The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

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The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are insurance and managed care, medical products and facilities, pharmacy services, and pharmaceutical companies.

Fortune Sector Leaders: Health Care

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

G500-2023-Cardinal Health

This U.S. wholesale health-supply distributor is one of three such companies in the top 40 of the Global 500. Its revenue rose 11.6% last year, to $181 billion. 
<ul> 
 	<li>Ongoing litigation issues over the alleged role of Cardinal and other pharmaceutical distributors in the opioid crisis bled into the company’s 2022 financials; the company registered a $933 million loss in the fiscal year ended June 2022. But the company’s stock soared in calendar 2022, reflecting investors’ relief after Cardinal reached settlements in several opioid-related lawsuits. (The company did not admit wrongdoing in those settlements.)</li> 
 	<li>The pharmaceutical arm of the company performed well, with a 5% increase in profit year over year.</li> 
 	<li>CEO Mike Kaufmann was succeeded by former CFO Jason Hollar in September 2022.</li> 
</ul>

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-Cardinal Health

This wholesale health-supply distributor is one of three such companies in the top 20 of the Fortune 500. Its revenue rose 11.6% last year, to $181 billion. 
<ul> 
 	<li>Ongoing litigation issues over the alleged role of Cardinal and other pharmaceutical distributors in the opioid crisis bled into the company’s 2022 financials; the company registered a $933 million loss in the fiscal year ended June 2022. But the company’s stock soared in calendar 2022, reflecting investors’ relief after Cardinal reached settlements in several opioid-related lawsuits. (The company did not admit wrongdoing in those settlements.)</li> 
 	<li>The pharmaceutical arm of the company performed well, with a 5% increase in profit year over year.</li> 
 	<li>CEO Mike Kaufmann was succeeded by former CFO Jason Hollar in September 2022.</li> 
</ul>

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World's Most Admired Companies

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

Despite bringing in over $160 billion in revenue in 2021, Cardinal Health reported net income of just $611 million for the year. Litigation costs were one factor: One of several companies entangled in lawsuits over their alleged role in the opioid crisis, Cardinal in July 2021 agreed to pay $6.4 billion in settlements to help fund health care and drug-treatment programs. The company also agreed to settle a case with the Equal Employment Opportunity Commission involving racial harassment claims made by Black employees at one of its distribution centers, offering $1.45 million in settlements and agreeing to implement a range of policy changes. On the business-building front, Cardinal partnered with logistics startup Zipline to deliver products to pharmacies using autonomous aircraft.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 Cardinal Health

Despite bringing in over $160 billion in revenue in 2021, Cardinal Health reported net income of just $611 million for the year. Litigation costs were one factor: One of several companies entangled in lawsuits over their alleged role in the opioid crisis, Cardinal in July 2021 agreed to pay $6.4 billion in settlements to help pay for health care and drug-treatment programs. The company also agreed to settle a case with the Equal Employment Opportunity Commission involving racial harassment claims made by Black employees at one of its distribution centers, offering $1.45 million in settlements and agreeing to implement a range of policy changes. On the business-building front, Cardinal recently partnered with logistics startup Zipline to deliver products to pharmacies using autonomous aircraft.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-030-Cardinal Health

The drug and medical supply company saw 5.1% sales growth last year (its fiscal year ended in June 2020) owing to the strength of its pharmaceutical distribution business. That was particularly true during the first half of 2020, as customers stocked up on medications at the onset of the pandemic. A manufacturer and distributor of the personal protective equipment that has been much in demand, Cardinal has seen both sales of these products and the cost of making and sourcing them increase in the past year. As with other drug wholesalers, Cardinal faces legal challenges over its alleged role in America’s opioid epidemic.

This year’s Fortune 500 marks the 67th running of the list.

F500-201-14-Cardinal Health

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-037-Cardinal-Health

The Ohio-based drug wholesaler, which counts CVS Health and Kroger as customers, saw revenues rise 6.4% in its 2019 fiscal year due to growth in its drug and specialty pharmaceutical distribution business—and despite the 2018 divestiture of part of its business in China. While depressed prices of generic medications and the cost of opioid-related litigation weighed on Cardinal’s bottom line, the company’s profits rebounded from 2018, when the company took a $1.4 billion impairment charge. Like its two large competitors, Cardinal faces thousands of lawsuits over its alleged role in the nation’s opioid epidemic. In February, states rejected a proposed $18 billion settlement with the nation’s three largest drug distributors.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-016-Cardinal-Health

The Ohio-based drug wholesaler, which counts CVS Health and Kroger as customers, saw revenues rise 6.4% in its 2019 fiscal year due to growth in its drug and specialty pharmaceutical distribution business—and despite the 2018 divestiture of the business in China. While depressed prices of generic medications and the cost of opioid-related litigation weighed on Cardinal’s bottom line, the company’s profits rebounded from 2018, when the company took a $1.4 billion impairment charge. Like its two large competitors, Cardinal faces thousands of lawsuits over its alleged role in the nation’s opioid epidemic. In February, states rejected a proposed $18 billion settlement with the nation’s three largest drug distributors.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

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This year's Fortune 500 marks the 64th running of the list.

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This year's Fortune 500 marks the 63rd running of the list.

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The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Cardinal Health is a U.S. health care services and products company operating across over 30 countries as of 2025. The business provides customized solutions for hospitals, health care systems, pharmacies, surgery centers, clinical laboratories, and patients at home. The medical giant distributes generic and specialty pharmaceuticals, as well as medical, surgical, and laboratory products. Cardinal Health’s history dates back to 1971, in its founding as Cardinal Foods; in 1979, the company switched industries from food to health care, changing its name to Cardinal Distribution.

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Q2 2025

Cardinal Health (CAH): Company Profile, Stock Price, News, Rankings

legacy

Cardinal Health

cardinal health

Hello, and welcome to the 2nd Quarter Fiscal Year 2025 Cardinal Health Incorporated Earnings Conference Call. My name is George, and I'll be your coordinator for today's event. Please note this conference is being recorded. And for the duration of the call, your lines will be in a listen only mode. However, you will have the opportunity to ask questions towards the end of the presentation.

And I'd now like to turn the call over to your host today, Mr. Matt Sims, Vice President of Investor Relations, to begin today's conference. Please go ahead.

Hello, and welcome to this morning's Cardinal Health Second Quarter Fiscal 'twenty five Earnings Conference Call, and thank you for joining us. With me today are Cardinal Health's CEO, Jason Holler and our CFO, Aaron Alt. You can find this morning's earnings press release and investor presentation on the Investor Relations section of our website at ir. Cardinalhealth.com. Since we will be making forward looking statements today, let me remind you that the matters addressed in these statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied.

Please refer to our SEC filings and the forward looking statements slide at the beginning of our investor presentation for a description of these risks and uncertainties. Please note that during our discussion today, the comments will be on a non GAAP basis unless specifically called out as GAAP. GAAP to non GAAP reconciliation for all relevant periods can be found in the supporting schedules attached to our press release. For the Q and A portion of today's call, we kindly ask that you limit questions to 1 per participant so that we can try and give everyone an opportunity. With that, I will now turn the call over to Jason.

Thank you, and good morning, everyone. Today, we reported strong second quarter results, accelerating the momentum that we've built over the last couple of years. Overall, the performance was led by robust demand across our largest and most significant business, Pharmaceutical and Specialty Solutions, and our relentless focus on the execution of our simplification strategy to best serve our customers. Notably, we're seeing strength in brand, specialty, generics and consumer health as we're well positioned within a growing market. As a result of the significant strategic and operational actions we've taken, we remain bullish about our position in the healthcare industry and confident in our strategic direction for the future.

And with this confidence, we are pleased to again raise our fiscal 2025 enterprise guidance, which Aaron will cover in more detail shortly. We see opportunities to continue building upon the resiliency of the pharma business and drive consistent growth, particularly within specialty. Today's closing of the acquisition of a majority stake in GI Alliance, which in conjunction with our recently completed integrated oncology network transaction, will allow us to continue to expand across key therapeutic areas and generate additional value for our customers, patients and shareholders. Later on, I'll talk more about how these investments accelerate our strategy, but for now I'd like to officially welcome both the ION and GI Alliance teams to Cardinal Health and thank them for their focus and dedication as we work together to unlock new opportunities. In GMPD, while Q2 was below our expectations, the team remains focused on executing the GMPD improvement plan with positive progress on our cost optimization initiatives during the quarter.

And across our other businesses, nuclear, at home and optifreight, we see robust demand across these 3 faster growing and higher margin businesses. We see robust demand across these 3 faster growing and higher margin businesses. The long term potential for growth is evident and we intend to continue to invest across these businesses to add scale and capabilities. In summary, we are pleased with this quarter's results, which reflect our efforts to accelerate our strategy, execute with precision and drive sustainable long term growth. With that, I'll turn it over to Aaron to review our results and updated guidance.

Thanks, Jason, and good morning. From a financial perspective, we continued our momentum in Q2 with outstanding results from the Pharma segment, strong performance from the businesses included in other and continued operational progress in GMPD. We grew operating earnings by 9%, while overcoming the headwinds of the prior customer contract expiration and the as anticipated COVID-nineteen seasonal timing. In summary, we had a lot going on and we are pleased to report that the profit growth across the business resulted in a much better than expected EPS of 1.93 dollars We are raising our EPS guidance to a range of $7.85 to $8 Let's review the results starting with Slide 4. Total company revenue decreased 4% to $55,000,000,000 on a reported basis.

Adjusting for the contract expiration, revenue increased 16% versus the prior year, primarily reflecting strong demand across Pharma and all three of the businesses included in other. Total company gross margin increased 5% with contributions from all of our operating segments. As you can see from the financials, our team continued to control our costs across the enterprise with SG and A increasing a modest 3%, covering the impact of rising healthcare costs, the Ion acquisition and investments against the businesses. This led to operating earnings growth of 9% versus the prior year. Moving below the line, interest and other increased $45,000,000 to $38,000,000 primarily driven by financing impacts related to the recent acquisitions, including the Q2 proactive debt issuance.

Our 2nd quarter effective tax rate finished at 21.4 percent flat to our rate a year ago. Q2 average diluted shares outstanding were 243,000,000 shares, 1% lower than a year ago due to our previous share repurchases. The net result for Q2 was EPS of $1.93 growth of 2%. Now turning to the segments, beginning with Pharmaceutical and Specialty Solutions on Slide 5. 2nd quarter revenue decreased 4% to $51,000,000,000 due to the impact of the customer transition.

Excluding that, revenue increased 17% driven by brand and specialty sales growth from existing and new customers. This included approximately 6.5 percentage points of revenue growth from GLP-one sales. As we indicated at a recent industry conference, during Q2 we saw strong pharmaceutical demand across our business in brand, specialty, consumer health and generics and from our largest customers. The team delivered segment profit of $531,000,000 in the 2nd quarter, an increase of 7% driven by growth from biopharma solutions, including contributions from specialty networks and a higher contribution from brand and specialty products, only partially offset by the customer contract expiration. In specialty, we saw strong performance across specialty distribution.

We also continue to be pleased with the progress of integrating specialty networks, which is benefiting our overall specialty strategy and tracking consistent with our original expectations. As expected, the distribution of COVID-nineteen vaccines was a headwind in the quarter as we compared to last year's peak during Q2. We do not expect a meaningful contribution from COVID-nineteen vaccines for the remainder of the fiscal year. Our generics program continued to see positive performance, including strong volume growth and consistent market dynamics. Operationally, our large customer onboardings and expansions are in progress.

While each customer's needs are unique and timelines vary, we are pleased with the performance of our pharma business and how that business has prepared for the future. Let's turn now to our turnaround business, the GMPD segment, which continues to advance the GMPD improvement plan. Revenue increased 1% in Q2 to $3,200,000,000 driven by volume growth from existing customers. As customers. As previewed earlier this month, volume growth was less than we expected, in part driven by softness with respiratory products in our lab business.

GNPD segment profit increased to $18,000,000 slightly below our initial expectations for the quarter, reflecting the softer volumes I just referenced and an unanticipated $15,000,000 impact in our wave mark business largely from the write off of uncollectible receivables. While we were disappointed with the wave mark adjustments this quarter, the business model is resonating with customers as they continue to realize substantial benefit from the products and value creating services we provide. On the positive side, it should be noted that the GMPD team managed to mostly offset the shortfall to expectations in the quarter with aggressive SG and A management and a better than expected impact from our cost optimization initiatives. Finishing with the businesses reported in other as seen on Slide 7. 2nd quarter revenue increased 13% to $1,300,000,000 due to the growth across all three businesses, At Home Solutions, Nuclear and Precision Health Solutions and OptiFreight Logistics.

The businesses collectively grew segment profit in the quarter by 11%, driven by OptiFreight and Nuclear. I'm especially pleased that our Nuclear business managed through the moly-ninety nine shortage astutely and posted better than expected results. We are looking forward to talking about At Home's progress against its automation and efficiency efforts in future quarters. Now turning to the balance sheet. We ended the quarter with a cash position of $3,800,000,000 which included $2,800,000,000 which was used today to close the acquisition of 73 percent of GI Alliance.

Adjusted free cash flow was a use of approximately $250,000,000 for the quarter, primarily reflecting unfavorable quarter and day of the week timing. During the Q2, we continued to deploy capital according to our disciplined capital allocation framework. We invested nearly $100,000,000 in CapEx back into the businesses to drive organic growth. We returned approximately $125,000,000 to shareholders through dividends and we closed on the Ion acquisition and obtained the financing that we're using to complete the GIA acquisition today. Now let's turn our gaze forward.

Some context notes before we begin. We have reached the midyear point and are now focused in the back half on significant customer onboarding and expansions, the 3rd element of our large customer non renewal mitigation plans. We've closed our acquisitions of Ion and GI Alliance and early positive views of those businesses are incorporated into today's update to guidance. We do not yet have visibility to a closing date on ADSG, given customary closing conditions, so we'll wait to incorporate ADSG into our guidance until after closing. Together, Ion and GIA, while positive profit generators, are not meaningful to our fiscal 2025 EPS given the partial remaining year, the increased interest expense to fund the transactions and the timing of our investments and synergy achievement plans.

We will provide more details beyond this fiscal year when providing fiscal year 2020 a $0.10 increase at the midpoint from our prior guidance of $7.75 to $7.90 This is primarily driven by strong growth in the Pharma segment offset by GNPD and higher interest costs. Reflecting our acquisitions, interest and other is increased to a range of $200,000,000 to $230,000,000 driven by the new debt financing and foregone interest income. Moving on to our segments, starting on Slide 10. For pharma, we are improving our revenue outlook to a decline of 1% to 3%, reflecting the additions of GI Alliance and Ion into our guidance and the strong year to date utilization we've seen. Normalizing for the customer transition and our acquisitions, fiscal 2025 revenue growth at the midpoint would now be approximately 20%.

For segment profit, we are raising our pharma segment profit guidance for the full year to 10% to 12% growth. Excluding the contributions of GIA and ION, this would equate to high single digit underlying segment profit growth. You should note that GIA holds meaningful minority equity positions in many of the ambulatory surgical centers in which their procedures are conducted. The ASC tied profit streams in GIA will not show up in our pharma segment, but will rather show up as a positive item in INO's other income. For reference, we expect about $15,000,000 of other income coming from GIA's equity method investments in fiscal 2025.

Regarding Pharma's cadence, we continue to expect significant incremental volume over the back half of the year from new customer wins and expansions. And we also continue to expect Q3 to be the highest profit dollar quarter of the year driven by the timing of manufacturer price increases, which have traded generally consistent with our expectations. For GMPD, our revenue outlook remains unchanged at 2% to 4% growth, which is also what we now expect for Cardinal brand revenue growth. As we think about the GMPD improvement plan and the efforts I referenced earlier, while we are pleased with the progress the team is making, the efforts do take time. For the rest of this year, we recognize the impact of the healthcare costs, the wave mark write offs and the Q2 soft volume headwinds that we have experienced.

As a result, we are adjusting our GMPD guidance on segment profit to be in the $130,000,000 to $150,000,000 range, still a significant improvement from last year. As I have commented before, we continue to expect improvements in profit in the back half of the year with Q4 being the high point of the fiscal year similar to last year. We are not providing an update to our fiscal 2026, our long term profit guide on GMPT today. While our financial objectives are clear, we are scrutinizing volume trends and the current highly fluid tariff environment in Mexico and the United States, and we are awaiting clarity on whether there will be industry wide dislocations or exceptions, which may present both risks and opportunities for us. This is a highly fluid situation.

The one certainty is that our GMPD team continues to aggressively work to improve our business. In other, we are reiterating our expectations for 10% to 12% revenue growth and approximately 10% segment profit. One note on other's cadence, we expect stronger year over year profit growth in Q4 than in Q3 due to the timing of our growth oriented technology investments and associated benefits. Before I wrap up, a couple of comments on capital deployment. We remain committed to creating continued shareholder value over the long term.

Nothing is changing regarding our disciplined capital allocation strategy. Invest in the business, protect our investment grade rating, return a baseline of capital and assess additional M and A and return of capital opportunities. Following the closures of our deals, we will take a disciplined approach to paying down debt. We anticipate retaining our BBB, Baa2 investment grade rating by quickly getting back within Moody's post deal updated targeted leverage range for us of 2.75 times to 3.25 times adjusted debt to EBITDA. We will also execute on our previously committed fiscal year 2025 additional share repurchases of $375,000,000 As for M and A, we are focused on executing against the integration and improvement plans that surround the acquisitions we have announced in the last year.

We will continue to evaluate high quality assets in strategic areas of importance, but we'll focus on integration and tuck in acquisitions to the multi specialty and oncology platforms that we have just acquired. To close, Cardinal Health continues to benefit from our disciplined focus on our core, while also making important investments securing our growth for the long term. Our shareholder value creation efforts span our enterprise and both the progress to date and the roadmap of what we have in front of us gives Jason and I confidence to raise our guidance again for the remainder of this year. We look forward to updating you on this in coming months. With that, I will turn it back over to Jason.

Thanks, Aaron. In Pharmaceutical and Specialty Solutions, a positive second quarter performance is a direct result of our rigorous focus on prioritizing core operational execution and simplification. The team's efforts have resulted in commercial gains, including new distribution business and renewals with key customers. We successfully onboarded a couple of notable acute health systems this quarter and consistently aim to provide them and all of our customers with industry leading service. In fact, our service levels have continued to increase off of last quarter's multi year high and are now up over 10% over the last 2 years.

Of note, our team has navigated severe storm activity this winter, while maintaining above target on time delivery metrics. Our efforts to build a strong foundation and increase our exposure to higher growth and higher margin areas are working to drive growth and continued momentum across the business. As I've consistently indicated, specialty is our most important growth area where we've been investing both organically and inorganically in areas where there's not only the greatest opportunity for future business growth, but also where we can create value for our customers and patients. Our specialty strategy, as seen on Slide 12, is centered upon the community provider and is our ambition to deliver clinical and economic value for specialty physicians across key therapeutic areas, enabling them to focus on providing high quality and cost effective patient care. We are excited about the suite of services and capabilities we're building beyond our heritage in distribution and contracting, including today's closing of GI Alliance.

This acquisition is a key component of our strategy to continue driving meaningful growth over the long term in the larger 60% of specialty market consisting of non oncology therapeutic areas. GI Alliance, the largest gastroenterology managed services platform in the country with over 900 physicians across 3 45 practice sites in 20 states

as the foundation of our multi specialty platform enabling further national expansion in GI and areas like urology, rheumatology and neurology. This team brings best in class support capabilities such as revenue cycle management and a physician led leadership team headed by Founder and CEO, Doctor. Jim Weber that is highly regarded in the industry and will continue to operate the business as a standalone platform within Cardinal Health. In oncology, the work to integrate the I'm team and providers into our Navista platform is progressing as planned. The combined leadership team is in place and has visited key sites where it's easy to see how joining Navista's clinical expertise with ION's operational strengths will be a big win for independent community oncologists.

The team has created its consolidated leadership structure, defined the Navista go to market strategy and is engaging with a growing pipeline of opportunities as a result of our expanded offerings. A multitude of data is created while treating patients and thanks to the capabilities of Specialty Networks PPS analytics, providers can generate actionable insight to improve patients' clinical outcomes while manufacturers can leverage its sonar capabilities for research purposes to improve future therapies. We've completed integration of the legacy Specialty Networks and Cardinal Health processes and established the go forward execution roadmap, including extending Specialty Networks capabilities to Navista, so providers on both our oncology and multi specialty platforms can enhance their ability to provide exceptional patient care and grow their practices. Aaron highlighted our strong performance from biopharma solutions, which in addition to specialty networks includes our leading specialty 3PL and SynXis patient access among its offerings. We continue to see strong 3PL performance during the Q2 with revenue growth of over 20%.

And SynXis, which has seen steady growth, is executing a number of key product implementations with a strong pipeline of opportunities ahead. We've previously highlighted our advanced therapy solutions offering, which supports 15 cell and gene therapy manufacturers across 450 sites of care and has already processed over 18,000 cell and gene therapy orders. In the quarter, we launched Advanced Therapy Connect, a 1st in class cell and gene therapy ordering solution, which allows our customers to efficiently consolidate their ordering processes onto our singular platform. Our business is partnering with biopharma innovators and many of the top academic medical centers to bring cell and gene therapy products more efficiently to patients. Turning to GMPD, where the team is focused on executing our GMPD improvement plan initiatives.

Stepping back, while we had some additional non recurring impacts with WaveMark in the quarter, we are pleased with the continued improvement in the GMPD business. Combined with last year's significant growth, this year's guidance reflects a nearly $300,000,000 profit improvement from fiscal 2023, driven by progress on inflation mitigation, cost reductions and a return to growth with our Cardinal branded products. But we recognize work remains in this transformation. We have an aggressive set of service, profit and cash flow improvement efforts in flight across the business that will continue to power the turnaround. For example, we are modernizing our distribution network and bringing innovative solutions to the market, including the opening of a new distribution center in Massachusetts that will increase U.

S. Warehouse capacity and expand specialized handling capabilities. At the same time, we reached an agreement to sell the legacy distribution facility in the area, which will contribute to our stated value creation initiatives along with some recent inventory improvements we've driven. Our business is committed to getting our customers the right products at the right place and time and remain focused on doing so as we navigate the existing trade environment, monitoring the potential impact of new trade policies and their effect on pricing. Our geographically diverse manufacturing network supports our ability to balance supply resiliency, service and costs for our customers.

As an example, with our recent investments to expand domestic syringe production, 90% of our syringe product categories now manufactured in the United States. And now finishing with our other businesses, which are becoming a greater growth driver for us in an area where we intend to continue to invest in the future. In Nuclear and Precision Health Solutions, we see continued strength in both our core business and Theragnostics along with an expanding pipeline. We are now the 1st company to offer Actinium-two twenty five at commercial scale spearheaded from our collaboration with TerraPower offering a significant milestone in increasing access to potential new cancer treatments for patients. New therapies containing the isotope Actinium-two twenty five have the potential to become the next generation of cancer treatment due to their less invasive impact to the patient.

This is an example of innovation in action and reaffirms our commitment to making meaningful investments to help address some of the most pressing health issues facing patients today. We've also grown production of GE Healthcare's Visimol and Alzheimer's pet diagnostic by nearly 70% since last quarter. Investments are underway to nearly double our Visimil manufacturing sites by the end of fiscal year 2025. In At Home Solutions, we have begun construction on our new distribution center in Fort Worth, Texas to continue benefiting from the growth of home health care. The facility will be equipped with leading robotics and automation technologies and should be fully operational by this summer.

Our investments in advanced distribution centers will enable synergies related to our acquisition of Advanced Diabetes Supply Group, Bringing together the scale and efficiency of our at home business with the patient acquisition and retention capabilities of ADSG will be highly complementary, create further diversification within our diabetes business and allow us to drive significant value for customers and patients. CMS continues to make policy decisions supporting CGM access and we are well positioned to take advantage of future market growth as CGM utilization continues to increase. And in OptiFreight Logistics, we continue to deliver action driven insights support our customers, many of the leading health systems in the United States, enabling them to better manage their shipping needs. The team remains laser focused on innovative and technology driven solutions that drive incremental value and capabilities for our customers. Recently, the team made enhancements to our TotalView Insights portfolio with TotalView Reporting, making it easier for customers to answer critical program performance questions and unlock decision driving insights.

At least 3 product launches planned over fiscal 2025 and 2026, our team is constantly expanding its capabilities and exploring opportunities for new product penetration and clinical departments within hospitals where customers are looking for support, efficiency and value. In closing, we are pleased with what we accomplished this quarter and are excited about the future. Thank you to our team for their unwavering dedication to fulfilling our role as healthcare's most trusted partner. With that, we will take your questions.

Thank you very much, Mr. Holler. Thank you. Our first question today will be coming from John Stansell calling from JPMorgan. Please go ahead sir.

Great. Thanks for taking my question. I think what I heard was high single digit operating profit growth in pharma ex M and A. Just thinking about the back half, I think that would imply a bit of a deceleration versus first half. Can you just help kind of pick through some of the key puts and takes as we think about growth second half fiscal twenty twenty five kind of excluding M and A and kind of what those factors might be?

Appreciate the question. As we called out in prepared remarks, we are really pleased with the results of the enterprise overall and certainly our pharma business so far this year, including Q2, including the raise to our guidance. Just to restate the raise for the full year OI up 10% to 12%. That of course includes the impact of ION and the GI deal, which we closed today. You heard us correctly that the OI for the full year would be high single digits without the deals.

The M and A is adding about 300 basis points to the pharma raise, but also don't lose sight of the fact that we have $15,000,000 more of positive progress that is going to hit other income just given the equity treatment on the minority ASCs. In the first half of the year, we experienced a strong utilization environment really across every element of the business. You heard Jason comment on that. In the back half, we are assuming a more normalized environment. We don't believe that utilization will be sustained at the same levels.

And of course, we would be happy to be wrong there. I also want to call out that we have also started the onboarding of the significant ramp of new customers. Our onboarding costs for those new customers are already built into the updated guide that we've provided. And of course, we're lapping our Specialty Networks acquisition in March. And so we believe that the guide in the back half, the need to guide for the year is a prudent one, reflective of the success so far and acknowledging that as I said in my prepared remarks, we have a lot going on and that we're looking to land the plane well.

Thank you. Our next question will be coming from Erin Wright calling from Morgan Stanley. Please go ahead.

Great. Thanks for taking my question. So could you talk a little bit about what you're seeing across specialty right now, just the key drivers that you're thinking about how the integration of some of these assets is progressing relative to your expectations and just how we should think about that progressing throughout the year? Thanks.

Sure. Yes. Specialty was absolutely a driver of revenue and profit for the quarter. We talked about the broad based specialty growth over the last several years ex a large customer non renewal. We've seen close to mid single digit type of mid teens growth type of growth, 14% growth over the last several years.

And we saw a pretty similar growth last quarter as well as this quarter was even a little bit stronger, a couple of points faster than that. So the specialty category continues to grow very well, which certainly gives us confidence to continue to invest into that business, which is, of course, underpinning not just the more recent closings now of both ION and GI Alliance, but of course, it was also a key component of the strategy that we laid out more recently and started with the inorganic investments with Specialty Networks. And we did include in the material, I believe it's Slide 12, that just reminds everyone of that strategy and I talked a little bit about it. But I think the key point here is that, that community physician, specialty physician, they have a lot of requirements, a lot of needs. They want to take care of those patients, but they also need to run a business.

And what we've done here is built up a series of support around them beyond contracting, getting into helping them manage their data, getting the administrative as well as the broader MSO services to support those physicians. And we think by putting that specialty physician at the center of how we approach them as a partner and as a customer will lead to growth well beyond just distribution and into all those other services. One other area of differentiation that we've continued to clarify with this strategy is that we're going to market with 2 very distinct platforms, 1 within oncology, which is of course, Ion as combined with our Navista business. And then the other one of course is GI Alliance. And getting into the other 60% of the multi specialty part of the business.

So we're pleased with the strategy. We're pleased with the underlying momentum that we're seeing in the specialty business that just further gives us confidence that we should be investing into this critically important part of the market, not just for us financially, but probably more importantly for customers and ultimately patients. Next question, please.

Yes, sir. The next question will be coming from Alan Lutz calling from Bank of America. Please go ahead.

Hi, good morning and thanks for taking the questions. One for Aaron. How did the COVID vaccine volumes come in, in the Q2 versus your expectations? I think we were estimating something like a $20,000,000 headwind year over year. But is there any way to size the relative contribution from vaccines in the Q2 versus the Q1 or size the headwind year over year?

We have not provided a specific number on the impact of COVID in Q2, although what I can tell you is it came in exactly as we expected it was. And we were pleased to overcome it, obviously, given the incredibly strong results from the former business in the quarter. We had said it would be a modest headwind and that's indeed how it played out. Next question, please.

Next question today will be coming from Elizabeth Anderson of Evercore. Please go ahead.

Hi, guys. Good morning and thanks for the question. Thanks for all the color today. I was wondering if you could talk a little bit more about GMPD. Obviously, you thank you for helping us to quantify the WaveMark contribution in the quarter.

But I know you've talked about some investments and I realize that there's tariff implications that we probably can't quantify right now. But if we think about like just the core business ex some of these one time items and forgetting about tariffs for a second, how do we think about sort of the cadence of sort of investments and sort of the opportunity as we move through the back half of the year? Like is that sort of ramping down and we should think of that as a go forward like rate there? Or you think there's sort of more long term investments that you will continue to make as you continue to grow that business?

Let me start with some comments on the guidance and then perhaps Jason will want to offer some strategic comments there. We started the year with a guide on GMPD of $175,000,000 And then as a result of the unanticipated health care incremental health care costs in Q1, we adjusted our guidance to bring it down and that was as you recall $17,000,000 in Q1. In Q2, we have certainly experienced another unanticipated item, which is a $15,000,000 charge in the wave mark part of the business really tied to uncollectible receivables. Absent those two items, the GMPD improvement plan really continues as it has. And so while we want to be prudent and reflect the realities of those two items and of course call out that volumes were a little soft in Q2, softer than we expected.

Other than that, the business continues to perform as we had expected and indeed consistent with the guidance we provided. We said at the start of the year that the we expected sequential improvement each quarter in profitability. We still expect that to be the case. Q4 will be higher than Q3, obviously, from a sequential perspective. And what we appreciate about the team leading GMPD is that they are leaving no rock unturned relative to continuing to invest in the business and find the ways to improve the operating performance, improve our customer service so that we are achieving the plans.

We have not backed away from our long term guidance today. We are not providing an update on long term guidance either for GMPD or for the overall enterprise and you can read into that which you will. I would just observe though that we believe the new guidance of $130,000,000 to $150,000,000 with the midpoint being the reduction of the 2 one time items or non recurring items from that original guidance is a reflection of kind of where we are. Jason?

Yes. I'll add on some other elements here. So I'm pleased with the performance of the team given some other elements that Aaron didn't talk about, right. We've been receiving a number of questions, of course, as it relates to international freight, all the storms, winter activity as well. There's a lot of complexities within supply chain that has not impacted significantly in the business and we've not made any changes to our guidance as a result of those types of items.

So the team has managed through a challenging type of supply chain environment this year. Now that leads us of course to all right, so now what does it mean for the balance of the year as it relates to tariffs? I should probably also add that we had tariffs in China that did require us to resource and to pass on some of that in the form of pricing as well. But now when we're looking at potentially more significant tariffs both in Mexico as well as in the United States, That requires us to continue to evaluate that model and manage through it. So we are not providing any adjustments to our guidance both current year as well as long term as it relates to that.

It's still a bit early to determine that. What I will say is that the team has done a nice job to de risk the model from where we were before. We still have some work to do with tariffs. We're looking at both sides of it, the sourcing side as well as the customer and pricing side. On the sourcing side, we've made some fantastic improvements to the resiliency of that supply base.

As a reminder, only about a third of our business of that $12,000,000,000 ish in revenue is Cardinal Brands. So the 2 third that's National Brands, we largely pass through those types of adjustments. So that one third that is Cardinal brand is where we have the most work to do there. Within that third, about a half of it is sourced out of North America, which is split between the U. S.

And Mexico for the most part. And then the rest of the world is quite diverse. We no longer manufacture out of China. We source a little bit, although with more recent tariffs, we've reduced that further. So we're definitely well below 10% at that level.

And we have near short into Latin America, quite a bit of product as well. We even brought some of it more onshore. As Aaron highlighted, 90% of our syringe category is now produced in a Cardinal owned facility in the United States. So we'll continue to do what we can to minimize the impact, as it relates to tariffs. But make no mistake, if there are widespread tariffs anywhere from the 10% to 25% range, I anticipate there will be corresponding price increases.

We will do what we can to minimize those. But with 1% to 2% margins, we will not absorb whatever impacts are left. And with our diverse supply base, supply chain throughout the globe and what we believe is balanced, we think we're well positioned competitively to be able to pass on those price increases. So it's something we'll work to minimize, but it's going to be a reality if tariffs are widespread across multitude of countries. Next question please.

Yes. Our next question today will be coming from Michael Cherny calling from Leerink Partners. Please go ahead. Your line is open.

Good morning. Congratulations on another really nice quarter. Maybe if I can go back to some of the specialty commentary. As you think about where you're now positioned with all the at least specialty oriented acquisitions closed right now, and Jason, you had talked a bit about some of your service expansion, but how fast do you feel some of that integration resonating in the market? How much of it do you feel is a competitive driver in terms of winning new business?

And how do you think about that against the backdrop of what seemingly appears to be elevated specialty market growth, whether it's due to changes in the IRA Part D design or other areas? But how does it all factor into from an underlying specialty basis, your ability to essentially accelerate growth on top of a now larger portfolio?

Well, it certainly doesn't hurt in the marketplace. As I'm sure you can imagine, there's a lot of factors that go into a customer's decision. I think our investments in specialty, they want to see that we're competitive and that we understand their needs in that space, which this certainly does. I wouldn't draw too many connections. I mean it depends on what part of the market you're talking about.

If you're talking about retail independent, if you're talking about a large chain, I think our investments in specialty are a lot less relevant. What's more relevant for them is are we taking care of their needs today? Is it service levels? What are their types of products and capabilities we can bring for them? Of course, when you're talking about that specialty physician, it is incredibly important for them that we take care of as many of their needs as possible, of which distribution is only one of them.

So it is that flywheel effect that we've talked about all the way back to our Investor Day that was a cornerstone of the strategy that is what's most important to that position. Of course, we have to be competitive in everything else, but it is all bringing together. Now this quarter, as I mentioned, we're seeing a little bit stronger specialty revenue growth. Is that because we continue to be a partner of choice? I think it's a little early with some of these acquisitions as well.

But certainly, we're growing at least as fast as the market, 16% type of growth in the quarter. So we're holding our own and have great partners that are growing quickly as well. And we're doing what we can to further improve our capabilities to be an even better partner for them going forward. Next question, please.

Next question will be coming from Eric Percher of Nephron. Please go ahead.

Thank you. I'd like to return to medical and maybe expand to GMPD and at home. It sounds like the impact from macro weakness is maybe a little bit less severe than we might have thought. Can you tell us is the Cardinal brand still growing? Has there been any change in trajectory?

And then is the impact extending to at home in any meaningful way?

Yes. So the overall, we saw a slight growth in overall for all products as well as Cardinal Health brand products. So there's no distinction or differentiation there of any significance. And you'll see in the queue that comes out, we continue no, I think Aaron even made the comments, we have double digit growth for each of our other businesses in terms of top line. So we continue to see very strong growth there.

As Aaron did highlight, we saw some weakness within respiratory and lab type of products within the GMPD business. Those are not products that drive volume through our at home business. It is a very diverse type of product groupings within that home customer, but it's different than those types of products. So, another thing I'd just highlight is last quarter we were at 3% growth. Overall market we predicted to be somewhere in the low single digit range.

And so 1% growth while a little bit weaker and we certainly wanted to call that out. We're watching it very closely. The trends are going to be important. How much of this is related to what is happening on the respiratory lab side of cough, cold and flu this season is something that we'll determine here in the next couple of months if it's a lasting trend or if it gets more back to that typical type of longer term lower single digit but better than 1% growth that we anticipate. And that's why we're watching it closely, but need to see what kind of trends this really looks like before making any other further adjustments.

Just to reinforce some of the questions some of the answers around At Home, you will see that At Home's revenue growth in the quarter was up 13%, strong in CGM, diabetes and urology related categories. We do continue to make large investments in that business even pre closure of the acquisition we've announced. And that's why you heard me signal in my prepared remarks of how we're looking forward to talking about the profit contributions from that business in future quarters really driven by seeing the return on the investments we've been making in automation and efficiency as they get to multi year record levels of productivity, quality and safety over the course of the year. And so we view while we haven't spent a lot of time talking about it, I don't we view it as a bright spot for the future of the business. Next question, please.

We will now go to Kevin Caliendo calling from UBS. Please go ahead sir.

Thanks. Thanks for taking my question. I want to get to your comments around utilization and the sort of expectation that it's going to normalize or step down a little bit from what you've seen in the first half. My question is sort of are you actually seeing this now? Is it a question of your comping higher utilization in the fiscal second half of the year?

And was the higher utilization that you saw in the first half of the year, was there anything special about it? Was it higher margin or did it contribute more to EBIT than corporate average? I'm just trying to understand like what was the driver or what the higher utilization was and sort of why you don't expect it to continue?

Yes. Let me start and then there's a lot there to unpack and so Aaron may have something in the back end. So as I think about let me talk to the 2nd quarter growth that we've seen and it does resemble quite a bit the type of growth we saw in the first quarter. So let me just go deeper into that, give you a little bit more insight as to what's driving. When we say broad utilization, what exactly do we mean?

Give you a little bit more perspective there. And then, I think that will help inform the types of trends that you would expect to continue, perhaps some that would not. So as I step back and think about the drivers of our profitability, we have already talked about some of the headwinds, right? So it's COVID and it's the large customer non renewal. As Aaron highlighted, our headwinds this quarter from an earnings perspective as well as from a revenue perspective were very consistent with our expectation.

And what I'm really pleased with this particular quarter is our strength in pharma was driven not by having less bad news, it was more good news, more strength in the underlying business. So what drove that those tailwinds that allowed us to grow that business from an earnings perspective this particular quarter. Okay. Utilization was is of course one of those items. So the 4% reduction in revenue as Aaron highlighted translates to 17% ex large customer non renewal.

And then when you adjust for GLP-1s that's another 6%, 7%. So you get close to 10% to 11% ex customer non renewal ex GLP-one type of growth. So that 10% to 11% is significant. It's not too unlike where we have been operating, but it's good growth. And of course, we're talking revenue.

But when you're looking at the underlying volume in areas that contribute less revenue like generics, it was also a little bit stronger than what we've typically seen. So within that 10% to 11% adjusted type of revenue, there were no real headwinds that we had to offset. So we did see growth across all the categories. Brand and generics were generally consistent with that type of rate where we saw excess growth above that was specialty. So that brings with it nice margin.

It brings with it a nice mix. And it's also some of our consumer health business. Within generics, while the revenue was not a big driver of it, where we saw strength were in the areas that do bring with it a little bit more margin like retail independence as one example. We did have some new customers that were being onboarded, but there was good mix by again specialty, by retail independents. There was the right type of volume that we saw that was a little bit stronger this quarter than we've seen before.

Now that's just one of the components of our earnings drivers. We also had very good productivity. It was a quarter that had great volume and we translated that volume to very strong earnings. And that's based upon some of the actions that we've put into place beginning almost a year ago when we learned of that large customer non renewal that we will start to lap. And then of course the specialty networks will be lapping here in the Q3 as well.

And that's the 3rd component. Our biopharma solutions business was very strong this quarter. That is specialty networks, but it's also our 3PL. We saw higher than usual type of growth. So 3PL is growing over 20%.

So there's a lot of growth drivers like that, that while we've invested into it and while we have confidence we'll continue to grow. The level of growth and that positive mix of specialty, of generics, of retail independents, of categories like that are more of the areas that we would expect to be more normalized going forward. And of course, specialty networks, we begin to lap it in the Q3 as well. Aaron, anything I missed there?

add was just the code of note that our back half, if you adjust if you normalize out for Optum, we are expecting the profit to grow above our long term target of 4% to 6%. And so I appreciate the pushback on the number there, but we are expecting higher than our targeted growth in the back half of pharma. Next question please.

Yes, sir. The next question now will be coming from Eric Coldwell calling from Baird. Please go ahead.

Thanks very much. I was hoping to touch on GI Alliance a bit. When investors see MSO deals in a drug distribution industry, they tend to think of distribution contracts, they think of biosimilars, etcetera. But is there not also a med surg opportunity, particularly in this segment? And if so, could you talk about that and where you might see some opportunities to further help those physicians with your MedSurg package and or any other solutions that you provide?

Are there tie ins to something in the other segment, for example, as well?

Cardinal Health (CAH) Q2 2025 Earnings Call Transcript

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