CAH - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Cardinal Health, Inc.

Second Quarter Fiscal Year 2021 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Kevin Moran, Vice President of Investor Relations. Please go ahead.

Kevin Moran

welcome. and morning Good discuss an second outlook. update will results, fiscal along with to Cardinal we quarter Health’s XXXX Today, our FYXX

can at release section press find on You IR the and of ir.cardinalhealth.com. presentation website our today’s

Joining Jason Chief and Executive Hollar, are me Financial Mike today Chief Officer; Kaufmann, Officer.

implied. specifically description a out matters to results those the GAAP call, uncertainties reconciliations comments risks for press that we The that making refer to be statements from these schedule as during for and Please could discussion non-GAAP forward-looking be periods can our to the in all SEC or at are the of the presentation actual release. differ our and are projected materially uncertainties. statement in During forward-looking will statements. our Please the basis, note cause be filings called these will addressed risks attached non-GAAP to found on subject GAAP. to our of beginning today, and a relevant the they slide unless

turn opportunity. to you that, portion try During that please and ask we to and everyone so limit call, Mike. yourself give an we Q&A of one now can over today’s I’ll question, the the try call that With

Mike Kaufmann

and growth fiscal our high updates areas. sharing then, morning, Jason and review I’ll discussion level Thanks, will our so results our Kevin, this outlook. few good updated And year. everyone. second close thoughts a regarding progress with start I’ll far on our ‘XX our by quarter

led the operating than global make rapidly plan Medical environment. second We segment. results as quarter by progress expectation, continue we changing strategic better our in our came the to Overall, on navigate

share. In fiscal effects to the pandemic range enabling favorability, $X.XX saw we the visibility solid EPS EPS we our per our into varying improved the including our to to guidance second Due the first XX% in timing increasing of are In year, business. deliver of of to some the performance saw a our half operating $X.XX quarter. line, and quarter, remainder we below growth the of us and narrowing on addition,

administrator, a positive as our and pandemic although health impact and to demand. COVID-XX to to our segment experience with And In lab OptiFreight as Ohio a release distribution continued And impact in generics net we related pharma, Logistics support in well. network the volumes, independent, Across we vaccination to strong Medical continued on effort. customers small state our the chain long-term consumer to products we and act to pandemic doing enabling and recovering efforts. through the the specialty the participate Our partnered vaccine like saw remain in business. support PPE mainly and imaging, in nuclear Pharma, Medical, with focused ongoing pharmacy adversely performing retail CDC part of partnered very are business Company, areas to care

range categories. are our for product we costs customers Assurance manage to in and program PPE, Regarding key provide long consistent Supply utilizing supply our

and masks, gowns We continue challenging with gloves. as some market but categories, exam improving are in see these supply product to of seeing such a

we any we remain help And ahead, are pandemic. ready communities willing Looking of challenges patients, government the our to through the supporting in and possible. ongoing committed and to customers, way

outlook details it quarter our to and over for Before turn year. the on I growth I’ll second on to provide some our updates areas, more Jason strategic share

Jason Hollar

a the consolidated to by strong tax sales SG&A billion. The Beginning items everyone. driven was results, and by X%, ups the with driven $XXX morning, Medical operating XX% discrete Good to margin second gross second which $X.XX, net Mike. for IT $XX.X Thanks, was quarter revenue quarter $X.X billion, Total X% at million, results. from a reflecting X% investments. increased $X.X Company result billion, growth reflects was other of to driven increase flat modest Total increase, expense existing decrease total primarily earnings result quarter customers. prior our of in by increased the due the net in for these Company’s was Interest as year negative a and of net prior expense value year Medical. the decreased was debt partially adversely as COVID-XX. as by of quarter, impact versus affected a deferred and by enterprise impact this I’ll plan positive impacts to XX% compensation interest an from reduction, investments. The offset segment discuss segment COVID-XX shortly. during lower million, $XX primarily a Pharma well

the for discrete tax the of reflects rate impact which Our non-GAAP quarter was certain XX%, effective items.

at taxes And benefit the GAAP net tax Now, a in federal we taxes. loss of were quarter. time. recover that million at impact carry ‘XX the that such, paid with associated in rates will recovery the effect a recorded federal in prior the as quarter, tax we return, our $XXX due of tax quick self-insurance fiscal and GAAP during on Primarily back note to previously

we corresponding Additionally, receivable XX expect $X the which to approximately months. recorded billion, next we within of receive a have

and billion, generated Turning the flow robust during the balance cash sheet. quarter. to We flow operating cash of $X.X

cash appropriate the the week, and no in under our We balance borrowings at our maintain We remain day to of which flows. balance action investment cash reminder, facilities. the the taking quarter ended on affects second sheet. point-in-time a outstanding grade $X.X focused with quarter As ends, credit a billion,

the June debt. that to Our reduce of By with we with timing end next retirement to we and ‘XX, approximately billion economics method intend due. so the of the by vary debt associated maturity debt fiscal is exact coming may long-term amount, continue early $X.X XXXX evaluate in as

a revenue execution quarter and positive to X% the beginning Medical billion, net $X.X driven on impact slide with Medical in X. Now, from by increased the by turning COVID-XX revenue team. segments, second our to solid

COVID-XX canceled volumes and higher elective well previously as impact by global deferred includes by offset cost mentioned saw net profit lab we procedures. as net primarily volumes the reduced and demand, from discussed, from a Segment resulting increased partially The manufacturing XX% PPE million, procedure and As contributions business, selling segment volumes $XXX were from positive impact higher which our profit lab by and savings, we due higher products PPE previously driven elective in increased positive that have prices COVID-XX regarding from was offset efficiencies. surgical to impacts. to

As it COVID-XX relates to lab, we demand products. for experience testing continue to tailwind increased from a

‘XX. While difficult remain the demand balance we this least of to to for predict, expect elevated at fiscal

our saw Regarding cost favorability and both, related efforts. PPE, we mitigation to volumes higher timing

the As to quarter assurance manage products products customers. cost during supply incurred we previously continue selling of year for higher costs rate, we still digits be vary, mentioned, volumes our as levels, volumes procedure electives, our with procurement for pre-COVID-XX continue higher choppy PPE have On although consistent quarter pandemic, our program and significantly versus we and baseline. expect mid-single our the first timing second to generally down below select the to exit were prior

Finally, the will as COVID-XX in expect we first Pharma global savings. to and COVID-XX-related specialty customers. see we like realize continue the generics benefits brand from savings a strong was continue manufacturing containment $XX.X to which and initiatives, XX% to the And efficiency cost to segment outside million. in mix billion, our nuclear declines quarter, Revenue chain resulting increased $XXX program profit to business, of decreased by distribution supply partially from segment continue X. during impacts, driven on volume the Pharma from X% driven in Transitioning sales quarter. This to offset sales solutions deliver transformation, contribution higher we pandemic. measures and our slide and by pharmaceutical growth by was from our

manufacturers, Our COVID-XX, volume specialty solutions resilience, continued continues with overall to of generally again quarter. with market in when strong Also, previously mentioned to the see biopharma our excluding consistent downstream both and business growth and upstream demonstrate generics the impact dynamics. program achieved providers

X, first below visibility EPS outlook. line. to review XX% strong our improvement I fiscal the updates slide guidance EPS the operating into on in our the range and of half growth. fiscal driven better $X.XX well to ‘XX, narrowing year-over-year half we Next, as back raising updates solid per performance at will our segments, are is the share, to This Due Medical ‘XX represents $X.XX midpoint our by as performance to which and

in now with improvement compensation the plan $XXX the of other adjustments. other deferred Regarding our updates range of to and interest by impact corporate to million expect $XXX assumptions, driven primarily million we the

a our bottom As to compensation reminder, line. neutral deferred adjustments offsetting corporate are net and SG&A fully

half lowering our effective to year-to-date We’re for ETR year, of the rate of tax higher back XX% expected year items. range and reflects which rate non-GAAP discrete fiscal due the timing the the to in our XX% effective tax of to XX%,

diluted expect outstanding now average in million to weighted year range XXX also the the to finish shares XXX million. of We

on X. Regarding the outlooks slide segment

mid-XXs to in of segment discussed low-double drivers, previously the For digits. percentage Medical, the for due we to revenue to growth the profit in low expect now year growth range high-single the and

and Regarding To to the in are growth the for current maintaining our comments prior Pharma low-single-digit initial impact of revenue assumptions we begin lap segment, half fiscal profit enterprise the mid-single-digit pandemic ranges year COVID-XX our growth. conclude, on we as back to guidance the year. some of

continue expect be impact in turn back than for ‘XX, improved medical from exit to it net near I’ll the COVID-XX, prepandemic to the to anticipated, And Mike. to to utilization fiscal enterprise, levels. less expectations. to we the continue the We and fiscal year originally negative or due choppy at expect though year-over-year now over

Mike Kaufmann

healthcare’s our the and growth, unprecedented like models, and with value time now beyond as healthcare health, and I’d We capital reinforced by look safety moment the be to to operating a and and toward create while deploying we of business this has second teams. resilient this aspire our quarter last Jason. said most we our and critical shareholders, partner this for on year. that half of greatest how fiscal development employees. in how create I for communities, investing we elaborate to all see Thanks, role efficiently discipline trusted the evolving role value prioritizing customers, take the

models as we can adapt that we’ve for seen today’s the throughout pandemic, future. and operate challenges address business the resilient First,

business portfolio enabling Jason Cardinal supply throughout both, instrumentation, pandemic. as Through we For the the laboratories independent and our acute of and distribution health support our brand example, lab and to enhance continues its relationships, to offerings patients. consumables, our reagents highlighted, Health

enhancing as adapt models these future. for distribution and to and we capabilities, also product core the continue are We our Medical Pharmaceutical

long-term strong efficiencies. generating We and in chain are both progress streams segments supply near making our on work in

in our to consolidate network increase pandemic for its X began on new experience, fourth expect example, operational and the work a of the the to year, segment that Chicago, For capacity storage. requests center, of part customer kind and customers’ this replenishment improve second is This square-foot to Medical quarter. near facility in meet the our we is last we be million quarter multi-year plan

we time, are our also experience in long-term portfolio customer investments We strategic, IT and strategic but key our our not are differentiated digital investing enhance drive in customers’ same needs. support, anticipate making growth to areas At also capabilities. to and in only infrastructure our the

specialty, care investments home, trends utilizing in nuclear at services, and us enable Our breadth recent a customer these billion and industry at conference in revenue, will to from represent Recall, medical and specialized three-year areas and favorable I CAGR. businesses connected together, capture of double develop benefits solutions, $XX to have historical noted that digit total our a scale. five revenue they the

Let few includes needs continued are In our and of that to of we the meet which technologies Logistics greater our customers. medical these areas highlight me drive detail. investing evolving WaveMark a in will services, innovation businesses, in OptiFreight

growth to managers data both, OptiFreight lab test insights platform, our and processes partnership for additional using which installations manage go continue workflow For in explore And have acute chain chain customers demand optimizing TotalVue kits in with and solutions as logistics their supplies. reminder, a tool recently example, supply with management. business, to chain customers. in we savings seen WaveMark help also healthcare drive is supply we as pipeline, clinical and are our WaveMark, opportunities leaders in recently supply announced our care, a live and lab to software-as-a-service the Analytics has increased we and critical our to our for initiated help

related recovery industry leading our remains to long-term further As pandemic, strengthen focused our our team plans to nuclear the its continues business on position.

board. build From to working Indianapolis, about to and in continue We of delivered. are our manufacture is the distribution, the patient Center change and way are coming development on together radiopharmaceuticals for care pharmaceutical to out we Advancements supporting Theranostics excited innovators commercialization

customer loyalty showcasing our proposition excellent, recent results our the addition, were value In differentiated in survey market.

double-digit business. and to to years data And to payers, deeply the making to six these mid excited levels, our growth this to million Demand new in of patients. Our more of the efforts we strengthen class past we pharmacists technology model, payers. we over XX cost and our launch meaningful, finally, solutions investments manufacturers, Care, seeing, products future long-term service appreciated XX,XXX our the and tools selling and about pharmacies, are customers. services services transform in by for enable reaching with And XX world take outcomes-driven between effective additional are actionable are are and our connections patients, advantage currently and continues increase, and solutions Connected

We with support medication million more locations annually quarter, tests to administer management. to already have our implemented tools are in sending more the designed, XXX developed last than pharmacy the and COVID-XX X,XXX engaged. than vaccine, And we help customers

over our coming areas, continue the will year. growth share We these they each materialize, capability and then of to as progress in core initiatives

responding who continued customers changing and to do Before we as I to the thank of our pandemic. tremendous want adapting team navigate the the Health, close, Cardinal needs job to a at I here

what matters shareholders, and to do employees customers, will our communities. Finally, that I reiterate we

As breadth, are we and lives. up that to value using and all to expertise provide forward, open scale we for questions. move and With our products solutions pause create to improve

Operator

Thank of of Cherny Instructions] Bank Michael you. We’ll question from our first [Operator take America.

Michael Cherny

you for could color nuclear, thanks think the and generic a dive If the and as of morning, headwinds do can so I you think all about on year. they little then, bit the Pharma the when the for and for How the on Good outlook into visibility rest about also the trajectory you? recover and the far. headwinds,

Mike Kaufmann

really I couple the to things Thanks guess, Yes. Michael. it. appreciate in I keep of question, mind. for

well as things We’re kind the the far, of lot affect and of which any the is, our like being the there. swing the quarters. initiatives. so pharma in distribution specialty of might we’re one seeing off a savings we’re feel as what really do track. both executing that’s It’s well main that We the we’ve of be what headwinds pleased the factors, resiliency on table January. And from the the one segment, a inflation, cost We inconsistent continue to segments, generics, with also, brand, -- from prior business. as we’re anything really good, we’ve from really on Pharma of we’re then, seeing seen there seen in such nuclear standpoint, our always could driver COVID-XX not that see And of in

still we for there choppiness are of COVID expecting factor. or the at lot the Pharma. half And continues be in choppy But, off of So, a really continue The factors things We the really we as see at that said, lot those rest to swing to we we expect say the But, would be to year the would guidance pre-COVID of when being of the for what second are exit year. near for we it growth our saw levels. to low-single-digit quarter. segment. the table look is a swing is, the I main

Jason Hollar

just year-over-year could a your saw nuclear, first than we one be we did Jason. headwind about bit point the see I And add what it’s less the if And little quarter. in point, Michael,

we’re So, of -- little of electives kind than underlying of little with continuing a follows elements bit seeing bit follow to more the a other what volumes.

a there, not of slight but improvement So, sequentially. lot news a new

Operator

question Thank Goldman you. Jones We’ll our with from Sachs. next Robert take

Robert Jones

kind you recovery half there’s up. level, the I particularly the versus all back at to-date we of I know, in on guidance, having was some pick see understand Maybe obviously the us half I I Medical, EBIT help seems, the impact Hey, you declines to assuming the to the just half I a And the pieces legacy on line. maybe of you’re lines significant front mid-XX the half. have It segment. high lot across But, front updated business, fade, the of as moving back COVID, with that question. you’d of drivers would Medical great. see would Mike, but on surgery and think related based what in kind the think a maybe Thanks see could you the potentially the for results product of COVID’s in hoping think,

Just you’ve decline what trying versus better assuming kind of could of half. that drive really seen what sense a half to in the you’re this get front back

Jason Hollar

Jason. Yes. is This

the you the feel low the did it half relates really see Yes. cost to performance. about. here quarters two me on our Certainly, as last year’s it stated we good good as trends Let products. with guiding of pleased our off. and we some first point as very Like To versus well start half about we to as to in mitigation half, still QX we’re said, growth double-digit year, second first now, on then PPE mid-XXXs well, efforts remarks, the as favorability certain for top

the to strength that’s in and was strength COVID to in addition saw lab element that with a in tailwind associated have that medical quarter. PPE we saw actually in component the a So, that an volume drove net that volume the we

that go And just forward. vary so, to continue thing will one as that’s quarter-to-quarter we

other The continue a year the with as underlying control of quarter that item about first we volumes. uncertainty be we last very well lot aggressive in that of is the to our here, over talked half the cost

third long-term so, do continue half going flexibility point year. make a into lot second And just we business. I’d make of of in our that wanted is the to And to that certain had investments the then, we make the we

opportunities. strong deployment to pipeline highlighted our one we organic As invest of is capital growth priority as the in number

And in well. so, of regard our we that as level always trade spend off

Operator

take We’ll with from Credit Suisse. Thank next Jailendra you. our Singh question

Jailendra Singh

you. Thank Hi.

aren’t these Company. realize But You as needle work programs vaccine participate up future to set with of doing few Company the curious you’re and things for I this vaccine for how just in a to future might distribution. help the opportunities the themselves you guys to off move phases in mentioned the going rollout. for to

Mike Kaufmann

-- Thanks. everything staying be vaccine. up-to-date I as and appreciate continue in it been involved the question. Yes. to to the We’ve relates

said, as we we’re working the And also are the a administrator. we’ve vaccine. with CDC a State acting them Ohio, helping the As with distribute of partner network

full And areas one area. events so, the -- to is this small I our in are At that continue belief believe other some end the we there having touch to scale that be And over day, the of important folks. do is most where in that of term and to the sense the distributors the most that make the the country’s we’re going the capabilities distribution long to is history, of and some that. of vaccines the all market to distribute bringing effectively able the to get

to and sure things doing however so, help participate can. continue the that we ready to our make able be self And to we all we’re to make out

Operator

We’ll Research. Eric take question with Percher next Nephron our from

Eric Percher

about Can pricing. the dig you. dynamics you quarter, I think, Thank to into this bit? the that we expect see pass ability we I little some quarter, increases. talked costs price going were input PP&E a last on And to

help mentioned? assume to and square to versus just the then you maybe with half? what broadly, that QX, So, second And pull-forward more can price QX cogs, you

Jason Hollar

Sure. overall here piece back supply across well. and Yes. and Certainly, general categories. components seeing Thanks certainly, for in me cost even and probably quite talk in imbalance be PPE we bit the the exam the remaining as supply demand gloves. to elevated more in that that It’s step continues get extreme terms and But, question. dynamic loop balance of strong, And all to remains demand are between in of little kind about demand. a more certain in obviously just let and try

we’re different the supply, has dealing supply, continue outstripping some supply so but just see the dealing elements with that cost just not inconsistency, and just with increases. chain of we the -- only timing also all of far to timing that increases we’re some price So, now demand which created

have until it a bit uncertain delayed later increases these an different of So, to just becomes of then quarters. influences that some combination of costs be driven

is same working to quarter, going to and program. cost the objective the manage vary, key we with Supply and appropriate. we’ll timing increases make all that our overall, mitigating But the to So, customers continue sure last remains as our said with we’re these as Assurance

Mike Kaufmann

thing driver continue Yes. I us at lab to PPE a fiscal for the ‘XX maintain is this big only of we that about Medical business the add to is The remainder was its that growth, its continue would to our be while for segment. really And driver, least ability the growth. current clearly assumption. our excited quarter is in And a

Operator

Morgan. go We’ll next you. JP Thank to Lisa Gill,

Lisa Gill

wanted an Is you be thinking your about line with cold business can seeing impact we the in positive? just on understanding the to there the of drug other to came or at we any with are how I and comments utilization, that seeing, about data half? Is year. distribution do flu? least based down, or of of your about we -- cough, due how trend? the RX new utilization, what fiscal Mike, us as anything -- think And prescription distribution One, back going around then your less having was volumes back into to go buying component see Just secondly, to you the how IQVIA? in think with an more half get groups? give the Pharma quarter continue and of of on the you branding, impact What are talked you an in a about kind generics? it You segment is you’re said

Mike Kaufmann

generics a Yes. I of Pharma that Thanks, of saw not between also in for we’re our volumes our on say related from really first impact QX view seeing I -- couple Lisa. volumes and that the A to is just I all would we is QX COVID-XX. difference all, business. And sequentially, between would lot important know say. it’s really guess, there what things that in to

dynamics as that volume our continue we It’s be the generics seeing impacting expect really as And to as like -- or buying So, relates other not groups challenges it the any just program. other COVID-XX. such to said year, we’re we months. up that to of to We do year. of the second back expect expect for six would near half the last choppy. at and but of still over the get down that the the levels saw or by pre-COVID a to end We that lot

flu, know, it seen be And for as become a at a in much driver It this the flu and far you less us. hardly as relates to has goes, small all. less of driver. As general, we’ve can as

driver of in the been has such vaccine all higher, ancillary down have types tiny not distribution for incredibly things, in type products again, they Pharma, that focused those -- at the that a little us terms So, something and concern again, other was but obviously. just it’s Tamiflus be is any COVID. or and as on looking which driving But might of we of any the challenges of are we of been

Operator

you. Thank

Santangelo with will Glen We next go to Guggenheim.

Glen Santangelo

at your comp taking like I the adjustments. capital guidance you for settlement changing I share you the count guidance. year? respect share deferred guidance. made and quick to question. priorities question if consideration for the ask to expense your wanted near-term? all a opioid just a I comments expense the you your count to deployment And Thanks Yes. appreciate at But, all priorities guidance And was the lowered raised is just balance Jason, of deployment the about potential looks interest that, It the interest secondly the but the capital with curious, you’re in your in

Jason Hollar

great. Okay,

as And and corporate interest, and of right. start is I a comments, SG&A. between highlighted, deferred terms in interest So, Consistent there. that’s other entirely the driving with guidance flip-flop Yes, change. my comp you’re let’s the elements

we with capital change net that. of no course, And there’s associated part although our of a substantial interest have EPS structure fixed. So, low, rates,

lot been. So, we don’t relates a of as variation, to just rates see have it where

there part? then parts. sorry, were I’m the second was What And three so, --

Glen Santangelo

Share count.

Jason Hollar

Okay.

modest share the guidance share would of any It point, range to before. new didn’t count, well. in The the is can range end, no first this the that repo. we do quarter the still we count low So, In slightly we’re of of you as quarter, at be high what your do second had high But the of within we as share didn’t repo. end repo; any would end amount imply the see.

baked what’s So, that’s within assumption. that

capital deployment, the we to relates haven’t it our changed priorities. As certainly,

saw work our activities. Of pipeline just medical of you we to foremost confident making that the global really are business we’re and chain in And those first there to to within priorities. continue with that, we And reinforce strong with quarter some and to great course, manufacturing we opportunities. want invest those work, growth organic this and as feed continue progress that supply we

point other in our was balance second the to just referenced maintain sheet. is The strong that commentary I grade my with priority consistent investment

look course, that, understanding through the opportunistically, of at increases, all on cash is such After look what return we that make dividend continue repo then, our the of get due variables, more our we priority. at as on of like. certainly can more highlight evaluate billion, fiscal debt continue to shareholders, of And we $X.X any But, primarily did it comes by aggressive and the third it to reduce we’ll opioids to at strategic that intend is to looks as our I So, as we all as continue each about we that And balance think our end of one every other the components. other with to we bolt-on as those that ‘XX. the M&A. priority. day. be if consistent time. we But, we that’s we’ll those confidence confidence Then, progress, And framing the and elements more

Operator

you. from our Thank question Hill Bank. George Deutsche take next with We’ll

George Hill

the to go taking be out little was in PPE guess, Eric’s to willing pricing. kind call wanted the this thanks kind to have to I the a or wondering in commentary of of pricing elevated? the to guys. on going positive some topic of Good Hey. guys half new PPE I how price for first Do of worry And question. on the interested bit think are would be back future, And year. impact we the is morning, if your pricing deflation? we I point I’d in about long Mike, stays normal at you

Jason Hollar

Yes.

that start, me So, part. first at let with least

break to pricing going separately. not out We’re explicitly the

pricing the that highlight that cost is to important really just it’s meant all, increase. of cover to First

balancing cost that to due our then, as Medical in And of that last was any of business, what the volume pricing, was did, increasing. in to With guidance update increases towards this that guidance update, due so, we’re as that the We volume PPE, balanced, which was in type that’s in it’s and say price definitely vast changes. more QX, lesser for increase a more extent, well lab majority to however, there. revenue increases weighted

and pricing it back So, go to it’s gives that by. of would just dynamic what PPE -- the is guidance being you increase understanding better driven I a

Mike Kaufmann

thing Yes. The dollars emphasize, come is, the assurance will maintain margin been that and I on our goal to customers comes would make our revenue the clear always with it’s program. again, work just our to But down, PPE only of an cost down. has as sure

being headwind can Jason so, And, as bit the flow revenue. shouldn’t -- actual little and And think the declining you when they have of about necessarily a PPE than cost through in said but recognition. sale lumpiness as timing you us, the costs of that a for create price other the

Operator

Ricky Goldwasser Thank with Stanley. you. We’ll go Morgan next to

Ricky Goldwasser

Good morning. Hi. Yes.

revenue. for distribution second So, look the two questions here. growth segment. we growing half, One implied EBIT is on faster the than When pharma at

I which is was where faster back going distribution the quick us sustainable give able we’d and segment? can there update volumes clearly, same think than know versus that margin, about stand? if opioids expectation year. just to comps think revenues about grow and early you the come are higher that think really, are that continuing EBIT Now, a XXXX. to we model last for as other question be And we year-over-year my and it some generic too if on -- nuclear, for we to us is drivers But, think period different But it’s easy to

Mike Kaufmann

Sure.

as the -- far As cover quickly. I’ll just opioids

As it to I’ve progress we’re the negotiations, continuing be, in said know, past, continues lot a parts, moving as but to make of you complex there.

on Pharma thoughts components. as we at on goes ‘XX. As or this those time can’t But, there, about obviously, right talk far the guidance you’re

lot of we confidence goes And our we we business that that levels at all, as a or would of forward. pre-COVID continue exit First expect, in to sequentially, business. if near nuclear it improve would have

current the they’re As only see comments you highlighted able growth around I guess, we business main our are generics to I know, also mid we’ve investments as over not seen the be well in the made performing reason is the off that and have because but as how theranostics in to And that space. that in volumes far go, it generic again, the COVID. long-term situation, in then, my of

working as rest that continue expected, -- to is being the we we the so, be all expected, COVID which to it the that continues are see driver. as components we And various in have program essentially program, we of

less So, an and COVID in less grow. of volumes programs generics begins our would again, as be to to impact, to expect our see we

Jason Hollar

Yes.

is It a is, comment, and revenue I’ll I point last there, relative of fixed the when on cost thing in the business. other add balance the business. is talked, margin to high-margin nuclear think, as QX to volumes declining year, you’re a as quickly, The Ricky, relates especially nuclear also it right high that the were we

very creates it that headwind we a in contribution margins So, certainly create that fourth saw a quarter. high

in be, then this is near exit year, quarter, the we fiscal guidance there if expect our the -- anniversary fourth pre-COVID it, or plugged model for into as as so, we probably improvement at especially accurate in time make that you with by of be that would to levels, that thing your to And needs the earnings to an key that components make one of relative whole sense. revenue to piece the

Operator

Rhyee from next Cowen. our question We’ll take Thank you. with Charles

Charles Rhyee

thanks for taking Hey, Yes. the questions.

that on from your some you side, Commentary become a peers more Pharma talk they’ve about to Just extent that meaningful contributor. an to impact? would suggest can of it’s had starting the and the biosimilars

segment, And a to in much -- the Pharma within -- sense, how get basically that’s impact? an Thanks. having that’s then wanted Just yes, it.

Mike Kaufmann

Yes. to an we’re Biosimilars continues also excited be about. area

continue biosimilars. to in. positive calling -- something We participate from level are point it’s as just to the do contributions this not the But it that at out it’s necessarily time. at be we driver seeing doesn’t It in

We’re that going able us, a biosimilars, that to be to should well-positioned customers see manufacturers as very and we and something tailwind as help look for we forward. do be with forward,

Operator

with We’ll from you. Valiquette Thank next our Steven Barclays. question take

Steven Valiquette

Great, thanks. Good morning, everybody.

first the fiscal segment trend line in of operating just then looking in XQ. back quarter, here segment, the where at we’re fiscal they Pharma kind all in X% XX% think, the I in the down year-over-year grew profits So, but were

the just that bit prior bit is, the little more overlooked? there you gotten that just tougher nuclear out mentioned I the on in or a quarter. call have that said actually impact in Q&A may what the to from seeing guess, COVID we December fiscal the that made was fiscal you’d question pharmacy in on despite in that XQ. And want the headwind maybe is generics. just on I a profits in December Thanks. else anything you there less little little not the you’re generic versus the else the color comp decline You worse think in quarter that I something sequentially XQ is get saw that for in quarter inconsistent the know, anything segment, a there bit

Jason Hollar

Yes.

number QX very As sequentially talked impact. Mike mentioned COVID the market general, earlier, type performance in consistent we generics a of We dynamics. consistent to about the QX. of categories, talked saw about in We

fairly So, that you talked of some do only where the not at program at that need but year, generics at the time. go volume, back And QX overall where that’s look strong. to impacts -- on were about that prior we was the mixed point to going

to as quarter within quarter very think comp as sequentially. well it’s I consistency So, much a

Operator

question We’ll Evercore. Elizabeth you. with Thank our take Anderson next from

Elizabeth Anderson

guys. Hi, morning. Good

going to a I’m think, ask about I vector. different

of health maybe expectations rest sort home through can talk quarter, in your as move we beyond? the of you the your how terms of that and been COVID business, In about has and performing

Mike Kaufmann

Yes.

to pleased our business. We continue very be with at-home

the in that number mix. we’re growth see our overall and to of of working continuing driving line we’re types customers We’re that with product serving,

All of those types of things getting after structure. our cost

We our online IT are here. be going making investments some that large will in systems

able more it in increased drive But, continue we effectively. it’s to do systems remain continuing us So, able to to to to that invest grow that as leaders believe as positive there of enables we the the our and very be SG&A a improve to to continue grow, to business. on. that think improve I one space are we customer experience, being to be little opportunities our that trends a business activities the in various in business. We And be and in favor

Operator

next our question from Eugene Research. take We’ll you. Wolfe Kim, Thank

Eugene Kim

morning. And love Medical are Thank to temporary of the quarter expecting you, are in if back good in more and cost I you. you half? that savings you for quantify share to would savings maybe much in benefit Can back segment. you benefit and the also, those savings get nature? some Thank come the how saw color on temporary the

Jason Hollar

Yes.

savings that most they is items. So, items two within topic, the the were impacts. as this quarter, we cost driving and performance. as And the year-over-year our COVID One significant called well out key are both

of or the because consistent in we their terms How of a COVID of you order matters, large savings our Anything largely think and that as and COVID-related would So, out performance the magnitude, is only of COVID driver that’s put of permanent. bucket. break should be they other that would cost we with driver. this that nature into by temporary,

transformational, squeezing It’s and aren’t and such, but within as continuous So, we costs be just temporarily, manufacturing foundational expense, our to supply deepens our improvement it global we and do expect DNA, our elements. truly SG&A see chain, permanent. as within and out just this we’d our that

Mike Kaufmann

IT some other the are in a and Medical and we’re performance the remember we as had capital standpoint. business first add half, we’ve in some expenses Yes. at-home, Medical to in the business And the mentioned only are Jason mentioned of that of also I business at looking talked where as investing about thing earlier, in in there is, the that areas I and because from we’ve just the would the areas. some strong

area our some that the growing to are ramping expenses business we investments the and of short-term. in the So, of over making up mid

So, expect little goal, up investments to about to million strongly second how as we permanent come the based be the But, them higher we’re back full performance what $XXX about year. is in we would five-year of out. that of half. on for the feel ramping But business the a type the talking seen expenses those our are

Operator

Eric from our take question next We’ll you. Coldwell with Baird. Thank

Eric Coldwell

storage We’ve doing morning. been perhaps good are I’m and as similar a lot and curious, in in of short a sounds it about stockpile some Thanks service medical, areas therapeutics, pharma or a hearing often in just items you’re mission-critical certain supply. service that the as does more for even exactly here. like or compensated And cetera? facilities, When that looks or costs, Thanks. model I’m that curious you? the from buy how the a are product storage, with things what XPLC, the you How the customer like this Is et does the capital work? business. like

Mike Kaufmann

I things. couple think, a

with from make services thing to compensated last at is important the return. is for sheet you getting working intend balance but not that that income looking all, any customers, with compensated for we investment appropriately and of we or a sure that only would we’re First statement, the be our the to to properly sure said that make as provide,

specifically we’re you know. see entire So, to going it complicated changes that’s -- the more on across chain. inventory I think because give To important it’s how to a works, that’s supply little

what able one, be and of these amount the you’re our the to of way our where percentage location supply to types and going the supply we they’re manufacturers The changes chain to what obviously, inventory manufacture we things. drapes of our and think, probably some the instance, self through gowns. capacity, to continue source, we own see I in the versus of increase manufacturer for carrying work, get

are some larger And store so, then, the up, be and managing it one. that as we mentioned, I ramp ability building centers. inventory And would distribution to way that

makes make are that I believe sure for end, that do to also be, our the have on we But, to both create and with that mean where at they items ones. other in us them our looking also So, warehouse certain them levels to are and customers. warehouse, to warehouse what versus that PPE-related inventory customers different expect these don’t our customers some cases, may what work service can opportunities that they capacity And for them. towards carry but more

important we service. we compensated to But, years, both, entire our adjust we thing to is provide the of get it -- from inventory. the think supply as order would and expect chain this, would the work to as suppliers, relates to will type note that, with next do I on of in couple that over customers So,

Operator

we our Tanquilut And, final question from will take Brian you. Thank Jefferies. with

Brian Tanquilut

said know Hey. side. distribution pharmacies of the independents. I question and the guys. chain Mike, Good morning, you on taking small vaccine care you’re just a

So, group? of terms is a there can the your what any like there, will thinking this you sort as percentage is of that of get overall are or in sizing clients they vaccinations put that

Mike Kaufmann

on Yes. point this At in weekly basis. know, you time, a changes it’s as It state-by-state.

help customers. you I I would good really be to our for on that. there we to on you that any tell continue don’t have So, how insights

the We’re to to driver do at continue to all help statements ready be them it. way our one or going a other. for It’s not financial

state. a financial to for vaccines from the it’d be you that really hard me by material. we’re the driver, anything of of there seeing, So, choppiness state even not it’s because amount But, give of

Operator

I’d call closing to time, That Kaufmann over like any turn our the At you. question-and-answer conclude will Mike Thank back session. this or remarks. to additional for

Mike Kaufmann

us Yes. on I you safe look are at I want and Cardinal of hope speaking joining to And families your thank we us morning. forward behalf again And all and for you Health, all well. to of to this everybody of really soon.

Operator

concludes participation. That call. today’s your you. Thank We appreciate

Cardinal Health (CAH) 5 Feb 212021 Q2 Earnings call transcript