0001140859-26-000020
SEC filingQ2 revenue grew 3.8% to $78.4B from both reportable segments, driving gross profit up 17.3% to $3.6B with margin expansion to 4.6%, while net income surged 129% to $1.6B and EPS to $8.40 on strong profitability gains despite operating cash outflow.
Revenue increased by 3.8% to $78.4 billion in Q2 FY2026 from $75.5 billion in the prior year quarter, primarily due to growth in both reportable segments as noted in management discussion. This topline expansion supported gross profit growth of 17.3% to $3.6 billion from $3.1 billion, with gross margin expanding to 4.6% from the prior period. The margin improvement reflects favorable product mix and pricing within the pharmaceutical distribution and solutions businesses.
Operating income rose 10.3% to $1.1 billion from $1.0 billion. Healthcare Solutions' operating income increased, primarily driven by the gross profit gains noted above, though offset in part by higher operating expenses. Any overall pressures, such as those in the European distribution business, were largely offset by gains across other operations. This contributed to operating margin stability at 1.5%.
Net income more than doubled, up 129% to $1.6 billion from $717.9 million, driving diluted EPS to $8.40 from $3.68—a 128% increase. The exceptional bottom-line performance underscores the leverage from topline growth and profitability enhancements amid controlled expense dynamics.
Cash flow dynamics showed volatility, with net cash provided by operating activities at -$967 million compared to +$632 million last year. This shift reflects the significant impact of timing in cash receipts, disbursements, and inventory purchases on working capital, a noted characteristic of the business. Free cash flow was -$1.3 billion after $285 million in capital expenditures, up from $235 million prior year. Management highlights that these capex investments support the continued expansion and enhancement of the distribution network alongside various technology initiatives, positioning for larger 2026 spending.
Overall, the quarter demonstrates resilient revenue momentum from segment growth, translating to robust profitability metrics despite cash flow timing headwinds. Future operations and borrowings are positioned to meet ongoing needs, including long-term opioid litigation payments over 13 years, with expectations for continued quarterly dividends.