Published: Thursday, April 30, 2026 · 6:25 PM | Updated: Thursday, April 30, 2026 · 6:25 PM
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Shares of Cardinal Health are taking a hit on Thursday after the drug distributor reported mixed quarterly results. We’re not buyers of the dip just yet. Revenue for the three months ending March 31 increased 11% year over year to $60.94 billion, missing expectations of $61.7 billion, according to LSEG. Adjusted earnings per share (EPS) came in at $3.17, ahead of the $2.79 consensus estimate compiled by LSEG. CAH 1Y mountain Cardinal Health 1-year return Bottom line Good, not great, is how Jim Cramer described Cardinal Health’s performance during Thursday’s Morning Meeting . While sales missed the mark across all three operating segments, overall profitability was strong — except for the Global Medical Products and Distribution segment, where Cardinal’s tariff exposure lies — and free cash flow was three times the Street’s consensus estimate. On the call with investors, CFO Aaron Alt said fluctuations in the sales mix between GLP-1s, IRA changes, and generics weighed on Pharmaceutical and Specialty Solutions segment revenues, while Global Medical Products and Distribution sales were held back by lower distribution volumes. In addition, the team raised its outlook for full-year earnings. However, only 13 cents of the 50-cent increase at the midpoint is attributable to improved operational performance, with the remainder attributable to taxes, share repurchases, and interest/other expenses. Still better than Street expectations, just not by as much. So, where do we stand now? Obviously, we wish we hadn’t initiated Cardinal in early March, ahead of the quarter. However, hindsight is 20/20, and the only thing that matters now is where the stock is going. At $190 apiece, shares are trading at about 16 times estimates for fiscal year 2027, which ends in June 2027. That puts us on the lower end of the roughly 15-21 times range we’ve seen over the past year, and the lowest we’ve seen since October of last year. We still wouldn’t rush into the stock, which is down more than 6% and hovering around the 200-day moving average, a key support level we want to see hold. As members know, we value fundamentals far more than technicals, but understanding that the stock is in a precarious technical position helps to see why patience is warranted. Notably, with today’s move, the stock’s RSI (relative strength index) has crossed into oversold territory. In other words, there’s a lot of pessimism baked into the stock. As a result, we are trimming our price target to $225 from $260. For now, we’re maintaining our 1 rating as we let the dust settle around the print and dig deeper into the sell-off. Commentary In the Pharmaceutical and Specialty Solutions segment, revenue increased 11% year over year to $56.2 billion, short of the $57.56 billion estimate. Revenue growth was driven by brand and specialty pharmaceutical sales from existing customers, while segment profit performance benefited from strength in brand and specialty products and positive performance in the generics program. Operations include the distribution of both generic and specialty pharmaceuticals, as well as health-care and consumer products in the United States. They also include services for pharmaceutical manufacturers and health-care providers, such as pharmacy management services for hospitals and Cardinal’s managed services organization platforms for specialty physician offices. On the post-earnings call with investors, Alt highlighted demand for GLP-1 drugs, noting that revenue growth of more than 30% for obesity and weight-loss medicines helped drive a 6-percentage-point increase in segment revenue in the quarter. In Global Medical Products and Distribution, revenue was largely flat versus the year-ago period, coming in at $3.25 billion, missing expectations. Revenue was unchanged, as lower distribution volumes were offset by growth in the Cardinal Health brand. Segment profit, however, took a large hit, falling 35% year over year, largely due to tariffs. This segment reports on the manufacture, sourcing, and distribution of Cardinal Health brand medical, surgical, and laboratory products. Operations span the U.S., Canada, Europe, Asia, and other markets. It also includes revenue from the distribution of medical, surgical, and laboratory products to hospitals, ambulatory surgery centers, clinical laboratories, and other health-care providers in the U.S. and Canada. “Our focus on simplification and cost optimization initiatives is producing tangible results, and we continue to see notable strength in our portfolio of Cardinal Health brand products,” CEO Jason Hollar said on the call. “Our deliberate actions to simplify operations, enhance supply chain resiliency, and drive commercial excellence remain strategic priorities as the business navigates a dynamic tariff environment.” In the Other segment, which includes Nuclear and Precision Health Solutions (NPHS), at-Home Solutions, and OptiFreight Logistics, revenue increased 31% year over year to $1.7 billion, coming up short of Street expectations. Both revenue and segment profit results were driven by growth in all three operating segments. Nuclear and Precision Health Solutions operates nuclear pharmacies and manufacturing facilities. Two primary businesses make up at-Home Solutions: Edgepark (including Advanced Diabetes Supply Group, which was acquired in April 2025) and at-Home. The former directly provides medical supplies to patients with chronic conditions in their homes, while the latter is a business-to-business distribution service that provides medical supplies and over-the-counter products. OptiFreight Logistics provides shipping and logistics support to health-care providers. Customers include hospitals, pharmacies, labs, and surgery centers. This may be the smallest of the three operating segments; however, it’s the fastest-growing in terms of both revenue and segment profit, and it also sports the highest profit margin by a long shot. As a result, this segment punches way above its weight class in terms of future earnings growth estimates. Guidance For the full year 2026, Cardinal raised its adjusted earnings outlook to $10.70 to $10.80 per share, up from the prior $10.15 to $10.35 range, and well ahead of the Street estimate of $10.31, according to LSEG. While this is a 50-cent raise at the midpoint, we learned on the call that only 13 cents is attributable to better-than-expected operational performance. As a result, investors aren’t giving the team full credit for the upward revision. Using 13 cents still beats expectations, but the midpoint is closer to $10.38 per share. Driving the positive revisions, the team now expects: Operationally, 22% to 23% segment profit growth in the Pharmaceutical and Specialty Solutions segment and 36% to 38% segment profit growth in Other. Those targets are up from prior ranges of 20%-22% and 33%-35%, respectively. Non-operating factors adding to the revision include a lower-than-expected non-GAAP effective tax rate and a slight increase in share repurchases. These tailwinds will be slightly offset by an increase in the outlook for interest and other expenses. The team also raised its outlook for adjusted free cash flow to $3.3 to $3.7 billion, up from the prior range of $3 to $3.5 billion and better than the $3.11 Street estimate, according to FactSet. (Jim Cramer’s Charitable Trust is long CAH. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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