Cardinal Health, Inc.

What they do

Cardinal Health distributes branded, generic, specialty pharmaceutical and over-the-counter products in the United States through its Pharmaceutical and Specialty Solutions segment, and provides medical products and distribution through its Global Medical Products and Distribution segment. It serves hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices and patients in the home. Other operations include Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight Logistics.

Revenue drivers

• Pharmaceutical and Specialty Solutions (Pharma) — The largest segment by far, with fiscal 2026 revenue of $234.8 billion, up 15%, and segment profit of $2.8 billion, up 23%. It distributes pharmaceuticals and specialty products and provides services to manufacturers and healthcare providers.
• Global Medical Products and Distribution (GMPD) — One of two reportable segments; in Q4 FY26 it recorded a one-time net operating profit impact of $100 million from IEEPA tariff refunds.
• Other (Nuclear and Precision Health Solutions, at-Home Solutions, OptiFreight Logistics) — Non-reportable operating segments grouped in Other, which do not individually require separate reportable segment disclosure.

Recent performance

Fourth quarter fiscal 2026 revenue rose 6% to $63.7 billion and GAAP diluted EPS rose 70% to $1.70. Non-GAAP diluted EPS increased 40% to $2.91, including a one-time positive impact of $0.31 from IEEPA tariff refund recognition; excluding that, non-GAAP EPS rose 25% to $2.60. For the full fiscal year, revenue rose 14% to $254.2 billion, GAAP diluted EPS was $7.23, and non-GAAP diluted EPS rose 37% to $11.26. Operating cash flow was $5.2 billion and adjusted free cash flow was $5.0 billion for fiscal 2026. Segment profit grew double-digits across all five operating segments.

Strategy

Management highlighted broad-based operational strength, with all five operating segments growing profit double-digits even before the IEEPA tariff recoveries in GMPD. The company completed an incremental $350 million share repurchase, bringing fiscal 2026 repurchases to $1.4 billion, and the board approved $5.0 billion in incremental repurchase authorization. Cardinal Health provided fiscal 2027 non-GAAP EPS guidance of 13% to 15% growth, or $12.40 to $12.60. CEO Jason Hollar cited disciplined execution of the strategy and investments for growth, and expressed confidence in continued shareholder value creation.

Risks

• Negative shareholder equity — Shareholder equity was negative $2.88 billion as of June 30, 2026, reflecting an accumulated deficit and large capital returns relative to retained earnings.
• Thin distribution margins — The Pharma segment generated $2.8 billion of segment profit on $234.8 billion of fiscal 2026 revenue, leaving limited cushion for pricing or cost pressure.
• One-time earnings items — Fiscal 2026 results included a one-time net operating profit benefit of $100 million from IEEPA tariff refunds in GMPD, which is not expected to recur in the same form.
• Debt and interest expense — The earnings release cited an increase in interest and other expense as a partial offset to earnings growth, and the latest balance sheet shows $2.50 billion of long-term debt.

Outlook

Cardinal Health guided fiscal 2027 non-GAAP diluted EPS to $12.40 to $12.60, representing 13% to 15% growth, which management described as above its long-term EPS guidance. The guidance follows a fiscal 2026 in which non-GAAP operating earnings grew 30% to $3.6 billion and adjusted free cash flow was $5.0 billion. Management said the company enters fiscal 2027 with momentum, supported by profit growth across all five operating segments and a $5.0 billion incremental share repurchase authorization.