Cardinal Health (NYSE: CAH) today will host an Investor Day beginning at 9:00 a.m. ET, where among other updates, management will detail its growth strategies to maximize the company’s potential for all stakeholders and move healthcare forward.
“We are excited to further share the actions we are collectively taking to build upon our progress and capture the significant opportunities clearly in front of us,” said Jason Hollar, Chief Executive Officer of Cardinal Health. “We’re becoming a simplified and more focused Cardinal Health. We believe in our resilient underlying core business and our plans to drive growth.”
The company will also discuss its long-term financial outlook and updated capital allocation framework.
Aaron Alt, Chief Financial Officer of Cardinal Health commented, “We have strong momentum as an enterprise, evidenced by the double-digit non-GAAP diluted EPS growth reflected in our narrowed fiscal 2023 guidance, our preliminary guidance for fiscal 2024 and in our long-term targets. With our strong balance sheet, robust cash flow generation, disciplined capital allocation framework and the plans we are communicating today, we are well positioned to maximize shareholder value creation.”
Strategic updates
While Cardinal Health’s business and portfolio review remains active and ongoing, the company has completed a preliminary assessment of the enterprise strategy and a more detailed review of the Pharmaceutical segment.
At an enterprise level, Cardinal Health is continuing its path towards becoming a simplified and more focused company. The company is prioritizing expansion in Specialty as the key long-term growth driver and investment opportunity for the enterprise. The company remains focused on realizing the growth opportunities ahead in both segments through its updated Pharmaceutical segment strategy and the Medical Improvement Plan.
The company continues to focus on executing the Medical Improvement Plan on the updated timeline, 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.
With respect to the completed work for the Pharmaceutical segment, the company is sharing the following:
Launching Navista™ Network
Cardinal Health is launching Navista™ Network supporting community oncologists and enabling them to remain independent as part of the company’s focus on expanding in Specialty.
Accelerating Outcomes™
As separately disclosed, the company announced the merger of its Outcomes™ business into Transaction Data Systems (TDS) which will expand solutions to retail pharmacies.
Investing in Nuclear & Precision Health Solutions
Additionally, after evaluating strategic alternatives for Nuclear & Precision Health Solutions, the company has determined retaining and investing in the business will drive the most long-term value for shareholders. The company announced a phase two investment for its Center for Theranostics Advancement in support of continued product development over the next several years.
Fiscal year 2023 guidance update
The company is narrowing its fiscal year 2023 guidance ranges for non-GAAP diluted EPS and Pharmaceutical segment profit:
- Non-GAAP diluted EPS: $5.65 to $5.80, from $5.60 to $5.80 (13% growth at the mid-point)
- Pharmaceutical segment profit: 11% to 12% growth, from 10.5% to 12% growth
The company is reiterating its other fiscal year 2023 guidance assumptions provided on May 4th, 2023.
Preliminary fiscal year 2024 guidance
The company is providing preliminary guidance for fiscal year 2024:
| Non-GAAP diluted EPS | $6.45 to $6.70 |
| Adjusted free cash flow | ~$2.0B |
| Capital expenditures | ~$500M |
| Interest and other | $110M to $130M |
| Non-GAAP effective tax rate | 23% to 25% |
| Pharmaceutical: | |
| Revenue | ~10% growth |
| Segment profit | 4% to 6% growth |
| Medical: | |
| Revenue | ~3% growth |
| Segment profit | ~$400M |
Long-term targets
The company is providing updated long-term targets for fiscal years 2024 to 2026 (3-year CAGRs as of fiscal year 2023 guidance baseline):
| Non-GAAP diluted EPS | 12% to 14% growth |
| Pharmaceutical: | |
| Revenue | ~10% growth |
| Segment profit | 4% to 6% growth4 |
| Medical: | |
| Revenue | 3% to 4% growth |
| Segment profit | $650M+ in FY263 |
| Share Repurchases | at least $2B5 |
Capital deployment updates
The company will provide a long-term capital allocation framework to drive shareholder value creation. Additionally, the Board approved a new $3.5B share repurchase authorization expiring December 31, 2027, reflecting $4.75B in total capacity for share repurchases.
