The segment that grew 91 per cent is guided lower

Where the closing year's profit came from

In the fiscal year just closed, revenue at Cardinal Health rose 14 per cent to 254.2 billion dollars and non-GAAP diluted earnings rose 37 per cent to 11.26 dollars a share. The same line on a GAAP basis stopped at 7.23 dollars. Nearly all of the revenue comes from pharmaceutical distribution: Pharmaceutical and Specialty Solutions alone produced 234.8 billion dollars of revenue, with segment profit up 23 per cent to 2.8 billion dollars. A revenue base of that size sitting against profit of that size tells you this is a distribution business, run on a thin margin.^[1]

In percentage terms the year's fastest move happened elsewhere. Global Medical Products and Distribution held revenue at 12.7 billion dollars while its segment profit rose 91 per cent to 258 million dollars. The businesses under Other turned 6.8 billion dollars of revenue into profit up 37 per cent to 707 million dollars. What pulled the headline growth rate up was the volume in pharmaceutical distribution together with the recovery in those two smaller segments.^[1]

Who carries the guidance?

The number asked for in fiscal 2027 is 12.40 to 12.60 dollars of non-GAAP diluted earnings a share, growth of 13 per cent to 15 per cent. The company's own outlook narrows where that growth can come from. Profit at the medical segment is guided to 200 to 220 million dollars. Set against the 258 million dollars of the year just closed, that hands back part of the 91 per cent jump.^[1]

That leaves three sources. Revenue growth is guided at 3 per cent to 5 per cent for pharmaceutical distribution and 11 per cent to 13 per cent under Other, and diluted weighted average shares are put at approximately 233 million. During the year 1.4 billion dollars of shares were repurchased and the board approved an additional 5.0 billion dollars of authorisation, so the denominator is part of the arithmetic too. Another reading is available: the medical guidance may be deliberately cautious after a year of one-off recoveries, in which case the segment beats it and the profit mix looks different.^[1]

The lines between GAAP and non-GAAP

Full-year GAAP operating earnings were 2.6 billion dollars against a non-GAAP measure of 3.6 billion dollars. The release names the lines in between one by one: amortization and acquisition-related costs of 469 million dollars, acquisition-related cash and share-based compensation of 287 million dollars, impairments and asset disposal results of 177 million dollars, impairment of the Outcomes equity interest of 122 million dollars, and restructuring and employee severance of 106 million dollars.^[1]

Some of those lines really are one-off. The 287 million dollars of acquisition-related cash and share-based compensation is a direct cost of how the company grows: in the same year the Strive Medical acquisition completed and a deal for the Diabetes Health business of AdaptHealth was announced. If acquisition continues as a strategy, the compensation tied to it reads as a cost that recurs every year. The way to watch where the guidance sits is to see how much that line keeps feeding the gap between GAAP and non-GAAP in the quarterly releases.^[1]