Cardinal Health may raise prices to offset potential tariffs (updated)

McKesson

30/01/2025 19:12

(Rewrites throughout to include CEO comments on tariffs)
    By Christy Santhosh and Kamal  Choudhury
       Jan 30 (Reuters) - Drug distributor Cardinal Health
 CAH.N  said on Thursday it may need to increase prices of some
of its products if the proposed tariffs on Mexico go into
effect, to counter increasing costs of manufacturing in the
region. 
        Redirecting production from Mexico is difficult as the
cost of production is "pretty low cost" CEO Jason Hollar told
Reuters in an interview. 
  
        Mexico, along with China and Canada, has been 
    threatened
     with tariffs by U.S. President Donald Trump 
    unless the countries
     move to halt flows of illegal immigrants and the deadly
opioid fentanyl into the U.S. 
  
        "If there are widespread tariffs anywhere from the 10%
to 25% range, I anticipate there will be corresponding price
increases for the customers," said Hollar. 
  
        Cardinal said it might move production away from China,
where it has limited supply chain exposure but is also expected
to be affected by tariffs, to Southeast Asia.
  
        The company said it was closely monitoring the "highly
fluid tariff environment" but did not specify if potential
tariff impacts had been factored into its fiscal 2025 forecast.
  
        Earlier in the day, the Dublin, Ohio-based Cardinal said
it expected an adjusted profit of $7.85-$8.00 per share, banking
on strong demand for costly specialty medicines and branded
drugs in its pharmaceuticals unit.
  
        Cardinal had previously forecast a profit of $7.75 to
$7.90 per share for fiscal year 2025 ending in June 30. Analysts
were expecting a profit of $7.86 per share, according to LSEG
data.
  
    On an adjusted basis, Cardinal Health reported a profit of
$1.93 per share in the second-quarter, beating analysts'
estimates of $1.76 per share, according to LSEG data.

 (Reporting by Kamal Choudhury and Christy Santhosh in
Bengaluru; Editing by Tasim Zahid)
 ((Kamal.Choudhury@thomsonreuters.com;))