Cardinal Health, Inc.

Good day and welcome to the fourth quarter FY2024 Cardinal Health Incorporated Earnings Conference Call. My name is George. I'll be your coordinator for today's event. Please note that this conference is being recorded and for the duration of the call, utilize your being listened only mode. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star 1 on your telephone keypad to register your questions. In order to allow you as many people as possible to ask a question, we ask that you please limit yourselves to one question each. If you require assistance at any point, please press star zero and you will be connected to an operator. And I'd like to call on your host today, Mr. Matt Sims, Vice President of Investor Relations. Please go ahead, sir.

Welcome to this morning's Cardinal Health fourth quarter and fiscal 24 earnings conference call. And thank you for joining us. With me today are Cardinal Health CEO Jason Holler and our CFO Aaron Ault. You can find this morning's earnings press release and investor presentation on the investor relations section of our website at ir.cardinalhealth.com. Since we will be making forward-looking statements today, let me remind you that the matters addressed in the statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Please refer to our SEC filings and the forward-looking statement slide at the beginning of our presentation for a description of these risks and uncertainties. Please note that during our discussion today, the comments will be on a non-GAAP basis, unless specifically called out as GAAP. GAAP to non-GAAP reconciliations for all relevant periods can be found in the supporting schedules attached to our press release. For the Q&A portion of today's call, we kindly ask that you limit questions to one per participant so that we can try and give everyone an opportunity. With that, I will now turn the call over to Jason.

Thanks, Matt, and good morning, everyone. Fiscal year 24 marked a year of strong operational execution and record financial results for Cardinal Health, delivered in tandem with significant strategic progress across the portfolio. On that note, we have three key headlines today. First, We finished the year with momentum, growing EPS 29% in both Q4 and fiscal year 24. Results exceeded guidance, and full year EPS of $7.53 was 96 cents above the midpoint of our original outlook from investor day. We also delivered nearly $4 billion of adjusted free cash flow for the year, positioning us with approximately $5 billion of cash at year end, even after $1.25 billion of capital returned to shareholders this year in funding our growth investments. Second, we have managed through the transition of a significant customer and are raising our guidance for fiscal year 25, while also reconfirming our long-term financial targets. And finally, we continue to advance our strategy to build upon the growth and resiliency of pharma and specialty, execute our GMPD improvement plan, and accelerate our growth in key areas while optimizing our portfolio to maximize shareholder value creation. More on that momentarily, but first, some brief reflections. This year, we continue to take decisive actions to simplify our business and drive performance, highlighted by the reorganization of our operating and segment reporting structure to enhance management focus while enabling efficiencies, accountability, and transparency. We grew our largest and most significant business, pharmaceutical and specialty solutions, above our targeted long-term growth rate. We saw ongoing stability in pharmaceutical demand, strong performance from our generics program, and our specialty business grew revenue 14% for the year. As of fiscal year 24, our specialty business is now over $36 billion, and we anticipate continued growth next year despite the large contract expiration. We prioritize key growth areas in specialty with organic investments across therapeutic areas and the acquisition of specialty networks. In GMPD, we executed our improvement plan initiatives Returning the business to profitability and delivering approximately $240 million in year-over-year segment profit improvement. Notably, we achieved our year-end inflation mitigation target, a critical milestone for the business. Across our other operating businesses, we collectively grew revenue 12% and segment profit 7% in fiscal year 24. We've seen strong demand across nuclear, at-home solutions, and opti-freight, And our purposeful investments and focus on performance excites us about how these businesses are positioned for the future. Overall, these results were achieved through our team's commitment to execute against a focused set of priorities to create value for our shareholders, our customers, and ultimately for millions of patients. As we turn the page to fiscal year 25, our confidence is reinforced by our strong and resilient business with positive industry trends supporting our growth. And we continue to take actions to optimize not only the performance of our businesses, but also the financial strength of the broader enterprise. Before I hand the call over to Aaron, let me provide an update on our business and portfolio review, which, as a reminder, kicked off in September of 2022. Last June, we concluded our review of the former pharma segment, highlighted at investor day with our enhanced organizational focus on specialty and decision to retain and further invest in our nuclear and precision health solutions business. Then, in January, we finalized a review of the growth businesses within the former medical segment, determining the best course of action for shareholder value creation was to invest in and further develop at-home solutions and opti-freight for long-term growth while also completing our resegmentation. All along, management, in collaboration with the business review committee and board, has been reviewing GMPD from every angle as the team executes our turnaround plan. We deeply understand the business's opportunities and complexities and today have some preliminary conclusions to share through the lens of our portfolio review framework as seen on slide 20. In short, we remain committed to executing the GMPD Improvement Plan and our fiscal year 26 target of $300 million in segment profit. We are pleased and unsurprised to see significant interest in GMPD during our review. The business is core to the operations of so many healthcare providers and features not only our formidable distribution expertise, but a broad set of Cardinal Health brand products that are critical to patient care. Following our extensive review, we have gained confidence that we are best positioned to continue capitalizing on the meaningful growth and operational opportunities on the horizon for this business. Ultimately, we see more value creation potential ahead for our shareholders by continuing to drive the GMPD turnaround plan. Even more, our analysis uncovered additional opportunities to unlock near-term value through further simplification actions and working capital improvements while continuing to drive the plan. From these initiatives, we plan to generate at least $500 million in cash over the next two years to be deployed according to our disciplined capital allocation framework. In recognition, we're raising our share repurchase expectations for fiscal year 25 to a total of $750 million which is beyond our $500 million baseline. In terms of mechanics of future reviews as the business continues to improve, the business review committee of our board, sunset in July, is planned, and the ongoing value creation efforts are now being overseen by the board as a whole. As always, we take a thorough, objective, and open-minded approach focused on maximizing long-term shareholder value creation while continuing to invest in the business to ensure that our customers receive the products and service they expect. I'll go deeper into our strategic plans for our segments later in my remarks. But first, let me turn over to Aaron to review our results and guidance.