Cardinal Health Q1 2027: EPS beats by 11%, CVS deal secured
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Full-year guidance went up to $12.80 to $13.00 per share, and management locked in a binding letter of intent to renew its CVS Health distribution agreements, removing the biggest customer-concentration question hanging over the stock. Pharmaceutical and Specialty Solutions profit rose 17%, the fourth straight quarter of beating EPS expectations.
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Cardinal Health reported adjusted non-GAAP earnings of $3.26 per share for its fiscal first quarter of 2027, beating the consensus estimate of $2.94 by nearly 11%. That extends a streak of four consecutive quarters in which the company has topped EPS expectations, a run of consistent execution.
Revenue of $67.51 billion edged past estimates of $66.51 billion by about 1.5% and grew roughly 5.5% from the same period a year ago. The Pharmaceutical and Specialty Solutions segment was the primary engine, with profit climbing 17% as brand and specialty pharmaceutical sales from existing customers gained momentum and the generics program performed well.
The single most significant non-financial development in the quarter was a binding letter of intent to renew Cardinal Health's pharmaceutical distribution agreements with CVS Health. CVS has long been Cardinal's largest customer, and the uncertainty around whether that relationship would be renewed had weighed on the stock. Locking in a letter of intent removes that overhang and reinforces the durability of Cardinal's core distribution franchise.
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On the strength of the quarter and updated expectations for the rest of the year, management raised its fiscal 2027 non-GAAP EPS guidance to a range of $12.80 to $13.00, up from the prior range of $12.40 to $12.60. The Pharmaceutical and Specialty Solutions segment profit growth target was also lifted, to 10% to 12% from 8% to 11%.
Cardinal also completed a $500 million accelerated share repurchase program during the quarter, which contributed to a lower diluted share count and helped lift non-GAAP EPS growth to 28% year over year. The non-GAAP effective tax rate fell to 18.5% from 21.9% in the prior-year period, providing an additional tailwind to per-share earnings. Investors will watch whether the company can sustain segment profit momentum and close its expected AdaptHealth Diabetes Health business acquisition in the third fiscal quarter.