CAH - Earnings call transcript Q1 2022

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Operator

Good day and welcome to the Cardinal Health Inc.

First Quarter Fiscal Year 2022, Earnings Conference Call. Today's conference is being recorded. At this time. I would like to turn the conference over to Kevin Moran, Vice President of Investor Relations. ahead. go Please

Kevin Moran

welcome. Quarter and will Cardinal discuss Good XXXX Today results. First Fiscal Health morning we

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

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

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

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

Mike Kaufmann

And Kevin. good you, Thank morning, everyone.

were results line first-quarter in expectations. Our with our

global see to beyond. is specialty, we continue of and outcomes well-positioned strategic We continue our momentum growth improvement, inclusive believe growth drive and are we're our FYXXXX growth encouraged As in quarter. businesses. near-term manage staying by of areas Pharma the Pharma saw long-term volume the and for in first that we we to the strategies profit priorities growth and pandemic, business, nuclear across through to focused and on the sequential In our

escalated, international that continues segment by elevated we disruptions to supply to freight pressures product costs commodities. last experiencing global Recently, these the chain called medical out due quarter. be have and and the we are rapidly Our in significantly impacted

this these not elevated are return year. fiscal of temporary, majority the believe levels supply we costs do to them normalized expect we While chain to

are we headwinds. medical result, to for a our increased these adjust lowering outlook FYXXXX profit As segment for

these share. We enterprise. $X.XX per reaffirming impacts across are of our to to actions EPS FYXXXX we're $X.XX guidance taking And mitigate the

We have and portfolio announcing are are so strengthen simplify for a core we growth in journey targets to broad-based on been our the we our sustainable as noted positioned long-term today. businesses,

and $X are improved with needs our in customers And are strategic in billion areas, solutions tomorrow. commitment today investment return We growth balance repurchase and our innovative to authorization, to share additional meet now and an to our dividend, we sheet, prioritizing to shareholders. our capital positioned

remain ahead, we confident our in strategy. Looking

it results. Now, Jason to over to I'll discuss turn our

Jason Hollar

review Company XX% sales Total in supply to $X.X X% divestiture $XX gross and Cordis net elevated growth from existing Mike some customers. total medical. billion capital closing and good on first-quarter results 'XX and I quarter our increased comments morning Thanks chain fiscal with for driven billion driven the first results, by before decreased everyone. expectations of with costs the by Beginning deployment. revenue updated will impact to margin

operating with XX%. savings by quarter's expectations, As costs higher was investments our line approximately support a first impacted and Cordis cost months. track growth, reminder, to two from in Overall. down the sales increased initiatives. technology in reflecting earnings the and results sale partially second information in August Cordis X% completed SG&A offset divestiture benefits quarter by the

reduction actions. $X Moving from continued other below the interest by decreased primarily line, driven interest debt lower by and expense million

we exercised call first provision the with million $XXX to quarter, debt a maturities. make-whole redeem outstanding XXXX, During June

XXXX upon $XXX of maturity. million expect notes June We to continue approximately to repay the remaining

well We reflects borrowings quarter shares and annual XX%. as prior approximately the balance of reflects for prior million X shares repurchases, facilities. EPS million about quarter the completed. was our rate outstanding ended tax the effective settlement were This fewer repurchase quarter as first was This program settlement and than million, initiated escrow the first agreement. quarter no in first the outstanding under $XXX Average year. recently Our the first with also result diluted year share XXX of credit payment our a net cash under proposed The $X.XX. into $X.X cash billion opioid share balance

from grew by This and in was COVID-XX. segments billion, adversely large which customers. X% Now, in on compared Pharma which Segment largely prior branded Specialty to driven technology XX% profit sales $XX turning Pharmaceutical quarter, an to reflects improvement increased million, information with year to offset beginning pharmaceutical investments primarily was Revenue $XXX by Distribution impacted volumes to enhancements. the Slide by X. the growth

depreciation reminder, quarters of As we infrastructure. first Distribution costs platforms journey new plan, tracking implementation fiscal across business to a part Pharmaceutical IT incremental and deploying according quarter a X as our the continue to technology our a This expect we is to 'XX. through last of multi-year began rollout and enhance

As quarter, Mike we demand, sequential in including broad-based mentioned, improvement pharmaceutical saw generics. the during

divestiture, profit X% the nuclear, in offset by to We medical COVID-XX. to contributions the $XXX to to the due pre-Covid our quarter, volumes medical program growth Transitioning partially as X, primarily the lesser year generic the during And favorability Pharma elevated $X.X generally To to consistent chain as Segment supply with divestiture. increased experience million, by billion prior continue market strong revenue from a levels outcomes. the expect calendar our reflects to to well segment year. driven impact continue also saw on primarily of by to and decreased businesses, sales, generics Outside performance attributed Oak. the end to Red extent, XX% this dynamics specialty, costs. net of recovery from Cordis Slide double-digit along the Cordis PPE volumes, the

In product are freight. inputs commodities, ocean segment as products, our year. international particularly was seen our profit we inflationary double in costs to of Medical polypropylene, have commodities the supply in container due resins, that temporary, prices are self-manufactured mentioned, they global impacted key headwinds of negatively where into recent to in source and increased Mike significant areas such do roughly pressures spikes As times by costs we're and majority chain, believe these with X the but to And them -COVID abate this freight, at not last We fiscal index year. pre we seeing with nearly levels. were expect XX some international

and look discuss impacts the from our of wrap near We I are aggressive the taking quarter, quarter To medical customers on these the Delta up procedure effectively and elective overall, volumes exited to continue despite shortly. management. XX% some action, including elective our variant cost through levels. pricing volumes, to outlook full-year will total pre-Covid impact manage

volumes the a Additionally, lab prior levels, remained performance the testing to due pre-Covid to but significantly year. was drivers the in quarter strong elevated not above material

eight, Next few to slide on our updates fiscal a outlook. XX

per updated We We ranges to as expectations the segment, Medical of for This share tax rate our are range now annual reiterating for lower reflects effective XX%. expect XX% of our the as tax EPS $X.XX share. $X.XX count. our in guidance range well and rate to

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

we're from reflect segment revenue outlook the first outlooks As Pharma that seeing customers. we low to adjusting large sales our growth for growth to strong double-digit X, on branded pharmaceutical are Slide the

This fiscal $XXX supply that discussed, significant driven expected headwind chain increases low For an now change $XXX million previously to by in is to the medical, which I in be on of expect segment down costs inflation profit result incremental we 'XX approximately the double-digits. net is mid-single year. to to

costs. impact quarter, from medical. is And decline compared well medical as cadence expect still in actions, Notably, significantly incremental [Indiscernible] original as the chain anticipated do of we 'XX our meaningfully today these Stepping back-half in increases be see we guidance and cost supply anticipate supply [Indiscernible] large timing our the impact any as guidance item we of noted realizing last inflationary EPS selling to mitigating the of our the Pharma weighted. back, Given a different material PPE, elevated we only of higher operational fiscal sequential the cost not net to costs expect timing that segment chain

deployment. an on close, to capital update Now

We are a and continue deploying manner, we'll capital lens through capital shareholder-friendly the balanced, in unchanged. are to allocate of which priorities, focused on disciplined, and our

on and have our tremendous been improve journey have progress. to our made We portfolio, and balance sheet a

look of capital return debt provide paydown will our increased which to with X see that shareholders. opportunistic we an we moderate, On our beginning more to note, forward, ability As to updates. be important

of a authorization share dividend turn of repurchases future of at back Our $X $X to key in board three-year to approved that $XXX we're XXXX. expect stock, the executed the new capital year and the that to includes additional EPS And expiring fiscal targeting deployment, both calendar in an to that growth recently term. expect be we share it repurchase XX, believe a of the end our which million our billion double-digit we repurchases up approximately growth to common billion the segments, that, Mike. With date. long with will We along driver in over yield combined now

Mike Kaufmann

with the focus delivering agility, approaching have challenges responded we with Throughout resilience of to customers. situation and Jason. our a Thanks, every pandemic, for

improve can our navigate macroeconomic care reviewing areas the as So environment. they dynamic their for business we continuing and seeking patients. to We're

that growth through additional are we accelerating We will efforts organization These costs medical medical. to our on long-term action mid focus chain costs include to cutting to target main the continual a are directing temporary segment. single taking throughout pricing, additional support growth of high X areas and supply customer, manage adjustments, mitigate in of our Outside for elevated the single-digit actions disruptions and opportunities. the

model. operating our simplifying are we First,

growth. We commercial reducing begun continue for Cordis to We our business, take the the decisive have reposition business footprint. divested to action and international significantly

where exiting on competitive which in we a announced have to the are the markets market, and of will initial allow us XX have advantage. process focus We

facilities. medical further modernizing Additionally, are our distribution manufacturing streamlining our and footprint we

and to We target, expect us savings initiatives to enterprise to $XXX sustained these growth. simplification position long-term cost contribute million our generate

commercial are we driving excellence. through mix on focused Second,

differentiated brand others. portfolio such Enteral products with breath, Feeding, clinically among Kendall has gloves, surgical and leading Protexis Kangaroo as Compression, Cardinal significant and Our brands

underpenetrated align and brand further An important even to in opportunity, the out our we mix While commercial of U.S. than our customer potential. we with internationally. we relative have Cardinal organization opportunities structure penetration in significant Health profit changes across incentives, that private increase recognized represents made to label a are base, channel in in-channel

both WaveMark. businesses. medical and aligned to a our market to double-digits mid and and long opportunity grow with and are pandemic, growth OptiFreight positioned and beyond. At-Home And deliver in FY'XX we As our which we over work savings medical growth businesses includes past trends capture move as this the third, and services, business customers to share growth see term. segment Logistics our for significant Solutions These fueling the industry

base customer that enhancements a in offerings. is At to to our technology a which invest businesses innovative And edge. continue in We In billion and Solutions, continue we competitive now business. solutions and Home give OptiFreight, $X.X expand our

We shifting continue to see rapidly home. volume to growth the is scare as

data We operational are drive efficiencies technologies investing new enhanced in visibility. and to

Moving to Pharma.

long-term Nuclear, X and primary business, mid-single growth. strengthen have of Continuing objectives to businesses, and achieve growth fueling Specialty, our guidance digit our our low segment We core Distribution Pharma to Outcomes. to

to continue in will focusing We core business areas. X primary strengthen our by

customer to of multiple in classes access developed critical supporting distribution leaders those all Over we've and care XX roles pharmacy, our customer chain diverse a First, play our customers, base. mail health whom local across Along and retail in expertise, providing trade lines. order, strong grocery, communities. independent with years, direct their honed of base

agreements we CVS FY our quarter, with distribution extended the Health During XX. through

we program to continue generics ensure consistent our managing to which see and dynamics, we're expect. Second,

is scale we through and also Our sourcing, Red recently anchored XX. partnership the FY Oak a extended generics of expertise program by

Third, enhance we've our heavily efficiencies. to experience drive and in been technology customer investing

to operational our approaching We end modernize journey will improvements yield capital and are which infrastructure, meaningful of multi-year the IT working investment a efficiencies.

As fueling businesses. second overall our our objective, Pharma growth for

value-based to solutions oncology transforming independent businesses lab distribution orientation We downstream double-digit And to competing Navista from bigger in next growth X we're technology become supporting by a the will a expect practices enable a the downstream Oncology, Pharma care. that our momentum care TS, years. continue oncology commercial these growth. on with practices improve these will grow, environment. differently to it in several performance In seeing businesses We're and their thrive segment. portion platform upstream Specialty, with a of our In focus value-based helps to over realize as key overall initiatives

adoption such market, manufacturers. increases of XPL from strong support the We areas supporting The by FY as as are of by a in insulin such which bio a expecting We profit supporting biosimilars resulting to to of operate billion area products the products oncology. that growing manufacturers in strong rheumatology, are new and $X distribution as the leading biopharma encouraged product. growth approval in as We're cell to Upstream, the hundreds our such other as outside higher-margin first FDA areas, come processes well-positioned see We're of double-digit. have therapeutic in and today growth, to also continues market a similar for expecting growth coming is wins, presence more next biosimilar interchangeable the phase support services of double-digit this we business doubling continued nuclear, a market, XX. gene growth anticipated therapy. in we

to of continue are partnering the grow pack Theranostics. Theranostics to investing for our center expand in up and build companies We capabilities. our multi-million-dollar to with pipeline We're Indianapolis advancement novel several

for continue for we several new will to for clinical our simplify, to Actinium-XXX, and is and PBMs, both For types. solutions chains and to example, produce clinical With structure include radionuclide business agreement billing, to has expect our as our in point-of-care in therapies the cost work to growth. and retail medical and digital creating strong involved see And with pharmacies strengthen expanding and transformation. we continue independent and we distribute other respect outcomes, targeted solutions aggressively This operations enterprise, cancer review and execute added streamline, payers capabilities. a we through our TerraPower, testing,

on and a with maintaining in to our balance, dividend, shareholders. yield. earlier, our to goal cost allocation, commitment combined expectations We're and total and a recently repurchase EPS our balance growth $X the cost I focus Long-term, investing targeting increased new those a double-digit and growth capital FYXXXX, targets by driven These million returning are strong with business, As and on to to our efforts cash authorization. we're segments, our billion we savings. dividend sheet, are our we share $XXX for mentioned paring by deliver track discipline, reduction shareholder-friendly reduction

agreement. satisfied, substantial settlement enough update Now, a subdivisions settle the for an participating step ends the distributors by result In each period, determine states all September, me we If let to sufficient settlement to and of agreement opioid additional to an that provide participate settlement with conditions the the Xnd, political the local offering proposed will state its process. would to governmental is on to XXXX. for each opioid the of is point, and in At and participation which a XXX settlement proceed announced filed opportunity forward there have phase, the are on agreement whether is opportunity and January agreed to states this state proceed our day a next the entities. majority in lawsuits Company. This the important of an that

our relief the committed said, communities solution provide consistently the U.S. of to the certainty settlement would we we've epidemic, remain As being to and believe opioid for part our for and shareholders.

greenhouse closing, I healthier, emissions XXXX. Turning matters. by And gas X minority Scope what Scope workforce serve these communities reduce now, sustainable XXXX, and is in our representation to critical global goals achieving remain a will questions. and to We we to increase ESG, priorities it to the our recently patients, announced X world. XX% their around more do by And and their world. take privilege In customers, our your Jason, by

Operator

JPMorgan, with queue. [Operator will We'll question you a Instructions]. come from And Lisa moment ahead. Thank please pause to the assemble our Gill first [Indiscernible] for go

Lisa Gill

you mix X. and, sales talked Good the I Medical are for divest? about make to and products? divestiture can within supply Cordis just And behind now Cardinal branded Cardinal you very what then all that the those Jason about the the model on that can back that, branded the margin to your morning, medical you, question [Indiscernible] of Thanks be talk And are simplifying then Mike us driving operating around differential to where to my of products. sell assets -- go X, remind and other you would want there you just Mike, much. third you and of behind sense products. last have percentage comments side, the thank comments. on Cordis would you

Mike Kaufmann

because grow. question. say Obviously Tough for Lisa. we historically this. questions can to is the of there room aren't Thanks, things given. We Thanks I to have believe answer, plenty these

Some penetrated were obviously and our were penetrated of accounts significantly less others in. in

by that have do we going So good account we're target after.

in think It's there's guidance we that. opportunity that So is longer-term plenty reasons can the our one of do there. we the of key believe for in medical fact we

we're around a Cordis, type always portfolio There's in percentage why is we do my brand. of category manufactured I Cardinal more looking general, to thumb, of rates but as we rates of as brand. lastly [Indiscernible] margin that brand on much As certain positioned to our But me product are we national entire businesses rule a then Cardinal at sticks win. margin in a have prepared them are And remarks as significant our which programs, generally, countries. our right dollars are go, sure There are, out that, much certain national products. that that or make we higher are of mentioned times far as XX are prefer nothing to terms exiting and have source businesses we in in or where preferred we they the more

country have etc. too significant be it at do not So believe only growth products, benefit, we and don't by we and risk might where whether at opportunity, we much look look countries, products versus we

model. number countries XX help made the why decisions real which of to in is to have simplify manage exiting conscious aggressively countries the We are we

Operator

All a right. Charles ahead. Cowen. question with will take next, Rhyee go And from we up Please

Charles Rhyee

think I and bit these jump starting starting bit a growth. off here. first Jason, to earnings fiscal and growth X-year targets for as the fiscal guess little for taking just thinking we just for that, when Are tailwinds 'XX remind for point this remind And the -- the year or question. away remainder you I be what to we is long-term off freight the are jumping those little higher considering the way assume obviously of 'XX. as that those shipping we Thanks. then as Yeah. is long-term we're about can our this year fiscal And we then And Mike the us half costs want secondly, after within do build it Thanks lastly, that this a be a the the targets? what again, you earnings model should just from -- that in from year? are target year. us you the back and go -- about the we relation about earnings should talk baseline

Jason Hollar

Hi. capture morning, is try to [Indiscernible]. points. This those all Good Jason, I'll

is it to relates question targets. longer-term Your certainly those fair the define trying baseline for to as

the As difficult inflationary we that the to in anticipate related expect million exactly a indicated to as remarks those is to would $XXX today, that's medium short-term, if And temporary. some a frame environment in to additional at we level revert time define moment, to current do or term. medium-term, the we this back $XXX normalized It's certainly short longer-term. to relatively

And so about not are of tailwind, we targets, longer-term when these we that right. type talk presuming

those normalized when isn't targets. a it we So more state provide

to And the that, that like on that cases, from X shipped freight we're freight, the nature cost, outs, we've ins not In within the they specifics historically time we acquisitions, commodities. times perspective associated And on type than more areas; a expect at polypropylene. You the elevated of so key performance. say frame with as really remarks is point lower the believe levels Asia that We're things chain and also would referenced X X-year, up so essentially seeing core a international expect levels, X as that talking such if type to the some types but two around reason we divestitures the average be that and big higher is to polymers, supply we a to cost just of of it would the years we've a cost items performance levels. that more versus reasonable its U.S. both to multiple the that XX container broad we're and are international different at which such get normalized of of types that pre we Those for I'd like commodities, Certainly what out shipping they of of is lot would levels be relates our future. that highlighted then getting overseas seen historically. getting at significantly Xx are seen temporary what locations as are on in -COVID about shocks to

expect future. are would tailwinds these we more get more to point are to not But again, targets, some get at So those those the us those in a back state again, targets normalized. normalized to to

for different second at In expect improve terms of the various indicate businesses, results half second Pharma, cadence of will we the where today. would did with to half, a steadily our that versus the we we're to continue

getting relates for Just back generics as to normalized underlying it to more stay volume.

also as final started to we in indicated especially continues fourth-quarter. be as investments, three front-end expected primarily as to and that expected, quarters, last the loaded, be relates with implementation would implement investments increases that to in QX. We the it cost first those our technology our So

effect that third of here. quarter start the we full-year the to we exit as get So

PPE price expect that timing. recall in a the QX we COVID QX to actions just of that fact, to go all to and I the just a the along timing to headwind also and the primarily chain indicate that be Medical year from was is then, of And result QX and supply decline expected On this with cost cost side, of that we to sequential that's not the that cited we a of through, mitigating as did that. favorability repeat, QX, realizing and in related walking last

our with of the And the QX we'd QX that PPE see our effects expect the then have benefit businesses, this of year, next the and fiscal we the year. The investments to tailwind growth as last have course associated in of that quarter been in fourth businesses from initiatives of of we from cadence. various contributions we over prior comparison course in then stronger put And place expect all the a year. ongoing in So question. COVID significant

Operator

question Research, ahead. Nephron come with from please will next Eric And go Percher

Eric Percher

here. chain you. used to Thank Appreciate commentary. commodity supply I'd to a on We impact. deeper guidance the have get like bit little

I represents anything So you along for to what can to freight, a what cost expense. versus decision think revenue to total I'm increased you're And billion sense then clearly $XXX and about of does relative that represent pass-through? is provide has expense of really to incur And us thinking give passed million What be you that made? $XX that commodity what to there. some the $XXX looking is the relative or seeing that

Mike Kaufmann

Thanks for the Yeah. question.

let see I help. me if could So

know, out our did fourth costs. that we of expect First in you we supply last of elevated as called all, chain quarter year

our $XXX we some quarter, reductions, impact to the a and incremental which notably the a cost will the things, chain impact supply split we in assumed already talked costs, guidance and quarter $XXX of commodities. certain containers in as So for actions, evenly plans a was freight through costs, most have of $XXX to this medical feel of those say is during that of What between significant increase million to amount those that went us. on, in originally and I was the year pricing as would saw we we for costs. built-in. commodities those an create particularly of about, for costs elevated already international that the relatively supply offset a well of high types freight, chain as we $XXX Roughly, And segment,

are they the be they for adjust and areas, saw where than the to higher and we will highs big other those will believe but are So we all-time they most significant ones very, which both really market and X that over able minor very ones, were of both at said as in part, Jason back were X. those were the because other we down. come temporary believe significantly earlier, time,

are It's what some The pass of That complicated. since that once that? the can So it Medical called to pricing actions, to that as number, adjustments a not. market through. are doing or is talk exactly very through about we about the have we passing is contracts net it you after obviously that There we through to is hard of work which $XXX $XXX really are through. we guidance, out getting

have to our both GPOs. the hospitals partners, the with work and We

understand have and environment. the of to We demand the supply in dynamics each item

And additional so the into and then And is those working all some built Company. there guidance Company, are we are maintain of since understanding that obviously through entire action across we we pricing number. actions taking for cost the factors but aggressive

We our improved pushing teams businesses, balance our growth are more our focusing to also leveraging and we're faster sheet. do And on there.

So some those are some -- I hope helpful comments.

Jason Hollar

It's freight to of and a increase of would a back is related it's parts. both in they We these to greater international And more but levels that it's also the longer that commodities, come increase not only thing anticipated I'd had duration. X this -- is earlier. normalized bit add expected areas

came -- how a in of longer like we PPE, to model distinction. times of product you many, number With revenue, through. that just saw saw spike So we that and draw I'd draw we on saw total little many higher through revenue on a just and both cost, much dollars a of in bit terms duration. so significant And cost it more higher impact and a

as is this moving that is significant, from nearly and much. meaningful not needle less it's perspective, much still revenue a While

question. Next

Operator

UBS. from Caliendo hear with go we'll next ahead. And Kevin Please

Kevin Caliendo

my taking for question. Thanks

you and maybe that supply change but is is if is So right. the -- range And doing just tax little didn't that guy, you're were it's it count, right, you the of that? range doing fact math guy the or rate. should still about about costs larger we lower the the yourself giving within the share guidance, thinking chain I'm I than bad end the the think that I lower How that a just room. lower the incremental am appears that the Am good perhaps

Jason Hollar

Yeah.

accurate times program a And underlying we just that referenced is guidance. the last for area $XXX is specific enterprise-wide but increased million math in other which explicitly called the function. comments, cost your Mike's not includes reductions, think that's corporate corporate few is typically expenses. quarter, and that we implied there's out provide the already I broad-based is the $XXX by we items million One as

that have as included to of do the identified well additional cost bottom are line, we our total segment corporate but fall reduction segments, profit the earnings actions either the So as in share. through per not

Mike Kaufmann

question, Next please.

Operator

hear Bank we'll with America. Please go Michael of from Cherny next And ahead.

Michael Cherny

do on mentioned, past. seen fluctuations some maybe ever And cost spikes volatility companies ways and mitigated as -- for see want I seeing that, little already interact your surprise said, space we the terms level be up dynamics of of can lot with with in these material to of are partners of have think I'm clearly, and are don't so out is you chain fashion supplier as particularly that you don't there of you lot your we more that some concurrent that dive control. a systematic approaches. you like But your about tends that the be I the and know That some the of the going ways more and being similar and Are guidance interact your forward have right from now in supply with volatility so long-term thinking a to chain. raw in spikes [Indiscernible] a continue control you're that I business at to any of this ways now, are the partners, and the supply customers seeing evolve contrast can it bit that morning. stuff this. time-to-time. come in into a some of that the Good

Mike Kaufmann

really question. good I Yeah. a appreciate It's the really one.

me back let take question step a others. couple medical, So on finish and few to a shot different and pieces, of hit with emphasize but I'll I'll here your a

point, and -- long-term components X Pharma, our having target target, really, having form we work yield and because model, double-digit there's EPS it generally be in really long-term does, to it and I as we're in talking see the of In fluctuations your their the growth are to if those happens passed able a the So say, our don't Jason the model. would mentioned. that obviously combined in which is costs affecting dividend averages through on business to commodities about generally, which on increases, drugs

combination to how we kind and exciting double-digit the the contracts getting nuclear those. you And mentioned course five-years chain, with believe to is raise of seeing instance continuing really we customers mid-single-digit things then for balancing more significant right the in that seeing Hopefully, that flexibility then going on It's And growth being outcomes mix goal ability of sure give really growth really help. On then it's one that initiatives growth. gave and a you and business are we focusing We helpful our to we're rollout and single-digit which sudden and to of our details continuing comments. our our and couple our some color managing as of changes to can some out getting simplify the customers specialty then all our go low as nuclear generics, balance, of capital into supply comes, there what's so growth repurchases. as with margin we won't medical dividend, is through of those found there that we're of we that that Pharma operating well businesses, doubling the having changes our drive and growth question to in did make price. making next on commitment mix stabilize, in strengthening in of [Indiscernible] when filling that especially, the PD because do mentioned, of on we with different in model, that. debt right driving is businesses. our to driving focused the now I on lower working is change use the in us share our But things your there able is the

with transparent. We're -- if customers to not sure those we're discussions our to we're We'd being be at that supply -- backs customer as do pass that that, willing so able come they Our -- indexes and back as very driving make things very want to they to that to things we're We on this a down. customers to to understand able our tie the a on don't mix our back want margins. do chance more and to a through them, because lower-cost like look going products, we during our improve launching necessarily not to of chain. are

be well we us what help those be direction other are when know they're do create to contracting them to them understand them on, will to as for working to are will to pass able as methods the the metrics we too. with So able changed allow that

Operator

Jailendra Please next question come Credit our from will go And with Singh ahead. Suisse.

Adam

Thanks Hi. Jailendra This question. on taking today. the is for for Adam

just being take that capital account as some the opioid able back higher-margin to payments segment businesses? your you should or invest targets, it anticipate growth into to potential Going how relates growth across wondering about we and to thinking allocated if long-term the impact of to your be

Jason Hollar

Yes. deployment Good as think that. about side morning, Adams, the Jason. capital Yes. of That we would that incorporate

available that billion part be and of we share what now the just for all have would that based that those your materially, capital expect have upon that would of quite That's beyond change we We what would authorization would would the is but payments completed set that in as of some know a over be this time for current period $X of baseline, example, of that repurchase and our the we inclusive capital upon time, I of answer, well, expectation as be. the course that. change would now, assumptions, that based outlay included an

question. Next

Operator

a Valiquette Barclays. we'll question Steven go And with up Please next ahead. from take

Steven Valiquette

Hi. Thanks. Good everybody. morning,

the question a Just on segment. Medical

pace the impact exited Delta I'm quarter total mentioned guess of levels. You despite -COVID XX% variant, your elective I from on that assumptions there's near the pre volumes updates offset the Thanks. segment. for discussed a of procedures 'XX. that remainder Medical fiscal helps return Is you within that the this the positive to some of for negatives also to some the that curious of any if factor the

Mike Kaufmann

there little the back pre we in started the to exited -COVID that that's of a Yeah. was quarter. we level And as quarter procedures The elective base variant. to a think at reduction levels. We bit the in Delta about at primarily close of the we -- in XX%. attributed first in And -- indicated, that

the the in offset the that our that direction. see since the in procedures. of trending business will pace improve. in continue quarter an And we right And virus modest we Lab the deterioration saw to of improvement we elective saw is then, So that with what importantly, effectively amount in we feel that

we're is two bad both offset virus. what right seeing items now pace So to the and that those the depending generally upon tend good of

saw as in significant and we we being a quarter So fluctuations don't that wild going anticipate there the it's result, nothing forward.

question. Next

Operator

with a Please take And ahead. next Stuart from we'll Hill go question Bank. Deutsche

Stuart Hill

contribution? and Good the second underlying this Mike, deployment [Indiscernible] on operating season about is been the how versus Jason long-term growth is, long just or time and morning, the which over this think guys capital guide, contribution the growth a quick you term, inorganic earnings earnings has do the question

Mike Kaufmann

would to the capital dividend in from REPO get single earnings double-digit low-single mid-single growth, Pharma come when Medical the that break talking deployment as dividend it down to you the being And of then as segment around yield. EPS as talking think digit. targets, mid-single low long-term we of in really to I our and combined high being operating being -- to the mid-single-digit we're to the well rest single-digit about yield, you really if growth about were

That dividend with really opportunistic capital and repo. there. this guidance the operating medical a focused foremost earnings on growth that also here But and what is earnings top not operating would as I that one about, have priority talked yield we say option and that about M&A may deployment. that more may and occur, is is on and and really we of some as So well

Next question.

Operator

All come Morgan go Please right. Goldwasser with last from ahead. And question Stanley. will our Ricky

Ricky Goldwasser

Good growth morning, I double-digit being growth, a rate normalized basis. the you know on so the about long-term sort on talked of

and apply as take of the to to that seeing, question then guidance That's So sort out digit normalized double that rate of for think the first the costs XXXX. in long abnormal growth that you back are secondly, should about costs transitory to then them growth nature. get we term part these and XXXX we from

costs, to You back potentially chain. headwind? raise a$ talked labor structural about XXX about we it the cost of Because related a to more salaries, we down. to bring as think million $XXX because once What's labor contribution the think difficult to about when supply someone that you it's costs it

cost? So think additional component within how the should we about that

Jason Hollar

is Ricky. start. Sure. Good This Jason. morning, I'll

reason to talked period and that not year. our that time. an highlight a intended we be As long-term average a target, expected about every or do There's over each is we it's that of

longer point is we a carries this feel had we quarter. not important very that this fiscal fiscal to And future that provide primary 'XX, not 'XX what we with XXX five of anticipate statement. identify. And indicated into at example a costs not these how comfortable were for over We of normalized time these the think an guidance we're something 'XX, that in about elevated you the being how at your is of have any, question -- much, that fiscal that that over would we're level as is that to that we that as fiscal example we to balance point with remain not described it an providing we at able said, a 'XX element XXX of the position it about there we the So businesses. guidance if the expectations terrific With would these out did one. are great consistent is then call our drivers and labor periods be for last will because taking

quarter, related pressures X for costs what like costs the that domestic But those cost even So the as are not guidance labor not international are seeing as for included for referencing not would that those well more like while clearly whole substantial such included compared last international fuel other that we're and that and what new commodities that. in nearly primary freight items as domestic freight. also to labor, industry, we're so are and inflation, as original very was real the anything the unique are versus I for before relatively transportation additional in quarter and and drive as any and Those other most this us, and the was highlight we adding and fluctuation, low items all items, commodities. was significant

Operator

our concludes will CEO, back to I over Mike closing for session And that for Q&A remarks. call turn the today. Kaufmann

Mike Kaufmann

we're I few for to thoughts. the to just want attention to want to majority I'd of the conclude We everybody help are X. That Medical for X. these the enterprise-wide today Segment with call the temporary. all to the I did But just X. believe carried I of costs be time We a aggressive actions reaffirm guidance. EPS and mitigate. a non-GAAP lot do costs here taking know your product reiterate taking of questions. within that, today. thank on elevated like And our

And in the operating With our achieving us and growth targets we confidence repurchase strengthening share together business. we return you commitment in an encouraged the our the Additionally, gives you With prioritizing have shareholders model, are our again. Pharma, businesses, resiliency this while thank businesses. the growth quarter, We to we that, to growth good our and provided. that our simplifying saw long-term by hope new a and investment dividend, additional in this capital ongoing profit are $X in in we billion to all positioned authorization core day.

Operator

thank And participation. this concludes again for today's your you call. We

now may disconnect. You

Cardinal Health (CAH) 9 Nov 212022 Q1 Earnings call transcript