Cardinal Health
(NYSE:CAH)
said today that new import taxes could cost the company up to $300 million, and that it has already held layoffs as one response.
Dublin, Ohio-based Cardinal Health — the world’s ninth-largest medical device company, according to Medical Design & Outsourcing‘s 2024 Medtech Big 100 ranking — said those tariff costs will mostly affect its Global Medical Products and Distribution (GMPD) segment.
Cardinal Health joins other medical device companies in warning new import taxes imposed by President Donald Trump — along with retaliatory tariffs from other nations in the ensuing trade war — will hurt their businesses and could cause device shortages for physicians and patients.
Related: Intuitive’s trade war strategy holds lessons for other device developers
Cardinal Health CEO Jason Hollar said the company is “engaging” with the Trump Administration “to try to mitigate impact to patient care.”
“Only after aggressive mitigation actions like these are accomplished do we consider price adjustments,” he continued. “So far, these actions and others have helped us already mitigate several hundred million dollars of exposure.”
Cardinal Health CFO Aaron Alt said those actions included layoffs at the end of the company’s third quarter, which ended on March 31. More information was not immediately available from the company.
Despite that, the company expects $200 million to $300 million worth of tariff costs in fiscal 2026, which starts on July 1, 2025.
“We anticipate mitigating the majority of these costs through continued operational actions and price adjustments, which we are already working on with our customers,” Hollar said. “… We are working to ensure that GMPD retains a viable financial profile. We are all too aware of the burden that GMPD and Cardinal Health shouldered during COVID resulting in significant financial losses, and we are highly focused on ensuring that costs are minimized, but also shared more equitably in this case. In proactively working with our customers we are seeking a scenario which does not result in market scarcity of key products or disruptions to supply.”
Cardinal Health’s Q3 FY2025 financial results
Cardinal Health reported third-quarter revenue of $54.9 billion (flat from the same period a year ago) and adjusted earnings per share (EPS) of $2.10.
Wall Street analysts were looking for adjusted EPS of $2.15 on sales of $55.31 billion.
Total sales were down due to a customer contract expiration in the Pharmaceutical and Specialty Solutions segment, which had $50.4 billion in sales for the quarter.
GMPD revenue, on the other hand, grew 2% year-over-year to $3.2 billion, “driven by volume growth from existing customers,” the company said in a news release. GMP profits grew 77% to $39 million for the quarter, “driven by the beneficial net impact of cost optimization initiatives.”
“There is a lot to be excited about with our results this quarter,” Hollar said on the call. “Not only did we see earnings growth in each of our five operating segments, but we also saw significant growth in our high-priority growth areas: Specialty, Nuclear, At-Home Solutions, and OptiFreight. We have more work to do at GMPD, but I am pleased with the operational improvements we have achieved even in a more uncertain macroeconomic environment.”
Cardinal Health adjusted its fiscal 2025 guidance from adjusted EPS from $7.85 to $8 previously to $8.05 to $8.15, reflecting a better outlook for the Pharmaceutical and Specialty Solutions segment.
The company lowered the top end of its expected GMPD segment profit, with a new range of $130 million to $140 million for fiscal 2025 down from $130 million to $150 million previously.
“Cardinal Health anticipates double-digit non-GAAP EPS growth in fiscal 2026, despite the evolving macro environment conditions,” the company said in the release. “The company continues to expect strong segment profit growth in Pharmaceutical and Specialty Solutions and across its three operating segments reported in Other. In the face of the macro uncertainty, the company is updating its expectations for fiscal 2026 GMPD segment profit, which it now expects to be at least consistent with fiscal 2025 segment profit.”
Cardinal Health stock is trading around $144.59 today, up about 2%.
Medtech pay analysis: Cardinal Health CEO pay climbs to $25M; Median worker pay dropped
