CAH — Cardinal Health, Inc.

Summary of Cardinal Health (CAH) Q3 2026 Earnings Call

1. Key Financial Results and Metrics:

• Total revenue increased by 11% to $61 billion.
• Gross profit rose 18% to $2.5 billion.
• Non-GAAP EPS was reported at $3.17, a 35% increase year-over-year.
• Enterprise operating earnings grew 18% to $956 million.
• Adjusted free cash flow for the quarter was $1.7 billion, with full-year guidance raised to $3.3 billion to $3.7 billion.
• Pharmaceutical and Specialty Solutions segment revenue grew 11% to $56.1 billion, with segment profit up 18% to $784 million.

2. Strategic Updates and Business Highlights:

• Continued strong performance in the Pharmaceutical and Specialty Solutions segment, driven by existing customer growth and strategic investments in specialty capabilities.
• Integration of Solaris into the Specialty Alliance is progressing well, with expectations for synergistic benefits.
• The at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics segments reported robust growth, with revenue up 31% and profit up 34%.
• Focus on simplification and cost optimization in the Global Medical Products and Distribution (GMPD) segment, with Cardinal Health brand products showing over 5% growth in the U.S.

3. Forward Guidance and Outlook:

• Full-year fiscal 2026 non-GAAP EPS guidance raised to $10.70 to $10.80, reflecting a 30% to 31% annual growth.
• Pharmaceutical revenue expected to be at the lower end of the 15% to 17% growth range, while segment profit growth outlook was raised to 22% to 23%.
• GMPD segment revenue guidance reiterated at 1% to 3% growth, with profit guidance maintained at $150 million.
• Other growth businesses expected to see revenue growth of 26% to 28% and profit growth of 36% to 38%.

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

• A GAAP basis impairment charge of $184 million related to the Navista business due to changes in risk profile and discount rates.
• GMPD segment faced challenges with lower distribution volumes and adverse tariff impacts, although management remains optimistic about ongoing improvement plans.
• The impact of the Inflation Reduction Act (IRA) and pricing adjustments on revenue growth, particularly affecting GLP-1 products, which moderated from previous quarters.
• Uncertainty surrounding the timing and administration of tariff refunds, with approximately $200 million in tariffs paid, potentially leading to a $100 million future benefit.

5. Notable Q&A Insights:

• Management emphasized the resilience of their business model and the ability to navigate regulatory changes, particularly regarding the IRA.
• The Specialty business continues to show strong growth, with management focused on expanding capabilities and addressing market needs.
• Concerns were raised about potential impacts on profitability from falling drug prices and the implications for fee-for-service agreements, but management expressed confidence in maintaining pricing power.
• The integration of acquisitions and the ongoing focus on operational efficiencies were highlighted as key drivers for future growth, with management remaining disciplined in pursuing further inorganic opportunities.

Overall, Cardinal Health reported a strong quarter, raising its guidance and demonstrating resilience amid challenges, particularly in the GMPD segment and regulatory environment.