–75M flowing through guidance, and "continues to assume a net $50 million to $75 million headwind". Last-resort pricing covers the remaining $100–125M. The confidence reads as earned rather than performative given the specificity of the mitigation math.

Confidence is higher than typical for Cardinal. The opening line — "We closed fiscal 25 with momentum, delivering excellent fourth quarter results in what was a transformative year for Cardinal Health" — replaces the measured, defensive tone that has characterized recent years with explicit assertions of business-model resilience and acceleration.

Recurring themes management leaned on this quarter:

Specialty MSO platform consolidation and cross-therapeutic expansionGMPD operational stabilization and cost disciplineOther growth businesses acceleration (at-home, nuclear, logistics)New customer wins and contract integration (pharma segment)Regulatory resilience and tariff mitigation capabilitiesTechnology and automation investments driving efficiency

Risks management surfaced:

Customer contract expiration (though largely annualized)Tariff headwinds ($50-75M FY26 impact)Regulatory uncertainty and evolving policy environmentReimbursement environment changes (at-home solutions)Working capital management and cash conversion

Q&A highlights

Aaron Wright · Morgan Stanley

Asked about GMPD segment utilization trends and tariff mitigation efforts, including quarterly cadence expectations and the materiality of mitigation actions to pricing.

Management indicated GMPD utilization remains consistent with market growth targets. On tariffs, reaffirmed ~$450M gross impact with $250-300M expected mitigation through operational actions. Remainder of $150-200M includes $50-75M in guided impact and $100-125M through pricing as last resort. Expects return to parity by end of fiscal 26. Outlined back-half weighted cadence with Q2 as lowest point and Q4 as highest.

$450 million total tariff gross impact$250-300 million mitigation target (up to two-thirds)$150-200 million remainder unmitigated$50-75 million included in guidance

Eric Percher · Nephron Research

Asked about Solaris acquisition at 750 providers, what capabilities Cardinal Health brings versus what Solaris adds, and where accretion will come from relative to MSO share, distribution, and new revenue streams.

Management highlighted Solaris combined with recent urology acquisitions represents ~1,000 urology providers. Cardinal brings specialty networks, nuclear/theranostics, at-home solutions, and distribution capabilities. Solaris adds 1.5B revenue with <1/3 from drug spend. Accretion will come from scale (fifth urology MSO), cross-business efficiencies, and Cardinal portfolio opportunities. $1.9B cash outlay for 75% stake at $2.4B enterprise value.

Solaris acquisition: 750 providersCombined urology providers: ~1,000Solaris revenue: ~$1.5 billionSolaris EBITDA estimate: ~$125 million

Lisa Gill · JP Morgan

Asked about the 100 basis points guidance raise for pharmaceutical and specialty solutions division, specifically the breakdown between NCI change (5 cents) and operational performance.

Management confirmed 20 cent guidance raise for full year, with roughly half (~10 cents) tied to liability classification change (NCI reclassification) and half tied to higher expectations for pharma on lower base and other business on higher base. Strong demand across business drove the raise.

Full year guidance raise: 20 centsNCI/liability classification impact: ~10 centsOperational improvement impact: ~10 centsDriver: strong demand across business

Daniel Crosslight · Citi

Asked about pricing headwinds in at-home solutions, particularly competitive bidding returning in future years, percentage of revenue subject to competitive bidding, and potential inclusion of CGMs and pumps.

Management expressed confidence in diverse payer portfolio and product offerings. Positioned company as uniquely scaled distributor-provider enabling compliance and fraud reduction. CGMs likely to face competitive bidding but already at low rates in concentrated two-manufacturer environment. CGMs represent <15% of Medicare at-home solutions revenue. Company expects to maintain leadership role given operational rigor.

CGMs represent <15% of Medicare at-home solutions revenueCGM market: concentrated (two manufacturers), already seeing low competitive ratesCompetitive bidding expected for CGMs but different setup than historical precedentsDiverse payer mix with relatively low Medicaid historically (higher in recent acquisition)

Stephen Valiquette · Mizuho

Asked for confirmation on total net earnings or loss attributable to non-controlling interest on P&L for FY26 post-liability classification change and whether it should be close to zero.

Management declined to provide specific guidance on NCI line items for FY26, instead referencing that details would be in the 10-K and directing to overall guidance raise reflecting both liability classification and underlying business improvements. Did not confirm whether NCI impact would be near zero.

Details to be provided in 10-K filing20 cent guidance raise reflects both liability classification and underlying businessBusiness positioned for continued growth into fiscal 26

What to watch into next quarter

GMPD Q1 segment profit run-rate. FY26 "at least $140M" with ~1/3 H1 / ~2/3 H2 cadence implies H1 ≈ $47M; with Q2 called out as the trough, Q1 is likely in the $20–25M range. Watch whether Q1 prints meaningfully above that band as an early signal the $140M floor is conservative.

Operational vs. NCI split of FY26 EPS upside. Roughly half of the 20-cent raise was accounting; watch the 10-K NCI disclosure and Q1 segment profit growth rates to verify the operational half is materializing.

Solaris close timing and initial contribution. Management guided "end of fiscal year" close; watch for any delay and for first-quarter-of-ownership revenue and EBITDA pull-through versus the ~$1.5B revenue / ~$125M EBITDA reference.

Pharma segment profit growth ex-customer contract annualization. With the contract expiration largely lapped, FY26 guide of 11–13% profit growth is the cleanest test of underlying specialty mix benefit.

Tariff mitigation cadence. Watch whether the H1 tariff drag tracks the ~1/3 share management guided, and whether any pricing actions show up as gross margin movement starting Q2.

Other segment profit dollars, not just growth rate. 25–27% profit growth on a base that contributed >40% of Q4 enterprise earnings growth needs to be backed up with absolute dollar disclosure as the segment scales.

Sources

Cardinal Health Q4 and FY2025 press release — https://www.sec.gov/Archives/edgar/data/721371/000072137125000075/a25q4_x063025xex991xnewsre.htm
Cardinal Health Q4 FY2025 earnings call (management commentary and Q&A)

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