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    CAH
    Earnings call· Dec 2025(Q2 FY26)

    CARDINAL HEALTH Q2 FY26 earnings call CAH

    Feb 5, 2026 Source

    Executive summary

    Cardinal Health Q2 FY26 — Strong Profit Growth Across All Segments and Raised Outlook

    Cardinal Health delivered a strong Q2 FY26, marked by double-digit profit growth across all five operating segments, driven by robust demand in Pharmaceutical and Specialty Solutions and significant contributions from Other Growth Businesses. The company raised its full-year EPS guidance, reflecting confidence in continued momentum and strategic execution, particularly in specialty expansion and core business optimization.

    Highlights

    5

    • Total revenue increased 19% to $66 billion.

    • Operating earnings increased 38% to $877 million.

    • Non-GAAP diluted EPS increased 36% to $2.63.

    • Pharmaceutical and Specialty Solutions segment profit increased 29% to $687 million.

    • Other Growth Businesses segment profit increased 52% to $179 million.

    Concerns

    3

    • Interest and other expense increased to $77 million compared to $38 million in the prior year, driven by financing costs for acquisitions.

    • GMPD segment profit was partially offset by the adverse net impact of tariffs.

    • 3-4 percentage points of GMPD Cardinal Health brand revenue growth in Q2 was due to timing of inventory restocking, anticipated to offset in Q3.

    Guidance & targets

    13
    CategoryTargetConfidence
    Fiscal Year 2026 Adjusted EPS
    $10.15 to $10.35
    high materiality
    High
    Fiscal Year 2026 Adjusted EPS Growth
    23% to 26%
    high materiality
    High
    Fiscal Year 2026 Pharmaceutical and Specialty Solutions Segment Profit Growth
    20% to 22%
    high materiality
    High
    Second Half Fiscal Year 2026 Pharmaceutical and Specialty Solutions Segment Profit Growth
    mid-teens
    medium materiality
    Medium
    Fiscal Year 2026 GMPD Revenue Growth
    1% to 3%
    medium materiality
    High
    Fiscal Year 2026 GMPD Segment Profit
    approximately $150 million
    medium materiality
    High
    Fiscal Year 2026 Other Growth Businesses Revenue Growth
    26% to 28%
    medium materiality
    High
    Fiscal Year 2026 Other Growth Businesses Segment Profit Growth
    33% to 35%
    medium materiality
    High
    Fiscal Year 2026 Effective Tax Rate
    21% to 23%
    low materiality
    High
    Fiscal Year 2026 Diluted Weighted Average Shares
    237 million to 238 million shares
    low materiality
    High
    Fiscal Year 2026 Adjusted Free Cash Flow
    $3 billion and $3.5 billion
    high materiality
    High
    Biopharma Services Revenue
    $1 billion
    medium materiality
    High
    Specialty Revenues
    surpass $50 billion
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Pharmaceutical and Specialty Solutions
    Growth driven by existing and new customers, strong pharmaceutical demand, and contributions from brand and specialty products, MSO platforms, and generics program. Segment profit increased 29%.
    GLP-1 sales: 6 percentage points of revenue growth
    		$61 billion19%—$687 million
    GMPD
    Revenue growth driven by volume from existing customers. Segment profit increased from $18 million in the prior year, driven by volume growth and cost optimization, partially offset by tariff headwinds.
    Cardinal Health brand portfolio revenue growth (US): 10%
    		$3.3 billion3%—$37 million
    Other Growth Businesses (Nuclear and Precision Health Solutions, at-Home Solutions, OptiFreight Logistics)
    Growth driven by strong demand across all three businesses and the contribution from the acquisition of Advanced Diabetes Supply (ADS). Segment profit increased 52%.
    Nuclear and Precision Health Solutions theranostics revenue growth: exceeding 30%OptiFreight Logistics revenue growth: over 30%
    		$1.7 billion34%—$179 million

    Operational metrics

    22
    Non-GAAP Diluted EPS
    $2.63up 36% compared to $1.93
    Q2 FY26

    Net result for the quarter.

    Gross Margin Dollars
    $2.4 billionincreased 24%
    Q2 FY26

    Driven by favorable mix across businesses.

    SG&A Expenses
    $1.5 billionincreased 16%
    Q2 FY26

    Excluding acquisitions, organic SG&A growth was low single digits.

    Organic SG&A Growth (excluding acquisitions)
    low single digits
    Q2 FY26

    Reflects disciplined cost structure management.

    Interest and Other Expense
    $77 millioncompared to $38 million in the prior year
    Q2 FY26

    Driven primarily by financing costs associated with announced acquisitions.

    Effective Tax Rate
    21.4%flat
    Q2 FY26

    For the quarter.

    Average Diluted Shares Outstanding
    237 milliondecrease of 2% from the prior year
    Q2 FY26

    Reflects share repurchases.

    Share Repurchases
    $375 million
    Q2 FY26

    Amount repurchased in the quarter.

    Baseline Share Repurchase Target
    $750 million
    FY26

    Full year target reached in Q2.

    Weighted Average Price on Repurchases
    $173 per share
    Q2 FY26

    Average price for shares repurchased in Q2.

    Cash Position
    $2.8 billion
    Q2 FY26

    Balance at the end of the quarter.

    Capital Expenditures
    $240 million
    YTD FY26

    Invested back into the business year-to-date.

    Dividends
    $250 million
    YTD FY26

    Returned to shareholders year-to-date.

    Pharma Service Levels
    10% improvement
    past 2 years

    Setting a new benchmark for product availability.

    Sonexus Patients Served
    over 1 million new patients
    recent wins

    Supported by key manufacturer partners selecting Sonexus for hub programs.

    New Product Launches Supported by 3PL
    roughly half of all new product launches
    calendar '25

    Cardinal Health's 3PL business partnered with manufacturers in commercialization.

    GMPD Cardinal Health Brand Revenue Growth (US)
    10%
    Q2 FY26

    Performance of the Cardinal Health brand portfolio in the United States.

    GMPD Cardinal Health Brand Revenue Growth (timing impact)
    3 to 4 percentage points
    Q2 FY26

    Estimated portion of growth driven by timing of inventory restocking by other distributors, anticipated to offset in Q3.

    Nuclear Customer Survey Net Promoter Score
    well above the industry average
    2025

    Reflects reliability, adaptability, and cutting-edge technology.

    Nuclear Pipeline Products
    more than 70 products
    pipeline

    Largely dominated by novel theranostics in oncology and urology.

    Continued Care Pathways Program Pharmacies Supported
    over 11,000 pharmacies
    current

    Program leverages the full Cardinal Health portfolio to simplify diabetes supply management.

    Specialty Revenue 3-Year CAGR
    about 16%increased from 14%
    3-year

    Reflects an acceleration in specialty market growth.

    Industry KPIs

    4
    MetricValueDetails
    Utilization trendslow single-digit%
    Pharmacy scripts specialty6 percentage points%
    Segment revenue operating income10%%
    Adjusted EPS EBITDA leverage guidance3.2xratio

    Product announcements

    3
    ProductTypeDetails
    SmartFlow intermittent pneumatic compression devicelaunch
    Continued care pathways programlaunch
    Partnership with Publix Super Marketsexpansion

    Deals & partnerships

    3
    Solaris Healthacquisition

    acquisition of the country's leading urology MSO

    Advanced Diabetes Supply (ADS)acquisition

    integration of ADS into our at-Home Solutions business

    Publix Super Marketscustomer contract

    new customer in our pharma business to further expand our reach

    Risks & headwinds

    5
    Increased interest and other expenseQ2 FY26

    $77 million compared to $38 million in the prior year

    Mitigation: driven primarily by the financing costs associated with our announced acquisitions

    Adverse net impact of tariffsQ2 FY26

    not quantified, but offset by other drivers

    Mitigation: segment's transitioned from past challenges to solid profitability is evident, and we remain committed to the improvement plan initiatives

    Timing of inventory restocking by other distributorsQ2 FY26, anticipated offsetting in Q3

    3 to 4 percentage points of Cardinal Health brand revenue growth

    Mitigation: anticipate offsetting in Q3

    Lapping prior acquisitions and new customer revenuesecond half of fiscal '26

    $10 billion of new customer revenue

    Mitigation: incorporated some of the recent strength and anticipate mid-teens profit growth in the second half of the year

    More difficult comparisons in nuclear businessthird quarter

    not quantified

    Mitigation: as we begin to lap some of the robust theranostics growth that we experienced a year ago

    Q&A highlights

    6

    Can you break down the components of profit performance in Pharma Solutions, distinguishing organic from inorganic growth, and discuss the implied underlying organic growth for the second half, considering demand trends and specialty strength?

    The Pharma business saw strong demand across all categories, with specialty trending above historical levels and MSO contributions consistent with expectations. The H2 guidance reflects strong Q2 performance and improved expectations, but also accounts for lapping $10 billion of new customer revenue and prior M&A. M&A is expected to contribute about 8% to total growth for the full year.

    “M&A for the pharma business is expected to be about 8% of our total growth for the full year.”

    asked by Erin Wilson Wright · answered by Jason Hollar

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Focus and Performance Drivers

    Cardinal Health's Q2 FY26 performance was characterized by broad-based strength, with all five operating segments achieving double-digit profit growth. The company's strategy of strengthening its core distribution business while expanding into higher-margin specialty areas and other growth businesses is yielding tangible results. Key drivers include robust demand in Pharmaceutical and Specialty Solutions, successful integration of acquisitions like Solaris Health, and progress in the GMPD segment's improvement plan.

    02

    Specialty Expansion and MSO Platforms

    The strategic focus on specialty is delivering significant results, with specialty revenues expected to surpass $50 billion in fiscal '26. MSO platforms, particularly the Specialty Alliance's multi-specialty platform, are meaningful growth drivers. The acquisition of Solaris Health, the country's leading urology MSO, was completed in early November, positioning the company for further expansion by adding practices and capabilities.

    03

    GMPD Turnaround Progress

    The GMPD segment continues to make progress against its improvement plan initiatives, focusing on Cardinal Health brand growth and simplification. The Cardinal Health brand portfolio saw 10% revenue growth in the United States, driven by improved operational health and execution. Cost optimization initiatives also contributed to a significant increase in segment profit despite tariff headwinds🌐.

    04

    Other Growth Businesses Momentum

    The Other Growth Businesses (Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight Logistics) delivered strong performance, with revenue up 34% and segment profit up 52%. This growth was fueled by strong demand, secular tailwinds, and contributions from the Advanced Diabetes Supply (ADS) acquisition. Nuclear's theranostics offerings saw over 30% revenue growth, and OptiFreight Logistics grew revenues by over 30% by welcoming new customers and expanding utilization.

    05

    Capital Allocation and Financial Flexibility

    The company achieved its targeted Moody's adjusted leverage ratio of 3.2x well ahead of schedule, providing flexibility for future capital deployment. Year-to-date, Cardinal Health has generated $1.8 billion in adjusted free cash flow, invested $240 million in CapEx, and returned $1 billion to shareholders through dividends and share repurchases. Management emphasized a disciplined approach to capital allocation, focusing on internal investments and opportunistic M&A.

    06

    Operational Excellence and Customer Focus

    Investments in technology and infrastructure, such as the Ventus HQ e-commerce platform and Total View Insights for OptiFreight, are driving customer efficiency, streamlining operations, and supporting margin profiles. The company's commitment to service levels was highlighted by a 10% improvement in product availability over the past two years and its ability to ensure critical product delivery during recent storms.

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