DUBLIN,
Ohio, April 22, 2024 /PRNewswire/ -- Cardinal
Health (NYSE: CAH) announced today that its pharmaceutical
distribution contracts with OptumRx, which expire at the end of
June 2024, will not be renewed. The
company reaffirmed its fiscal 2024 non-GAAP diluted EPS guidance of
$7.20 to $7.35. Despite the nonrenewal of the OptumRx
contracts, the company also reiterated both its Pharmaceutical and
Specialty Solutions long-term segment profit CAGR target of 4% to
6% and its consolidated non-GAAP EPS CAGR target of 12% to 14% for
fiscal years 2024 to 2026, relative to a fiscal 2023 baseline.
Affirming these targets reflects the company's ability to achieve
sustained growth over the long term and deliver attractive returns
for shareholders through an ongoing focus on value creation.
While Cardinal Health has not yet provided financial guidance
for fiscal 2025, the company expects growth in fiscal 2025 in both
Pharmaceutical and Specialty Solutions segment profit and non-GAAP
diluted EPS. The company expects to partially offset the impact of
OptumRx through a combination of new customer wins, specialty
growth and other actions.
Sales to OptumRx generated 16% of Cardinal Health's consolidated
revenue in fiscal year 2023. Approximately 90% of these sales were
serviced by the company's Pharmaceutical Distribution business and
primarily consisted of non-specialty bulk shipments to Optum's mail
dispensing facilities.Total sales to OptumRx generate a
meaningfully lower operating margin than the overall Pharmaceutical
and Specialty Solutions segment.
Furthermore, Cardinal Health continues to expect to generate
adjusted free cash flow of approximately $2B on average from fiscal 2024 to 2026; however,
the company anticipates lower-than-average adjusted free cash flow
in fiscal 2025 due to the unwinding of negative net working capital
associated with the OptumRx contract and day-of-the-week
timing.
"We have plans in place to continue delivering profitable growth
in fiscal 2025, and we are pleased to reaffirm our long-term
targets for the Pharmaceutical and Specialty Solutions segment and
enterprise, despite this nonrenewal." said Jason Hollar, CEO of Cardinal Health. "We remain
confident in the resiliency and strong value proposition of our
business and look forward to updating you on our continued progress
on our upcoming earnings call."
"Our team remains focused on driving our strategy and executing
on behalf of our customers," said Debbie
Weitzman, CEO Pharmaceutical and Specialty Solutions. "We
are excited about the many other opportunities in the marketplace,
such as the onboarding of new customers and the additional
capabilities from the integration of Specialty Networks in fiscal
2025."
About Cardinal Health
Cardinal Health is a
distributor of pharmaceuticals, a global manufacturer and
distributor of medical and laboratory products, and a provider of
performance and data solutions for healthcare facilities. With more
than 50 years in business, operations in more than 30 countries and
approximately 48,000 employees globally, Cardinal Health is
essential to care. Information about Cardinal Health is available
at cardinalhealth.com.
Media:
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Erich
Timmerman
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(614)
757-8231
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Erich.Timmerman@cardinalhealth.com
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Investors:
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Matt Sims
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(614)
553-3661
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Matt.Sims@cardinalhealth.com
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Cautions Concerning Forward-Looking Statements This
news release contains forward-looking statements addressing
expectations, prospects, estimates and other matters that are
dependent upon future events or developments. These statements may
be identified by words such as "expect," "anticipate," "intend,"
"plan," "believe," "will," "should," "could," "would," "project,"
"continue," "likely," and similar expressions, and include
statements reflecting future results or guidance, statements of
outlook and various accruals and estimates. These matters are
subject to risks and uncertainties that could cause actual results
to differ materially from those projected, anticipated or implied.
These risks and uncertainties include risks arising from ongoing
inflationary pressures, including the risk that our plans to
mitigate such effects may not be as successful as we anticipate or
that costs could remain elevated; competitive pressures in Cardinal
Health's various lines of business, including the risk that other
customers may reduce purchases made under their contracts with us
or terminate or not renew their contracts; the performance of our
generics program, including the amount or rate of generic deflation
and our ability to offset generic deflation and maintain other
financial and strategic benefits through our generic sourcing
venture or other components of our generics programs; our ability
to manage uncertainties associated with the pricing of branded
pharmaceuticals; uncertainties related to the timing, magnitude and
profit impact of the distribution of recently commercially
available COVID-19 vaccines; and the risk that we may not realize
the anticipated benefits related to our updated operating and
segment reporting structure. Cardinal Health is subject to
additional risks and uncertainties described in Cardinal Health's
Form 10-K, Form 10-Q and Form 8-K reports and exhibits to those
reports. This news release reflects management's views as
of April 22, 2024. Except to the extent required by applicable
law, Cardinal Health undertakes no obligation to update or revise
any forward-looking statement. Forward-looking statements are
aspirational and not guarantees or promises that goals, targets or
projections will be met, and no assurance can be given that any
commitment, expectation, initiative or plan in this news release
can or will be achieved or completed.
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SOURCE Cardinal Health