Cardinal Health (CAH) 44th Annual J.P. Morgan Healthcare Conference summary

Operational and Financial Progress

• EPS is projected to reach at least $10 per share by fiscal 2026, with guidance raised from $9.65–$9.85, driven by broad-based growth and specialty business strategies.

• Core operating earnings have grown at a 14% CAGR, with EPS at 18% and adjusted free cash flow averaging over $3 billion.

• Over 99% of revenue is now U.S.-based, following a strategic reduction in international operations, with over $255B in revenue projected for FY26.

• Pharmaceutical and Specialty Solutions account for over 90% of revenue and nearly 80% of profit, with high-margin growth from At-Home, Nuclear, and OptiFreight businesses.

• Specialty revenue is expected to exceed $50 billion in fiscal 2026, reflecting a 16% CAGR over three years, with focus on autoimmune, urology, and oncology.

Strategic Initiatives and Business Model Resiliency

• Continued investment in specialty, nuclear, at-home, and OptiFreight businesses, prioritizing secular growth trends and leadership positions.

• Biopharma Solutions targets $1 billion in revenue by fiscal 2028, with recent contract wins and a 20% CAGR, and is expected to grow over 30% in FY26.

• The business model has proven resilient to industry shocks, with successful adaptation to IRA and insulin price changes.

• Capital allocation remains disciplined, focusing on organic growth, shareholder returns, selective M&A in specialty and growth businesses, and maintaining investment grade balance sheet.

• GMPD has transitioned from losses to positive cash flow, with ongoing investments in infrastructure and performance improvement.

Market Trends and Growth Drivers

• Demographic shifts, especially the aging U.S. population, are fueling long-term pharmaceutical demand.

• Growth is broad-based across all customer and product categories, with strong utilization and innovation as key drivers.

• MSO business benefits from increased utilization, GPO activity, and data services, supporting about 3,000 providers and contributing ~$4.5B in higher-margin revenue.

• Red Oak partnership with CVS provides best access and pricing for generics, with more opportunities as LOE increases.

• At-Home Solutions and nuclear businesses are positioned for continued growth, supported by investments in distribution, technology, and a robust nuclear medicine pipeline through 2031.