Cardinal Health, Inc. (CAH) Earnings Call Transcript & Summary

I'm Kevin, Vice President of Head of Investor Relations. Thank you all for joining. It's been a while since we last spoke with you in this type of format, 8 years to be exact, and a lot has changed in the world. And for us, during that time, we became a little bit better. I'm excited for you to hear about the strategy [indiscernible] of products and services we provide. [indiscernible] please refer to SEC filing today [indiscernible] for the agenda for today. To cap things off, Jason Hollar, our CEO, will [indiscernible] Next, we'll hear from Debbie Weitzman, CEO of our Pharma segment to discuss our strategies to build upon the growth and resiliency of the Pharma business. She will be joined by Craig Cowman, EVP of Strategic Sourcing and Manufacturer services. After a short break, Steve Mason, the CEO of our Medical segment will join us to share progress and plans for the Med improvement plan. He will be joined by Ben Brinker, President of Global Products and Supply Chain. Aaron Alt, our CFO, will bring it all together with the financials and talk about our plans to maximize shareholder value through robust cash flow generation and a disciplined capital allocation framework. We'll then hold a Q&A session with all our speakers for both those of you in the room and joining us virtually. It's going to be a great morning, so let's get things started with a short video. [Presentation]

Okay. Terrific. Good morning, everyone. Thanks again for joining us. As Kevin highlighted, we are excited for this morning. Excited to share more about Cardinal Health, about our strategy going forward. And as Kevin indicated, to spend some more time with our leadership team. As I've been anticipating this time together with you today and especially thinking about it through the perspective of those that might be a little bit newer to Cardinal Health, I couldn't help but think about what attracted me to come here 3 years ago. I was very much attracted by our strong culture, our strong values, but also what you just saw in that video, our mission to be health care's most trusted partner. I think it sums it up quite well what we're here for. Now for those that have spent more time in this industry, I'm sure you can appreciate the breadth and the complexity where we operate. The slide just shows a few of those key metrics that really signifies the extent of where we operate. And in those first days when I arrived 3 years ago, I could quickly see how uniquely positioned we were to maneuver through that complexity, to connect all the way from the clinical to the operational aspects of health care, solving the needs of our customers and their patients. But I'm entirely fair with you, that was also really interested in what that means to us as a business. Perceiving those first days, I could see 3 years ago that our core was strong and it was resilient. We were operating in an industry had a lot of secular tailwinds, and we had fantastic growth opportunities within our business, but that was being overshadowed by some challenges. Some challenges that I felt were either temporary or could be mitigated, but I felt that we stay focused on driving that core and improving that core, then what would emerge would be an even stronger, even more resilient company. And I think that's exactly what we've seen, especially this past year, and why we're still decided to tell you the rest of the story today as we're taking this company next. So now let's fast forward. 9 months ago, I stepped in as CEO, and I told you in that first meeting that we were going to ruthlessly prioritize 3 key strategic areas, all very much focused on that core that I just referenced. Number one, so that we would build upon the growth and the resiliency of the Pharma segment. This is our largest most significant part of business trends in the industry as well as our own unique performance, and we're doing so well, continuing to invest for the future. Number two, I said that we would drive improvements in our Medical segment to the execution of the [indiscernible] plan. Now, we've got some work to do here, but we are making clear progress on each of the initiatives behind those pillars. Then number three, I told you that we would maintain a relentless focus on shareholder value creation, which we have demonstrated through the predictable, responsible return of capital back to our shareholders. These 3 areas have service very well this year and will be a foundation for where we're taking the business next. Okay. As I just mentioned, this week actually marks the 9 months for me in this role as CEO. And in that time, we've been very busy. We have taken decisive actions in the first days and weeks of my appointment, we really want to work and simplifying how we do business and ensuring that we are very much focused at the core. That simplification went all the way up to my level to my direct reports, and rationalizing how we operate, not just from an org structure perspective, but also how we rationalize the product lines we do business in. We exited our nonhealth care portfolio. And then thereafter, we continue to rationalize our manufacturing footprint as well as in which the countries that we operate in. We did so not just a day out cost, but to ensure that we're focused on what's left and what is most important for our business and for our customers. We didn't stop there, of course. We also continue to be focused on our balance sheet, cash flow, returning capital to shareholders, and we maintained a strong focus on driving financial results that resulted in some good operational performance this year. Our Board was at work as well. They refer your focus on our governance, brought on 4 new independent directors, implemented the business review committee, and we have just recently extended that further. We've done all this with a continued eye by maximizing our long-term shareholder value creation. Of course, none of these will be possible without our dedicated team of 46,500 professionals across the world in 30 different countries. They are the ones that are working on these initiatives every single day, and keeping the customer and their patients at the center of everything that we do. Moving on to our executive leadership team, who are all here with us today. Each 1 of us are humbled by the opportunity to lead. I think a better word is probably to serve our team, our company and to do our part within this incredibly important industry at this exciting time. If you take a look at our profiles, what you'll see is that we offer a diverse mix of skill sets, experiences and backgrounds, and we have a terrific balance of internal expertise as well as outside talent. We certainly value diversity, but we also have a lot in common. We're passionate about this business, and we have a gritty approach to getting things done. And we take our commitment to a more sustainable macro world very seriously. We are excited that we believe we can simultaneously drive these initiatives forward, while also executing upon our strategies as of the business. Said differently, we don't think that there has to be a trade off. We don't think ESG initiatives are in conflict with our business strategy but are very much a driver of it. So with that, let's pause for a brief moment here and see a video on this important topic. [Presentation]

All right. Terrific. Okay. So let's now move on and spend the rest of our time looking a little more forward as to where we're taking the business into the future. And we'll start with our strategy, portfolio and operations and specifically, we'll dive into the business and portfolio review. As you can imagine, I've received quite a few questions on this topic over the -- at least the last 9 months. And instead of just telling you the conclusion and the answers to the questions that may be asked, let me start by walking you through the process that we utilize to work through the business and portfolio review, effectively trying to answer the questions of which businesses stay, which may remain -- which businesses may remain versus ones may be divested and then should we partner in different ways with all of the above. So there's not necessarily a checklist, right? When you go into a business and portfolio review, there's a lot of variables, a lot of criteria that we work through. The first one, the strategy is probably what you would typically think of as it relates to a portfolio review. Now this is answering the question of a particular business we may be evaluating, how does that strategy linked into the overall enterprise? Is there something unique about it, whether it may be the competitive environment or secular trends in that business versus the enterprise, but effectively, the typical answer to that is being -- the typical question is being answered is, are there unique synergies or dis-synergies between that business and the rest of the enterprise? Now it's not always simple. It's not usually a binary answer. Most businesses have both synergies and dis-synergies, but we try to aggregate that the best we can. But you do have to go farther than that. You need to look at the operational performance of each of these businesses. And if they are not performing to their potential, then why? And are we the rightful owner to get that business to the level of performance that it needs to be at? That same question or a concept around are we the rightful owner is certainly present as well. When we talk about the value, are we getting the benefits of this business within the intrinsic value of Cardinal Health, if not, again, why? And is it of more value elsewhere. Now that question is always difficult to answer. I would certainly contend that in today's somewhat more dynamic capital market environment is probably even more difficult. Now to make this complex concept even more difficult, each of these 3 criteria really do interplay with 1 another. They really are interconnected, which the main conclusion here is that's why this must be an ongoing and living process. We have the business review committee. We utilize that, but we have demonstrated over the last several years that we're constantly evaluating our portfolio because these types of criteria are always changing. With that said, and while this work does remain active ongoing, we have made some conclusions, and we'll share with you the work that has been completed and what still is in front of us today. These conclusions do largely relate to the Pharma segment, but let me start with our conclusions as it relates to the enterprise. Some of these may feel a little bit philosophical or may feel like we're already doing them. And in a lot of cases, you're right, but this process is meant to highlight what do we do long term. We may be acting in this way short term, but this is meant to memorialize where we need to continue to work as an enterprise. I think this first observation is an important one as it relates to the conclusion that we have more work to do on simplification. I do believe that this is 1 of the key enablers of our performance to date. We have taken significant action not just to improve the underlying cost structure of our business through efficiency actions, but also and probably more importantly, through effectiveness, executing better, more predictable, better, quicker decision-making. And while we made tremendous progress, we also think of it as a journey and that we're somewhere in the middle of that journey with more opportunities still in front of us. Another similar concept related to specialty, which we'll talk a lot about today between Debbie and myself. Same point that we have been investing fairly heavily with a lot of focus in the last several years in specialty, and this is just recognizing that we expect it to continue to be a primary source of our future growth, the long-term growth driver for the enterprise, and we'll certainly spend a lot more time on that. Our core will always be important to us. But as the growth driver of the long-term part of the company, that's what we're highlighting here. And then finally, this is not meant to be all-inclusive. There are many other growth initiatives between both segments, Pharma and Medical, which Debbie and Steve will spend some time walking through shortly. So now let's go deeper as it relates to the conclusions within the Pharma segment, and I'll go through each of the 3 that are listed there in the bottom left in a little bit more detail. Again, let's start with the Specialty business where I'll touch on it now, and Debbie will go into it further shortly. So again, back to the point of long-term focus is what we're building here. And there's a couple of key points. First of all, it's 1 of the earlier conclusions you can make in a process like this, but we certainly agree that specialty is expected to continue to be following the long-term growth drivers of the industry. It will benefit from the secular trends that are present, and we believe will continue to be present well into the future, and that our downstream Specialty Distribution services as well as our Upstream Manufacturer services will be well positioned to benefit from that, and that's the primary second point that we are well positioned to capitalize on that growth, well positioned for a few reasons. First of all, we have, at the very beginning of Debbie's time in this role 9 months ago, she restructured the business to ensure that Specialty was very much repositioned into the core of the organization access to those resources, access to the -- certainly, the organic and inorganic investments. The second point is that we are very capable, very scaled player today, probably more so than what you understand, and we'll go through those details shortly. And to wrap up this whole point, we see that there's a lot of opportunity, a lot of opportunity with inorganic investments, similar to what we did earlier in the year as it relates to Bendcare and driving the Rheumatology space. But in other areas like Oncology, we say that there's also opportunity through organic investments. One of the announcements that we have today is the launch of Navista Network, a specific set of programs that will drive growth with our community oncologists and driving and helping their growth as well as their desires to remain independent. Moving on to Nuclear, which is certainly a business that's been the center for lot of speculation, so let's just put it out there, walk you through everything that we've been doing because we are working on this a lot. We've evaluated a lot of alternatives, and we have decided that retaining and investing in this business will drive the most significant long-term shareholder value creation. Now this has never been a question about performance. This business has consistently performed very, very well. This is more of a strategic dialogue, a strategic work stream because this is an incredibly unique business, a business that has very unique capabilities, very unique logistics and distribution capabilities, fantastic customer relationships, a wonderful management team. It can do a lot, and we needed to have a 360-degree view of this business to ensure that we were getting the most value for this business. That work pulled us and what we learned from it is that, yes, there's some opportunity still do we have in this business, but it's primarily within Cardinal Health. That's 1 of the other announcements we have today is given the progress we've had to date with our Theranostics business, which is at the center of precision medicine. We're already nearly fully subscribed with that capacity that we just launched a few years ago, so we're now embarking on a Phase II investment that will further drive our leadership in that space. But beyond that, in the longer term, we also see that there are some additional opportunities available to us. Again, back to the specialized capabilities that this business has and how that could help propel growth in other areas, areas like our Specialty business, perhaps call and gene or into other aspects of oncology. And then you step back and look at just the operational profile of this business. It's a fantastic margin contributor, greater than average margin rates, very strong, consistent double-digit profile of earnings growth and well on track to its target to double the profitability by fiscal '26 from that fiscal '21 baseline. Now turning to Outcomes. We have a different conclusion with this business, but the starting point is the same. This is a fantastic business as well. This business offers a valuable network that connects the payers, the manufacturers and the pharmacies to the patient, and it's built the industry's largest patient [indiscernible] platform. So it's a wonderful business, but in this case, we felt that there was more potential value by partnering with others in the outside. It's a very quick moving space, requires a lot of focus and investment, and it's important for us to stay in the space, but we wanted to look at, are there ways to accelerate the growth in this space. So when we looked at all the potential partners, we're very excited when we met up with Blackrock's TDS business and decided to bring these businesses together to combine the network, the services to provide value not only to both of the owners, but also to provide value to the customers and our patients. We've deeply feel strongly about the opportunity of this business for the future, which is why we've rolled 100% of our equity and outcomes into this enterprise as well as expect to have a small future capital contribution as well. In addition, we've entered into commercial and strategic long-term relationships to ensure that we continue in various reforms with that partnership. So now let's move on to Medical. Another area where you can imagine and get a lot of questions. And again, before I just kind of jump into where we're at, let's step back and remind ourselves that criteria that I started with, right? You get the strategy, the operating performance and then the value. It's clear within Medical that we are very focused on driving the operational performance of this business. Now my comments today are going to be very consistent with what I've said in the past that regardless of the appropriate long-term course of action for this business, for this segment, we know that executing the Medical Improvement Plan remains the most critical near-term priority. The extension of the business review committee by an additional year certainly allows us to continue to stay focused on driving that improvement also allows the capital markets to further stabilize. As it relates to our performance, while there's work to be done, we're making a lot of progress, making a lot of progress and the initiatives behind each 1 of those key 4 pillars of the plan. Encouraged by our reiteration today of our expectation that the Medical segment has an $80 million profit in the fourth quarter, that's representative of that progress that we laid out last quarter, and we are clearly on track for 3 of the 4 pillars. Actions and results are in place for mitigating the inflation, all $300 million of that by the end of fiscal '26 as well as driving the growth in our growth businesses and further taking out costs through the simplification efforts. The only area that was not on that path was the delay related to our Cardinal Health brand volume. Now what you're going to hear a lot from Ben and Steve this morning is that the leading indicators, the work we're putting into to ensure that product line is healthy and able to grow with the market is intact, and we have a lot of confidence that we'll see that growth participate with the market in fiscal '24. So while we are excited by the progress that's been made to date, we recognize that there's still some work to be done. Beyond the extension of the business review committee that was just done in May that I referenced before, we also extended the cooperation agreement with Elliott, and we're pleased with the continued partnership as well as the contributions that we're receiving from all of our Board members. We do continue to have a very engaged board as well as a business review committee as evidenced by our near monthly cadence of meetings and other interactions. So let's move on to capital deployment. We'll spend a lot of time on this today. Aaron will spend certainly a lot of his time, so I don't want to steal all of his thunder, but I did want to highlight a couple of key takeaways here. First of all, I would highlight that this is a long-term capital deployment framework. We have been, I believe, very consistent about our priorities in the past, but they were a little bit more short term in nature. So a key distinction today is you'll hear from Aaron, a lot of longer-term perspectives on how -- not just where we think we are right now from a deployment perspective, but where we are targeting that deployment over the next 3 years. The other key component to this is that there are some enhancements that will be made within this framework. But I would really like to highlight more than anything else is that the priorities are very similar in concept to what we had before, which you may recall from before, we had 3 key top priorities. All of those top priorities are within what we call Table, Stakes now, so we're not trying to break out 1, 2 and 3, it's like choosing between your children, trying to figure out just which ones are the most important, and we have to have dry powder each year available for those. So those top 3 that we had before that are on that table stakes list are the investing back in the business to drive organic growth, maintaining a strong balance sheet, a strong investment-grade balance sheet. And then finally, the commitment to the dividend. Those 3 remain consistent with what we've talked about in the past. The distinction here as it relates to table stakes is the very last item that you see there, the base share repurchases. What this represents is the fact that we've made a lot of progress on our leverage, made a lot of progress in our financial flexibility. We believe given our strong cash flow profile, we have the flexibility to have share repurchases each and every year. Now even beyond that, we would anticipate having fairly significant residual cash flow beyond that, which is why we're clearly identifying additional share repurchases as well as M&A as the opportunistic uses of that residual cash flow. Again, Aaron will walk through more of the details on how -- and how we intend to operationalize that when he gets up here. Okay. So let me wrap up this section and just touch on financial performance. Again, not to present everything that he'll get into. But I can't help but start the conversation by stressing that we're having a great year. We're very proud of the fact that we've raised our guidance twice this year and again today, bringing up the low end of our EPS range to another $0.05 per share. And that strong growth that we have this year, we expect it to be even stronger next year in fiscal '24 with our preliminary guidance. Now that's because we expect the Medical segment to be on that track towards the at least $650 million by fiscal '26, and so we would expect a meaningful contribution from Medical from a year-over-year perspective to further improve that overall EPS growth for fiscal '24. Now beyond that long-term target for Medical, we are also raising here today our Pharma expectations to go from low to mid-single digits to solidly in the mid-single digits at 4% -- 4% to 6% growth, so it's the combination of those 2 as well as ongoing strong base share repurchases, that gets us to our financial algorithm of a 12% to 14% EPS growth through fiscal '26. And it's important to highlight that beyond that strong earnings growth that's expected, we would expect to maintain a strong dividend yield, and you add that together, and we have what we believe are the makings of a very compelling total shareholder return opportunity. So now let me finish similar to where I began. When I opened this morning, I told you why I came to Cardinal, while I was so attracted and why I was so excited to the opportunities we have at that point, so let me finish now by telling you why I can continue to be so excited about where we're taking this business. First of all, we're performing well. And at least [indiscernible]. I get excited when we're doing well. And I think we're doing well because we're focused on what matters most, and it still happens. What matters most to us is also what matters most to our customers and their patients, our folks in the core to drive core performance within this business. Our core is strong. It's resilient and it's growing. Our largest, most significant business, our Pharma segment is having a fantastic year, driven both by secular tailwinds associated with this industry as well as very specific business, operational and strategic performance in areas like the Specialty business. We have some more work to do in Medical. We know that. We understand that. The plan is clear. We know what we need to do, and we have confidence we will drive further improvements in this business and exceed the $650 million by fiscal '26. If you step back from all that, we're highlighting some exciting announcements today in some strategic areas that will benefit us a little bit in this period of time, but they are also the tailwind for longer-term growth. Areas like our Phase II Theranostics investment in Nuclear, the launch of Navista Network to further drive oncology growth. The deal with Blackrock TDS to get the most out of our Outcomes business and the patient engagement platforms. You take these strategic drivers, you add to it, the operational drivers, some of which I touched on, you'll hear from Debbie and Steve further. You add to that a strong, resilient tailwind from the industry as well as our capital deployment with share repurchases and dividends. You add that all up, and that's why we believe we have a very compelling investment thesis. So whether you're new to our story or you've been with us for some time, I anticipate that you'll leave today with a greater appreciation of the wonderful opportunities that we have in front of us. And speaking of the wonderful opportunities we have in front of us, I'd like to now introduce you and bring up Debbie Weitzman, the CEO of our Pharma segment.

Good morning. It's great to be here this morning. I am a first timer in this type of forum, so looking forward to discussion. Today's agenda is designed to share with you why we're so confident about the Pharmaceutical segment and our future that lies ahead. I'll be covering a lot of examples, a lot of tangible actions that we're taking in both our core business as well as Specialty and Nuclear. Nine months ago, as part of my appointment to the segment CEO position, we made some organizational changes to make it easier for our customers and for manufacturers to do business with us. Now we're building on our scale in distribution to focus on all of our resources and drive growth through both our core as well as the 3 business areas that we're most focused on. So first, our core. This consists of full-line distribution in -- full-line distribution of Pharmaceutical as well as Specialty where we distribute brand, generic and pharmaceuticals in the Specialty area as well as consumer health products. We operate a scaled supply chain, but we are much more than just a distributor. We build solutions that help our customers run their businesses, and that helps them generate new revenues and different opportunities. Some of the examples of which we will share today. We help our customers stay healthy. That is part of our mission. Increasingly, Specialty is a critical area of focus for us, so we'll spend some time diving deeper into what we're doing in this important area. Second, we have a very tenured sourcing and manufacturer services team, which focuses on our manufacturer partnerships. With brand and biopharma partners, we take a very holistic approach from early-stage development all the way through to commercialization. For generic sourcing, we leveraged the scale and the expertise of Red Oak Sourcing. Our 50-50 Joint venture [indiscernible]. And third, our Nuclear and Precision Health Solutions team [indiscernible]. We transformed this business to be an end-to-end innovation partner, which involves itself the growing area of Theranostics, which combines imaging diagnostics and precision radio therapeutics. Now I'll turn to some key trends in health care, which are helping to create tailwinds. You've likely heard some of these demographic statistics before from census data. 17% of the U.S. population is currently aged 65 or older. These are the same people who typically take 3 or more prescription drugs. By 2060, this population is expected to increase from 56 million to 95 million people. This is why we anticipate a continued uplift from demographics well into the future. Second, scientific advancements in drug development are expanding the breadth of conditions that are being addressed with medication and this will also continue to drive our growth. For example, biologics and cell and gene therapies have helped us to move up the curve from treatment to cure for some really devastating diseases. At our specialty 3PL, we helped pioneer the commercialization of innovative cell and gene therapies like CAR T, and we continue to see opportunities from this in the future. Turning mix to the mandate to lower the cost of care for patients. We are seeing a shift to lower cost of [ statics ] . For example, pharmacists are increasingly serving as health care providers and their communities as we saw during COVID with vaccine administration. We also believe that this focus on cost reduction will be a driver for the adoption of Bio-similars. And finally, technology advancements will have a direct impact on accelerating patient care and helping us to advance our business model, and you'll hear a little bit more about this later in the presentation of what we are doing. So many of these trends such as increasing demand for health care services and pharmaceutical innovation, make the U.S. pharmaceutical market incredibly resilient over a long period of time. The U.S. pharmaceutical market has seen consistent annual growth over the past 10 years at a compounded 7%, and it's now projected to end 2023 at over $650 billion in invoice sales. So let's turn to the heart of our business, our customers. We are positioned for growing with a strong and diverse customer base. We have partnered with the leaders in their respective markets with anchor customers in retail chain, grocery, mail order and long-term care, and all of them continue to grow faster than the overall market. We proudly serve over 8,000 retail independent community pharmacies, and we offer services that are critical to their businesses. We distribute and offer services to many of the country's leading health systems and we serve 20,000 physician offices and clinics, and we are the leading wholesaler in state government with primary distribution agreements in 41 states. We believe our strong and diverse customer mix is a point of differentiation. It's going to continue to drive demand at above-market revenue growth. In short, we are winning with the winners. The Pharma segment has a lot of momentum. Over the last 3 years, we've been seeing consistent annual revenue growth driven by brand growth from our largest customers. Our revenue growth has outpaced our segment profit growth due to our customer mix and market price inflation. During the pandemic, we did see some variability in demand in our generics program and in Nuclear which masked a bit our underlying improving fundamentals. This impacted the whole of FY '21. But in FY '22, we delivered 5% segment profit growth, while managing through the inflationary supply chain impacts that were hitting us in the second half of the fiscal year. And as we bring FY '23 to a close, we expect double-digit segment profit growth. This consistent performance serves as a strong foundation for us to consider -- to continue growing well into the future. Our generics program is anchored by the scale and the expertise of Red Oak Sourcing, which was established in [indiscernible]. we see a strong pipeline for generics launching well into the future with a projected [indiscernible]. Our generic program advanced[indiscernible] remains a very important component of our overall offering and our performance in the core. So how will we build on this moment? We have clear growth strategies and we are laser focused on our biggest areas of opportunity. I'll start with our core strategies by highlighting 2 areas: providing customer-focused solutions [indiscernible] come up and Jason and I will both discuss our strategies to accelerate in Specialty, which is our key growth area and these will include expanding downstream across key therapeutic areas and partnering upstream with manufacturer services, and then I'll finish up to share how we're supporting end-to-end innovation in our Nuclear business and how everything fits together. For over 50 years, we have been essential in delivering health care providers the products and the services they need to serve their patients. For example, our valued retail independent pharmacy customers. We have a lot of services, several of which are embedded into our leading pharmacy services administrative organization, which is known as a PSAO. This network has over 6,500 member stores. And among other services, this is really fundamental because it helps them get into payer networks. We also have, for example, an inventory management tool that helps the reorder on a real-time basis where they are dispensing, and we have many clinical solutions such as multi-dose packaging, immunization programs and point-of-care testing. We are also really helping our customers think about the future. What will a winning pharmacy business model look like in the future? And how can we help support our customers in getting there? So let's start with the new outcome strategy. The formation of Outcomes through 4 acquisitions over the last 8 years, created an industry leader in patient engagement services. Outcomes has the largest network of pharmacist-led interventions with 40,000 pharmacies participating and over 24 million patients opted into the adherence programs. Outcomes helps our retail pharmacy customers practice at the top of their licenses by enabling them to deliver a bigger range of clinical services to their patients. These are paid engagements on behalf of payers and manufacturers which are designed to provide a better patient outcome. As Jason mentioned, this week, we announced we are combining the outcomes business with Transaction Data Systems or TDS to make an even greater scaled entity. TDS' existing portfolio includes the Rx30 and Computer Rx pharmacy management systems as well as prescribed wellness, its patient engagement platform. The combined company will retain the Outcomes name and we will have a long-term commercial partnership in place with them and with Cardinal Health. Bringing outcomes and TDS together is a major win for pharmacies because it will drive even more meaningful opportunities for them with payer and pharma and these are revenue-generating opportunities for them. I will be serving on the board, and I'm really looking forward to see how the new Outcomes will accelerate. Let's turn to health systems. Health systems have a pharmaceutical supply chain, which is very disconnected and reactive. They have data inputs that come at them from many different sources in many different formats. So we are the first to market with a clinically integrated pharmaceutical supply chain, which leverages the secure Palantir Foundry platform. We are using artificial intelligence and machine learning to ingest and organize this information from our data, the hospital data as well as market inputs. By creating an interactive supply chain, health systems will have predictive analytics to optimize their inventory and ensure quicker access to medications. Since the initiative was announced in late January, Cardinal Health has 2 modules, which customers are accessing to be able to maximize contract maximization. We are actively developing other modules as well, the first of which is helping customers address the complexity of both specialty and biosimilar medication selection. We also support our customers and our manufacturer partners through the scale and efficiency of our operations. Now that the modernization of our ERP and warehouse management systems are behind us, we have the tech foundation to build on. We will continue to leverage automation and technology to drive efficiencies and a safer work environment for our associates. For example, we have a new inventory management tool, which gives end-to-end visibility to our procurement team. This enables them to do scenario planning and have real-time insights. These capabilities improve the customer experience with increased product availability and faster resolution of supply disruptions. That generates incremental revenue and margin for us. Looking ahead, we expect continued benefits from increasing productivity and maximizing working capital from these investments. Another important part of our value proposition for retail customers are over the counter consumer health products. A profitable front end of the store is very crucial as a way for stores to have additional revenue, particularly with the independent pharmacy customers and small chains. We are investing in a dedicated replenishment center for consumer health, which is a game changer for our business and for our customers. Work has kicked off for a new 350,000 square foot automated distribution center that will serve as a central hub to receive and distribute consumer health products to our 4 distribution centers and ultimately to our customers. We anticipate having this up and running in FY '25 and once operational, this new hub will free up a lot of capacity in our 4 distribution centers as well as reducing overall inventory. The Consumer Health Hub also enables us to pursue new business in the growing health plan over-the-counter benefit programs. These programs are growing, particularly in Medicare Advantage plans. The current aggregate over-the-counter allowance for Medicare Advantage enrollees is $7 billion, and that's going to continue growing as Medicare Advantage enrollment expands. Over time, we see this as a $300 million incremental revenue opportunity on a multibillion-dollar base business. Now let's talk about specialty. This is 1 of our key growth areas. I'd like to reiterate that we are very sizable today in Specialty. We project to close FY '23 with over $30 billion in revenue, which is a 14% CAGR over the last 3 years. To be clear, that does not include $30 billion of certain specialty products like HIV or rheumatoid arthritis treatments, which flow through our traditional Pharma distribution channel. As a reminder, the channel is largely dictated by manufacturers, and we are well positioned to pivot to whichever path they choose. We're focused on capturing growth over the long term with 2 key objectives: expanding downstream across key therapeutic areas and partnering upstream with manufacturer services. We see opportunities to expand through partnerships and both organic and inorganic investments that will drive distribution volume and our suite of upstream manufacturer services. Oncology is the largest therapeutic area today, and it's growing double digits. Community-based oncology practices are often a preferred place for cancer patients to be treated, close to home with their care team and their loved ones nearby. Although many oncology practices have been acquired or committed their practices to managed service organizations, which I referred to as MSOs, there exists a market segment of medical oncologists around 1,500 who remain unaffiliated, but they have need that Cardinal Health can address. These are independent community-based oncologists who want to remain independent. We know this model because for decades, we've been committed to helping independent community pharmacies maintain their independence. So today, we're introducing a new network for community oncologists called the Navista Network. This will be a flexible model that allows practices to maintain autonomy and flexibility but also helps them create economic stability. Practices will be able to align to the services they need most, which can vary from practice to practice. We have had extensive discussions with a variety of oncology practices, and we found a common set of needs as well as some unique ones. Practices align on the need for business services that can make them more efficient and access to capital to fund practice expansion. Practices also want predictable profitability with value-based and risk-sharing contracts gaining momentum with payers, we will continue to invest in our value-based care suite of services, so network participants can respond to these new payer models. We believe that participating in the Navista Network, practices will have a more compelling route to monetize their data. Our solutions offer the Navista Network will also make it easier for practices to participate in real-world evidence and patient-reported outcomes research through our practice research network and to participate in innovative and transparent data programs. As you've heard today, we're very committed to growing in Specialty. The launch of the Navista Network builds upon our existing capabilities to create an offering for community oncology that is differentiated in the market. Some existing MSOs in the market require oncologists to commit their assets and make decades long commitment. The Navista Network will be a more flexible model that will support independence. Now let's talk about the therapeutic areas that make up the other 60% of the market. In rheumatology, nephrology and several other therapeutic areas, we are an advantaged player. The road map for us started back in 2015 with our acquisition of Metro Medical. And then last year, we expanded our position in rheumatology by acquiring Bendcare's GPO and by making a minority investment in their managed services organization. Bendcare is the largest U.S. rheumatology MSO, and it supports their network of almost 200 rheumatologists. The $20 billion rheumatology market, which does not include the products that go through retail, is projected to grow mid- to high single digits, and we are very well positioned to capture this opportunity. And beyond rheumatology, the commercial agreement we have with Bendcare's MSO allows us to extend the services to additional therapeutic areas. Biosimilar adoption has continued to grow year-over-year, driving cumulative savings to our health system of $13 billion since 2015. The pipeline of biosimilars is very heavily weighted towards biosimilars that are outside of oncology, which is an accelerator for us in rheumatology and other therapeutic areas. In February, we released our 2023 biosimilars report which surveyed over 350 providers across 4 key therapeutic areas and shared prescribers perceptions about biosimilar adoption. The combination of market growth and our commitment to create awareness and increased education of biosimilars leads us to expect continuing contributions from this. And now, I'm pleased to welcome Craig to the stage, and he's going to dive a little bit deeper into the other strategy for manufacturer services.

Okay. Great. Thanks, Debbie. Good morning, everyone. I'm going to spend some time this morning providing insights into how we are partnering closely with health care manufacturers to support their clinical needs and drive growth in Specialty Pharma. We have a breadth of services that are critical about health care value chain. We work from product research and discovery, all the way to life cycle management and patent extension, so we're working really across the entire continuum of care with 4 key things in mind. One, is improving market access and availability for the manufacturers that we partner with; improved costs; three, is patient adherence and support; and also improved outcomes. That's the commitment that we make to the manufacturers we support and the customers we have in the Specialty area. These services are really growing quickly, have very strong momentum and drive nearly $400 million in annual revenue with significantly higher margins in our core distribution business, and we're expecting to see continued double-digit growth well into the future. So let me dive down just a little bit here and give you some insights on some of the work that we are doing and how we are supporting manufacturers. The first service area I'm going to focus on is our third-party logistics business or 3PL. I think the key here is strong, consistent market leadership over 2 decades. This was a homegrown business that Cardinal created back in the early 1990s and has continued to have a leading position in the 3PL space and continues to really set the pace, I would say, amongst our competitors. It's clear that our scale, our superior customer service and our tenured team of what differentiates us in the market here. We also have unique services through our 3PL, 1 of which is our exclusive pharmaceutical transportation network. This is a network of dedicated trucks going to over 70 common routes, full cold chain products rather than using overnight service. So it results in fewer deductions, more reliable service and lower operating costs, a great example of using our ingenuity and our expertise to come up with a unique solution. We continue to be very, very bullish on the growth of our 3PL and maintaining our leadership through a few things. One, is significantly expanding our ambient and cold chain space to keep up with the customers that we currently have as well as we see this -- where we see this market going over the next number of years. Two, is technology enhancements to improve the customer experience and reduce our cost to serve. And finally, capitalizing on our expertise to help pharmaceutical manufacturers grow in the cell and gene therapy space. Jason mentioned that. Debbie mentioned that, and I'll talk more about that here in just a few moments. But continuing to set the stage here and the things we do to support manufacturers, the next area I'd like to talk about is our Sonexus Access and Patient Support service. This is a full-service hub platform, inclusive of a patient assistant specialty pharmacy that removes obstacles to care along the patient journey. We clearly see this as an increasingly important part of our business based on the trends in the cost of care, driving more growth and focus on patient hub platforms and patient services. We've been devoting a significant amount of energy into this particular business, and we're very pleased with the progress that we are seeing. I think a key point here is that we've been implementing what we call our next-generation hub, which is where we are digitizing and automating the patient journey process or the hub process, which combined with our team of experts is getting more patients on to therapy, getting patients on to therapy faster keeping patients on therapy longer through adherence programs that drive better outcomes and as a result of our expanded capabilities, we're seeing significant new business opportunities. We're also pleased to say that we're getting great reaction from the manufacturers that we support. In the past few months, we did a customer loyalty survey that resulted in a 100% score those manufacturers that work with us in our patient assistant specialty pharmacy. We're also proud to say we've grown the number of customers we work with in Sonexus by over 30% this past year, so it's very clear that Sonexus has significant potential and a high-growth market with industry-leading capabilities. Next, I want to transition to the exciting work we are doing in cell and gene therapy through an initiative we have called Advanced Therapy solutions. As many of you know, cell and gene therapy is an emerging fast-growing market that we will be growing exponentially over the next number of years. This market is a primary focus of Advanced Therapy Solutions. We were working early in the cell and gene space, having started on this path over 8 years ago as a result of the great work we do in our 3PL and also in our regulatory consulting service. It was a very natural fit for us to begin to collaborate with these manufacturers to whiteboard and map the processes needed to get these unique products prepared for commercial launch. We had the privilege of being very involved in the launch of the first 2 CAR T therapies back in 2017. We work very closely to determine the best solutions to get these products efficiently to sites of administration and ultimately to patients by using our 3PL to perform order to cash management and back-office functionality. In fact, we've been doing such a good job here that our experience has expanded into currently partnering on 5 out of the 7 cell therapies that are currently in the market today and 3 of 8 gene therapies currently on the market. And as you might imagine, we continue to have commitments for products that are in the pipeline and awaiting FDA approval. Maybe a little bit more insight on to the scale that we're working at here in the cell and gene space, is that to date, we have processed over 9,000 commercial cell and gene therapy orders across 425 qualified sites of care in the U.S. Now these sites of care have been validated by manufacturers as having the abilities and the skill sets necessary to administer these very unique therapies. We have them set up and we're operating them through our system. We've also collaborated on a little over 40 products in our Regulatory Consulting business as well in the cell and gene space, so we took the expertise in 3PL and what we're doing in our Regulatory Consulting business. We combine that with Real-world Evidence business and Sonexus and the other services to really create Advanced Therapy Solutions. It's designed to be the connective tissue within Cardinal that's providing connectivity and a holistic high-touch customer experience across emerging therapies by bringing the key elements of all of our services together. It's staffed by a dedicated team of clinical experts and business experts with experience and expertise that spans the therapeutic categories, which are critical to this rapidly developing market. They're intended to bring the full power of Cardinal Health and all of our services to support the development and the commercialization of cell and gene therapies and are a top provider to manufacturers of these critical drugs. A key challenge in this space is really the significant cost of these therapies and significant cost of care, ranging from hundreds of thousands of dollars to millions of dollars. And so our goal is to bring together a cohesive offering that is tailored to the unique needs of each one of these products to be sure that they realize the benefit and the value that is intended. We are well positioned to support the hundreds of products that are currently under development in the cell and gene space, and we will continue to grow our offering in the coming years to support stakeholders from biopharma manufacturers to providers and payers. So let me pull together what Debbie had talked about, what I'm talking about relative to specialty. Debbie talked about what we're doing with our downstream provider customers and what we're doing to drive growth there, including the Navista network. I've talked and giving you some insight on our platform and what we're doing upstream to support manufacturers. We believe our continued growth in specialty will be driven by really the link between this upstream and downstream connection. They're intended to feed on each other. We help physician networks become more clinically integrated. We use specialty distribution to obviously deliver product, but also capture data, that then enables us to have unique insights to create more value for manufacturers, along with our other clinical services. So if you think about the one side of this, it's we drive growth and opportunity in the provider space. The success there fuels our opportunity to be successful and have opportunity in the specialty services space as we are successful there, that then in turn feeds opportunities in the provider space, thus what we call the specialty growth cycle. We are confident that our connected specialty growth strategy will drive double-digit growth well into the future. I'm thrilled to be part of the Cardinal team. I'm confident in our plan and appreciate your time this morning. Debbie, I will turn back to you.

Thanks so much, Craig. Now I'm really excited to talk about the nuclear business. As Jason shared, this is a business that we believe is strategically positioned for growth. And we're going to be investing in it to enhance our leadership position. So to highlight the great work being done in nuclear, we have a nice short video for you. [Presentation] The world in medicine is changing it is moving from a world of one size fits all to precision health care. It is exciting to see the important role that radiopharmaceuticals is now having on real patients. Theranostics is really the body precision. It is a diagnostic and therapeutic working in combination to target the specific needs of the patient . The big thing about Theranostics and why it makes such a big difference compared to things that we've done in the past is rather than impacting the entire body to try to treat cancer, these Theranostics are being developed to get directly to the cancer. It's an amazing technology and it's moving forward so fast. All this is new, especially when we talk about Theranostics going up in the business in traditional, we could put things on the shelf for a couple of years. So here, we may have a couple of days to hours. So we have to move this very quickly, delivering precision medicine is more complex, ensuring that you have expertise in that deal to be able to deliver radiopharmaceuticals is really important. And so one of the key investments that we've got is through our center Theranostics Advancement in Indianapolis. And at that center, we've built upon our capabilities to develop products to earlier-stage clinical trials. And then following update approval, we have a commercial manufacturing center and capabilities that we've built out so that we can scale up quickly and we can reach the maximum number of patients. The Center of Theranostics Advancement closes the gaps from an initial conversation about it and to but across the entire United States and the time that it needs to be there. They can bring this idea into the center. We can prove that it could be done repeatedly and scalable to a process that can be manufactured at a commercial level. All of that is connected through our pharmacy network. We have more than 130 nuclear pharmacies across the United States to ensure that we can get those doses to the patient effectively in a [indiscernible] Our on-time delivery to the patient, and remember, this is a 15-minute window, is 99.7%. When a hurricane hit in Florida, we had a driver that got out of this car, the road was flooded. And he held the dose over his head, at his own risk walked across that water to get it to the patient in the hospital. Everything we do is done with the patient in mind.

We are confident that Theranostics represents a growth opportunity because we've successfully anticipated where this market is going. For example, we saw the emergence of Theranostics. Back in 2014, we signed an agreement with Bayer to manufacture their Sofigo product. Fast forward to today, we are the only commercial manufacturer of Alpha Therapeutics, which are a key category of therapies in oncology. Demand for our Theranostics Advancement is just about at capacity. And for that reason, we're planning to invest $30 million over the next few years to expand and support our partners' projects as they advance through the commercial development pipeline. With so much focus on emerging therapies in oncology, we believe there will be opportunities in the future to leverage our capabilities in Theranostics, biologics and cell and gene therapies to develop the unique solutions that are going to be required to commercialize these products. Nuclear is positioned for growth, and we have an emphatic right to win in this promising and innovative part of the industry. So let's bring it all together. Pharma is resilient and growing. Core distribution will grow profit in the low single digits, while the higher-margin specialty and nuclear businesses will grow double-digit profit. This will result in the Pharmaceutical segment delivering 4% to 6% segment profit. We have delivered and we will continue to deliver. Long-term health care trends are working in our favor. A strong customer base and consistent generics program give us a solid foundation in our core and specialty will be a key growth driver long term, expanding downstream in oncology, rheumatology and other therapeutic areas, as well as continued double-digit growth from partnering upstream with manufacturer services. And nuclear is on its way to double profit by FY '26. I am really excited about the future of this business, and I'm very proud to be part of a team that has a track record for success, and we are well positioned for continued growth. Thank you very much.

We're going to take a short break right now, let's call it about 15 minutes, so we'll see you at 10:20. [Break]

Okay. Thanks for coming back. It's my pleasure to introduce Steve Mason, the CEO of the Medical segment.

All right. Well, good morning. Welcome back from break. First, let me start by saying I have an absolute privilege and something I enjoy coming to work every day to serve our patients, our customers, our employees, and it's all surrounding the medical business, and I'm super excited to talk about it today. Today, we're going to talk about who we are and what we do, our progress against the medical improvement plan and how we will achieve at least $650 million in segment profit by FY '26. The medical business has one common mission, and that's ensuring global health care providers have the right products at the right place and time so that they can do what they do best, which is care for patients. We do this in 3 ways: first, as an integrated global medical product manufacturer with vertically integrated distribution in the U.S. and in Canada. Products and distribution is the largest part of our business from a revenue and global scale perspective. Second, in the U.S., we do this as a direct-to-patient medical supply provider as well as fulfillment partner, and we do that through our at-Home solutions business. And third, in the U.S., we do it as a digital supply chain solutions partner, and we primarily do that through our OptiFreight Logistics business where we enable help care providers to improve their supply chain performance. Now I want to walk into how we leverage our scale and our global reach. Our businesses generate about $15 billion in revenue. We service consumers around the world. And this gives us the depth and breadth to play a critical role and helping health care providers navigate their most pressing challenges. From the prevention of pulmonary embolisms to malnutrition and dehydration to the management of chronic conditions like urinary continence and many more. And while through our distribution services, we help customers simplify their supply chains. We help them drive cost out through efficiency. And in this environment, we help them with the necessary resiliency that's required coming out of the pandemic. All of this is powered by 24,000 employees around the world. We're a global medical product manufacturer. We do $4.6 billion in annual revenue with our Cardinal Health branded portfolio and we sell in over 50 countries. The majority of our revenue is in the U.S. and about $800 million is sold through Canada, Latin America, Europe and Asia. We're a leading medical product distributor in Canada. We're a leading medical product distributor in the U.S. to hospitals, and we're increasingly recognized as a leader to ambulatory surgery centers and laboratories. We've been a long leader in direct-to-patient medical supply space, and our digital supply chain businesses continue to drive strong growth, and we'll talk more about that in a bit. To wrap this section up, what we do really matters to the health care system. Now the kind of the main attraction of the show, I'm going to talk about our progress against the medical improvement plan. Executing the medical improvement plan is a top priority for me as well as my leadership team. As Jason highlighted, while our time line has evolved, we're on target for 3 of the 4 priorities, and we have a clear path to at least $650 million of segment profit by FY '26. So as we jump in, first, we remain on track to mitigate inflation and supply constraints. This is the #1 key to returning our business to a normalized profitability. And second, we have a clear plan to optimize and grow our Cardinal Health brand portfolio. I would describe the situation like this. We've essentially been running in place when it comes to our volumes. And this is the primary reason we're extending our time line. But we have commercial activities ramping up, and they're aligned to our investments and our plan, and we are confident in growing Cardinal Health brand this year and achieving the $50 million target over the next 3 years. Our confidence is tied to key leading indicators that have been improving, and we'll spend more time on this today. Third, we remain on track to accelerate our growth businesses and deliver at least $75 million in segment profit here over the next 3 years. And lastly, we remain on track to drive simplification and cost optimization. We have a very good track record here and look forward to achieving at least $60 million in net savings. Next, we're going to take a deep dive into each one of the strategic priorities, and I'm going to start with mitigating inflation and supply constraints. Until the last couple of years, our industry operated in a low inflationary environment. And while it has improved, overall costs do remain elevated. And it's important to call out that international freight has generally returned to prepandemic levels. We expect this to be reflected in our FY '24 results, and it's why we're confident in the overall cost will come down from their peak in Q2 of FY '23. Labor, domestic transportation and some raw materials have generally stabilized. And we -- but we continue to see elevated inflation in key commodities that are used in this -- in our products. So what are we doing about inflation? We started price increases in March of 2022. We've now successfully increased pricing on about 90% of our Cardinal Health branded revenue. Next, we amended our contracts, which are generally fixed for 3 or more years. So now 75% of our contracts allow for temporary price increases if extraordinary events occur. About 1/3 of our contracts now include permanent price increases. And more importantly, over the next several years, permanent price increases will be reflected in the majority of our contract renewals. We've also increased distribution service fees to offset higher inflationary costs for suppliers in which we distribute their products. So what does all of this mean? Combined with our efforts to reduce product costs will offset at least 50% of inflation as we exit FY '23. And importantly to call out, we remain on track to get 100% mitigation by the end of FY '24. Now I'm going to jump into strategic priority #2, which is growing and optimizing our Cardinal Health brand. Before we jump into the details, I'd like to welcome Ben Brinker. He's our President for Global Products manufacturing and supply chain for our medical business. Ben has over 20 years of global medical device experience, and he's one of the best in the industry when it comes to transformation. So when it came time to select a leader to help us figure out how are we going to optimize our global portfolio and our global operations. Ben was my #1 choice, and I'm super excited. He's with us today. He's going to walk through the approach that we're taking on the portfolio, where we're focused and how we're making decisions to optimize. And then he and I will walk through how we plan to grow the Cardinal Health brand portfolio and deliver $50 million in segment profit over the next 3 years. So welcome up Ben.

Thank you, Steve, and good morning, everybody. is really great to be here. Before I get into the portfolio itself, I thought it would make sense to quickly orient you around some of the key drivers, in fact, specific to the broad portfolio as well as our operations. As an integrated medical device manufacturer and distributor, we're committed to delivering the right products at the right place in time. Now as an integrated global manufacturer we deliver over 25 billion products every single year. And that equates to roughly $4.6 billion of Cardinal Health brand revenue, of which we self-manufacture over half of it within our 28 manufacturing facilities. This portfolio is split into 2 parts. You've got specialty at $1.1 billion, and the remaining $3.5 billion is made up of our core to distribution products, which I will get into in a few minutes. That also is inclusive of PPE. Now the pandemic clearly put a spotlight on PPE. But as you can see, it does make up a relatively small portion of our total portfolio, and I'm really happy to see the categories beginning to stabilize. Now as the distributor, we have an extensive network, both in the U.S. as well as in Canada where we serviced over 90,000 customers. And these customers include hospitals, surgery centers, physician clinics and more. Now I want to turn to the next slide and get into a little bit more depth specific to the portfolio itself as well as how that complements strategic driver number two. Our Cardinal Health brand portfolio growth is anchored to enable the backbone and future of health care. Simply put, we deliver essential products to caregivers each and every day. Guiding our portfolio is our approach to portfolio life cycle management, which at Cardinal means true end-to-end ownership of the portfolio from a concept, to end of life of an item. Once again, at Cardinal, we separate the portfolio into 2 parts, specialty and core distribution. Our core products, as you see on the left hand of the slide here include things like operating room products. These are oriented to complement the surgical suite. Our Presource sterile kits is a really good example here. Laboratory products. These are consumables using specimen collection and clinical lab operations. PPE, as I just mentioned, think facial protection, isolation gowns and masks. Incontinence, and this is an area we actually continue to invest in products such as under pads, adult protective underwear and breaks. Now it's also important to note, as a distributor, our services play a real critical role in this part of the portfolio. typically prime vendors favor the distributors brand here. Now on the other side of the slide, these represent our specialty products, and these represent market and industry-leading brands backed by outcomes and strong clinical outcomes. Typically, global demand for these products are outpacing the markets in which we compete. There are 4 key products represented here. First, for over 35 years, we're the only company in the world to offer a true end-to-end solution for the delivery of [ enteral ] nutrition and hydration through our comprehensive Kangaroo platform; two, surgeons and clinical staff, they put on our [ Protectis ] clubs over 400 million times every year worldwide. Three, we manufacture the Kendall SCD compression system, which delivers mechanical prophylaxis to design to reduce the risk of deep vein thrombosis or you may more commonly know it as DVT, which in the U.S. alone impacts over 600,000 people each and every year. And finally, we offer a full array of Kendall disposable lead wires and electrodes. And they enable accurate, reliable and safe cardiac monitoring across clinical settings. Now I'd like to turn your attention to an example of one of our innovative specialty product developments with the commercial launch scheduled this summer. I'm lucky and excited to have the opportunity to launch the Kangaroo OMNI product platform. This is the first and only enteral feeding system that is designed to meet the needs from the hospital to the home from infancy to end of life. There are 4 key differentiating features that really make this product special. First, it's compact size, which drives portability, but we are also able to maintain this versatility of both feed and hydrate, which is [ cord ] Kangaroo product itself. Two, it has the ability to deliver thick formula. It has remote monitoring and it also is capable to capture and transmit feed history. And the Kangaroo OMNI, it's just the start here. Within the nutritional delivery space, we're continuing to identify and address unmet needs to get after clinical research. And our new end trainer system is a great example of a recent adjacent market expansion that we just executed. This is a device designed to reinforce the development of enteral feeding skills in newborns and infants born prematurely. Clearly, innovation is crucial across the portfolio, but it's really important within our specialty products to maintain market leadership. And this leads me to my next slide, focused on a number of additional incremental investments we've made to support the Cardinal Health brand growth. It is clear the combination of both product availability and volume growth is absolutely required for Cardinal Health brand to meet our goals. And we've made a series of deliberate investments. And just a few examples are shown here on the slide, notable examples. We've increased our U.S. distribution network capacity with more efficient and modern distribution centers. In nutritional delivery, we've expanded our capacity by over 25%. With fluid management, we have invested in automation to increase our total capacity out of our Jacksonville, Texas facility by 35%. We've increased Protectis surgical glove capacity by an additional 25% in support of that market-leading brand. And finally, we are continuing to make investments across our incontinence category, but particularly within wearables where we've also been able to launch a new stretch brief. All of these are critical investments in support of the medical improvement plan. Now I'd be remiss if I didn't also mention in parallel, we do continue to enhance our manufacturing and sourcing footprint to ensure we maintain supply chain resiliency, product quality as well as reduce our overall cost structure. Now to close out on Strategic driver number two. And as I turn to the next slide, I'm going to ask Steve to come back up and talk about our plan to achieve $50 million of segment profit over the next 3 years. So Steve, back to you.

All right. Thank you, Ben. So as you heard Ben highlight, we're targeting $50 million in segment profit growth for our Cardinal Health brand. We've recently mentioned though, we did lose some business over the last couple of years due to supply constraints. And what's really important about that is we know what needs to be done and we have aggressive actions in motion as a result. We have a clear 5-point plan that's focused on the key leading indicators that must be in place for us to be successful. And it's very important and quite frankly, exciting for me to call out, we're seeing progress in all 5 of those. This plan will enable us to grow with the market, and it's anchored by stable, in what I would describe as improving utilization environment. The #1 leading indicator and focus of our Five-Point Plan is customer experience. Let me start with the punch line. With all the investments that you heard Ben highlight, our customer loyalty index for U.S. distribution has improved by 13 points over the last 2 years, 13 points. That is a significant improvement and it puts us at pace with our competition. This is important because distribution is at the center of our value proposition and it's also the key enabler for how we grow the Cardinal Health brand portfolio. One does not happen without the other. And driving an excellent customer experience is absolutely our north star. The second part of the plan, we need to improve our portfolio and supply chain health, and we're making significant forward progress here as well. With the focused investments we've reduced our back orders and improved our service levels. This has resulted in some of the highest service levels we've had as a business in roughly 4 years. So why is this important? I think it goes without saying it helps us meet the expectations of our customers that we expect. But as importantly, it creates an environment where our sales reps can be successful. They can sell, they can convert product, accelerate the pipeline. Best way to put it is, we're not playing defense anymore. We're on offense. And I do know one thing being in this business a long time. You can put points on the board if you're playing offense. So it's very exciting for us as a business. The third part of the plan, and Ben already walked through this, is that we're committed to new product development and innovation to broaden our portfolio. Like him, I'm equally excited about the Kangaroo OMNI launch. This is a really big deal for the patients that we serve in that space. Fourth, we have the right sales force and the right structure with clear incentives to drive Cardinal Health and growth. I know that today, there are a lot of reps listening in on our webcast and may know they're instead to drive Cardinal growth. It has to be the way we drive forward. Lastly, and most importantly, we're improving our sales pipeline and win rate. We have some really good examples. This last quarter, we had the largest distribution we've had in several years. And this is important because it's also an opportunity for us to drive Cardinal Health brand penetration with that customer. We also had a landmark win in our compression category that we expect to grow that category in the U.S. by 10% FY '24 over previous FY '23. Let me close this section out by saying this. I want to assure you that everything that can be done is being done to grow the Cardinal Health brand for our portfolio. We have a very good plan in place, and we're making progress in all 5 areas. Now I'm going to turn our attention to strategic driver #3, and I'm very pleased to share that our growth businesses are on track, and they're accelerating to deliver at least $75 million of segment profit over the next 3 years. I'm going to cover off on solutions than our op freight logistics business. Starting with at Home Solutions, we serve approximately 4 million patients annually in the U.S. with chronic conditions. We're [indiscernible] as observable met on behalf of other DME providers, which I commonly refer to as their fulfillment partner. Our core competencies include payer access for patients, managing medical billing across more than 1,400 contracts and our ability to reach patients through our national network. We continue to see very robust top line growth with a 10% CAGR over the last 3 years. And as we look forward, we expect double-digit growth. Care is shifting to the home. It's a trend that's here to stay, and we're responding by expanding our network and our offering. We're investing in technology, automation distribution capacity. This includes over 1 million of square feet of additional square feet capacity to help us keep up with growing demand. And we're definitely not stopping there. A new offering and at-home solutions business is called Velo Care, and we launched this in 2022. This is a last-mile fulfillment solution, which can reach patients in 1 to 2 hours with the goods and services that are necessary to have hospital-level care in the home. This means a patient can recover the home with the same level of care that's traditionally available only in the hospital. This frees up beds in the hospital, and there are studies that show that it can reduce cost by as much as 30%. We launched this in collaboration with Medically Home. Cardinal Health, along with Baxter, Mayo Clinic and Kaiser Permanente are enabling medically home to advance hospital-level care in the home. Velo Care is currently in 3 markets, and we have more markets to come. Now I'm excited to jump into OptiFreight logistics. This business offers industry-leading logistics management to customers. It's powered by our proprietary technology and what I would describe as very deep expertise in freight management. Saying it differently, we optimize inbound and outbound direct shipments for our customers. And for our customers, this is an area where they can find tremendous cost savings to come out of their systems. And when you look in aggregate and all the customers that leverage OptiFreight logistics services they generally see about $700 million in annual savings in their shipping. This year, we will support more than 20,000 health care provider sites by managing over 20 million packages -- 20 million packages. This is an increase of 6% over the previous year. Providing a consistent, excellent customer experience is 1 of the key -- it's been 1 of the keys for growth in this business, and we are honored to have 17 of Gartner's top 25 supply chain health systems as our customers. We also see an opportunity to continue to grow by investing in this business, specifically into digital automation -- excuse me, digital innovation. In January, we launched the newest addition to our total view offering, which provides supply chain visibility tools, which is an incredible thing to drive value for our customers coming out of the pandemic, given the need to understand what's happening in supply chains. And we already have over 1,000 customers taking advantage of this new offering. We're very excited about this business and the potential it has for continued growth and most importantly, adding the value that it adds for our customers today. To close out our strategic drivers, I'm going to talk about now simplifying in our cost optimization efforts. This is central to our strategy. We're on track to deliver at least $60 million in net savings by FY '26. There are 3 key areas of focus to achieve our target. And the first, we've made substantial progress simplifying and optimizing our international footprint. We've reduced our commercial footprint by more than 50% to about 52 countries today. And as importantly, we're deploying the right go-to-market models to drive efficiency and maximize our commercial potential. Second, through our portfolio life cycle management approach, we're actively deciding what is in and what is out of the portfolio. One of the very important decisions we made was to exit the Cordis business. And frankly, this enabled us to be able to make the progress we've made in simplifying our international commercial approach. We've also exited noncore product categories as a result of these actions. Finally, building off what Ben shared, we're reshaping our global operations and manufacturing network. We have consolidated operations with the goal of delivering efficiency, resiliency and the best cost position. This means that since 2017, we've reduced our global footprint by 1.2 million square feet and have exited 6 medical product manufacturing facilities globally, half of which happened in the last several years. And the other thing I would call out here is we know the playbook here and we have additional opportunity that we're really excited to get after. So to wrap up, I hope you see what we see so clearly. First, we remain on track to mitigate inflation and supply constraints. As I've shared, this is the #1 key for our business returning to a normalized profitability. Second, we have a clear plan for Cardinal Health brand growth, and we're making progress. Our customer loyalty index and our service levels are at multiyear highs. We're launching new products, and our 5-point plan is yielding new wins and conversions. We're on the offense. This is really exciting. Third, we remain on track to accelerate our growth businesses. And finally, we remain on track to successfully drive simplification and cost optimization in our business. We know what has to be done, and we know how to do it. The path to achieve sustainable growth is clear and the potential within this -- the medical business, it does remain. My team and I are committed to executing the medical improvement plan, and we're really excited about the position we're in to continue to drive forward progress. Thank you for the time today. I enjoyed it. And with that, I would like to welcome Aaron Alt, the CFO for Cardinal Health.

All right. Good morning. On behalf of Jason, the team, indeed, all of the Cardinal executives in the room, I'm delighted to be here with all of you with this team talking about our path forward. Now the team so far today has talked about our enterprise strategy, our operations strategy, the segment strategy. And they've asked the finance guy, unfortunately, for all of you to wrap it all up. And so I'm going to try to tie it all together for you this morning by talking about our financial strategy, by talking about our guidance. The here and now, next year as well as the 3 years so that you understand what we can see, which is the significant opportunity in front of Cardinal Health for value creation. Of course, before we talk about where we're going, we have to confirm where we are, our launching point, so to speak. And we are a mere 3 short weeks away from the end of our fiscal year '23. If you listen to our Q3 earnings call, you heard our second beat and raise of the year. That's the good news, if you will. And indeed, there's some further good news today, which is, I hope, in listening so far, you've picked up on the fact that Indeed, we're updating our guidance for this year, the year that we're in. The new guidance is $5.65 to $5.80 as we narrow our EPS guidance for this year towards the top end. How are we getting there? Pharma is now expected to do 11% to 12% profit increase for the year, which is effectively 4% to 8% growth in Q4. Med is still expected to hit approximately $80 million in profit for Q4, a $60 million increase over the prior quarter. Of course, they just returned to profitability in Q2. So we're pleased with that news. We've got some modest benefit in corporate interest expense and tax for the quarter. And we are also confirming today the updated cash flow guidance we gave during our Q3 earnings call, which is $2 billion to $2.3 billion of adjusted free cash flow with approximately $450 million of CapEx in fiscal '23 as we continue to invest in the success of the businesses as we carry forward. So with 13% non-GAAP EPS growth year-over-year expected at the new midpoint of our updated guidance which, by the way, would be our highest non-GAAP EPS ever for a year. We will land fiscal '23 quite strong as we then launch into fiscal '24 in a couple of weeks from now. Now before I walk you through the guidance for fiscal '24 or indeed the long term, I think it's important to just take a step back and talk about what is the calculation, what is the algorithm? How do we think about the business? How do we drive profit growth as we carry forward? Starts with the portfolio and the customer positioning, and I won't attempt to do that again. You've heard that from Debbie and Steve and Jason and others already. But I do want to point out, we have benefited in recent quarters from operational performance improving, right? COVID, et cetera, there's been a lot going on. And we've had the good news of things like fill rates are up. On-time deliveries are up. Employee retention is up. And we do expect stronger operational performance to continue, laddering into stronger financial performance going forward. Of course, we'll need to continue to run the bases on the basics. I'm sure you'll ask us about what's going to drive those numbers. And you're going to hear us say things like, we need to continue to effectively manage our generics program. We need to continue to smartly drive our branded platforms. We need to accelerate our specialty focus. I hope you've heard a lot about that today so far. And of course, consistent with what Steve and Ben just walked through, we need to make continued progress against our medical improvement plans. When you combine all of that, and that's a lot, we combine all of that with our enterprise cost savings programs in the background. You start to see the opportunity that we see from why we believe we can continue to drive the growth within the profitability of the enterprise. Now look, we are a Fortune 15 company. We're a big company. We drive a lot of revenue and we drive a lot of volume. But we're also in a low-margin industry, which makes the relentless focus on cash critically important. And under Jason's leadership in partnership with our customers and our suppliers, we're going to continue to assess opportunities, both in how do we grow the business, but also how do we improve our working capital position as we carry forward. And I'm here to tell you that we have continued opportunity in that way. So if you take that as a given and you tie that to our strong cash balance, recall that we had almost $4 billion at the end of Q3, and we talked about the strong cash flow we're going to have going forward, and we apply a disciplined capital allocation framework, which I'm going to come to in a second, right? I hope you really start to understand the algorithm that we're looking internally of how we're going to create that value through a combination of both improvements found on the income statement and through cash flow. All right. Let's push ahead. Our preliminary fiscal year '24 guidance is on the slide behind me. And we are expecting 15% growth of non-EPS -- non-GAAP EPS, rather, at the relative midpoint with a guidance range of $6.45 to $6.70 for the coming year. These results are a combination of progress in pharma and med and include us continuing to build our corporate capabilities and the investment spend necessary to get there. Accompanying our income statement, profit growth is adjusted free cash flow of approximately $2 billion in fiscal year '24. After approximately $500 million of capital expenditures in support of the growth agenda you've heard us talk about today. Now you might say $2 billion, it was $2.3 billion, what's going on. And there's a simple answer, which is there's a days of the week dynamic in our business, which was a benefit to us. There was 1 extra Friday in fiscal '23. Interest and other should be -- rather $110 million to $130 million for the year. We did benefit in fiscal '23 from the higher cash balances as well as the higher interest rates on those cash balances and so that's why you'll see a modest increase there. We're expecting tax to be 23% to 25%, and diluted weighted average shares of 250 million to 254 million shares. I'm going to come back at the end of the presentation to our conversation around how we get to the number of shares. Now I'm going to pivot from the enterprise to a quick conversation about the individual segments. Debbie and Steve have alluded too much of this already. But I do want to acknowledge that this team is running 2 different business models at the same time. The pharma business is clearly in build and grow mode, right? And we have a series of investments and actions we're taking with that. While the medical business is in turnaround mode, and we have a different series of actions we're taking there. But what I want you to take away as we talk about the long term is that both businesses, both models, presents with the opportunity for value creation as we carry forward. And we are reserving the capital and the expense dollars necessary to be successful with respect to both plans. All right. On the slide behind me, you'll see the build-and-grow story for pharma. Given its relative size of almost $200 billion of sales, the pharma segment is obviously the largest contributor to our absolute profit. We do expect about 10% revenue growth for pharma, higher-than-market growth and also expect segment profit growth of 4% to 6% for the year. In making this projection, we continue to assume consistent market dynamics for our generics program. We are also expecting continued positive operational improvements and continued strong performance by Red Oak, as well as progress against our organic specialty efforts. We are not assuming for next year any outsized benefits from product inflation on the branded side of the house, in contrast to some of the conversations we've had as part of some of the quarters in fiscal year '23. And these numbers also do not assume that we execute any M&A within the pharma business, although as I'll come to in a second, we are quite open to those opportunities as accelerators. Now let's talk about the medical business, the turnaround operational improvement story. Jason and Steve already talked through many of the elements, but I want to highlight a couple of things. The first is that -- for the year, medical does return to significant profitability. We're calling it at 400 approximately for the year. That's on the base of revenue growth of approximately 3%. We're going to continue to assume that we will exit fiscal '24 -- exit fiscal '24, having achieved 100% mitigation of inflation. And as Jason has called it a number of times, while our plans may be simple, they aren't easy. And so as we approach the year, we have built that in and have confidence in the number that we are providing today. Now from an enterprise level, I want to be clear, we're not done with fiscal '23 yet. The books are -- the month is still open. The books are not closed. We have a couple more weeks to go. We will report earnings for the quarter and for the year in early August. And at that time, of course, we'll provide any further updates to the preliminary guidance for fiscal year '24. But I want to leave you with this, right? We have high confidence for a successful fiscal year '23. EPS growth of 13% at the midpoint over the prior year to which we are now adding the preliminary guidance for fiscal '24 of approximately 15% non-GAAP EPS growth for '24 versus '23. So pushing -- coming year aside, let's now talk about the long term. As you can see from the right side of the page, we expect to drive low-double-digit -- low double digit CAGR for non-GAAP EPS growth in the 12% to 14% range over our 3-year plan for the enterprise. While most of this profit growth will come from increased operating profitability, 1/4 to 1/3 of the benefit will come from our baseline capital deployment strategies and the reduction of shares. And I'll touch on that more in a minute. As you can see on Slide 74, we are guiding the Pharma segment at 4% to 6% CAGR for profit growth based on an assumed compounded annual revenue growth of approximately 10%, this growth is anchored to the 2% to 3% projected generic unit market growth that Debbie referred to earlier, and consistent market dynamics in our generic program and comes from a combination of low-single-digit growth in our large core business, and double-digit growth in our specialty business and in our nuclear business. With respect to medical, while we continue to believe it will achieve its significant segment profit growth of $650 million we do think it prudent to extend the time to achieve that plan by 1 year, as you've heard us say today, to fiscal year '26. We are forecasting a 3% to 4% revenue CAGR and the contribution of the elements of the medical plan that Steve and Jason and Ben have already alluded to during this presentation, and you can see some further details on the slides. So let's talk cash. Let's put the income statement behind us for a second. We are forecasting approximately $2 billion of adjusted free cash flow in each year of our 3-year strategic plan. There'll be some variability year-to-year driven by days of the week, but set them aside for purposes of our conversation today. So we'll have $6 billion of new cash flow to be deployed against our business over the period. Alongside, call it, $2 billion of available opportunistic cash from the fiscal year '23 year-end balance and the excess is above our general preference to keep approximately $2 billion of cash on hand for business purposes, which brings us back to the question that Jason and I have both called previously, which is how will we be disciplined? What will we do with that cash? What is the order of priority relative to how we will spend the cash? I'm going to walk you through the framework quickly again, then we're going to talk through each of the elements in some more detail. First, we're going to do the core, right? We're going to invest our cash organically in our business. How are we going to drive that profitable growth? That's job 1 for us. Second, we're going to act to maintain our strong investment-grade rating, while also fulfilling our obligations. Third, we do expect to return a base line of capital to our shareholders. Fourth, while we're doing all that, we are going to opportunistically look at important targeted M&A opportunities. And finally, having done all of that, we will also look for incremental opportunities to return capital to shareholders, consistent with our cash flows and consistent with the needs of the business. Let's talk about each of those. We are committed to investing in our business to drive that organic profit growth. And as you can see on the annual walk on the slide, it's going to ramp up modestly for us to approximately $500 million in each year of our long-range plan. We have several specific examples of how we're doing this including opening new distribution nodes to support new customers and new channels. You may have seen in the news that we recently opened 2 new facilities in the Central Ohio area, supporting our medical business and we've announced plans to expand or build new operational hubs supporting our pharma and nuclear businesses in Missouri, South Carolina and Indiana. We're also adding automation in our buildings to drive efficiency. You would have seen pictures of some of that in the video at the start of the day. And we're driving technology upgrades across our value streams to drive both better customer experience, and efficiency in support of the income statement. Our investment-grade rating luck, like our competitive set, we are firm in our conviction that maintaining a strong investment-grade rating is a critical component of our success. We are currently rated BBB, BAA2 and we intend to stay at that ratings as -- in our view, that's the most efficient capital structure for our operations. Our leverage from our perspective is a combination of our outstanding indebtedness and the impact of our opioid liabilities. For ease of reference as we talk about that, we look to Moody's debt-to-EBITDA leverage ratio, which combines our existing gross leverage and the present value of our opioid liabilities. And Moody's target for us is to retain our rating is 2.5 to 3x. If we apply that methodology, we anticipate hitting the expected range during fiscal year '24. We're just above as we end fiscal '23, and we'll hit it as we go through '24. But I want to emphasize, we have a excellent capital structure, and we've benefited from our long-term liabilities being largely fixed during the recent rise in interest rates. And while our team will continue to optimize that excellent capital structure to reflect the evolving market, we don't anticipate that we need to repay any of our existing nodes to get to this leverage target. The combination of growing profitability, plus our payment of the known opioid liabilities will naturally improve our ratio of EBITDA to leverage consistent with the Moody's framework. So what you should assume from a modeling perspective is that we will refinance upcoming maturities, potentially in a higher rate environment and that will lead to modestly higher interest expenses in the short term or indeed in the out years of the plan that we've put on the page as we're doing the modeling, okay? Which brings us to the important topic of return of capital to shareholders. Allow me to announce the obvious, Cardinal Health is a dividend aristocrat. We've increased our dividend each year for more than 30 years. Our dividend yield is -- almost 2.5%, which is substantially higher than our key competitors and indeed higher than the S&P in the Healthcare Index. And as part of our overall return of capital strategy, we are committed to growing our dividend as we have done for more than 30 years. We also view return of capital as having a couple of layers and a couple of paths. As a minimum baseline, we expect to return approximately $1 billion of cash to our shareholders each year through both the dividend payments and baseline share repurchase. Now you will have noticed from the news that our Board of Directors last month approved a 1% increase to our annual dividend, that's the fifth year in a row that the company has taken that action with respect to our dividend, the 1% increase. So we will pay approximately $500 million of dividends in fiscal year '24. We will match that with approximately $500 million of base share repurchase each year. That means that roughly 50% of the adjusted free cash flow, the $2 billion I called out earlier, will be returned to shareholders, through our baseline decisions to pay the dividend and repurchase the shares. Of course, the absolute dividend outflow will decline as the number of shares comes down. And importantly, we are -- if you think through that capital allocation structure, we will continue to evaluate additional opportunistic share repurchases as we move through the years. Before I go there, though, I know it's on your minds. I'm going to talk M&A, because before we get to additional share repurchase, we are preserving capital as we look for M&A opportunities in support of our strategy. Jason and I both referenced it, but we are being quite purposeful in preserving the dry powder. And as you can see on the slide behind me, we're going to be incredibly disciplined in our pursuit of acquisition targets. M&A has to exceed our internal hurdle rates. It has to have a detailed strategy. It has to have a detailed implementation plan. It has to fit with our overall efforts across Cardinal Health. So while it's difficult to predict the timing, indeed or the precise magnitude of any of those transactions, just know that it is a tool that is in front of us that we are going to be quite disciplined as we execute against it, with most of our effort actually focused in pharma and specifically in specialty, as well as augmenting the existing capabilities within the business. Alright. I've been teasing the share repurchase long enough, let's go to that slide. And what you can see is, as I said before, as we move through the year or years, as we continue to have line of sight to business performance, to run rate cash positions and our further organic investment needs, we're then going to look to give additional capital back to our shareholders through incremental share repurchase actions. And while these actions are not built into our model or the guidance we're providing today, I will note that our Board recently approved a new share repurchase authorization of $3.5 billion, that should have hit the ticker this morning, I believe, expiring in December 31, 2027, so we had $1.2 billion still left on our prior authorization, to that we've added $3.5 billion of new authorization, so we have authority to buyback shares to the tune of almost $5 billion, which is roughly equivalent to 22% of our market cap. On the slide behind me, you can see the roll-up of our intended deployment of free cash flow over the 3-year period. Again, after investing in the business, preserving our investment-grade rating, making $1.5 billion of litigation payments and making our $3 billion of baseline return of capital, we expect to have $3.5 billion of remaining room to cover M&A and for the return of capital to shareholders as we move through the 3-year period. Now we're not committed to waiting until the very end before deciding what we're going to do, and we want to give you an important signal of that commitment. And so today, we're announcing that during the next few months, sometime between Q1 -- or between the end of Q4 and Q1, we will execute a $500 million share repurchase program, which is additive to the $1.5 billion we've already executed in fiscal '23 and also additive to the $500 million baseline share repurchase program for fiscal '24 you've already heard me talking about today. This decision is a proof point, right? It's us following the disciplined capital allocation strategy that we have laid out before, and it's how we're going to approach things as we carry forward. So thanks for your time. Let's sum it up. In pharma, we have a resilient and growing business, which is supported by long-term industry tailwinds. We're building on our core and the team is investing in specialty and expecting to grow profitably 4% to 6%. In medical, we have the benefit of all the hard work that's come before, but we also have further work here to support achieving our medical improvement plan and the significant increases in profitability that come with that success. We expect double-digit non-GAAP EPS growth at the enterprise level, along with the generation of robust cash flow, which we'll use to invest in the business and which we will return to shareholders in the form of both growing the dividend and executing new share repurchase activity, both through the baseline as well as opportunistic efforts. And importantly, as we become a more simplified and focused company, we will find ourselves in a place where we can continue to maximize shareholder value by deploying the assets we have as a leader in health care as a Fortune 15 company. Thank you for your time. With that, I'm going to invite the team to come on stage while we set up for a Q&A section.

Just bear with us here for a moment while we get the stage ready. I'm going to try and not overcomplicate this. So we have 2 mic runners, 1 on. If you can just make eye contact or raise your hand, we will try and get this started. So let's do the first one? Michael Cherny from Bank of America, please.

Great. Thanks, Kevin, for not making me repeat my name. I appreciate all the color. Obviously, a lot of anticipation given the first one you've done a few years. I guess I'll ask a question on the Pharma segment, and particularly the areas of growth. Highlighting specialty seems like it's where the market is going. You made the one big, I would say, internal investment with Navista being announced, which seems like it's a big focus point across the market. As you think about that pull-push of organic versus inorganic growth and your comfort factor and hitting that 4% to 6% target, how much of it is tied to some new innovations, either from new product launches or new service launches on your part to make sure that you hit the numbers? And especially, what do the characteristics have to look like for you to be at that 6% part of the range?

Yes. Maybe I'll start. So a couple of things to highlight. And when you look at the last slide in Debbie's section, I think it lays out very well the balance for the overall pharma segment, the contribution from the core non-specialty, non-nuclear continuing to grow at the low single-digit type of rate. And then to your point, Michael, is further accelerated by the double-digit growth within the growth areas of specialty and nuclear. One thing that Aaron did highlight that is important is that, it is all organic growth. We are not including inorganic opportunities. And I would say, generally speaking, when you think about the areas that we announced today, whether it's within the pharma side of it, whether you're talking about the Theranostics Phase 2 investment, Navista network, or the outcomes deal. All of those will take some level of time to kind of spool up. Now the one exception I'd like Debbie to talk a little bit more about, is Navista network is a further extension of some of the work we're already doing today. So it's not like we're entering into new space. And same with Theranostics where we have the nuclear Theranostics, that Phase 1 is -- that's a big part of why medical or the nuclear business is expected to double by fiscal '26 from fiscal '21. So those initial investments, the initial business is very much a driver. But as it relates to Navista network, that would be -- we would expect to continue to grow with the ongoing business, but not necessarily a further acceleration being meaningful within the next 3 years.

Yes. I would point to the material that Craig share, which is really the concept of this specialty growth cycle. You drive distribution by providing the appropriate services for your providers. And then when you grow your distribution, you're also growing your GPO, you're growing your ability to kind of feed the machine on all the services and Navista will bring all of that together for us. These are some assets we've had for years. Some we've developed very recently, like our value-based care suite of tools. And then we'll be looking to develop some as well as that's an opportunity for M&A to create capabilities or to buy capabilities.

Okay. Let's do Elizabeth Anderson with Evercore, please.

Can you talk a little bit about more how you see that community oncology assets sort of contributing over that forecast period? Are there certain sort of metrics you're looking to hit on across that? Or like how do you sort of judge the success of that program?

Obviously, participation in the network will be a measure. We are just announcing the introduction of this network today. So more to come on that. But the data and the information is difficult to kind of weed through. There are many different networks. Some of them are clinical networks, some of them are buying networks. So this is something we feel is differentiated and that is a flexible network that gives community oncologists a pathway to stay independent without making an extremely long commitment without necessarily selling their practice.

Okay. Let's go with Eric Percher from Nephron, please.

A similar question on the medical side. So loud and clear on the mitigation. But when we look at the Cardinal Health brand growth and contribution from at home. If you do not see the growth over the next year, particularly on the Cardinal side, would that materially impact the fiscal year '24 outlook? And at what point do you need to see those contributions really coming through for both those segments -- both those pieces?

Yes. So we -- there is a slide in there that highlights the assumptions for the medical segment growth. And so it's a low-single-digit, 3% overall revenue growth for the segment, which includes some at-home growth that's -- on the higher end of that but it would assume a lower single-digit type of growth rate. So that portion is included in our guidance, which we think is pretty consistent with the underlying market growth. So certainly not growing faster in market, but participating with the market growth is the underlying assumption, Steve?

Yes. The only thing I'd add, which is really important to note as it relates to Cardinal Health brand volumes, we did experience some losses and with all the work we've done around the loyalty index and service levels, we're starting to lap some of the losses that we had. We're getting retention rates back to what I would call -- and so with the commercial efforts combine those 3 things together, that's why we feel confident that we'll start to see kind of growth -- the growth for Cardinal Health brand in FY '24 with that ramping up towards the back half of that year.

And just got to say, Eric, I'm a little disappointed. You're always my go-to person when it comes to getting capital deployment question. So the fact that you went with medical means that someone's got to pick up that here.

Let's do Kevin from UBS, please.

It's Kevin Caliendo from UBS. Specialty right now, is it margin accretive to your business, meaning -- for the Pharma segment, is it -- at corporate margins or better? And how do you think the margins on specialty trend with these investments and sort of some of the new businesses that you're getting into?

So when we talked about, especially in the past, what we've highlighted is the margin accretion is largely in the services side. So the distribution is relevant type of margins, maybe a little bit better. But the real difference is the services that go along with that further improve the overall. And as -- I think both Craig and Debbie have highlighted, it's that growth cycle that brings them all together. It's hard to -- it's hard to -- we don't necessarily look at them as separate because it is very much connected on the one to the other. The second part of your question, maybe you picked up on that better than I did. You're asking where how they would trend going forward?

[indiscernible] do the margins not more?

Well, I think -- basically what Jason just said, which is that the services can have higher margins. We're introducing more services to be able to wrap around more things and get that growth cycle going both on the distribution side as well as the services side. And I think the momentum there will give us some lift over the long term, but it's going to take some time.

Yes. And just as a reminder that we would typically expect there to be higher revenue growth rates than margin, overall for the segment just by the nature of the product brand inflation that comes through. So I think that services is expected to grow at least at the pace as the distribution. So that's an opportunity for -- when you isolate that piece. But overall, it will be overshadowed with revenue growth in the broader projects.

Well, just to be really clear, I think it's an interesting point, especially for those that may not follow us as closely as others. Margin percent is not a key measure of success for this business. And it almost pains me to say that because I'm not sure I've ever said it in my career anywhere else. And that's because there's so much volume, but importantly, just that empty calorie pricing that comes along with the large part of our revenue with brands. So when you look at the overall segment, I do not anticipate margin rate accretion anytime in the future because I would anticipate that there's still going to be ongoing brand price inflation as well as good volume that's associated with lower margin part of that. And that's fine because we can still generate good margin dollars, earning dollars and importantly, cash dollar growth, and that's our primary measurement.

Let's go with Charles from Cowen, please.

I want to ask about nuclear. You obviously made the decision here to keep the nuclear business and make investments in Theranostics. My understanding is that's still -- a very small part, and there's a lot of exciting development happening in this area, but the bulk of the nuclear business probably still remains SPECT imaging, PET. Can you talk about what the trends are in that part of the market? Could you talk about doubling the operating profit contribution from '21 to '26? Where is that most of that doubling coming from? Is it really all going to be coming from Theranostics or are we seeing improvements in the growth profile in the core kind of SPECT imaging and PET market?

It is overweighted towards those new growth areas. But I would say we have a very stable, resilient core there as well. And it is -- that Theranostics is the largest incremental piece -- where we're at in that journey. Maybe you want to kind of walk through the -- we're adding the doubling.

Oh, yes, happy to. We're more than halfway there, right? And so the baseline was a fiscal '21 target. We've a little bit over halfway to the doubling of the opportunity. And by the way, we made that commitment before we were investing more into the business the way we are today. And so we see both a nice uplift opportunity on the top line and on the bottom line on this business as we carry forward.

I think I see Daniel on the back there from Citi.

On the inflation mitigation efforts on the medical side, you mentioned around a little over 90% of your branded SKUs -- price increases this year. So I assume that most of that inflation mitigation came from price increases. As we think about '24 and exiting the year, mitigating all of the inflation, how much is going to come from additional price increases versus cost savings -- and then on the cost savings side, because a lot of that is going to materialize as you sell more volume because you're capitalizing international freight costs, is the slowdown in -- or the delay in branded medical product sales going to slow the cost savings efforts?

Let me attempt to address that by answering your question, which I think is the thrust of where you're going, which is so we've committed that we're going to land the fourth quarter at about $80 million for the Medical segment. And we've committed today as well that the Medical segment is going to do $400 million during fiscal '24. So how do we get from the $80 million to the $400 million? I think in answering that, I can perhaps address the point of your question as well. A couple of things, health and [ warning ] statements, if you will. This is a complex business. It's going through a significant amount of change. Set aside seasonality, from the purpose what I'm about to say for the next -- for the next minute or so. I'd like you to think about the simple math of how we get from the $80 million to $400 million, this way. 60 of the 80 will be core operational performance for the Medical business. The other 20 will be a combination of onetime items and seasonality, et cetera, to Q4. So focus on the 60 for a second. If we blow that out across the 4 quarters for fiscal '24 as a baseline of operational performance, which includes the benefits of all the work that's gone so far as well as the benefits of the inflation mitigation, which is already rolling through our systems. That's within that 60 within each quarter, again, setting aside seasonality for me, right? We said during our Q3 earnings call as well that there was about a $50 million overhang on the quarter that would have been improvement, but for the inflation. So if you annualize that, call that $200 million, and we've said that we're going to get to 100% mitigation by the end of fiscal '24, we'll get there, but we won't benefit across the year call it, $100 million of inflation improvement over the course of fiscal year '24. Add that to the $240 million of just the core performance I was calling out before it gets you to the $340 million as well. leaving about $60 million, which will come from the combination of the remaining factors from the medical improvement plan. It's to further benefit from the simplification efforts, right? It's the -- it's every element before. And part of that as well is the Cardinal Health brand contribution to the $400 million and Steve, I believe, just alluded to, the timing from that will be more back-end loaded as we think about the contribution over the course of the year. Does that help?

And Steve, you walk through the price.

Yes. The only other thing I would add for color is, of course, in any product portfolio, we'll continue to drive cost out but from how we price, we will continue because today, we have 1/3 of our contracts that we've renegotiated with permanent price. And these contracts are generally 3-year fixed. So over the next several years, we'll continue to reprice those, and we'll do that with the market dynamics in mind. So we continue to watch the markets -- we know that, as Aaron just said, costs will be rolling off, but we also have key areas where we've got elevated costs that will remain. And we have a slide that kind of shows the ramping up of the pricing efforts, combined with the cost cutting down and we'll just continue to focus on the value of our products and pricing them to what the market needs -- for based on the what it delivers.

Let's go with George Hill from Deutsche Bank, please.

And this one is, I guess, for Jason and Steve. I guess, Steve, it seems like you guys had a lot of success pushing through the pricing initiatives in the Cardinal branded non-PPE products. My question would be, is there a way to quantify what the market share loss -- or I'll call it the wallet share, not the market share, but the client wallet share losses look like that kind of led to the pushing out of the target. And then the follow-up to that would be is, I guess, can you talk about the visibility to getting those wallet share gains back with clients? Or is that even a factor like how much is core growth versus wallet share gains as you think about hitting the Medical segment targets in '26?

Yes. So the volume step-down was really 12 to 18 months ago is when we had the supply chain constraints at its peak. And that's where -- when you look at the year-over-year kind of revenue declines, I think it's fairly representative of what we experienced for that period of time. The rest of our businesses were growing. And of course, our home business was growing. But we called out Cardinal Health brand, in particular, I think, just 1 or 2 quarters. So it was certainly relevant. But when we're talking about a total base of revenue for Cardinal Health brand, we're talking less than $4 billion when you're looking at the -- excluding PPE. So that baseline is certainly relevant from a revenue perspective, but this is really driving -- these are, of course, much higher margin products, and that's why it's been more impactful for us. But the second part of your question...

Yes, the way I'd answer your question, I'd kind of take the approach of summarizing what you just said, though, at the end of the day, what's really going to be different in our ability to drive Cardinal Health brand. And the things that I would call out is there is a direct commitment to distribution and the value it provides for our ability to drive Cardinal Health branded product. And these investments that we called it out around modernizing our distribution facilities, adding additional capacity adding -- we added customer service resources to take out a lot of the friction that's in the supply chain. We added capacity to our product portfolio so we could drive price. When you put all those together, as much as we will continue to drive our specialty or our leader products, we sell those in distribution and also in other channels. That's been pretty steady and will continue. Where we've got to drive the growth is the value proposition in distribution, and that's where we're starting to make a lot of progress. And as we are lapping these losses, that's where we'll start to feel the growth from.

Let's go with A.J. Rice from Crédit Suisse, please.

I might just ask a little more about the business review and how that's played out. You made the decision, I guess, to now close the pharma side, but you're still leaving open the review on the medical side. I guess, first of all, was that always the way you thought it would play out or it's played out that way? And is there a specific reason? And I wondered on the medical side is how you do on the medical improvement plan sort of a gating factor to what you decide to do in the business review with the medical business? Do those work together in some form or fashion? And any thoughts on that?

Yes. The work that we've done with pharma, the business is obviously performing very well, and it was, I'll say, a simpler approach, a very large company, but the businesses are very well-defined within that business. Medical is just more complex. I'll get to your operating performance element of that. So I think you picked up on the right point there. But beyond the operating performance priority that we have right now and the focus that we have, it is also a much more complex business. Even though it's smaller, it's that's 1/10 the size, 1/8 the size of pharma, it is much more complex than what that size represents. You're not only talking about products versus distribution. You're also talking about international locations, you're talking about direct-to-patient, OptiFreight, Wavemark and then you got your other products and distribution. So that requires certainly more analytics -- analysis to go into the various scenarios and options. But of course, that is -- it is all interconnected than with the operating performance. And the business, and that's our focus right now is to continue to drive the medical improvement plan under every scenario that will drive much greater shareholder value creation, and that's why we're still focused on that.

Is that NIC?

[indiscernible] TCW. Could you elaborate on the services you provide for gene therapy and cell therapy and who you're partnering with on the pharma side or the biotech side. And -- is these sites in hospitals? Or just give me a little bit more information on that.

Yes. I would not go into specific customers, but you can talk maybe a bit further about where we participate in deals, especially.

Sure. On the services side, we are really trying to bring the best elements of all the different suite of services that we have to come together and wrap around opportunities to help manufacturers commercialize and selling genes. So we have 3PL that is doing back office management today. Eventually, we'll be going into the logistics side. We have Sonexus patient services hub platform that can work to help with patients. We have a real-world evidence business that is focused on understanding the value that these products create in the marketplace to help work with manufacturers and talk to payers or talk to the government, whoever it might be about the value that these therapies create. We have insights engagement, which is working with physicians to help understand key elements of what's going on in cell and gene therapy. And so -- we have and -- are continuing to be on the outlook for other services that we can continue to be a leader in this space and working with manufacturers on the commercialization side. So -- in the patient support side. So as Jason said, I don't know we would go into specifics somewhere around the partners that we have, but those are our -- that's our real intent.

You can touch on that -- is you throw out a few statistics in terms of the breadth of where we're participating in that -- to that.

Yes, sure. So I think based on being early into this and having started on this 8 or so years ago, we've been at this for a while and working with a lot of different manufacturers in the capacity of either the back-office managed support. I mentioned we are working with 5 of the 7 cell therapies on the market and 3 of the 8 gene therapies on the market today. We're using our regulatory services business to do a lot of consulting with manufacturers as they prepare their products to be commercialized. So that's maybe a little bit more sense of scope. Yes. So the question was, are these already revenue generating? The answer to that is, yes, we're already doing work in this space.

Okay. Let's go all the way in the back there. I think we've done all the aisle way ones. We're going to have to work a little harder here.

Ann Hynes with Mizuho Securities. When I look at the midpoint of view, our former segment, operating growth guidance, it's about 100 basis points below your peers. Do you view that as an opportunity over time to close that gap? And could you do it organically? Or would you need to do it inorganically through an acquisition?

But we're focused on our business and driving our growth that we think is appropriate for us. I think, again, go back and reference Debbie's last slide, which highlights the growth we anticipate for both our core non-specialty, non-nuclear business, low single-digit growth there, which we think is appropriate for where the maturity of that market is. We feel very good about our ability to grow our specialty business at strong rates. When you look at the -- with 14% growth we've seen over the last 3 years. I -- from what we can tell, that is clearly at or above market levels of growth rates. So we think there's some room to run there, and it's why the blended average of that in our algorithm with our sides of our business and specialty. That is a good answer for our business at this point in time.

Eric Coldwell from Baird, please.

If you don't mind, I might take a couple of, hopefully, relatively easy ones. First off, this is a bit of a technical clarification. But in the recent filings, we've seen nuclears had a much higher growth rate, and you've talked about 2 different revenue growth rates. I'm curious if we could just get some specificity on what's...

Yes. Yes. In the segment footnote, I think we break that out in a few places. That has been higher than typical and higher than normalized because there was a revenue recognition change. So we've been pretty consistent at right around double-digit type of growth when you normalize for the rev rec accounting change. The core business has continued to very consistently grow that close to 10% type of rate.

Sorry, I'm just trying to figure out what the rev rec change actually is?

It was how a contract was -- it was structured in a way that basically brought with revenue and no margin. And so...

Exact kind of pass through? Okay. And then Cardinal Health at Home, it's been one of the bright spots within medical and continues to grow at a double-digit clip. I'm curious, have there been any kind of small and material tuck-ins driving that growth? Has it been all organic? And then with your thought process on M&A talking about pharma and maybe being more weighted towards specialty within pharma, we didn't -- I didn't hear a lot of conversation about M&A potential in medical, and that would seem to be possibly a category where there could be some opportunity. So I'd love to get some insights into your direct-to-patient business you're at on?

Yes, it's a great business. It's clearly a part of the plan for medical improvement plan. To answer your first question, no, there's been no M&A that's driven that growth. It's been a very consistent organic growth there. Our priority clearly is going to be specialty. And that's not just because of how we're operating the positioning, but also where we see the size of that business and the opportunity is just greater. When I think about beyond specialty, and I want to be careful here because we have a lot of organic execution in all these businesses. And I can tell you, if you hear from any one of the Cardinal team, they'll say exactly why I just said that that's our focal point for inorganic growth because we have a lot of opportunities to drive organic growth in all the other areas. But when you get past that first big priority, yes, I think over time, we would be interested in other M&A and other spaces. The next tier of priorities I would put into those types of categories, the growth businesses. I just don't think that you'll see kind of that core distribution anytime soon within our businesses, in terms of additional inorganic opportunity, but the growth business is being within Medical, of course, at home and OptiFreight or the growth businesses there within pharma, of course, specialty and then nuclear now that we've decided it's a part of our ecosystem, less opportunities in a space like that, given how specialized it is, but I wouldn't rule that out, but then after that, I would talk about anything else related to our core business, which I think would be very unlikely, at least in the near term.

Okay. We're going to go with John over there.

John Stansel for JPMorgan filling in for Lisa. Just thinking about the M&A side of things. You kind of laid out the $3 billion in kind of -- call it opportunistic cash flow over the next few years. I guess, how -- as we're thinking about it kind of on a year-over-year basis, is that a ceiling that you would call it? I mean, or is it -- as you think through kind of your credit rating like leverage focus -- is it more better to think about it on a kind of a breaking that up $750 million to $1 billion on a given year. Could you kind of pull forward some of that if the right deal present itself?

Yes, it's a great question. Look, we were purposeful in laying out the disciplined capital allocation strategy in the way that we did to really focus on the organic growth, followed by maintaining that investment-grade rating because it's core to our future and certainly the environment we've all been operating for the last couple of years has proven that having the resources is important to us. But to the thrust of your question, assuming we have the -- we're making the investments we need, we'll leverage our balance sheet, right? We will do the right thing by the business to drive that growth. And what we've described today is the use of allocation or use of the cash in the absence of knowing what M&A looks like. But here's the thing I would do -- what you take away, we're going to be disciplined. We're going to be smart about it, right? We're going to do the right thing for the business. It's got to be strategic. It's got to have the right plan. It's got to hit the hurdle rates as we carry forward. And the 3.5% that you're referencing is that is dry powder that we start with, right, and then we'll go from that.

And I'll just add, the reason we called it opportunistic is so we wouldn't have to answer that question because it's going to be variable based upon all the factors that Aaron just highlighted.

I'm going to take a couple of questions that we've received online. So the first one is a 2-parter, but the first part of it is about have we evaluated real estate as a part of the strategic review and the second part of it is, can you explain what's left in the medical strategic review?

But we have evaluated our real estate portfolio. We've come to a conclusion at this point that while there may be an opportunity from time to time, there isn't an overall real estate play that we're announcing today to carry from the marketplace. We are -- we're continuing to evolve our pharma platform. We're continuing evolve our med platform. Indeed, you would have heard me call it during my presentation that we've opened 2 new facilities recently. We've announced plans for 3 more. Just assume that we'll be smart about how we finance and how we act with the assets that we have.

And then as far as the medical strategic review, where are we at on that?

Yes. It's the same words I've said many times before, regardless of the appropriate long-term course of action. Right now, under all scenarios, we see the best path forward, most value creation is to drive the medical improvement plan. As I -- another thing I highlighted is that this is a living process. So even though the work has been completed for the pharma segment, it's one of those things that as our business changes as the environment -- competitive environment changes, we'll continue to evaluate the business. Our focus right now is on the operating elements of the 3 criteria of strategy, operational performance and value. And until we get further progress there, it's really impossible to answer that question.

Okay. One more from online. We called out 2% to 3% market growth over the next several years in Med. What does that represent? Do you need to take share from others to achieve that?

Yes. I mean, reiterating what we've said, which is we're -- first off, it represents, let's call it, the medical product space. Inside -- come back to that. Inside of at home, it's higher than that, and we grow quite a bit above market. But inside the medical product space, we will be lapping some of the losses that we've experienced. So we will get some lift of that. We will also -- we've seen pretty solid utilization that's been accelerating as it relates to same-store sales. So we will get some lift on that. And then, of course, we're ramping up our commercial efforts. And we believe those 3 things combine we'll be able to grow -- get our share of the market and grow with the market.

Are there any additional questions in the room? Anyone who hasn't already asked a question? Okay. We can go at George then.

Kevin, I knew you were ducking me earlier and that behavior pattern just proved it. One for Aaron, one for Debbie quick follow-ups. I just want to understand big picture. Dividend is going to grow about 1% this year, while operating earnings grew mid-single digits and EPS growth target is low double digits, inclusive of capital, inclusive of share repurchase as this is a relatively new management team sitting on stage here at the CEO and CFO level, are we seeing a priority shift away from the dividend, which has historically been considered differentiated and more towards share repurchase and capital allocation. And then I'll have a quick follow-up for Debbie.

What I'd tell you is the dividend increase that our Board announced in May is consistent with the last 4 dividend increases. And so I wouldn't draw a conclusion from a change in that respect. What you are hearing a go-forward approach is to be transparent about the decision-making process we go through internally, the disciplined capital allocation process as well and that we get it that it's both that the value creation that Cardinal has in front of us is driven by both the profit improvements that these leaders are driving as well as the fact that if we don't have an immediate use or a short or medium-term use for the cash, then we can give it back, right? And so we'll be opportunistic on both -- first, we will do the baseline share repurchase, and we will be opportunistic on the incremental return of capital to shareholders.

Okay. And then just from what I'm hearing, it sounds like an increased focus on M&A versus prior conversations versus prior public statements by the company. Debbie, I would ask, as you look at the ...

I'm sorry, just on that point. We've always had M&A as an opportunistic element of our capital deployment. To your point, George, we haven't actually exercised it a lot in the last several years. I think what your -- so the framework is similar, but you should infer that we are -- I think exercising the opportunities a lot greater now. So -- and that -- but that would take that back to less of a change in philosophy and more of that opportunistic bucket is a bigger bucket because of the financial flexibility, the progress we made both with managing debt down as well as our operating earnings up. Leverage ratio being much lower, that gives us more of that financial flexibility that we can utilize to consider across the spectrum in ways that for financial flexibility reasons were more challenging. But I would also say the business needed to stay focused on fixing some of the operational elements before we earn the right to embark on additional M&A. With the progress that we've seen this year, we feel more confident in that ability to bring on more businesses in a very accretive way. But we're entirely agree with every word that Aaron said that, we're going to be very prudent and careful about that to make sure that we don't get too far ahead of ourselves.

Okay. I agree. And Debbie, my question to you would be is, if you look at the pharmaceutical segment, particularly as you think about the [ Nascent ] oncology offering, could you talk about where you kind of see the biggest white space opportunities as they relate to M&A? Kind of what don't you have in your bag right now that you'd like to have in your bag?

Well, specifically as it relates to M&A, we will, as has been said many times, be very disciplined and strategic about following our stated strategy, which is to look at what will help us to drive the downstream penetration into the different therapeutic areas, and we will continue to look in Craig's areas and the manufacturer services to see what our complementary areas around data, around value-based care, around real-world evidence. These are places we already have a foothold but will continue to grow. And then I think looking really further ahead in the future, several years out, its around cell and gene and the emerging technologies.

We get a lot of questions trying to -- it's a good question in terms of trying to narrow in. First of all, I want to be careful about being so narrow that it makes it difficult for us to actually go do the things we want to do. But the other thing is while there's still some good fragmentation of potential targets out there in this space, there's only so many that are there. So I do think we're going to have to have some level of flexibility. And so to look at just one therapeutic area or just one type of manufacturer service, I think that would be a challenge. We're going to have to be more flexible than that. And we certainly have the financial flexibility. We can execute a number of these types of transactions and still operate effectively. But ultimately, I think there's as much just a practical reality of what types of assets are going to be available to us, which -- back to one of the prior questions, could, at some point, lead us down a different path, but we have some work to do in specialty first before we feel comfortable in prioritizing other spaces.

Okay. I see no further questions online. So I'm going to turn it back to you, Jason for some closing comments.

Yes. Great. Well, thanks again for spending time with us today. You've heard a lot from us. You've heard from Debbie that we have a strong and resilient pharma segment that is benefiting from both the secular trends in that space as well as the individual business performance that we have. You've heard a lot from Steve that -- we are really excited about the medical improvement plan and the progress we are making. We've got some work, but that's also the excitement that's behind that. And then you heard from Aaron, we will absolutely maintain our relentless focus on shareholder value creation and that ongoing responsible deployment of capital. So I hope that you've heard a lot of excitement from all of us today. We are excited about where we're taking the business, not just because it's great for our business. But everything you heard of today, I think, is also very good for our customers and their patients, and we do keep them in the middle of all this. And I think we have the right team and the right plan in place to execute effectively here. And we do look forward to providing you with much more regular updates in the future and not 8 more years until the next one. So thanks again.