Cardinal Health (CAH Quick QuoteCAH - Free Report) enters fiscal 2027 with strong momentum across pharmaceutical distribution, specialty solutions and growth businesses. Specialty pharmaceuticals, cell-and-gene therapy capabilities and expanding non-core operations should support earnings growth, while IRA-related pricing changes, GMPD execution challenges, tariffs and elevated operating costs could constrain its overall performance.

Shares of this Zacks Rank #3 (Hold) company have risen 13.4% so far this year compared with the industry's 3.1% growth and the S&P 500 Index’s 12.3% rise.

Cardinal Health, with a market capitalization of $52.87 billion, is a global specialty medical device company.

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CAH’s bottom line is estimated to improve 13.3% over the next five years. Its earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 14.72%.

What's Driving CAH’s Performance?

Pharma Profit Growth Should Remain a Core Earnings Catalyst: Cardinal Health enters fiscal 2027 with strong momentum in its largest business. Pharma segment profit increased 21% in the fourth quarter of fiscal 2026, supported by brand and specialty portfolios, while the generics program continued to outperform its long-term targets. Management expects 8-11% Pharma profit growth in fiscal 2027, despite assuming more normalized demand. Brand and generic volume strength, additional generic launches, Red Oak-enabled sourcing and previously won distribution contracts should support profitability. Management expects generic conversions to remain earnings-accretive because of their higher-margin economics. This combination of resilient utilization and favorable product mix provides a relatively dependable earnings engine even as fiscal 2027 revenue growth normalizes.

Other Growth Businesses Are Emerging as Growth Engines: Cardinal Health’s Other businesses are becoming increasingly important contributors to consolidated growth. In the fourth quarter of fiscal 2026, the group generated 7% revenue growth and 14% segment-profit growth. Management expects fiscal 2027 revenues to increase 11-13% and profit to rise 15-18%. Nuclear and Precision Health Solutions is particularly attractive, with PET revenues growing more than 20% in the fiscal fourth quarter and Theranostics improved nearly 30%. OptiFreight is also seeing strong adoption of technology-enabled logistics products, while at-Home Solutions is benefiting from scale and integration. The combination of secular demand, operating leverage and selective acquisitions creates a faster-growing earnings layer beyond traditional pharmaceutical distribution.

Operational Efficiency Strengthens Competitive Position: Cardinal Health’s operational investments are increasingly translating into measurable service improvements and customer stickiness. Management highlighted service levels at or near record highs and noted that the company retained key customers across all classes of trade, including a long-term extension with its largest GMPD customer. In the at-Home business, the total fill rate reached nearly 99%, while on-time departures reached a record level. Automation and technology are also improving order accuracy and distribution efficiency. These capabilities can strengthen Cardinal Health’s competitive position because reliable fulfillment is critical in pharmaceutical and medical-product distribution. The combination of scale, service quality and customer retention supports more durable revenue visibility.

What’s Hurting CAH’s Prospect

IRA Pricing Changes May Suppress Pharma Revenue Growth: Cardinal Health expects pharmaceutical revenue growth to moderate to 3-5% in fiscal 2027, partly because of the annualization of 2026 IRA price changes and implementation of additional 2027 changes. Management expects the percentage revenue impact to be broadly consistent with the headwind experienced during the second half of fiscal 2026. While the company does not anticipate an adverse profit impact, the pressure can lead to uncertain underlying volume performance and constrain reported top-line growth. This is particularly important because Pharma remains Cardinal Health’s largest operating segment. Investors therefore need to separate revenue trends caused by government-mandated pricing changes from underlying demand, especially as GLP-1 volume growth also moderates.

Specialty Growth Is Likely to Decelerate: Specialty remains a major growth engine, but its unusually strong performance in fiscal 2026 creates a tougher comparison for the coming year. Management said Specialty grew approximately 25% in fiscal 2026, boosted by distribution growth and contributions from acquisitions. For fiscal 2027, management still expects double-digit Specialty revenue growth but explicitly indicated that it will not match the prior year’s pace. Management characterized the expected trajectory as closer to the historical mid-teens range. This normalization could reduce the incremental contribution from Specialty to consolidated growth even while the business remains structurally attractive. The risk is therefore not deterioration, but a meaningful deceleration from an exceptionally strong base that could temper investor expectations.

Commodity Costs and Geopolitical Risks Could Pressure GMPD Profitability: Although GMPD is progressing operationally, its profitability in fiscal 2027 remains exposed to external cost pressures. Management specifically cited diesel fuel, polyethylene, polypropylene, polyvinyl and resins as areas experiencing inflationary pressure. Cardinal Health expects tariff benefits to offset much of these costs, but acknowledged that sustained elevated commodity prices or a prolonged Iran conflict could push GMPD toward the lower end of its $200-$220 million profit guidance. The company has improved its ability to mitigate such pressures through commercial flexibility and fuel surcharges, but some costs still flow through. Consequently, geopolitical developments and input-cost inflation remain important variables for the segment’s earnings trajectory.

Cardinal Health, Inc. Price

Cardinal Health, Inc. price | Cardinal Health, Inc. Quote

Estimate Trend

The Zacks Consensus Estimate for fiscal 2027 revenues is pegged at $266.02 billion, implying growth of 4.6% from the year-ago reported figure. The consensus mark for adjusted EPS is pinned at $12.55, indicating an improvement of 11.5% from the previous year’s recorded level.

In the past 60 days, CAH’s earnings estimate for fiscal 2027 has improved 4.2%.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Globus Medical (GMED Quick QuoteGMED - Free Report) , West Pharmaceutical (WST Quick QuoteWST - Free Report) and Merit Medical Systems (MMSI Quick QuoteMMSI - Free Report) .

Globus Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported a second-quarter 2026 adjusted EPS of $1.34, which surpassed the Zacks Consensus Estimate by 19.6%. Revenues of $789.6 million beat the Zacks Consensus Estimate by 0.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

GMED has an estimated long-term earnings growth rate of 12.4%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 27.9%.

West Pharmaceutical, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2026 adjusted EPS of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%.

WST has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.4%.

Merit Medical Systems, currently carrying a Zacks Rank of 2, reported a second-quarter 2026 adjusted EPS of $1.19, which surpassed the Zacks Consensus Estimate by 24%. Revenues of $419 million beat the Zacks Consensus Estimate by 3.5%.

MMSI has an estimated earnings growth rate of 12.3% for 2026. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 14.10%.