Cardinal Health, Inc. (CAH): history, ownership, mission, how it works & makes money

A Brief History of Cardinal Health, Inc. (CAH)

Founding and Early Years

Cardinal Health, Inc. was founded in 1971 as Cardinal Foods by a group of entrepreneurs, including Robert D. Walter, in Dublin, Ohio. Initially, the company focused on distributing pharmaceutical products. In 1983, it underwent a significant transformation by changing its name to Cardinal Health and expanding its services.

Growth and Expansion

In the 1990s, Cardinal Health grew rapidly through strategic acquisitions, including the purchase of the pharmaceutical wholesaler, C. R. Bard, for $1.1 billion in 1997. By 1999, the company was ranked among the top pharmaceutical distributors in the United States.

Public Offering

Cardinal Health went public in 1983, and its shares were listed on the New York Stock Exchange under the symbol CAH. The company raised approximately $43 million in its initial public offering (IPO).

Acquisition of Healthcare Companies

In 2001, Cardinal Health strengthened its market position by acquiring the healthcare services company, VHA Inc., for $1.8 billion. This acquisition allowed for a greater reach into healthcare management.

Launch of Medical Segment

In 2004, Cardinal Health launched its medical segment, expanding its portfolio to include medical and surgical supplies. This strategic shift contributed to the company generating over $80 billion in revenue in fiscal year 2007.

Spin-off of Clinical and Medical Products

In 2016, Cardinal Health announced the spin-off of its medical products segment, resulting in the creation of a new company named Avanos Medical, Inc. The move allowed Cardinal Health to focus more on its core pharmaceutical distribution business.

Recent Financial Performance

For the fiscal year ended June 30, 2022, Cardinal Health reported revenues of $181.4 billion, with a net income of $1.7 billion. The company continues to maintain a significant presence in the pharmaceutical distribution landscape.

Recent Acquisitions

In 2021, Cardinal Health acquired the pharmaceutical company, eCatalyst Healthcare Solutions, enhancing its ability to provide pharmacy solutions. The transaction was valued at approximately $1.6 billion.

Market Position and Financial Metrics

Strategic Initiatives

Cardinal Health has focused on several key strategic initiatives, including enhancing supply chain management and investing in technology to improve efficiencies. In 2022, the company allocated $500 million towards technology and innovation to streamline operations and improve healthcare delivery.

Future Outlook

Looking forward, Cardinal Health aims to expand its presence in both the pharmaceutical and medical segments, with plans to target emerging markets and increase service offerings. The company projects a compound annual growth rate (CAGR) of approximately 6% through 2025.

A Who Owns Cardinal Health, Inc. (CAH)

Major Shareholders

As of June 30, 2024, Cardinal Health, Inc. (CAH) has approximately 327 million common shares outstanding. The ownership of the company is composed of institutional investors, mutual funds, and executive shareholders. Below is a detailed representation of the major shareholders:

Key Institutional Investors

Some of the largest institutional investors in Cardinal Health include:

• Vanguard Group, Inc. – 12% ownership
• BlackRock, Inc. – 8% ownership
• State Street Corporation – 7% ownership
• Fidelity Investments – 6% ownership
• Invesco Ltd. – 3% ownership

Executive Compensation and Shareholding

Key executives hold significant shares in Cardinal Health, aligning their interests with those of shareholders. The following table illustrates the executive ownership:

Recent Changes in Ownership

In fiscal years 2022 through 2024, Cardinal Health repurchased a significant number of shares. The following summarizes the repurchase activities:

Shareholder Rights

Holders of Cardinal Health's common shares are entitled to:

• One vote per share for Class A shareholders.
• One-fifth of a vote per share for Class B shareholders.
• Participation in dividends as declared by the Board of Directors.
• Equitable participation in asset distribution upon liquidation.

Market Presence

At the end of June 2024, Cardinal Health maintained a strong market presence with over 6,238 shareholders of record. The company's shares are actively traded on the New York Stock Exchange under the ticker symbol "CAH."

Cardinal Health continues to foster shareholder engagement through quarterly cash dividends, subject to Board discretion based on financial performance.

Cardinal Health, Inc. (CAH) Mission Statement

Overview of Mission Statement

Cardinal Health, Inc. articulates its mission as providing effective and efficient solutions to healthcare providers, enabling them to deliver quality care to patients. The company positions itself as a key partner in the healthcare ecosystem.

Core Values

The mission is underpinned by several core values:

• Integrity: Committing to honesty and adherence to ethical practices.
• Customer Focus: Prioritizing the needs and satisfaction of healthcare providers.
• Innovation: Seeking out and implementing advancements to improve healthcare outcomes.
• Accountability: Taking responsibility for actions and commitments.

Business Segments

Cardinal Health operates primarily through two key business segments:

• Pharmaceutical Distribution: This segment involves the distribution of pharmaceuticals, with revenues amounting to approximately $153 billion in fiscal year 2023.
• Medical Segment: This includes the manufacturing and distribution of medical and surgical products, generating approximately $19.4 billion in revenue in the same fiscal year.

Financial Performance

Strategic Priorities

Cardinal Health emphasizes several strategic priorities aligned with its mission:

• Enhancing Supply Chain Efficiency: Focus on optimizing logistics to ensure timely delivery of healthcare products.
• Investing in Technology: Implementation of digital solutions and data analytics to enhance service offerings.
• Expanding Product Portfolio: Innovating and diversifying product lines to meet emerging healthcare needs.

Commitment to Sustainability

The company is dedicated to sustainability practices across its operations. Cardinal Health aims for:

• Reducing Carbon Footprint: Target to reduce GHG emissions by 20% by 2030.
• Waste Reduction: Initiatives in place for minimizing waste across supply chains.
• Product Stewardship: Ensures responsible lifecycle impact of products.

Community Engagement

As part of its mission, Cardinal Health actively engages in community initiatives:

• Health Access Initiatives: Programs designed to improve access to healthcare services, contributing over $35 million in donations.
• Employee Volunteering: Encouraging employees to participate in local community services.

Future Outlook

Looking forward, Cardinal Health aims to adapt to challenges in the healthcare landscape, including:

• Regulatory Changes: Navigating evolving healthcare regulations to maintain compliance and operational efficiency.
• Market Expansion: Exploring growth opportunities in international markets and emerging healthcare technologies.
• Partnerships and Collaborations: Building strategic alliances across the healthcare sector.

How Cardinal Health, Inc. (CAH) Works

Business Segments

Cardinal Health operates primarily through two segments: Pharmaceutical Distribution and Medical Segment.

Pharmaceutical Distribution

This segment is responsible for distributing pharmaceutical products and provides a wide range of services to healthcare organizations.

• For the fiscal year 2022, revenue from the Pharmaceutical segment was approximately $162.4 billion.
• Sells to approximately 35,000 healthcare facilities and 26,000 retail pharmacies.

Medical Segment

The Medical segment focuses on the distribution of medical products. This includes surgical and medical supplies, as well as other health-related products and services.

• The revenue for the Medical segment in fiscal 2022 was roughly $18.9 billion.
• Supplies products to over 100,000 locations, including hospitals and outpatient facilities.

Operational Structure

Cardinal Health operates a vast distribution network supported by numerous facilities.

• The company has approximately 50 distribution centers across the United States.
• Employs over 49,000 people globally.

Supply Chain Management

Strong supply chain management is critical for Cardinal Health's operations.

• The company utilizes advanced technology and analytics to optimize inventory management.
• In 2022, Cardinal Health reported reducing supply chain costs by 15% through improved operational efficiencies.

Financial Performance

Cardinal Health's financial health is assessed through various key metrics.

Growth Strategy

Cardinal Health's growth strategy includes both organic and inorganic approaches.

• Investment in technology and automation to improve distribution efficiency.
• Acquisitions to enhance product offerings; recent acquisition of Navitus Health Solutions for approximately $1.2 billion.

Market Position

As of 2023, Cardinal Health is positioned as one of the largest healthcare services companies in the world.

• Ranked 14th on the Fortune 500 list with significant market share in pharmaceutical distribution.
• Achieved a top-three position in the US medical distribution market.

Conclusion

Cardinal Health’s comprehensive distribution network and diverse service offerings enable it to maintain a strong presence in the healthcare industry. Continuous improvements in operational efficiencies and strategic acquisitions will likely play a key role in its ongoing growth.

How Cardinal Health, Inc. (CAH) Makes Money

Business Overview

Cardinal Health, Inc. operates primarily in two segments: Pharmaceutical and Specialty Solutions and Global Medical Products and Distribution (GMPD). The Pharmaceutical and Specialty Solutions segment focuses on the distribution of pharmaceuticals, including branded and generic products, while GMPD is involved in manufacturing and distribution of medical and surgical products.

Revenue Streams

The company's revenue is generated through several key segments and lines of business highlighted below.

Cost Structure

Cardinal Health's cost structure includes several components such as cost of goods sold (COGS), selling, general and administrative expenses, and liabilities.

Operating Profit and Earnings

Cardinal Health reported operating earnings reflecting significant increases year-over-year.

Market Trends and Strategic Initiatives

Cardinal Health has proactively engaged in strategic growth initiatives including expanding their generics program and enhancing supply chain efficiency. The implementation of price increases and commercial contracting strategies has been pivotal in navigating inflationary pressures.

Challenges and Opportunities

Challenges include managing the effects of inflation on profit margins, particularly within the GMPD segment, where commodities and transportation costs significantly impact profitability. However, opportunities for growth persist in the specialty pharmaceuticals sector and through robust market demand for healthcare products.

Recent Financial Highlights

For fiscal year 2024, Cardinal Health saw a notable improvement in net earnings.

Cash Flow Management

In terms of cash flow, Cardinal Health reported a strong balance of cash and equivalents of $5.1 billion as of June 30, 2024. This reflects a net cash provided by operating activities of $3.8 billion for the fiscal year, allowing for strategic investments and shareholder returns.