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]

Core Insights - Cardinal Health, Inc. reported first-quarter fiscal 2026 adjusted earnings per share (EPS) of $2.55, exceeding the Zacks Consensus Estimate of $2.21 by 15.4%, and showing a year-over-year improvement of 35.6% [1][8] - Total revenue for the quarter reached $64 billion, marking a 22% increase year over year and surpassing the Zacks Consensus Estimate by 8.4% [2][8] Revenue Details - Sales increased by 22% year over year to $64 billion, beating estimates [2] Segmental Analysis - **Pharmaceutical and Specialty Solutions**: Revenues rose 23% to $59.2 billion, driven by growth in branded and specialty pharmaceutical sales [3] - **Pharmaceutical Profit**: Totaled $667 million, up 26% from the previous year, supported by brand and specialty products [4] - **Global Medical Products and Distribution**: Revenues reached $3.2 billion, a 2% increase year over year, with profits rising from $8 million to $46 million [4] - **Other Segment**: Sales grew 38% to $1.6 billion, with profits increasing 60% to $166 million, driven by strong performance across its operating segments [5] Margin Analysis - Gross profit increased 22% year over year to $2.32 billion, with a gross margin of 3.6% [6] - Distribution, selling, general and administrative expenses rose 14% to $1.46 billion [6] - Operating income was $668 million, an 18% increase year over year, with adjusted operating income up 37.1% to $857 million [6] Financial Update - The company ended the quarter with cash and cash equivalents of $4.59 billion, up from $3.87 billion in the previous quarter [9] - Net cash provided by operating activities was $973 million, compared to $1.65 billion used in the same period last year [9] 2026 Outlook - Cardinal Health raised its fiscal 2026 earnings guidance, expecting adjusted EPS between $9.65 and $9.85, up from a prior outlook of $9.30-$9.50 [10] - Projected revenue growth for the Pharmaceutical segment is 11-13%, with segment profit expected to increase 16-19% [10][11] - Medical segment revenues are estimated to grow 2-4%, while the Other segment is expected to see revenue growth of 26-28% [11] Conclusion - The company reported strong first-quarter results, with broad-based profit growth across all segments, particularly in Pharmaceutical and Specialty Solutions [12] - The positive results led to a 10% increase in shares during pre-market trading, with a year-to-date gain of 39.1% compared to the industry’s 4.1% [13]

Core Viewpoint - Cardinal Health, Inc. is expected to report strong fourth-quarter fiscal 2025 results, driven by growth in the Pharmaceutical segment and recovery in the Medical segment, with adjusted EPS projected to increase by 10.3% year-over-year [1][2][8] Financial Performance - The company’s adjusted EPS for the last reported quarter was $2.35, exceeding the Zacks Consensus Estimate by 9.3%, with an average surprise of 10.3% over the last four quarters [1][2] - For the upcoming fourth quarter, the Zacks Consensus Estimate for revenues is $60.67 billion, reflecting a 1.3% increase from the prior year [7][8] Segment Analysis - The Pharmaceutical segment is anticipated to show robust performance, supported by strong volume trends in branded drugs and specialty physician practices, along with the expansion of the Outcomes platform [3][4] - The Medical segment is expected to continue its recovery, aided by improved global supply chain execution and stability in manufacturing, with modest sequential revenue growth anticipated [4][5] Cost Management - Operating discipline and cost-saving initiatives under the Medical Improvement Plan are expected to support margin stability, despite some offset from performance-based compensation and IT investments [5][6] Shareholder Value - Adjusted EPS is projected to benefit from segment-level profit growth, lower interest expenses, and share repurchases, with full-year adjusted EPS guidance maintained at $7.20-$7.35 [6][8] Market Performance - Cardinal Health's shares have gained 29.7% year-to-date, outperforming the Medical - Dental Supplies sector and the broader market [11][12] Valuation Metrics - The forward 12-month price-to-earnings (P/E) ratio for Cardinal Health is 16.5X, which is a premium compared to the industry average of 15.9X and its peers [16] Long-Term Initiatives - The company is investing in new distribution centers, including a facility in Fort Worth, TX, expected to enhance its distribution chain with advanced robotics and automation technologies [17][18]