CAH - Earnings call 2 2024 | Cardinal Health, Inc.

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

Operator

Good day, and welcome to today's Second Quarter Financial Year 2024 Cardinal Health Earnings Conference Call. This meeting is being recorded.

At this time, I'd like to hand the call over to Matt Sims, Vice President of Investor Relations. Please go ahead, sir.

Matt Sims

Welcome to this morning's Cardinal Health second quarter fiscal '24 earnings conference call, and thank you for joining us. Cardinal Jason are CFO, and today Alt. Aaron me Health Hollar; CEO, our With

this release at morning's on find can You press Relations of the and section our website ir.cardinalhealth.com. Investor presentation investor

making addressed the and uncertainties these to turn the that risks remind Jason, materially will let over differ Before statements those forward-looking the or are our I from the SEC today, refer of matters call statements a that and filings the since could uncertainties. to we statement cause actual presentation results be in to beginning forward-looking you implied. to projected at risks me slide for Please our description subject and of

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

over turn [Operator Instructions] With call that, now I the to will Jason.

Jason Hollar

everyone. our Good specialty value on notable continued news yesterday's In made strategy Specialty our providers, which create specialty progress, patients and growth new manufacturers exciting ways. including will our several and weeks, announcements Networks, further regarding we to for company's morning, in acquire agreement last few the

review reporting industry And progress in our further achieved actions recent we our simplified as quarter. be structure, beginning reflected highlighted to enterprise focused at business next which updated segment company, with reporting on portfolio conference, take and and continuing we're and a financial operating to will ongoing more become and a our

against begin our strong segments, strategic growth In priorities. today, further with go QX, we brief execution operating comments both our into on updates to results. you We few but in continued and me first, let a recent momentum with demonstrating delivered profit plan our

fiscal and 'XX. segment our again to consistent in performance. to profit we're for X% X% business strong expectations, Overall, is outlook Pharma with growth delivered our pleased the performing reiterate

seen and including trends, in our in program demand. stability We've ongoing strength generics broad-based pharmaceutical continued in macro overall

see vaccines business including also first Distribution COVID-XX demand, strong part continued with Our the Specialty to of the quarter. in

QX consistent was our operating in revenue progress Distribution in performance, Notably, medical some the the outlook We're reflecting a further Products we our our saw plan to with reflected Global quarter. updated Medical Turning the and former QX, on underlying focused nonrecurring profit 'XX fiscal encouraged the in improvement adjustments for efforts which quarter, we Medical Medical improvements for in with Medical. despite the second by in segment segment. change second in segment business. trend growth

Along with positive continued Health to And but the the volumes only growth from the Cardinal yield of below plan results. operating our cash at-Home enterprise, the strength of generating we're Solutions, financial effects our broader continue to and brand robust optimize we're also not we seeing benefits performance flow of as meaningful grow businesses, the X-point line. seeing

our and flow. result As we guidance for first as ahead, performance confidence increased 'XX we're and a our EPS free adjusted outlook pleased raise to our half of fiscal look cash

we everything and forward. of and drive we as to to them services core patients execution center prioritize do, company operational their the at products serve essential remain team customers and our with our our course, Of continues best

to Now over turn guidance review more let in Aaron it detail. me results updated to our and

Aaron Alt

morning. and Jason, good Thanks,

commentary will our structure, former let be begin, Pharma Medical. according that to and segment remind our me we Before you segment QX

which growth total of quarter delivered EPS XX%, company second results with included of $X.XX, the growth strong quarter. across start of XX%. Let's earnings operating enterprise the with QX for another

even We activity incremental following billion in also quarter delivered $X.X cash quarter. repurchase strong the flow ended with the cash, and share of

enterprise, despite We growth. total reflecting in segments. drove higher Pharma growth for in billion, investments sales business and As $XX.X both to company the incremental seen the increased the support Medical on X, revenue costs Slide operating and XX% to leverage

increased margin segments, $X.X billion. X% SG&A and consolidated both to by increased billion, $X.X to Gross driven XX%

the than a growth ago. With strong delivered year operating $XXX higher profit XX% in we earnings million, of both segments,

other increased line, million by cash in million and balances to below on Moving $XX rates. higher income and income due interest decreased and from higher $X the interest equivalents cash to

As noted, rates benefit a fixed our we've near rising is largely term. in debt rate, interest the from net resulting in

plan from and interest reminder, a as a in nearly quarterly income above company's benefited deferred QX Additionally, of line. the the million offset has from matching compensation $XX our investments, revaluation other which

better to Our second and than quarter was discrete a due than tax in effective rate year anticipated lower period. items of positive X.X ago points we percentage XX.X% the

shares diluted due And each XXX quarters. QX of X% in the to outstanding share a average as lower the result ago $X.XX, X XX%. repurchases mentioned million, I than earlier, was net of were last of QX reflecting for growth EPS year

Pharma the to segment on turn Let's Slide X.

growth Second increased We from existing generics, brand, product quarter customers. specialty consumer sales customers. to across by demand pharmaceutical saw from billion, specialty, health revenue and and XX% strong and pharmaceutical categories, largest brand $XX.X our driven

GLP-X to provided tailwind demand in a revenue medications, continue the for also robust We see which quarter.

COVID-XX $XXX quarter brand driven program Segment contribution by generics higher in and performance profit the specialty increased distribution including positive from products, second and XX% vaccines. the of million to

market volume consistent generics reflect positive dynamics. performance program Our growth continued and to

peaking exited much the immunization strength October we carry to September the for in as trending season run and demand the lower fall COVID-XX second quarter. vaccines, saw respect rate to With mid-month before into we from a

from in QX growth a offset segment by volumes. costs driven to includes increase The increased Pharmaceutical sales partial support profit higher

the to Slide X. Turning Medical segment on

both to, Products the which, segment in over first as was brand the to volumes. Cardinal time X% increased in to Health for Medical Medical X increase revenue reflects Distribution, growth This driven at-Home primarily higher by years. quarterly growth GMPD Second for growth quarter with billion, and Global alluded related the Jason revenue Solutions $X.X and

ago, our profit generally was driven QX, with consistent mitigation million, including weeks communicated in the $XX nonrecurring impacts, Medical segment adjustments in the improvement of Consistent despite segment profit initiatives. year-over-year inflationary with $XX quarter. increase, expectations a an delivered some million a few by net

through We the underlying by with first encouraged business, quarters continue year, plans. the the consistent X which, has of original our tracked to of be the performance

the to to of free billion adjusted billion $X.X We cash hand. billion QX, generated flow earlier, $X our on turning cash free in cash quarter balance robust as year-to-date I flow with Now and, bringing $X the sheet. adjusted ended noted of

with disciplined We remain fiscal invest the half Thus focused the our against on 'XX, CapEx. allocation deploying businesses priorities, would, year-to-date our of investing growth framework. $XXX into million in drive to we've through capital continued to doing including first highest what said we back we according far, capital over to organic

repurchases in half, billion includes to excess $XXX $X million our first returned committed share have of $XXX These shareholders, are and dividend the repurchases In payments we repurchases. year-to-date which total our share baseline of million. quarterly in

in And a in to in at prenegotiated is January, result $XXX we million which made certain settlement GAAP-only of prepayments discount, quarter. million approximately expected opioid $XXX gain a of third the

fiscal guidance. 'XX beginning updated With and our enterprise. half Slide on the our 'XX performance our are first for with X, positive fiscal EPS strong guidance again we Now raising outlook,

QX increase bottom XX% fiscal $X.XX to 'XX $X.XX top range from is end which EPS guidance our results. of our range the a at the increase at a a and $X.XX above new and $X.XX end midpoint, reflects Our

and reduced the strong We flow cash a are is improvements reflects certainly million, and operating line. higher-than-anticipated of which range to Interest the generation, by the balances. contributing million which $XX below income interest other of encouraged performance businesses from our to to is primarily $XX our increased cash

in year the balances lower half average expect cash due anticipated timing of the cash second part in of the seasonal We to flows.

XXXX upcoming maturities to We in our the are evaluating half opportunities of the back debt refinance year.

are the of positive in to tax guidance to the discrete lowering to half the reflect end our of We rate items top we've the new XX% first of a range year. XX% effective seen

million XXX also We shares No assumed completed to accelerated 'XX. QX. approximately outlook reflects lowering which for share share program in guidance our additional are million, we in our fiscal year XXX repurchase are updated repurchases the

Now our 'XX for fiscal segments. outlook turning the to

segments let for a our updated with While beginning structure as be to QX, point comparison we segment will in start the transitioning our me new former reporting structure.

to the changes Pharma segment. for outlook former No the

We profit and are XX% XX% growth. X% to reiterating growth to revenue the X% segment

segment in expectations in 'XX are with Outside million $XXX of of net the profit profit Medical year is consistent million year the nonrecurring as segment to the profit segment, For fiscal of impact these, approximately outlook segment corresponding adjustments. overall prior million our well former the updated as for fiscal QX $XXX to 'XX. reflect the $XXX the operational delivering expectation of for prior

impact We have the progress within by the some of business and growth, seasonality. consistently brand weighting specific half Medical of Health guidance highlighted inflation mitigation and volume GMPD driven cumulative Cardinal back the

continue. there expectations Our

half a second observed to delay. our largely freight, in year a in we necessary January, of inflation in visibility place. are reminder, the with to by achieve year-end strong example, improvements target as mitigation, X- reductions For in cost as the overall income initiatives have And now exit our to driven mitigation we international statement on which, reflect X-quarter we've the

'XX we on structure 'XX updated actuals with targets comment me fiscal long-term segment provided to this XX, Slide the see guidance we and recast translates let how Now back. few year on weeks preliminary a fiscal to our along go

into structure on January went Our effect new X.

in from the segments, at-Home we GMPD, provide new the results Nuclear, Solutions on to recast X plan other. to that At results 'XX structure, the and fiscals aggregated Pharmaceutical a and in to beginning and and QX, for segment new So time, to according drivers will also we separate segmentation. OptiFreight Specialty report and 'XX these provide

segment, the our excluding Pharma even business. Beginning and former with ranges segment, with Specialty Pharmaceutical are higher-growth the consistent the Solutions Nuclear guidance

term. fiscal a X% We growth X% CAGR long expect outlook and the X% and XX% profit over X% growth profit for to segment to segment XX% to revenue 'XX

from 'XX approximately fiscal towards loss remain business. execution where million target operating in Through fiscal $XXX approximately fiscal year-over-year expect of to 'XX. halfway to plan $XX operating in the million roughly improvements us this From low the Turning of to initiatives, improvement the this point, GMPD, $XXX profit. in drive segment position improvement million approximately we our fiscal an Medical million 'XX 'XX by GMPD of of encouraged $XXX would income we of the

of Finally, at-Home included and between remainder segment XX% deliver 'XX to in profit in X% long-term rate residing and the nonrecurring collectively Logistics, year QX Solutions, difference to fiscal X% 'XX. Solutions, CAGR with the for in growth we the within reflects Solutions X% to Precision other, at-Home this and 'XX businesses fiscal portion adjustments to OptiFreight the of expect Nuclear GMPD. fiscal The growth 'XX the Health

recently I of allocation deployment capital opportunistic acquisition. as and a noted been Before the on the disciplined capital specialty potential comments for of for our highest part category We've our close, has M&A announced priority our consideration couple that primary framework. our

of XX% specialty therapeutic areas have other Given our range a evaluated market our accelerate the the flexibility strong potential financial oncology, and further we acquisition presence in of specialty outside of in to candidates strategy.

to thrilled agreement family. are Health for of We an reach Cardinal Networks become the part a Specialty to

Jason aspects of but which, closing will elaborate on the the our of and of of include required of is to we plan closing the upon deal, to regulatory conditions, the customary expected receipt course, subject approvals. transaction financial satisfaction guidance impacts strategic including the

XX For accretive following be general purposes, modeling we expect close. deal to the months

wrap So value us. first progress of exciting the the up, still year, in to opportunities front creation tremendous half of with in

for to ongoing prioritize our We plans grateful team, are and efforts confident who the continue of in initiatives our customers. of needs and the our drive our

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

Jason Hollar

Thanks, Aaron.

upon #X and our strategic foundation, in Specialty and structure Pharma both while the Though focus on on executing additional beginning largest growth significant priorities, accelerate our changed, Now priority and in core building business. upon most our our perspective remains, of and has the segment with this slightly for Solutions, strong downstream building growth to investing we're upstream. some specialty,

leveraging this enables investment. on Pharmaceutical Specialty front structure business those between positioning and More focus, by the We efforts segment enhancing for believe long-term Distribution shortly. that and that new connectivity management and further growth the

supply. Red industry to A key an dual Red fulfilling deep both component expertise excellent of analytical managing do generics which its help our for strong Oak, customers. maximize Oak by job their and cost leverages continues delivery our tools proprietary to program mandate, anchored core foundation service and is

engagement invest our strategies continuing commercial our addressing our business prioritize to challenges We're to provide day. the complex solutions in customer-focused face to every customers and evolve

our chain, integrated Investor Day, Platform. highlighted the For clinically example, Cardinal first-to-market InteLogix at supply Health we

drug and artificial solution simplify the Palantir actionable to through intelligence machine This streamline supply. inventories providers leverages learning platform insights costs, innovative medication optimize Foundry help generate and and reduce to

plasma product expansion. We've continued already alternatives, capabilities, compliance, value like to Contract our see to system and and and such for drives Key the blood opportunities develop are from which we Optimizer generics, further brand offerings, more. future savings as through controls tool, customers cost contract benefiting these health and

have investing to complementary their areas. a a to Shifting where of also the which of Networks into is were Distribution. longstanding our Specialty offering is exciting This Specialty, service familiar The we given expand to very been our fronts. we business through on with Specialty members acquisition number us partnership to already

Specialty practice critical independent organization, including enabled, ways. enhancement providers Networks our serving total accelerating group across urology, capabilities is X,XXX their technology than today, purchasing gastroenterology We see practices. service in efforts X,XXX rheumatology more a and and multi-specialty physicians XX,XXX as

in delivering costs, First, and care value specialty offerings and for Networks leader lowering management, providers. areas and specialty to best-in-class and more physicians in patients. provide in their practice our expertise clinical that economic further to reach, efficiently a therapeutic operating extending research key support Specialty technologies is increased

For X,XXX through its that economic UroGPO. example, solutions improve provides to urologists company clinical and the leading over outcomes

a solution and electronic company's therapeutic medical imaging systems advanced utilizes platform a for transform language expansion subscription-based it into data practice actionable processing, platform artificial natural analyze and providers continuous areas. Analytics creating that stakeholders. insights to records, and as technology PPS Second, other specialty dispensing and across our learning management, intelligence, algorithms for from is such The

We and in Specialty practices Networks' specialty accelerates opportunities management which data suite complementing distribution with upstream and to see clinical capabilities our research our solutions and nationwide. clinical experience manufacturers. robust, practice are biopharma engagement also this of

on network. clinical Specialty build Specialty the accelerate operational has and physician ongoing and our capabilities enhancing practices, and understanding of ongoing of Third, of the of needs is including Navista network, deep a Navista oncologists. expertise focused our the independent the supporting Networks we see of that supporting independent capabilities will the development community business, which

services, specialty and patients. our that us providing further this between to new downstream enabling the partners customers, link In transaction capabilities upstream enhances strategy summary, our value by for create strengthen and manufacturer

business, medical priority to the the where #X GMPD improvement Turning in executing plan. we're

progress 'XX. and of review in the to expectation While of business, prioritize business turning the business as continues, profitability continues indicated, with around fiscal in to that significant Aaron returns our make portfolio the team the GMPD operational performance this and

we priority fiscal remain #X to we The mitigating supply remains time the where track chain exit on the by 'XX. inflation, impact address

of target. As to QX, we're approximately XX%

in international reflected results, line freight overall in and elevated, to while we've we improvement the On anticipated, fiscal the the sight cost seen of still side, strong lower of second our costs as year. half have continued

and make inflation, actions efforts to continually additional continued contracting We've commercial progress with our sourcing mitigation offset elevated such through initiatives and to taking as are initiatives.

As to half second achieving reflect provides as year-end in increased target improvements results. to the work continue we've confidence cost overall fiscal Aaron date indicated, our accomplished in our

distribution We're and continuing resiliency of invest to chain our in and supply manufacturing our capacity. the

capacity to We have centers in technology opened for X new the adding automation past state-of-the-art while distribution streamline year, featuring operations. growth,

leveraging increase picking Canada autonomous packing serve customers, while accuracy For and new DC Toronto robots Health mobile and example, expands our to efficiencies. capacity drive Greater area Cardinal to

expansion invest continuing product innovation alignment with in and new in key portfolio portfolio approach. in to management disciplined also categories, our We're

to result X-point our seeing a Health importantly, As improvements and, leading volume Cardinal strong team's we're growth. of our and our customer volume grow result retention efforts, product collective in indicators brand in plan most

for will streamlining cost product value continue believe to noncore the enable improvement optimize plan we plan our further new as lines, rationalizing execute deliver our our our and medical to simplification drive continue Finally, structure customers. We footprint. network efforts, by and exiting and our international we structure

accelerating growth #X, key areas. Now in priority

businesses, develop in businesses OptiFreight these excited about invest our Solutions seeing creation demand for portfolio. value to of at-Home our recent part as and further we our and strong in long-term determination and the We are are

at-Home and technology of efficiencies. the In drive and our continue on home of acute the support for to we Solutions, patients health demand enabling for to offering to comfortable and we're care, new the breadth operating with focus chronic network, supporting investing capacity home-based To in care expand our growing conditions.

increased XXX,XXX our for And track center facility. is new recently plans automation announced facility in open and Carolina built within announced be the in to previously year. on built technology distribution being robotics We calendar capacity, Texas South to foot a square advanced this with

are we're support continuing feedback. chain care leaders spend core to and supply tools volume growth In better shipping enable to in Logistics, health We've to the receiving manage their OptiFreight supply customers invest digital business. our offerings to and new in visibility, we give our launched chain great more

X,XXX operations. than leveraging providers have we health platform their gain now on example, our care insights to TotalVue valuable For more Insights

and premier in pharmaceutical future Solutions, our our and Precision Health success continuing to manufacturers business differentiation Theranostics, choice strong growth commercialization to both see portfolios. for a due of we're foundation of radiopharmaceutical as In Nuclear looking core and their we're core partner above-market with

tools Theranostics, these saw radiodiagnostics disease. properly half revenue prostate providers the and in fiscal diagnostics. in health ramp-up to example, We are For 'XX first in care for cancer important growth meaningful from assess of of the demand treat year-over-year the

a expand center oversubscribed. for from we're Theranostics with demand perspective, pharmaceutical From currently pipeline partners manufacturer investing our to advancement,

clinical the PET aging prevalence, And growth and of population, driven diversification an increasing we're PET accommodate trial expand as by investing reimbursement trends capabilities from therapy cancer emerging is availability resiliency manufacturing such and to portfolio to and This our needs. Alzheimer's enable agents. for demand the and network increasing

of Finally, priority improved #X, cash and allocation capital. shareholder our shareholder value robust creation through continuing value maximize flow creation. operational performance, We're maximizing to responsible

value-creating our enabling capital deployment, operating our only in M&A share Aaron additional driving plan quarter in is the benefits is opportunistic cash pursue line, our robust repurchases beyond baseline with not below ability As generation our the noted, flow to and specialty. it

potential the opportunistically Specialty, in but in share disciplined repurchases. well other only and evaluating flexibility M&A, positioned continue financial to growth areas our not additional remain with We

and on business review, recent do have you we keep our portfolio of further our our updates plan this share not apprised today, but conclusions With progress. to

the a about our fulfill critical To many as and like strong close, progress our most of to build partner. our thank health are half for upon as team excited the our trusted to and role our had and underway driving we engaged talented highly momentum. customers I we year care's first initiatives would prioritizing

will we With that, questions. take your

Operator

Barclays. very is calling Stephanie [Operator from Our Davis first Instructions] coming from question

Stephanie Davis

Networks' bit but GPO a both of Analytics Jason, given color around the dig acquisition, in you nature on higher further already Specialty and shared lot the hoping little you and was a margin could Solutions. capabilities of I just just mix

pipeline following I hoping you of And then just for as deals on could the up, story. given the rates hurdle mentioned, you becomes that bigger some was part share a future thoughts that

Jason Hollar

behind we're a excited love Networks. goes great. the it, lot of there's this yes, I the we about it. into love and question, how all asked really it's and because the business, That's technology -- Stephanie, And GPO whether Specialty Stephanie, you analytics or it's that

PPS urology, for learn areas felt is this really therapeutic from they're today. how the we special, they've other Specifically, we that X we then but technology created that that other of this areas. of in something team Analytics was how their terms in primary not potentially could original therapeutic extended has And business thought just into and capability use across further beyond

value. a exciting key it's So to us, that was certainly really of part and the

customer, but good solutions we good So and a a challenges only believe technology that for lot patient. we end and manufacturer, that is ultimately not that can provider see both and we really go. technology better value to attributed importantly, business, was And that definitely the our much of giving where to solving

nicely our throughout that be the space. and across win-win to to specialty a it's and -- one strategy the So in plugs industry

So we feel great about that.

plug transaction, team. want acquiring to our nicely certainly also, will to don't fantastic own very miss we I that in this That are team. a existing leadership And through

a well it's very process. I And fantastic, we've very that think so together. will culture a And work had quick

the But point the end, quickly known course, talking diligence. value Networks well, possible went beginning that so We us. understand for for the doing but the that tie-up, nonetheless, we about of quite started from to business Specialty a from and could while, knowing a we deep thorough the we

anyways. I'm hurdle we're type about, on think generally As it part you're relates a go to. not exactly sure referring our business competitive no part which the of and of to talking rates, of it's stable your to I'm second not normally question deeper environment, I so matter business into going speaking, But what that

market But overall out not about, really speaking, an to today. our quite of we're Regardless we're business calling utilization talking be and good from anything what generally continues perspective predictable.

environment as nice as organically transactions So growth, to at like able we're then a opportunistically this. for look both in ongoing well

Aaron Alt

Jason their are of noting we in profitable the expand And do initiatives intend business well. only that doing what business is specialty a as scope initiatives, Probably today. it on but not highlighted, to to as across they invest worth the early our within own

Operator

to gentlemen, next Gill question Lisa JPMorgan. is and Ladies our calling coming from today be from going

Lisa Gill

we really to One, your wanted you still two to think core Medical about ask forward? Jason. on that a strategic business the Just feel going things, as do One, side commitment business.

look And reporting core it Is like If that. margin else the down the on and then us and incremental time does line just you there secondly, Is taking costs? understand the either the competitively something something help structure, there that's or the that's about could business. shift turnaround? changing as of shifting you're we the think new

Jason Hollar

no Sure, and very to Lisa. has business. been there's there beginning commitment here. our in from change It Very No, clear be. to continues the this

has As I portfolio been turning priority context from we talk business when our the be and Medical about continues moment always highlighted review, first and #X business in to the around. the the of

That and are Cardinal with we've that operational consistent made message entirely is service of it progress X-point The that. is working exactly of brand of, laid we've Health cost and to business through we the the simplification core inflation value how mitigate drive volumes and drive been first in Everything additional to on plan reductions. all, performance out. the has

But today are resegmentation. the this targets going So were only had plan absolutely those year recognition unchanged that we've nonrecurring after aggregate to in fiscal update of that the we're in items. 'XX some the of

the have bucket was absolutely growth improvement plan We but the moving we just various the the are pieces that, the a in were did profitability And service component business. Medical those did is all progress tools. the long-term in into our because team unchanged And that The commitment and that overall I'm that aggregate pieces. excited of really absolutely unchanged. to to unchanged, is making buckets this that of businesses have absolutely -- plan is the about

Operator

And will our coming Elizabeth Evercore calling ISI. question from Anderson next be from

Elizabeth Anderson

I had had big to two questions going more forward. sort the maybe sort pretty you of of about talk us Can down. financial you interest expense? a Obviously, step

understand terms and to wanted of structure. that on that the thoughts ongoing in your sort Just of capital

the you talk as can to That free also And in the flow about improvement? was that in cash about guidance. terms the free of well nice why see step-up -- the quarter

Jason Hollar

happy that's below-the-line generation, hand. to of cash pleased billion quarter. I'm going the on course, the results, of quite question. $X.X the with with announced, perspective. course, which for with cash fact of quarter to And ended the We're that, strong part We're some was by driven offer of your start we the as the we end

has half business, of we highlighted further against and flow strong you internally the back If we to cash flow on something Investor doing, the delivered generated for balance. and the that efforts our were was the first Day, think optimization those thus focused had position our in cash team

some interest higher benefited which return the been indeed get higher course, line return, That's from as we a is a balances offsetting And that knock-on the negative have also right? operating, where quarter our larger well. us we place. It's the the of geography rate cash we've because there is below that line. we've have in positive environment, Particularly the in greater a for on Of cash on within we'll that an of comp the rate statement the was above consequence had more hand. in case deferred

really for And those X so several quarter. the which led results to the those -- things of things, the it's aggregation or

going our as on of And and point I think as you carry opportunities models today at Nothing are respect, should do the have in June couple and we what we that that coming things just We're asked be address November. to about some a forward. but about maturities we We financing will as in assessing well, forward. announce there. clear our

it back as case cash And balances in well. our seasonally also half that fluctuate is the the

so we to demands remain it seasonal is where the And wouldn't expect the just balance high on the business. given

Operator

Eric Percher of from Nephron Research. question next Our is coming Mr.

Eric Percher

through side, what the to and trajectory to items, in million those looked $XXX one-timers of million trajectory you half, see what on ask hard items, want quarter On to kind the and first onetime give excluding so the the on the I of the year Medical from for can onetime nature going it's like, views exit us that. you're $XXX half to any relative second how pacing the

Jason Hollar

were by really We you. Thank in underlying Medical the encouraged performance QX of the business.

JPMorgan with those communicated in took we the some the Just ago adjustments to that restate with consistent generally QX, expectations of the consistent several the and results weeks here, Conference the were at QX results quarter. we despite

prepared of structure to is some you and plan, underlying against I of cost progress relative emphasize, took, elements the to that away they're from as move we the remarks the inflation our mitigation my -- our of right? on you track, improvement We building. want heard adjustments medical how the

The benefit these benefits of structure we've half year. our actions the will taken of the cost in back

quarter simplification have You the been first we execute core continues heard plan the that that And initiatives in to the with well, in were as Cardinal part time Health we X against revenue the and the improvement that. brand the had that growth years medical with comes of us team pleased announce growth for all along.

which quite pleased we with So quarter. the is where I to were back in I'm to operational the going started, go performance

that we which that, of the change year -- is from out reflect the adjustments, to not want that relative the of behind also the point guidance was the to that to ahead. updated nonrecurring I guidance which for the while sum impact guidance us, reflect a the is nonrecurring perspective,

remains And for guidance there's if and always for guided Medical unchanged, back-half along we been year you think through that focused with for very performance. all how how are we the operational core here trajectory a our the pleased with the have along, year,

Aaron Alt

I you the add. first cadence still we couple If half that first key could about points. half, anticipate of a versus the When Yes. second step-up why half, the in think half same second just and there's

both inflation brand price sight. First This good to Cardinal part inflation side of then line the There's volume significant elements. combined of cases, where all, side. course, there's, it's with one a on cost get mitigation. Health a moment. of In and of very growth, in there's mitigation, which I'll is a we X But that, have

as quite cost volumes the bit of and while expected. on through a we given -- a it's anticipated, Sea, is our international really as Red expected, so the little while talked is is have it balance freight. have noise as sheet especially -- largely with side, already and now, cost that rolling we've our that On been for And been as

line very to second a and have we cost down to in going So step sight of year. that confidence continue high is the of the the half

year as beginning that of do update at some rolling -- before, always on a And little we the the of We roll-through contract side, the calendar the the pricing have then those we more price adjustments. talked then pricing there's of on. bit

sight we us, of to side behind line being January pricing good well. have as So the really

half of So this us, it through time to the there's actions but seeing at actually roll year. to get the come the are to now relates confidence to that statement. through in inflation stage we're of even second stage, quarters now next couple as But now more largely and behind would confidence had get it start income some always to this we mitigation. for needed have We've the our

market what the second to the was the that And for continues volume. is utilization Part brand quite time the component is to Now exciting market and about be at that the inflection going that seeing actually the that's market good. driven market what be volume, first of further extent is in growing. really of participating growth other Health Cardinal quarter the and

be the That see we itself. continue the greater here, of a that to that market an So as impact and much the get we variables bad, that over to always like that course But growth track. monitor that confidence or us year. good will are there step-up and gives we'll will some continue

from points key to get second the the the are half. those would first half that So us

Jason Hollar

the observation half point but we Eric, additional it's will in near segment offer part of one Medical at fiscal business the GMPD first follow that the has on new quarter. not in the core probably can We're reporting in levels structure worth of this the 'XX. breakeven That QX, perspective. operated offering

key sign offer where 'XX positive they perspective that perspective. fiscal I where going a progress. with that from guidance contrast as and were overall of And an view We in a we're from you

Operator

question be next Erin going Morgan Our to from of Wright coming is Stanley.

Erin Wilson Wright

Great.

have pricing drug easing others you? too? as you front, that continue for Are key the do And On still deflationary dynamics you to noted, that seeing material generics that a mention driver. is how

for here the for What for sustainable some we also about how are drivers is of or think cadence the that at balance COVID with as as key segment, quarterly it? And looking of how Pharma well U.S. the the that And there? the particularly are dynamics, that too? the thinking about you're year -- you

Jason Hollar

question. the Appreciate

the quarter volume out of dynamics commenting generic the matched of with on had for strong -- consistent reason the business one we during Pharma our -- for things that that was the continued volume reasons strong space, market was One the a success in the within called business.

of continue we as indeed component that's Pharma business, indeed, And the of X the sides see for to we balance. about being talk equation what and that in core carry our generic forward. often our is a within We guidance

do I to want guidance we X% last X%. to Pharma Thank a quarter, that you. from took perspective to reminder, last profit actually up One remind our

Operator

move now calling Bank to America. Allen We'll from of Lutz

Allen Lutz

what in selling SG&A investments for unpack the then the you Can Can business and costs. expenses remainder we should SG&A quarter? in of You And growth the incremental year? higher about exactly flagged growth you those about of how think talk the are?

Aaron Alt

were with SG&A pleased to profit achieve the SG&A. some offer leverage faster Happy than in to perspective. actually quarter did gross We operating grow. growing

volume course, also grew. Of

cost in the was volumes. increase our cost to of of tied component variable higher serving primary the so And

strategic It business. in the Jason remarks, though we highlighted are also against our investing case that, is his has as

And other our growth the SG&A plans. places making growth some Navista investments we're purposeful, of elements like and the was to relative of in

as focused cost opportunities fact whole, end as that with very look we on and structure. optimize our a are we I for in continues SG&A further prior the team to the will have to years

Operator

Kevin of UBS. Caliendo move now to We'll

Kevin Caliendo

you progress Can two. have renewal have update an give there? timing? us on contract you of the United I updates the Any

quantify just that that saw is follow maybe trying in and things in interest in some the how to to SG&A from on given when upside how made you the incremental up investments SG&A of the much line. I'm -- just And below quarter? question. was to there you the Was trying plan versus original purposeful sort I'm upside saw other much of

Jason Hollar

through are lot exceed And on innovation and keep of years And Yes. the customer both customer, year. of to doing There's highlighted goes as we'd working I'll a before, touch course. this fiscal job of attempt Optum we're one their worked that we them, they of the very hard updates one Sure. great health longstanding we've a care here. with that and ours, points contract to that with expectations, I a brings that. think to over to great love no

of the do I go But number of order in not disclosed couple and to around the past, points lot going K, have magnitude think in given the a comes we get questions I've it the just just and this, received of of a details. Now I'm I magnitude. of every questions is order into of through

not of $XX I of and mail to a nature. have with of of the a of base the things that sure attempting impacts is order they just to today. and we billion a revenue business lot It model that have over of clear And the customer So is I'm them with majority were it's things last -- couple them real try about PD out see lot a we a year, of people through our business, ours. that scope is And volume.

and are the what typical you large a order. PD of mail markers customer, majority here So have

of margin of all are those business. markers type lower-than-average So

are have business the large to of of we have industry. breadth so those various other overweight support a And But They do very of we how with of tend and them, a little bit into the be of for them. course, lot parts us, too.

short that support to only we Short term that. is getting would going making to in I thing term it's long not SG&A, the volume term. the we both can strong look customers place. necessities and growth our at enterprise across be I relates on and and the sure is capabilities like volume -- in it the say do is, As What the needed, no, we

balance had investments, with network as through of also we we we've Navista have today. it's that to before even longer-term whether looking then are Day others number We a went that the and investments. But out called Investor updates have during

Within the our that or new over we're have X. X next the facilities of at-Home online course business, year we bringing

Within I talked the about today. facilities Distribution, X Medical

We have center. new on the logistics Pharma health side the consumer

some I So e-commerce IT made around -- within and capabilities also some some Pharma, of the and the comments InteLogix capability. of

our are investing well where turn efficiently, are just we So off. sense very makes it investments you that strategy. these and aligned to can not And on

key and the We we appropriate, where that invest away we're have as what to objective. to as something it going to is want but waste invest growth take there's only do So well. it's

Aaron Alt

cough, worth working well very as in pointing unusual called those on season. was customers the the probably case Pharma overall profitability particularly that demand, strength it's with it to we models, that business, cold QX respect out the in out as a the last large their flu year, and For strong from

keep looking you're as mind. in your at comparisons, that So

Operator

Bank. Mr. [Operator Deutsche George Instructions] to We'll move Hill of now

George Hill

but if Yes. could softness of kind the or it versus growth which is targets, of term Jason long-term coming relative planned or you termed of to But kind near the of subsegments kind think kind seeing year the other the and if gap guidance. segments segment, the I guys kind the Aaron, long-term and as missed of forgive address of you're the balance wonder kind closes this restatement I it already. which for like in if longer-term looks talked and this or the through to of me relates which expectations the this disaggregate out accelerates with in in -- what the you year you coming in, of

Jason Hollar

Health their other long will CAGR through report forward have term, on be we to indeed, be part at-Home and and our as us going growth other what the to business traditionally of our over Those business. And businesses we collective businesses called expect our that business, The our segments. growth Nuclear for OptiFreight Precision X% are XX%. the

business weeks -- 'XX, in for a X% is which ago that adjustments to the referencing, The we the QX the of only X% disconnect from expectations QX. of we by talked you're as our referenced the impact nonrecurring at-Home couple the fiscal on is driven about

disclosed its I businesses off we and profit the Each contribute and believe. 'XX of as of get fiscal its pieces. as for think individual pretty revenue profit growth doubling carry for the baseline you can well, by 'XX fiscal forward. earlier about we've revenue close, Nuclear other to talked In I the us indeed, of we our the disclosures, And

get to -- And can component so to able you're you that through of other that.

Operator

of Fargo. take Wells will We Stephen now Baxter

Stephen Baxter

of whether you million. was on performance ones. you could the you the year. or commercial quarter contribution last think I kind quarter, the this channel, and us the for was quick balance vaccine hoping update what On of that couple COVID indicated around $XX in A anything of I implied factor was

And then and does nonrecurring to just million? more Can us on What just tell the terms the adjustments. medical represent business the try activity? you actually one your in on that accounting time $XX underlying of

Jason Hollar

Yes.

So and such. for and the of give trends and you through the just kind quarters, of the walk the vaccines, that benefits couple of will a flavor last

FDA September, running, the when approval quarter, to last fairly and of -- hit we've beginning the had ground highlighted with significant staged we we volume we at in quarter. first talked QX we in were as the that So

expect that to peak we would anticipated, that we it at indicated as point QX. within But

over in And higher QX. volume, because key within month the the contribution October wind December. think course is And to that we saw seeing expectations. And is and quite and November of then so expected QX largest compared of I message that volume QX, as that in expect was consistent QX versus the we insignificant to saw season. with expected, I as then QX. Overall, that some would in higher but what our down be saw we Still level this it we

in Pharma that strength And in growth the of offset the those we with COVID it second primarily drivers component. then Aaron a serve his and was quarter. the program. had have to brand, driving was As these highlighted drivers. It X to generics comments multiple investments already, partial segment we for the Within other cost

the about contribution overall good health feel it. within and of of business we COVID overall, the So the

if... know I Aaron, don't

Aaron Alt

nonrecurring a -- majority -- decision other to will we as take dig some which to well hitting comment the now, we which the Medical reports the respect is when updated GMPD nonrecurring in part the business. as which QX WaveMark to we've across around And or previewed of hit a then and component now business, at-Home adjustments, JPMorgan at our which report as of our comment business, part which as deep of we the is the is the continued have portfolio, commentary new our adjustments, With the taken Yes. business. this back Conference

million to driven we the quantification impact as So if the approximately by moved you from own your of and to adjustments, year to million through approximately comments. $XXX nonrecurring can read reach the conclusions our the guidance update where relative for you the given distribution the $XXX those

Operator

Cowen. TD next question of Rhyee Our is Charles from coming

Charles Rhyee

saying you to say wanted I December was had in peak you Just up quarter. the in contribution, expected the kind impact. overall? question still quarter higher there that first vaccine that though, months to you're given on vaccine on it than you follow the understand Allen's X that Would of the from

kind on to wanted sense relative the higher that investments? to to get that relative a costs you fund use at incurred, did Just you of look we that had if And those what expected, contribution. you

Jason Hollar

Yes.

did partial And November, off it as would the than why December have and be got peak that's well. contributions you to As in little. I October is month. had it higher to But We September, we the was of very the really it since end a we only time highlighted, in by QX quarter, QX. expect tailed clearly the

my think way typical investments, nothing that general, back just around And vaccines of for prior there's just funding I'll answer I so there. again, the you worth in the It's to seeing question. question the go to asked

with associated the costs rollout. were There vaccine

you X ramp lot As worth for imagine, that's of months' can of support. up really to volume a

and were play Our with in team before COVID. role that did the discretion manufacturers a to customers we not fantastic our when job the for working involved vaccine

currency laid with with we've So was feel our all to good the that out costs not the But to strategically I incur forecast very role, and fund period very such and necessarily ramp-down as in and are associated and programs ramp-up used about we time. have other short consistent did of the plans here. programs. and important a actions Those the

both So to there's changes how it short-term no relates these we're as well requirements approaching as long-term as investments.

Aaron Alt

a Probably worth COVID perspective, high thereafter. were is in quickly off from the for points point -- tailing for emphasizing October and that September us that Jason's distribution

Operator

from were Mr. Grosslight question last our coming today Daniel of And Citi.

Daniel Grosslight

question to wanted onetime item, Medical thing. this quickly was kind million and that That one confirm I quarter. wholly $XX profitability go of just concentrated to back the

Medical So million. would the without that, have profitability around $XX been

down rates commentary Red in the And around then shipping benefiting volatility your on and coming the you Sea. and

shipping rates, West to Coast they If spiked have in January. China you look materially the at

So I of I'm -- a couple there. guess, wondering how things

how capitalized, impact then those how quarters cadence given and through post those your being capitalize in expense One, medical your the that plan then X roll may kind fiscal it improvement contracts? costs over of might that And 'XX? you of X to costs that

Aaron Alt

question. first the that half of with Start

about of adjusted business. the on just the would math I'll yearly nonrecurring are that in given And adjustments the we've of reasonable. correctly. reflect and we the performance guidance QX, impact our go be operational the things to pleased with emphasize, were back You your conclusion thinking really

Jason Hollar

Yes.

the On you are second spiked. rates correct have that component, shipping

in is, I the materially yes, I less was how we and word it they think used past. materially but the where would characterize were than substantially accurate, that's

determining permanent more are a continue order that on will that Yes, permanent component not. we level. the a do something is we'll the vastly -- that, talking that is It in how or smaller. about magnitude and believe evaluating, of flexibility be lever also be we're contracts, these not and our that will we So have to be whether

say as that volatility. has our manage space type well, of as substantially also and invested types underlying to improved -- would the capability these within in I our through this we've maturity, of that processes procedures

good generally where being we feel we a material overall, So to stand closely. watch as continue very item. this see and don't it we'll about But

Operator

Hollar Mr. back gentlemen, I'd that session. Jason today's for to Q&A the additional and over Ladies call closing any remarks. or turn like will conclude to

Jason Hollar

the we've but momentum We're we about elements joining that this lot have about the Yes. clearly both business, morning. us longer-term in Thanks, talked everyone, operational shorter-term our a today, also the strategy. about excited for that

about just Networks of both term With and still the in and the we're short and acting, that announcement of Specialty week, front it this long excited opportunities are term, looking really us. highlights

again thanks today, and have us for a day. So joining great

Operator

today's that and Thank gentlemen, your will conference. Ladies conclude attendance. for

You may now disconnect. Good day, and goodbye.

Cardinal Health (CAH) 1 Feb 242024 Q2 Earnings call transcript