CAH · Q3 2026 Earnings

Bullish

Cardinal Health

Reported April 30, 2026

30-second summary

Cardinal delivered Q3 non-GAAP EPS of $3.17 on revenue of $60.9B (+11% YoY), with Pharma & Specialty profit of $784M (+18% YoY) and Other segment profit of $179M holding flat with Q2 against the explicitly flagged tough theranostics comp. Management raised FY26 non-GAAP EPS a third consecutive time to $10.70–$10.80 (from $10.15–$10.35), a 50-cent midpoint lift driven by Pharma segment profit growth moving to 22–23%, Other to 36–38%, FCF to $3.3–$3.7B, and a tax rate drop to ~19% from 21–23%. The quiet tell: GMPD's $150M segment profit guide and 1–3% revenue growth guide were both withdrawn after the segment printed just $25M profit and 0% growth in Q3 — H1's $83M is now likely the full-year peak conversation.

Headline numbers

EPS

Q3 FY2026

$3.17

Revenue

Q3 FY2026

$60.90B

+11.0% YoY

Gross margin

Q3 FY2026

4.1%

Operating margin

Q3 FY2026

0.8%

Key financials

Q3 FY2026

Metric	Q3 FY2026	YoY	Q2 FY2026	QoQ
Revenue	$60.90B	+11.0%	$65.60B	-7.2%
EPS	$3.17	—	$2.63	+20.5%
Gross margin	4.1%	—	3.6%	+45bps
Operating margin	0.8%	—	1.1%	-24bps

Guidance

Cardinal Health significantly raised FY2026 non-GAAP EPS guidance to $10.70–$10.80 (+30-31% growth) from $10.15–$10.35 (+23-26% growth), with raises across adjusted FCF, Pharma segment profit growth, and Other segment profit growth, offset by modestly higher interest expense and withdrawals of GMPD segment metrics.

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

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Non-GAAP EPS	FY2026	$10.15 to $10.35	$10.70 to $10.80	+$0.55 to +$0.65 (midpoint +$0.57)	Raised
Non-GAAP EPS growth	FY2026	23% to 26%	30% to 31%	+4-7 percentage points	Raised
Adjusted Free Cash Flow	FY2026	$3.0 billion to $3.5 billion	$3.3 billion to $3.7 billion	+$0.3B low end, +$0.2B high end	Raised
Pharmaceutical and Specialty Solutions Segment Profit Growth	FY2026	20% to 22%	22% to 23%	+2 to +1 percentage points	Raised
Other Segment Profit Growth	FY2026	33% to 35%	36% to 38%	+3 to +3 percentage points	Raised
Non-GAAP Effective Tax Rate	FY2026	21% to 23%	approximately 19%	-2 to -4 percentage points (favorable)	Lowered
Diluted Weighted Average Shares Outstanding	FY2026	237 million to 238 million	approximately 237 million	-1M shares at high end	Lowered
Interest and Other Expense	FY2026	approximately $325 million	approximately $340 million	+$15 million	Raised
Global Medical Products and Distribution Segment Profit	FY2026	approximately $150 million	Withdrawn — no replacement	—	Withdrawn
GMPD Revenue Growth	FY2026	1% to 3%	Withdrawn — no replacement	—	Withdrawn

Segment KPIs

Q3 FY2026

Segment	Q3 FY2026	YoY
Pharmaceutical and Specialty Solutions	$56.1B	+11.0%
Global Medical Products and Distribution	$3.1B	—
Other	$1.7B	+31.0%
Pharmaceutical and Specialty Solutions Segment Profit	$784 million	—
Global Medical Products and Distribution Segment Profit	$25 million	—
Other Segment Profit	$179 million	—

Other KPIs

Q3 FY2026

Segment	Q3 FY2026
Pharmaceutical and Specialty Solutions Segment Profit Margin	1.40%
Adjusted Free Cash Flow (YTD)	$3.525 billion
Non-GAAP Operating Earnings Growth	18%
Debt Reduction	$100M term loan payment + $250M share repurchase
Leverage Ratio	3.0x

Management tone

GMPD turnaround validated (Q4 FY25) → broad-based operational raise (Q1 FY26) → all-five-segments delivering (Q2 FY26) → core engines accelerate while GMPD quietly de-emphasized (Q3 FY26).

The narrative has shifted from "balanced strength across the portfolio" to "Pharma and Other are the story, GMPD is a managed asset." Last quarter management anchored the bull case on "the balance of results across our portfolio as we achieve strong profit growth of at least double digits from all five of our operating segments" — explicit five-segment framing. This quarter the framing tightened: "improved operating segment performance across Pharmaceutical and Specialty Solutions and Other segments," with GMPD relegated to a separate paragraph about "improvement plan execution on track." Withdrawing GMPD's specific guidance figures while the segment underperforms is the strongest possible disclosure-side confirmation that management does not want investors anchoring on GMPD dollars for FY26. The bull case has narrowed to two of three pillars.

Specialty has moved from aspirational to delivered. Q2's framing was "we expect our specialty revenues will surpass $50 billion in fiscal 26"; this quarter it is operating reality: "Specialty revenue expected to exceed $50 billion" combined with explicit Q&A disclosure of specialty growth at 20%+ and oncology at 30%+. The M&A roadmap got sharper too — autoimmune and urology are now named as the next bolt-on priorities, signaling the platform is being built out by therapeutic area rather than opportunistically. This is the most concrete forward M&A signal Cardinal has issued in four quarters.

Confidence is being projected forward an unusual distance. Last quarter management mentioned FY27 only as a reference point for comparison discipline. This quarter, the language explicitly extended: "The collective strength and sustained momentum across the enterprise... gives us the confidence to again raise our full-year outlook for fiscal 26 and highlight our expectations for continued momentum in fiscal 27." For a company that historically does not pre-guide a year out, embedding "continued momentum in fiscal 27" in the prepared remarks is a meaningful signal — but it also raises the bar for the Q4 call, where investors will demand specifics on the FY27 setup against the ~19% tax base, the GMPD trajectory, and the IRA pricing run-rate.

Tariffs have moved from "managed headwind" to "potential upside not in guidance." The disclosed $200M potential tariff refund (with ~50% expected to flow back to customers, leaving ~$100M net upside) is explicitly excluded from FY26 guidance — a stance that reads as conservative accounting rather than optimism management. The phrase "we have not recognized any financial impact in the quarter nor reflected potential impacts in our updated guidance" removes a tail risk while preserving optionality.

The IRA pricing impact was disclosed with a specificity not seen in prior quarters: a 6-point revenue headwind to Pharma, fully offset by 6-point GLP-1 contribution. This level of bridge math indicates management has moved past defending the business model to actively educating investors on the moving parts — a posture consistent with a company that believes its FY27 setup is misunderstood.

Recurring themes management leaned on this quarter:

Broad-based operational strength across pharmaceutical and specialty solutions segmentSpecialty business expansion and above-market growth exceeding $50B revenue targetGMPD improvement plan execution with Cardinal Health brand consistent mid-single-digit growthOther growth businesses (At-Home Solutions, Nuclear/Precision Health, Optifreight) as critical long-term growth driversResilient business model navigating complexity including tariffs, winter storms, and regulatory environmentStrategic M&A integration and synergy realization (Solaris, ADS) delivering incremental value

Risks management surfaced:

Tariff exposure concentrated in GMPD segment; IEPA tariff refund timing and scope remains uncertainHealthcare landscape and regulatory environment remain dynamic with potential macroeconomic headwindsGLP-1 revenue moderation from prior quarter despite remaining robust at over 30% growthDiscrete tax planning benefits in Q3 non-recurring; expected ETR decline to ~19% in FY26 creates FY27 comparison challengeWinter storm activity increased operational complexity in Q3, though well-managed

Q&A highlights

Michael Cherney · Learing Partners

Quantify accelerated SG&A investments in the quarter and identify portfolio gaps or inorganic opportunities for specialty business expansion

SG&A up 17% enterprise-wide but 7% excluding M&A; investments focused on technology and team. Specialty growing over 20% with $50B+ revenue expected; prioritizing autoimmune and urology for future inorganic growth; emphasizing bolt-on acquisitions to existing platforms (MSOs, nuclear, at-home solutions) with significant interconnectivity driving 20%+ specialty growth

SG&A up 17% overall, 7% excluding M&A impactSpecialty revenue expected to exceed $50 billionSpecialty growth exceeding 20%Oncology growing over 30%

Eric Percher · Nephron Research

Detail the NAVISTA and ION impairment, characterize changes to risk profile (near-term vs long-term), and assess impact on oncology MSO strategy and platform economics

Impairment driven by market shift from non-equity to equity physician collaboration models; increased discount rate applied to small part of oncology business. Broader specialty M&A strategy unchanged; specialty growing 20%+ and oncology 30%+; equity model now prioritized over non-equity transactional arrangements; eight percentage points of M&A contribution to fiscal 26 specialty growth remains consistent with prior guidance

Increased discount rate applied to small part of oncology businessMarket shifted toward equity physician arrangementsSpecialty growth 20%+, oncology growth 30%+Eight percentage points of M&A contribution to specialty growth in fiscal 26

Glenn Santangelo · Barclays

Assess vulnerability to IRA price reductions affecting practice profitability and potential downstream squeeze on distributor margins beyond fee-for-service agreements

Distribution fees unchanged regardless of drug price changes; services remain constant and Cardinal maintains lowest-paid position in supply chain; fee-for-service contracts renegotiated at beginning of quarter consistent with prior announcement; MSO drug spend only one-third of $4-4.5B revenue with diverse payer mix; expects minimal IRA impact to MSOs given diversification and competitive positioning

Distribution fees remain unchanged with drug price changesVast majority of distribution contracts have renegotiation rightsMSO drug spend represents only one-third of $4-4.5B MSO revenueMSOs have diverse payer mix reducing IRA exposure

Alan Lutz · Bank of America

Explain drivers of free cash flow raise despite lower-than-expected revenue; clarify contribution from IRA drugs, GLP-1 mix shift, and generics

Free cash flow improvement driven by cross-enterprise management of inventory, AR collections, and AP optimization across all business units. Pharma revenue growth 11% reflects six percentage-point headwind from IRA WAC changes offset by six percentage-point uplift from GLP-1 growth; GLP-1s growing over 30% but at slower rates than prior periods; generic LOE conversions positive for profit despite revenue headwind; strong underlying demand observed across quarter

Pharma revenue growth 11%IRA WAC: negative six percentage points to revenue growthGLP-1 growth: positive six percentage points to revenue growthGLP-1s growing over 30% year-over-year

Kevin Caliendo · UBS

Clarify GPMD lower volumes attribution (macro vs. market share); status in April; tariff clawback accounting treatment ($200M potential refund vs. $100M net benefit)

Industry med-surg volumes resilient at low single-digit range; softness in lab/respiratory from earlier flu season; lost VA contract and large customer merger impact; Cardinal branded growth over 5% despite softer top line indicating underlying strength. Tariff refund of $200M potential; expecting to share approximately half ($100M) with customers; no financial impact recognized in Q3 P&L; accounting treatment uncertain pending clarity on recovery amount, mechanism, and timing; tariffs and fuel create offsetting puts and takes for 2027

$200 million potential tariff refund on amounts paid through IPA announcementExpected to share approximately 50% ($100M) of refund with customersNo tariff refund impact recognized in Q3 guidanceCardinal branded GPMD growth over 5% despite softer top-line

Answers to last quarter's watch list

Q3 Pharma deceleration vs. distributor buying-pattern timing. Pharma segment profit was $784M in Q3, the highest absolute dollar print on record, on +11% revenue growth and +18% profit growth. While the revenue rate decelerated from Q2's +19%, management bridged it explicitly to IRA pricing dynamics (6pt headwind / 6pt GLP-1 offset) rather than the timing reversal flagged last quarter. The FY guide moved up another 1–2 points to 22–23%. Status: Resolved positively

GMPD H2 cadence against the ~$150M FY floor. Q3 GMPD printed $25M, well below the $30M watch threshold. YTD totals $108M, leaving $42M needed in Q4 to hit the old $150M guide — and management responded by withdrawing the guide entirely rather than committing. The directional bear case (industry volume softness, customer losses, tariff cost realization) outweighed the Cardinal-branded growth resilience. Status: Resolved negatively

Other segment Q3 dollars vs. the $179M Q2 print. Other segment profit held at exactly $179M in Q3, identical to Q2, against the explicitly flagged tough theranostics comp. The FY profit growth guide was raised to 36–38% (from 33–35%), indicating Q4 is expected to deliver further dollar growth. The $160M watch threshold was cleared comfortably. Status: Resolved positively

Capital deployment after hitting full-year buyback at H1. Cardinal added $250M of share repurchases in Q3 (taking YTD above the original $750M plan) plus a $100M term loan repayment, with leverage at 3.0x. Management did not announce a new buyback authorization or accelerated M&A timing, but the incremental buyback + deleverage combination signals a balanced rather than aggressive posture. Status: Resolved positively

Whether the FY EPS guide is raised a third consecutive quarter at Q3. FY26 non-GAAP EPS was raised to $10.70–$10.80 from $10.15–$10.35, a $0.50 midpoint lift — the third consecutive quarterly raise, totaling $1.40 of cumulative midpoint upgrades from the original $9.30–$9.50 guide. The pattern is now firmly established, though this quarter's raise includes a larger below-the-line (tax) contribution than Q1 or Q2. Status: Resolved positively

What to watch into next quarter

GMPD Q4 print versus the withdrawn $150M FY guide. YTD GMPD profit is $108M; a Q4 print above $42M would suggest the withdrawal was a discipline move rather than a signal of deterioration. A print at or below $30M would confirm the segment has materially weakened beyond the H1 narrative.

FY27 framing on the Q4 call. Management has now twice mentioned FY27 in prepared remarks. Watch whether Q4 provides specific FY27 guidance (range, segment growth shape) or qualitative bridges off the ~19% tax base and IRA pricing run-rate. Anything less than a clear framework on FY27 segment growth would be a tone-relevant disappointment given how forward management has projected confidence.

Tariff refund recognition and customer pass-through accounting. Management disclosed $200M potential refund with ~50% expected to be shared with customers. Watch whether any of the ~$100M net upside is recognized in Q4, deferred to FY27, or whether the accounting treatment is still pending — and watch the FY27 guide for whether this is baked in or flagged as upside.

Pharma segment profit growth into FY27 against a Q3 base of $784M. With FY26 raised to 22–23% growth, the absolute dollar base for FY27 will be elevated. Watch for early FY27 framing that addresses how Pharma growth normalizes from this elevated base, particularly given the IRA WAC pricing dynamic running into FY27.

Other segment Q4 dollars and FY27 setup. Q3 held flat at $179M against tough comps; FY26 guide of 36–38% profit growth implies Q4 dollars likely in the $185–195M range. Watch whether ADS network utilization (still only 2% of capacity per Q1 disclosure) is producing visible synergy ramp.

Whether the ~19% tax rate is reaffirmed as FY26-specific or guided to persist. Management explicitly flagged Q3 discrete planning benefits as non-recurring. The FY27 tax rate posture will materially shape the FY27 EPS bridge — a return to ~22% would be a meaningful headwind that needs to be operationally absorbed.

Sources

Cardinal Health Q3 FY2026 press release — https://www.sec.gov/Archives/edgar/data/721371/000072137126000017/a26q3_x033126xex991xnewsre.htm
Cardinal Health Q3 FY2026 earnings call (management commentary and Q&A)

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