August 14, 2025 ⢠4 min read
Cardinal Health, a linchpin in the U.S. healthcare supply chain, recently released its annual 10-K report for fiscal year 2025. This document provides a detailed look under the hood of the healthcare giant, revealing its financial performance, strategic shifts, and the challenges it faces. Let's dive into the numbers from the latest filing to see how the company is navigating the complex healthcare landscape.
At first glance, Cardinal Health's top line shows a minor contraction. Total revenue for fiscal 2025, which ended June 30, was $222.6 billion, a 2% decrease from the prior year's $226.8 billion. This dip was primarily driven by a 3% revenue decline in its massive Pharmaceutical and Specialty Solutions segment, largely due to the non-renewal of its contract with OptumRx, a major customer.
However, the real story lies in the company's profitability. Despite the slight revenue dip, GAAP (Generally Accepted Accounting Principles) operating earnings surged an impressive 83% to $2.3 billion. This translated to a diluted earnings per share (EPS) of $6.45, an 87% jump from the previous year.
To get a clearer picture of the core business performance without one-time events, analysts often look at non-GAAP figures. Here too, the story is strong. Non-GAAP operating earnings grew a healthy 15% to $2.8 billion, with non-GAAP diluted EPS rising 9% to $8.24. This signals that the underlying operational health of the company has improved significantly.
The flow of revenue through the company's costs and expenses to its final profit is illustrated below.
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A standout theme from the report is Cardinal Health's aggressive acquisition strategy, signaling a decisive pivot towards higher-margin specialty physician services. Over the past year and a half, the company has spent billions on several key acquisitions:
This acquisition spree has reshaped the company's balance sheet, nearly doubling its "Goodwill and other intangibles" from $6.5 billion to $12.2 billion. It's a clear bet that expanding into specialized care management will fuel future growth and profitability, moving beyond its traditional, lower-margin distribution business.
The strategic shift is also visible in the performance of its core segments.
One critical point to watch is customer concentration. With the departure of OptumRx (which accounted for 17% of revenue in 2024), CVS Health has become an even more significant customer, now representing 30% of total revenue, up from 24% last year.
Cardinal Health's fiscal 2025 was a year of profound transformation. The company managed to dramatically improve profitability even as it navigated the loss of a major client. Its aggressive M&A strategy is a bold move to capture more value in the specialized corners of the healthcare market. The key challenge ahead will be to successfully integrate these massive new businesses and manage the risks associated with its heavy reliance on a single, powerful customer. How well Cardinal Health executes on this new strategy will determine whether it can sustain this impressive new level of profitability.
Last updated: August 14, 2025