CAH — Cardinal Health, Inc.

Summary of Cardinal Health, Inc. Q2 2026 Earnings Call

1. Key Financial Results and Metrics:

• Total revenue for Q2 2026 increased 19% to $66 billion, driven primarily by strong demand in the pharmaceutical and specialty solutions segment.
• Gross margin rose 24% to $2.4 billion.
• Operating earnings reached $877 million, a 38% increase year-over-year.
• Non-GAAP diluted EPS was $2.63, up 36% from $1.93 in the prior year.
• SG&A expenses increased 16% to $1.5 billion; however, organic growth in SG&A was modest in the low single digits.
• Year-to-date adjusted free cash flow was $1.8 billion, with a cash position of $2.8 billion.
• Share repurchases totaled $375 million, achieving the full-year target of $750 million.

2. Strategic Updates and Business Highlights:

• Strong performance across all five operating segments, with double-digit profit growth.
• Pharmaceutical and specialty solutions segment revenue increased 19% to $61 billion, with segment profit up 29% to $687 million.
• Continued focus on specialty solutions, with expectations for specialty revenues to surpass $50 billion in fiscal 2026.
• Acquisition of Solaris Health completed, enhancing the specialty MSO platform.
• Progress in the GMPD segment with a revenue increase of 3% to $3.3 billion and a segment profit increase to $37 million.
• Other growth businesses (Nuclear Precision Health Solutions, At Home Solutions, Optifreight Logistics) saw revenue growth of 34% to $1.7 billion and profit growth of 52% to $179 million.

3. Forward Guidance and Outlook:

• Fiscal year 2026 EPS guidance raised to a range of $10.15 to $10.35, reflecting year-over-year growth of 23% to 26%.
• Pharmaceutical segment profit guidance increased to 20%-22% growth, while GNPD segment profit guidance raised to approximately $150 million.
• Other growth businesses’ revenue guidance remains at 26%-28% growth, with segment profit guidance increased to 33%-35%.
• Anticipated adjusted free cash flow for the year remains robust at $3 billion to $3.5 billion.

4. Bad News, Challenges, or Points of Concern:

• Increased interest and other expenses to $77 million, primarily due to financing costs from acquisitions.
• Potential impacts from manufacturer list price decreases associated with the IRA, which could affect revenue but are expected to be managed within cost structures.
• The GNPD segment experienced some growth attributed to inventory restocking, which may normalize in future quarters.
• Competitive pressures in the specialty market and the need to maintain operational excellence amidst evolving market dynamics.

5. Notable Q&A Insights:

• Management emphasized strong core growth in the pharmaceutical segment, driven by specialty and generics, with expectations for continued demand.
• The integration of Advanced Diabetes Supply (ADS) is progressing well, contributing positively to the At Home Solutions business.
• Management remains cautious about assuming outsized demand in the second half of the year, focusing instead on sustainable growth.
• The company is committed to disciplined capital allocation, with flexibility for potential acquisitions in the MSO space and other segments.
• Questions regarding GLP-1 products highlighted the expectation of continued volume growth, but management does not foresee significant impacts on profitability from oral formulations in the near term.

Overall, Cardinal Health reported a strong quarter with broad-based growth across its segments, while maintaining a cautious but optimistic outlook for the remainder of the fiscal year.