CARDINAL HEALTH INC

Results of Operations

Revenue

Pharmaceutical and Specialty Solutions

Pharma segment revenue increased 6 percent from the prior-year quarter to $62.6 billion, primarily due to branded and specialty pharmaceutical sales growth from existing customers.

Global Medical Products and Distribution

GMPD segment revenue was flat at $3.2 billion compared to the prior-year quarter. This reflected Cardinal Health brand growth, offset by a decrease from distribution.

Other

Other segment revenue increased 7 percent from the prior-year quarter to $1.8 billion due to growth across Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight® Logistics.

Cost of Products Sold

Cost of products sold increased 5 percent from the prior-year quarter to $64.9 billion due to the factors affecting the changes in revenue and gross margin.

Gross Margin

Gross margin increased 12 percent from the prior-year quarter to $2.6 billion, primarily due to the acquisition of MSO platforms, the contribution from branded pharmaceutical and specialty pharmaceutical products, and the performance of our generics program.

Gross margin rate increased 23 basis points from the prior-year quarter, primarily due to the acquisition of MSO platforms and the performance of our generics program.

Distribution, Selling, General, and Administrative ("SG&A") Expenses

SG&A expenses increased 9 percent from the prior-year quarter to $1.6 billion, primarily due to acquisitions of MSO platforms and higher costs to support sales growth for existing customers.

Segment Profit

We evaluate segment performance based on segment profit, among other measures. See Note 12 of the "Notes to Condensed Consolidated Financial Statements" for additional information on segment profit.

Pharmaceutical and Specialty Solutions

Pharma segment profit increased 17 percent from the prior-year quarter to $783 million, primarily due to the increased contributions from branded and specialty pharmaceutical products and the performance of our generics program.

Global Medical Products and Distribution

GMPD segment profit decreased 28 percent from the prior-year quarter to $33 million, primarily due to unfavorable distribution and foreign exchange impacts, partially offset by growth in Cardinal Health brand.

Other

Other segment profit increased 16 percent from the prior-year quarter to $193 million due to the performance of OptiFreight® Logistics, Nuclear and Precision Health Solutions, and at-Home Solutions.

Corporate

The changes in Corporate during the three months ended September 30, 2026 are due to the factors discussed in the "Other Components of Consolidated Operating Earnings" section that follows.

Other Components of Consolidated Operating Earnings

In addition to revenue, gross margin, and SG&A expenses discussed previously, consolidated operating earnings were impacted by the following:

Restructuring and Employee Severance

Restructuring and employee severance costs during the three months ended September 30, 2026 primarily related to the implementation of cost-savings and other strategic initiatives. Restructuring and employee severance costs during the three months ended September 30, 2025 primarily related to the implementation of cost-savings initiatives.

Amortization and Other Acquisition-Related Costs

Amortization of acquisition-related intangible assets was $100 million and $87 million for the three months ended September 30, 2026 and 2025, respectively.

Transaction and integration costs associated with acquisitions were $82 million and $17 million for the three months ended September 30, 2026 and 2025, respectively.

Acquisition-related Cash and Share-based Compensation Costs

Acquisition-related cash and share-based compensation costs were $94 million and $64 million for the three months ended September 30, 2026 and 2025, respectively, primarily driven by the acquisitions within The Specialty Alliance.

Litigation (Recoveries)/Charges, Net

During the three months ended September 30, 2026, we recognized income of $47 million for net recoveries in class action antitrust lawsuits in which we were a class member or plaintiff.

Earnings Before Income Taxes

In addition to the items discussed above, earnings before income taxes was impacted by the following:

Interest Expense, Net

Interest expense, net decreased 9 percent from the prior-year quarter to $73 million, primarily due to increased interest income from cash and equivalents.

Provision for Income Taxes

During the three months ended September 30, 2026 and 2025, the effective tax rate was 19.2 percent and 24.1 percent, respectively. See Note 7 of the “Notes to Condensed Consolidated Financial Statements” for additional information.