Cardinal Health Lifts FY26 Outlook, But Stock Down As Q4 Revenues Miss Street; To Buy Solaris Health

(RTTNews) - Shares of Cardinal Health, Inc. were losing around 6% in the pre-market activity on Tuesday after the company's fourth-quarter top line missed the market view, even as profit beat the Street. In addition, the health care service provider raised its fiscal 2026 outlook, also above market estimates.

Separately, Cardinal Health announced that its multi-specialty management services organization or MSO platform, the Specialty Alliance, has agreed to acquire Solaris Health, a urology MSO, from Lee Equity Partners and Solaris Health physician owners.

Cardinal Health will provide around $1.9 billion in cash to the Specialty Alliance to complete the acquisition and will own around 75 percent of the Specialty Alliance after its acquisition of Solaris Health.

Regarding the results, Jason Hollar, CEO of Cardinal Health, said, "Fiscal 2025 was a transformative year for Cardinal Health, and we closed the year with momentum, delivering strong fourth quarter results. The broad-based operational strength, with all five of our operating segments growing profit double-digits, reflects the disciplined execution of our strategy and our investments for growth. We enter Fiscal 2026 with confidence, evidenced by our increased financial outlook, as we continue to evolve towards reaching our full potential."

For fiscal 2026, the company now expects adjusted earnings of $9.30 to $9.50 per share, higher than previously expected $9.10 to $9.30 per share.

The revised outlook represents a 13 percent to 15 percent growth from last year's adjusted earnings were $8.24 per share.

The Wall Street analysts on average expect the company to report earnings of $9.25 per share. Analysts' estimates typically exclude special items.

The company now projects revenue growth of 11 percent to 13 percent in Pharmaceutical and Specialty Solutions segment and 2 percent to 4 percent in Global Medical Products and Distribution segment.

In the fourth quarter, Cardinal Health's net earnings totaled $239 million or $1.00 per share, 2 percent higher than $235 million or $0.96 per share last year.

Adjusted earnings were $501 million or $2.08 per share for the period, compared to $450 million or $1.84 per share a year ago. Analysts had expected the company to earn $2.03 per share.

The company's revenue for the period rose 0.5 percent to $60.159 billion from $59.867 billion last year. The Street was looking for revenues of $60.92 billion for the quarter.

The fourth-quarter revenue increased 21 percent excluding the impact of a previously communicated contract expiration.

Pharmaceutical and Specialty Solutions segment revenue remained nearly flat at $55.4 billion, and revenue for the Global Medical Products and Distribution segment increased 3 percent to $3.2 billion, driven by volume growth from existing customers.

Regarding the Solaris Health acquisition, Cardinal Health said the deal is anticipated to be slightly accretive to its adjusted earnings per share in the first 12 months post-close. The transaction is expected to close by the end of 2025.

Cardinal Health intends to finance the acquisition with a combination of cash on hand and new debt. The acquisition is expected to accelerate its multi-specialty growth by extending the reach of The Specialty Alliance.

Solaris Health supports over 750 providers across more than 250 practice locations in 14 states.

Post transaction, Cardinal Health MSO platforms will reach around 3,000 providers in 32 states.

In the pre-market activity, Cardinal Health shares were losing around 5.5 percent to trade at $149.17.

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