Cardinal Health Announces Progress on Business and Portfolio Review and Fiscal 2024 Outlook Update

  • Progress achieved on company’s ongoing business and portfolio review
    • Completed review of growth businesses within the Medical Segment: investing in and further developing at-Home Solutions and OptiFreight® Logistics as part of the company’s portfolio for long-term growth and value creation
    • Review of Global Medical Products and Distribution business continues, with focus on driving operational performance through the Medical Improvement Plan
    • Reorganizing leadership structure to continue company’s simplification efforts, prioritize core operational execution and drive efficiencies, accountability and transparency
  • Updated enterprise operating and segment reporting structure, effective January 1, 2024, to be reflected in company’s financial reporting beginning third quarter fiscal 2024
    • Providing pro-forma long-term financial targets for updated segment reporting structure
  • Updated fiscal 2024 non-GAAP diluted EPS guidance to high end of $6.75 to $7.00 range
    • Primarily driven by favorability in Interest and Other and Diluted Weighted Average Shares Outstanding, enabled by continued strong cash flow generation and incremental share repurchase during second quarter fiscal 2024
    • Further updates and details to be provided on February 1 during fiscal 2024 Q2 earnings call

 Cardinal Health (NYSE:CAH) today announced progress on the company’s ongoing business and portfolio review, including an updated enterprise operating and segment reporting structure, and an update to its fiscal year 2024 non-GAAP diluted earnings per share (EPS) outlook. These updates build upon the company’s momentum, focus on long-term value creation, and continued actions to become more streamlined and focused. The company will host an analyst conference call today beginning at 8:30 a.m. E.T. where management will further discuss these announcements.   

“We are excited to demonstrate further progress on how we are driving our company, and healthcare, forward,” said Jason Hollar CEO of Cardinal Health.  “As we continue down the path of becoming a simplified and more focused company, these actions align with our operational focus on the core of our business, provide increased visibility to key growth areas, and enable greater efficiencies across all our businesses. We continue to prioritize focused execution to best serve our customers and advance our mission as healthcare’s most trusted partner.”

Business and portfolio review update

While Cardinal Health’s business and portfolio review efforts remain active and ongoing, the company has completed a review of its growth businesses within the Medical Segment, at-Home Solutions and OptiFreight® Logistics, and has determined that investing in and further developing these businesses will drive the most significant long-term shareholder value creation for Cardinal Health.  This conclusion follows the June 2023 announcement that the business review determined that Cardinal Health would retain and invest in its attractive Nuclear and Precision Health Solutions business.

Cardinal Health’s at-Home Solutions business, a $2.6B revenue leading home healthcare medical supplies provider serving people with chronic and serious health conditions in the United States, is well-positioned to continue to accelerate in the coming years with industry trends of care shifting to the home. To support increased demand, the company is investing in network expansion, and today, is announcing plans to build a new distribution center in Texas, with increased capacity, advanced automation and robotics within the facility. This is in addition to the recently opened site in Ohio, and the previously announced expansion in South Carolina set to open this calendar year.

Cardinal Health’s OptiFreight® Logistics, a $250M revenue leading provider of healthcare logistics, manages over 21 million shipments annually to 22,000 healthcare provider shipping locations across the continuum of care. Powered by its proprietary technology and team’s deep expertise, the business has a strong operational track record of profitable growth over many years. To sustain the business’ strong performance, the company continues to invest in innovative and technology-driven solutions such as TotalVue™ Insights that enable healthcare supply chain leaders to optimize their transportation and logistics processes and control shipping spend.

Cardinal Health’s review of its Global Medical Products and Distribution business continues, with a focus on executing the Medical Improvement Plan, which remains a critical priority for the enterprise. The company is continuing to drive ongoing initiatives and invest in the business to support customers’ needs and achieve its long-term target.

Operating and segment reporting structure update

The company also announced plans to realign its business to increase its focus on the core and accelerate its growth areas. 

Effective January 1, 2024, the company began operating under an updated enterprise operating and segment reporting structure, which includes two reportable segments Pharmaceutical and Specialty Solutions and Global Medical Products and Distribution (GMPD). Separate from these two segments, Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics will be reported as Other1.

The Pharmaceutical and Specialty Solutions Segment, previously in the Pharmaceutical Segment, continues under the leadership of Debbie Weitzman. The segment consists of the company’s largest and most significant businesses, its resilient Pharmaceutical Distribution business and its higher-growth Specialty business, including both downstream Specialty Distribution and upstream Manufacturer Services. Weitzman will continue to report directly to Jason Hollar.

The GMPD segment, previously in the Medical Segment, continues to be led by Steve Mason. The segment consists of the company’s U.S. and International Products and Distribution businesses, as well as its WaveMark business. Mason will report directly to Jason Hollar and continue to have a pivotal role in driving the success of the Medical Improvement Plan.

Other consists of at-Home Solutions and OptiFreight® Logistics from the former Medical Segment, and Nuclear and Precision Health Solutions from the former Pharmaceutical Segment. Each of these businesses will continue to operate independently and each of the business leaders, Rob Schlissberg, at-Home Solutions; Emily Gallo, OptiFreight® Logistics; and Mike Pintek, Nuclear and Precision Health Solutions, will now report directly to Jason Hollar. This updated operating structure is designed to provide greater visibility to the performance of these businesses and allow prioritization of investments to ensure their long-term success.

The company plans to report its second quarter fiscal 2024 results on February 1, 2024, according to its former reporting segments and will then report its third quarter fiscal 2024 results and forward on the basis of its updated structure.

Fiscal 24 outlook update

The company updated fiscal year 2024 non-GAAP diluted EPS guidance to the high end of its $6.75 to $7.00 range.

This update is driven by anticipated favorability in fiscal 24 Interest and Other and Diluted Weighted Average Shares Outstanding, due to continued strong cash flow generation, resulting in higher-than-expected cash balances, and the execution of a new $250M accelerated share repurchase program in the second quarter.

The company also provided an update to its previous expectations for second quarter Medical segment profit. While utilization trends, including Cardinal Health™ Brand volumes, and inflation mitigation efforts have trended according to the company’s expectations in the GMPD business, the company now anticipates second quarter Medical segment profit to be generally consistent with first quarter Medical segment profit, due to anticipated non-recurring adjustments in the second quarter. These anticipated non-recurring adjustments do not affect the company’s progression towards its previously-communicated fiscal 26 targets.

The company will provide further updates and details on its fiscal second quarter results and its fiscal 24 guidance during its second quarter earnings call, on February 1, 2024.

Long-term financial targets

The company reiterated its long-term financial targets reflecting 12% to 14% growth of non-GAAP diluted EPS2.

The company also provided pro-forma long-term targets for its updated segment reporting structure, and, for information purposes, recast its fiscal 2023 actuals on the same basis3.

The company’s previously announced Medical Improvement Plan targeting at least $650M of segment profit by fiscal 26 continues, with elements of that plan to reside in the results of both GMPD and Other.View News Release Full Screen

FY23 Actuals3Long-term TargetBusinesses
Pharmaceutical and 
 Specialty Solutions   
Revenue:~$188.8BSegment Profit:          ~1.87B          4-6%Segment Profit CAGR2Former Pharmaceutical Segment, excluding Nuclear
and Precision Health Solutions
GMPDRevenue:~$12.1BSegment Profit:          ~$(165)M          ~$300 million     in Segment Profit by FY26       Former Medical Segment, excluding at-Home Solutions 
and OptiFreight® Logistics
OtherRevenue:~$4.1BSegment Profit:          ~$410M          8-10%Segment Profit CAGR2at-Home Solutions, Nuclear and Precision Health Solutions
and OptiFreight® Logistics

The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See “Forward-Looking Non-GAAP Measures” below for additional explanation.

Analyst Conference Call and Webcasted Investor Events

The company will hold an analyst conference call, which will be webcast, to discuss today’s announcements prior to the opening of trading on the New York Stock Exchange beginning at 8:30 a.m. Eastern.

Additionally, the company plans to present at the 42nd Annual J.P. Morgan Healthcare Conference today beginning at 5:15 p.m. Eastern.

To access the webcasts and corresponding presentations, visit Cardinal Health’s Investor Relations page. No access code is required. Presentation slides and a webcast replay will be available on the Investor Relations page for 12 months.

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