Cardinal Health Q2 Earnings Call Highlights

Core Insights - Cardinal Health reported strong fiscal second-quarter 2026 results, with total revenue of $66 billion, up 19% year over year, driven by robust demand in Pharmaceutical and Specialty Solutions [3][4] - Operating earnings reached $877 million, a 38% increase from the prior year, while non-GAAP diluted EPS rose 36% to $2.63 [1][6] - The company raised its full-year earnings guidance, expecting non-GAAP diluted EPS to be between $10.15 and $10.35, indicating a year-over-year growth of 23% to 26% [17] Financial Performance - Gross margin dollars increased by 24% to $2.4 billion, attributed to a favorable mix, while SG&A expenses rose 16% to $1.5 billion [2] - The effective tax rate remained flat at 21.4%, with a lowered outlook for the effective tax rate to 21% to 23% for the full year [1][18] - Cardinal Health generated $1.8 billion in adjusted free cash flow year to date and ended the quarter with $2.8 billion in cash [19] Segment Performance - Pharmaceutical and Specialty Solutions revenue increased by 19% to $61 billion, with segment profit rising 29% to $687 million [6][7] - The Global Medical Products and Distribution (GMPD) segment saw revenue growth of 3% to $3.3 billion, with segment profit improving to $37 million from $18 million a year ago [10][11] - Other businesses, including Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight Logistics, reported revenue growth of 34% to $1.7 billion and segment profit growth of 52% to $179 million [13] Strategic Focus - Management emphasized that specialty remains a strategic priority, with expectations for specialty revenues to surpass $50 billion in fiscal 2026 [8][6] - The company is investing in its distribution footprint and technology, achieving a 10% improvement in service levels over the past two years [8] - Cardinal Health's M&A activities are expected to contribute about 8% to total growth in the pharmaceutical business for the full year [9] Guidance and Outlook - The company updated its revenue guidance for the Pharma segment, maintaining expectations while raising segment profit growth outlook to 20% to 22% [22] - GMPD revenue outlook was adjusted to 1% to 3% growth, with segment profit guidance raised to approximately $150 million [22] - Other businesses maintained revenue guidance at 26% to 28% growth, with segment profit growth outlook raised to 33% to 35% [22]