Cardinal Health reaffirms non-GAAP EPS guidance and long-term targets for fiscal year 2024 amid non-renewal of OptumRx customer contracts

DUBLIN, Ohio, April 22, 2024 /PRNewswire/ — Cardinal Health (NYSE: CAH) today announced that its pharmaceutical distribution contracts with OptumRx, which expire at the end of 2019, June 2024, will not be extended. The company reaffirmed its fiscal 2024 non-GAAP guidance for diluted earnings per share of $7.20 Unpleasant $7.35. Despite not renewing the OptumRx contracts, the company also reiterated its long-term Pharmaceutical and Specialty Solutions segment profit target of 4% to 6% and its consolidated non-GAAP EPS CAGR target of 12% to 14% for the fiscal years 2024. to 2026, compared to a 2023 budget baseline. Affirming these targets reflects the company’s ability to deliver long-term sustainable growth and attractive returns for shareholders through a continued focus on value creation.

While Cardinal Health has not yet provided fiscal 2025 financial guidance, the company expects fiscal 2025 segment profit growth for both Pharmaceutical and Specialty Solutions and non-GAAP diluted earnings per share. The company expects to partially offset the impact of OptumRx through a combination of new customer acquisition, specialty growth and other actions.

Sales to OptumRx generated 16% of Cardinal Health’s consolidated revenue in fiscal 2023. Approximately 90% of these revenues were provided by the company’s pharmaceutical distribution operations and consisted primarily of non-specialized bulk shipments to Optum’s mail distribution facilities. Total OptumRx revenue generated a significantly lower operating margin than the overall Pharmaceutical and Specialty Solutions segment.

In addition, Cardinal Health continues to expect to generate adjusted free cash flow of approx $2 billion average from fiscal year 2024 to 2026; However, the company expects lower than average adjusted free cash flow in fiscal 2025 due to the resolution of negative net working capital related to the OptumRx contract and day of the week timing.

“We have plans in place to continue to deliver profitable growth in fiscal 2025, and we are pleased to reaffirm our long-term goals for the pharmaceutical and specialty solutions segment and the business despite this non-renewal.” said Jason Hollar, CEO of Cardinal Health. “We remain confident in our company’s resilience and strong value proposition 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,” the CEO said Debbie Weitzman, CEO of pharmaceutical and specialty solutions. “We are excited about the many other opportunities in the market, such as onboarding new customers and the additional capabilities resulting from the integration of Specialty Networks in fiscal year 2025.”

About cardinal health
Cardinal Health is a distributor of pharmaceutical products, a global manufacturer and distributor of medical and laboratory products, and a provider of performance and data solutions for healthcare organizations. With more than 50 years of experience, operations in more than 30 countries and approximately 48,000 employees worldwide, Cardinal Health is essential to healthcare. Information about Cardinal Health is available at cardinalhealth.com.

Cautionary Statements Regarding Forward-Looking Statements This press release contains forward-looking statements that address expectations, prospects, estimates and other matters that depend on future events or developments. These statements can 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, forecasts and various accruals and estimates. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated expected or implied results. These risks and uncertainties include risks arising from continued inflationary pressures, including the risk that our plans to mitigate such effects will not be as successful as we expect or that costs may remain high in the various industries of Cardinal Health, including the risk that other customers may reduce their purchases under their contract with us or terminate or not renew their contract, the performance of our generic drug program, including the amount or rate of generic drug deflation and our ability to offset generic drug deflation and sustain other financial and strategic benefits through our generic purchasing business or other components of our generic drug programs; our ability to manage the uncertainties associated with the pricing of branded drug products; uncertainties regarding the timing, extent and earnings impact of the distribution of recently commercially available COVID-19 vaccines; and the risk that we may not realize the expected 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 these reports. This press release reflects management’s views as of April 22, 2024. Except as required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement. Forward-looking statements are aspirational and do not provide any guarantees or promises that any goals, objectives or projections will be achieved, and no assurance can be given that any commitment, expectation, initiative or plan contained in this press release can or will be achieved or completed.

SOURCE Cardinal Health