Cardinal Health Raises FY26 EPS and Free Cash Flow Outlook Amid Strong Q3 Non-GAAP Performance
Summary
Cardinal Health reported strong Q3 non-GAAP results, with revenue up 11% and non-GAAP diluted EPS up 35%, and raised its full-year fiscal 2026 non-GAAP EPS and adjusted free cash flow guidance, alongside completing additional share repurchases.
Key Events
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Strong Q3 Non-GAAP Performance
The company reported third-quarter revenue of $60.9 billion, an 11% increase year-over-year. Non-GAAP operating earnings rose 18% to $956 million, and non-GAAP diluted EPS increased 35% to $3.17, driven by strong performance in Pharmaceutical and Specialty Solutions.
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Raised Fiscal Year 2026 Outlook
Cardinal Health raised and narrowed its fiscal year 2026 non-GAAP diluted EPS guidance to a range of $10.70 to $10.80, representing 30% to 31% growth. Adjusted free cash flow guidance was also raised to $3.3 billion to $3.7 billion.
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Goodwill Impairment Charge
GAAP operating earnings decreased 30% to $509 million and GAAP diluted EPS decreased 20% to $1.69, primarily reflecting a $184 million pre-tax goodwill impairment in the Navista & ION reporting unit.
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Share Repurchase and Debt Reduction
The company completed an additional $250 million accelerated share repurchase program, bringing the fiscal year 2026 total to $1.0 billion. Cardinal Health also reduced debt by completing a $100 million term loan payment ahead of schedule, lowering its leverage ratio to 3.0X.
Analysis
This 8-K filing is highly important as Cardinal Health reported robust third-quarter non-GAAP results and, more significantly, raised and narrowed its full-year fiscal 2026 non-GAAP EPS and adjusted free cash flow guidance. This indicates strong operational momentum and management's increased confidence in future performance. While GAAP operating earnings and EPS decreased due to a non-cash goodwill impairment, the company's focus on non-GAAP metrics, coupled with substantial share repurchases and debt reduction, signals a healthy financial position and commitment to shareholder returns. Investors should view the raised outlook as a strong positive, suggesting continued growth and stability.
At the time of this filing, CAH was trading at $203.69 on NYSE in the Trade & Services sector, with a market capitalization of approximately $47.7B. The 52-week trading range was $136.71 to $233.60. This filing was assessed with positive market sentiment and an importance score of 8 out of 10.