CAH — Cardinal Health, Inc.

Cardinal Health (CAH) Q3 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total Revenue: Increased by 11% to $61 billion.
• Gross Profit: Grew 18% to $2.5 billion.
• Operating Earnings: Rose 18% to $956 million.
• Non-GAAP EPS: Reported at $3.17, a 35% increase year-over-year.
• Adjusted Free Cash Flow: Increased guidance to $3.3 billion - $3.7 billion from $3 billion - $3.5 billion.
• Pharmaceutical and Specialty Solutions Revenue: Grew 11% to $56.1 billion, with segment profit increasing 18% to $784 million.
• GMPD Segment Revenue: Flat at $3.1 billion; segment profit decreased to $25 million due to tariff impacts.
• Other Growth Businesses: Revenue increased 31% to $1.7 billion, with profit up 34% to $179 million.

2. Strategic Updates and Business Highlights:

• Continued strong performance in the Pharmaceutical and Specialty Solutions segment, driven by core growth and strategic investments in specialty capabilities.
• Successful integration of Solaris into the Specialty Alliance, enhancing patient care and access.
• Ongoing execution of improvement plans in the GMPD segment, focusing on simplification and cost optimization.
• Positive performance in at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics, attributed to long-term investments and favorable demand trends.
• The Specialty business is expected to exceed $50 billion in revenue for fiscal 2026, with over 20% growth in Q3.

3. Forward Guidance and Outlook:

• Non-GAAP EPS Guidance: Raised to $10.70 - $10.80 for fiscal 2026, reflecting a 30% to 31% annual growth.
• Pharmaceutical Revenue Growth: Expected at the lower end of the 15% - 17% range.
• GMPD Segment: Revenue growth guidance reiterated at 1% - 3%, with profit guidance maintained at $150 million.
• Other Growth Businesses: Revenue guidance unchanged at 26% - 28% growth; profit growth guidance increased to 36% - 38%.
• Confidence in long-term targets for fiscal 2027, with expectations of continued strong cash flow generation.

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

• Goodwill Impairment: A $184 million pretax charge related to the Navista business due to changes in risk profile and increased discount rates.
• GMPD Segment Struggles: Revenue flat and profit decreased due to tariff impacts; ongoing tariff uncertainty remains a concern.
• IRA Impact: The Inflation Reduction Act (IRA) has created headwinds, particularly affecting revenue from GLP-1 drugs and pricing dynamics.
• Operational Complexity: Increased operational challenges due to weather events and supply chain issues, particularly affecting MSO volumes.

5. Notable Q&A Insights:

• SG&A Investments: SG&A increased by 17%, but adjusted for M&A, the growth was 7%, indicating purposeful investment in technology and teams.
• Specialty Portfolio: Continued strength in specialty growth, with a focus on autoimmune and urology for future acquisitions.
• Tariff Refunds: Potential for $200 million in tariff refunds, with expectations of sharing half with customers; no financial impact recognized yet.
• Market Dynamics: Confidence in maintaining fee-for-service pricing power despite falling drug prices, emphasizing the value provided in distribution agreements.
• 2027 Outlook: Management remains optimistic about long-term growth targets, citing strong demand and demographic trends as supportive factors.

This summary encapsulates the key points from Cardinal Health's Q3 2026 earnings call, highlighting both achievements and challenges faced by the company.