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Cardinal Health is showing signs of recovery following a tough earnings decline, with CEO Jason Hollar crediting “ruthless prioritization” as the lever for transformation, while praising staff for their level of engagement in the process.
The healthcare giant, which provides products and solutions to over 90% of US hospitals, saw its operating earnings fall by $300m just three years ago.
“This concept of relentless simplification and ruthless prioritization was the cornerstone of the change management and the strategy,” Hollar said. “And I use the word ruthless for a very particular reason, to put a little bit of an edge to it, because I didn’t want people just to reprioritize everything they’re doing. I wanted them to stop doing certain things.”
Hollar took over as CEO in late 2022, and on his first day, he put in motion a game plan that included slashing business segments and slimming down the organization. Cardinal Health’s non-GAAP operating earnings dropped 12% between 2021 and 2022, falling from $2.3billion to $2billion. Non-GAAP net earnings declined 13%, from $1.6 billion to $1.4 billion in the same period.
By Q3 of fiscal 2025, operating earnings had rebounded to $807 million. Hollar credited the company’s embrace of tough changes. “[Cardinal Health] is a great place to work. But [employees] were getting frustrated as well that we weren’t succeeding,” he said. “It’s great to be with a great group of people, but people want to win, and we weren’t winning as much as we could have.”
Slimmed-down strategy yields faster gains
Hollar first joined the firm as CFO during COVID, a time marked by disruption and product liability challenges, including opioids. Upon stepping into the CEO role, he exited product lines, withdrew from a “significant number” of countries, and sold off the non-healthcare portfolio.
“There were a lot of changes done in a pretty short period of time,” Hollar told Fortune. “I saw that some poor decisions on capital deployment was a primary driver of some of those operating challenges. So I believed if we did fewer things, [if] we simplified the operations in the organization, and then took those resources and reprioritized it to the faster-growing parts of the industry in the business, that we could be a lot more successful.”
The company’s Medical segment also underwent a major overhaul. The unit had lost $16million in a single quarter before Hollar's intervention. In addition to ramping up capital expenditures and SG&A on specialty growth initiatives, Hollar held off on M&A for 18 months. The company later acquired Specialty Networks in 2024 for $1.2billion.
Leadership shake-up supports accountability culture
Employee engagement was part of the strategic reset. “I told the team, ‘There’s one value we don’t show up with every single day, and that’s accountability. That’s the one we have to work on,’” Hollar said. “We’re not going to change the values, we’re not going to change our mission and vision. What we need to do is we actually just need to live up to them.”
He restructured the leadership team, removing two executive roles while adding three new ones.
“These are a lot more than happy words, these are our actual actions, that we’re going to put resources behind the strategy that I laid out,” he said. “Ultimately that led to $5billion of M&A that we’ve done over just the last 18 months.”
