Start here if you're new
what it is
It moves drugs and medical supplies through the healthcare system, then tries to earn a little more on each box.
how it gets paid
Last year Cardinal Health made $222.6B in revenue.
why growth slowed
Revenue fell 1.9% last year. The 11.91% EPS beat mattered because Cardinal only has a 2.2% operating margin.
what just happened
Cardinal's last reported quarter put up $2.63 in EPS versus a $2.35 estimate, a 11.91% beat.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
40/100 earnings predictability — expect surprises
25.6x trailing p/e — priced about right
1.0% dividend yield — cash in your pocket every quarter
44.5% return on capital — every dollar works hard here
xvary composite: 74/100 — average
What they do
It moves drugs and medical supplies through the healthcare system, then tries to earn a little more on each box.
Scale is the moat here. Pharmaceutical and Specialty Solutions made up 93% of fiscal 2025 sales, or about $207.0 billion out of $222.6 billion, which means Cardinal sits where hospitals and pharmacies already buy. Distribution density (lots of product through the same network) → lower unit costs → so what: if you rely on that network, switching risks delays, shortages, and higher prices.
How they make money
$222.6B
annual revenue · revenue declined -1.9% last year
total revenue
$222.6B
1.9%
The products that matter
drug distribution and logistics
pharmaceutical distribution
$222.6B revenue base
it's the scale engine. this snapshot only gives the total company revenue figure, but that $222.6B tells you Cardinal Health is playing a volume game at national scale.
scale
medical products and provider support
medical and specialty mix
750 providers added
the Solaris Urology acquisition added 750 providers and 250 practice locations. that matters because management is clearly trying to own more of the higher-margin side of healthcare, not just the trucking lane.
mix shift
capital allocation bet
higher-margin assets
0.9% net margin
when the whole company keeps less than 1 cent on the dollar, even modest mix improvement can matter. that's why the higher-margin pivot is the real strategic story here.
the bet
Key numbers
44.5%
return on capital
Return on capital → profit from each dollar invested → so what: Cardinal turns asset-light distribution scale into unusually high profit efficiency for a low-margin business.
$9.0B
long-term debt
Long-term debt → money owed over years → so what: debt is 15% of capital, which is manageable for a company expected to do $280B in fiscal 2027 sales.
$280B
fy2027 sales est.
Sales estimate → expected annual revenue → so what: the model still points to nearly $57.4B more revenue than the $222.6B posted in fiscal 2025.
25.6x
trailing p/e
P/E → price compared with past earnings → so what: you are already paying up for margin improvement, not just steady distribution volume.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 80 / 100
- long-term debt $9.0B (15% of capital)
- net profit margin 1.0% — keeps 1 cents of every dollar in revenue
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in CAH 3 years ago → it's now worth $28,570.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Cardinal's last reported quarter put up $2.63 in EPS versus a $2.35 estimate, a 11.91% beat.
The quarter was driven by stronger profit execution than expected. Revenue reached $129.6B in the latest reported period, while gross margin stayed razor-thin at 3.6%, which is the whole story here.
$129.6B
revenue
$2.63
eps
3.6%
gross margin
the number that mattered
The 11.91% EPS beat mattered because Cardinal only has a 2.2% operating margin, so small execution gains can move earnings a lot.
-
cardinal health has closed its $1.9 billion acquisition of solaris health.
-
cardinal purchased a 75% stake in solaris via its multi-specialty platform, the specialty alliance.
-
the remaining piece is owned by physician owners and management.solaris is a leading urology management services organization (mso) in the united states and the pact will add 750 providers and 250 practice locations to the acquirer’s footprint across 14 states.
-
the deal is in line with management’s push toward higher-margined assets and away from drug distribution, which generates lower levels of profitability.the specialty here is the urology therapeutic area, and the company’s overall reach now exceeds 3,000 providers in 32 states.
-
in the meantime, the company kicked off fiscal 2026 (year ends june 30th) in fine fashion.
source: company earnings report, 2026
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What could go wrong
the #1 risk is drug price negotiation and reimbursement pressure across a 0.9% margin model.
med
drug pricing and reimbursement pressure
Cardinal Health does not have much room to absorb spread compression. When the company keeps less than 1 cent on the dollar, a tougher reimbursement environment can hurt faster than the revenue line suggests.
0.9% net margin on $222.6B of revenue is the proof. This is a scale business with very little cushion.
med
the higher-margin shift may stay smaller than investors hope
Management is clearly buying and building toward specialty and provider-adjacent assets. The problem is simple: the core machine is still huge. Newer assets need to matter enough to move a $222.6B company.
The Solaris Urology deal adds 750 providers and 250 locations, which is real. It still has to show up in company-level mix and earnings.
med
low-margin distribution leaves little room for mistakes
Gross margin was 3.7% in the latest quarter. Revenue fell 1.9% last year. In a throughput model, weaker volume or small operating missteps can matter more than they would at a software company with fat margins.
If volume softens while margins stay thin, you get hit from both sides. That's the quiet part in every distributor story.
a company running at 3.7% gross margin and 0.9% net margin does not need a disaster to feel pain. It just needs the spread to move the wrong way.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
gross margin, not just revenue
3.7% was the latest gross margin. In this business, a few tenths of a point matter more than flashy sales growth.
risk
drug pricing negotiation fallout
Any reimbursement squeeze matters more here because the company only keeps 0.9% of revenue after costs.
calendar
next earnings report
You want to see whether the recent EPS beat turns into a margin story, not just another quarter of big revenue and thin economics.
trend
proof of the mix shift
Management is buying into higher-margin assets. The test is whether that changes the numbers at company scale, not just the slide deck.
Analyst rankings
short-term outlook
top 5%
momentum score 1 — the highest rating. in human-speak, analysts think CAH still has better near-term momentum than almost everything else.
risk profile
average
stability score 3 — middle of the pack. not a bunker stock, not a chaos stock.
chart momentum
average
technical score 3 — the chart is no longer doing anything especially dramatic after a huge three-year run.
earnings predictability
40 / 100
earnings are harder to forecast here than the recent stock performance might make you think. expect some noise.
source: institutional data
Institutional activity
541 buyers vs. 566 sellers in 3q2025. total institutional holdings: 0.2B shares.
source: institutional data
Price targets
3-5 year target range
$173
$331
$211
current price
$252
target midpoint · +19% from current · 3-5yr high: $285 (+35% · 9% ann'l return)
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