CAH earnings analysis
What we found in CAH's 10-K: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Cardinal Health delivered strong fiscal 2026 growth, with revenue up 14% to $254.248 billion, GAAP EPS up 12% to $7.23, and operating cash flow increasing to $5.174 billion. Pharma and the acquired MSO and at-Home businesses drove results, while GMPD profit recovered despite essentially flat revenue. The outlook is strategically constructive, but the new IRS tax disputes, expanding tariff exposure, and the Navista & ION impairment raise execution and downside risks.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue Accelerated to $254.2B
- Fiscal 2026 revenue increased 14% to $254.248 billion from $222.578 billion in fiscal 2025. Revenue was $226.827 billion in fiscal 2024, indicating a significant two-year recovery despite the OptumRx contract expiration at the end of June 2024.
- EPS and Operating Earnings Expanded
- GAAP diluted EPS rose 12% to $7.23 from $6.45, following a sharp increase from $3.45 in fiscal 2024. Non-GAAP diluted EPS increased 37% to $11.26 from $8.24, while non-GAAP operating earnings grew 30% to $3.624 billion.
- Margins Improved Modestly
- Gross margin increased 20% to $9.774 billion, and the gross margin rate improved 17 basis points year over year. Consolidated operating earnings increased 15% to $2.613 billion, implying an operating margin of approximately 1.03% versus approximately 1.02% in fiscal 2025.
- Pharma Led Segment Growth
- Pharma remained the primary growth engine, with revenue of $234.833 billion and segment profit of $2.783 billion. Management attributed the profit increase to branded and specialty pharmaceuticals, the generics program, and MSO acquisitions.
- Specialty MSO Platform Expanded
- The company completed the approximately $1.9 billion Solaris Health acquisition, adding more than 750 providers across more than 250 practice locations in 14 states. Cardinal Health owns approximately 76% of The Specialty Alliance following the transaction.
- Cash Generation Supported Returns
- Net cash provided by operating activities increased to $5.174 billion from $2.397 billion in fiscal 2025 and $3.762 billion in fiscal 2024. Capital expenditures were $649 million, up from $547 million in fiscal 2025, while the company deployed $1.4 billion for share repurchases and paid $491 million in dividends.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- New IRS Tax Audit Exposures
- The IRS issued two Notices of Proposed Adjustment during fiscal 2026. One challenges the deductibility of self-insurance losses and could create approximately $400 million of additional tax expense plus interest and approximately $1.4 billion of additional tax liability plus interest; the other could create approximately $160 million of additional federal tax liability plus interest.
- Tariff and Supply Disruption Risk
- Trade-policy exposure broadened beyond the approximately $200 million of IEEPA tariffs paid to date. Management states that proposed tariffs on generic pharmaceuticals could reach 100% beginning in 2028 and 200% beginning in 2029, potentially increasing costs or reducing supply; the company also said existing tariff mitigation actions have not fully offset adverse impacts.
- MSO Integration and Impairment Risk
- The MSO strategy showed a new impairment signal: Cardinal recognized a $184 million pre-tax goodwill impairment for Navista & ION after reductions in long-term plan assumptions and an increased risk profile. Management notes that a hypothetical 0.5 percentage-point increase in the discount rate to 11.0% or a 1.0 percentage-point decrease in terminal growth to 2.0% would reduce estimated fair value by approximately $70 million further.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $7.23
- Gross margin
- 3.85%
- Operating margin
- 1.03%
- Segment
- Pharmaceutical and Specialty Solutions: $234.833 billion revenue, up 15%; $2.783 billion segment profit, up 23%.
- Segment
- Global Medical Products and Distribution: $12.719 billion revenue, up 1%; $258 million segment profit, up 91%.
- Segment
- Other: $6.792 billion revenue, up 26%; $707 million segment profit, up 37%, driven by at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics.
What they said about what is next.
The 10-K does not provide annual revenue or EPS guidance; annual outlook was provided separately in the earnings release/call. The MD&A states that fiscal 2027 capital expenditures are expected to be approximately $700 million, primarily for manufacturing and distribution infrastructure and technology investments.
The filing reads better than the one before it.
What came before.
- 10-Q · April 30, 2026
- Cardinal Health reported Q3 FY26 revenues of $60.9 billion, an 11% increase year-over-year, driven by branded and specialty pharmaceutical sales growth. Despite a GAAP EPS decline of 20% to $1.69 due to goodwill…
- 10-Q · November 1, 2024
- Cardinal Health reported revenue of $52,277 million, down 4% year-over-year, driven by the expiration of OptumRx contracts (which generated 17% of FY2024 revenue). Gross margin rose 9% to $1,902 million (3.64% of sales)…
- 10-K · August 14, 2024
- Cardinal Health reported FY2024 revenue of $226,827 million and net earnings attributable to Cardinal Health of $852 million (diluted EPS $3.45), reflecting year-over-year improvement from $204,979 million revenue and…
- 10-Q · February 1, 2024
- Cardinal Health reported Q2 FY2024 revenue of $57,445 million, up 12% year-over-year, with GAAP diluted EPS of $1.43 and non-GAAP diluted EPS of $1.82 (non-GAAP EPS up 38% YoY). Pharmaceutical drove the growth…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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