Cardinal Health(US:CAH)2023-02-02 18:10Financial Data and Key Metrics Changes - Total company revenue increased by 13% and gross margin increased by 3%, driven primarily by the Pharmaceutical segment [11] - Operating earnings were $467 million, consistent with the previous year, reflecting growth in the Pharma segment profit offset by a decline in Medical segment profit [11] - Earnings per share (EPS) grew by 4% to $1.32, with a diluted weighted average share count of 263 million, down 6% year-over-year due to share repurchases [12] Business Line Data and Key Metrics Changes - Pharmaceutical Segment: Revenue increased by 15% to $48 billion, with segment profit rising by 9% to $464 million, driven by growth in branded and specialty pharmaceutical sales [13][14] - Medical Segment: Revenue decreased by 7% to $3.8 billion, with segment profit declining by 66% to $17 million, primarily due to lower product and distribution sales [16] Market Data and Key Metrics Changes - Strong overall pharmaceutical demand was noted, particularly from large customers, with contributions from new customers and seasonal products [14] - The Medical segment experienced volume softness, but there was a slight improvement in PPE volumes sequentially [17] Company Strategy and Development Direction - The company is focused on three strategic priorities: executing the medical improvement plan, enhancing the growth of the Pharmaceutical segment, and maximizing shareholder value [10][22] - Investments are being made in expanding the Cardinal Health brand portfolio and optimizing supply chain operations to mitigate inflation impacts [24][25] - The company plans to hold an Investor Day on June 8th to discuss long-term financial outlook and growth strategies [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the Pharmaceutical segment and anticipated gradual improvement in the Medical segment [21] - The company raised its EPS guidance for fiscal 2023, reflecting improved outlooks for the Pharmaceutical segment and interest income [18] - Management acknowledged ongoing inflationary pressures but noted effective mitigation actions, expecting to exit the year with at least 50% inflation mitigation [20][23] Other Important Information - The company completed a $1 billion accelerated share repurchase program and initiated a new $250 million program, with expectations of $1.5 billion to $2 billion in share repurchases for fiscal 2023 [12] - The company reported a cash position of $3.7 billion with no outstanding borrowings on its credit facility [13] Q&A Session All Questions and Answers Question: Expectations around surgical procedures and staffing issues - Management acknowledged constraints impacting growth in the Medical segment and anticipated gradual improvement in volumes as staffing issues resolve [32][33] Question: Pharma improvement and interest expense guidance - Management indicated that the improvement in the Pharma segment is primarily driven by volume, with interest expense guidance reflecting changes in cash balances rather than significant differences in interest rates [40][41][42] Question: Concerns or headwinds built into EPS guidance - Management provided a balanced outlook, noting that while the Pharma segment is expected to grow, the Medical segment has areas of concern that need to be monitored [45][47][56] Question: Opportunities in COVID treatments and core Pharma segment - Management noted limited participation in COVID treatments but indicated potential opportunities for 2024 and beyond as commercialization opens up [50][52] Question: Pricing and customer receptivity in Med/Surg - Management discussed a consistent approach to pricing adjustments and the desire to work collaboratively with customers to address challenges [61][62] Question: Size and growth of the at-home solutions business - Management confirmed that the at-home solutions business generated $2.4 billion in revenue last year, with approximately 9% growth in the first two quarters [68]