Cardinal Health Inc. (NYSE:CAH) shares fell Tuesday after the company reported mixed fourth-quarter results and announced a $1.9 billion deal to acquire Solaris Health.
M&A Deal
On Tuesday, Cardinal Health’s Specialty Alliance, its multi-specialty management services organization (MSO) platform, agreed to acquire Solaris Health, an urology management services organization (MSO), from Lee Equity Partners and Solaris Health physician owners.
Cardinal Health will provide approximately $1.9 billion in cash to The Specialty Alliance to enable the acquisition, and will own approximately 75% of The Specialty Alliance after it acquires Solaris Health.
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Solaris Health physicians and several members of management will join GI Alliance physician owners and management as equity holders and operators in The Specialty Alliance.
Solaris Health supports over 750 providers across over 250 practice locations in 14 states. Cardinal Health expects the transaction to close by the end of 2025.
The transaction is expected to be slightly accretive to Cardinal Health’s adjusted earnings per share in the first 12 months following close. Cardinal Health expects to include the expected impact to its fiscal year 2026 guidance after the acquisition is completed.
Cardinal Health reaffirmed its disciplined capital allocation framework in connection with the announcement of the acquisition. The company will finance the acquisition with a combination of cash on hand and new debt financing and plans to take a focused approach to paying down debt over the next 18 to 24 months.
The company does not expect its deleveraging plans to change its previously outlined share repurchases. It expects to be within its targeted leverage range by the end of fiscal 2026.
The cash and cash equivalents for the company were $3.87 billion as of June 30, 2025.
Earnings
The healthcare giant reported adjusted earnings of EPS of $2.08, beating the consensus of $2.04.
Sales remained almost flat at $60.16 billion, missing the consensus of $60.89 billion. Adjusted operating earnings increased 19% to $719 million.
Fourth-quarter revenue for the Pharmaceutical and Specialty Solutions segment was relatively flat at $55.4 billion. Fourth-quarter revenue increased 22% excluding the impact of the customer contract expiration, driven by brand and specialty pharmaceutical sales growth from existing and new customers.
Fourth-quarter revenue for the Global Medical Products and Distribution segment increased 3% to $3.2 billion, driven by volume growth from existing customers.
Fourth-quarter revenue for Other increased 37% to $1.6 billion, driven by growth across the three operating segments: at-Home Solutions (including the acquisition of Advanced Diabetes Supply), Nuclear and Precision Health Solutions and OptiFreight Logistics.
Outlook
Cardinal Health raised outlook for fiscal year 2026 adjusted earnings per share from $9.10-$9.30 to $9.30-$9.50 compared to the consensus of $8.19.
The company expects Pharmaceutical and Specialty Solutions segment sales growth of 11%-13%, with segment profit growth of 11%-13% compared to the prior guidance range of 10%-12%.
Global Medical Products and Distribution segment sales will increase by 2%-4% compared to the prior growth expectation of 3%-5%, with a profit of around $140 million.
Price Action: CAH stock is trading lower by 7.40% to $146.00 during the premarket session at last check Tuesday.
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