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Cardinal reaffirms fiscal guidance and long-term targets amidst nonrenewal of OptumRx customer contracts

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DUBLIN, Ohio — Cardinal Health 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.”


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