Good day, and welcome to the Cardinal Health, Inc. Fourth Quarter Fiscal Year 2021 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Vice President of Investor Relations, Kevin Moran. Please go ahead, sir.

Good morning and welcome. Today, we will discuss Cardinal Health's fourth quarter fiscal 2021 results, along with guidance for fiscal year 2022. You can find today's press release and presentation on the IR section of our Web site at ir.cardinalhealth.com. Joining me today are Mike Kaufmann, Chief Executive Officer; and Jason Hollar, Chief Financial Officer. During the call, we will be making forward-looking statements. The matters addressed in these statements are subject to the risks and uncertainties that could cause actual results to differ materially from those projected or implied. Please refer to our SEC filings and the forward-looking statement slide at the beginning of our presentation for a description of these risks and uncertainties. Please note that during the discussion today, our comments will be on a non-GAAP basis, unless they are specifically called out as GAAP. GAAP to non-GAAP reconciliations for all relevant periods can be found in the schedule attached to our press release. During the Q&A portion of today's call, we please ask that you try and limit yourself to one question, so that we can try and give everyone an opportunity. With that, I'll now turn the call over to Mike.

Thank you, Kevin, and good morning, everyone. I will start my comments today by acknowledging that our fourth quarter results were below our expectation and yours, primarily due to an inventory reserve adjustment of $197 million. This reserve adjustment was driven by changing market conditions related to COVID-19 on certain highly commoditized PPE products. To meet our customer commitments during the pandemic, we carried higher levels of inventory in certain PPE categories during a period of significantly increased demand, higher prices, and longer than normal supply chains. Our analysis at the quarter-end of both the anticipated customer demand and projected sale prices for these products resulted in a sizable inventory reserve that affected a subset of our medical products inventory. In addition, there were a few other unexpected items that affected our results, which Jason will cover in his remarks. Throughout the past year, we have been taking action to drive performance, and we will continue to move forward with urgency. For example, we divested the Cordis business, extended our Red Oak Sourcing agreement with CVS Health, identified $250 million of additional cost savings opportunities, restructured parts of our organization to increase accountability, and made important leadership changes. We are continually reviewing our business, and seeking areas to improve. With the actions we've taken to date, and our plans for FY'22, we feel confident in our strategy and are encouraged by the tailwinds behind our growth areas and strong cash flow generation. In FY'21, we grew revenue 6% versus the prior year, and despite an estimated $200 million year-over-year operating earnings headwind related to COVID-19, we grew EPS. We continue to aggressively streamline our cost structure, and surpassed our enterprise cost savings target for the third consecutive year. We generated strong operating cash flow; prioritized returning cash to shareholders through dividend and share repurchases, and took actions to further strengthen our balance sheet. As I reflect on the unprecedented events of the past year, our team has prioritized our customers, maintained continuous operations, partnered with governmental agencies to support vaccine administration and protect patients, and further improve the resiliency of our supply chain. Before turning it over to Jason, I want to highlight last week's announcement, that we have negotiated a comprehensive proposed settlement agreement and settlement process designed to achieve broad resolution of governmental opioid claims. If all conditions are satisfied, this agreement would result in the settlement of a substantial majority of opioid lawsuits filed by state and local governmental entities, and depending on the level of state and subdivision participation, we would pay up to $6.4 billion over 18 years. This is an important step forward for our company. As we've consistently said, we remain committed to being part of the solution for the U.S. opioid epidemic, and believe a settlement would be a prudent way to provide necessary relief for our community, and certainty for our shareholders. With that, I'll turn it over to Jason to further discuss our results and FY'22 guidance.

Thanks, Mike, and good morning, everyone. In the fourth quarter, we delivered EPS of $0.77, which as Mike mentioned, included a $197 million inventory reserve on certain PPE in the Medical segment. Turning to the Pharma segment, on slide six, fourth quarter revenue increased 15% to $38 billion, driven primarily by sales growth from large pharmaceutical distribution and specialty solutions customers. As a reminder, the fourth quarter fiscal '20 included reduced pharmaceutical demand related to COVID-19, which to a lesser extent contributed to the growth in the quarter. Pharma segment profit was flat in the fourth quarter, at $358 million. This reflects COVID-19 related volume recovery in our nuclear business, offset by pharmaceutical distribution customer contract renewals. This impact in renewals was in line with our expectations, and generally consistent with prior quarters. However, there were some other items, including inventory adjustments and opioid-related legal costs that are higher than previously assumed. As we've mentioned, we continue to prioritize investing for growth and optimizing our core operations. In the fourth quarter, the deployment of some of these technology enhancements results in incremental costs for implementation and depreciation, which we also expect the next several quarters as we continue to deploy new capabilities. I will further discuss our investments as we look to fiscal year '22. As we highlighted last quarter, we continued to experience softer volumes in certain therapeutic classes within our generics program. Our generics program continue to see generally consistent market dynamics. With respect to other product types, including brand, specialty, and consume health, we largely saw volumes at or above pre-pandemic levels during the fourth quarter. In Medical, depicted on slide seven, revenue increased 23% to $4.2 billion in the fourth quarter. This revenue increase was driven by a net positive impact from COVID-19 on products and…

Thanks, Jason. To be clear, we are disappointed with this finish to the year and are moving forward with a sense of urgency to improve our operation and execute our strategy. We're prioritizing investment in our strategic growth areas and expect these businesses to collectively realize double-digit growth as FY'22. And across our business, we're enhancing our IT infrastructure in key areas to increase capabilities and digitization that improve the customer experience and drive productivity. While we expect the benefit from these investments this fiscal year, the majority of these benefits will materialize and FY'23 and beyond. In Pharma, we're investing an additional $80 million in technology infrastructure to create additional operational efficiencies, improve data insights, and drive cost synergies to enhance our ability to grow and generate better outcomes for our customers. Our generics program remains a critical priority. This week, we extended our Red Oak agreement with CVS Health for an additional five years, which takes the term of our generic sourcing joint venture through June 30, 2029. This ensures that we can continue to deliver best-in-class sourcing capabilities for our customers well into the future. We are also investing in data and analytics including our pricing capabilities, as we continue to focus on managing all components of our generics program and expect market dynamics consistent with the last few years. We remain committed to supporting the retail pharmacy community, and our recent annual retail business conference, we connected virtually with over 4,000 retail independent pharmacy customers and launched two new digital offering, NavixRx and E-Commerce Storefront to help independent pharmacies expand their services and improve healthcare outcomes. In Specialty, we're investing in our Sonexus patient hub where our technology solutions help biopharma customers remove barriers to patient care. And then our third party logistics business, we're extending…

Thank you. [Operator Instructions] And our first question will come from Michael Cherny with Bank of America. Please go ahead.

Good morning. Thanks so much for the question. I want to dive a little bit more into the capital deployment priorities you think about into '22. Obviously, you have the Cordis proceeds that are coming in of [$1 billion] [Ph], I believe the [indiscernible] agreement, if I recall, is about $1 billion or so, and I could double-check that in the last quarter's transcript. When you think about that, think about your cash position as you sit now and the free cash that you're going to generate this year, even with the investments that you're making, do you think there's an opportunity to be a bit more aggressive, either on the buyback given where your stock sits in the market, on M&A, given that you talked about a number of growth priorities, of which I assume there's some bolt-on transactions. Just curious about that philosophy, where you sit now, given that the company is in as strong a balance sheet position as I can recall seeing in a while?

Thanks, Mike. I appreciate the question. And we are really excited about the work we've done around that. But I'm going to have Jason give you a little bit more color on it.

Yes, thanks, Mike. And first of all, yes, I think we had some really great cash flow this last year, so $2.4 billion of operating cash flow. And that resulted in $3.4 billion ending cash balance, which does include the $500 million debt paydown that we completed in the fourth quarter. So, as you indicated perfectly, we're stepping into this year with a lot of flexibility even before the Cordis transaction closed, which was just a few days ago. We're still to add another $1 billion to that balance. As we highlighted in some of those comments this morning, we do expect to pay down the $815 million that's coming due by the end of the fiscal year or before end of the fiscal year. So that will be some of those uses. And then, of course, we guided towards the $500 million to $1 billion for the share repurchases, which is a fairly wide range, and reflective of some of the flexibility that we talked about. And as I think about the Cordis proceeds, of course cash is somewhat fungible, but essentially that $1 billion, how we're thinking about it is accelerating some of that debt paydown, and a portion of that $500 million to $1 billion. So, we feel real good about that as we entered into the first quarter here. You referenced the tax receivable, and I don't think we provided any updated comments on that so far. The last quarter, I'd referenced that we expect it by the end of the calendar year. It's still our expectation, like I think a lot of different organizations throughout the world right now; I think COVID has impacted some of the processes, and a little bit less certainty as to the precise timing. But we still feel pretty good that that's a good approximate timeframe. But when you think about receiving those proceeds perhaps late in the calendar year, there will less time to actually deploy those to the balance of this year. So, it's certainly still a potential opportunity to get us maybe to some of the higher end of that range. But, nonetheless, there's a lot of flexibility that goes along with that. As you indicated, when we talk about the opportunistic uses, essentially we have increased flexibility here. M&A is always on that list, and it depends on the opportunity, the valuation, and what we see delivering to us strategically. And so that will be another thing that we evaluate along the year. Thanks for question.

Up next, we'll hear from Kevin Caliendo with UBS. Please go ahead.

Great, thanks. I just want to expand on that a little bit. I guess I don't understand why you're not being more aggressive with the buybacks. Given the settlement, looks like it's largely done, the cash on hand is greater, the stock is going to come under pretty meaningful pressure today, most likely. What's stopping you from going out and buying $2 billion of stock or more? I mean are there any credit issues or anything else that you're concerned about? And also, on the buyback, if I'm doing the math right, it feels like the numbers don't entirely jive to get to that $0.21. Is there -- is it just simply the timing that it would happen so late in the year is why the buyback wouldn't cover the sort of $0.21 of dilution from Cordis?

Yes, let me start, Kevin. And then I'll turn it back over to Jason. I'll just comment specifically on the opioid piece, and then let Jason give you a little bit more information. The opioid, as we said, we're pleased to get to the point where we right now, where we have a comprehensive settlement out there. But it does have a few more steps left in it. So, we do have to wait and see if we get the states, and cities, and counties to sign on to get enough critical mass in order to make a final decision. And so, we do have some time left on that to make sure we understand exactly with clarity where that's going to be. But we're pleased with where we are as far as an initial step of finally getting something out there for people to consider. And then let me now turn it over to Jason to go into a little bit more the other detail that you asked about.

Yes, and as it relates to the [indiscernible] on the Cordis that was implied or referenced within there, it's just a matter of the timing of which you assume when we pay down the debt and when we would complete the share repurchases. And so, there's an opportunity for that to have a reasonable range. And that that guidance range, we think, reflects what we think that possibility may be. And -- but the key thing, on a pro forma basis, is that extra $1 billion will be deployed in some manner. And we will see, and certainly within fiscal '23 run rate, there will not be dilution expected that divestiture. And as it relates to the [the other] [Ph] question, and somewhat as it relates to credit issues, there's nothing there. I mean, we're on a guidance -- a glide path to getting to our targeted leverage ratio. A key part that I referenced last quarter is that this remaining debt that's come due at the end of this fiscal year is a key part of getting us towards those targets. And I indicated, last quarter, that I would anticipate the level of debt paydown to begin to diminish after this fiscal year. That continues to be our expectation. There's a lot of factors, as Mike just referenced, that would play into that. But overall, that remains our viewpoint, and there's nothing here that is, I'll say, overly constrictive from that point. Just a little bit of prudence until we get some of these risks and uncertainties defined. And we also need to see underlying performance in cash flow over the course of the year. And then, as I mentioned before, we do have some additional flexibility as it relates to the precise timing of the tax receivable.

And up next, we will take a question from Jailendra Singh with Credit Suisse. Please go ahead.

Thank you, and good morning, everyone. I want to go back to your just inventory impact on PPE in the quarter. Can you elaborate a little bit more what products this relates to? And is there a potential that you might have another write-down in fiscal '22, and what kind of initiatives you're putting in place to ensure that this does not happen again?

Sure. Yes, so I'll go and start it and -- so, as Mike mentioned, the key thing here is there's been a lot of uncertainties with the pandemic. And we were first and foremost going to put our customer commitments in front of us. And that resulted in a higher level of inventory that we carried over that period time. And that happened while there was; obviously, increasing demand, higher prices, and longer than normal types of supply chains. And then we step back, at every quarter we step back and do our analysis and determine what the net realizable value that is, and then make any adjustments that may be necessary. So, as Mike highlighted, there were some highly commoditized products, so [indiscernible] is a subset of our PPE, that think of it as those products that would have more volatile type of pricing. We saw that move more dramatically over the period. And given it was a subset of our inventory, it was relatively defined. It was a relatively large percentage reduction within that, but it was contained to a certain subset. And again, we're not getting into all the details product by product, but it was that type of product that had a little bit of the value add, and therefore as a little bit easier to get more supply into the market, and that drove the prices down quicker than other products. Anything else to add, Mike?

Only, I'd reiterate that our focus has always been and will continue to be on our customer. And it was important to, us from the very beginning of this pandemic, to acquire critical PPE for our customers. And as Jason says, we did ramp up during a period of higher demand and higher prices, and longer supply chains.

Next question, please.

And next, we will hear from Ricky Goldwasser with Morgan Stanley. Please go ahead.

Yes, hi, good morning. And thanks for all the details you provided in the prepared remarks. Just a couple of follow-up questions to understand sort of the moving parts into guidance, so specifically, you talked about the customer renewal, seems like it's CVS, can you maybe help us quantify what the impact is in 2022, and also is there any other renewals that we should be considering in the next 12 to 18 months? And then, the second question in terms of the moving parts are on the investment that you're making, should we think about them as sort of a one-time investment in 2022, or should we now factor just kind of like ongoing resource of investments to support future growth?

Yes, I'll start talk about the renewals, and then I'll have Jason make a comment on the investment. The renewal that we're talking about at the Red Oak renewal is not at all included in what Jason was talking about on customer renewals. That's considered in our overall generics program performance, which we expect to be something that we would expect to be a tailwind next year. We feel really good about where we're headed with all the various components of our generics program and excited to continue to partner with CVS moving forward with on Red Oak. What Jason was talking about in renewals was just the normal renewals. There is nothing unexpected in the fourth quarter customer renewals, they basically came in as planned, and so that was not anything I would consider it as we look for. We don't see customer goals being any different or unusual for us in FY'22.

Yes. It's relates to the other moving pieces for Pharma that are a part of that underlying guidance. Our growth businesses we expect to contribute. As Mike mentioned, we expect double-digit growth for our growth businesses top line as well as bottom line, and for the Pharma business that would be of course specialty nuclear and outcomes. And then we have the year-over-year COVID benefit that I mentioned would be a key part of that. But as Mike mentioned that the customer renewals is not something that we would anticipate to be significantly different year-over-year. And then your question regarding investments, those investments are next year of -- we've spent quite heavily over the last couple of several years on the capital side of getting these IT systems in place. We are finalizing a multi-year journey now, and are starting to depreciate those assets. So there will be elevated appreciation that of course is more fixed in nature, but there's also a component of the final testing and rollout launch of the system tends to be more expensive versus capital. And so, as we're riding that roll out stage that expense will be elevated. And that far we would expect to reduce longer term certainly beyond fiscal '22, but for the balance of this year, we would expect it to be elevated and then thereafter some portion of that will come down later on.

Next question?

And up next, we'll hear from Eric Percher with Nephron Research. Please go ahead.

Thank you. I wanted to ask about the generic volume commentary around certain classes. I know that we saw a clear increase in acute volumes from March into April on the quarter. So what are the classes where you're seeing this and any other specifics on how that's impacting the generic program?

Yes, thanks for the question. So, a couple things on that, we did see some sequential growth from Q3 to Q4 on generic volumes. So that continues to be a positive sign. We do expect our impact from COVID-19 on all generic volumes to be back at pre-COVID levels by the end of the calendar year or by the end of our Q2. What we're referring to here is, we're still seeing again ramping up, but we're still seeing some less than pre-COVID volumes on areas like anti-infectives, antibacterials, antibiotics, antivirals, and some pain medications that we've not seen. Our thoughts are as life continues to get more and more back to normal if that's the right word, kids are back in school, et cetera. We would start to see those drugs being needed more than they probably have historically been needed. So again, expect them to be back to pre-COVID levels by the end of the year, but that's really what we're talking about. Very similar to the exact same thing we talked about last quarter. And it's kind of continuing to play out as we should back then.

Next question please.

And next we'll hear from Steven Valiquette with Barclays. Please go ahead.

[Technical difficulty] -- The categories that are trending above baseline, I'm curious if you're seeing those same trends as well. Thanks.

Mr. Valiquette?

I'm sorry. We didn't catch the beginning of your question. So if you could try it again. Thank you.

Yes. So I knew at some point it would happen. I would get paying to ask two questions on two calls at the same time. That just happened. So, I guess I'm curious to -- curious to if you could provide more color on the elevated supply chain costs, you mentioned for the Medical segment and fiscal 4Q, you cited that in the press release. I guess I'm curious geographically is this cost pressure mainly in the U.S. or the international as well, in addition to some other color, just that mechanically what's happening there and that's a sale of Cordis alleviate this in any way into a fiscal 2022. Thanks.

Thanks. I'll start with your second piece first. Really, I don't see Cordis alleviating that at least towards the -- what the guidance we said, of course, there could have been a elevated costs on some of their raw materials and products and Cordis being more international. Obviously it had more aspects, potential fluctuation, but don't see Cordis being a factor there. As far as the elevated supply chain cost, what we started seeing in the fourth quarter is I think what you're hearing a lot of companies talking about, we're seeing increased fuel costs. We're starting to see the cost of, for instance, containers can be three to 10x. What they cost to should have been prior to COVID just due to where it's being blocked things like that. So we're just wages, et cetera. So it's just those types of things that we're seeing general elevated supply chain across the board. Again, saw that in Q4, we expect that to continue in for the first couple of quarters. And then as we think things get back to more normal, we'll be able to see some either reductions in those or we'll be able to take some of those costs and where possible that appropriately pass it through the customers, if it's a more permanent type of thing. So we'll be monitoring that and keeping our eyes on that.

All right, and our next question will come from Elizabeth Anderson with Evercore ISI. Please go ahead.

Hi, good morning. This is Eduardo on for Elizabeth. Can you guys maybe provide some more color on the $250 million of additional cost savings opportunities? And I guess what areas of the enterprise they expect to generate those savings from?

Sure. Yes, I would say it's very much continuation of what we've done to date, as you certainly recall our initial target was the $500 million and we've come close to accomplishing that after the -- just the first three years. And that was in varied areas everywhere from manufacturing, our footprint worked there to our distribution work all the way up to our functional areas. As we go forward, what we're seeing this next stage is the ability to go from more of the transactional first order benefits of like rate negotiation in areas like transportation and going further into really redesigning networks and getting into more augmented intelligence and things of that nature. We have one area that is allowing us to unlock additional value in this next stage is the Cordis divestiture. We talked about the simplification of our international operating structure. That's a -- that's an enabler for us to continue to go after additional opportunities there and then just continue on and all fronts given that we've got good momentum in place already for the existing initiatives.

Only thing I would add is that just to emphasize something Jason mentioned is around the use of digital to really get after being able to use bots, AI, RPA, et cetera, to get after our cost structure. We've been investing a lot of time on that. Our IT team has done a nice job of building out both people, resources and our businesses and functions are all embracing this as well as making sure we're doing work in the right locations are all other important factors that we see being able to give us some tailwinds going forward and cost savings.

Next question please.

And next we'll hear from Lisa Gill with JPMorgan. Please go ahead.

Thanks so much. Good morning. I just really want to understand as we think about normalization in your Pharma segment, so beyond the renewal. Do you see low-single digit to mid-single digit normalization in Pharma segment profits growth over the longer term, and where are our specific opportunity that you see to maybe further accelerate that growth beyond 2022 at that'd be kind of my first question, and do things like specialty and nuclear that you talk about returning to double-digit. I know they're on the smaller side. Did they help to accelerate that, that low-single digit to mid-single digit normalization? Just any drivers or help you can get around that on a longer-term basis.

Yes. Thanks, Lisa. Appreciate it. Actually you hit a lot of it right there in your question is that we did want to provide a normalized growth so that we could share with you what we do believe are achievable longer-term growth rates for both of the businesses that we provided the normalized growth on, specifically the Pharma, I think you said it well, we do expect continued double-digit growth from nuclear and specialty in our outcomes businesses. We see all of them next year being able to grow the top and bottom lines by double-digits. And we continue to see those businesses continue to be a bigger and bigger portion of the overall Pharma segment. So, as they continue to grow at those rates and are a bigger portion of the segment obviously they're going to continue to have more and more impact. We feel really good about the pipeline of products in nuclear and what the work we're doing in our -- the center for advancement of Theranostics. We already have a significant amount of manufacturers committed to joining us in that center when we opened it and working together on some new both treatments and diagnostics for cancer and other areas. So we feel good about all of those businesses. And then, as far as the core PD business goes, we think we are well-positioned with some very large and important customers that, that you're aware of. We've got eight more years now on our agreement related to Red Oak, and we feel good about that partnership and that continued positive impact on our generics program. And so those are some of the things I would say, make us feel good about that growth going forward.

Next question please.

And next we'll hear from George Hill with Deutsche Bank. Please go ahead.

Hey, good morning, guys, and thanks for taking the questions. I guess, Mike first, I would ask you, with the renewal of the Red Oak agreement, are there any substantive changes to the economics of that agreement? And then number two, you guys called out contingent brand inflation in the pressure -- I'm sorry, in the presentation as the business is starting to mix back towards brand growth. Are you seeing any changes in the underlying economics of the brand relationships and the amount of profits exposed to our brand price inflation?

Yes. Two very good questions, so first of all, on brand, what we're seeing there is we're expecting overall inflation rates to just be similar to the last couple of years. So we're not seeing any real changes there. And that's as Jason mentioned, the reason he said getting less dollars is because more of the suppliers that were contingent to inflation have moved to non-contingent and we've renegotiated a couple of those DSAs over the last year, so that we will no longer be contingent to inflation. As far as overall rates go, I would say we continue to feel very good about our overall value proposition. We have very strong relationships with manufacturers. And as you know, when anytime there's changes in their portfolios, sometimes that means they should get a lower price when they have higher cost drugs coming out. And sometimes they need to pay more fees when they loosen and say high priced item to a patent expiration. And so those types of moving parts in terms of volume and average line extension are taken into account with each negotiation and the team has done an excellent job working with our manufacturer partners and continue to have what I consider to be a fair market rate for that, and feel very good about that being able to be something that we can continue going forward. As far as the Red Oak renewal, we won't be able to get into any specifics there, but as you can imagine, it's been an excellent seven-year relationship. The team there continues to remain intact. They have decades generic buying experience. The leadership there in the team has just a great group of individuals again with experience that continues to bring new ideas together to the market, to be able to help us continue to get the best cost in the marketplace. And we continue to partner well with CVS at Board Meetings, et cetera, to continue to drive that. So we feel that the both companies took into in the context, on the market conditions on generics, then we renegotiate it and we feel very good about where we are with our Red Oak extension. Take one last question.

And the last question will come from Charles Rhyee with Cowen. Please go ahead.

Yes, thanks. Thanks for squeezing me in here. Maybe Mike, maybe a question on opioids in the settlement here, and I think there's like 150 days or so that for the plaintiffs to accept the terms of the settlement. What's the minimum participation that's required under this settlement for it to go into effect? So in other words, is it like half the participants have to at least participate and then it's my understanding that the amount that you would pay out would scale down depending on the number of participants. So just wondered what that minimum requirement is. And then what happens if you don't hit that threshold. Thanks.

Yes. Thanks for the question. So you're right. And so the total number that is accrued assumes all 50 states, cities and counties are in. So if any single state or cities and counties within states do not elect to be part of it. The number will come down based on agreed upon proration by states. So it will decline that states not -- and cities and counties do not participate. Second thing to your point, it is multi-steps, there's a point where we get some insights to where the states are. Then there'll be another point where we'll get to understand what about cities and counties and the subdivisions are. And after all of that, we will take a look at what we'll call -- we're calling critical mass. There is no set number. So there's no minimum. Our goal has been and continues to be to get 100% participation on all 50 states in order to have the most clarity, that may not happen in anything less than that, then we as a group, we'll have to sit down and determine if that's enough clarity and participation. It's highly dependent on the states that do and don't participate. So we'll have to really step back and look at it as an overall -- from an overall standpoint, and make a decision on whether or not to move forward.

One thing I'd like to just clarify, as Mike indicated, if not all 50 states choose, or we come to an arrangement to join that would mean the cash payments would be lower under that structure. It does not necessarily mean the accrual would change. And that would we look at the facts and circumstances of the situation is determined what their proper accounting would be at that time. There could certainly be a difference there that we would need to evaluate.

Good clarification. And that concludes our Q&A session for today. I will now turn the conference back to Mike Kaufmann for closing remarks.

Yes. I want to thank everybody for taking the time to be on the call and for the very helpful questions. I know there was a lot of noise in this quarter, but I just wanted to end with a few thoughts to keep in mind. We did see -- first, we did see underlying growth in FY 2021 in both of our segments, if you exclude COVID-19, which gives us confidence as we move forward -- going forward with the impacts of the pandemic, hopefully beginning to dissipate. Our guidance is for growth next year in each segment. And also if you take normalized growth in each segment, when you normalize for noise, like COVID and Cordis divestiture, we will grow in both segments. We have tailwinds behind our growth businesses. We really expect all of our growth businesses as a group to really grow at least double-digits on the top and bottom line. And we have taken some significant actions such as getting after an additional $250 million in cost savings, closing the Cordis transaction, which will enable us to simplify our operating model and extending our agreement with CVS or just a few of the examples, and it's the first question was in Jason's comment, we do have very strong cash flow generation, which gives us a lot of flexibility to be more opportunistic in our capital deployment. So with that, thanks again, and have a good day.

And this concludes today's call. We thank you for your participation. You may now disconnect.