Cardinal Health (CAH) 4 May 232023 Q3 Earnings call transcript

Hello and welcome to the Third Quarter Fiscal Year 2023 Cardinal Health Incorporated Earnings Conference Call. My name is George. I'll be your coordinator for today's event. Please note this conference is being recorded, and for the duration of the call, your lines will be in a listen-only mode.

However, you will have the opportunity to ask questions at the end of the presentation. Instructions] [Operator

Please now Mr. the of Kevin to today's would your over Investor to begin today. sir. host Moran, conference. like I call hand to Relations, And ahead, go Vice President

morning. results, with XXXX we quarter year our along discuss Health's updates Cardinal Good third Today fiscal full to outlook. will

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

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

statements. call The risks from addressed uncertainties results we statements will subject the that or actual forward-looking are making During the matters be cause implied. those projected materially in to and to the differ could

these our beginning non-GAAP Please out note risks slide SEC to today, as the and that at during refer the of forward-looking comments a for the presentation specifically on discussion will be statement are called GAAP. of and Please our our basis uncertainties. filings description they unless a

reconciliations all found to GAAP can our schedules attached be the in for release. to non-GAAP press relevant periods

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

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

another Overall, by our good quarter and to growth segment. plans momentum Thanks, Kevin, demonstrating in our we're and QX pleased against morning, continued everyone. progress led deliver with results the Pharma

our raising flow narrowing our in cash the confidence and quarter 'XX rest adjusted increased strong year, a and in the we performance With are the overall EPS guidance. of free fiscal and

and pharmaceutical given supply resilient diverse business strong positioned we're in growing where the and critical Our is and our base. customer a Pharma business well chain role

and classes continued the also in consistent stability including our dynamics strength categories spanning pharmaceutical the We've demand seen in generics and market Specialty core product the business, across operations is we're program. seen fundamentals demand team of for in on underlying plans of We've both broad-based in ongoing capturing focused our growth, increasing distribution Specialty, Services. and Pharma in this Products build executing to upon our where trade.

business pleased In for be profit with confident short, able to mitigation and million we're at the initiatives. segment fiscal 'XX, the by target our in inflation we our outlook driven fiscal plan and raise 'XX. by $XXX Medical, of least remain strength growth and to of improvement medical of our resiliency Pharma

While consecutive making focused we remain of to segment on drive business's we potential. are the more this taking actions progress performance financial with second quarter predictable line profit, with underlying in positive

now, for stagnant, Cardinal higher updated we've several remain fiscal our For demand generally 'XX in which we've our outlook. reflected seen margin quarters brand products Health

progress the growth of the We key We're urgency to relentless with on Across number plan, one continue the more to medical achieve on drive resiliency key on of on segment, forward. building inflation profitability. normalized maximizing a focused to level of our are we operating executing and returning enterprise, value. priorities mitigation, collectively businesses the maintaining the a focus shareholder the with our Pharmaceutical strategic business three improvement and to

Aaron first, continued to on and I'll me provide progress it our some to over results shortly, review updates turn but our outlook. updated further let

on join now days I from nearly with I outside could under role true my on my What since am inside. see you the the proven to CFO call you, has Jason. Thank first pleased XX be to this belt. assuming morning the

strategy, enterprise's plenty results with strong creation and I'll for the balance a team leadership a a sheet of quarter. engaged promote Cardinal today is Health a defined our begin operational strong value opportunities to strong the and third for stakeholders. board, business with

cost part SG&A the increased by which chain billion, inflationary and offset wide $X.X Pharma both were supply Consolidated savings Total driven costs, revenue increased increased X% billion segment. reflecting enterprise billion, $X.X initiatives. XX% to margin to in gross X% by primarily our $XX.X comprehensive to

us earnings higher $XXX with million Medical profit Pharma XX% remaining driven segment profit of for year, of growth achieve by opportunities quarters. significant in the Operating future quarter third to than last were segment increases

to decreased line $XX driven million, cash the and from and XX% equivalents. interest primarily below income Moving increased by interest other

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

third strategy our per third than quarter continued million, of rate items earnings to finished year effective $X.XX due share in year. X% net of the result progress repurchase average at growth a the XX% some than share actions. quarter. of lower ago Our was the The prior Diluted positive against were in the quarter adjusted versus had XX.X%, tax reflecting XXX weighted expected, lower slightly we discrete shares

Now with robust $X.X adjusted billion. quarter quarter. adjusted of generated hand. balance $X free turning on business cash with liquidity of billion the the flow to flow third strong Year-to-date the $X.X The in sheet. billion cash free We is cash ended

outstanding period Given no balances, facilities. with our cash on ended borrowings we the our credit

paid down with $XXX notes with XXXX And strong hand maturing the of during in of rating, further cash support million we investment our consistent our quarter, plans. March grade on

We of XXXX. our revolver billion extended of also liquidity February until $X backup

of I in Earlier shareholders. remarks, return capital referenced to my

made we dividend $XXX repurchase $XXX $X.X payment program through million million we've shareholders our and Year-to-date, quarter, payments. nearly to returned share of the billion million long standing returned accelerated During $XXX in through repurchase share dividend. a and

our slide segment cover five. will with performance on beginning Pharma I Now

customers. existing brand billion, Third quarter largest sales to revenue by demand, strong, our pharmaceutical driven from growth from and XX% We saw pharmaceutical based customers. specialty particularly $XX increased broad

generic $XXX and specialty provided tailwind Pharma a products. pleased see by including were segment in from and higher both was XX% GLPX profit and driven the results, to contribution to quarter. that revenue this progress increased mix, medications brand also million. volume We positive a program by

consistent specialty Oak contribution generics from and from Sourcing. to benefit strong we With and to higher Within modest increases. market our program, regards a branded reflects performance manufacturer the Red dynamics price see continue products,

third in our As the a is margin quarter. fiscal while agreements, highly portion overall fixed our XX% derived over is reminder, fee-for-service branded from of contingent concentrated

strong services. with manufacturer upstream of key distribution the growth double-digit seen to along across Moving Specialty. our We've specialty area growth

which continued business, of ahead plan, launches Theranostics. including growth, is benefiting nuclear recent tracking from its double-digit of Novel Our

incremental through a cost impacts industry third continue not the Within And supply basis. effectively were material net to seen year-over-year the on inflationary our pharmaceutical these quarter, in chain, pressures manage we wide.

Finally, costs in now lapped related more to costs opioid we enhancements. and significant quarter, ERP related the legal higher technology completed the

Now turning to Medical on six. slide

Third quarter revenue billion, and by lower decreased products primarily expected driven distribution to price X% declines. volume to due $X.X and sales, PPE

products versus volumes prior to profit million, distribution primarily to and Medical unfavorable year due sales and lower mix. segment decreased XX% $XX

Additionally, PPE margins. these both including improvements adjustments, in reflect modest non-recurring year-over-year unfavorable results net some actions and simplification

margins normalized Similar observed to third we QX, PPE quarter. in the

we've volume and products distribution brand. Cardinal including overall in softness environment, demand the some discussed our business, Regarding previously Health

during quarter, quarter, products our mitigation driven efforts. flat sequentially. our continued were the We by Cardinal for In volumes inflation over Health XX% achieved of brand the roughly

benefits saw our chain. cost supply also We savings ongoing initiatives from and as manufacturing such our in

updated 'XX slide on our fiscal beginning for eight. outlook Now

we working is seeing in team key parts and hard portfolio. Our are results our of positive

we we As of of to our move into the $X.XX from $X.XX. and EPS $X.XX to are quarter to range narrowing guidance $X.XX year, final non-GAAP a the raising new range

a growth. midpoint, for outlook this for and year, reflects segment XX% year-over-year the an This for the outlook primarily well cent Medical. update the more $X.XX Pharmaceutical as increase as improved represents At short-term modest a

guidance today segment on Medical improvement are the for or that commentary long-term our are financial the Day the save plan June in reaffirming Xth, Investor upcoming guidance we on for long-term updates segment. will medical we sharing While we

adjusted a wide million updating ETR are slide seen free for We and of on non-GAAP to cash year. of also year-to-date in $X interest million, year some we assumptions Based generation other performance, as $XXX key and to $XX eight. enterprise expect flow XX% $X.X on the XX% of billion range for billion approximately to now the the

million, million our continued of year-to-date to in expectation repurchase We total activity $X.X share the $X XXX repurchases billion fiscal expect shares diluted reflecting in to average weighted of outstanding in billion range XXX 'XX. and

of expenditures continued capital of $XXX approximately organic to expect now timing investment we our the million, reflecting growth. drive Finally,

Turning and range to strong segment year between we've and pharmaceutical to that on date, the Pharma, XX.X% we growth to growth segments a performance nine. XX% in expect growth. of slide demand XX% now profit revenue seen full to XX% the In with

business 'XX. to We year are growth normalized non-recurring drive business, in at year-over-year more Pharma the profit the resiliency and of includes plans 'XX fiscal tailwinds. pleased looking with note the and the our it's important strength when fiscal of our double-digit Yet two performance extremely to ongoing outlook

we assume noted, experienced in increases from a as modest unlikely is future branded years. First, we in manufacturer price that benefit year repeat 'XX to fiscal

'XX. assumed supply costs chain to Additionally, fiscal 'XX for offsetting fiscal costs, year-over-year usual and than comparisons, our relative legal technology costs year drivers, inflationary lower several total guidance higher opioid impacts year in non-recurring related between lower compared prior to the enhancements year previous

a produce to we expect year comparison in-year However, 'XX. unique these to year-over-year year to fiscal for now 'XX items tailwind the fiscal modest

year Pharma into our provide our including early during Investor for for will Day, We fiscal some 'XX. insights targets long-term guidance

revenue Medical, we profit and now of key a segment This X% to reflects changes. decline approximately updated year. for XX% Turning outlook the of a expect approximately three decline

actual I've already as quarter discussed. third First, results,

around the consistent remainder namely volumes, of for will Health Cardinal assumptions demand updated patterns brand we Second, relatively that see fiscal the year.

to which Third, previously delayed international costs, realization incurred freight. primarily lower we related of have

now into updated our fourth expect in P&L shift the the quarter expectations, previously improvements on we some 'XX. volume Based of fiscal anticipated to

sheet. capitalized on reminder, in which our incurred on international seen significant into freight side, improvement a are we've the As balance costs, cost inventory

as then we are through our P&L costs in delay sell the results products. on a These recognized

We of into sight continue to strong this eventual have line benefit.

However, will quarter more our previously modest be due than impact results timing, the to fourth to assumed.

gross to offsetting Importantly, impact the year, XX% expect of the exit we at to from inflation. continue least

improvement three approximate our embedded Looking $XX reflects the million guidance the primarily in quarter, profit of combination sequential the ahead to Medical fourth segment items. in

from normalization QX. adjustments the the First, from non-recurring

previously Second, in the from international mitigation on benefit costs. the initiatives, including continued our freight progress improvement incurred

Third, extent, fourth normal improvements the quarter. in lesser seasonality and to a

summary, an front overall, with quarter in excellent of still raise guidance us. in So opportunities financial to our financial

over turn now I'll that, With it to back Jason.

Aaron. Thanks,

priorities key a our on few fiscal updates three 'XX. strategic for Now

track incremental First, pleased with progress on initiatives. improvement plan medical executing our I'm We on continued this and constraints, our and actions global remain critical inflation for chain with mitigation supply our front.

efficiencies. our XX% brand additional and Cardinal costs, supplier labor impact temporary higher our to now sourcing fee business We've over includes increases on price as transportation, gross our through opportunities nearly focus fuel of increases of This offset offset and mitigated Health across our distribution initiatives. widespread other the categories, mitigation such all to product

pricing collective flexibility. contracts are they our this long-term these adjusting work current language we allows we to collaboratively time as industry headwind our our actions. path of are to taking partners fully with product by approach, market successfully conditions make to on for through greater that future a renew, re-contracting 'XX that exit continue efforts, transparent fiscal adjustments We By reflective the mitigating also including and advancing

improvement with fourth remain international we've seen peak in results. along generally now costs stabilization While to costs levels in are improved significantly believe most levels, pre-pandemic cost across past quarter be reflected freight begin relative overall as elevated will freight. We our the a international areas, to we

as We to earlier. continued accelerating remain simplification Health drive growth our our actions, our brand efforts, cost on our committed and focused optimization. mitigation highlighted growing growth optimizing businesses portfolio, and mitigation are we Cardinal To and outside driving

As other stagnant Cardinal new implement for over availability, Aaron 'XX. demand initiatives three the products and first drive in demand improve We generally our remained product brand ongoing has innovation increase 'XX improvements. coinciding fiscal with will product indicated, and Health 'XX our believe of fiscal commercial market to quarters

cleared enteral hospital is early and to in As the patients, generating OMNI is Enteral platform has fiscal at recently Kangaroo feedback new the accurately only home, feeding we infancy an positive innovation, product formula to the needs excitement pump OMNI ESPEN unveiled the of OMNI both Feeding from deliver of enteral thick end and designed for launch from very the life. Congress. to clinicians 'XX. meet to received example

Solutions, driving OptiFreight key including product Outside areas and international products and Logistics of at-Home the Medical segment. and distribution. WaveMark distribution, US in and growth we're of Services, other

sustained industry For match business. our at-Home example, growth we the and expanding are home to in in we of care footprint Solutions, are our seeing the health

equipped to strategy growth service distribution step capabilities now improve operational. This center will next Ohio be systems location safety, Central the operational and automation with efficiencies. in new supporting Our new and and our is is

A that a growth new In by throughput in will and audited diversifying capacity. our focused increase are direct-to-patient storage offerings. as primarily management fulfillment. An driving accelerating system facilities ideal experience Logistics, and on we and continually at-Home OptiFreight Solutions leader tech-enabled customer technology are our logistics best-in-class retrieval product for

to action take cycle distribution supply to business to continue Medical we optimizing through And our our network simplification our chain global across management. and active drive and product by approach life

resiliency of growth Pharma, we're the and upon the Next, in business. building the

a broad mail respective trade. with retail health We pharmacy, leaders many classes order, and base, of services serve including and are the grocery customer care their providing to in privileged systems partner among in essential health communities,

We resilient are chain. of strengthening developing generics to keep bringing offerings solutions Sourcing. by with continually by on across support from including focus in continue anchored to Red leading operations supply our and new we our comprehensive we and demand program Oak To and by seeing significant the strong customers our market, our our customers, technologies scale investing customer pace the core focused capabilities

Our and goal innovative our our customers and while providing We're the the challenges also address is actions to value unique distribution specialty chain. through that our supply area continue tools across prioritizing further of unlocking efficiencies investments. of

continued our seen customers effectiveness, double-digit move enabling across organizational alternative manufacturer us and health new specialty systems prioritize to Downstream, including of the distribution, growth partners. better driving and Our and we've care. needs and in design quicker efficiencies is further

physician And engagement and continues GPO our for acquisition of rheumatologists their office double-digit channel, again the capabilities. saw services manufacturers. manufacturer for third differentiated quarter. investment drive expanded with our a MSO growth biopharma in We Bendcare in the through in model the to Upstream

area to Center XPL in double-digit win demand seeing in the for fourth product XX Indianapolis. therapy. including QX, we we're nuclear Through and specialty continues gene Theranostics business, And quarter. leading cell supported business, with growing in in our of Our launches new anticipated a Advancement pipeline for our launches the

prostate-specific Theranostics We've as seen recent PET such strong from radiopharmaceutical volumes launches, imaging. supporting

we business, occurring continue the be area. the innovation this that's with in of the about excited space, success promising continued to very the With combined

shareholder brief lastly relentless a creation. value update And on regarding focus our

plans have strong share This and to $X responsible capital return shareholders. We including to deployment, fiscal billion dividends placed on a return through our over capital repurchases. in shareholders evident of emphasis to the through is 'XX

value continue to for will additional shareholder opportunities We pursue creation.

in focus Our has realigning simplicity. made progress significant and drive our management to team operations

framework we is the committee. Board company's review strategy, work portfolio, continue support business with Our allocation ongoing of work our our through a of capital the to and comprehensive review operations and and

we Elliot. that XX, year Given for extended we announced today, of have additional has committee the the through of the the importance the of Board July work this term XXXX, also cooperation term with the and extended an agreement

articulate Health success We to for on upcoming we are York forward topics, and maximize and and provide well and believe to why positioned plans Xth City June our Day to and other portfolio in looking very review. our long-term much Cardinal New to our Investor on opportunity is further plan detail shareholder long-term outlook, strategies our value. allocation growth updates Among we the capital framework business the ongoing

health Before I serving patients. their our our are employees our role strategic key in conclude, Health I and advancing want fulfilling who to Cardinal care, and essential priorities customers thank

continued While excited there's our encouraged team's still to and about do, am work future by I our opportunities. progress

we that, your With will questions. take

Cherny [Operator from Thank from you Michael go Instructions] ahead. coming coming question very of sir. much, is Bank America. Please first Today's

is open. Your line

build roll detail behind into on the the if I dynamics does Is question. off that the $XXX quantitative taking what that's the Good go bridge versus there just then led multiyear dynamics to to and way given can build morning as you of run can the that, within qualitative that the about where more understanding, time think Maybe get what just components side towards rating you you're the in the been longer-term an thanks of million especially and the as 'XX. for Medical any absorbed how targets? nonrecurring and between part segment? dig in about And piece over the

Sure. Yes. Thanks, Michael.

the you giving of of there. enough you're And just but me fiscal the in pieces the back implies and for components down across then can be let this, explicit 'XX a that numbers, asking think into these I impact what given inflation 'XX into way break Let's we've of around you and you really for beyond. as the inflation quarters the

think that your questions. I of And get most at will

QX, And included within million reported inflation, $XXX the we year, had net actions. of the of we QX, of our in half first then net in the specifically impact the gross segment inflation earnings. around about Medical So QX, QX, namely peak somewhere saw mitigation

last the we of had the have improvements quarter. Now over course

continue ongoing expected. what So and at to million those that the saw as the QX, levels quarter. we was mitigation incurred P&L then pricing And costs in related $XX both to $XX expected as lower benefit be of actions to drove dynamics did for the a million

volumes be The are difference now lower. in QX, both the our as to that quarter QX as well expected is

in see spending incurred is a costs little expected. as But bit we are the less So anticipated. what we're those we than coming P&L what on what in had

$XX that's million impact. QX improvement a $XX the in again, to net to QX, So million

And more a originally freight permit into the through to to benefit continue especially improve and than to the new to our continue anticipated, the fourth again, slower ongoing international And more structure. we then P&L, and pricing another million. million over expect roll quarter, that's still that have then expect as we roll $XX in we $XX at we pace but contracts

to that about So let's think to million as $XX million call you QX to about or million actions. mitigation of benefit the journey, $XX just that's it QX $XX related

had actions So delaying more expectations. volume are fiscal that it our some just consistent of effectively entirely 'XX the what see benefit spilling into component over anticipated. we is until again, than with It's what of we the

So biggest run $XX an our of the quarter. that's type the of bridge part million-ish in fourth the rate implies because guidance

you $XX that there. million gets of getting so kind that, And to that QX of QX,

were your let we don't and some QX, continue XXXX XXXX. will and anticipate Now puts that nonrecurring on QX, takes alone into there point, to in some items,

about that think terms to that's So much not of kind out bridge. and and overall so in really something of in

so in of started $XX the the million said, beginning you inflation. as And this last Now at okay, of I run to fourth about with $XXX part the that is, million gets year, impacted quarter. story of QX of because the the then rate we

$XX in includes million the million exit profit $XX That we implies still you $XX The quarter related the the down as inflation. takes to that year million impact each $XX the in of of to for QX. results, to QX in that our million net million $XX quarter

that further That's in cost in is talking as fully to. as down pricing this different to low we renewals continue to continue remain expect to us we anticipate ongoing currently areas, I expect we're the than mitigate We through is the expectations. committed here will Nothing the our of come it significant will stay terms commodity international our opportunity but at well other do what not reductions do of impacts P&L. that levels freight at. about that

Next question please.

sir. you, Thank

Next of ahead. question from Lisa is Please Gill go coming JPMorgan.

just Thanks very core Or any portfolio around that talk your about detail. this portfolio But and this you at Is your Day much you're around this insights about there's your review? far would talk be about something review. would and Analyst some you you is that? all And know nuclear the when business of Can your thus how maybe thanks you see I you Jason, going year think around think had overall that that, about the business. that forward? component the for nuclear contribution a helpful? going to been speculation have

Lisa. expect, would you As

over segment revenue fantastic It RevRec the did $X we on First because is of billion. at the to business. all, our taking a comment I'm little increase that's the rumors break or going above out speculation. any a is footnote, some bit changes revenue a What our of XX%. nuclear growth say I'll well that's good of here trending In morning. not

been growth revenue But the the of type of normalized low the growth. level revenue double-digit kind of has in

than the growing never it's margin. We've indicated margin, a out have we higher average So it's but been nicely. broken

It's So great area. going business a a say strong And about to secular that's growing and we're it's business. all that a that.

please. question Next

ahead, much, go very go to you sir. sir. Thank We'll calling Kevin Caliendo now UBS. from Please

little around can the the quarters of on Thanks. demand things appreciate has want -- control for why a question. that you the products. understand couple confusing I the Thanks market your my for last But color to been Medical stagnant all I it's to side. taking

the increased -- at are it geographic stagnant? who kind like happening demand? it of not Just better, Is portfolio there clearly you're or level? from least product is a public changing at in Like the what Given we kept that hospitals and a purchasing seeing actually hear that's the issue? the portfolio doing customer hospital issue? what's your Is marketplace a issue is private

few There's Yes. a additional on. color I components some provide can

of highlighted the First we've all, some the categories. of

situation destocking the still. highlighted we've PPE, So

So we're seeing new or there. anything not different

other of significant, volume some actually and categories which lab little a Nothing testing, certainly sequentially. have couple then pretty over of COVID with but originally and is more bit it's our headwind that's We last seeing some had like too the good business, with flu normalized. we getting a years,

like that. So we have some headwinds

non-PPE that other were is highlight that the of that years And to just For customers from chain we our the saw what some a very important especially go significant at ago, Cardinal us, have time, Health needed. margin constraints. we perspective, to to not products to are that year, type able of they get categories we brand last couple back a supply

on Fortunately, working very been that. we've hard

Our seen our not are customer health, since at product availability, pandemic. levels service we've the our before levels product

customers of shape result all some that So they that not period really, good as needed our really that. were opportunity the products we time. to but we're of we getting lost over in now, a And

to capacity, more keep that us. ever from product customers, more innovation, and fair not benefiting And buy we're service of exciting of that in our now. our why product the further improving. further from our the we're just and but We're that that's they that. is do I certain share as growth want increasing are also so levels that's focused not that right our getting much we investments on where that think to So very really utilization levels of making underlying investments

important It's And pillars the confidence is been have plan, four years in of part the improvement growth. of we're the more position we've and best medical one an in right? This that we'll of in, there. get

are the million-plus necessary anticipating actions about $XX hit of the improvements. And further for to is us target. It XX% we so

That's can why over and continue we on we're do that for to very if as believe market, see utilization deliver the other and we a the But this. focused to actions well as improve to overall prospects derisk to that, in positioned been and good now feel participate that long get see better are than especially into we fiscal in growth, our 'XX. we time I we've about will

Thanks so much.

Elizabeth question is from calling Evercore. go next Our Please from coming Anderson ahead.

the the guys. much question. business. what Medical and Thanks sort you so Hi, contribution on for or all tell thanks of the us was details of for hoping, just I thing could help the one One, I more the was wondering if on exclusively us -- and hit it quarter pushes it like on a Because two, about of And operating Pharma seems you the profit items on the can could from bit be onetime a in talk the the bit little conservative there. then fourth was Medical? pulls in quarter?

there. just that you. the have I down want So to all dynamics we Thank make sure

Okay.

second It's your on used, net a turn part first over impact that was in of highlight to it quantified we wanted we've one. for question, again, just that I'll the QX. the to negative words that make it I'll nothing your Aaron comment So a modest explicitly

simplification costs number I did there. in So component. first well. as actions. it's are the as We of some had further that for an takes some the one of example, of puts and that of types It's within items one highlight a quarter

to the them other that else guidance further into take taking nothing rest or profitability we of is key within us and for and action that to even just expect Aaron? the 'XX. our the than So but quarter, fiscal continue, ongoing really adjustments at some our not to looking highlight improve certainly long-term portfolio the our don't required there we're to constantly

the talk business. Pharma Good to morning. Happy about

let the to well Pharma brand me be the some in and and my the lean prepared the generics as really of accomplishing said business on in just strength part year and the the based to resiliency little in that team the repeat us performance as the and our a strength that which the guidance pleased what they our showed is bit the forward core business. business with of progress is of specialty QX for in in platform we I the what allowed double-digit Pharma First, are for raise on able portfolio growth remarks,

expect stable highlight with of is, the we underlying about the performance a good strong to to laid QX year want point. for out, to is QX, see to things operational you was and and strong fundamentals a your I which a a macro last which was news I point think we're of environment, note relative couple as question, continued think the higher it we us, important lapping that so quarter while

the also we It's that as called case from earlier items some our have remarks nonrecurring that well. benefit less in we'll out prepared

in performance overall, to strong looking QX. so our And QX, good forward in a But careful expectation setting.

to Please go Nephron. Eric ahead. Thanks sir. Percher move now We'll very of much,

I are Pharma changes list year you around side, AMP the front the profit Sunset renegotiate. to ask we're a understand next changes seeing more when fee-for-service I the how or up? and the renegotiations products potential to and can Cap would type insulin in this is Thank a to Staying to whether prices on wanted close characterize it? significant. confident absolute of you the you. And for maintain come that that change they you economics, gives But to something right you is

be activity-based to that appropriately very for value. our compensated Yes. continue In short, we'll confident

demonstrated sense that various something So any we've adjustments. make over I the different appropriate years, make the and other think had this makes is than types to the to of it's we've adjustments not

other start with. is The point I'd not for the highlight strong thing a margins starting product to like real this is

pool a profit from. not big draw So which from to there's value

we'll value the to for compensated continue to and do follow. provide be expect So we that we and monitor

that don't visibility in in cases had this One the some just most how at because sufficient where have it I the minute fall made. type topic some renegotiation, to last the about something we talked have restructuring would and past does of of is arrangements we concern require changes of lab thing when is are kind in on our the

and straightforward, be have more we short-term feel the and bit But really if to that outcome the negotiate time we appropriate needed be there's it. certainly for little the any a And can would is for one This impact, we distinction of is type separately. ever it. addressed like

Thanks very much, sir.

Next go question George ahead. coming of Deutsche Bank. from Hill is Please

relates be for morning, you that in quick on is as I Cardinal provide any evaluate relates is forward the there first, the way there guess Good guess customers guy not guys are question. the my and with thanks look flex losing timing impact whether buying bought know Health in the mitigation. is products as around to wallet to have I we guess, of or when I way of and it and commodity-based Medical, guess, And any you branded guys, to more that inflation guys any Jason, the share impacting it taking Medical color would the commodity historically kind to in as I follow-up that products. volumes? forward

when costs think we inflation through. it kind to Just pulling to trying we these relates when about lower as of like see really the

Yes.

that of think back relates a share to it and I when at volume had QX our you in year. And down step last look again important as We is clearly was we QX So volume, It's commodity a It there. customers. -- that's business came business a lot PPE was that out our us. there lost a for there. share of for in

We of product. that participate most source needed. as We

the is customer some non-Cardinal mentioned care I of What's So as volume, and most supply category take In important we weakness we needs. that not saw constraints. that's the chain before, there, also it's our a our priority.

little we then result as there's that then. have So had of very since that. of would a think had other as lower change providers share Again a I capacity been

the dramatically course levels even of improved health Our have product over fiscal our and 'XX. service

So seeing with consistent a been have everything not contracting that from expectations new I this has believe perspective year. that we do we're our here

don't anything with we is of I impacts years. So there. see But new case. happened are the last that couple over part That dealing some the

it benefit impact freight to with hit P&L inventory. our having Your reduced that's of commodity six we of two significantly right before worth P&L think, is is months that that's we're second quarters' nine ago. really one question, in I typically three or because reduced. terms our the And have I to why the is And the international timing the associated of the on now, favorably answered cusp big to

lower over is our 'XX been than volumes spilling it's anticipated. that have into Why

taking movements not out There's There's so I've not little other recognize movement. any better. some for There's on to that benefit. us significant have commodities. bit And it's clearly called improved. that a longer some

Overall, it's consistent our with expectations.

a expected that We a bit and just board, some freight. nonwovens, have and very on the types across not of we just staying international more are costs do of a bit where haven't improvement geopolitical outside of categories an seen We anything raw than of high input those impact there's like that just little costs. on

impact there's future. why the changing with if our to And that flexibility more in commodities other contract, not seeing is to we're high have they're stable, a but the overall at to enough we something really our continue structure pretty to so be adjustments. to may in change or price the It's the not may here. levels, message that admittedly fairly able have But have shock further right be overall,

change, will as change. our the by pricing And way, those

I this. not imagine some those those more objective But to offset expecting then We're down to make if with that will on would Our that. prices costs adjust those quickly, a at adjust is point, will consistent -- this. margin come

well, to right now our will be, we still per until absorbing of But right those again, $XX million 'XX. $XX do increasing need think prices why which two those quarter now, $XX million of that's fiscal to converge, keep and end to the we million, costs, are lines closer still

sir. much, very you Thank

Next of ahead, Baird. question coming sir. Please Eric go is from Coldwell

seen few over if some I'm last on generic the curious forward? during of thing. some have moving some know same generic your Most are but pricing you've might the deflation the improvement you're And our topic. positive months. what call, made pricing also in that outlook hit generally Thank data, suggested pricing did covered, the front that mine generics want on market comments you. but been consistent. I I We've to you. Thank be seeing dynamics

market Thanks, dynamics. and and Eric. mix favorable We called out consistent volume

the best-in-class And Oak mix. those the competitive As the And be volatility well much the our the total of very or part at margin of Sourcing levels service ongoing to deliver other, are continue to as it's continue positioning per continue fairly look think balanced. as of we before, as we've on sell. why to there good as not Red side cost. in buy important the one feel be will And highlighted times to we one think or other, will volume and and story and both it's well a expected but about there importance overall many we dynamics direction the the than unit sides, and the as

sir. much, very you Thank

to Next go from come Valiquette calling Barclays. Mr. going Steven Please ahead. question is from

morning. Great. Thanks. Good

curious have on little just the more was segment. might this I but You for overall just bit, guess a I touched Pharma

bunch all now including you double-digit a obviously top being growth, of brand about had strong. line quarters talked XX% brand consecutive inflation, specialty, quarter. this generic And of You've volume,

question my to. guess I So related was

[Operator gentlemen. Citi. to sorry go of Grosslight Daniel Very Instructions] about that We'll

know if with Well, might I I going the could, where think he's I question.

this up any to I there other I saw just about think he businesses we Pharma I our questions -- quarter. was I'm that was throughout segment. leading performance leading nuclear, to, was meant -- deviations broad-based like I've what from guessing were our really answered up mean he's asked nuclear -- that.

performance We the also volume generics. We is to I on was referenced performance saw referenced across strong strong very positive. certainly wanted this highlight We referenced board. the specialty. across our brand. Utilization strong board. We a delivering also

year about ramp-up always in to there's but last the The a prior QX they -- as one a of new the process year. that we was onboarded And QX, thing were talked customer to maybe was there. well, add this onboarded that --

this terms So quarter fully to we this some did of see year onboarded. relative customer last being now in benefit

benefit the a So last -- extent this not of what been robust to very of bit we last we in as has the the was saw well. quarter quarters. had a that piece then And there, of couple

Aaron case That certainly in the prior year, mentioned. GLP-Xs had was were that the the not

class across of of trade business class All a was it customers, the combination customer right. individual -- strength units. So trade as as well

to next So now question. ahead go can the you

sir. Thank you very much,

Sorry about that.

is question from Our Daniel next calling Grosslight Citi. from coming

the a for raise for EBIT I'm on Nice little you will if in kind a 'XX? thanks curious of this for the similar much I and the fiscal the how can obviously Thanks. more Pharma. question. Pharma taking raise but more us EBIT But break question, had out nonrecurring in in quarter. items detail Yeah, be recurring

think them they nonrecurring I the is into fiscal items Well, won't recur of 'XX. benefit being

similar think way. If is answer more QX, that I on your question is in the

saw situation. a segment, board. we the We across was fundamentals. Pharma had strength macro underlying the the strong stable It For

well, repeat carry We have branded performance quarter see are we well. the as good We -- some as us from going for operational manufacturer the and don't predict we to we don't did which as increases modest price being third benefit forward. this

And think a QX. us Pharma for the good quarter good so for for was I a story so far, year

and have long-term We we and -- our during expectations business the Day raised our indeed for talk 'XX guidance more year, Investor Xth. about June the fiscal for we'll our on

could nonrecurring have on one we Yes. think of inflation just it perfect was assumption be way true the modest. what next That depends to of year. think brand as that the Aaron been add, will was And only way it would relates that -- items, your you put I'll it

from anticipated. part ERP do some perspective growth see little that that running a opioid we fees The out legal did bit related of a call lower is costs we rate implementation to benefit was a than our that other year-over-year our and

are quicker that level have had just those of nonrecurring, what anticipated. a Now gotten bit It -- we than more normalized means to we a that's right?

do if not down provide out and be further that's to I further. related we'll be that improvements there in expect to periods updates significant It years will to the going case. even something those costs So out continue evaluate the

our It's reasons communicating now targets. anything when QX point we'll June not Day we're why implied differently together on longer-term also Xth. is right at those Investor for certainly that more revisit in rate our growth it's why come we But for normalized. And the

or But margins here normalizing brand direction, cost more new on items think basis from are normalized drivers whether all generally you on the customer, trending in some the we a now and out. strength, we're that these it's we expect right the why inflation the should are seeing of speaking, go-forward

for the Thanks color.

Thank much, you very sir.

question Please coming Cowen. ahead, Next is go Rhyee TD from calling Charles from sir.

Yeah. Thanks the question. to to up. follow wanted taking -- I for just wanted

would of service language Red get in sort earlier of follow-up, contracts sort you on are trying sort as into, well of done a some your sort I think pricing in providing. question instance of you is well. around, are ahead talking capture the that And mitigate you how and talked being the adjudicate just already into fee-for-service Eric's Oak was insulin is kind of would Thanks. of more these it of about you -- terms better then biosimilars generics. work with if were built that. Can a go maintain bit, in and side your Oak Red about thought a us and that of for continuing and in that insulin have of any generally? that you perform Curious to specific to kind with about -- to economics perhaps can of I changes automate lot had with that specifically, little because occurring, how to again, contracts that arranged maybe as And

into to mechanics Well, not contracts the level and go going a structure. product I'm of

with back go about that reiterate that feel our of process, and very confident Just any we experience, other change type any history our comes our product.

and the a those go changes Again, what's and we'll today's continue role that's existence the nothing to than for the And about a said getting it. play in to been the structure how the there. that distributor, have we from We as will we it. with evolve with is we present who to manufacturers and play need always our years to role. be when different adapt of last product XX -- enough this But be environment of in

what on phase of areas next we new such the pharmacy are next therapeutic or expanding It's well to going as is that positioned support believe several the plays to say which biosimilars, the would years strength as respect as sites to therapeutic over then products to And predominantly growth a we in we with area quite to that and with immunology going specialty from ophthalmology. of care. come a our greater it's -- presence, retailer well

we 'XX year of -- beyond. it so expectation into ahead and be a for end will tailwind And we our push fiscal as is us the

Next question please.

much, Thank you Thank sir. very you, sir.

Next A.J. Rice ahead, sir. Please question go Suisse. is from Credit of

here. on Jonathan for A.J. It's Thanks. Yong

you're flow back guess given going again. to constraints kind that especially the that cost kind on that of through, to tied side appreciate the on seeing a not Thanks. doing the some of line much actually volume through. the related seeing that But how is Just Medical you I to the up going good I flow need improvements freight improving how side, of 'XX. and to same framework the to that's you're cost of set comments for and volume improvement

we what one that impact to Well, 'XX. is it's quarters exactly so the but let not something time alone future million the impact the fiscal fiscal get recognition we it have of which about 'XX, guidance the that depends will talking the we're at in change some about, does significantly That drivers for on of of that volatility ultimate volume this $XXX talking as inflation all quarter-to-quarter, year. But frame we're not will our something goal materially is the mitigation. for the when highlighted impact

impact is that And volume, we Cardinal one the we're products, talking on so that brand presentation, of the of is and I slides have that growing of that think component this the magnitude magnitude the of of about volume the benefit for Health about. $XX expect million the pillar volume that we of in the order volume order growing

that that. I of And side cost impacts not spills the do that, mitigation long-term and believe the and over so

that in and just short-term So how the longer term a term you short is a as the much to that, more can very timing impacts, recognize cost, they mix to terms quickly independent are bit what the effect. relates that but about that think as it does of those lower we

going very ahead, much, coming sir. last Thank be Please Brian question you today is from And sir. go Tanquilut calling our to Jefferies. from

have for I might want Kristen to earlier, Shuman This is mentioned just you clarify. And but Hi. Brian. this

guidance segment Pharma in some give of Thank just 'XX? the you. to you could how guidance much recur So fiscal range EBITDA around is expected

to pleased performance Well, 'XX in we provided have strong the not guidance. year report fiscal QX. We're

did about, talked our As overall for and we've Pharma. indeed, we guidance raise

year, to That's guidance of contrast low the be earlier single year. our For to in the XX% guidance full profit to digit. expecting to digit XX.X% now the we're for mid-single

to expecting see So June a we business, all Investor to from the on at Day good this finish our you Xth are and year we're excited presentation.

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

you, for insight drivers. a you have today. wanted know of I at to but you, thank key today, on we lot you give and a everyone, you to Great. an just as more that lot us Yes. joining the out Thank we lot and threw a progress share organization and going the with

terrific certainly, has, and If back fantastic the I about across think course, Pharma we're year, feel talked. we went a through, a enterprise. fantastic quarter, as we broad-based what making of the just progress about that step

three the side in four improvement pillars. on the we about On clearly we We're of opportunity. progress of We are making those made have very, feel the the focused Medical good plan. medical driving really business, very

fair the share We the that confidence work volume. is on underlying have leading indicators We'll volume. have have that market in that to us do to for our confidence going more for the volume in also take where get will of

and we're raising today that Of course, guidance, talked the we about and as well. very performance that narrowing that also, the we with guidance that had cash pleased

the but along the It with responsible management cash highlights that strong have, that. going that's also deployment capital we both

thank your look for you you time to seeing June just Day all at the Xth. of on and you today forward So again, Investor

very sir. Ladies much, that your will Thank gentlemen you conference. today's you time. for and Thank conclude

You good goodbye. Have and disconnect. may a day now