Cardinal Health (NYSE:CAH) Reports Upbeat Q3, Stock Jumps 10.7%

Cardinal Health (CAH) reported strong Q3 CY2025 results, with revenue of $64.01 billion, a 22.4% year-on-year increase that beat analyst estimates by 7.8%, and adjusted EPS of $2.55, surpassing consensus by 17.3%. Following these upbeat figures, which also included a significant beat on Adjusted EBITDA, the company's stock jumped 10.7%. Management further boosted confidence by raising its full-year Adjusted EPS guidance to $9.75 at the midpoint, signaling robust operational and financial performance.

Analysis

Cardinal Health (CAH) reported exceptionally strong Q3 CY2025 results, significantly surpassing analyst expectations across key financial metrics. Revenue surged 22.4% year-over-year to $64.01 billion, beating estimates by 7.8%, while adjusted EPS of $2.55 exceeded consensus by 17.3%. This robust performance, which also included a 17.7% beat on Adjusted EBITDA, led to a 10.7% jump in CAH's stock price post-announcement.

Management further bolstered investor confidence by raising its full-year Adjusted EPS guidance to $9.75 at the midpoint, signaling continued operational strength and a positive outlook. The company also demonstrated a substantial improvement in Free Cash Flow, reaching $865 million compared to a negative $1.74 billion in the prior year's quarter, indicating enhanced cash generation capabilities. Operating margin remained stable at 1%, consistent with the prior year.

This quarter's 22.4% revenue growth marks a significant re-acceleration, especially considering the annualized revenue growth had decelerated to 5.6% over the preceding two years. Sell-side analysts now project an 8.3% revenue growth over the next 12 months, suggesting that newer products and services are effectively catalyzing improved top-line performance. The company's historical 5-year compounded annual growth rates for revenue (8.7%) and EPS (9.4%) underscore a track record of profitable expansion.

Key Decisions for Investors

• Investors should consider the raised full-year EPS guidance and significant Q3 beats as strong positive signals for Cardinal Health's near-term financial trajectory.
• Monitor the sustainability of the re-accelerated revenue growth, particularly the 8.3% analyst projection for the next 12 months, to confirm long-term top-line momentum.
• Evaluate the company's ability to leverage its substantial revenue growth into improved operating margins beyond the current 1% stability, indicating enhanced profitability from scale.