Cardinal Health Q1 FY2026: Revenue Surges 22% on Pharma Strength

Cardinal Health (NYSE: CAH), a crucial link in the U.S. healthcare supply chain, is a major distributor of pharmaceuticals and medical products. To understand the company's current financial health, we're diving into its latest quarterly report for the first quarter of fiscal year 2026, which ended on September 30, 2025. The full 10-Q filing is available on the SEC's website, and it paints a picture of robust growth fueled by its core business, alongside strategic moves that are reshaping its expense structure.

Overall, Cardinal Health reported a strong quarter, with significant increases in both revenue and earnings, demonstrating impressive operational momentum.

Revenue Engine Fires on All Cylinders

Cardinal Health's total revenue for the quarter surged an impressive 22%, reaching $64.0 billion compared to $52.3 billion in the same period last year. The growth was overwhelmingly driven by its largest segment:

• Pharmaceutical and Specialty Solutions: Revenue in this segment, which handles the distribution of brand-name and generic drugs, jumped 23% to $59.2 billion. The company attributes this powerful performance to sales growth from both new and existing customers.
• Global Medical Products and Distribution (GMPD): This segment, which provides medical, surgical, and lab products, saw more modest growth, with revenue increasing 2% to $3.2 billion, primarily from higher volumes with existing customers.

To visualize how the company's massive revenue flows through its costs and expenses down to its net earnings, the following flow diagram illustrates the income statement for the quarter.

A Tale of Two Earnings Figures

While revenue growth is strong, the profitability story is even more compelling, particularly when looking at management's preferred metric, Non-GAAP earnings. Non-GAAP figures exclude certain items that management believes don't reflect the company's core operational performance, such as acquisition-related costs, restructuring, and litigation charges.

• GAAP operating earnings grew a solid 18% to $668 million.
• Non-GAAP operating earnings, however, soared 37% to $857 million.

The significant difference this quarter is primarily due to the exclusion of $104 million in amortization of intangible assets from past acquisitions and $64 million in new cash and stock compensation costs tied to recent buyouts. By looking at the Non-GAAP figure, we get a clearer sense of the underlying business's strong performance, stripped of these non-operational accounting items. This strength was also reflected in the Non-GAAP diluted earnings per share (EPS), which rose 36% to $2.55.

Notably, the GMPD segment's profit showed a dramatic improvement, increasing from just $8 million last year to $46 million this quarter, a positive sign for the diversification of the company's profit streams.

The Cost of Growth

Cardinal Health's growth isn't just organic; it's also fueled by acquisitions, and the financial statements reflect this strategy. Selling, general, and administrative (SG&A) expenses rose 14% to $1.5 billion, and net interest expense more than doubled to $80 million. The company directly ties these increases to the costs of integrating newly acquired businesses and the debt used to finance them.

Alongside investing in acquisitions, Cardinal Health is also returning capital to its shareholders. During the quarter, the company spent $375 million to repurchase its own stock, signaling management's confidence in the company's value.

Looking Ahead

Cardinal Health has started its fiscal year on a very strong footing. The Pharmaceutical segment remains a powerful engine for growth, and the improved profitability in the Medical segment is encouraging. The key challenge ahead will be to successfully integrate its recent acquisitions and manage the associated higher costs. Investors will be watching to see if the company can maintain this momentum and continue translating its top-line strength into bottom-line results.