Cardinal Health (NYSE:CAH) reported fiscal second-quarter 2026 results that management described as “another excellent quarter,” citing broad-based momentum across the portfolio and double-digit profit growth in each of its five operating segments. Executives also raised full-year earnings guidance again, pointing to strong demand trends and continued execution in the company’s core pharmaceutical distribution business, expanding specialty capabilities, and ongoing improvement in its Global Medical Products and Distribution (GMPD) segment.
Second-quarter results show revenue and profit expansion
For the quarter, Cardinal Health posted total revenue of $66 billion, up 19% year over year. CFO Aaron Alt said the top-line growth was driven primarily by continued strong demand in Pharmaceutical and Specialty Solutions, as well as the company’s “other” businesses.
Operating earnings were $877 million, up 38% from the prior-year period. Below the operating line, interest and other expenses increased to $77 million from $38 million, primarily due to financing costs related to acquisitions, including Solaris Health. The effective tax rate was flat at 21.4%.
Cardinal Health reported non-GAAP diluted EPS of $2.63, up 36% from $1.93 in the year-ago quarter. Average diluted shares outstanding were 237 million, down 2% year over year, following $375 million of share repurchases during the quarter. Alt said the company reached its fiscal 2026 baseline share repurchase target of $750 million, with a weighted average price of $173 per share.
Pharmaceutical and Specialty Solutions leads, with specialty and generics highlighted
Pharmaceutical and Specialty Solutions revenue increased 19% to $61 billion. Management said the growth reflected both existing and new customers, with strong pharmaceutical demand “across the portfolio.” Alt noted that GLP-1 sales contributed approximately 6 percentage points of segment revenue growth.
Segment profit rose 29% to $687 million. Executives pointed to multiple drivers, including contributions from brand and specialty products, MSO platforms, and positive results within the Red Oak-enabled generics program. Alt said generic unit growth exceeded the company’s long-term expectations, while market dynamics remained consistent.
CEO Jason Hollar emphasized that specialty remains a strategic priority and reiterated expectations that specialty revenues will surpass $50 billion in fiscal 2026. He also discussed continued investments in distribution footprint and technology, saying service levels have improved by 10% over the past two years, setting a new benchmark for product availability.
In response to questions about organic versus inorganic drivers, management said M&A is expected to represent about 8% of total growth for the full year in the pharma business, consistent with prior commentary. Management also said it is not assuming that Solaris distribution volume moves over to Cardinal Health during fiscal 2026, noting that any transition would likely occur toward the end of the fiscal year.
GMPD shows profit improvement; Cardinal Health Brand growth and tariffs discussed
In GMPD, revenue increased 3% to $3.3 billion, driven by volume growth from existing customers. Alt highlighted 10% U.S. revenue growth in the Cardinal Health brand portfolio, while noting that the company estimates 3 to 4 percentage points of that growth was related to the timing of inventory restocking by other distributors, which is expected to offset in the third quarter.
GMPD segment profit increased to $37 million from $18 million a year ago. Management attributed the improvement to volume growth and cost optimization benefits, partially offset by the adverse net impact of tariffs. Hollar said GMPD’s improvement plan is yielding “tangible results,” citing better manufacturing and supply capabilities, lower backorders, and higher service levels, which have supported growth opportunities with customers.
Management also addressed a CMS proposal related to domestic PPE. Hollar said PPE is not a major growth category for Cardinal Health, but described the company as flexible in sourcing and open to supporting domestic procurement if customers are incentivized to do so.
Other growth businesses: ADS integration, Theranostics momentum, and OptiFreight growth
Cardinal Health’s “other” businesses—Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight Logistics—posted revenue growth of 34% to $1.7 billion and segment profit growth of 52% to $179 million. Management cited strong demand across all three businesses and contributions from the acquisition of Advanced Diabetes Supply (ADS).
Alt said ADS integration is progressing well, and management described at-Home Solutions as benefiting from a dual strategy as both a direct-to-home distributor and a direct provider. Hollar discussed the company’s ContinuCare Pathway program, designed to simplify diabetes supply management for partner pharmacies and patients, and said it is already supporting over 11,000 pharmacies. He also cited a partnership with Publix Super Markets tied to the company’s pharma business.
In Nuclear and Precision Health Solutions, management highlighted continued momentum in Theranostics, with revenue growth exceeding 30% for the quarter. Hollar said the company has more than 70 products in its pipeline, “largely dominated by novel Theranostics in the areas of oncology and urology,” and described opportunities to connect nuclear capabilities with MSO and specialty businesses to support community practices building Theranostics programs.
OptiFreight Logistics delivered revenue growth of over 30% in the quarter, according to Alt, driven by new customer wins and expanded utilization among existing customers. Hollar said investments in the company’s TotalVue Insights platform support its value proposition in cost savings, transparency, and operational efficiency, and he described progress in expanding into the pharmacy space.
Guidance raised again; cash flow and capital allocation remain in focus
Cardinal Health raised fiscal 2026 non-GAAP diluted EPS guidance to a range of $10.15 to $10.35, up from prior interim guidance of “at least $10.” Alt said the updated outlook implies year-over-year EPS growth of 23% to 26%.
- Pharma segment: Revenue guidance unchanged; segment profit growth outlook raised to 20% to 22% (from 16% to 19%).
- GMPD: Revenue outlook updated to 1% to 3% growth; segment profit guidance raised to approximately $150 million, with management expecting normalization in Q3 and sequential profit growth from Q3 to Q4.
- Other businesses: Revenue guidance unchanged at 26% to 28% growth; segment profit growth outlook raised to 33% to 35% (from 29% to 31%), with tougher comparisons expected as the company laps ADS in Q4 and prior-year Theranostics growth in Q3.
Below the operating line, Cardinal Health lowered its effective tax rate outlook to 21% to 23% from 22% to 24%, citing first-half performance and expected positive discrete items in the back half. The company also lowered its diluted weighted average share count assumption to 237 million to 238 million, reflecting the Q2 accelerated share repurchase program. Adjusted free cash flow guidance remained $3 billion to $3.5 billion for the year.
Year to date, the company generated $1.8 billion in adjusted free cash flow and ended the quarter with $2.8 billion of cash. Alt said Moody’s adjusted leverage ratio was 3.2x, back within the company’s targeted range of 2.75x to 3.25x, which management said provides flexibility to evaluate future capital allocation. Executives reiterated a disciplined framework and said they remain open to opportunistic actions, while noting that the company’s strategy is not predicated on significant M&A.
About Cardinal Health (NYSE:CAH)
Cardinal Health is a multinational healthcare services and products company headquartered in Dublin, Ohio. Tracing its roots to the early 1970s, the company has grown into a major provider of supply chain and distribution services for the healthcare sector. Cardinal Health operates across a range of service lines that support hospitals, health systems, pharmacies, physician offices and clinical laboratories.
The company’s core activities include the wholesale distribution of branded and generic pharmaceuticals, the supply and distribution of medical-surgical products, and the provision of logistics and inventory management solutions.
