The $65.6 Billion Secret Wall Street Doesn’t Want You to Know About Cardinal Health

Core Insights - Cardinal Health reported a strong second-quarter performance with non-GAAP EPS of $2.63, exceeding the consensus estimate of $2.38 by 10.5% [2] - Revenue increased by 19% year-over-year to $65.63 billion, surpassing the estimate of $64.79 billion [2] - The company's shares rose 8% over the past week, significantly outperforming the S&P 500's 23% decline during the same period [2] Segment Performance - All five operating segments of Cardinal Health achieved double-digit profit growth [3] - The Pharmaceutical and Specialty Solutions segment, the largest, generated $60.7 billion in revenue, reflecting a 19% increase driven by brand and specialty pharmaceutical demand [3] - Global Medical Products and Distribution revenue rose 3% to $3.26 billion, with segment profit more than doubling to $37 million, a 106% year-over-year increase [3] Financial Metrics - Non-GAAP operating earnings increased by 38% to $877 million [4] - Operating cash flow improved to $686 million from a $396 million outflow in the prior-year quarter [4][8] Guidance and Outlook - Management raised the full-year fiscal 2026 non-GAAP EPS guidance to $10.15 to $10.35, indicating a growth of 23% to 26% [5] - The Pharma segment profit growth outlook was increased to 20% to 22% from the previous 16% to 19% [5] - Guidance for the GMPD segment profit was raised to approximately $150 million from $140 million [5] Capital Allocation - Cardinal Health completed a $750 million annual baseline share repurchase and achieved a targeted leverage ratio of 3.2x [6] - The company declared a quarterly dividend of $0.52 and is expanding through acquisitions, including Solaris Health, a leading urology MSO with over 750 providers [6] - The stock trades at a forward P/E of 22x, with analyst price targets averaging $234, reflecting a modest premium to growth expectations despite an 81% gain over the past year [6]