Cardinal Health posts revenue growth in Q4, full year

Cardinal Health today reported an increase in revenues for the fourth quarter as well as for fiscal year 2023, while raising its outlook for fiscal year 2024.

The company's fourth quarter revenues were $53.5 billion, an increase of 13% from the prior year period. GAAP operating earnings were $137 million, primarily due to a non-cash, pre-tax goodwill impairment charge of $368 million in the medical segment. 

The Dublin, Ohio-based company's GAAP diluted loss per share was 25 cents, primarily due to this impairment, net of tax effects. Non-GAAP operating earnings increased 24% to $560 million, driven by increases in medical and pharmaceutical segment profit. Non-GAAP diluted earnings per share increased 48% to $1.55 in the quarter, reflecting the increase in non-GAAP operating earnings, lower interest and other expense and a lower share count. The increase was partially offset by a higher non-GAAP effective tax rate, Cardinal Health said.

Cardinal Health's fiscal year 2023 revenues were $205 billion, a 13% increase from fiscal year 2022. GAAP operating earnings were $727 million, due to cumulative non-cash, pre-tax goodwill impairment charges of $1.2 billion in the medical segment. GAAP diluted EPS were $1.00, primarily due to these impairments, net of tax effects. Non-GAAP operating earnings increased 3% to $2.1 billion, driven by an increase in pharmaceutical segment profit. The increase was partially offset by a decrease in medical segment profit. Non-GAAP diluted EPS increased 14% to $5.79 for the year, an all-time high, reflecting the increase in non-GAAP operating earnings, lower interest and other expense and a lower share count, Cardinal Health said.

"Fiscal 2023 was an inflection point for Cardinal Health, with improved performance, strong execution and notable progress against both our short and long-term plans," said Jason Hollar, CEO of Cardinal Health. "We are pleased with the strong finish to the year, including robust cash flow generation, continued strong growth in the pharmaceutical segment and significant improvement in the medical segment, driven by execution of our medical improvement plan. We enter the new fiscal year with momentum and are raising our previously communicated fiscal year 2024 EPS guidance."

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Cardinal Health reported fourth-quarter revenue for the pharmaceutical segment increased 15% to $49.7 billion, driven by brand and specialty pharmaceutical sales growth from existing customers.

The company's pharmaceutical segment profit increased 12% to $504 million in the fourth quarter, primarily driven by positive generics program performance.

Cardinal Health’s fourth-quarter revenue for the medical segment was flat at $3.8 billion. This reflects a decrease in products and distribution sales related to lower PPE volumes and pricing, partially offset by inflationary impacts, including mitigation initiatives. This decrease within products and distribution was offset by growth in at-Home Solutions, Cardinal Health noted.

Cardinal Health's medical segment profit increased to $82 million in the quarter, driven by an improvement in net inflationary impacts, including mitigation initiatives and normalization of PPE margins.

[Read more: Cardinal Health posts revenue growth in Q1]

The company raised its fiscal year 2024 outlook for non-GAAP earnings per share by 5 cents to $6.50 to $6.75 from the preliminary outlook previously communicated at the company's Investor Day, which primarily reflects increased expectations for pharmaceutical segment profit.

Cardinal Health reiterated its fiscal year 2024 pharmaceutical segment profit outlook for 4% to 6% growth on higher ending fiscal year 2023 pharmaceutical segment profit. The company also increased its fiscal year 2024 pharmaceutical revenue outlook, driven by continued growth of GLP-1 medications, which do not meaningfully contribute to segment profit. Additionally, the company narrowed its range for diluted weighted average shares outstanding. The company reiterated its expectations for all other fiscal year 2024 outlook items.