Cardinal Health Q4 FY2026 Earnings: Revenue Rose 6% as Margins Expanded

Cardinal Health (NYSE: CAH) reported fiscal Q4 2026 revenue of $63.7 billion, up 6% year over year, while GAAP diluted EPS rose 70% to $1.70 from $1.00. Pharmaceutical and Specialty Solutions generated most of the revenue growth, while a one-time tariff refund amplified profit in Global Medical Products and Distribution. Excluding the refund, non-GAAP diluted EPS still increased 25% to $2.60.

Core earnings data

For the quarter ended June 30, 2026, gross profit grew faster than operating expenses: gross profit increased 16%, while distribution, selling, general and administrative expenses rose 10%. That operating leverage, along with lower acquisition-related compensation and asset disposal charges, helped GAAP operating earnings rise 70%.

Non-GAAP operating earnings increased 30%. Non-GAAP EPS grew faster at 40%, supported by a lower effective tax rate and fewer diluted shares, although higher interest and other expense provided a partial offset.

The principal quarterly metrics were:

GAAP results included a $122 million pretax impairment of Cardinal Health’s equity interest in Outcomes. This item was excluded from non-GAAP earnings.

Business and segment performance

Pharmaceutical and Specialty Solutions accounted for nearly all of the consolidated revenue increase. GMPD reported a sharp profit improvement despite lower revenue, but that result requires adjustment for the tariff refund. The Other businesses delivered revenue and profit growth without that one-time benefit.

Pharmaceutical and Specialty Solutions benefited from higher brand and specialty pharmaceutical sales to existing customers. Segment profit also received contributions from brand and specialty products and positive generics program performance.

GMPD revenue declined because of lower distribution volumes and the expected repayment of tariff refunds to customers, partly offset by Cardinal Health brand growth. Other revenue increased across Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight Logistics, with profit growth led by OptiFreight and at-Home Solutions.

The tariff refund amplified GMPD profit, but underlying earnings still grew

Cardinal Health recognized a one-time $100 million operating profit benefit from IEEPA tariff refunds in GMPD. That benefit accounted for two-thirds of the segment’s reported $150 million quarterly profit. Excluding it, GMPD profit was $50 million, down 29% from $70 million a year earlier rather than showing the substantial increase implied by the reported figure.

At the consolidated level, the refund contributed $74 million after tax and $0.31 per diluted share. Excluding it, non-GAAP net earnings increased 21% to $608 million and non-GAAP EPS rose 25% to $2.60. This shows that the company’s broader earnings improvement was not solely dependent on the refund, even though the one-time item materially increased reported growth rates.

Profitability, cash flow and the balance sheet

The gap between GAAP and non-GAAP earnings remained significant. In addition to the Outcomes impairment, quarterly adjustments included $121 million of amortization and other acquisition-related costs, $44 million of acquisition-related compensation and $40 million of restructuring and severance costs.

EPS also benefited from factors below operating profit. The GAAP effective tax rate declined to 27.9% from 36.9%, while the non-GAAP rate fell to 22.5% from 26.3%. Diluted weighted-average shares decreased to 235 million from 240 million. Net interest expense, however, increased 7% to $79 million.

For the full fiscal year, operating cash flow rose to $5.174 billion from $2.397 billion, while adjusted free cash flow increased to $4.971 billion from $2.488 billion. Working-capital movements contributed to the improvement: inventory used $488 million of cash compared with $1.816 billion in FY2025, receivables used $408 million compared with $833 million, and accounts payable provided $3.463 billion compared with $2.732 billion.

Cash and equivalents ended the year at $4.856 billion, up from $3.874 billion. Cardinal Health spent $1.358 billion on treasury shares during FY2026, reported as approximately $1.4 billion in its earnings release. The board also increased the repurchase authorization by $5.0 billion, bringing total authorization to $6.4 billion as of August 2026; the authorization itself does not guarantee that all shares will be repurchased.

Fiscal 2027 guidance

Cardinal Health introduced FY2027 non-GAAP diluted EPS guidance of $12.40 to $12.60. The stated 13% to 15% growth rate uses adjusted FY2026 EPS of $10.95, which excludes the $0.31 tariff-refund benefit. Compared with reported FY2026 non-GAAP EPS of $11.26, the range represents approximately 10% to 12% growth.

The outlook includes the estimated effects of the completed Strive Medical acquisition and the announced acquisition of AdaptHealth’s Diabetes Health business.

The adjusted free cash flow range would be approximately 20% to 30% below FY2026, despite the EPS growth outlook. Cardinal Health did not provide a reason for that expected decline in the supplied release.

Management perspective

CEO Jason Hollar emphasized that all five operating segments produced double-digit profit growth for FY2026 even before the GMPD tariff recovery. Management described the performance as evidence of broad operational execution and entered FY2027 expecting continued growth, including contributions from recent tuck-in acquisitions.

Recent insider transactions

The supplied insider data reports 418,341 shares purchased across nine transactions and 5,074 shares sold across two transactions during the latest six-month period, producing net purchases of 413,267 shares. The most recent dated entries on August 4, 2026 were stock awards to eight executives at a reported grant price of $0, but share counts were not included in the supplied extract.

The aggregate activity and recent transactions with nonzero reported values were:

The supplied aggregate data does not clearly distinguish open-market purchases from equity-compensation activity, so it does not by itself establish insiders’ view of the company’s valuation or prospects.

Risks investors need to watch

• GMPD’s reported profit included a nonrecurring benefit. Excluding the $100 million tariff refund, quarterly segment profit declined 29%. Future progress needs to come from operating improvements rather than a repeat of the refund.
• Cash flow is expected to normalize. FY2027 adjusted free cash flow guidance of $3.5 billion to $4.0 billion is below the FY2026 result, while capital spending is expected to increase to approximately $700 million.
• Revenue growth remains concentrated in pharmaceutical distribution. Brand and specialty sales to existing customers drove most of the quarter’s increase, leaving results exposed to customer volumes, contract renewals, pharmaceutical pricing and regulatory changes.
• Acquisitions create integration and impairment exposure. FY2026 included substantial acquisition-related costs, a $122 million Outcomes investment impairment and a $184 million goodwill impairment related to the Navista and ION reporting unit. FY2027 guidance also incorporates additional tuck-in acquisitions.
• Interest expense has increased. Full-year net interest expense rose 62% to $348 million, and higher interest and other expense partially offset quarterly non-GAAP EPS growth.

Conclusion

Cardinal Health’s fiscal Q4 2026 combined moderate revenue growth with faster underlying profit growth, led by Pharmaceutical and Specialty Solutions, lower tax rates and a reduced share count. The tariff refund materially enhanced GMPD and consolidated results, but earnings still advanced after removing that benefit. For FY2027, the main points to monitor are whether GMPD can improve from its refund-adjusted base, whether acquisition contributions meet the guidance assumptions and why adjusted free cash flow is expected to decline while EPS continues to grow.