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Cardinal Health (CAH)
NYSE:CAH
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Cardinal Health (CAH) AI Stock Analysis

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CAH

Cardinal Health

(NYSE:CAH)

Rating:70Outperform
Price Target:
$169.00
▲(7.12%Upside)
Cardinal Health's strong operational performance and strategic growth initiatives are offset by financial risks due to negative equity and high leverage. The stock's valuation is relatively high, and while technical indicators show stability, the company's ability to manage tariff impacts and maintain growth will be critical for future performance.
Positive Factors
Financial Guidance
The company raised its guidance for the fiscal year, demonstrating confidence in its future performance.
Strategic Investments
Cardinal Health is making smart strategic moves with investments in specialty areas like Nuclear and At-Home, which are expected to accelerate growth.
Negative Factors
Market Challenges
Management's decision to de-prioritize GMPD in favor of investing more in other businesses is expected to be well-received by investors.
Tariff Headwinds
The company is managing tariff headwinds effectively while continuing to pursue strategic opportunities such as tuck-in M&A and buybacks.

Cardinal Health (CAH) vs. SPDR S&P 500 ETF (SPY)

Cardinal Health Business Overview & Revenue Model

Company DescriptionCardinal Health, Inc. is a global, integrated healthcare services and products company, providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices worldwide. The company operates in two main sectors: Pharmaceutical and Medical. Its core products and services include the distribution of pharmaceuticals, over-the-counter healthcare products, and the provision of medical and surgical supplies and equipment.
How the Company Makes MoneyCardinal Health makes money primarily through its two main segments: Pharmaceutical and Medical. The Pharmaceutical segment is the largest contributor to revenue, where the company earns money by distributing branded and generic pharmaceuticals, specialty pharmaceuticals, and over-the-counter healthcare products to a wide range of healthcare providers and pharmacies. The Medical segment generates revenue by distributing medical, surgical, and laboratory products, and by offering supply chain services to healthcare providers. Cardinal Health also benefits from strategic partnerships and contracts with healthcare providers and manufacturers, which enhance its distribution network and service offerings, contributing significantly to its overall earnings.

Cardinal Health Key Performance Indicators (KPIs)

Any
Any
Profit by Segment
Profit by Segment
Shows profitability across different business units, highlighting which areas drive earnings and where there might be challenges or opportunities for growth.
Chart InsightsCardinal Health's Pharmaceutical segment shows robust growth, with a notable profit increase driven by brand and specialty pharmaceutical sales, aligning with a 14% segment profit rise reported in the latest earnings call. The Medical segment, however, continues to face volatility, with recent profits recovering from previous lows but still under pressure. The company's strategic acquisitions and customer onboarding are expected to bolster future performance, although challenges in the GMPD segment due to tariffs may pose risks. Overall, the company anticipates sustainable long-term growth, supported by strong cash flow and strategic initiatives.
Data provided by:Main Street Data

Cardinal Health Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q3-2025)
|
% Change Since: 12.00%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, strategic customer onboarding, and successful acquisitions, contributing to positive growth. However, challenges in the GMPD segment due to tariff impacts posed significant concerns, which the company is actively working to mitigate.
Q3-2025 Updates
Positive Updates
Strong Financial Performance in Q3 FY 2025
Operating earnings grew by 21% and EPS increased by 13% compared to the prior year, driven by growth in Pharmaceutical and Specialty Solutions and other businesses.
Record Customer Onboarding
Successfully onboarded $10 billion of new customer revenue in FY 2025, contributing significantly to revenue growth.
Strategic Acquisitions and Expansions
Completed acquisition of Advanced Diabetes Supply Group and saw positive impacts from acquisitions of GI Alliance and Integrated Oncology Network.
Pharmaceutical Segment Growth
Pharmaceutical segment profit increased by 14%, driven by brand and specialty pharmaceutical sales and successful onboarding of Publix.
Robust Cash Flow and Shareholder Returns
Adjusted free cash flow of $1.2 billion year-to-date, with $750 million in share repurchases and $2.8 billion deployed for acquisitions.
Negative Updates
Impact of Tariffs on GMPD Segment
Anticipated $200 million to $300 million in gross tariff costs for FY 2026, with mitigation efforts underway but some pricing adjustments expected.
Challenges in GMPD Segment
GMPD segment profit guidance narrowed to the lower end of the range due to ongoing challenges and tariff impacts.
Interest and Other Costs Increase
Interest and other costs increased by $38 million to $65 million in the quarter, primarily due to acquisition-related financing costs.
Company Guidance
In the third quarter of fiscal year 2025, Cardinal Health reported strong financial performance, highlighting a 21% increase in operating earnings and a 13% rise in EPS, reaching $2.35. The company achieved revenue of nearly $55 billion, flat on a reported basis but reflecting a 19% increase when adjusted for a customer contract expiration. Cardinal Health's Pharmaceutical and Specialty Solutions segment significantly contributed to these results, with a segment profit increase of 14%, driven by brand and specialty pharmaceutical sales growth. The company also completed acquisitions that are expected to contribute approximately 3 percentage points to segment profit growth. Cardinal Health raised its EPS guidance for the full year to a range of $8.05 to $8.15 and anticipates adjusted free cash flow at the high end of the prior guidance, approximately $1.5 billion. The company reported a third-quarter effective tax rate of 22.4% and executed $750 million in share repurchases year-to-date. Cardinal Health's diverse business segments, including growth in specialty and pharmaceutical solutions, underpin the company's confidence in achieving sustainable long-term growth, with double-digit non-GAAP EPS growth anticipated for fiscal year 2026.

Cardinal Health Financial Statement Overview

Summary
Cardinal Health shows robust revenue growth and operational efficiency with improved profit margins. However, the negative equity position and high leverage present significant financial risks. Cash flow generation remains strong, though the recent decline in free cash flow growth is a concern.
Income Statement
75
Positive
Cardinal Health has demonstrated strong revenue growth, with a TTM revenue of $222.3 billion, up from $205 billion the previous year, a growth rate of approximately 8.4%. The gross profit margin stands at 3.5%, indicating stable profitability, while the net profit margin improved to 0.7%, reflecting enhanced cost control and operational efficiency. The EBIT and EBITDA margins are 1.1% and 1.3%, respectively, signaling healthy operating performance. Despite these strengths, the margins remain relatively low, suggesting room for profitability improvements.
Balance Sheet
50
Neutral
The balance sheet shows a concerning negative stockholders' equity of -$2.95 billion, indicating long-term financial instability and a need for equity improvement. The debt-to-equity ratio is not directly calculable due to negative equity, highlighting leverage challenges. However, the company has maintained a sizable asset base of $49.9 billion. The equity ratio is also negative, reflecting a need for stronger equity capital. These factors suggest potential financial risk, although the asset base provides some stability.
Cash Flow
70
Positive
Cardinal Health's cash flow performance is moderately strong, with a TTM free cash flow of $2.44 billion, down from $3.25 billion the previous year, indicating a decline in free cash flow growth. The operating cash flow to net income ratio is approximately 1.89, suggesting efficient generation of cash relative to net income. The free cash flow to net income ratio is 1.56, indicating solid cash conversion. While cash flows remain positive, the decline in free cash flow growth rate warrants attention.
BreakdownJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income Statement
Total Revenue226.83B205.01B181.36B162.47B152.92B
Gross Profit7.41B6.89B6.54B6.78B6.87B
EBITDA1.98B1.44B126.00M1.31B-2.62B
Net Income852.00M261.00M-932.00M611.00M-3.69B
Balance Sheet
Total Assets45.12B43.42B43.88B44.45B40.77B
Cash, Cash Equivalents and Short-Term Investments5.13B4.04B4.72B3.41B2.77B
Total Debt5.09B4.70B5.32B6.24B6.78B
Total Liabilities48.33B46.27B44.58B42.66B38.97B
Stockholders Equity-3.21B-2.85B-706.00M1.79B1.79B
Cash Flow
Free Cash Flow3.25B2.36B2.73B2.03B1.58B
Operating Cash Flow3.76B2.84B3.12B2.43B1.96B
Investing Cash Flow-1.85B-454.00M567.00M-378.00M493.00M
Financing Cash Flow-847.00M-3.05B-2.46B-1.32B-2.20B

Cardinal Health Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price157.76
Price Trends
50DMA
158.21
Negative
100DMA
146.06
Positive
200DMA
132.65
Positive
Market Momentum
MACD
-0.11
Positive
RSI
42.80
Neutral
STOCH
17.88
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAH, the sentiment is Neutral. The current price of 157.76 is below the 20-day moving average (MA) of 162.48, below the 50-day MA of 158.21, and above the 200-day MA of 132.65, indicating a neutral trend. The MACD of -0.11 indicates Positive momentum. The RSI at 42.80 is Neutral, neither overbought nor oversold. The STOCH value of 17.88 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CAH.

Cardinal Health Risk Analysis

Cardinal Health disclosed 19 risk factors in its most recent earnings report. Cardinal Health reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Cardinal Health Peers Comparison

Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$56.78B34.00161.58%0.74%12.18%-5.92%
74
Outperform
$9.03B23.0611.78%1.75%8.76%
71
Outperform
$89.18B27.7651.23%0.48%16.22%15.29%
70
Outperform
$37.50B24.53-43.80%1.61%0.78%183.45%
69
Neutral
$3.78B17.9012.30%1.10%2.65%
52
Neutral
$7.61B0.04-62.94%2.44%16.14%0.33%
52
Neutral
$631.30M-49.91%2.84%-828.91%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CAH
Cardinal Health
157.76
62.35
65.35%
COR
Cencora
293.44
68.27
30.32%
HSIC
Henry Schein
74.19
3.15
4.43%
MCK
McKesson
714.00
120.95
20.39%
OMI
Owens & Minor
8.24
-7.43
-47.42%
PBH
Prestige Consumer Healthcare
76.73
6.33
8.99%

Cardinal Health Corporate Events

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Cardinal Health Updates FY25 Outlook and FY26 Guidance
Positive
Jun 12, 2025

On June 12, 2025, Cardinal Health announced updates to its fiscal year 2025 outlook and preliminary guidance for 2026, highlighting strategic initiatives and financial targets at its Investor Day. The company raised its non-GAAP diluted EPS guidance for FY25 and set preliminary FY26 guidance, emphasizing growth in Pharmaceutical and Specialty Solutions and other segments. Cardinal Health is investing in its Specialty Alliance MSO platform and expanding its Biopharma Solutions, while also enhancing its pharmaceutical distribution network with new facilities and technologies. The company aims to achieve sustainable long-term growth and value creation, with expectations of significant cash flow and share repurchases.

The most recent analyst rating on (CAH) stock is a Hold with a $104.00 price target. To see the full list of analyst forecasts on Cardinal Health stock, see the CAH Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Cardinal Health Reports Q3 2025 Earnings Growth
Positive
May 1, 2025

On May 1, 2025, Cardinal Health reported its third-quarter fiscal year 2025 results, showing flat revenue at $54.9 billion compared to the previous year. However, excluding the impact of a customer contract expiration, revenue increased by 19%. The company saw a 21% increase in non-GAAP operating earnings to $807 million, driven by profit growth across all segments, and raised its fiscal year 2025 non-GAAP EPS guidance. The Pharmaceutical and Specialty Solutions segment experienced a 14% profit increase, while the Global Medical Products and Distribution segment saw a 2% revenue rise, highlighting Cardinal Health’s strong operational execution and value creation.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 12, 2025