Cardinal Health Inc (CAH)
Interest coverage
| Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 2,316,000 | 2,262,000 | 1,893,000 | 1,845,000 | 1,260,000 | 1,004,000 | 1,206,000 | 596,000 | 743,000 | 606,000 | -65,000 | -889,000 | -615,000 | -463,000 | 121,000 | 1,530,000 | 503,000 | 686,000 | 739,000 | 608,000 |
| Interest expense (ttm) | US$ in thousands | 215,000 | 154,000 | 116,000 | 89,000 | 71,000 | 85,000 | 77,000 | 94,000 | 105,000 | 117,000 | 127,000 | 139,000 | 154,000 | 159,000 | 166,000 | 175,000 | 180,000 | 185,000 | 200,000 | 217,000 |
| Interest coverage | 10.77 | 14.69 | 16.32 | 20.73 | 17.75 | 11.81 | 15.66 | 6.34 | 7.08 | 5.18 | -0.51 | -6.40 | -3.99 | -2.91 | 0.73 | 8.74 | 2.79 | 3.71 | 3.70 | 2.80 |
June 30, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $2,316,000K ÷ $215,000K
= 10.77
The analysis of Cardinal Health Inc.'s interest coverage ratio over the period from September 2020 through June 2025 reveals significant fluctuations, indicative of considerable financial variability.
Initially, during the third and fourth quarters of 2020 and into the first quarter of 2021, the interest coverage ratios ranged between approximately 2.80 and 3.71. These levels suggest that the company was generally able to cover its interest expenses with operating earnings, albeit with a modest margin of safety.
A notable spike occurred in the third quarter of 2021, where the ratio soared to 8.74, implying a period of markedly improved earnings relative to interest obligations. However, this was followed by a sharp decline in the fourth quarter of 2021, with the ratio dropping to 0.73, indicating a very tight coverage and raising concerns about the company's capacity to meet interest commitments solely from operating income.
The subsequent quarters saw further deterioration, with the ratio turning negative starting in the first quarter of 2022, at -2.91, and continuing downward to -6.40 by the third quarter of 2022. Negative ratios indicate that operating earnings were insufficient to cover interest expenses, suggesting potential financial distress or extraordinary accounting adjustments during this period.
Towards the end of 2022 and the first quarter of 2023, the interest coverage ratio recovered sharply to 5.18, signaling improved earnings capacity. This positive trend persisted into subsequent quarters, with ratios rising to 7.08, 6.34, and ultimately reaching 15.66 in December 2023, representing a significant strengthening in the company’s ability to meet its interest obligations.
Projections into 2024 and 2025 demonstrate a sustained positive trajectory, with ratios averaging around 10.77 to 17.75, indicative of robust operating earnings relative to interest expense. These values suggest a strong financial position, with the company comfortably covering its interest commitments during these periods.
In summary, Cardinal Health Inc.’s interest coverage ratio has experienced considerable volatility over the analyzed period. Despite periods of financial strain and negative coverage, recent and projected ratios demonstrate a pattern of recovery and strengthening, reflecting an improved capacity to service interest obligations with operating income in the foreseeable future.
Peer comparison
Jun 30, 2025