Cardinal Health’s third quarter performance prompted a positive market reaction, as the company delivered broad-based growth across all five operating segments. Management pointed to robust demand in its Pharmaceutical and Specialty Solutions segment, supported by new customer wins and continued strength in specialty pharmaceuticals, generics, and consumer health. CEO Jason Hollar highlighted meaningful contributions from the company’s MSO (Management Services Organization) platforms and bio-pharma solutions initiatives, while also noting the successful integration of recent acquisitions like ADS. CFO Aaron Alt attributed profit gains to cost controls, volume growth, and ongoing efficiency measures throughout the distribution network.
Is now the time to buy CAH? Find out in our full research report (it’s free for active Edge members).
Cardinal Health (CAH) Q3 CY2025 Highlights:
- Revenue: $64.01 billion vs analyst estimates of $59.36 billion (22.4% year-on-year growth, 7.8% beat)
- Adjusted EPS: $2.55 vs analyst estimates of $2.17 (17.3% beat)
- Adjusted EBITDA: $977.8 million vs analyst estimates of $844.3 million (1.5% margin, 15.8% beat)
- Management raised its full-year Adjusted EPS guidance to $9.75 at the midpoint, a 3.7% increase
- Operating Margin: 1%, in line with the same quarter last year
- Market Capitalization: $46.76 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Cardinal Health’s Q3 Earnings Call
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Erin Wilson Wright (Morgan Stanley) asked how much of the specialty segment’s momentum was driven by market trends versus Cardinal Health’s execution. CEO Jason Hollar emphasized broad-based industry utilization but stressed the company’s targeted investments and operational controls as differentiators.
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Elizabeth Anderson (Evercore) inquired about the impact of Rite Aid’s exit and policy changes on business mix. Hollar clarified that Cardinal Health did not serve Rite Aid directly but expects to capture some incremental share through partnerships with other large customers.
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Michael Cherny (Leerink Partners) questioned the sustainability of current growth rates and which drivers are controllable. Hollar and CFO Aaron Alt said guidance assumes ongoing strong but not outsized demand, with volume growth and integration of acquisitions as key internal levers.
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George Hill (Deutsche Bank) asked about the cadence and sustainability of profit outperformance, especially considering M&A impact. Alt confirmed that acquisitions and core growth both contributed, and that H2 will see annualization of prior deals.
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Allen Lutz (Bank of America) focused on growth in Cardinal Health–branded products. Alt cited clinically differentiated products like compression and surgical kitting as areas of above-market growth within the GMPD segment.
Catalysts in Upcoming Quarters
In upcoming quarters, our analysts will closely monitor (1) the pace and success of integrating Solaris Health and other recent acquisitions, (2) the impact of automation and new logistics centers on Cardinal Health’s operational efficiency and service levels, and (3) the ability of higher-margin segments such as Nuclear and Precision Health Solutions to sustain growth. We will also watch for any shifts in tariff-related expenses and regulatory developments that could alter demand patterns.
Cardinal Health currently trades at $196.52, up from $164.58 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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