Hello, and welcome to the Third Quarter Fiscal Year 2024 Cardinal Health Incorporated Earnings Conference Call. My name is George. I'll be your coordinator for today's event. Please note, this conference is being recorded and for the duration of the call, your lines will be in a listen-only mode. [Operator Instructions] I'd like to turn the call over to your host today, Matt Sims, Vice President, Investor Relations. Please go ahead, sir.

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

Good morning, everyone. A year ago at our Investor Day, I reflected upon what attracted me to Cardinal Health, our strong culture, values, and mission to be healthcare's most trusted partner; how the company was uniquely positioned with its breadth and scale to navigate the complexities of the healthcare ecosystem and serve the needs of customers, manufacturers and ultimately, patients. At the same time, I was open about some of the opportunities in front of us as an organization. Together, we laid out a clear but aggressive strategic plan, streamlined our focus, and the team got to work, all the time prioritizing on our core business to emerge as a stronger, more resilient company. And we have a recent proof-point. Over the last several months, we deeply focused on preparing for a variety of alternatives regarding a particular large, low margin customer contract, which has allowed us to quickly navigate the upcoming contract change and confirm that we expect to grow our earnings in fiscal '25. By driving improvements in our core operations, investing to expand our offerings in key areas like specialty and evolving our commercial approach in ways which have resonated elsewhere in the marketplace, we demonstrated that we have made progress on positioning our business for sustained success and growth. As we look ahead, the current quarter's results reinforce our confidence. We're operating from a position of growing strength and resiliency, with industry trends that remain stable and in our favor. In Q3, we delivered broad-based growth, while executing on our four strategic priorities; building upon the growth and resiliency of pharmaceutical and specialty solutions, executing our GMPD improvement plan, accelerating growth in key areas, and maintaining a relentless focus on shareholder value creation. In our most significant business, Pharmaceutical and Specialty Solutions, we again drove solid…

Thank you, Jason. This morning, we are reporting our financial results on the new financial reporting segment structure we implemented at the beginning of Q3. To that end, we released an 8-K on April 23, which provided the recast historical quarterly results for fiscal year '22, fiscal year '23, and fiscal year '24 through Q2, reflective of the new segmentation for Pharmaceutical and Specialty Solutions, GMPD, and Other. As we called out at the time, the new segmentation is designed to provide greater transparency, focus, and accountability across our businesses, and we are already seeing those benefits. Overall, Q3 was a strong quarter with double-digit operating earnings growth and 20% EPS growth. We accomplished that growth, while at the same time leaning in and making significant investments of time, expense and capital against our longer-term strategic plan. With both continued confidence in our strategies and a resilient business and team, we are pleased to once again raise our EPS guidance for fiscal year '24, more on that shortly. As seen on Slide 4, total company revenue increased 9% to $55 billion, reflecting revenue growth in the Pharmaceutical and Specialty Solutions segment, the GMPD segment, and in all of the businesses making up Other. We were particularly pleased to see the second consecutive quarter of revenue growth in GMPD at 4%. We are also pleased that gross margin increased 9% to $1.9 billion. While consolidated SG&A also increased just under 9% to $1.3 billion in the quarter, the increased amount reflects technology and other purposeful investments against the future of the business and higher costs to support sales growth. With strong broad-based profit growth, we delivered operating earnings of $666 million, 10% higher than last year. Moving below the line, interest and other was generally consistent with the prior year at…

Thanks, Aaron. Now for some additional perspective on our businesses, beginning with Pharmaceutical and Specialty Solutions, where our focus remains executing in the core to build upon our strong foundation. We're continuing to invest in our core business to drive operational efficiency and provide improved customer focus capabilities. At the same time, we have been evolving our commercial engagement strategies to get closer to the customer, better understand their complex needs, and provide proactive solutions. As an example, we've highlighted our first to market clinically integrated supply chain, the Cardinal Health InteLogix Platform, which deploys AI and machine learning through the Palantir Foundry platform to analyze real-time clinical and purchasing data to help providers reduce costs, optimize drug inventories, and streamline medication supply. We've also developed the Cardinal Health Atrix Elements offering, which is a suite of hospital reimbursement services that help improve hospitals' workflows and efficiencies. We've driven tremendous progress in our services for health systems, leading to the successful onboarding of a new key customer and additional new health system business coming in fiscal '25. We recently broke ground on our new 350,000 square Consumer Health Logistics Center in Central Ohio that we see as a differentiator in the marketplace. Over the past several years, we've experienced growing demand for over the counter consumer health products, which are an important part of our offering for retail pharmacy customers, particularly among our valued retail independent community pharmacies. With innovative technology and automation solutions powering the new facility, which will serve as a centralized replenishment center, we anticipate improved inventory efficiency across our network and providing unparalleled supply chain responsiveness for our customers. We see the rapid development of advanced automation technologies as an ongoing opportunity for our business. During the quarter, we deployed new sortation systems in a number…

Thank you very much, sir. [Operator Instructions] Our first question today is coming from Lisa Gill coming from JP Morgan. Please go ahead.

Good morning, and thanks for taking my question. Jason, I just really want to dig into the 2025 guidance that you've given, especially when we think about Rx and specialty business. We clearly know that revenue will be down because of the change Rx, I'm sorry, because of the OptumRx contract, but...

Very sorry about that, gentlemen. Her line appears just to have dropped. So if she could just maybe dial back in, I will put her back in the queue. But now, we will move to Michael Cherny. Please go ahead.

Good morning, and hopefully, my line won't drop. I probably had a similar question on Lisa, so hopefully you can address this directly. Relative to the '25 segment EBIT, as you think about the moving pieces here, maybe a two-part question. First, is there any way you can give us an underlying growth rate beyond the loss of Optum? And then second, as you think about the at least 1% segment performance, can you give us just a further breakdown on how much of that is volume growth versus mix versus new customers? Any more color you can provide on that as we think about the jumping off point and then how that factors into '26 would be great. Thanks so much.

Good morning. This is Aaron. I appreciate the question, and happy to provide a little more context. I want to start by observing that the PS&S team has got -- have strong plans for '25 as they continue to deliver against what was a very strong fiscal '24. We had provided long-term guidance for PS&S of 4% to 6% profit growth. As we now think about that in comparison to the guidance we provided today of at least 1% profit growth within that segment, the delta, you should think about it is really the impact of profit -- net impact of profit so far relative to the Optum business. And the simple math I do is, if you take the midpoint of our long-term guidance, the 5%, each percentage point is worth about $20 million. You take it down to the 1% -- at least 1% that we've guided, that's about an $80 million net impact so far that we are working through. So that's the profit guide I would give you. On the revenue side, I would observe that we've already provided the impact that fiscal '23 was about 16% of our revenue. Fiscal '24, not yet done, will land somewhere between $35 billion and $40 billion of revenue. Back that out, but recognizing that the portfolio is still growing 10% or so as we push ahead. And then lastly, on the cash flow side of the house, I hope you noted my comments that we are holding to our average of $2 billion of adjusted cash flow each year in the '24 to '26 period. It will be lower in '25 as we work-through the negative working capital position from that non-renewed contract and a days of week impact. But this is manageable and as you -- I hope you take away from the fact we're calling growth as we push ahead for PS&S. We have plans in place. Jason, anything you want to add?

Yeah. Just I'll build out a little bit further the puts and takes for '25. As Aaron highlighted and scoped it, the delta is a net approximately $80 million when you look at the -- those different reference points. So, that obviously implies an Optum impact of something greater than that, that's being partially mitigated through several different items that we've called out. One is the other customer progress that we've had. So this value proposition is definitely resonating well with our customers and so we've had good win rates in other areas. And so, that would allow us some opportunity to partially offset that, that's included in that net $80 million, as well as the inclusion of Specialty Networks. So overall, specialty growth, we expect to continue to be strong. And then we have the Specialty Networks acquisition that closed last month. So we'll get kind of a three quarter type of year-over-year benefit, because we'll have it in our fourth quarter as well and the ongoing growth with that. And then there's some opportunity to further reduce cost by streamlining our processes even further, simplifying even further. So, overall, we feel really good about those offsets and that gets us to that net about 4 percentage points that we're calling out right now.

Next question, please.

Thank you, sir. We'll now move to George Hill of Deutsche Bank. Please go ahead. Your line is open.

Yeah. Good morning, guys. And Jason, I kind of have a question around the intersection of the competitive environment in specialty. The industry has been pretty stable without any large contract switches for a while, though, we saw two kind of in the last handful of months. And my question is, like, given the composition of assets in the pharmaceutical business right now, are you seeing more of a demand for what I would call like cross functional service where people want to see core pharmaceutical distribution with other parts of specialty with -- as it relates to oncology and just trying to figure out, like, how do you guys deal with the breadth of solutions that you offer as the competitive environment evolves?

Yeah. There's a couple of things I think about this, George. First of all, thanks for the question. As I step back and think about just the backdrop of your question on the competitive environment, there -- while there are a couple changing hands, as you highlighted, I think the overall market continues to behave in a very rational way. We continue to be very thoughtful and disciplined in how we participate within it. And it's the exception of those contracts changing hands. The vast majority of contracts don't change hands as they come up for renewal. So I don't think that that -- it changes things. And you -- while you're still stepping back from everything, our role ultimately on the distribution side is to safely, securely, and efficiently deliver these products for our customers, that hasn't changed. Now, I think your question is, are there other elements that make that evolve further. Hey, we've got the full suite of services. We are building those out further. I think our customers always are looking for opportunities where we can add additional value. That hasn't changed either. It just evolves as to where they are most focused, and each customer has a little bit different value proposition from which to build from. So that will resonate better with some customers than others. And our objective is to continue to build out those capabilities, both upstream and downstream, so that we can be that full service supplier and partner to ensure that we can help them grow their business.

George, I would add one further thought, which is, as you see from examples like our acquisition of Specialty Networks, of course, we continue to work to get closer to the ultimate practitioner, so that we are prepared to offer the incremental services that the industry is demanding.

Thank you. We'll now move to Lisa Gill of JP Morgan. Please go ahead again.

Good morning, and thank you, and hopefully, this time it will work. So my question was actually asked, but I wanted to just really dig in just a little bit deeper. As I think about the cadence for 2025, I know you're not giving specific guidance, but maybe even first half, second half, as we think about some of the comments you made, for example, simplifying costs, right, that'll...

Okay. Very sorry about that. It would appear we're -- I'm very sorry, gentlemen. It's just that her line has dropped.

Well -- yeah, I think we can understand where she was going with trying to build out further for first half versus second half. So, the one thing I would stress, let's talk about the puts and takes and the timing of the puts and takes. So this customer migration will be somewhat of a cliff event at the end of the fiscal year. So, the June 30 to July 1, which is exactly the beginning of the fiscal year. So, that first quarter, we'll see that volume drop off fairly precipitously. And then the other business that we've won, some of it is already feathering in, some of it will continue over the course of the year, and we've highlighted in our comments a lot of it will be in the second half of fiscal '25. So, the timing of that, that piece of the puts and takes will be a little bit more second half weighted. Especially networks I referenced, that is a nice tailwind that is going to start benefiting us. It's included in our guidance for the fourth quarter, but we'll have three quarters of year-over-year performance driven by that business being added in and the continued just overall growth of utilization over the course of next year that we expect as well. The other cost actions will be varied. There's some things we've been planning for this for quite some time. And so, some of those cost actions will be in place by the end of the year. Some of those will need to take time to allow our operations to settle with that lower volume. So this is a customer that beyond it being -- it's a large and growing customer. So we definitely liked that volume. At the same time, it was a customer that had a lot of non-standard and customized processes and the demand profile was a bit more volatile. So we'll be able to operate more efficiently as this volume exits, but that won't necessarily be a day one type of thing. It will take us a little bit of time to get the each of the individual sites to be flowing with the new product that is coming in, but also just optimizing with the existing product. So the puts and takes there are all items that we start to see some mitigation at the very beginning of the fiscal year and then build over the course of the year.

Thanks.

Next question, please.

Thank you, sir. We'll now move to Allen Lutz, calling from Bank of America. Please go ahead.

Good morning, and thanks for taking the questions. We've heard anecdotally that generic prices are a little bit firmer this time versus maybe last year. Can you talk a little bit about buy side and sell side pricing here of generics and maybe how gross profit dollars in that part of the business in generics are trending versus...

So, thanks for the question. What we would tell you is, as we continue to be in an environment of consistent market dynamics, where we see stability on the buy and the sell within our generic business. As we've talked about in the past, the stability that comes with that is when we see a rising tide of volume and a strong prescription demand environment, which we have, we continue to see strength in the generics portfolio, and that's where we are. We are aware that others have made comments somewhat variant from that over time, but we see consistent market dynamics and view that stability as a strength of our portfolio.

Thank you. We'll now move to Kevin Caliendo, calling from UBS. Please go ahead.

Thanks. I'll try to ask quickly before it gets dropped. Can you help us bridge on the medical side sort of the inputs to get to your fiscal '25 operating income from sort of where we are today? What are the most important factors that will get us from sort of where we are with the run rate through fiscal 3Q of '24 to the expected numbers in fiscal '25? And then just a quick follow-up. Does the loss of Optum and your partner in Red Oak also lost a large payer contract. Has that affected Red Oak in any way, shape, or form or your purchasing power or your economics there? I'm just wondering how to think about that, because it's two sizable chunks of business, but I just don't know how to think about the impact on Red Oak. Thank you.

Why don't I start with the med cadence and then turn over to Jason to talk further about Red Oak? Look, the med, the -- or rather the GMPD business, we are executing against the plan that we've now been talking about for several quarters. And a couple of numbers on the page. Fiscal year '23, it was a negative $165 million; in fiscal '24 today, we've confirmed we're calling a positive $65 million. That's about a $230 million swing, which puts us halfway to the fiscal '26 target of $300 million. Fiscal '25, we've called today, will be approximately $175 million, really a midpoint between those. How we get there is how we have gotten -- how we've gotten halfway there so far. The single biggest initiative, single biggest impact to those numbers is continuing to achieve the inflation mitigation that we've been talking about for several quarters. We exited Q3 at about 90%. We expect to achieve full mitigation by the end of the fiscal year. But as we move into next year, of course, we'll be lapping the lower percentage execution. So that will be tailwind. That will be significant tailwind for us certainly in the first half and, indeed, the first -- for the full year. It's also important that we continue to see the good revenue growth and, in particular, the good volume and revenue growth tied to the Cardinal Health brand is that is a broader -- that is a more profitable part of our business. I know you noticed that in Q1, we called out a positive change in trend relative to the revenue in that business. Q2, we saw 2% growth. Q4 we saw 4% growth. And so, we're seeing signs of progress that give us reasons to believe that we can achieve both the $65 million this year and the $175 million next year. Lastly, on the cadence and the importance, the team will continue to do what they've been doing around simplification and cost out, right? It's a very complex business and the team has been doing a good job of simplifying and identifying sources of cost this year, and that will continue into next year as well. Jason, anything you want to add or talk about Red Oak?

Nothing to add on that component. As it relates to Red Oak, we feel very good about the scale and competitiveness of that venture -- joint venture that we have with CVS. The combined volume that we both bring is sufficient to have significant scale in the space. The percentage of volume that was related to the lost customer is quite small relative to the total that we have that remains. So we feel good about our -- continuing our mandate of both continued value for our partners and, ultimately, our customers and as well as the dual mandate aspect of also driving supply as much as possible.

Thank you, sir.

Next question, please.

We'll now go to Eric Percher, calling from Nephron Research. Please go ahead.

Thank you. A couple of modest items relative to Pharma that I wanted to tick through. One is, in discussing the headwind, penciling out to $80 million, you used the comment so far once or twice. Is that so far reflecting that there may be more mitigation or that this is influx? That would be one. Number two, is there a contemplation of any incentive comp reduction in '25 that would then reset in '26 in that mitigation? And the last one is, Specialty Networks, it sounds like you're expecting a benefit at the op profit line. I believe the comment when you closed it was it would be accretive 12 months following close. Any commentary on contribution there would be helpful as well. Thank you.

Yeah. So I -- the so far comment was simply to highlight that we are guiding to at least 1% growth. And so, that reference is entirely around, of course, we continue to look for other opportunities to mitigate further. And depending upon our success with those additional actions will be the answer to your question about incentive comp. We'll, of course, appropriately define a target with the alignment with our Board to ensure that we are motivated to drive the business forward. And then, as it relates to Specialty Networks, our underlying assumptions are unchanged. The accretive comment was -- you're right, Eric, that the reference point was a year after the close and that was including the dilutive effect on the interest. So, the lost interest on $1 billion, $1.2 billion is the offset to the operating earnings that we see within the Pharma business. So it's really just the geography of the plus and minus with that.

Eric, you had also asked about the impact to compensation plans. And the point I would make is, we set compensation plans on an annual basis for the management teams. And -- but we also have a long-term element, which is highlighted in our proxy, the targets there, and we'll continue to -- the teams will be continually motivated to hit those objectives.

Next question, please.

Yes, gentlemen. The next question will be coming from Stephanie Davis of Barclays. Please go ahead.

Hey, guys. Thank you for taking my question. You called out a few new wins and expansions in the prepared remarks and you did highlight some customer progress that offsets the Optum headwinds. So I was hoping we can dig in there a little bit more. Can you tell us about the nature of these wins? Is this more core? Is it onc (ph)? Is it other ologies? And how much the bridge from FY ‘25 to the three year guidance relies on further progress with these wins versus more of the streamlining and cost-out that you've called out?

Yeah. So it's across various classes of trade. So it's broad based wins that we've received. We are not anticipating needing additional new wins beyond what we've already completed or in process of completing. And that's why when you think about the embedded guidance that we're talking about in terms of maintaining our long-term targets of that 4% to 6% growth, some years like this year were at the above the high end and next year, it will be a little bit below the low end, but the average is out to that 4% to 6%. And so, it implies a '26 and beyond type of rate that continues to be in that 4% to 6% range, which is kind of a normal -- normalized ongoing type of earnings level. So what -- how I step back and think about our progress to date, it really comes down to our service levels and our customer service and really listening to what is important to those customers and working with them for a solution that is not necessarily customized, it is standardized, but with their needs in mind. And we're getting fantastic feedback from our current customers in terms of what that service level has been that is translating over to the desire by customers that we're not working with today to consider using Cardinal Health. And so, we have the time, attention, and energy now that we're able to devote even more to those existing customers to streamline those processes in a little bit more of a simplified fashion, and we'll continue to drive that value proposition with those new customers. But it's very much a booked business type of perspective that we're now into execution mode. And after this year, fiscal '25, we'd expect it to be even more normalized at that point.

I would add a couple of things to that. First, you asked about cost-out, and my response or our response is that simplification has been a priority of ours for the last couple of years, and we will, of course, continue to go looking for ways we can simplify our operations and optimize our cost. But let me be clear, right, we are not backing away from customer support, particularly the new customers coming onboard, so that we do that seamlessly. And we're not backing away from investing in our future across our enterprise. And so, we will continue to talk about the highlights of those as we make them in future earnings calls, but we will optimize as appropriate, while focused on the long term.

Thank you, sir. We'll now move to Eric Coldwell, calling from Baird. Please go ahead.

Thanks, and good morning. I wanted to talk a bit about specialty in general and then tie in Specialty Networks. So, in the recent past, you've given a sizing of your overall specialty business in the low-to-mid $30 billion range. You will lose some of that with the Optum roll off, probably $3.5 billion, $4 billion, I'm guessing. You're going to add some with Specialty Networks, and then you have normal market growth. So, netting this all together, what would you anticipate the baseline specialty business to be sized at when you start fiscal '25?

So, those are a number of puts and takes that as you noticed, I'm sure, Eric, we did not provide revenue guidance in this update. We will be providing that in the next update, of course. So, certainly, you're in the ballpark on the Optum piece, as I've highlighted before, that is about 10% of that overall book of business. That specialty, everything else would be, PD, non-specialty. And Specialty Networks, the revenue is quite low, because it's the service revenue, it's not distribution revenue. So that's what I would think of independent is that we, of course, would expect our non-Optum specialty revenue to continue to grow nicely and we will frame that, but don't think about that as something specifically related to Specialty Networks.

Thank you very much. Next question is coming from Elizabeth Anderson, calling from Evercore. Please go ahead.

Hi, guys. Thanks so much for the question. I was hoping you could talk a little bit about -- more about GMPD. It seems like the competitive environment maybe is improving in your favor. It seems like maybe there's some benefit from underlying just like utilization demand. Could you please just give us a little bit more color on sort of those underlying changing dynamics in more -- maybe more conceptually and about some of the specific cost-cutting and other inflation offsets that you've already talked about?

Yeah. I think the competitive environment, I'm not sure I'd put much into that. Our performance within this industry has improved dramatically. I referenced in my comments, the customer loyalty scores improve -- have improved consistently and dramatically from the bottom of the pandemic a couple of years ago. So, our performance is noticeable. Our customers are feeling it. That customer loyalty index, the scores behind it improving, because we have -- we have the low back order, we have product availability, we have great service levels. We're very engaged from a sales force perspective. So we're out there now selling instead of reacting to the challenges of the pandemic. So our customers are feeling that. We have very stable win/loss types of rates. We're growing at least with the market now. So it's more of us showing up, I think, the right way than the market being overly growing more or growing less. The market utilization continues to be more and more normalized. So there's maybe a little bit of volatility here and there, but it's much more normalized compared to where it has been in the last several years. So, not -- that -- and that's the environment we like. We like to see predictable, consistent lower-single digit type of utilization rates that we can grow a little bit above that through our mix and other actions. And then, of course, as Aaron highlighted, the single biggest driver, not only this past year, but that -- what we expect at least in the first half of next year, would be just the lapping of the inflation impacts and everything we've done to mitigate that. Which -- that's another thing that's helpful for us to get that behind us so that we're focused on selling and talking to our customers about the value that we can help provide them, as opposed to dealing with inflationary fluctuations that have occurred in the past. So we're well-positioned to now drive the other elements of the medical -- the GMPD Improvement Plan, which is the ongoing simplification, the ongoing cost reductions, but just continuing to really prioritize more than anything the Cardinal Health brand volume growth.

Next question, please.

Yes, sir. The next question will be coming from Stephen Baxter, calling from Wells Fargo. Please go ahead.

Hi, thanks. Just one quick confirmation and the actual question. I think what you're suggesting is that beyond fiscal 2025, there is no direct or indirect impact from the Optum contract loss to contemplate. Just wanted to confirm that point, that there's not any kind of earnings contribution from a transitional period inside the 2025 thinking. And then the actual question is just on the Other segment. The revenue growth has been quite strong. It's taken a little bit for the profit growth to kind of catch up to your long-term expectations. Just remind us what the key kind of moving parts are there to accelerate the profit growth in the next couple of years. Thanks.

So, an answer to your first question, our guide today does confirm the long-term growth within the Pharma business of 4% to 6%. It will be off a lower base in fiscal '25 as we grow at least the 1%. We've not commented on an absolute dollar basis, but we will provide more context on that when we get to our year end results and final guidance for fiscal '25 during our August earnings call. With respect to the Other business, we are pleased with what we're seeing so far. We re-segmented the operation to create additional transparency, focus, and accountability, and I referenced in my prepared remarks that we are already seeing the benefit of that. The topline results are good, right? And we guided 6% to 8% profit growth for this year. We were a little bit lower than that in Q3 for the businesses aggregating in Other so far. And of course, we had the impact of some of the non-recurring adjustments that we called out in Q2 tied to the at-Home business, which reports into Other in the second quarter. But I want to emphasize, we did confirm that we are expecting to achieve the higher results, the 8% to 10% for fiscal '24 and we confirm the high end of that range for fiscal '25, as Jason digs in with the businesses now reporting directly to them and as we invest as an enterprise against setting those businesses up for a higher growth trajectory.

Yeah. Just a couple of things to add. First, on the first question, just to be real explicit, given it's a cliff event customer transition that we are anticipating for July 1, we'd anticipate that that would be largely in fiscal '25 results and there's nothing that we're calling out or indicating at this point that would carry over into '26. And as it relates to the Other businesses, how I think about them, they're each growing very nicely. They each have strong industry, strong sectors of the industry that are benefiting from their own individual secular tailwinds. So, they each have different reasons for their growth. But ultimately, it's because that each of these three areas provide a real interesting value proposition to customers and, ultimately, to the patients. And each of these three, we have a leadership position in. So we're not only benefiting from that secular trend, but we're leading and maintaining or growing our own fair share within it. So we're well positioned for each one of these three and why we have confidence about them. We are investing into them, as Aaron highlighted. That's driving the growth that we believe will be driving long-term profitability as well.

Next question, please.

Yes, sir. The next question will be coming from Charles Rhyee of TD Cowen. Please go ahead. Your line is open.

Hi. This is Lucas on for Charles. I wanted to ask about Cardinal Health brand and get a sense of where we're at on the path to realizing $50 million in targeted growth by fiscal '26. I understand that you've expanded the number of products you offer under private label and that you're starting to see momentum in growing volumes. Can you help us understand how much of that $50 million has already been realized? And then how much we should expect you guys to realize in fiscal '25? Thanks.

Yeah. So I'd -- the -- it's a -- we inflected a couple of quarters ago, right? You saw that with our overall revenue growth that is partly driven by the Cardinal Health brand volume growth. So we saw, for example, this quarter, our revenue growth of 4% was pro-rated within that national brand, as well as Cardinal Health brand, so, we're seeing distribution stabilize. We're seeing that. We've won some business there that has allowed us to grow at or a little bit better than the market. So, overall, we're seeing that this business has now stabilized at a growth consistent with the market. We expect that to continue. This is something that we do have as a component of that growth. As Aaron highlighted, the single biggest driver of profit performance for '25 -- from '24 to '25 is the annualization, the carryover of the inflationary pressure. So that's the biggest item of that implied $100 million, $110 million year-over-year profit improvement. Then beyond that, you have Cardinal Health brand volume growth, cost reductions, and other actions. And so, it is a component, it's not the biggest component. And then it would be a -- from '25 to '26, the primary components that then drive that growth would be Cardinal Health brand volume, as well as further cost reductions as we continue to look to streamline and optimize our footprint, as well as our other supporting cost. So, we're not going to break out the individual pieces there, but those are the biggest pieces then when you go from '25 to '26.

Next question, please.

Yes, sir. Our last question today will be coming from Daniel Grosslight of Citi. Please go ahead. Your line is open.

Hey, guys. Most of my questions have been asked, but I was hoping to just get an update on Navista and any metrics you're able to share on the market adoption you're seeing there, number of providers aligned to it, etc. And I know one of the key strategic objectives of the Specialty Networks acquisition was to kind of integrate some of their technology, notably PSS Analytics (ph) into Navista and other specialty assets. I'm also curious if you can provide an update on how quickly you can integrate that technology and Murphy, you've already kind of started on that path. Thank you.

Yeah. Thanks for the question, Daniel. And so, with Navista, we are on track to everything that we've laid out first raising this about a year ago. I mean, as I think about the progress we've made, I'd break it into a few key buckets. First of all -- first and foremost, we've hired and brought in a fantastic team, a great mixture of internal and external talent, really drawing from industry those that have done this before and understand what that looks like, but also using our own expertise that have been more focused in other therapeutic areas, but a nice augmentation of the two. And then that new team quickly went to work and defined what went in front of our customers and prospective customers and really listened as to what is it that they need to run their practice, their business more efficiently, more effectively. And it was through that work that we then came to the final point, which is defining the tools, the capabilities that we are building within Navista. So, we didn't just go off and build it. We are building it around what the customers are demanding that they need, those community oncologists, those independent community oncologists, really looking at differentiating for what they need to run their business, both again, efficiently, but also effectively to further improve upon the lives of their patients. So that is the work that's been done, and we are every day building out more elements of this. So I wouldn't think about it as a particular date that everything goes live and we suddenly have this influx of volume. This is the type of thing that builds out our capability over time in different ways and working with our current customers, as well as the prospective ones…

Thank you very much, gentlemen. Ladies and gentlemen, that will conclude today's question-and-answer session. I turn the call back over to Mr. Jason Hollar for any additional or closing remarks. Thank you.

Yeah. Thank you. Just to close, appreciate everyone spending some time with us this morning. We hope the overall message that you took away from the call today is that we have a strong and resilient business and a very clear plan for us for '25 and '26, and we're excited about the opportunities and ensuring that our customers and their patients continue to get fantastic service. So thanks again for joining us today and have a great day.

Thank you very much. Ladies and gentlemen, that concludes today's presentation. Thank you for your attendance. You may disconnect. Have a good day and goodbye.