Cardinal Health, Inc. (CAH): BCG Matrix [Dec-2025 Updated]

You're looking for the hard truth on where Cardinal Health, Inc.'s capital is actually working as we hit late 2025. We've mapped their core segments onto the classic BCG Matrix, and the picture is clear: the massive 90% revenue engine, Core Pharmaceutical Distribution, is the rock-solid Cash Cow, projected for $205.3 billion in FY25 revenue. Meanwhile, high-growth specialty areas are the Stars, but don't miss the capital-hungry Question Marks like Nuclear and Precision Health Solutions, which are aiming for 25% to 27% profit growth next year. Still, the Global Medical Products unit is clearly lagging as a Dog. Dive in below to see exactly where Cardinal Health, Inc. needs to invest, hold, or divest resources right now.

Background of Cardinal Health, Inc. (CAH)

You're looking at Cardinal Health, Inc. (CAH) right at the close of its fiscal year 2025, and honestly, the numbers tell a story of significant transition. For the full fiscal year 2025, Cardinal Health posted total revenues of $222.6 billion. That figure is actually a slight dip, down 2% from the $226.8 billion seen in fiscal 2024. But here's the key context you need: when you strip out the impact of that big customer contract expiration-the one with OptumRx-revenue actually jumped 18% year-over-year. That contract loss, which expired in mid-2024, was a major headwind, as it represented about 15% of their 2023 revenue.

Despite the top-line noise from the contract loss, profitability looked much stronger. Non-GAAP operating earnings for fiscal 2025 hit $2.8 billion, marking a solid 15% increase over the prior year. On the bottom line, GAAP diluted Earnings Per Share (EPS) landed at $6.45, while the non-GAAP diluted EPS grew by 9% to reach $8.24. The company also generated $2.5 billion in adjusted free cash flow for the year.

Cardinal Health, Inc. operates primarily through a few key areas. The largest is the Pharmaceutical and Specialty Solutions segment, which brought in $204.6 billion in revenue for the full year, though this was a slight 3% decline due to the contract loss. Still, segment profit for this division grew by 12%, showing underlying strength in their core distribution and specialty business. The Global Medical Products and Distribution (GMPD) segment, which handles medical and surgical products, saw its profit reach $135 million for the year.

Then you have the 'Other' category, which is where the real growth story is right now. This group, which bundles together at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics, saw its segment profit grow by an impressive 22% for the year. In the fourth quarter alone, this 'Other' segment revenue surged by 37%. To fuel future growth, Cardinal Health, Inc. has been busy with acquisitions, including taking a majority stake in GI Alliance and acquiring Integrated Oncology Network, positioning themselves more deeply in specialty care platforms. They're definitely making moves to shape the portfolio for what comes next.

Cardinal Health, Inc. (CAH) - BCG Matrix: Stars

Stars in the Boston Consulting Group Matrix represent business units or products operating in a high-growth market where Cardinal Health, Inc. maintains a high market share. These units require significant investment to maintain their growth trajectory and market leadership, often resulting in a near break-even cash flow situation due to high promotional and placement support needs.

Specialty Solutions MSO platforms, including the acquired GI Alliance, are key drivers in this quadrant, contributing to strong segment performance. For the third quarter of fiscal year 2025 (Q3 FY25), the Pharmaceutical and Specialty Solutions segment profit increased by 14% to $662 million, with MSO platforms cited as a driver. Furthermore, the strategic move to acquire Solaris Health, described as the country's leading urology MSO with over 750 providers, signals a continued push to bolster high-share positions in specialized service areas.

The market for specialty medicines is clearly in a high-growth phase, directly fueling this Star status. In Q3 FY25, revenue for the Pharmaceutical and Specialty Solutions segment increased 20% when excluding the impact of a prior customer contract expiration, a growth rate explicitly driven by brand and specialty pharmaceutical sales. This demand includes strong trends in areas like GLP-1 therapies, as noted in earlier fiscal year guidance updates.

The BioPharma Solutions business, which includes Specialty Networks, is also positioned as a Star component within this segment. Its contribution, alongside MSO platforms, fueled the segment profit growth in Q3 FY25. This business leverages its scale in what is clearly a high-value, fast-growing market segment for Cardinal Health, Inc.

Strategic acquisitions are actively being used to solidify and expand this high-share position in high-growth therapeutic areas. The investment in oncology, exemplified by the $1.12 billion acquisition of Integrated Oncology Network, directly targets a complex, high-value area. Similarly, the expansion into urology, evidenced by the GI Alliance moving into that area and the acquisition of Solaris Health, shows a focused strategy to capture market leadership in these specialized fields.

The success of these Star units is reflected in the raised financial outlooks for fiscal year 2025 (FY25) and beyond, indicating the company is investing to keep its market share:

The company's confidence in these growth engines is underpinned by long-term targets. Cardinal Health, Inc. has confirmed a long-term target of 12% to 14% non-GAAP diluted EPS Compound Annual Growth Rate (CAGR) for fiscal years 2026 through 2028.

The high-growth nature of these areas requires continued cash deployment, which is evident in the capital plans. The company improved its outlook for non-GAAP adjusted free cash flow to approximately $1.5 billion for FY25, despite maintaining substantial capital expenditures of $500 to $550 million in that period. For fiscal year 2026, the projected non-GAAP adjusted free cash flow is $2.75 billion to $3.25 billion.

You can see the key growth drivers supporting the Star classification:

• Specialty Solutions segment profit growth outlook raised to 12% to 13% for FY25.
• Acquisition of urology MSO Solaris Health announced.
• Q3 FY25 adjusted revenue growth of 20% in the core segment.
• Investment in oncology via Integrated Oncology Network acquisition for $1.12 billion.
• Long-term EPS CAGR target of 12% to 14% through FY28.

If Cardinal Health, Inc. can sustain this success as the specialty markets mature, these units are positioned to transition into Cash Cows, generating significant free cash flow without the same level of reinvestment required now. Finance: draft 13-week cash view by Friday.

Cardinal Health, Inc. (CAH) - BCG Matrix: Cash Cows

You're looking at the bedrock of Cardinal Health, Inc.'s financial engine, the segment that consistently funds the rest of the portfolio. This is the classic Cash Cow profile: high market share in a mature, necessary market.

The Pharmaceutical and Specialty Solutions segment is the core, representing the vast majority of Cardinal Health, Inc.'s top line. For Fiscal Year 2025, this segment generated $204.6 billion in revenue. This figure is a slight decrease of (3)% from the prior year's $210.0 billion, which reflects the known impact of a large customer contract expiration, but the underlying business strength remains clear. The segment profit, however, grew by 12% year-over-year to $2.3 billion in FY25, showing that operational discipline is improving profitability even with revenue headwinds. This segment profit growth is a key indicator of milking the cow effectively.

The market position here is dominant. Cardinal Health, Inc. is one of the Big Three distributors that collectively control over 90% of the US drug distribution market by revenue. This massive scale grants significant bargaining power across the supply chain. You see this stability reflected in the segment's consistent demand profile; essential drug distribution isn't cyclical, so it underpins the enterprise's financial stability year after year.

Here's a quick look at the segment's financial contribution for the full Fiscal Year 2025:

The performance of the generics program is a reliable source of positive impact on the Pharmaceutical segment profit. For instance, in the fourth quarter of FY25, segment profit increased by 11% to $535 million, driven in part by contributions from brand and specialty products, even while navigating the contract loss. This consistent earnings stream is exactly what you want from a Cash Cow.

The investments here are focused on efficiency, not massive market expansion, which is why the segment generates substantial cash flow. You can see the focus on efficiency translating into profit growth despite flat or declining revenue in certain periods. The company's overall Non-GAAP adjusted free cash flow for FY24 reached $3.9 billion, a direct benefit from the strong cash generation of this core business. Capital Expenditures for FY25 were guided between $500 million to $550 million, a relatively modest investment to maintain this high-share business.

The key drivers supporting the Cash Cow status include:

• Massive scale in branded and generic drug distribution.
• Segment profit growth of 12% in FY25, showing margin leverage.
• Market share dominance with peers exceeding 90% of the US market.
• Consistent earnings contribution from the generics program.

The company raised its FY25 non-GAAP diluted EPS guidance to $7.85 to $8.00 in its January 2025 update, a direct result of the reliable performance from this segment. This cash flow is what you use to fund the Question Marks and Stars, and service corporate needs. Finance: draft 13-week cash view by Friday.

Cardinal Health, Inc. (CAH) - BCG Matrix: Dogs

You're looking at the Global Medical Products and Distribution (GMPD) segment as a prime example of a Dog within the Cardinal Health, Inc. portfolio as of fiscal year 2025. This unit operates in a mature, low-growth environment with a relatively small footprint compared to the company's behemoth Pharma segment. The expectation for this segment's top-line performance reflects this stagnation; revenue growth was projected at only 2.4% for FY25.

The financial performance metrics clearly signal the cash-trap nature of this category. Persistent margin pressure, stemming from factors like manufacturing costs, ongoing supply chain complexities, and rising health & welfare costs, has kept profitability low. For FY25, the segment profit guidance reflected this constraint, landing in the low range of $130 million to $150 million.

Specific operational headwinds have further complicated the picture for GMPD. The WaveMark business, which provides inventory and analytics solutions, has been a source of unexpected costs. This is evidenced by the operational challenges that included a specific write-off of uncollectible receivables totaling $15 million during the second quarter of FY25, directly impacting segment profitability.

To put the market share disparity into perspective, you can see the sheer dominance of the Pharma segment, which leaves GMPD with a minimal slice of the overall revenue pie in a fragmented medical supplies market. This low market share is a defining characteristic of a Dog, tying up capital without generating significant returns.

Here's a quick look at the scale difference using the full fiscal year 2025 revenue figures:

The GMPD segment's low growth and profit profile suggest it requires careful management, as expensive turn-around plans are rarely justified for assets in this quadrant. The focus here is typically on minimizing cash consumption and maximizing divestiture value, if possible. The segment's recent profit performance illustrates the tight margins:

• GMPD Segment Profit (Q2 FY25): $18 million (before considering the WaveMark write-off).
• GMPD Segment Profit (Q4 FY25): $70 million.
• GMPD Long-Term Profit Growth Target (Post-FY26): $50M+ of profit growth per year.

The fact that the company has a specific, modest long-term profit growth target of $50M+ per year after fiscal 2026 for GMPD suggests a strategy of slow, managed improvement rather than aggressive investment, which is consistent with managing a Dog.

Cardinal Health, Inc. (CAH) - BCG Matrix: Question Marks

You're looking at the parts of Cardinal Health, Inc. that are burning cash now but have the potential to become major revenue drivers later. These are the Question Marks in the BCG framework: high market growth, but Cardinal Health, Inc. still holds a low share.

The focus here is squarely on the Other segment, which bundles together Nuclear and Precision Health Solutions (NPHS), at-Home Solutions, and OptiFreight Logistics. This collection of businesses is definitely capital-intensive, and securing future market leadership isn't a done deal yet.

The high-growth prospects are clear from the company's own projections. For fiscal year 2026, segment profit growth for this group is guided at 25% to 27%, yet this growth originates from what is still a relatively small revenue base compared to the core Pharmaceutical and Specialty Solutions segment. In fiscal year 2025, the entire Other Operating Segment represented just 2.42% of Cardinal Health, Inc.'s total revenue of $222.6 billion.

Here's a look at the components making up this high-growth, high-cash-consumption quadrant:

• The Other Operating Segment generated $5.38 billion in revenue in fiscal year 2025.
• In the fourth quarter of fiscal year 2025, the Other segment revenue saw a significant jump, increasing 37% year-over-year to $1.6 billion.
• The segment profit for the fourth quarter of fiscal year 2025 reached $160 million, marking a 44% increase from the prior year period.
• For the full fiscal year 2025, the Other segment revenue grew by 19%.

Nuclear and Precision Health Solutions (NPHS) is positioned as a key growth bet, centered on the emerging fields of theranostics and PET imaging. This area demands continued heavy investment to achieve necessary scale. The commitment to this space is evident in its performance:

The revenue growth for NPHS in the first quarter of fiscal year 2026 was particularly strong, showing a revenue jump of over 30% in that quarter alone.

at-Home Solutions, which includes the recent Advanced Diabetes Supply acquisition, represents a smaller but rapidly expanding play focused on the shift toward preferred sites of care. This area is clearly gaining traction, as shown by its revenue figures:

The strategy for these Question Marks is clear: you must either invest heavily to quickly capture market share and transition them into Stars, or divest if the potential isn't there. These businesses lose the company money in the short term due to the necessary investment, but their high growth trajectory suggests they could become Stars in a high-growth market.