Cardinal Health (CAH) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Strategic outlook and financial guidance

• Targeting 4%-6% long-term EBIT growth in Pharma and Specialty Solutions, but guiding 1%-3% for the current year due to a major contract non-renewal.

• Despite a 4%-6% revenue decline in pharma, excluding the non-renewal, underlying revenue is up 15%-18% with 10% organic growth expected.

• Specialty segment remains a key growth driver, with double-digit margin growth and continued investment.

• Medical segment delivered a $240 million profit increase in fiscal 2024, with a $300 million EBIT target for 2026.

• Back-half weighted profit growth expected in both pharma and medical segments due to timing of new business and cost actions.

Portfolio and customer dynamics

• Successfully offsetting lost business from contract roll-off with new wins like Publix and expanded relationships with BioPlus and Elevance.

• Focused on “winning with the winners,” maintaining strong partnerships with CVS and retail independents.

• Specialty Networks acquisition expanded presence in urology, gastroenterology, and rheumatology, enhancing technology and talent.

• Averon joint venture with CVS targets biosimilars, aiming for best-in-class access and cost.

• Committed to supporting innovation in pharma and pharmacy models, including DTC initiatives.

Market environment and operational strategy

• Stable pharmaceutical demand and consistent generic market dynamics support profitability.

• Branded drug inflation expected to remain consistent; IRA impact still evolving but business model is resilient.

• Medical segment growth driven by inflation mitigation, Cardinal Health Brand expansion, and cost optimization.

• Freight and input cost increases are managed and built into guidance; minimal exposure to China and diversified supply chain.

• Ongoing cost optimization and simplification efforts across the enterprise, including recent manufacturing changes.