Good day and welcome to the Cardinal Health fourth quarter fiscal year 2017 earnings and fiscal year 2018 guidance conference call. Today's conference is being recorded. At this time I would like to turn the conference over to Sally Curley.

Thank you, Anthony, and welcome to this morning's call to discuss Cardinal Health's fourth quarter and year-end fiscal 2017 earnings and fiscal 2018 guidance. With me today are Chairman and CEO, George Barrett; CFO, Mike Kaufman; and VP Investor Relations, Lisa Capodici. George and Mike will have some prepared comments, and then we'll move into Q&A. Since we will be making forward-looking statements, we need to remind you that the matters addressed in the statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Please refer to the SEC filings and the forward-looking statement slides at the beginning of the presentation found on the Investor page of our website for a description of risks and uncertainties. We will be ending today's conference call promptly at 9:45. To more efficiently get through our question-and-answer queue, we're limiting each individual to one question with one follow-up. As always, the IR team will be available if you have an additional question. There are a few items I want to highlight today. First, you may see a second posting of our 8-K filing today. The components were initially misclassified on the SEC website, so we're fixing that. But there is no change to the content. And second, we'll be presenting at the Robert W. Baird Healthcare Conference on Thursday, September 7, at 9:05 a.m. Eastern in New York, and at the Morgan Stanley 15th Annual Global Healthcare Conference on Monday, September 11, at 8:45 Eastern in New York. Before I turn the call over to George, as many of you know September 18 will be my last day at Cardinal Health. It has been an honor to be a Cardinal Health Investor Relations officer and to serve you for nearly a decade. I'll continue to work closely with George, Mike, and Lisa to make this transition as seamless as possible. Lisa has more than 30 years of finance and IR experience. And she and her team will serve the company well. So after more than three decades as an IRO and spokesperson, more than 120 earnings calls, more than 400 sell site events, several thousand investor meetings, and millions of frequent-flier miles, I'm looking forward to parlaying all that experience into my new Savannah-based consulting business. I've made great friendships with many of you that I know will stand the test of time. And I look forward to catching up with you over the coming weeks. Now on to the earnings call. George?

Thanks, Sally. Good morning, and thank you for joining our year-end call. These past 12 months have been trying ones for those of us in health care. Our fiscal 2017 was a year of challenges but also a year in which we took important actions to strengthen our market positioning, grow our scale, add new long-term drivers of growth, and improve the overall balance of our integrated portfolio. These actions will have significant impact over the next two years to five years. With this in mind I'll devote most of my commentary to the year completed and the year in front of us, letting Mike provide details on Q4, which came in largely as we expected. Before I begin, I'd like to make a quick comment about our guidance for fiscal 2018. Our perspective on the environment and our operating performance for FY 2018 has remained fairly consistent since we provided an early outlook back in April. We will however, take actions this year, which have some impact on our EPS for fiscal 2018 relative to that early outlook. We feel confident that this work will accelerate our growth rate trajectory in fiscal 2019 and beyond. Mike will cover these incremental items in his commentary. While demand for the health care products and services we provide continues to grow, powered by demographic changes that will only accelerate in the years ahead, a combination of market dynamics, policy uncertainty, and economic forces made our FY 2017 among the most difficult years to model and predict. The impact of those dynamics was most pronounced in our Pharma Distribution business, where pricing was a material headwind that was mostly associated with generics. We have talked about this pricing phenomenon all year and spoke about it extensively in April. Along the way however, we…

Thanks, George, and thanks to everyone joining us on the call. As George said, it has been a trying year but also a year of significant accomplishments, as the organization has taken a number of important steps. I will divide my comments into two primary areas. First, I plan to provide some greater specifics and clarity on our numbers for the quarter and the year. Then I will give you some additional color on our FY 2018 and provide a financial bridge from the early outlook we provided in April to our updated FY 2018 guidance. The financial results that I provide this morning will all be on a non-GAAP basis, unless I specifically call them out as being GAAP. Slides 7 and 11 of the presentation on our website include our GAAP to non-GAAP reconciliation tables for the fourth quarter and full year. Let me start by discussing the financial performance for the quarter and full year as detailed on Slides 4 and 8 respectively. The quarter ended up largely where we guided when we spoke in April, except for our tax rate, which was lower than expected. Fourth quarter consolidated revenues increased 5% to $33 billion, while full year revenues increased 7% to $130 billion. Fourth quarter non-GAAP gross margin dollars increased 1% and were flat for the full fiscal year. Gross margin rate decreased in the fourth quarter and full year by 22 and 35 basis points respectively. The drivers for these three items are best explained when I cover the segments in greater detail. SG&A expenses increased for the quarter, largely because of our important investment in the IT system refresh in the Pharma segment. Again this major project, which we refer internally as P-Mod, is designed to improve long term customer service and interactions. So…

Thank you. We'll take our first question from Charles Rhyee with Cowen. Charles Rhyee - Cowen & Co. LLC: Yeah. Hey. Thanks for taking the question and for all the information there. Maybe, George or Mike, you talked about China a little bit earlier. Can you talk about sort of how is that currently – is that currently still in the guidance as we're looking forward? And can you give a sense for the magnitude of its – sort of the contribution it's given the business in case something happens? And then secondly, I think you mentioned in the Medical business you acquired within Cordis, a drug-eluting stent. Do you have – is there any kind of approval processes you need to go through to market that in the U.S.? Or is that something currently just in Europe? Thanks.

Yes. Thanks for the question. As it relates to China, we are assuming a full year of contribution in China in our FY 2018. So it's assumed to be all the way through June 30 of this year. But then we are assuming – and when we say at least $5.60 of earnings in FY 2019, we are not including China in our FY 2019 guidance. Now since it's probably a follow-up question, we are assuming there'll be some redeployment of capital. But right now in our at least $5.60, China would be slightly dilutive to us in our FY 2019 numbers. And, George, would you like to handle the stent?

Yes. Sure. Hi. Good morning, Charles. On the second part of your question, the drug-eluting stent was actually not part of the Patient Recovery business that we acquired, but actually done through partnership. If you remember, we talked about the fact that we'd be adding to the portfolio largely through opportunities to partner. And that's what we've done here. So it's an approved product and not something that we acquired through the Patient Recovery business.

Yeah.

And by the way, to be clear, this is not for the U.S. market right now.

Yeah. And if you listened on my comments, I made a comment that the partnership agreements were on a significant growth trajectory for FY 2018. And this would be one of the items that we expect to drive that growth for us in FY 2018. Next question?

Our next question comes from Michael Cherny with UBS.

Good morning, everyone. Thank you for all of the color. And, Sally, again wishing you best of luck in the new role. So just wanted to understand some of the additional customer actions. As you think about the investments you're making, how many of these do you view as defensive, reactionary? I know there's a lot that's positioning for the long term health of the business. But part of I think what I'm trying to understand and I think some other people are trying to understand is just are these going to be truly one time in nature in terms of strength of the business now? Or is there a need over time, especially in an increasingly competitive market, to continue to pursue these types of investments for the long-term health of the business?

Michael, good morning. It's George. I'll take that and then Mike can jump in. I think our perspective in dealing with our customers is always sort of on the, how do we grow opportunity? How do we see the opportunity to partner more deeply with them and create growth over the long term? And so while I can't go into details on these programs, that's sort of the underlying assumption. As we mentioned earlier of course, as you said, it is a competitive market. But our position with our customers is strong. There are things that we see that are opportunities to solidify those relationships and create new value. And that's sort of what is the focus of our work.

Yeah. And I wouldn't see these investments as something we have to make incrementally each year. This is something that again we have an option to make this year. If we don't think we'll get the right returns out of those investments, we don't necessarily have to make those. And that could provide some upside for us this year. But we thought it was prudent to build these in, because we think there's some things that we'd like to do that we think are important for us to be able to solidify where we're headed in 2019 and beyond.

Great. I'll turn it over to other people. Thanks so much.

Thanks, Michael.

Thanks, Michael.

Our next question comes from Ricky Goldwasser with Morgan Stanley. Ricky R. Goldwasser - Morgan Stanley & Co. LLC: Yeah. Hi. Good morning.

Morning, Ricky. Ricky R. Goldwasser - Morgan Stanley & Co. LLC: So my first question is around your generic deflation assumptions in the mid-single digits. Sounds like you incorporate sell side and buy side. So can you just give us a little bit more context in terms of what are you seeing in the market right now? And how do you think the pricing will play out throughout the year? Because to your point, you're giving us like more forward-looking thoughts around pricing.

Yeah. A couple things. I'd say first of all, as we've mentioned, we thought it was – the curve was steepest during our first couple quarters of our year. And we've started to see less steep of a decline in our second half. And to us that indicates that there's clearly been some stabilizing in the environment from what again we're seeing as well as what we're hearing from the teams. And so what that means is we would expect to have some tougher compares in our Q1 and Q2 this year. And then we would think the comparisons to the prior year would get better in the second half of the year. So that's the first thing I would say. When we say we're including the buy side and sell side, what we're basically saying is that when we get lower acquisition cost, sometimes that will translate into lower market pricing. And sometimes that's an opportunity for us to take a look at our margins, always keeping in mind our customers and making sure that they can compete in the marketplace and that they have the appropriate generic pricing that they need to have. And so ours is just basically an all-in of what we're seeing from the terms of our ultimate sell price downstream to the customer. So generally, I would say that the good news is what we're seeing is it looks like the market is stabilizing over the last several months. Ricky R. Goldwasser - Morgan Stanley & Co. LLC: So my follow-up, I have a follow up on the Medical segment, but also a clarification on what you just said. So first on the generic assumptions, it sounds like you are really thinking about it from a comp perspective in the second half of the year. So it'd be great if you just can confirm that for me. And then on the Medical segment, when you talked about the delay in sales coming from partnership agreements, that are now kind of like starting to pick up, what was it about the relationship that led to that kind of like slow ramp-up? And any lessons that you learned that you think could help you to improve when you sign up these new type of customers?

Yes. Thanks. So, yeah, on the generics, I would say that again all I'm saying is that since the curve was steeper in the first half of last year, we would expect the comps on generic deflation to be a little tougher in our first half than we would in the second half. And hopefully that answered that. As far as the partnership agreement, I'll mention it and George may have a couple quick comments in. Yeah, I think we've learned a couple different things. No – I wouldn't say any real concerns. Just generally that sometimes just getting it down on paper and actually getting it signed and all the terms and conditions agreed to just takes a little bit longer than you think. And then sometimes when you're working with the partners, the timing of which they think they'll get approvals, whether it be overseas or in the U.S., just take a little longer than they expected. So it's really more about getting the I's crossed – T's crossed, I's dotted and these approvals that just slowed it down. But nothing at all that makes us concerned that this isn't the right strategy, isn't going to be a significant portion of what we do. I think customers – these partners see us as a great go-to-market partner, not only because of our distribution capabilities, but because of our commercialization capabilities with the significant sales activities that we have in place and an excellent sales team.

Yeah, Ricky, I actually don't have anything to add to that. I think that's exactly the right response.

Our next question comes from Ross Muken with Evercore ISI.

Good morning, guys.

Morning, Ross.

So just digging back into the sort of 2019 color that you gave, I'm just trying to sort of back into the underlying profit growth. So you talked about a pretty decent step up in accretion from the Medtronic deal. So an incremental $0.34 in 2019. And obviously you've got some moving parts on the China piece. I mean it seems like the underlying growth is somewhere in the 5% to 6% range. I guess, one, is that right in terms of profit? And if so is it really thinking about sort of the improved results in the second half? And then kind of run rating that into 2019 in both of the underlying businesses? Or is there sort of other assumptions in there to kind of be mindful of as we kind of get into that picture? Again I realize you're not going to give a ton of color. But just maybe broad strokes as how you're thinking about that progression?

Yeah, absolutely. So I think obviously one of the things that we'll see is we really believe that the Pharma Distribution business will be stabilizing. And FY 2019 as we continue to lap some of the headwinds that we've had both in terms of some customer changes as well as generic market pricing, we believe that we're going to continue to see really strong growth in our Specialty business, which its base continues to get larger and larger, so that strong growth becomes more and more meaningful. We won't have any inventory step up for the Patient Recovery business, which as I mentioned that we're targeting to be up to $100 million. Plus we expect to see growth in that business as well as Cordis and other businesses. We have some negative comp, things that we mentioned that were one-timers last year that affect this year that we won't have that noise in the numbers. Overall demand – we expect base overall demand to continue to grow. We also expect some really nice growth as we've seen this year in our core Med business in – the post-acute and the distribution services area have done a very nice job in Med this year. And we are excited about them in the future. And then also there's some opportunities with capital deployment. So I would say those are the broad strokes as to why we feel good about where we're headed in FY 2019.

And maybe – this morning one of your customers was acquired by KKR, but also there was involvement from Walgreens, in PharMerica. I'm sure it's hard to comment. But I guess in those cases, can you just give us a sense for the profile of a customer like that? The sort of materiality to the business? And how you think about risk during these sort of transition periods?

Yes, Ross. Why don't I start? First of all, obviously we just saw the news this morning. And so it is hard to say much, other than that PharMerica has been a customer. And our agreement goes through June of 2018. We've been in an industry that has seen the chess board move around a fair amount. We will occasionally be on the right side of those movements. We'll occasionally be on the wrong side. And that is true for all of us. I would say in the big picture, this is not a material issue for us. But you certainly are seeing an industry that is going through some changes over these last couple years. And we'll probably see more now and again. But we feel like we have a very robust base at this point, strong positioning. And our customer stability is quite high.

Our next question comes from Lisa Gill with JPMorgan. Lisa Gill - JPMorgan Chase & Co.: Thanks very much and good morning. George, I was wondering if you were seeing any changes on the manufacturing side. So any of your contracts that maybe weren't under a fee-for-service relationship previously? Are you seeing any changing in any of the contracting right now on the manufacturing side?

Good morning, Lisa. So I'll do this carefully. Obviously the conversations that we have with our manufacturer partners are proprietary. And we're careful about that. I will say the industry is going through some interesting changes over these last couple years. And so we're trying to make sure that in our conversations with our branded partners, both sides are reflecting those changes. I think Mike sort of captured one of them, which I think is very significant. Which is we're just going to see less and less that is in contingency that is tied to something other than a fee base. So I think directionally we'll see more moving towards a standard fee base. And I think Mike captured that and gave you a little bit of economic sense of that. I would think that trend is going to continue. But by and large I think conversations are productive. I think we are hopefully respected for the value we create. And we have great respect for the partners that we work with on the manufacturing side.

Yeah, as I mentioned, we said in 2017 was a little less than 15% was contingent, but we exited at less than 10%. So we would expect our 2018 to be less than 10% to be contingent. And we are continuing as George said to have very productive conversations with some of the folks in that less than 10% bucket. So we'll see where that goes. But I feel very good that we're doing the right things to reduce our exposure there. Lisa Gill - JPMorgan Chase & Co.: And then my follow-up question, Mike, would just be around the $0.16, where you talked about first seeing customer initiatives on the Pharmaceutical segment. Can you just give me an example? I'm just trying to understand what kinds of things you're doing and then the investments that you're making around your customer segment?

Yeah. That's hard to do, so I really can't do that. It's just we have some different discussions that we're doing with various customers that again if we think together with them, that leads to the right type of situation that we find to benefit us in 2019 and beyond, we'll make those investments. And if we don't then we won't make those. And you will see some upside from us for the year related to not making those investments. So I can't really give you more detail than that.

Our next question comes from Erin Wright with Credit Suisse. Erin Wilson Wright - Credit Suisse Securities (USA) LLC: Great. Thanks. Can you speak to the strength in the Specialty business that you've alluded to? And how should we think about the quarterly progression here? And what's driving that business?

So let me start. I'd probably say that I don't know that I can give you much about the quarterly progression as it relates to Specialty. Again I think beyond – Mike may want to just give further color on Q1 that he mentioned. But our Specialty group has just been on a very strong pattern here. I think we've built out a lot of capability. We're clinically very strong. I think our analytics are very strong. And what we've been able to do I think is grow in both our ability to serve more therapeutic areas downstream and create more service offerings for our biopharmaceutical partners on the upstream. And obviously we are also aligning with the trend that's happening in the pharmaceutical and biotech world, which is more products that are being approved and are in development are specialty drugs. So I think we've been – seven years or eight years ago we made an important turn in the road to really double down in this business. And we've made a few acquisitions. We've done some great things organically to grow. And we've built out some real capability. And we like to see ourselves as a thought leader in the space. So I think it's an encouraging sign, great direction, leadership is strong. And we're thrilled with the team that we've got there.

Yeah, I don't see anything lumpy or anything like that happening in Specialty. I think it should be strong, steady growth throughout the year. Erin Wilson Wright - Credit Suisse Securities (USA) LLC: Okay. Great. And on potential redeployment of capital following the China exit. As you further diversify kind of your business or have been in recent years, what other verticals have you contemplated, whether it be in contract research services side or alternative (56:25) such as animal health? Anything like that? Thanks.

Yeah, why don't I take that? Qualifying that as it relates to redeployment of any capital that may come in from the China activities, that's one we can't comment on at this point. In terms of where we are strategically and the portfolio, there are areas that we think are very important, most of which we are now competing in and competing very effectively. So I wouldn't say that there is a marked hole in the portfolio. I like where we are on the Pharmaceutical side. I think we touch all channels. I think we touch all of the manufacturing world. And I think our reach is extensive. We said a couple years ago that Specialty needed to be bigger. It is. We said that generics needed to be bigger. It is. I think we're doing the things we need to do there. On the Medical side I think our business at this point is really driven by the value that we can create for our customer base. And if you look at our customers, whether those are an IDN customer or a straight hospital customer or a clinic, our ability to provide a really broad basket of related services and products right now is pretty extensive. So we'll always look for opportunities to increase scale or competitive strength, but I wouldn't point you to a particular area of weakness right now. Again the other piece I'd add is our post-acute work has been really interesting. And I think we're quite strong there. And we sort of took an early position in that space. So I wouldn't say that there's an area to highlight as a weak area, but I think we're on the right paths there. And I think the portfolio looks strong and highly connected.

Our next question comes from Brian Tanquilut of Jefferies.

Hey. Good morning, guys. Just to follow up on generics, I know to Ricky's question earlier, so you're assuming mid-single digit deflation for the full fiscal year. But you also said that you think that it's starting to stabilize. So just parsing the details, I mean are you basically expecting this to turn flat to positive once we anniversary the market disruptions or as we get to the back half of the year?

No, I wouldn't say that we would see it going to flat or to the positive. In fact, the history of generics wouldn't indicate that that's typically the case. As we said a few times, we've had a couple years where we did have a net increase, had net inflation in generics. But typically it is a net deflationary environment. So we would assume it to stay in a deflationary environment, just not as extreme as we saw for the first part of this year. And I think that's probably just the best way to summarize it.

I got you. And then my follow up, you mentioned something about investment in opioid measures. If you don't mind just walking us through what you're thinking of doing there? And then as we've seen this in the press, obviously a lot of focus on you guys and your exposure there. So if you don't mind giving us some color on what you think with all the investigations your exposure is, given what you do for opioid drugs?

Let me do the second part first, and then I'll come to the first part of your question. Some of the basics. We operate a very strong, robust suspicious order monitoring system and process that not only meets our regulatory requirements, we believe it exceeds what is required of distributors. We're doing our part to prevent the diversion of drugs. I would also say though, it is important that everyone do their part in dealing with this issue. I said in my comments earlier that the search for blame is the enemy of the search for solutions. It's something I say often in our organization. But it is especially true in a complex situation like this. What we really need is for all of the stakeholders to work cooperatively and ultimately to address both sides of this issue. And so I think that's important. As it relates to legal cases, I'd just say this. We're going to vigorously defend ourselves. We believe that the lawsuits do not advance the hard work needed to solve the opioid abuse crisis. And we are going to do the things that we think are important in the public good to help in a place where we've got some knowledge. And so we are doing this and have been doing this in education. We've talked a lot about our Generation Rx initiative. Some of you know about it. We haven't been that visible in the public about it. But it is actually a really important program in helping to combat drug abuse and misuse. We are working with law enforcement. We're working with educators. We are working on product donations to help in a crisis. We've got takeback strategies. So what we are probably going to be doing in terms of our focus is working in the regions where the – we're really going to pilot this in regions where it is most acute. And we feel that's very important. So it's an action that we want to take. It will build on the work that we've done. And we think it's important. And we're going to do it.

Our next question comes from John Kreger with William Blair. John C. Kreger - William Blair & Co. LLC: Hi. Thanks very much. George, could you talk a little bit more about how you view the international opportunity? It seems like on the one hand you're signaling that you're backing away from China at least on the drug distribution side. But on the other hand you're investing on the Medical side with Cordis and Medtronic. So how do you think about international as a growth opportunity going forward?

Hey, John. Yeah. Great question. You actually drew a very valuable distinction, important one for us, which is we're looking at – and I think I've always said this to you as we look internationally. We look at the services part of our business with a different lens than we look at the product side. Let me put it very plainly. We have a big product business. We want to sell those products in every market in the world. Those tend to be opportunities where scale is advantageous to us. It drives manufacturing costs. And there's sort of a virtuous cycle of having that scale. Service businesses transport with greater challenges. It's harder to create value out of service businesses. We entered China because we saw a unique opportunity. We knew it was a business that was in a market that was growing. There was a roll-up that was likely to occur and that we felt we could bring something to that market. And I think that we have. And our teams have done a great job there. They've really grown that business. But I think what we are seeing there is to have the kind of leadership that we seek is going to require a deployment of capital that can be more effectively deployed elsewhere. And so I think it's just for us a question of how quickly and what does it take to achieve that leadership position. And so that's driving our decision in China. But I do think that the distinction that you drew is an important one. We tend to look at product lines and product businesses a little bit differently than we do those service businesses. John C. Kreger - William Blair & Co. LLC: Thank you. And then a follow-up for Mike. Can you just talk a bit more about investment scenarios in fiscal 2018? It looks like CapEx is slated to be up significantly. It looks like over 30%. What sort of investments are you planning on making in the coming year?

Yeah. As far as overall capital deployment, you're right. We would expect CapEx to be, as we said, $500 million to $540 million. We still plan to maintain our dividend policy of a 30% to 35% payout. And as I mentioned, we also committed to pay down about $500 million of debt each year for the next three years. So those are three important things for us in terms of capital deployment. And obviously after that as we always have, we'll continue to look at opportunistic repo and M&A that fits strategically with the business. Specifically as it relates to CapEx, the biggest piece of that is going to be our P-Mod costs that – continue to make those investments over that multiyear project. And then there's also some dollars that were significant into some of the acquisitions. The Patient Recovery business will have some initial capital that we want to put into our plan for this year, as well as continuing to invest in some of our other recent acquisitions. So those are the biggest ones. And then we'll continue to invest obviously in all of our infrastructure, whether it be our buildings, IT systems, et cetera, at our other businesses that we continue to do across post-acute and specialty, et cetera. But those are a couple of bigger carveouts.

Our next question comes from Garen Sarafian with Citi Research.

Good morning, everyone, and farewell, Sally.

Morning.

You'll be missed by many. Mike, sorry to come back to this. But in your prepared remarks on generic pricing you stated that it remains competitive but seems to be stabilizing.

Yeah.

And maybe we're mincing words here. But when can you declare victory, that it has indeed stabilized? I think to an earlier response you implied it's lapsing of the quarters. But wanted to see if there's something else that we're missing?

Yeah. I would just say this. I'm not sure that you can ever declare – I wish that I could say on November 15 we ought to be good to go. But that's just not the way it works. I think it ebbs and flows, depending on various things going on in the market. And I think that when you have various launches that happen, multiple players, et cetera, et cetera. So I think it has always ebbed and flowed. That's been the case – I've been here 27 years now, and I've seen it. I think what we've tried to say is that we're used to dealing with those normal ebbs and flows. What we saw in the late last year and the first half of this year was a little bit more extreme, because there was a lot of noise in the marketplace. And it seemed like those ebbs and flows were just a little bit more extreme. And what we're saying is it's not that it's stabilized in the sense of no competition. It's just that it's going back to what I would call more historical norms. And, George, I don't know if you want to add – ?

Yeah. Garen, that's an interesting question. And let me frame it. And it's probably aligned with what Mike was just saying. Historically you see deflation in generics. So in a way victory is just going back to typically our ability to model it very effectively. We actually have been able to model it very effectively. This was the most challenging year for us in terms of being able to predict and model it. It just looked a little different than we had seen. So in some ways victory is actually just knowing that we're seeing patterns that are familiar and that we can model more effectively. And I think that's my version of victory on this one.

Got it. No, that's actually very helpful. And then just moving on to the Medical side of the business. Hospital utilization trends have been weak thus far in the quarter. It doesn't look like it impacted you this quarter. But anything that you've observed? And what are you assuming for fiscal 2018? Thanks.

Yes, Garen. It's – yeah. From the data that we've seen, it's relatively flat utilization. I still – and I think I've said this to a number of you. I do think that in a way that defies gravity – I mean, we know that demographics are driving more people to need health care. And so I do think what we're seeing, and I think we'll continue this for a while, is some choppiness associated with shifting benefit designs. But ultimately I think demographics will win out. I mean that's the reality. Our business has been growing. I do think our value proposition is resonating perhaps differently than it did three or four years ago. And as a result, we're positioned well with market leaders. And I think our share position is good. So I think we're not assuming a big increase in utilization in our upcoming year. I think we'll continue to assume it's relatively steady as she goes. No major changes. Again, my view is that underlying that there are some issues that are probably going to continue to grow over years.

Our next question comes from David Larsen with Leerink Partners.

Hi. Let's assume you do sell the business in China. Can you talk about any restrictions on what that cash might be? Can you take it back into the U.S. and buy back stock? Or any thoughts around that would be helpful. Thanks.

Yeah. Obviously that's something we are obviously thinking about. And as you can imagine are doing the appropriate planning to do the right things to be able to have access to that cash. So at this point in time I can't say a lot, other than we would not expect to be limited with at least a large portion of any net proceeds that we have.

Okay. Great. And then for these $0.16 of discrete items, that's in addition to the $0.50 that you mentioned last quarter? Is that correct? And then would any of that $0.16 – are those like separate discrete projects? Or would some of that potentially be perhaps pricing a bit more aggressively to win new business? Thanks.

Yeah. Good question. Really they're two separate things. When I was really talking about the discrete items that were greater than $0.50, I was really trying to call out things that caused FY 2018 to be down from FY 2017. For instance, if you have a discrete tax item that doesn't repeat in 2018 that you had in 2017, then you obviously create a headwind. Or if you have a reserve adjustment that was positive in 2017 that isn't going to repeat in 2018, then those are the types of things I was talking about. So that greater than $0.50 obviously finished a little bit higher, because taxes got a little bit better. And that's why we finished a little higher, which created a little bit more headwind for 2018. So that was that bucket. What I was specifically talking about on the $0.16 plus the $0.06, so a total of roughly $0.22, was where I was really trying to help you bridge our guidance that we gave of $4.85 to $5.10 back to the April early outlook, where we said that we would be down flattish to mid-single digits. And so that $0.22 really helps you reconcile roughly midpoint to midpoint if you look at it of what happened. Because since April we went back and said as we were establishing our budget, what else that we think is important to do? And so first of all – not really part of the budget – we finished $0.06 higher, but then we had the other $0.16 as I mentioned is from customer investments we decided to build in that again, if we do not do them, those will be potentially things that we would be able to give back this year in terms of overperformance. But we think those are good investments that we're working through with various customers. I will say those are not just being more aggressive in the marketplace. That's not at all what those would refer to. And then it's some tax planning that we're doing in order to put ourselves in the best position. And then as George mentioned, it's some significant investment into fighting this opioid epidemic that we are planning to do in 2018 that we think is an important thing for us to do as a company to step up.

I think we've – go ahead.

Our next question comes from Steven Valiquette with Bank of America Merrill Lynch.

Yes. Thanks. Good morning, George and Mike. And also, Sally...

Morning, Steve.

I enjoyed the partnering action over the years. And thanks for taking the question here. Just quickly on brands. We heard that one of your peers talk about some pressure in mid-calendar 2017 from just recently converting more branded drug manufacturer contacts to fee for service. So I was just curious if Cardinal made any changes around that in the past several months? And is that playing a role in the near term results and outlook? And then I have a very quick one-line follow-up question.

Yeah. I would say that we can't get into a lot of specifics, but we have been working as I said with some of the suppliers that were in that contingent bucket that had a portion of contingent. And some of those suppliers we have reached new agreements with. And other ones we're still working through with. So that's why I said we went from around 15% to less than 10% now being contingent. Was there a little bit of noise on some of that? There is a little bit of that. Nothing I would call as significant in our 2018 numbers. But yeah, there was a little bit of trade-offs as we worked through with some of those manufacturers. But we feel really good in general about where those came out and some of the other components of the deals that we were able to strike.

Okay. Great. And just quickly on Red Oak, you mentioned I think for FY 2018 maybe a little bit less contribution year over year. I'm just curious. Can you remind us just how much the annual payments were from Cardinal to CVS in fiscal 2017 that just ended? And then is that expected to change materially at all in FY 2018?

Yeah. The annual payments to CVS are $45.6 million a quarter, and those payments are locked in for the rest of the deal. So there will be no change in the impact of those payments in FY 2018 to FY 2017. But again the value that we're seeing from Red Oak net of those payments continues to be very, very positive. Just quickly because we're running late on time, we're really going to have to make the next question our last one. And then anybody else that didn't get a chance to get in, please, we'll hopefully answer your questions as we do one-on-one calls today or throughout the next several days if you need to get your questions answered. So let's go to the last question.

Our final question comes from Robert Jones with Goldman Sachs. Robert Patrick Jones - Goldman Sachs & Co. LLC: Appreciate you guys sneaking me in, and I'll just limit it to one. Looking at fiscal 2019, the kind of early guidance you guys have given there, obviously pretty unprecedented for Cardinal to be providing guidance two years out when wrapping up the fiscal year. So I guess just maybe, both George and Mike, just a little bit more on the thought process behind this? I would think honestly, given how fluid the environment has been that visibility would be still somewhat limited, especially that far out. So how should we think about your confidence in the drivers behind fiscal 2019? And maybe just the thought process behind kind of taking a step out and providing that to us today?

Bob, thanks. It's a fair question. I think it was important for us as we looked at our business. We have been over these last nine years, we've had moments where we've had to reset, invest, and drive for future plans. I mentioned that during my prepared comments. This is sort of one of these moments. Part of this is the conditions of the market. Part of it is the moves that we've made. We felt as we started looking out at the business, particularly having deployed some capital and some important moves, that it would be valuable for you to understand how we saw those and to sort of lay out our aspirations. And so I think it's partly a way of sort of framing how we see the business and the evolution of the portfolio. You've seen us make – announce one potential move here in China. Over the last week we've closed another transaction that we think strengthens our business on the product side. So as we talked about it and felt that it would be helpful for us to frame that out for our investors to give you a little bit of sense of our direction, our portfolio, and our sense of optimism going forward. Robert Patrick Jones - Goldman Sachs & Co. LLC: Great.

All right. Folks, thank you for staying with us. It was I know a long call today. I know there are one or two, maybe three or four of you who did not get a chance to get questions in on the call. We will make sure to be available to you during the day. We look forward to getting a chance to talk with all of you. Thank you all, and we'll talk to you soon.

That does conclude today's conference. Thank you for your participation.