Cardinal Health reported stronger than expected results for the first quarter of its fiscal 2027 year on Thursday. The company posted total revenue of $67.51 billion, a 4% increase from the same period last year. This figure surpassed the consensus estimate of $66.6 billion. Adjusted earnings per share climbed 28% to $3.26, significantly exceeding the anticipated $2.94.
Shares of the healthcare distributor rose more than 3% following the announcement. Although the stock pulled back from its intraday high, it remained a notable gainer in a market that experienced a sharp sell-off. Analysts noted that the company delivered a cleaner quarter than in the previous year's August report, with its largest segment returning to exceeding both sales and profit expectations.
The Pharmaceutical and Specialty Solutions segment, which is the company's largest operating unit, drove much of the positive sentiment. CEO Jason Hollar stated that the business benefited from strong demand for both generic medications and specialty therapeutics. He highlighted that the specialty business, a key long-term growth driver, expanded at a high-teens rate. Hollar noted that this strength was particularly evident in priority areas such as urology and oncology.
Cardinal Health also manages services organizations, or MSOs, which handle the business side of medical practices. The company has made several acquisitions in recent years to expand this presence. Management indicated that integration progress has been positive and that they see opportunities for additional mergers and acquisitions in this space, although they did not commit to specific deals.
While the pharmaceutical segment performed well, the Other segment, which includes nuclear pharmacies and logistics, missed on both revenue and operating profit. This is the smallest segment by revenue but is strategically important due to trends like aging populations and home-based care. The Global Medical Products and Distribution segment saw a 28% decline in operating profit compared to the year-ago quarter, a result attributed to tariff pressures and elevated petroleum costs.
In a broader strategic update, the company stated it has renewed contracts representing nearly two-thirds of its enterprise revenue within the past 12 months. This includes a significant renewal with CVS Health, which was announced on October 1. Hollar emphasized that the agreement with CVS will continue beyond the pharmacy chain's planned 2028 spin-off of its insurance and pharmacy benefit management businesses.
Cardinal Health repurchased $500 million worth of stock during the quarter, which is half of the $1 billion buyback program it previously signaled for fiscal 2027. CFO Aaron Alt stated that the company has the flexibility to deploy its cash flow for either additional acquisitions or further returns to shareholders.
The company revised its full-year outlook upward. It now projects adjusted earnings per share between $12.80 and $13.00, an increase from its previous guide of $12.40 to $12.60. The new midpoint implies 18% year-over-year growth when excluding tariff refund benefits. The company also raised its profit growth guidance for the Pharmaceutical and Specialty Solutions segment to between 10% and 12%.
Analysts remain positive on the stock, with one firm raising its price target to $300 from $265 while maintaining a hold-equivalent rating. The firm cited the company's consistent earnings growth and its transformation into a diversified healthcare provider beyond simple pharmaceutical distribution.
