Non-GAAP earnings rose 40% to $2.91 a share, but $0.31 of that came from a one-time refund that masked a 29% profit decline in the medical products segment.
Cardinal Health reported fourth-quarter non-GAAP earnings of $2.91 a share, up 40%. Revenue was $63.7 billion, which missed a consensus figure near $65.1 billion by about 2.3%. The shares touched a fresh 52-week high of $258.30 during the session, then gave back most of that gain to close at $240.26, up 1.30%. The headline growth rate depends on a refund that will not repeat, and the segment that received it was weaker underneath.
The $0.31 refund is doing most of the work
Cardinal Health states this in its own reconciliation. A $100 million tariff refund landed in the Global Medical Products and Distribution segment this quarter. It is worth $0.31 a share after tax. It sits inside both the GAAP and non-GAAP earnings figures. Strip it out, and non-GAAP earnings per share grew 25% to $2.60 rather than 40% to $2.91. For the full year, growth of 37% to $11.26 becomes 33% to $10.95 on the same basis. Both figures are the company's own headlines, printed in the same release.
The segment that received the refund tells the more important story. GMPD segment profit was reported at $150 million, a growth rate the company calls not meaningful because the prior year was so much smaller. Excluding the $100 million refund, GMPD profit was $50 million, down 29% from $70 million a year earlier. Revenue in the segment fell 2%. The company attributes that to lower distribution volumes and to the recognition of an expected repayment of part of the refund back to customers. Chief Executive Jason Hollar's release quote credits all five operating segments with double-digit profit growth. He adds a qualifier: that this holds even before the GMPD tariff recovery. The qualifier is necessary. Without it, the claim is not accurate for GMPD.
Consolidated net earnings were $398 million on a reported basis and $324 million excluding the refund, growth of 36% rather than 67%. Any comparison to consensus or to prior quarters should use the ex-refund figures.
Two separate impairments, a year apart in effect
Cardinal Health reported a $122 million impairment of its 16% equity stake in Outcomes during the quarter. The company called it a reduction in the estimated fair value of the business. That charge is excluded from non-GAAP results, worth $0.51 a share.
A second, unrelated impairment sits in the full-year GAAP figures only. A $184 million pre-tax goodwill charge, tied to the Navista and ION reporting unit within the Pharmaceutical segment, was recognized earlier in the fiscal year. It is also excluded from non-GAAP. The two charges hit different segments at different points in the year and should not be described as one item.
The combined effect widens the distance between the two earnings measures. Full-year GAAP diluted earnings were $7.23, up 12%. Full-year non-GAAP diluted earnings were $11.26, up 37%. The $4.03 gap is the widest in this reporting season among comparable healthcare names. Cardinal Health's own release notes that exclusions have swung its earnings by as much as $6.97 in a single year before, in fiscal 2022. That is the company telling readers directly that its adjustments are large by design, not an artifact of this quarter alone.
The 2027 guide depends on which 2026 number you start from
Cardinal Health guided fiscal 2027 non-GAAP earnings to $12.40 to $12.60 a share, above a consensus figure near $12.04. The company describes that range as 13% to 15% growth. Its own footnote specifies the growth rate is measured against the $10.95 ex-refund base for fiscal 2026, not the $11.26 reported figure. Measured against the reported number instead, the same guidance range implies growth of only about 10% to 12%. The ex-refund base is the one the company itself uses to support its stated growth rate.
Segment guidance for GMPD shows the same effect in miniature. The segment is guided to $200 million to $220 million of profit in fiscal 2027. That sits below the $258 million GMPD reported for fiscal 2026. It sits above the $158 million the segment produced excluding this year's refund. Read one way, GMPD guidance looks like a decline. Read the other way, it looks like solid growth. Both readings use real numbers from the same release.
One cash metric moves against the earnings trend. Fiscal 2027 adjusted free cash flow is guided to $3.5 billion to $4.0 billion, down from $5.0 billion this year. That is a decline of roughly 25% at the midpoint, even as earnings guidance implies growth. The release does not explain the drop in the text retrieved for this analysis. The guidance also assumes the completed Strive Medical acquisition. It also factors in the pending purchase of AdaptHealth's Diabetes Health business, which has been announced but had not closed as of the release.
Pharma carries the company, and financing costs are rising
Pharmaceutical and Specialty Solutions produced 92.5% of company revenue in the quarter. Segment profit grew 21% to $645 million, which the company attributes to brand and specialty products and to generics program performance. No tariff or other one-time item touches this segment's growth. The Other segment, covering at-home solutions, nuclear and precision health, and logistics, grew profit 14% to $183 million.
Underneath those gains, two costs are climbing. Net interest expense rose 62% for the full year, to $348 million from $215 million. The company attributes that generally to financing tied to recent acquisitions, without further detail. The effective tax rate fell sharply, to 27.9% from 36.9% on a GAAP basis and to 22.5% from 26.3% on a non-GAAP basis. That is a meaningful tailwind to both earnings figures. The release does not explain it beyond the standard reconciliation mechanics.
The same morning, Cardinal Health filed a separate disclosure establishing a new $4.0 billion revolving credit facility. It replaces three older facilities, including a terminated five-year revolver, and simplifies what had been a more fragmented liquidity structure. The specific pricing and tenor of the new facility were not available in the material reviewed for this article. Cardinal Health also announced a long-term renewal of its wholesaler distribution contract with Kroger, with no financial terms disclosed. A new Indianapolis distribution center, opening in 2027, will add expanded automation.
What the balance sheet is built to do
Cardinal Health's balance sheet carries a structural feature worth naming precisely. Total shareholders' equity was negative $2,724 million at year end, worsening slightly from negative $2,634 million. That reflects how a distribution business finances itself. Accounts payable reached $38,283 million, up 10.3%, funding trade receivables and inventory that grew more slowly. It is not, on its own, evidence of financial distress, though the release offers no framing for the figure either way.
Operating cash flow more than doubled to $5,174 million, driven mainly by a $3,463 million increase in accounts payable. Adjusted free cash flow was $4,971 million, which the release rounds to $5.0 billion. The company repurchased $1.4 billion of stock during the year and received a new $5.0 billion buyback authorization, bringing total authorization to $6.4 billion. A quarterly dividend of $0.5158 a share was declared, payable in October, without characterization as an increase.
The burden of proof for fiscal 2027 rests on three things. Pharmaceutical has to keep carrying the company. GMPD has to show its underlying trend is closer to the ex-refund decline than to the headline growth. Free cash flow has to absorb a guided drop even as earnings guidance points higher. The AdaptHealth transaction, already built into guidance, has not closed.