(FORTUNE Magazine) – It's a dreary, gray, late-winter morning in the Columbus suburb of Dublin, where the clock at the Heartland Bank has been flashing temperatures in the teens. The climate's more hospitable inside the Embassy Suites hotel, where a soft-spoken man named Bob Walter is giving a pep talk to top managers of a company called Cardinal Health, the class act of the drug-distribution industry. "You all know my history," says Walter, who's been running Cardinal since he founded it 32 years ago. "I just don't like working for a big company. All of us have to be totally intolerant of what happens in big companies."

Wait just a minute, Bob. The think-small sentiment is fine and good, but Cardinal is a big company. Really big. With revenues of $51 billion, it's No. 19 on the FORTUNE 500, making Walter, 57, the highest-ranking founder-CEO on the list. It's also true that Cardinal owns 30% of the drug-distribution business, employs 50,000 people, and has produced 20% or better annual earnings growth for the past 15 years. Yet Cardinal and its CEO do legitimately share one attribute with small companies: Most folks haven't heard of either of them.

It's not hard to see why Cardinal has such a low profile. There's the CEO's Midwestern reticence. But that's incidental. The real reason you don't know anything about Cardinal is that the distribution business--our apologies, Bob, but let's be frank--is not sexy. The largest portion of Cardinal's business--82% of operating revenues and 52% of operating earnings--comes from acting as the big man in the middle. Cardinal buys pharmaceuticals from the likes of Pfizer (its biggest supplier) and sells them to the likes of CVS (its largest customer). Its profit is the tiny take from trucking the drugs from one place to another. Running such a business involves complex logistics but not much name recognition. In fact, you won't see CARDINAL HEALTH plastered on those trucks crisscrossing the country. The reason: Each might have as much as $40 million of drugs on board, including narcotics with an even higher street value. Best not to draw too much attention.

Walter does get recognition, however, from his peers in American business. "He's one of the best managers I've ever seen--and I've seen thousands," says legendary investor Peter Lynch, a Fidelity vice chairman. Viacom chief operating officer Mel Karmazin says that when he was choosing members for his company's board, "there was never a doubt in my mind that Bob would be on the short list." Adds American Express CEO Kenneth Chenault, who invited Walter to sit on his board too: "Very few business leaders can manage a business through the number of cycles that Bob has."

Bigness, however, brings its own problems, and Walter now finds himself in a pretty tough cycle. Investors doubt that any company that grows by acquisition, as Cardinal has, can continue to succeed. They also doubt the probity of any wholesaler's accounting these days, thanks to stock-crushing accounting shenanigans disclosed at Ahold's U.S. Foodservice distribution unit and at major Cardinal supplier Bristol-Myers Squibb. Those doubts have weighed down Cardinal's stock price, even as its earnings continue to grow.

Walter dismisses Wall Street's concerns as little more than the latest in a long line of "crises du jour." The Clinton health-care plan of the early 1990s, for example, was supposed to take a scalpel to drug pricing. It didn't. At the other end of the decade, the Internet was supposed to eliminate distributors altogether. Again, it didn't, and Cardinal's stock rebounded. Now, as Walter moves the company beyond distribution into higher-margin services and drug manufacturing, he believes it will rebound again.

Bob Walter started Cardinal Health, he claims, because he hated his first real job. After getting an engineering degree from Ohio University in 1968, he began working on missile technology at North American Rockwell. But the bureaucracy at the company, later known as Rockwell International, was too much for young Walter, who now calls it the "worst, scariest experience of my career." He quit after six months and went to Harvard Business School. "I decided I'd never work for a big company again," he says.

Walter came back to Columbus after business school in 1971 and borrowed $1.3 million to buy a local food distributor. His father had been a food broker, so he knew the business a little. But after ten years or so of peddling ketchup it occurred to Walter that Cardinal Foods, as the company was then known, would never be a big fish in the food business. So he put on his Harvard Business School hat and did some research. His discovery: The drug distribution industry had 354 independently owned distributors, but just three public companies. Consolidation wasn't the only opportunity Walter saw. The drug business was growing faster than the economy, and what's more, when doctors prescribe a drug, another drug typically can't be substituted--unlike, say, steak sauce.

In 1983, Cardinal offered shares to the public, hoping to raise funds to get into drug distribution. Fidelity's Peter Lynch was impressed enough during Cardinal's IPO roadshow to buy about $1 million worth of Cardinal's stock at a split-adjusted price of $1.04. At presstime it was selling at $56. (Fidelity remains Cardinal's largest shareholder, with a 10% stake as of the end of 2002.)

After making the switch to drug distribution, Cardinal did nothing for 15 years but buy smaller distributors and move drugs from point A to point B. That worked well until Walter got zapped with an electric shock of paranoia. In 1995 a competitor, FoxMeyer, tried to take market share by underpricing its rivals. Fearing prices could collapse, Walter started looking for new businesses. FoxMeyer went bankrupt the next year, but by then Cardinal had already begun to diversify.

The typically reserved Walter livens up as he leaps to a white board to diagram how diversification happened. As a distributor, Cardinal has relationships with drug companies and hospitals, and those relationships begat opportunities. Years of buying from drugmakers gave Walter the opening to start making the drugs those companies didn't care to make themselves. Cardinal, for example, bought the company that puts Advil into soft gel caps. Cardinal sells to hospitals, so it made sense to Walter to buy up medical- and surgical-products makers. It also bought Pyxis, a maker of machines that dispense drugs to nurses in hospitals. The automated medicine chests cut down on theft and prevent potentially lethal mistakes. They are a natural extension for Cardinal's sales crew, who already call on hospital-purchasing managers.

Leveraging such relationships is the only way Cardinal, with its giant size, can continue to grow. Cardinal and its biggest competitors, Amerisource-Bergen and McKesson, control about 90% of the drug-distribution business, ruling out further consolidation (antitrust laws would prevent that) or significant market share gains. Cardinal, however, is more profitable than its rivals because it led the way into higher-growth and higher-margin businesses. Pyxis, for instance, returns margins of 42%, compared with the 4% average for the rest of the company.

Lately Walter has felt frustrated that the story he wants to tell--that of a company moving beyond distribution--has been hijacked by fears that some accounting disaster is lurking beneath the surface at acquisitive Cardinal Health. He points out that blowups have happened at companies with ultrafast growth, high debt, and unfocused strategies, with Tyco being the poster child. Cardinal, by contrast, has grown gradually, has low debt (16% of total capital), and follows an acquisition program that never strays from selling to pharmacies, hospitals, and drugmakers. Bristol-Myers spooked investors when it said in March that it had incorrectly accounted for incentives paid to Cardinal to take on excess inventory. Cardinal insists that it books revenues only when it sells merchandise to retailers. "We will not have any restatements," says investor-relations chief Stephen Fischbach.

Walter is clearly annoyed that Wall Street doubts him. He announced in February that Cardinal will no longer give precise earnings guidance, a tacit acknowledgment that earnings won't continue to grow consistently by 20%. (Bear Stearns analyst Raymond Falci suggests that even at 15% Cardinal will be growing faster than the market average.) And Walter has been spending a fair amount of Cardinal's $800 million in annual free cash flow buying back stock. Still, he has big plans. "We are builders," he says, "and we aren't done yet."

Those who know him don't doubt that Walter means just that. Dick Notebaert, CEO of Qwest, played high school football with Walter. Now a Cardinal director, Notebaert describes his old friend as "one notch down in competitiveness from Michael Jordan." For all his Midwestern humility, for all his big-company bashing, Walter is about winning, and that means moving fast and getting bigger. Following his pep talk to employees at the Embassy Suites, Walter straps himself into his bright-red BMW two-seater for the five-minute ride back to headquarters. The car roars like a rocket when he shifts gears. The vanity plate on the little red Beemer? HT TMLE. Hot Tamale. That says it all.