Cardinal Health, Inc. Q1 FY2026 earnings call

• Strong start to fiscal '26 with continued operating momentum and broad-based performance, having strong double-digit profit growth across each of the 5 operating segments.
• Pharmaceutical and Specialty Solutions segment benefited from robust demand environment, progress in specialty with MSO platforms and BioPharma Solutions, and upcoming acquisition of Solaris Health which is expected to close shortly to add capabilities to the Specialty Alliance.
• GMPD continues to make steady progress against the improvement plan initiatives.
• Other growth businesses such as at-Home Solutions, Nuclear and Precision Health Solutions and OptiFreight Logistics showed continued acceleration, with at-Home Solutions seeing strength in demand and ADS integration synergies, Nuclear and Precision Health Solutions seeing strong Theranostics revenue growth, and OptiFreight seeing volume uplift.
• Investments in distribution centers, like the opening of a state-of-the-art consumer health logistics center and plans for new distribution centers, and efforts to modernize and optimize existing DCs for better supply chain efficiency.

Pharmaceutical and Specialty Solutions: Q1 revenue increased 23% to $59 billion, driven by Brand and Specialty Pharmaceutical sales growth from existing and new customers, including approximately 6 percentage points of revenue growth from GLP-1 sales. Profit increased by 26% to $667 million, driven by contributions from Brand and Specialty Products, MSO platforms and positive generic program performance. GMPD: Revenue increased 2% in Q1 to $3.2 billion, driven by volume growth from existing customers, with over 6% revenue growth in the U.S. for Cardinal Health brand. Profit increased by $38 million to $46 million in the quarter. Other businesses: Revenue increased 38% in Q1 to $1.6 billion, reflecting strong demand across all 3 businesses. Segment profit increased by 60% to $166 million, driven by strong growth across all 3 of the businesses, including the acquisition of ADS. The acquisitions of GIA and ION contributed approximately 8 points of the first quarter segment profit growth in Pharmaceutical and Specialty Solutions.

• Raised full year EPS guidance to a range of $9.65 to $9.85, equating to 17% to 20% EPS growth from the prior year.
• Increased adjusted free cash flow guidance to a new range of $3 billion to $3.5 billion for the full year.
• Increased Pharma revenue guidance to 15% to 17% growth from 11% to 13% growth, and Pharma segment profit guidance to 16% to 19% growth from 11% to 13% growth, with M&A expected to add approximately 8 percentage points to Pharma's profit growth in fiscal year '26.
• GMPD expected 2% to 4% revenue growth and at least $140 million in segment profit, with net tariff costs anticipated near the high end of $50 million to $75 million range.
• Other businesses revenue guidance remains unchanged at 26% to 28% growth, while segment profit guidance is up 4 percentage points to 29% to 31%.
• Interest and other expenses higher due to financing costs related to Solaris Health, but offset by Solaris' profit contribution.
• Lowered diluted weighted average shares outlook to approximately 238 million shares from the prior range of 238 million to 240 million shares.

Q: At June Investor Day, long-term Pharma and Specialty Solutions profit growth was raised, how to think about broader momentum and M&A contribution?

A: Jason and Aaron discuss Investor Day messages, utilization trends, strong performance translating to results, and M&A contribution including Solaris and others, with focus on executing plans and confident in guidance.

Q: Does assumptions include Rite Aid from CVS closing and policy changes?

A: Rite Aid volume contributing, policy changes aligned with access to affordable healthcare, neutral to positive if achieving objectives.

Q: Build between what can control and market strength in Pharma?

A: Focus on what can control, executing plans, demand strength and acquisitions contributing, confident in guidance.

Q: Sources of beat, sustainability, Part B vs Part D growth?

A: Focus on executing plans, comfortable with momentum and guidance, and no further breakdown provided on Part B vs Part D growth.

Q: Cadence of other segment growth, synergy realization?

A: Strong growth across other segment businesses, ADS integration synergies realized quickly, with each of the 3 businesses in other segment performing strongly.

Q: Cardinal Health brand growth, products driving it?

A: Strength in clinically differentiated products like compression, electrocardiography, surgical kitting, syringes, etc.

Q: Same-store generic unit growth drivers?

A: Consistent market dynamics, strong volume in generic portfolio.

Q: Biosimilar policy, impact?

A: Conceptually positive, but details needed to understand exact impact.

Q: Onboarding of MSO acquisitions' distribution, Solaris?

A: Onboarding of ION and GIA distribution included in guidance, Solaris not yet closed, no update to guidance on its distribution yet.

Q: Competitor divestment impact on GMPD?

A: Focus on service level and performance to be partner of choice.

Q: MSO assets, Pharma spending trends?

A: Broad specialty growth, MSOs have diverse revenue streams with focus on autoimmune, urology, oncology.