What Happened?
Shares of healthcare distributor and services company Cardinal Health (NYSE: CAH) jumped 16.5% in the morning session after the company reported strong third-quarter 2025 earnings that beat expectations and raised its full-year guidance.
The company's sales for the quarter jumped 22.4% year-over-year to $64.01 billion, surpassing analyst estimates by 7.8%. Adjusted earnings came in at $2.55 per share, which was 17.3% ahead of the consensus view. Buoyed by the strong performance, Cardinal Health increased its forecast for full-year adjusted earnings per share to a midpoint of $9.75. The company also reported a significant improvement in its finances, generating $865 million in free cash flow, a stark turnaround from the negative $1.74 billion in the same quarter last year. Overall, the strong top-and-bottom-line beats, coupled with an improved outlook, drove investor optimism.
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What Is The Market Telling Us
Cardinal Health’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. Moves this big are rare for Cardinal Health and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was about 1 month ago when the stock dropped 4.9% on the news that the U.S. Commerce Department initiated a national security investigation into medical equipment and devices, raising concerns about potential tariffs. The probe, conducted under Section 232 of the Trade Expansion Act, examines whether imports of items like syringes, infusion pumps, and surgical instruments pose a national security risk. Such investigations can pave the way for new import duties, creating a significant overhang for the sector. The goal of potential tariffs would be to boost domestic manufacturing by increasing the cost of foreign goods. This development has introduced new uncertainty for the industry, leading to broad-based declines in the stocks of major manufacturers, including Baxter International and GE HealthCare, as investors weigh the potential impact on supply chains and costs.
Cardinal Health is up 60.7% since the beginning of the year, and at $189.63 per share, has set a new 52-week high. Investors who bought $1,000 worth of Cardinal Health’s shares 5 years ago would now be looking at an investment worth $4,141.
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