Cardinal Health Implements Layoffs to Mitigate Tariff Impact

Cardinal Health, a major player in the pharmaceutical and medical products industry, has announced significant employee layoffs as part of its strategy to offset the financial impact of recent tariff policies. The company expects to face tariff-related costs ranging from $200 million to $300 million in its fiscal year 2026, prompting aggressive mitigation efforts across its operations.

Tariff Mitigation Strategies and Financial Outlook

Cardinal Health CEO Jason Hollar revealed that the company has already implemented several measures to counteract the tariff charges. These include:

• Increasing manufacturing capabilities
• Diversifying suppliers away from high-risk jurisdictions
• Deploying artificial intelligence in tariff planning and compliance
• Reducing headcount

Despite these efforts, Cardinal Health still anticipates a substantial financial hit. Hollar stated, "Based on today's tariffs, we would still anticipate roughly $200 million to $300 million of remaining gross tariff costs in fiscal '26, before further mitigation." The company plans to mitigate the majority of these costs through continued operational actions and price adjustments, which are already being discussed with customers.

Industry-Wide Impact of Tariffs

Cardinal Health is not alone in facing tariff-related challenges. Other healthcare companies, including Johnson & Johnson, Abbott, Boston Scientific, and Stryker, have also forecast hundreds of millions of dollars in charges due to recent tariff policies. While some companies have maintained or raised their guidance, others like Stryker and GE Healthcare have lowered their earnings outlooks.

CFO Aaron Alt expressed confidence in the company's ability to navigate changes in the healthcare industry, including potential industrywide tariffs resulting from the Trump administration's pharmaceuticals investigation. Alt noted that while there will be some impact in the company's fiscal fourth quarter from earlier tariffs between the U.S., Mexico, and Canada, "most of that early impact will be offset in the quarter, or will be recognized in future periods when the related product is sold."

Financial Performance and Future Outlook

Despite the tariff challenges, Cardinal Health reported stable financial performance, with total revenue of nearly $55 billion, remaining flat year over year. The company's pharmaceutical and specialty solutions segment generated $50.4 billion in revenue, while the global medical products and distribution business contributed $3.2 billion.

Cardinal Health plans to hold an investor day on June 12 to discuss its business in more detail. CEO Hollar emphasized the company's adaptability in the face of evolving tariff situations, stating, "As everything evolves, we've got a great process and model set up to be able to manage this [in] real time."