Cardinal Health NYSE: CAH reported what executives described as “another strong quarter” in fiscal third-quarter 2026, citing broad-based demand, continued momentum in pharmaceutical distribution and specialty, and solid performance from its faster-growing businesses. Management also raised full-year guidance for non-GAAP earnings per share and adjusted free cash flow, while noting a GAAP goodwill impairment tied to the Navista business.
Third-quarter results and key drivers
CFO Aaron Alt said total company revenue increased 11% year over year to $61 billion, while gross profit grew 18% to $2.5 billion. SG&A rose 17% on a headline basis, which Alt said included the impact of M&A; excluding M&A, SG&A grew 7% due to increased volumes and “purposeful investments in teams and technology.” Enterprise operating earnings increased 18% to $956 million.
Below operating income, Cardinal Health recorded net interest and other expense of $117 million, which Alt attributed primarily to higher financing costs tied to prior acquisitions. The company’s non-GAAP effective tax rate was 10.2% in the quarter, driven by “discrete tax planning items,” including “a multi-year benefit” that Alt said contributed approximately $0.35 to quarterly non-GAAP EPS.
Non-GAAP EPS was $3.17, up 35% year over year. Alt also highlighted share repurchases, saying average diluted shares were 236 million and the company completed a $250 million repurchase program in April. He said fiscal 2026 year-to-date share repurchases totaled $1 billion, exceeding the company’s baseline target by $250 million.
Pharmaceutical and Specialty Solutions: demand, GLP-1 mix, and specialty momentum
Cardinal Health’s Pharmaceutical and Specialty Solutions segment posted revenue of $56.1 billion, up 11%, which Alt said was “primarily driven by existing customer growth across the portfolio” and strong demand across specialty, generics, and consumer health. He noted that GLP-1s contributed 6 percentage points to segment revenue growth, with GLP-1 revenue up “over 30%” but moderating from the prior quarter.
Alt said the GLP-1 contribution was “generally offset” by a 6-percentage-point revenue headwind from Inflation Reduction Act (IRA) wholesale acquisition cost pricing adjustments. Later in the call, Alt added that brand dynamics such as loss of exclusivity moving to generics can be a “downdraft on revenue, but a positive…from a profit perspective.”
Segment profit rose 18% to $784 million, with Alt attributing the outperformance versus revenue growth to brand and specialty contributions and noting that Cardinal Health maintained its economics on distribution contracts despite WAC changes. CEO Jason Hollar reiterated confidence in the distribution model, stating the company expects to continue receiving “the same amount” of fee-for-service compensation because “the services are certainly not changing.”
Specialty remained a key focus. Alt said specialty revenue grew more than 20% in the quarter, and Cardinal Health still expects specialty revenue to exceed $50 billion in fiscal 2026. Hollar also said oncology growth was “over 30%” in the quarter. He highlighted progress in the Specialty Alliance MSO strategy, including three tuck-in acquisitions since last quarter that expanded the physician network into a 33rd state.
On upstream specialty services, Hollar said the Synexus patient support business onboarded three new pharmaceutical therapies during the quarter, with another 10 scheduled over the next two quarters.
Navista goodwill impairment: GAAP impact, strategy unchanged
Alt said GAAP earnings were impacted by a $184 million pre-tax goodwill impairment charge related to the Navista business. He said the non-cash impairment resulted “primarily due to changes in the risk profile of the business plans resulting in an increase in the discount rate,” and emphasized it did not affect non-GAAP results.
In response to analyst questions, Hollar said the impairment reflected a strategic pivot within oncology MSOs toward an equity arrangement rather than a non-equity, more transactional model. He said the change “does not change the broader strategy” for MSOs or specialty, and later confirmed the issue was “entirely” specific to Cardinal Health’s go-to-market prioritization rather than a broader read-through for the oncology or MSO marketplace.
GMPD and tariffs: brand growth offset by tariff headwinds
In the Global Medical Products and Distribution (GMPD) segment, revenue was $3.1 billion, roughly flat year over year. Alt said lower distribution volumes were offset by Cardinal Health brand growth. He reported Cardinal Health brand grew more than 5% in the U.S., while segment profit declined to $25 million due to “the adverse net impact of tariffs.”
Hollar attributed volume softness in part to a previously disclosed loss of a large government customer (the VA) and a customer merger where Cardinal Health did not retain all volumes, adding that those customers carried a relatively low mix of Cardinal Health brand products.
On tariffs, Alt noted exposure is concentrated in GMPD. He said the Supreme Court ruled certain tariffs imposed under the International Emergency Economic Powers Act unlawful in February 2026 and a refund process is being developed, but Cardinal Health has not recognized any financial impact due to uncertainty around timing and administration. Alt said the company has paid roughly $200 million in IEEPA tariffs to date and previously shared impacts with customers; if refunds become more certain, the company would anticipate a net benefit “about half” of that amount due to repayment of customer pricing actions.
Other growth businesses: strong demand and ADS integration
Cardinal Health’s “Other” businesses—At-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight Logistics—posted revenue growth of 31% to $1.7 billion and profit growth of 34% to $179 million. Alt said results reflected robust demand across all three businesses and the acquisition of ADS, and he described theranostics growth in Nuclear as continuing with “over 30%” revenue growth in that area.
Hollar said ADS integration has reached a one-year milestone, including migrating ADS volumes into Cardinal distribution centers, onboarding nearly 1,000 employees, and adding nearly 500,000 new patients. He also cited growth in Cardinal Health’s Continued Care Pathway program, saying the team is serving 165,000 patients, up nearly 20% since January, and noted the company signed a lease for a new Sacramento distribution center.
In Nuclear and Precision Health Solutions, Hollar said the company announced an expansion of Actinium-225 production capabilities at its Center for Theranostics Advancement and that Actinium-225 has supported more than 15 clinical trials worldwide.
Guidance raised for fiscal 2026; early perspective on 2027
Alt raised Cardinal Health’s fiscal 2026 non-GAAP EPS outlook to $10.70 to $10.80, a $0.50 increase at the midpoint. He said about $0.13 of the increase came from operational strength in Pharma and the Other growth businesses, with the remainder from below-the-line items. The company also lifted adjusted free cash flow guidance to $3.3 billion to $3.7 billion from $3.0 billion to $3.5 billion.
Segment-level updates included:
- Pharmaceutical and Specialty Solutions: revenue expected at the lower end of the company’s prior range, with profit growth guidance raised and narrowed to 22% to 23% from 20% to 22%.
- GMPD: revenue outlook reiterated at 1% to 3% growth, with profit guidance held at $150 million.
- Other growth businesses: revenue growth guidance unchanged at 26% to 28%, while profit growth guidance increased to 36% to 38% from 33% to 35%.
Alt also updated below-the-line expectations, lifting interest and other expense guidance to about $340 million and lowering the full-year expected non-GAAP effective tax rate to approximately 19%, down from 21% to 23%, due to the discrete tax planning benefits realized in Q3.
Looking to fiscal 2027, Alt said the company remains confident in long-term targets and would provide more detail on the fourth-quarter call. Hollar added that management’s “job is to manage the entire income statement, year-over-year,” and said the company continues to believe in its long-term non-GAAP EPS growth target of 12% to 14%.
During Q&A, management also confirmed Solaris distribution volumes are beginning to ramp in the pharma business, while emphasizing that distribution contracts are modeled separately from acquisitions and that the fiscal 2026 impact would not be material due to timing late in the year.
Hollar closed by saying the company is “very pleased with another strong quarter” and remains focused on long-term execution and investment.
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.
Featured Stories
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Cardinal Health, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Cardinal Health wasn't on the list.
While Cardinal Health currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Enter your email address and we’ll send you MarketBeat’s list of ten stocks set to soar in Spring 2026, despite the threat of tariffs and what's happening in Iran. These ten stocks are incredibly resilient and are likely to thrive in any economic environment.
Get This Free Report
