Cardinal Health — First Quarter Fiscal Year 2027 Earnings Summary

Financial Performance:

• Revenue increased 5% year-over-year to $67.5 billion in Q1 FY27, compared to $64.0 billion in Q1 FY26.
• GAAP operating earnings rose 13% to $753 million from $668 million in the prior year period.
• GAAP diluted EPS increased 27% to $2.38, up from $1.88 in Q1 FY26.
• Non-GAAP operating earnings grew 17% to $1.0 billion, compared to $857 million in Q1 FY26.
• Non-GAAP diluted EPS increased 28% to $3.26, up from $2.55 in Q1 FY26.
• Net earnings attributable to Cardinal Health, Inc. increased 23% to $554 million from $450 million in Q1 FY26.
• Non-GAAP net earnings attributable to Cardinal Health, Inc. increased 24% to $759 million from $611 million in Q1 FY26.
• The effective tax rate was 19.2% in Q1 FY27, down from 24.1% in Q1 FY26; the non-GAAP effective tax rate was 18.5%, down from 21.9%.
• Net cash provided by operating activities was $1.398 billion, up from $973 million in Q1 FY26.
• Non-GAAP adjusted free cash flow was $1.583 billion, compared to $1.285 billion in Q1 FY26.
• Gross margin was 12% in Q1 FY27, consistent with the 12% growth rate in gross margin dollars ($2.596 billion vs. $2.319 billion).
• Distribution, selling, general and administrative expenses were $1.595 billion, a 9% increase from $1.461 billion in Q1 FY26.

Guidance and Future Outlook:

• Cardinal Health raised its fiscal year 2027 non-GAAP diluted EPS guidance to $12.80 to $13.00, up from the previous range of $12.40 to $12.60.
• The updated guidance reflects 17% to 19% growth compared to the FY26 ex-tariff refund baseline and 14% to 15% growth from reported FY26 results.
• Pharmaceutical and Specialty Solutions segment profit growth guidance was raised to 10% to 12%, from the prior range of 8% to 11%.
• Other segment profit growth guidance was raised to 17% to 20%, from the prior range of 15% to 18%.
• Other segment revenue growth guidance was raised to 12% to 14%, from the prior range of 11% to 13%.
• The non-GAAP effective tax rate guidance was lowered to 18.5% to 19.5%, from the prior range of 19.0% to 20.0%.
• Diluted weighted average shares outstanding guidance was updated to 231 million to 232 million, down from approximately 233 million, reflecting the timing of a $500 million accelerated share repurchase in Q1.

Business Segments and Product Lines:

• Pharmaceutical and Specialty Solutions: Revenue increased 6% to $62.6 billion, driven by brand and specialty pharmaceutical sales growth from existing customers. Segment profit increased 17% to $783 million, driven by contributions from brand and specialty products and positive generics program performance.
• Global Medical Products and Distribution: Revenue remained approximately flat at $3.2 billion, driven by growth in Cardinal Health Brand offset by lower distribution revenue. Segment profit decreased 28% to $33 million, due to unfavorable distribution and foreign exchange impacts partially offset by growth in Cardinal Health Brand.
• Other: Revenue increased 7% to $1.8 billion, driven by growth across Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight Logistics. Segment profit increased 16% to $193 million, driven by growth across the same three operating segments.

Market and Competitive Landscape:

• The company highlighted a strong start to fiscal 2027 demonstrating consistent execution against strategic priorities.
• Management noted benefits from focused investments, disciplined operations, and the strength of a diversified portfolio.
• The company entered into a binding letter of intent to renew its pharmaceutical distribution agreements with CVS Health, reinforcing a long-standing strategic relationship and enabling continued volume growth.
• Cardinal Health announced a real-world evidence study, INSIGHT-IBD, in partnership with Eli Lilly to understand treatment patterns and outcomes for patients with IBD in routine clinical practice.

Risks and Challenges:

• Risks include the ability to manage uncertainties associated with the pricing of branded pharmaceuticals, including regulatory changes.
• Risks related to tariffs, including the potential inability to offset increased costs.
• Risks arising from the conflict with Iran, including potential supply disruptions, delays, or inability to forecast cost increases.
• Risks associated with litigation matters, including Department of Justice investigations focused on potential violations of the Anti-Kickback Statute and False Claims Act.
• Risks regarding the performance of the generics program, including generic deflation and the ability to offset it through sourcing ventures.
• Risks related to the successful operation of recently acquired entities and the continued execution of GMPD Improvement Plan initiatives.

Management Commentary and Tone:

• Jason Hollar, CEO, stated that results reflect a strong start to fiscal 2027 and demonstrate consistent execution against strategic priorities.
• Management expressed confidence in the company's ability to benefit from focused investments and disciplined operations.
• The tone was positive, citing the strong performance of the quarter as the basis for raising the full-year outlook.

Other Key Points:

• Cardinal Health completed a $500 million share repurchase program in the first quarter.
• The company anticipates completing the acquisition of AdaptHealth's Diabetes Health business in Q3 of fiscal 2027.
• Cardinal Health announced an additional $1.0 billion in uncommitted revolving credit facilities.
• The company does not provide forward-looking guidance on a GAAP basis due to the inability to reasonably estimate certain excluded financial information.
• Non-GAAP measures exclude items such as LIFO charges, state opioid assessments, restructuring costs, acquisition-related costs, impairments, and litigation charges to facilitate comparison of ongoing business performance.