CAH · Q1 2026 Earnings

Bullish

Cardinal Health

Reported October 30, 2025

30-second summary

Cardinal delivered Q1 non-GAAP EPS of $2.55 on revenue of $64.0B (+22% YoY), with all five operating segments posting double-digit profit growth and the Pharma segment profit up 23% YoY on a 23% revenue lift. Management raised FY26 non-GAAP EPS to $9.65–$9.85 (from $9.30–$9.50) and FCF to $3.0–$3.5B (from $2.75–$3.25B), with the Pharma segment profit growth guide jumping a full 5–6 points to 16–19% — this raise is clearly operational, not the accounting-driven half-raise we saw last quarter. GMPD held its $140M floor despite an expected zero-profit-growth Q2 from tariff cost realization.

Headline numbers

EPS

Q1 FY2026

$2.55

Revenue

Q1 FY2026

$64.00B

+22.0% YoY

Gross margin

Q1 FY2026

3.6%

Operating margin

Q1 FY2026

1.0%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$64.00B	+22.0%	$60.20B	+6.3%
EPS	$2.55	—	$2.08	+22.6%
Gross margin	3.6%	—	3.7%	-4bps
Operating margin	1.0%	—	0.7%	+33bps

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

Metric	Period	Guide	YoY
GMPD segment profit (Q2 FY2026 outlook)	Q2 FY2026	No year-over-year profit growth expected; profitability continues but tariff cost realization impacts quarter	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Non-GAAP EPS	FY 2026	$9.30 to $9.50	$9.65 to $9.85	+$0.35 to +$0.35 at midpoint (approximately +3.7% at midpoint)	Raised
Non-GAAP adjusted free cash flow	FY 2026	$2.75 billion to $3.25 billion	$3.0 billion to $3.5 billion	+$0.25B to +$0.25B (low and high end each raised $0.25B)	Raised
Pharmaceutical and Specialty Solutions segment profit growth	FY 2026	11% to 13%	16% to 19%	+5 to +6 percentage points	Raised
Other segment profit growth	FY 2026	25% to 27%	29% to 31%	+4 to +4 percentage points	Raised
Pharma revenue growth	FY 2026	11% to 13%	15% to 17%	+4 to +4 percentage points	Raised
Interest and other expense	FY 2026	~$275 million	approximately $325 million	+$50 million	Raised
Capital expenditures	FY 2026	~$600 million	$600 million to $650 million	widened to range; upper end +$50M vs prior point estimate	Raised
Diluted weighted average shares outstanding	FY 2026	238 million to 240 million	approximately 238 million	narrowed to point estimate at low end of range	Lowered
Non-GAAP EPS growth (YoY %)	FY 2026	+13% to +15%	+17% to +20%	+4 to +5 percentage points	Raised

Reaffirmed unchanged this quarter: GMPD revenue growth (2% to 4%), Other revenue growth (26% to 28%)

Segment KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Pharmaceutical and Specialty Solutions	$59.2B	+23.0%
Global Medical Products and Distribution	$3.2B	+2.0%
Other	$1.6B	+38.0%
Pharmaceutical and Specialty Solutions Segment Profit	$667 million	—
Global Medical Products and Distribution Segment Profit	$46 million	—
Other Segment Profit	$166 million	—

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Non-GAAP Operating Earnings	$857 million
Non-GAAP Effective Tax Rate	21.9%
FY2026 Non-GAAP EPS Guidance	$9.65 to $9.85
FY2026 Adjusted Free Cash Flow Guidance	$3.0 to $3.5 billion
Diluted Weighted-Average Shares Outstanding	239 million

Management tone

Q3 FY25: GMPD turnaround skepticism → Q4 FY25: GMPD validated, FY26 guide established → Q1 FY26: broad-based beat, conviction in raised trajectory.

The raise narrative has shifted from "M&A is doing the lifting" to "operations are doing the lifting." Last quarter, Cardinal's 20-cent FY26 EPS raise was split roughly half from NCI/liability accounting and half from operations; this quarter, the 35-cent raise is overwhelmingly operational, anchored to a Pharma segment profit growth guide that jumped from 11–13% to 16–19%. Management's framing — "This quarter's results are a clear demonstration of our strategy in action and the broad-based momentum of our business" — replaces the more cautious "transformative year" language from Q4 with confidence that the upside is structural.

GMPD has moved from "fix-it project" (early FY25) to "delivering steady improvement" (Q4 FY25) to a quietly confident hold this quarter. Management said "the business's core operational performance continues to improve, and we are holding to our annual guidance" — but notably did not raise the $140M floor despite Q1 printing $46M. The disclosed Q2 zero-profit-growth call explains the restraint: tariff cost realization moves through the P&L unevenly, and management is not willing to declare victory while that's working through.

The "Other" segment has been promoted again in narrative weight. Q4 FY25 management said it contributed "over 40% of enterprise operating earnings growth"; this quarter the language is sharper — "we delivered fantastic results, demonstrating the increasingly important role these higher margin and faster growing businesses play in our long term strategy." The 38% revenue / 60% profit growth print, combined with the +4 point raise to the FY profit guide, supports the SOTP re-rating thesis that has been building since Q4.

Tariffs have moved from "managed near-term headwind" to "under control with mitigation working." Q1 produced only a "slight net headwind"; Q2 is flagged as the worst quarter of the year for GMPD. Management's specificity on the $50–75M FY net impact (held since Q4) and the lack of any expansion of that range despite ongoing trade volatility reads as earned confidence rather than performative.

Specialty MSO positioning has firmed into a unified platform thesis. Where Q4 framed Solaris as the fifth MSO platform alongside others, this quarter management explicitly described "approximately 3,000 specialty providers across 32 states" under a unified "Specialty Alliance" banner — language signaling integrated multi-specialty operating model rather than a portfolio of separate roll-ups. Solaris close is described as "shortly" with no timeline slip flagged.

Recurring themes management leaned on this quarter:

Broad-based double-digit profit growth across all five operating segmentsSpecialty MSO platform consolidation and Specialty Alliance expansionStrong pharmaceutical demand environment with robust utilization trendsIntegration execution excellence (ADS, GIA, ION, and anticipated Solaris)Higher-margin growth businesses (Nuclear/Precision Health, At-Home Solutions, Optifreight) gaining strategic importanceOperational efficiency through automation and network modernization

Risks management surfaced:

Tariffs expected to step up in Q2 at high end of $50-75M rangeCOVID vaccine distribution as year-over-year headwind continuing into Q2Back-half year-over-year comparison pressure from annualizing ION and GIA acquisitionsDynamic legislative and regulatory environment requiring close monitoringSecond quarter GMPD projected to show no year-over-year profit growth due to tariff timing

Q&A highlights

Elizabeth Anderson · Evercore

Does guidance include Rite Aid volume from CVS closing, and what opportunities exist from policy changes in D.C. given the diverse business mix?

Rite Aid volume was not previously supported by Cardinal Health (starting at 0%), so pickup from Rite Aid is a component but not the primary driver of growth. Policy changes aligned with affordable, innovative healthcare access are viewed as neutral to positive, driving appropriate utilization.

Rite Aid volume previously at 0%, now gaining portion of volumeBroad-based strength across different customers and classes of tradePolicy changes supporting affordable, innovative healthcare are neutral to positive

Michael Cherney · Learning Partners

How much of the pharmaceutical and specialty solutions segment growth comes from controllable factors like customer penetration versus uncontrollable market strength?

Management focuses on what they can control: ensuring capacity, service levels, quality, and safety to maintain and grow market share. They anticipate strong utilization but are not assuming outsized growth levels.

Strong anticipated utilization, but not assuming outsized growthHeavy organic and inorganic investment in capacity and service capabilitiesFocus on share gains through operational excellence and customer satisfaction

Eric Percher · Nephron Research

What drove the 60% profit growth in the other segment in Q1, and how much came from ADS acquisition versus core business performance?

Both core business and ADS acquisition drove the strong results. Revenue up 51% for at-home, 17% for nuclear, 21% for PPM. ADS integration performing well with volume moving into Cardinal network using only 2% of capacity.

Other segment: 38% revenue growth, 60% segment profit growth in Q1At-home revenue +51% (inclusive of ADSG acquisition)Nuclear revenue +17%, PPM revenue +21%ADS volume moving to Cardinal network with only 2% capacity utilization

Alan Lutz · Bank of America

Cardinal Health brand growth was over 6%—what types of products are driving this and what is the runway for outsized growth?

Growth driven by clinically differentiated products including compression, electrocardiography, surgical kitting, and syringes. These align with the five-point plan discussed at investor day.

Cardinal Health brand growth exceeded 6% in Q1Clinically differentiated products are growth driversKey product areas: compression, electrocardiography, surgical kitting, syringes

Kevin Caliendo · UBS

What drove better-than-expected generic unit growth—category specific, prescribing habit changes, spread improvements, or biosimilar contribution?

Generic growth driven primarily by volume in consistent market dynamics. Part of a three-year outlook expecting higher new loss of exclusivity and biosimilar launches. Small component of $7B new customer revenue.

Generic growth driven by volume, not spread improvementsConsistent market dynamics in generic portfolio managementThree-year outlook includes higher new loss of exclusivity and item launchesSmall revenue component from biosimilars in $7B new customer wins

Answers to last quarter's watch list

GMPD Q1 segment profit run-rate. GMPD printed $46M in Q1 versus our $20–25M expected band, well above the implied H1 cadence for the $140M floor. However, management held the $140M FY guide unchanged and explicitly flagged Q2 will show no YoY profit growth as deferred tariff costs hit. The floor now looks conservative but management isn't ready to raise it. Status: Continue monitoring

Operational vs. NCI split of FY26 EPS upside. The Q1 raise of $0.35 to FY26 EPS is overwhelmingly operational this time — anchored to a 5–6 point lift in Pharma segment profit growth (11–13% → 16–19%) and a 4 point lift in Other segment profit growth (25–27% → 29–31%). The $50M interest expense headwind argues the raise quality is genuine rather than below-the-line. Status: Resolved positively

Solaris close timing and initial contribution. Management said they "anticipate closing shortly" but did not provide a specific date or initial contribution figures. The unified "Specialty Alliance" framing (3,000 providers, 32 states) signals integration planning is advanced, but no Q1 P&L contribution disclosed. Status: Continue monitoring

Pharma segment profit growth ex-customer contract annualization. Pharma segment delivered $667M profit on +23% revenue growth in Q1, and management raised the FY profit growth guide from +11–13% to +16–19%. With the prior-year customer contract expiration now lapped, this is clean evidence of underlying specialty mix benefit. Status: Resolved positively

Tariff mitigation cadence. Q1 produced only a "slight net headwind" — well below the ~1/3 H1 share that the $50–75M annual envelope would imply. Q2 is the called peak. The mitigation strategy appears to be working as guided, with no expansion of the $50–75M FY range. Status: Resolved positively

Other segment profit dollars, not just growth rate. Q1 Other segment profit disclosed at $166M, supporting the 60% YoY growth claim with absolute dollars. The +4 point FY guide raise (25–27% → 29–31%) was made with full transparency on the dollar base. Status: Resolved positively

What to watch into next quarter

GMPD Q2 print versus the explicit zero-YoY-profit-growth guide. Q2 FY25 GMPD profit was the second-best of FY25; management is calling for Q2 FY26 to come in at or below that level. Watch whether GMPD prints any positive YoY profit growth — a beat here would force a $140M FY floor raise.

Pharma segment profit growth in Q2. Q1 delivered +23% YoY revenue and 23% segment profit growth; the FY raised guide of +16–19% profit growth implies a meaningful deceleration through H2. Watch whether Q2 sustains a >20% pace or whether the deceleration starts immediately.

Solaris close confirmation and first-quarter-of-ownership contribution. Management has now said "closing shortly" for two quarters. If Q2 prints without Solaris included, the FY guide implicitly absorbs more pressure to the unguided H2 contribution.

Other segment profit dollars trajectory. Q1 = $166M; FY raised guide of +29–31% on the FY25 base implies meaningful quarterly progression. Watch whether Q2 dollars hold above $150M as ADS network capacity utilization rises from 2%.

Whether the $50–75M FY tariff impact envelope expands. Cardinal has held this range for two consecutive quarters despite trade volatility. Any widening of the range, even to $75–100M, would be a meaningful tell that mitigation is hitting limits.

Biosimilar contribution disclosure. Management was notably non-specific on biosimilar economics in Q&A. Watch whether next quarter's deck breaks out biosimilar revenue or unit growth as policy tailwinds materialize.

Sources

Cardinal Health Q1 FY2026 press release — https://www.sec.gov/Archives/edgar/data/721371/000072137125000128/a26q1_x093025xex991xnewsre.htm
Cardinal Health Q1 FY2026 earnings call (management commentary and Q&A)

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