Healthcare distributor and services company Cardinal Health (NYSE: CAH) announced better-than-expected revenue in calendar Q3 2026 (fiscal Q1 2027), with revenue up 5.5% year on year to $67.51 billion. Its non-GAAP profit of $3.26 per share was 10.9% above analysts’ consensus estimates.
For more on Cardinal Health, read our free full research report.
Cardinal Health (CAH) Q3 CY2026 highlights:
- Revenue $67.51 billion vs S&P analysts’ consensus estimates of $66.72 billion (5.5% year-on-year growth, 1.2% beat)
- Adjusted EPS $3.26 vs S&P analysts’ consensus estimates of $2.94 (10.9% beat)
- Adjusted EPS guidance Management raised its full-year adjusted EPS guidance to $12.90 at the midpoint, a 3.2% increase
- Operating margin 1.1%, in line with the same quarter last year
- Free cash flow margin 1.8%, similar to the same quarter last year
- Market capitalization $60.65 billion
"Our results reflect a strong start to fiscal 2027 and demonstrate consistent execution against our strategic priorities," said Jason Hollar, CEO of Cardinal Health. "We continue to benefit from focused investments, disciplined operations and the strength of our diversified portfolio. Given this quarter's strong performance and our updated expectations for the remainder of the year, we are raising our fiscal 2027 non-GAAP EPS outlook."
Revenue growth
Reviewing a company’s long-term revenue performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones sustain growth for years. Cardinal Health’s 9% annualized revenue growth over the last five years was decent. Its growth was slightly above that of the average healthcare company and shows its offerings resonate with customers.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Cardinal Health’s recent performance shows its demand has slowed as its annualized revenue growth of 7.2% over the last two years was below its five-year trend. Decelerating revenue growth in the sector warrants caution, as it could signal changing consumer tastes aided by low switching costs. 
This quarter, Cardinal Health reported year-on-year revenue growth of 5.5%, and its $67.51 billion of revenue exceeded Wall Street’s consensus estimates by 1.2%.
Looking ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, according to S&P, a slight deceleration versus the last two years. This projection is underwhelming and indicates its products and services will face some demand challenges. On the positive side, the company is performing well on other measures of financial health.
Adjusted operating margin
Cardinal Health’s adjusted operating margin has more or less stayed the same over the last 12 months, averaging 1.2% over the last five years. This profitability was poor for a healthcare business because of its suboptimal cost structure.
Analyzing the trend in its profitability, Cardinal Health’s adjusted operating margin might have fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
This quarter, Cardinal Health generated an adjusted operating margin of 1.3%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings per share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share, or EPS, points to the profitability of that growth. For example, a company could inflate its revenue through excessive spending on advertising and promotions.
Cardinal Health’s EPS grew at a 16.9% compounded annual growth rate over the last five years, higher than its 9% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its adjusted operating margin didn’t improve.
A closer look at Cardinal Health’s earnings helps explain the drivers of its performance. A five-year view shows that Cardinal Health has repurchased its stock, shrinking its share count by 19.4%. This indicates its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings. 
In Q3, Cardinal Health reported adjusted EPS of $3.26, up from $2.55 in the same quarter last year. This result easily beat analysts’ consensus estimates. Over the next 12 months, Wall Street expects Cardinal Health’s full-year EPS to grow 11.1% from $11.66 to $12.96, according to S&P.
Key takeaways from Cardinal Health’s Q3 results
Cardinal Health delivered a decent quarter, with EPS topping Wall Street’s consensus estimates and full-year EPS guidance also coming in above consensus. Shares rose 3.1% to $270 immediately after the release.
Cardinal Health had a solid quarter, but the investment case depends on the bigger picture. The latest quarter is only one piece of the longer-term business quality puzzle. Quality, combined with valuation, can help determine if the stock is a buy. For more on Cardinal Health, read our full research report here (it’s free).
