CARDINAL HEALTH INC
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
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Item 2. Results of Operations
| MD&A | Results of Operations |
|---|
Results of Operations
Revenue
| Three Months Ended September 30, | |||
|---|---|---|---|
| (in millions) | 2026 | 2025 | Change |
| Pharmaceutical and Specialty Solutions | $62,582 | $59,205 | 6% |
| Global Medical Products and Distribution | 3,190 | 3,184 | —% |
| Other | 1,764 | 1,641 | 7% |
| Total segment revenue | 67,536 | 64,030 | 5% |
| Corporate | (23) | (21) | N.M. |
| Total revenue | $67,513 | $64,009 | 5% |
Pharmaceutical and Specialty Solutions
Pharma segment revenue increased 6 percent from the prior-year quarter to $62.6 billion, primarily due to branded and specialty pharmaceutical sales growth from existing customers.
Global Medical Products and Distribution
GMPD segment revenue was flat at $3.2 billion compared to the prior-year quarter. This reflected Cardinal Health brand growth, offset by a decrease from distribution.
Other
Other segment revenue increased 7 percent from the prior-year quarter to $1.8 billion due to growth across Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight® Logistics.
| Cardinal Health | Q1 Fiscal 2027 Form 10-Q | 7 |
| MD&A | Results of Operations |
|---|
Cost of Products Sold
Cost of products sold increased 5 percent from the prior-year quarter to $64.9 billion due to the factors affecting the changes in revenue and gross margin.
Gross Margin
| Three Months Ended September 30, | |||
|---|---|---|---|
| (in millions) | 2026 | 2025 | Change |
| Gross margin | $2,596 | $2,319 | 12% |
Gross margin increased 12 percent from the prior-year quarter to $2.6 billion, primarily due to the acquisition of MSO platforms, the contribution from branded pharmaceutical and specialty pharmaceutical products, and the performance of our generics program.
Gross margin rate increased 23 basis points from the prior-year quarter, primarily due to the acquisition of MSO platforms and the performance of our generics program.
Distribution, Selling, General, and Administrative ("SG&A") Expenses
| Three Months Ended September 30, | |||
|---|---|---|---|
| (in millions) | 2026 | 2025 | Change |
| SG&A expenses | $1,595 | $1,461 | 9% |
SG&A expenses increased 9 percent from the prior-year quarter to $1.6 billion, primarily due to acquisitions of MSO platforms and higher costs to support sales growth for existing customers.
| 8 | Cardinal Health | Q1 Fiscal 2027 Form 10-Q |
| MD&A | Results of Operations |
|---|
Segment Profit
We evaluate segment performance based on segment profit, among other measures. See Note 12 of the "Notes to Condensed Consolidated Financial Statements" for additional information on segment profit.
| Three Months Ended September 30, | |||
|---|---|---|---|
| (in millions) | 2026 | 2025 | Change |
| Pharmaceutical and Specialty Solutions | $783 | $667 | 17% |
| Global Medical Products and Distribution | 33 | 46 | (28)% |
| Other | 193 | 166 | 16% |
| Total segment profit | 1,009 | 879 | 15% |
| Corporate | (256) | (211) | N.M. |
| Total consolidated operating earnings | $753 | $668 | 13% |
Pharmaceutical and Specialty Solutions
Pharma segment profit increased 17 percent from the prior-year quarter to $783 million, primarily due to the increased contributions from branded and specialty pharmaceutical products and the performance of our generics program.
Global Medical Products and Distribution
GMPD segment profit decreased 28 percent from the prior-year quarter to $33 million, primarily due to unfavorable distribution and foreign exchange impacts, partially offset by growth in Cardinal Health brand.
Other
Other segment profit increased 16 percent from the prior-year quarter to $193 million due to the performance of OptiFreight® Logistics, Nuclear and Precision Health Solutions, and at-Home Solutions.
Corporate
The changes in Corporate during the three months ended September 30, 2026 are due to the factors discussed in the "Other Components of Consolidated Operating Earnings" section that follows.
| Cardinal Health | Q1 Fiscal 2027 Form 10-Q | 9 |
| MD&A | Results of Operations |
|---|
Other Components of Consolidated Operating Earnings
In addition to revenue, gross margin, and SG&A expenses discussed previously, consolidated operating earnings were impacted by the following:
| Three Months Ended September 30, | ||
|---|---|---|
| (in millions) | 2026 | 2025 |
| Restructuring and employee severance | $23 | $20 |
| Amortization and other acquisition-related costs | 182 | 104 |
| Acquisition-related cash and share-based compensation costs | 94 | 64 |
| Impairments and (gain)/loss on disposal of assets, net | (4) | 2 |
| Litigation (recoveries)/charges, net | (47) | — |
Restructuring and Employee Severance
Restructuring and employee severance costs during the three months ended September 30, 2026 primarily related to the implementation of cost-savings and other strategic initiatives. Restructuring and employee severance costs during the three months ended September 30, 2025 primarily related to the implementation of cost-savings initiatives.
Amortization and Other Acquisition-Related Costs
Amortization of acquisition-related intangible assets was $100 million and $87 million for the three months ended September 30, 2026 and 2025, respectively.
Transaction and integration costs associated with acquisitions were $82 million and $17 million for the three months ended September 30, 2026 and 2025, respectively.
Acquisition-related Cash and Share-based Compensation Costs
Acquisition-related cash and share-based compensation costs were $94 million and $64 million for the three months ended September 30, 2026 and 2025, respectively, primarily driven by the acquisitions within The Specialty Alliance.
Litigation (Recoveries)/Charges, Net
During the three months ended September 30, 2026, we recognized income of $47 million for net recoveries in class action antitrust lawsuits in which we were a class member or plaintiff.
Earnings Before Income Taxes
In addition to the items discussed above, earnings before income taxes was impacted by the following:
| Three Months Ended September 30, | |||
|---|---|---|---|
| (in millions) | 2026 | 2025 | Change |
| Other (income)/expense, net | $(6) | $(10) | N.M. |
| Interest expense, net | 73 | 80 | (9)% |
| Impairment of equity interest in Outcomes | (2) | — | N.M. |
Interest Expense, Net
Interest expense, net decreased 9 percent from the prior-year quarter to $73 million, primarily due to increased interest income from cash and equivalents.
Provision for Income Taxes
During the three months ended September 30, 2026 and 2025, the effective tax rate was 19.2 percent and 24.1 percent, respectively. See Note 7 of the “Notes to Condensed Consolidated Financial Statements” for additional information.
| 10 | Cardinal Health | Q1 Fiscal 2027 Form 10-Q |
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