Cardinal Health Earnings Rise on Specialty Demand
Cardinal Health earnings showed a stronger Q2 and a raised FY2026 non-GAAP EPS outlook, which could prompt repositioning and higher trading flows.
KEY TAKEAWAYS
- Q2 revenue rose to $65.6 billion and non-GAAP diluted EPS reached $2.63.
- Company raised FY2026 non-GAAP EPS guidance to $10.15-$10.35.
- Completed $750 million baseline share repurchase and reached 3.2x leverage target.
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Cardinal Health earnings improved, and the company raised its fiscal 2026 non-GAAP diluted earnings per share (EPS) outlook on Feb. 5, 2026, after specialty pharmaceuticals demand and broad segment profit gains powered a stronger second quarter.
Second-Quarter Results and Segment Performance
Cardinal Health reported second-quarter fiscal 2026 revenue of $65.6 billion, a 19% increase from the prior year. GAAP operating earnings rose 29% to $707 million, with GAAP diluted EPS at $1.97. On a non-GAAP basis, operating earnings climbed 38% to $877 million, and diluted EPS rose 36% to $2.63, exceeding consensus estimates by about 10.5%.
The Pharmaceutical and Specialty Solutions segment generated $60.7 billion in revenue, up 19%, and segment profit increased 29% to $687 million. Growth was driven by brand and specialty sales, expansion of management services organization (MSO) platforms, and generics. The Global Medical Products and Distribution segment posted $3.3 billion in revenue, a 3% rise, with segment profit doubling to $37 million due to volume growth and cost optimizations, partly offset by tariffs. Other operations—including at-Home Solutions linked to the Advanced Diabetes Supply acquisition, Nuclear/Precision Health, and logistics unit OptiFreight—reported $1.7 billion in revenue, up 34%, and segment profit rose 52% to $179 million. Chief Executive Officer Jason Hollar said, "Our strong second-quarter performance reflects at least double-digit segment profit growth across all five of our operating segments."
Outlook and Capital Returns
Cardinal Health raised its fiscal 2026 non-GAAP diluted EPS guidance to a range of $10.15 to $10.35, up from $9.65 to $9.85, implying roughly 23% to 26% growth. The revision reflects segment momentum and a lower share count, partly offset by acquisition financing costs.
Management increased the Global Medical Products and Distribution profit outlook to about $150 million from at least $140 million and raised the Other segment's profit-growth forecast to 33%–35% from 29%–31%. The company also guided a non-GAAP effective tax rate of 21%–23%, down from 22%–24%.
The company completed its $750 million annual baseline share repurchase and reached its targeted leverage ratio of 3.2 times. Management projects specialty revenues to exceed $50 billion in fiscal 2026, representing roughly a 16% three-year compound annual growth rate.
