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    CAH
    Earnings call· Sep 2025(Q1 FY26)

    CARDINAL HEALTH INC CAH

    Oct 30, 2025 Source

    Executive summary

    Cardinal Health Q1 FY26 — Strong Start with Raised FY26 EPS Guidance

    Cardinal Health delivered a strong Q1 FY26, exceeding expectations with broad-based operating momentum and double-digit profit growth across all segments. The company raised its full-year EPS and free cash flow guidance, reflecting robust demand, strategic acquisitions like Solaris Health, and effective integration of prior deals. Investments in MSO platforms, distribution networks, and growth businesses are driving sustainable value creation.

    Highlights

    5

    • Operating earnings grew 37% in Q1 FY26.

    • EPS grew 36% to $2.55 in Q1 FY26.

    • Pharma segment profit increased 26% to $667 million in Q1 FY26.

    • "Other" segment profit increased 60% to $166 million in Q1 FY26.

    • FY26 EPS guidance raised by $0.35 to a range of $9.65 to $9.85.

    Concerns

    3

    • Net tariff costs are anticipated near the high end of the $50 million to $75 million range for FY26.

    • Q1 interest and other increased by $43 million to $70 million due to financing costs related to acquisitions.

    • COVID vaccine distribution was a slight year-over-year headwind in Q1 for the Pharma segment, with a similar headwind expected in Q2.

    Guidance & targets

    15
    CategoryTargetConfidence
    Full-year EPS
    $9.65 to $9.85
    high materiality
    High
    Full-year Adjusted Free Cash Flow
    $3 billion to $3.5 billion
    high materiality
    High
    Pharma Revenue Growth
    15% to 17%
    high materiality
    High
    Pharma Segment Profit Growth
    16% to 19%
    high materiality
    High
    GMPD Revenue Growth
    2% to 4%
    medium materiality
    High
    GMPD Segment Profit
    at least $140 million
    medium materiality
    High
    Other Revenue Growth
    26% to 28%
    medium materiality
    High
    Other Segment Profit Growth
    29% to 31%
    medium materiality
    High
    Interest and Other Expense
    approximately $325 million
    medium materiality
    High
    Capital Expenditure
    $600 million to $650 million
    medium materiality
    High
    Diluted Weighted Average Shares
    approximately 238 million shares
    low materiality
    High
    Solaris Health EPS Accretion
    about $0.05
    medium materiality
    High
    BioPharma Solutions Growth
    over 30%
    medium materiality
    High
    GMPD Q2 Profit Growth
    do not expect to see year-over-year profit growth
    medium materiality
    High
    GMPD Q4 Profit
    highest profit dollar quarter
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Pharmaceutical and Specialty Solutions
    Driven by Brand and Specialty Pharmaceutical sales growth from existing and new customers, MSO platforms, and positive generic program performance. Strong demand across Brand, Specialty, Generics, and Consumer Health. COVID vaccine distribution was a slight year-over-year headwind in Q1.
    GLP-1 sales contribution to revenue growth: ~6 percentage pointsION and GIA contribution to segment profit growth: ~8 percentage pointsSame-store generic unit growth: healthy, above long-term expectationsBioPharma Solutions growth: expected over 30% in FY26
    		$59 billion23%—$667 million
    GMPD
    Driven by volume growth from existing customers. The team remains highly focused on mitigating the impact of tariffs and controlling costs. Net tariffs produced a slight net headwind during Q1.
    Cardinal Health brand revenue growth in U.S.: >6%
    		$3.2 billion2%—$46 million
    Other
    Reflects strong demand across all three businesses and successful integration of ADS. Integration of ADS into at-Home Solutions is progressing well with earlier realization of planned synergies.
    At-Home Solutions revenue growth (inclusive of ADS): 51%Nuclear and Precision Health Solutions revenue growth: 17%Theranostics revenue growth: >30%OptiFreight Logistics revenue growth: >20%
    		$1.6 billion38%—$166 million

    Operational metrics

    15
    Operating Earnings Growth
    37%YoY
    Q1 FY26

    Overall company operating earnings growth.

    Interest and Other Expense
    $70 millionincreased by $43 million
    Q1 FY26

    Due to financing costs related to announced acquisitions.

    Effective Tax Rate
    21.9%100 basis points better than a year ago
    Q1 FY26

    Due to the timing of discrete items.

    Diluted Shares Outstanding
    239 million shares2% lower than last year
    Q1 FY26 average

    Due to share repurchases.

    Investments into Business
    $110 million
    Q1 FY26

    Invested to fuel future growth.

    Bond Maturity Retired
    $500 million
    September

    Bond maturity retired in September.

    Shareholder Returns
    $500 million
    Q1 FY26

    Returned to shareholders.

    Baseline Share Repurchases
    $750 millionhalf completed
    FY26

    Total baseline share repurchases for fiscal year '26.

    Cash Position
    $4.6 billion
    end of Q1 FY26

    Ended the quarter with this cash position.

    SG&A Growth
    14%YoY
    Q1 FY26

    Excluding ION, GIA, and ADS acquisitions, SG&A growth was more modest.

    New Customer Revenue
    $7 billion
    FY26

    Incremental new customer revenue, primarily in the first half of the year.

    Network Capacity Increase
    20%
    ongoing

    Additional overall network capacity created by the new Consumer Health Logistics Center.

    MSO Platforms Providers
    approximately 3,000
    upon closing of Solaris

    Number of specialty providers served by MSO platforms upon closing of Solaris Health acquisition.

    PET Network Expansion Investment
    $150 million
    next 3 years

    Investment to expand PET network and theranostics advancement.

    ADS Volume Integration
    majority
    Q1 FY26

    Majority of ADS volume moved into Cardinal Health's network with minimal utilization of capacity.

    Industry KPIs

    4
    MetricValueDetails
    Utilization trendsstrong
    Pharmacy scripts specialtyhealthy
    Segment revenue operating income$46 millionUSD
    Adjusted EPS EBITDA leverage guidance$9.65 to $9.85USD

    Product announcements

    4
    ProductTypeDetails
    Consumer Health Logistics Centerlaunch
    Flagship Forward Distribution Center (Indianapolis)roadmap
    Distribution Center (Fort Worth, Texas)launch
    Distribution Center (Sacramento, California)roadmap

    Deals & partnerships

    1
    Solaris HealthAcquisition of the country's largest urology MSO with over 750 providers.

    Will add capabilities to the Specialty Alliance, Cardinal Health's multi-specialty platform. Partially funded by $1 billion raised from August bond issuance.

    Risks & headwinds

    3
    Tariff CostsFY26, with a step-up in Q2

    net tariff costs anticipated near the high end of $50 million to $75 million range

    Mitigation: GMPD team remains highly focused on mitigating the impact of tariffs and continues to take aggressive actions to control costs across the business, including various sourcing initiatives.

    COVID Vaccine Distribution HeadwindQ1 FY26 and Q2 FY26

    slight year-over-year headwind

    Increased Interest ExpenseQ1 FY26

    interest and other increased by $43 million to $70 million

    What to watch in Q2 FY26

    5

    GMPD Q2 Profit Growth

    Q2 FY26
    CurrentQ1 segment profit increased $38M to $46M
    TargetNot expecting year-over-year profit growth in Q2

    Why it matters

    This indicates the impact of tariff costs on GMPD profitability and is a key factor in the segment's annual guidance.

    Looking at GMPD second quarter, while we project the business will continue its profitability, we do not expect to see year-over-year profit growth in the quarter, as we realize a larger portion of the tariff costs incurred in previous quarters.

    Q&A highlights

    7

    How should we think about the broader momentum for Pharma and Specialty Solutions, what drove the Q1 upside, and the M&A contribution to guidance, specifically Solaris?

    The strong Q1 performance is a continuation of momentum, driven by stronger-than-expected demand in specialty (autoimmune, urology, oncology) and BioPharma Solutions. Generics also performed well with volume above expectations. M&A (ION, GIA) contributed 8 percentage points to Pharma profit growth, with Solaris expected to add 3 percentage points of that for FY26. H1 is expected to be stronger than H2 due to new customer wins.

    “The specialty business in Q1 was trending above historical levers and was a strong performer for us, particularly in our areas of strength, autoimmune, urology, oncology.”

    asked by Erin Wilson Wright · answered by Aaron Alt

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Growth Initiatives

    Cardinal Health is executing on strategic priorities, including expanding specialty solutions through MSO platforms and BioPharma Solutions. The acquisition of Solaris Health, the country's largest urology MSO with over 750 providers, is expected to accelerate this growth, adding significant scale and reach to the Specialty Alliance platform. The company aims to serve approximately 3,000 specialty providers across 32 states upon Solaris' closing, with integration efforts underway to create synergies.

    02

    Operational Excellence and Investments

    The company is making substantial investments in its distribution network to enhance capacity, efficiency, and service levels. This includes the opening of a new state-of-the-art consumer health logistics center, which adds 20% to overall network capacity, and plans for a new 230,000 square foot flagship forward distribution center in Indianapolis. These investments support strong double-digit growth and faster, more accurate product movement for customers.

    03

    Performance of Growth Businesses

    The 'Other' segment, comprising at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics, demonstrated strong performance. At-Home Solutions is benefiting from successful ADS integration and planned synergies, with the majority of ADS volume already moved into Cardinal Health's network. Nuclear and Precision Health Solutions is driven by over 30% revenue growth in Theranostics, while OptiFreight Logistics continues to see volume uplift and over 20% revenue growth.

    04

    GMPD Improvement and Tariff Management

    The GMPD segment delivered strong Q1 results, with revenue up 2% and segment profit increasing by $38 million to $46 million. This was driven by volume growth from existing customers and over 6% revenue growth in Cardinal Health branded products in the U.S. The team remains focused on mitigating tariff impact🌐s, which are anticipated near the high end of the $50 million to $75 million range for FY26, and controlling costs across the business.

    05

    Capital Allocation and Shareholder Returns

    Cardinal Health generated $1.3 billion in adjusted free cash flow during Q1 FY26, consistent with its disciplined capital allocation approach. The company invested $110 million back into the business, retired a $500 million bond maturity, and returned $500 million to shareholders through $125 million in dividends and a $375 million accelerated share repurchase program, completing half of its $750 million baseline share repurchases for FY26.

    06

    Market Dynamics and Policy Alignment

    Management noted broad-based positive industry utilization trends, driven by demographics and pharmaceutical innovation across branded, specialty, and generics. The company aligns with the administration's intent to ensure access to affordable, innovative healthcare, viewing policy changes aimed at these objectives as potentially neutral to positive by driving appropriate utilization, though the exact impact remains to be seen💬.

    AI-generated summary of the company’s earnings call. Not investment advice.