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DUBLIN, Ohio — The latest earnings report from Cardinal Health reflected positive momentum from its continued focus on improving core operations and investments to expand in key growth areas. The company’s third quarter results showed broad-based growth, including solid profit growth in its Pharmaceutical and Specialty Solutions segment.
Jason Hollar
Based on this strong performance, the company raised and narrowed its guidance for the remainder of the 2024 fiscal year, and also provided preliminary guidance for the 2025 fiscal year, demonstrating its resilient positioning.
“We’re operating from a position of growing strength and resiliency with industry trends that remain stable and in our favor,” said chief executive officer Jason Hollar. “Our strategy and long-term outlook are unaltered, and our team remains focused on executing our plan, as we serve our customers and continue to drive our company forward.”
On January 9, Cardinal Health announced in a statement that it had updated its reporting structure and realigned its business to increase its focus on core businesses and accelerate growth areas. As part of this new structure, the company will operate two reportable segments, Pharmaceutical and Specialty Solutions and Global Medical Products and Distribution (GMPD). The company separated its Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight Logistics businesses from the former Pharmaceutical and Medical segments, which will now be reported collectively as Other.
“As we continue our path toward becoming a simplified and more focused company, this reporting structure aligns with our operations focus on the core of our business, provides increased visibility to growth areas and enables greater efficiencies across our business as we continue to prioritize focused execution for our customers,” Hollar said.
Third quarter results for the Pharmaceutical and Specialty Solutions segment showed continued strong demand across brand, specialty, consumer health and generics. The company’s generics program continued to see both volume growth and consistent market dynamics. Overall, the segment’s profit growth was solid, on top of an extremely strong quarter the previous year.
In January, the company announced its acquisition of Specialty Networks, a technology-enabled multi-specialty group purchasing and practice enhancement organization. The acquisition demonstrated Cardinal Health’s strategic prioritization of investing to accelerate growth in its Specialty business and complements the company’s offerings in key therapeutic areas, enhancing its downstream provider-focused analytics capabilities and service offerings by accelerating its upstream data and research opportunities with biopharma manufacturers.
“Specialty Networks is a leader in specialty practice management, research and technologies that support physicians in delivering best-in-class care to their patients,” said Debbie Weitzman, CEO of Cardinal Health Pharmaceutical and Specialty Solutions. “Combining their unique service offerings and advanced technology solutions like PPS Analytics with our distribution partnerships and operations will enhance our value proposition for our specialty GPO members across therapeutic areas. Together, we will positively affect the lives of countless patients.”
Completed in March, the acquisition adds unique capabilities and expertise that will accelerate the company’s ongoing development of Navista, a clinician-designed oncology practice alliance that helps transform practice management, accelerate growth and secure practice independence.
In April, Cardinal Health announced that construction has begun on its new 350,000-square-foot Consumer Health Logistics Center, located near its headquarters in central Ohio. The distribution center is slated to be fully operational by summer 2025.
“Our new Consumer Health Logistics Center will support the needs of the pharmacies we serve to help them meet the rapidly growing demand for consumer health products, offering affordability and reliability from a comprehensive selection of over-the-counter medications, treatments and diagnostic solutions,” said Weitzman.
The company’s Consumer Health Logistics Center will feature advanced inventory management systems, enabling enhanced speed and convenience; greater agility to optimize product needs across its distribution network; more frequent replenishment and inventory balancing; and enhanced supply chain responsiveness.
Cardinal Health continues to be focused on support for independent pharmacies, offering distribution, service, solutions and expert guidance to help pharmacies continue to thrive. The company will be offering a Vaccine Alliance program to help pharmacies engage new patients and expand year-round immunizations. Through its LeaderNet PSAO and Medicine Shoppe PSAOs MCC and MSInterNet, the company negotiated directly with PBMs for an extension to quarterly DIR fees that carried over from 2023, helping pharmacies manage cash flow. Additionally, its Medical Benefit Billing solution helps pharmacies integrate billing into their existing workflow for greater visibility and efficiency for more than 30 clinical services.
“We understand that pharmacies must be able to bill for the expanded array of clinical services they now offer in order for them to generate new revenue streams,” said Brad Cochran, executive vice president of pharmaceutical and specialty distribution. “Our team of industry experts, dedicated account teams and leadership are working hand-in-hand to advocate on behalf of independent pharmacies as a trusted partner, focused on helping them navigate the current market dynamics and continue their evolution into community health care destinations.”
In the third quarter, GMPD delivered strong performance and accelerated growth, continuing its progress against its ongoing improvement plan. For the second straight quarter, GMPD reported revenue growth and delivered its highest quarterly profit in more than two years. The segment also made significant progress on inflation mitigation efforts, delivering year-over-year improvement and Cardinal Health Brand volume growth.
The company’s U.S. Medical Products and Distribution business within GMPD was recognized for high achievement in supply chain resiliency by nonprofit consortium Health Industry Resilience Collaborative (HIRC), a respected benchmark within the health care industry.
The company’s Nuclear and Precision Health Solutions business is experiencing continued double-digit growth in Theranostics and a large, growing pipeline that will deliver value into the future. Its Center for Theranostics Advancement, located in Indiana, offers a seamless end-to-end solution for commercializing novel radiopharmaceuticals, supporting innovation, pre-commercial and commercial manufacturing, pharmacy operations, and commercial services.
The company’s at-Home Solutions business is positioned to grow, driven by strong demand for home health care. As part of a multiyear strategy to modernize operations and increase warehouse capacity based on demand, at-Home Solutions opened a distribution center in Grove City, Ohio, in 2023, the first Cardinal Health facility to feature Swisslog’s AutoStore robotics, the fastest order fulfillment system per square foot on the market. This year, at-Home Solutions will open a new 350,000-square-foot distribution center in Greenville, S.C., its largest facility to date. Following the opening of the Greenville facility, the business will break ground on its next facility in Texas.
As Cardinal Health builds on its momentum, it has maintained its strong culture and adherence to its core values. For the second year in a row, the company was recognized by Fortune as one of America’s Most Innovative Companies, which is a measure of its product innovation, process innovation and overall cultural emphasis on innovation. The company also ranked No. 51 out of 500 companies on Forbes list of America’s Best Employers for Diversity based on anonymous employee feedback of their company’s approach to DEI as it pertains to age, gender, ethnicity, disability and sexual orientation. ν
