Cardinal Health, a global distributor of pharmaceuticals and medical products, has announced significant progress on its business and portfolio review, as well as an update to its fiscal year 2024 non-GAAP diluted earnings per share (EPS) outlook. The company's stock price experienced a -3.6% movement, closing at $101.34 per share following the announcement.
Jason Hollar, CEO of Cardinal Health, emphasized the company's commitment to becoming a more streamlined and focused organization. He stated, "We are excited to demonstrate further progress on how we are driving our company, and healthcare, forward. As we continue down the path of becoming a simplified and more focused company, these actions align with our operational focus on the core of our business, provide increased visibility to key growth areas, and enable greater efficiencies across all our businesses."
The company has completed a review of its growth businesses within the medical segment, determining that investing in and further developing at-home solutions and OptiFreight® logistics will drive significant long-term shareholder value creation. Cardinal Health's at-home solutions business, a leading home healthcare medical supplies provider in the United States, is poised for accelerated growth in line with industry trends of care shifting to the home. The company is making substantial investments to support this increased demand, including plans to build a new distribution center in Texas. Additionally, Cardinal Health's OptiFreight® logistics, a leading provider of healthcare logistics, continues to experience strong operational performance and profitable growth, supported by ongoing investments in innovative and technology-driven solutions.
Furthermore, Cardinal Health has realigned its business to increase its focus on the core and accelerate its growth areas. Effective January 1, 2024, the company began operating under an updated enterprise operating and segment reporting structure, which includes two reportable segments: Pharmaceutical and Specialty Solutions, and Global Medical Products and Distribution (GMPD). Additionally, separate from these two segments, at-home solutions, OptiFreight® logistics, and nuclear and precision health solutions will be reported as "Other." This updated operating structure is designed to provide greater visibility to the performance of these businesses and allow prioritization of investments to ensure their long-term success.
The company also updated its fiscal year 2024 non-GAAP diluted EPS guidance to the high end of the $6.75 to $7.00 range, primarily driven by anticipated favorability in interest and other, and diluted weighted average shares outstanding, enabled by continued strong cash flow generation and incremental share repurchase during the second quarter of fiscal 2024.
Cardinal Health will provide further updates and details on its fiscal second quarter results and its fiscal year 2024 guidance during its second quarter earnings call on February 1, 2024.
The company's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $136,809 | $145,534 | $152,922 | $162,467 | $181,364 | $205,012 |
| Revenue Growth | n/a | 6.38% | 5.08% | 6.24% | 11.63% | 13.04% |
| Net Margins | 0% | 1% | -2% | 0% | -1% | 0% |
| Net Income (MM) | $256 | $1,363 | -$3,696 | $611 | -$933 | $262 |
| Net Interest Expense (MM) | $329 | $294 | $238 | $180 | $149 | $93 |
| Depreciation & Amort. (MM) | $1,032 | $1,000 | $913 | $783 | $692 | $692 |
| Earnings Per Share | $0.81 | $2.59 | $4.04 | $2.94 | -$4.29 | $1.0 |
| EPS Growth | n/a | 219.75% | 55.98% | -27.23% | -245.92% | 123.31% |
| Diluted Shares (MM) | 300 | 294 | 295 | 281 | 261 | 250 |
| Free Cash Flow (MM) | $2,384 | $2,394 | $1,585 | $2,029 | $2,735 | $2,358 |
| Capital Expenditures (MM) | $384 | $328 | $375 | $400 | $387 | $481 |
| Current Ratio | 1.05 | 1.03 | 1.17 | 1.15 | 1.04 | 0.99 |
| Total Debt (MM) | $7,599 | $6,742 | $6,720 | $5,342 | $4,685 | $3,890 |
Cardinal Health has negative net margins with a positive growth rate, EPS growth achieved by reducing the number of outstanding shares, and irregular cash flows. On the other hand, the company has growing revenues and increasing reinvestment in the business working in its favor.
