Cardinal Health's Earnings Soar 260% After CEO's Turnaround Strategy

Cardinal Health, a leading healthcare giant in America, faced a significant downturn when its operating earnings plummeted by $300 million just three years ago. The company, which supplies medical products and data solutions to over 90% of U.S. hospitals, required a drastic turnaround strategy under the leadership of its new CEO, Jason Hollar. Hollar, who took over in late 2022, implemented a strategy of "ruthless prioritization" to revive the company's fortunes. This approach involved slashing business segments, streamlining operations, and focusing on core strengths, all of which were met with unexpected support from the workforce.

Hollar's strategy was centered on "relentless simplification and ruthless prioritization," a concept he believed was crucial for the company's turnaround. He emphasized the need to stop certain activities rather than just reprioritizing them. This approach was necessary because some segments were costing the company hundreds of millions of dollars annually. Before Hollar's tenure, Cardinal Health's non-GAAP operating earnings fell 12% from $2.3 billion in 2021 to $2 billion in 2022, while non-GAAP net earnings dropped 13% from $1.6 billion to $1.4 billion in the same period. Hollar's plan included exiting product lines, pulling out of several countries, and selling off non-healthcare portfolios. These actions were aimed at simplifying operations and redirecting resources to faster-growing parts of the industry.

Hollar's first days in office were marked by significant changes. He exited product lines, pulled Cardinal Health out of a "significant number" of countries, and sold off its non-healthcare portfolio. He also increased capital expenditures and selling, general, and administrative expenses in specialty growth initiatives. The Medical segment, which manufactures surgical and laboratory products, was particularly in need of a revamp, having lost $16 million in just one quarter before Hollar took over. Despite these challenges, Hollar's strategy proved effective, with the company's operating earnings for Q3 of the 2025 fiscal year hitting $730 million.

Hollar's approach was not just about technical changes; it also involved a cultural shift. He acknowledged that while employees were happy to work at Cardinal Health, they were frustrated by the company's lack of success. Hollar's message to the team was clear: accountability was the missing value that needed to be addressed. He restructured the business, separating three of his eight direct reports and eliminating two roles entirely, while adding three new direct reports. This restructuring demonstrated his commitment to the turnaround strategy and led to $5 billion in M&A activities over the past 18 months.

Hollar's "ruthless" approach was met with support from the workforce, who were eager for a change. He believed that people inherently want to win, and by focusing on accountability and simplifying operations, he was able to align the company's goals with the aspirations of its employees. This alignment has led to improved service levels, productivity, efficiency, and safety and quality standards across the board. Hollar's philosophy is that all processes must be deeply rooted in success, or none of them will be effective.