Earnings call transcript Q4 2023

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

Operator

Good day, and welcome to the Fourth Quarter FY 2023 Cardinal Health Inc. Earnings Conference Call. Please note this conference is being recorded. [Operator Instructions]

I would now like to hand the call over to Kevin Moran, Vice President of Investor Relations. ahead. go Please,

Kevin Moran

welcome. quarter and with will Cardinal discuss outlook Good fiscal Today, year fourth 'XX. and fiscal along end Health’s for morning year we XXXX our results,

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

Chief today our Officer. me Aaron Hollar, are Chief Jason Executive Joining and Officer; our Alt, Financial

cause differ During we our description of will full risks matters from statements these and in to or the refer be the The risks implied. to forward-looking beginning a call, these to filings are uncertainties slide and actual those projected could our of that addressed the for at materially and making forward-looking results statement subject Please presentation statements. the SEC uncertainties.

discussion on release. our will the be periods are our note found to GAAP. they unless relevant the that a to basis called reconciliations schedules today, be press out specifically as can in non-GAAP GAAP during comments all all non-GAAP for Please attached

today’s in For everyone yourself we give the and Q&A portion opportunity. can try so call, we one question, to ask queue that an limit the to kindly of

With I’ll now Jason. call turn to that, over the

Jason Hollar

good Thanks, everyone. Kevin, morning, and

growth notable Health the short record Fiscal inflection an point execution for in prior including our both and performance, financial year. ever, against improved 'XX XX% performance, EPS strong Cardinal and reflecting long-term plans. was delivered progress our with We non-GAAP highest

generated adjusted to loss of $X.X We segment operating grew cash $XX of first from in and significant And profit QX. profit the in quarter billion we performance XX% segment in drove in improvement segment million sequential Pharma impressive an flow. free over Medical, a

they, Consistent in segment, the our team's action serve to our strategic with our decisive what three at turn, Improvement creation. our heard maximizing patients. imperatives; Investor so Day, caring on to our advance Pharma business the building Medical better and our focus resiliency upon ruthlessly This our results through and value of Plan for year, achieved you prioritize customers these shareholder we took of executing commitment June were core can to

by enhancements, how and We manufacturing governance made operate changes positions rationalizing to leadership across talent and and Board. enterprise key structure, key and we and footprint. exiting simplified product adding our We streamlining our lines the non-core geographic our organizational

and formed business evaluating On new tasked more business deployment. operations invest Navista strategy, oncologists, & that capital our our Investor the Network further to my We will Nuclear note, review at completed and we extended Pharma in launched review I the later with remarks. committee in and of including our Solutions supporting Health our community announcements Day Precision discuss segment, portfolio, which

growth. a closed future merger accelerate Data opportunity an the Outcomes Systems, win business' recently for see and we big our BlackRock's which to We Transaction with important as pharmacies

on value, We continue also for deployed to continued a capital eye shareholders. we and responsibly value driving are the maximizing positioned with with flexibility financial

At pleased Investor ahead, Day, year fiscal can 'XX confidence that preliminary the fiscal to look a we raise finish outlook. strong for we as 'XX. provided increased I With we and our am guidance

three our on priorities. Aaron me you it to financial details further hand strategic our over share guidance. will walk and first, I remarks, through my results But in Later let to

Aaron Alt

morning. good and Jason, Thanks,

the initiatives. guidance, of a with year QX for $X.XX team the which I fourth was against at won't the progress delivered in EPS strong our of from full We Investor our strategic and lead. Day. to high significant bury end year $X.XX finish the Jason's made guidance a Cardinal quarter

points. reached results the historical For both EPS year, QX high our and

We expected also I cash something flow, delivered than on will touch more stronger later.

and billion specialty increased by growth revenue brand Pharma X. Let's driven on start XX% with customers. from Slide $XX.X the sales segment quarter pharmaceutical existing Fourth to

largest consumer customers. health in see specialty, from our product categories, strength to generics brand, Pharmaceutical spanning broad-based across continue demand and We and

program provided Similar the $XXX driven Segment in positive revenue increased quarter QX, profit generics in GLP-X primarily to the by a fourth to medications million performance. quarter. XX% tailwind

contributions program, along from offset nuclear positive Within and we Increased performance generics specialty higher higher brand dynamics, by expenses, growth saw growth. support our a from with and volume sales including were and also consistent products operating including factor, Oak. costs Red to market partially investment strong

partially Turning related billion, decrease inflationary a distribution offset on at in This including to our mitigation impacts, Slide and revenue was was initiatives. $X.X lower by and Solutions. at-Home decrease improvement We within growth in to Medical PP&E X. products offset and sales saw flat quarter Fourth in volumes an trend. pricing, products distribution by

the Medical and the from our of approximately The a nearly with quarter million and seasonality items. connection Improvement results consistent Investor were $XX Day segment $XX quarter, $XXX net the In both of Medical profit favorable composed more we performance the prior year loss. increase million, approximately Plan commentary, or $XX core million in with driven fourth delivered onetime million of for

initiatives achieved at inflation improvement which mitigation the an of exiting in normalization PP&E Of least impacted timing target we net impacts, our XXXX were price/cost inflationary saw and unfavorable including mitigation. we fiscal prior year. by note, expected, As in margins, our XX% the of with

the to product indicators with at to expectations communicated early Investor Cardinal Day, with Consistent encouraged of brand our an were in respect improvement we trend sales. see Health

our businesses, positive significant and profit with from Though including contribution ongoing growth total XX%. at-Home in optimization from segments, a of growth saw earnings measures. also Solutions million, operating We delivered of we $XXX and cost growth OptiFreight overall our both

our compensation by is income the as offset a in million decreased the above which, company's below reminder, and $XX Interest corporate. cash interest investments, $XX other to Moving fully million to due line increased and plan increased from income deferred equivalents line. from and

points certain finished higher tax XX% to approximately prior due fourth than percentage rate two Our at effective items. quarter to the year discrete

X% a $X.XX, Day. initiated result quarter quarter XX%. The growth to due including share million as shares lower Fourth repurchases, EPS of quarter were we all announced Investor was of at million, than this in of accelerated year diluted repurchase net fourth a XXX average share outstanding $XXX ago program the of

to increased billion revenue Pharma increased time. segment. XX% Now, $XXX We billion, for for gross $X.X the $XXX margin transitioning consolidated our mark the driven the the Fiscal X% both results by to revenue 'XX surpassed year. billion to first and

Total costs higher increased $X.X offset partially primarily our enterprise-wide to SG&A higher chain investments operating measures. comprehensive support savings X% supply and which such expenses as in growth, were company inflationary billion, reflecting to sales costs by cost

driven Operating from and $X.X interest X% earnings to decreased other income Interest to primarily increased cash increased and million, $XX equivalents. XX% by billion.

largely rising near-term. reminder, a is from fixed As rate, rates debt in in interest the net benefit our a resulting

was tax $X.XX, EPS, finished effective annual for Net growth XX%. XXXX of rate Our at fiscal result XX%.

a the Pharma XX% contribution segment and Slide driven year to with beginning As program full partially XX. segment's results, generics billion, products, for specialty Pharma offset brand performance inflationary and $X on positive from supply by costs. profit higher by chain increased

manufacturer are year growth modest Fiscal which costs benefit from technology repeat branded will also costs legal comparison for well higher 'XX. price we increases, opioid-related related fiscal as enhancements included a in not favorable assuming 'XX a to prior and fiscal 'XX year-over-year as in

million, This Segment of net due normalization Moving lower by profit to Medical inflationary unfavorable distribution on decline mix to and and Slide mitigation impacts, products and decreased primarily initiatives. XX% PP&E margins. to including partially sales volumes was XX. offset $XXX

with robust on turn flow end we of year. billion let's cash sheet. $X.X year adjusted before the billion strong the Now, We to of towards flow particularly of 'XX, fiscal cover balance free the ended with In I cash cash generated $X the fiscal 'XX, hand.

Cardinal 'XX, and deploying go-forward in our balanced, the effort in it days-of-week area for fiscal is and an Investor from Day, we of inflow, flow that that focus on our a capital notwithstanding perspective. cash disciplined, At our across a highlighted team continue shareholder-friendly calendar teams, manner. focused an remain businesses. tougher This optimization was delivered outflow We will

billion we growth, increased a in the repurchases. to and 'XX, fiscal our share approximately maintain including $X XXth of In dividend million debt to CapEx May in $X.X returned row through Board and to $XXX leverage in million back our of year for over paid strong reduce that ratings, future down invested the shareholders, drive investment-grade business billion the into $XXX

updated $X.XX. year 'XX, the strong our we are within now particularly where increase a fiscal 'XX our we fiscal EPS raising a higher jump-off guidance guidance to Today, on at XX. This fiscal 'XX the entering finish to Pharma range reflects to $X.XX for Now, Slide are of point.

to of also million tightening shares XXX repurchases 'XX. XXX reflects We share course which fiscal the million the over $XXX as range expectation recent share million, base continued repurchases to are our as of our in well

free adjusted EPS our are provided guidance in tax newly Investor XX% range cash to Day. of $X the $XXX midpoint million 'XX approximately fiscal at fiscal of our XX% of is rate changes raised results. million, Interest effective the fiscal There 'XX XX% assumptions calculate, and corporate other EPS to the above guidance to and between other and will no flow 'XX. in billion you $XXX As

also for contribute outlooks category, range a to fiscal profit. with branded high revenue not of exception, segment as product for meaningfully driven segment do GLP-Xs, acceleration the by Our which, continued Pharma are 'XX one a unchanged

Pharma, Slide and grow build XX 'XX our fiscal shows for our outlook business.

is of revenue segment to range which We the in now XX% due the on larger growth to in reference strong point and the X%, our growth a to 'XX expect X% fiscal year. profit range finish of XX% to

reiterating assumptions our key at Day. provided We Investor are

execution and and We with expect operational volume growth growth from our against organic dynamics generics our efforts. program consistent specialty market positive

benefits outsized In from that contrast, the we in some assuming branded benefits fiscal are inflation. We did 'XX. not of see

typical fiscal On year expect cadence, follow 'XX seasonality the we to the Pharma patterns.

price to see largest As the due the dollar our quarter being QX usual, manufacturer of segment increases. fiscal usual timing we branded profit

the to to the both and and I that our QX, 'XX, during that and in want the Turning against tackling team still Medical. improve fiscal demand to blocking cost. acknowledge do we have to particularly made recognize drive progress also turnaround Medical

are $XXX for profit of providing the segment and while year, For some color. of of additional we assumptions approximately year, approximately revenue the reiterating our full X% growth million

we 'XX, to profit weighted. anticipate back-half be fiscal segment Like significantly

consistent is in There low why generally Plan year. driven are a be couple point to core performance with Medical QX QX factors with initiatives. expect our quarterly We QX the for improvements Improvement thereafter from by of sequential the the

QX in and Medical seasonal timing business is cost distribution the the recognition. point global keep for volume mind due of products low First, that and our to

over over growth And the expect greater second fiscal of improvements will in plan half for impact offsetting that inflation, the to Health to are making slight of to continue volume the continue 'XX we the fiscal while exit Cardinal grow finally, gross course Second, hit year. the largely expected of we brand impact the to time, those year.

So are for for of we in XX% to see businesses Stepping fiscal year. approximately with our a continued fiscal back, 'XX. CAGR our in fiscal for XX% XXXX, QX the 'XX baseline Medical growth $XXX improving continuing to the front point with us from to Day, to our across to launching we for of in fiscal each us are messaging guidance the work get 'XX now year summary 'XX, Investor quarter million targeting Consistent from growth higher from $X.XX. EPS pleased

Now investing approximately our capital allocation third After and billion regarding to strong seen of July, consistent deployment growth, of further payment is investments as payments, we under incremental with the we intended have organic $XXX expect capital, the return to million business, possibility approximately the of return cash, litigation which national the framework including business on shareholders. $XXX flexibility opioid in our M&A baseline on and settlement assess in back drive to our as of disciplined into making $X XX. million capital Slide our back

beyond as that million guidance magnitude or I potential of at our predict in reiterate timing M&A, reflect year. capital, to each or difficult repurchases fiscal want which shared Day, deployment including to our long-term additional 'XX of or targets opportunistic our is we repurchases $XXX neither share baseline Investor

to value. continue to We will opportunistically levers of drive these evaluate both long-term

'XX. To be accomplishments lot with respect proud has are our pleased Cardinal with have their close, fiscal team I Jason and to a made. the progress the of to in teams

in still significant plans opportunities We in Health. are in of our confident the value creation team the front have realize we and for place, Cardinal we to are excited

it With over will turn I to that, back Jason.

Jason Hollar

Aaron. Thanks,

the and to on into and upon one has the matters priority strategic core Pharma most, and customers execute Pharma with performing In segment deeper our are prioritizing delivering for dive actions most largest number priorities, beginning our segment. patients. we been Let's resiliency of now our the business, taking three well their what significant the focusing the by building

benefited also is actions at favorable positioned business the from has industry of forefront secular The and and specific our trends performance.

expect recently growth pleased profit we X% raise consistent long-term segment solidly in our mid-single growth, segment profit We are digits the target with to the to 'XX. to fiscal X% and in

stable scaled, higher-margin single from and businesses. enabled our double-digit specialty is in core growth and Nuclear and resilient Pharmaceutical low growing a the Our by distribution growth business digits

offering a Within our the enabled critical program and overall component our core, Sourcing. performance, of by generics Oak Red remains

its to industry whenever in expertise position tools shortages continue deep best scale, Red customers. addition analytical In and possible Oak's occur us proprietary servicing leading product to puts the

committed to our Day. Investor together We're of trade innovations. through our our Business many critical XXst communities Annual the solutions hosted showcase recently, caring in play across X,XXX our we More pharmacies classes country the from to attendees their we brought as independent customers providing role noted across at customer-focused and where we commitment our to Conference, celebrate Retail for newest nearly

conveyed operations, specialty to Square flexible growth. independent rheumatology our therapeutic such to For key payment example, through we integrate area as emerging payment seamlessly areas. is costs. other that to reduce our and downstream We've solutions modern collaboration a to enabler with payment invest and and are across expand manage offering options, long-term our help key continuing business pharmacies oncology, of priority We're focus areas processing

build We're with our growth to to launch and independent. our of offerings supporting excited a upon specific of oncologists, Navista desire suite existing community their the for Network, recent remain capabilities

continue appointed Network's with the success clinical organization and and in deep and with talent. development, the external new ensure we've industry leadership build recently internal out To experience Navista to

from have advisory created We continue input and seek board. customers to an

and I'm While innings, still with engagement early potential pleased from the current customers.

strong chain journey. implementations At expecting we're an a leading to we record to with XPL, expanding up services. access growth. growth new the specialty, on our and In patient ambient our streamline in keep client business' continue and number support, double-digit cold Upstream excess products patient we're our manufacturer to from new of delivered continued launch space and innovative

supporting of our growth through Pharmaceutical advanced the also solutions We're manufacturers offerings. therapy therapy cell in gene space the and

helping with navigate TrakCel tracking therapies we're visibility cell to them multiple development commercialization. biopharma example, capabilities by stages partnering of bring through For and to companies and

the upstream we will that confident cycle, we're connection between specialty and call specialty, our into well downstream growth growth future. double-digit in Overall our strategies, what drive the

million is center in which investing growth medicine. strategically the commercial track space they Phase $XX further theranostics profits several business, over on 'XX 'XX with a at double X pipeline. for our of Nuclear positioned of as is to projects as and advance next the advancement through fiscal Our precision for partners' to by We're our baseline, investment center our of support the fiscal the development expand years manufacturer

and Pharmaceutical see We're innovation breadth encouraged and being the emerging conditions precision therapies that are of with expanding to addressed such gene as medicine. cell

care of to for specialty treatment continues manufacturer future realize to theranostics and biopharma these patients health the from to enables and from providers offer breadth touch As to us new manufacturers, evolve, Pharmaceutical and options. and capabilities services points multiple promising radiopharmaceuticals of value our distribution,

progress achieved around the last over and where priority introduced and the turning immediate we to two. Improvement August, Medical Medical performance turning months. tremendous distribution, the focus we've was product XX core Now, number When Plan the in our past

global track chain the We exit to and target. level halfway time the of is fiscal are by the impact and more key 'XX. of constraints a to normalized on to to number over we inflation supply now address one This profitability, returning our we are

and continue We with execute urgency such we other our and exploring commercial manufacturing initiatives offset offsets excellence our mitigation elevated sourcing make as to And our to contracting are with inflation efforts. progress initiatives.

remain levels, costs elevated, and improvement returned has we in freight our fiscal pre-pandemic be international results. generally overall this While reflected expect 'XX to to

and rates brand investments improvements customer and enhanced product significant retention product optimizing volume X-point index includes leading We're for to costs. levels, We're higher distribution. customer This and indicators. health progress through loyalty portfolio seeing in Cardinal plan driving in for Health experience scores our service automation categories through driving availability key grow better our and while

reducing SKUs Day, categories cycle business. simplify Branded enabled two-pronged Investor the portfolio which completely process us our to are we care the highlighted life Health over Cardinal At we portfolio. of non-health product exit our X,XXX approach to our has in management, across to And

feeding investments Within areas continued part growth incontinence. pandemic new but source core a smaller in products We're compression, we've growth pre-sourced PPE, product the surgical such to distribution, and category. portfolio that a enteral stabilization expansion our and capacity of in as with key volatility and focusing seen development our of during our our in are fitting

clinically comprised In and products products of like Kendall meet portfolio our sustainable in leading Kangaroo, investing differentiated we're innovation Protexis, specialty and to growth. needs drive brands and customers'

new this of our For system example, month. Enteral Feeding launch the OMNI™ Kangaroo

our of commercial efforts, is momentum result accelerating. a As combined

During QX, give participate growth improving These to the positive from moving businesses. quarter. we'll utilization we're that environment. overall confidence in wins Outside growth the key core, our new indicators medical we renewed and distribution an forward track accelerate saw leading during several us net the customers on

with In into at-Home demand network in continues shift we're as to DC care keep pace Solutions, expansion to investing home. increased the

begun recently construction automation XX DC. the months our drive in advanced XX facility, efficiencies. foot square operational and be national in XXX,XXX XXth technology Greenville, we've to equipped example, to network fully For South for will This robotics new Carolina, a operational and with

performance. powered provide to we We're our sustain capabilities invest OptiFreight, tools premier to In strong support volume by in management and our technology and digital growth logistics core continuing expertise.

to we optimizing such footprint. cost our our supply simplification global manufacturing and initiatives Finally, chain and and savings our as continue international execute

two For additional example, manufacturing additional we exited four year. sites and countries this

In Plan. short, Improvement are progress we Medical making with our

front excited of significant there is I'm profitability for still fiscal While more in to 'XX. to business the in us, execution return

performance, shareholder responsible cash and value capital. maximizing three, value operational Finally, maximizing flow priority generation the creation. of We're shareholder allocation number creation robust through

And cash anticipate, notable some flow that and residual share our Aaron opportunistically the balance specialty made Day, flexibility we cash that additional We're disciplined potential each progress evaluate enhancements. year. repurchases our which flow strong to our new every in with profile our significant on framework, with for we've and long-term repurchases. priorities with and the long-standing we'll capital continue the sheet, detailed have upon share allocation Investor At we builds M&A pleased

While there us. for is still the particularly operations our team our work opportunity over significant in has past in year, simplicity, realigning made focus and of and progress front

and We we our ongoing initiatives, with value evaluate continue progress including the review. making business additional are to creation portfolio

determination key are to I still Thank opportunities the acknowledge health role and I'm employees Cardinal up, healthcare and in for who forward. advancing our their customers for our come. care, essential wrap Health patients. want To moving our dedicated your to fulfilling excited serving priorities and you

With your will take that, we questions.

Operator

[Operator question from Instructions] Our Lisa first of JPMorgan. today comes Gill

Lisa Gill

Good much. just morning very start with want the Thanks on and really quarter. I congratulations the GLP-X to comment.

about I So contributory you're the And two, are profit the are understand a GLP-X? dollars. that margin all Is One, keeping points. same to that my XXX that and when you're not segment case by margin, basis understanding Pharmaceutical is 'XX? but overall I raising revenue they think is for they the when lower the

Aaron Alt

Yes. to Yes, reason raise GLP-X. Good the question. guidance the the the related the morning, the Thanks Lisa. revenue on primary for is for in

out And a that. not near else. will year that we forward, looking finish change relates call can to trends. did as it those foresee that saw the So in the strong anything that there's nothing to We we see we term

a reminder, GLP-X from benefit the a year-over-year did perspective first call for quarter. our we to as growth third a revenue the As in out time

before but of that, was -- So there significant. have growth as we not a kind

more in QX. meaningful it was and so QX And

growth be forward the half that's in to look of of you as year that a expect stronger as fiscal 'XX, first the would to revenue more So contributor. you

like benefit. muted lap but second Now that you going of start slope course, that, will what terms the in is to XXXX as 'XX, we be of year-over-year we anticipate don't to would know that more the half look into of

question, guess would second leave as your these just just products. to what not I a I meaningful relates profit such, segment it And part it your reiterate they're that as at just to and are contributor that. branded -- of And

Next question please.

Operator

from of comes Nephron Percher Eric The Research. next question

Eric Percher

$XX precise the one-time you million, that not all at there I be look the performance. benefits $XX on And the off define and seasonality for around Thanks expectation and of cadence fiscal this 'XX? any on we're Medical recur will would stepping commentary year that core make and sure can want million. kind those then, for to as performance quarter, point we

Jason Hollar

combined for more Eric, quite happy good on performance can the context Medical, was imagine, items positive called through impact million morning. purposely referring because out it your what Good to you a one-time as does in seasonality voice fiscal we million to that of as it cadence I fourth 'XX. -- that were that. give you results. quarters the little and $XX how we're for to way delivering $XX pleased of I in and aggregate and we the Look, $XX hear That with call results And quarter. of think million during

you quarterly But giving we we million target I before the to little remarks from how playing at tackling Investor Day relative unchanged number the as profit moving Now go pieces that Medical referred Improvement well. observe description are of forward. Plan, given year back see the out, carry the I we to to reiterating key from the more want we a prepared context and remain and just blocking little as $XXX as on are my the in do more guidance, for color providing The a segment the our that on year. Medical the the components,

perspective, a would I from full year have this. way you about is think look, it So the

that gets Investor incremental to $XXX you and at net to on of X, if take gets million total. you said of inflation that million I core million As multiply that, profit, that you $XXX you in right? performance by add of of Day, $XXX If top $XX million

other from year, simplification of Cardinal across think at And $XX of cetera. et to That's of the we full as how it. the view brand, Health a leaves the about that year Day, about million about elements contribution talked Investor

'XX. just the in cadence, as profit we the year clear are though, during being the it think that like about will year be fiscal we weighted Now was back-half

with QX QX both for thereafter. with recognition. similar cost to point Distribution is Products Med business the performance important due core seasonal volume view our is sequential the will that point. of Our well the an and as timing QX low as performance have That's

do continued we inflation over the year of as acceleration And expect similarly, of the well. that mitigation course

push in of half. pleased to back-half don't So perspective brand, that forget largely we clear weighting we're while growth And out Investor weighted. the in call from volume Day the will sign trend change in the then brand a that very helps. Cardinal Hope a back that Cardinal that profit at were Health Health is also

please. question, Next

Operator

comes next The from question Kevin Caliendo of UBS.

Kevin Caliendo

Thanks. Maybe to follow-up on bit. that a little

, if the first seasonals' we're million the $XX about million, So of $XX quarter thinking million is likely really is and the in because $XX baseline one-timers.

I are or the The the Is want weighted? down products -- year? get launches first is explain base new likely brand or sure on. the that's like manufacturing contractually of secondly, Is And to on grow quarter it to incrementally, capabilities? brand that then Cardinal higher and new because off that commenting that Can or the as make of well? Cardinal you're new be you product increase million. products sort to dynamics to the contracts half what to then that, that of the of committing is the in back $XXX sequentially or just products, the coming just

Aaron Alt

over Well, and Jason. to I'll it toss start, then

response to QX. in an do to this in versus core some interpret question, You you QX we way are earlier seasonality saying we're in correct in QX performance that that if line. will is And roughly QX negative about what be I was thinking have the just

is off jumping why performance the the So Jason? core point QX versus that's results.

Jason Hollar

about brand growth think the back of half-loaded couple through I'd volume Yes. being lenses. different Cardinal a

the we all, do of continue utilization will will -- to that consistent. think relatively underlying First market the for be be

that out growth will same-store and see do we anticipate So that, there, continue. sales we

highlighted plan performance we over five-point or And so the point is within working. is now XX prior that and are last we the that months that, lose easier year our lapping comparison did becoming business some our we within to as our

that importantly, chain Our the five-point customer improve supply improving health. plan experience that to -- includes and

grow in CLI That gave customer the to that scores lap were of relates that us in us strong it year. the underlying second especially impact, the wins be will think net that gives to levels, prior us gives new with We're progress the quarter. that good foundation positive market, that -- in more as year we the confidence continue very we'll seeing half which as service impactful quarter, that retention the we

So with will and how and Day us the in of all leading as year. visibility indicators and market consistent it the next we there the course at out Investor growth that able we'll going that that the the this that to confidence anticipate over are laid be gives participate anticipated we be

please. Next question,

Operator

Hill The Bank. next question George Deutsche comes from of

George Hill

ramping and particularly about of guess of beyond, market, fiscal growth should just first the in that Yes. kind Good morning Navista contribution? maybe bit Analyst the guys. progress oncology, hear business for guess, Jason, size of ramp the I And it of kind announced questions. so guys you to direction. I'd little thanks think the it And in different through have Day. how taking was made a specialty the at you. I we my I'll the the in Thank take love 'XX and on the given that offering, since progress

Jason Hollar

question, we so Yes. think about I think it's Sure. for Yes, Navista, the had Thanks to George. Great. in we recognize important when place. a that foundation

We have specialty in off built business. of our existing place, a foundation

we clinical to of help where insights, support. and our, course, We and are capabilities Navista support community in like TS, the already other of initiatives platforms oncologists value-based providing had research initiatives, care data their programs plenty to

tools. of lot the a have we So

bringing of in doing Network with all new brought is, Navista What place. a that together the business form is additional in senior leadership

bring in since announcement that serving team key already brought customers that's their were ago, the strong the patients. we things couple So additional important and place is we happened have of the a had in top one that's these already on of of leadership that months to

both we out as are So internal further building well talent. with as external that

next We board that an this we to we voice they sure and to this current a more to are development platform with the go have also advisory of both strong business. with in anything customers, prospective as created than make that ensure working directly where

are a before out here research, We're continue interested listen and building most we of on and for they're in notably health X,XXX well strongly are already care's that highlighted very What's really what doing We be feel in key we're this demanding. which that be and is desire key these but what attributes the field like of we're maintaining platform this as a hearing we focused positioned transparency, also independence. that their the trusted for. ongoing strong partner, also we're some of to to lot we're network the

So of in be we've this continue met. it's the definition frame, out. that customers sure to the since make with that couple built with and are rolled only been of better prospective needs platform team their a work to what out needs we those months place, to got in time But

question, Next please.

Operator

comes Next question from Anderson Elizabeth of Evercore.

Elizabeth Anderson

A little the gone those and so course the there very through to annualizing? that that that Is I ramp cuts going Medical, are could more for also know would ratably like be if has just corporate through, through you you year? discussed something bit the already Hi, something of you that over the gone are help -- that Thanks expect much Is comment don't costs on question. guys. $XX in just have million. helpful. the

for not then you've about last price you I'm can that what know more commentary different obviously year? about the secondarily, cetera, inflation contracts, was might more on provide in offset but what that is And XX% of can getting your any this additional this – getting same different looking next We just been year Thanks. this the you talk remaining XX%. be about et

Jason Hollar

Okay.

least the that. I think caught part I of essence at

question part believe start. in let second the next related half. I the part to the of was So of inflation the mitigation me

to think corporate the related I question other the ramp. cost

start to second throw over me let So the and part with first the then it for part. Aaron

XX% as you XX%. next there's the really the piece, So inflation second same about mitigation it it's -- think the as and the first was for the

to down nine to months the what coming is years we've both levels a about seen back ago. got six international spiked freight. maybe and cases, So in started significantly and ago two down pre-pandemic moderation That about year ago of a

-- 'XX. benefit especially has that as exited to fiscal So been started we us

was start inventoried to those that. see So our into inventory, capitalized It, we inventories. our costs into course, of did

a benefit as our reduce. that cost to So little took P&L it while for a

temporary way, those are with as other costs. those coming the pricing down. on not see increased parallel as We All mainly any them year coming costs other costs commodity a increases other and basis that, first along for don't And transportation, well plateaued. in all They course, of signs those and have were increases of in down. labor domestic the we transportation,

have And to so permanently items. for those we price

freight. international costs the freight the those to prices. for temporarily as higher on off, we international And priced need roll maintain We

And some so continuing are we being to prices. permanent the price those are now prices of into and rolled temporary

for gross continue as only pricing contracts half being of level, mean, to impact more our that that beyond prices. clear, expect we're we'll compensated rolling renew would of I recognized. XX% that those we be overall increased so prices very of point And that At we've to still not that back more and the see incurred. the We've we're costs. not

over contracts 'XX, But we fiscal we the the by come this increase we time to more exit of prices do of the the of that down. the cost, those will the renewed the freight course exit international on of as that and course permanently, at end to then get first And as through the will expect cross year Aaron, year, and with go the question? year. the continue over lower in then we'll we manner

Aaron Alt

Sure.

answer going so I'm I and something I couple heard and think think question a this. goes it I heard, different the things, like I of to

three did -- of to was touched on just $XX the simplification benefit of in really that Improvement Health Cardinal million earlier we comment Med the and Jason year the other by of inflation the the core driven pillars the annualization course performance coming over mitigation contribution So work. other businesses, the and addition the there I within brand the growth of that the indeed Plan, did the that

over we've benefit Steve benefit seen year. work the half every are team back working simplification see more back towards million are seasonality as more progress. certainly making of won't As go and so the Cardinal year, They and already on over the the I has growth Health some well. have businesses touched the The good I of was hard are touching additional We contributor progresses coming to then just I brand, the on, want day. half. emphasize $XX the the in there. at Jason They And to strong a of the really efforts. the course the course that that year.

Jason Hollar

Next question please, operator?

Operator

Grosslight The next Daniel Citi. of from comes question

Daniel Grosslight

then slight ask efforts around in There real presentation current your Hi. the my I'll your language was the quick I have a presentation. question, your question. ID from one Thanks change just mitigation inflation question. taking for to and housekeeping

end mitigating the a mitigating. was just of the fully kind been there's of in you're if change thinking went some about Curious if of language? things? simplification You it 'XX Or how from to by

real my is towards have business. fiscal seems question benefited competitors a around more the And like of the and it your end then have it you your seems from like accelerated generics It might environment. favorable year. And all

your So generics generics of benefit or market in thinking the about Thanks. vis-a-vis 'XX. saw I'm just fiscal you in guidance tailwind get your the how thoughts curious on to potential strength you're and fiscal shortages the 'XX

Jason Hollar

Sure.

to in for measure. simplification more one our highlight language mitigation, would a is best. So said became similar you those the COVID, terms difficult It's thing change it precisely over to I disclosures The of I inflation with time, language. think

inflation there's inflation now spikes, So normal inflation spikes and mitigation Well, well. in always had was are dramatic we on inflation. -- we because the this focused unusual incremental as

to that the this harder So bit recognize between differentiate two. a broader just language time, little it's to over becoming is

becomes doing language going our broader get freight. recognize still We it. that on incremental, precise analytics bit a the have of it But be it early into less good a when you challenging. get just is as was most understanding normal, to measurement. labor, what's And We're little to than we to like reasonable possible impacts have a what's understanding in the it deep more as significant international of of

takeaway – business think the As and are that model. down strategy we of sense. the it key pushed final given the I with customer, ultimately, well, I the the It the should be user to is think final makes – relates on services, the to track, products right,

level tenets reflecting the believe And the absolutely we of so precision. are just that It's unchanged. basic

levels the question and growth all back I business. than been utilization about generics, it's I what second inclusive for your the highlighted relates than our about reasons think overall is step very think good can There's has that strong, are. is a long-term is as as to Pharma the performance of On targets occurred. generics that growth higher the things a segment as within you that. well Aaron very what our and have market There normal it for of couple been performance certainly overall a And this is generics, at higher year, the rate has think that segment bit as and

'XX, And as to we I that think normalize. forward to expect fiscal

for with to levels it from have be indicated related as type our cost and growth. during to a growth, mandate to we drive shortages. Oak that. Day both well as your like cost Investor of continue the the range well would both performance within expect participate as We still X% volume expect dual And areas favorable point, performance the Sourcing to service X% expect in to They a to customers. drive unit product to We continue we to to Red other as

the new spikes. demand various and are driven driven spikes There's there that's chain, distribution shortages while sporadic So overall Pharmaceutical product phenomenon. within supply a not supply

those that give Our challenges service. of goal, our best is course, to possible within customers the to minimize

primary were fact, some a of fiscal we a opportunities little short as what by others it but able being we distributor, saw, to in supply where when provide 'XX, benefit to distributor second was were the product. bit And products we not able a had in as on

positive expect a to in feel be as growth. to things of types for more and those well. normalized was that participate that And in year this 'XX us overall, slight So fiscal we well-positioned

Aaron Alt

just Jason would called forward, in thought, growth, but year consistent for the add dynamics. as to we And Jason well. are highlighted, saw I we also as unit QX, the guiding is as market one volume, dynamics upcoming which overall indeed, look market strong we but consistent out

Jason Hollar

question Next please.

Operator

A.J. Next question today Rice Credit from Suisse. comes of

A.J. Rice

an did in and on, lot on that uptick I more Hi, a heard part the in of that little reported. Thanks. wondered toward from utilization? there's to know that's And of I see the Medical, change some the uptick your of behavior you others back peel any providers. Medical was side, we've going a going your everybody. on everything an have in if in utilization than customers you're I suggest discussion about inpatient on there skewed this But some

environment? when you're a just think around calling sequentially normalization Do seasonality we to pretty is then get on from PPE you any normal out remember call we're category profits here, to to there environment, comment, as of a And the from to back And that here. return normal it we steady?

Jason Hollar

sales of Yes. The has We're pretty fairly wouldn't consistent. same-store call I it utilization, or anything. growth. consistent we underlying think, been type an acceleration seeing

within from unique sufficient Day, Investor it laid we there. So and where business call anything out model wouldn't I but our out it's

couple a of normalization, PPE to relates it As points.

we've normalized a value. of is category category for important amount an made our So money is It's that ever and a good for customers. us. tremendous This not

we to do we everything can needs. satisfy so their And

they and that going ensure with volume get our that. volatility Recall we forward, cost So minimize being But the the that with challenges way once. along one customers at goes objective material the is other. had just PPE and we a see it need price driver don't was I to all or that product volatile the that

the there. now right down a they've been price in volume have staying been challenging. type a And been And manageable. destocking been -- beginning that's couple volume that, that of a that's it's another well, We've was little ago somewhat more you over terms of one it in the highlighted steadily. occurring normalization underlying is that bit close to of coming over has that's What both now relative about of year cost and spread a last enough years been

volatility this margins. incremental of because right relatively volume contributor margins low lack product, incremental a that But just margins margins not are issue those type tight large not it's for and the getting an growth the much or given relatively means or of of is volume volume for the us, of

stable, fairly it's objective keep it's think I and it that level a our way. to that at we're So

operator. please question, Next

Operator

Our question final Jefferies. Tanquilut Brian comes today of from

Unidentified Analyst

flow had a get a regards this fiscal Good the for specifics you bit Thank in priorities can capital just for allocation [indiscernible] to you. see in Generated curious fiscal year. cash question quite there's morning. you the 'XX. capital This allocation year? And with about fiscal into free I is of if I'm where Brian. your year any next

Aaron Alt

were cash capital Look, were we Thank it fiscal particular. great very Hi, see 'XX in for the for pleased out and decision in QX also we us. Investor very allocation disciplined table our overall we for you the the generation matrix laying focused question. to Day apply. putting on And on that

CapEx to the what simple at there to us, do we Investor that are just a table stakes answer. of reminder, do are respect. we We're couple for were going in a said going things Here's quick Day And going as to which plans first, which spend spent in XXX to back is We've going business to into against We across business the about fiscal million the our business. invest guided we're in drive we're organic the growth. 'XX. $XXX

short-term Our you'll Day course, sheet. recall we Investor from is don't second our maturities. And that of maintaining have our balance investment-grade priority,

the of the good year likely bonds our at we're balance that sheet feeling some due will just refinance. coming investment-grade about we have But end We

We've raised are fiscal And million least how then to dividend. a it cash. going the buy our in shares Those year of during Similarly, we a committed of row. to of shareholders, continuing committed back parts we've to stakes we're 'XX. XX $XXX the return grow to baseline capital years at to table use of

we year, be two opportunistic looking have is front As of the through we will as at. how assess us, the we we we then performing, move as opportunities levers also that business the in assess

at active, looking we targeted opportunities M&A and is as have largely and specialty, that we're disciplined in there well. first The

either announce those were respect And we two to capital also disciplined to will going we want to strategy. allocation continue capital be to top on But what that, levers. then we at of do said that additional on return going are with of do to Nothing to clear today we incremental we of our to shareholders. look

Operator

now the conclude turn Jason like for to today's would the any call. remarks. I that CEO, session to Hollar And or does question-and-answer closing additional over of call

Jason Hollar

a morning. inflection, 'XX joining fiscal we 'XX fiscal into you summarize, this was With for It Okay, us a this beyond. are a to thank excited was that, great continue and great of and year and great. year. day. momentum Thanks again have To

Operator

full conclude thank that your the does Inc. all may We Cardinal year for and now fourth Health, quarter you you participation And earnings 'XX conference call. disconnect.

Cardinal Health (CAH) 15 Aug 232023 Q4 Earnings call transcript