Cardinal Health Shares Rise After Earnings as 2027 Profit Outlook Tops Estimates

Cardinal Health shares rose Tuesday after the healthcare distributor issued fiscal 2027 profit guidance above Wall Street expectations and reported a stronger-than-expected fourth-quarter profit, even as quarterly revenue came in below consensus. Reuters reported the stock was up more than 4% in premarket trading after the results.

Cardinal Health said fourth-quarter revenue increased 6% from a year earlier to $63.7 billion, while GAAP diluted earnings per share rose 70% to $1.70. Reported non-GAAP diluted EPS was $2.91, up 40%, but that figure included a one-time 31-cent benefit tied to the recognition of an International Emergency Economic Powers Act tariff refund. Excluding that item, Cardinal Health said non-GAAP EPS was $2.60, up 25%.

Profit beat estimates even after removing the tariff benefit

The headline earnings figure was comfortably above the $2.42 per-share average analyst estimate cited by Reuters. The comparison remains favorable even after excluding the 31-cent tariff-refund benefit, because the company’s $2.60 underlying non-GAAP EPS still exceeded that consensus figure.

Revenue was less clear-cut. Cardinal Health reported $63.67 billion for the quarter, compared with the $65.03 billion average estimate reported by Reuters. That means the quarter combined a sales miss with stronger profit performance, a mix that puts more emphasis on the composition of earnings rather than revenue growth alone.

Cardinal Health’s Global Medical Products and Distribution business was the main source of the one-time tariff effect. Revenue in that segment fell 2% to $3.1 billion, while segment profit rose to $150 million from $70 million a year earlier. The company said the profit increase was driven primarily by IEEPA tariff refunds. Its reconciliation shows segment profit would have been $50 million excluding the $100 million refund, down 29% from the prior-year period.

The distinction matters for the forward outlook because Cardinal Health is not using the tariff benefit as the base for its fiscal 2027 growth target. The company said its projected 13% to 15% increase in non-GAAP EPS is measured from adjusted fiscal 2026 results that exclude the tariff refund.

For the full fiscal year, Cardinal Health generated $254.2 billion in revenue, up 14%. Reported non-GAAP diluted EPS increased 37% to $11.26, while the figure excluding the tariff refund was $10.95, up 33%. Operating cash flow was $5.2 billion and adjusted free cash flow was $5.0 billion.

Specialty pharmaceuticals remain the main operating driver

The company’s largest business, Pharmaceutical and Specialty Solutions, continued to carry most of the revenue base. Fourth-quarter segment revenue increased 6% to $58.8 billion, with Cardinal Health attributing the increase to growth in brand and specialty pharmaceutical sales from existing customers. Segment profit rose 21% to $645 million, helped by contributions from brand and specialty products as well as positive performance in the generics program.

That operating mix is central to the fiscal 2027 outlook. Reuters said continued demand for specialty medicines was a key reason the profit forecast came in above Wall Street expectations. Specialty distribution has become an increasingly important part of the large U.S. drug distributors’ earnings mix because many of the medicines involved treat complex conditions and require more specialized handling and services than traditional high-volume drugs.

Cardinal Health expects fiscal 2027 non-GAAP diluted EPS of $12.40 to $12.60. Reuters said analysts on average had been expecting $12.04 per share, putting even the low end of the company’s range above consensus. This is Cardinal Health’s initial fiscal 2027 outlook rather than an increase to a previously issued full-year range.

Within Pharmaceutical and Specialty Solutions, Cardinal Health expects revenue growth of 3% to 5% and segment profit growth of 8% to 11% in fiscal 2027. That points to a slower revenue growth rate than the 15% recorded by the segment for all of fiscal 2026, but management is still forecasting profit growth to outpace sales growth.

The company’s other businesses are also part of the earnings plan. Global Medical Products and Distribution is expected to post 2% to 4% revenue growth and $200 million to $220 million of segment profit in fiscal 2027. Cardinal Health’s group of smaller operations, including Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight Logistics, is expected to generate revenue growth of 11% to 13% and segment profit growth of 15% to 18%.

The guidance also incorporates the estimated effect of recent home-care transactions. Cardinal Health said its fiscal 2027 outlook reflects the completed acquisition of Strive Medical and the announced acquisition of AdaptHealth’s Diabetes Health business. Those deals extend the company’s direct-to-patient presence in areas including diabetes supplies and urology.

New buyback authorization is larger than planned 2027 repurchases

Cardinal Health also expanded its capital-return flexibility. The board approved a $5 billion increase to the company’s share-repurchase program, bringing total authorization to $6.4 billion as of August. The company had already completed $1.4 billion of repurchases during fiscal 2026, including an additional $350 million accelerated program.

The size of the authorization should not be read as a commitment to spend $5 billion immediately. Cardinal Health’s fiscal 2027 assumptions call for roughly $1 billion of share repurchases, well below the total amount authorized. A repurchase authorization gives the company capacity to buy stock over time, while actual purchases can depend on cash generation, valuation, acquisitions and other capital needs.

That distinction is relevant because the company is simultaneously funding investment and acquisition activity. Cardinal Health expects about $700 million of capital expenditures in fiscal 2027 and forecasts non-GAAP adjusted free cash flow of $3.5 billion to $4.0 billion. That cash-flow range is below the $5.0 billion reported for fiscal 2026, even as adjusted EPS is expected to rise.

The company also approved a regular quarterly dividend of $0.5158 per share, payable October 15 to shareholders of record on October 1. Separately, it announced a new $4 billion revolving credit facility replacing three historic facilities and said a new Indianapolis distribution center, featuring additional robotics and automation, is scheduled to open in 2027.