Cardinal Health 2025-26: FY26 EPS $9.30-$9.50 (+13-15%)
FY25 (Jun 2025 FYE) revenue $222.58B (-2%); Op income $2.28B (+83%); NI $1.56B (+83%); EPS $6.45 (+87%). Q4 Pharma & Specialty Solutions revenue +22% ex-customer contract expiration / segment profit +11%. GMPD Q4 revenue +3% / segment profit highest in years. FY26 guide raised to EPS $9.30-$9.50 (+13-15% growth) — driven by liability classification + stronger Pharma + other growth businesses. Pharma revenue growth +11-13% from new customer wins.
Key takeaways
- Operating income +83% — the cleanest cash story in healthcare distribution. Op margin rose to 1.0% (small but meaningful for distribution) on Pharma growth + GMPD recovery + Other Growth Businesses scaling.
- Pharma & Specialty Solutions Q4 revenue +22% ex-customer contract expiration. Segment profit +11% to $535M. Brand + specialty pharmaceutical sales growth driving. Generics program also positive.
- GMPD (Global Medical Products & Distribution) profit at highest in years. Q4 segment profit $70M; revenue +3% to $3.2B on volume growth from existing customers. Years of GMPD margin pressure now behind.
- FY26 EPS guide raised to $9.30-$9.50. +13-15% growth from FY25 GAAP EPS $6.45. Driven by (a) liability classification impact, (b) stronger Pharma performance, (c) Other growth businesses.
- New customer wins annualizing. Pharma revenue +11-13% growth in FY26 reflects new customer ramp (notably onboarded major customers; segment profit guide raised).
Business
Cardinal Health is a leading global healthcare services + medical products distributor. Three reporting segments:
- Pharmaceutical & Specialty Solutions (~88% of revenue): Distribution of brand-name + generic pharmaceuticals + specialty drugs to retail + hospital + physician + specialty pharmacy customers. Highest revenue but lowest margin segment (operating margin 0.8%).
- GMPD (Global Medical Products & Distribution) (~7% of revenue): Branded + private label medical/surgical products distribution. Operating margin recovery year FY25. Q4 highest profit in years.
- Other (Other Growth Businesses) (~5% of revenue, growing): At-Home Solutions + Nuclear & Precision Health Solutions + OptiFreight Logistics + new growth platforms. Higher-margin growth segment.
Strategic positioning: alongside McKesson + Cencora (formerly Amerisource Bergen), Cardinal is one of three dominant US pharmaceutical distributors. Operating margin in distribution is structurally low (1-1.5%); growth is from volume + specialty mix + Other Growth Businesses scaling.
FY25 financial performance (Jun 2025 FYE)
| Metric (FY) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue ($B) | 204.98 | 226.83 | 222.58 |
| Gross profit ($B) | 6.89 | 7.41 | 8.17 |
| Op income ($B) | 0.75 | 1.24 | 2.28 |
| Op margin | 0.4% | 0.5% | 1.0% |
| EBITDA ($B) | 1.44 | 1.96 | 3.11 |
| Net income ($M) | 330 | 852 | 1,561 |
| Diluted EPS ($) | 1.26 | 3.45 | 6.45 |
| FCF ($B) | 2.36 | 3.25 | 1.85 |
| Capex ($M) | -481 | -511 | -547 |
| Total debt ($B) | 5.18 | 5.61 | 9.35 |
| Dividends ($M) | -525 | -499 | -494 |
| Buyback ($M) | -2,000 | -750 | -765 |
The earnings print: Revenue -2% on customer contract expiration headwind, but op income +83% and EPS +87% on margin expansion + GMPD recovery + Other Growth Businesses contribution.
Total debt jumped to $9.35B (+$3.74B YoY) reflecting M&A or working capital cycle. Buyback held at $-765M in line with FY24.
Capital allocation
- Capex: $-547M FY25 (0.2% of revenue). Capital-light distribution.
- Dividends: $-494M FY25 (held flat at $1.99/share annual).
- Buybacks: $-765M FY25 (similar to FY24).
- M&A: Bolt-ons in Other Growth Businesses (e.g., specialty + nuclear + at-home).
- Debt: $9.35B (+$3.74B YoY). Working capital cycle + likely M&A funding.
FY26 outlook (per Q4 FY25 call, 2025-08-12)
| FY26 guide | Range / point |
|---|---|
| Diluted EPS | $9.30-$9.50 (+13-15% growth) |
| Pharma revenue growth | +11-13% (new customer wins) |
| Pharma segment profit | Raised guidance |
| GMPD revenue growth | Continued |
| Other Growth Businesses | Continued growth |
| Liability classification impact | Positive contributor |
The EPS guide raised reflects: stronger Pharma (new customer ramp + brand/specialty growth) + GMPD recovery + Other growth businesses + liability classification benefit.
Key risks
- Customer concentration: Pharma distribution has major retail + hospital pharmacy customer relationships. Loss or margin compression on a major contract is meaningful.
- GMPD margin sustainability: Recent margin recovery; soft surgery volumes or pricing competition could compress.
- Specialty drug mix: Specialty pharmaceutical distribution growing faster but margin profile differs from generics + branded.
- Tariff regime: Pharma supply chain affected by trade policy; pass-through generally works but with friction.
- Generic drug pricing: Competitive pricing on commodity generics flows through to wholesaler margins.
- PBM regulatory environment: Indirectly affects Pharma distribution + payer relationships.
Bottom line
CAH FY25 (Jun FYE) is the margin recovery + Pharma growth year. Revenue -2% but op income +83%, EPS +87%. FY26 guide $9.30-$9.50 EPS (+13-15%). Pharma + GMPD + Other Growth Businesses all contributing. Risks are customer concentration + GMPD margin sustainability + specialty drug mix. At low base operating margin (1%), continued operating leverage compounds.
Citations
- Cardinal Health Inc. FY25 Form 10-K (filed August 2025, SEC EDGAR; June 30, 2025 fiscal year end).
- CAH Q4 FY25 earnings call, 2025-08-12 — Pharma Q4 revenue $55.4B (+22% ex-customer expiration, segment profit +11% to $535M); GMPD Q4 revenue +3% to $3.2B (highest profit in years); FY26 EPS guide $9.30-$9.50 (+13-15%); Pharma revenue growth +11-13% from new customer wins.
- Internal financial_statements view (consolidated annual + cash flow + capital structure).