And there is also the case that our cash balances fluctuate seasonally in the back half as well and so we wouldn’t expect the high balance to remain where it is just given the seasonal demand on the business.
Matt Sims: Next question, please.
Operator: Yes, sir. Our next question is coming from Mr. Eric Percher of Nephron Research. Please go ahead.
Eric Percher: Thank you. On the medical side, it’s hard to see through the one-time items. I want to ask what you can give us on the nature of those one-time items? What the trajectory looked like excluding one-timers in the quarter? And any views on the exit trajectory for the year and kind of going from $140 million first-half to $240 million second-half how you’re pacing relative to that?
Aaron Alt: Thank you. We were really encouraged by the underlying performance in Q2 of the medical business. And just to restate the results, the Q2 results were consistent with the expectations we communicated several weeks ago at the JPMorgan Conference and generally consistent with Q1, despite some of those adjustments that we took in the quarter. I want to emphasize that as you move away from the adjustments that we took, the underlying elements of the Medical Improvement Plan, they are on track, right? You heard some of my preferred remarks relative to our progress against the mitigation of inflation and how our cost structure is building. The benefits of each actions we’ve taken will benefit our cost structure in the back half of the year.
You heard us announce that we had revenue growth for the first time in two years in the quarter as well, and we were pleased with the Cardinal Health brand growth that comes with that. And the team continues to execute against the simplification initiatives that have been a core part of the medical improvement plan all along. So let me go back to where I started, which is we were quite pleased with the operational performance in the quarter. I also want to point out that from a guidance perspective, while we updated the guidance for the year to reflect the relative impact of the non-recurring adjustments, that was the sum change of the guidance, to reflect that which is behind us, not that which is ahead. And if you think through how we have guided medical for the year all along, there’s always been a very back half focused trajectory for our guidance for the year and that remains unchanged along with how pleased we are with the core operational performance.
Jason Hollar: Yeah, if I could just add, you know, when you think about that first-half, second-half things and why we still anticipate the same step up in the second-half versus the first-half. There’s a couple of key points. First of all, inflation mitigation, this is one where it’s a significant part of that combined with Cardinal Health brand volume growth, which I’ll get to in a moment. But on the inflation mitigation, there’s of course two elements. There’s the cost side, and then there’s a price side. In both cases we have very good line of sight. On the cost side as we’ve talked really for quite a while now it’s been the international freight and that while we have a little bit of noise with the Red Sea it is largely as anticipated so and that cost is already on our balance sheet and is rolling through as expected, especially given our volumes have been as expected.
So, we have a very high line of sight and confidence the cost is going to continue to step down in the second-half of the year. And then on the pricing side, as we talked before, there’s always the contract roll-through that we then update the pricing on. We do have a little bit more at the beginning of the calendar year of some of the price adjustments. So January being behind us, we have a really good line of sight to the pricing side as well. So there’s some time now for the next couple of quarters needed to get that to roll through our income statement. But the actions now are largely behind us as it relates to inflation mitigation. We’ve always had confidence we would get to this stage, but we’re now at this stage and have even more confidence actually seeing it start to come through in the second-half of the year.
Now the other component is the Cardinal Health brand volume. You know, part of that’s going to be market-driven, and the market volume, that utilization continues to be quite good. And what was exciting about the second quarter is seeing that further inflection and actually participating in that market growth really for the first time at the extent that what the market is growing. So that gives us much greater confidence that we’ll continue to see that growth and that stuff as we get over the course of the year. But there’s some variables like the market itself that will always be an impact here, good or bad, that will continue to monitor and track. So that those are the key points that I get us from the first-half to the second-half.
Aaron Alt: Eric, it’s probably worth offering one additional point of perspective. We’re not reporting on the new segment structure this structure that will follow on Q3, but we can offer the observation that the GMPD core part of the medical business has operated at near breakeven levels in the first-half of fiscal ‘24. And I offer you that in contrast with where they were from a fiscal ‘23 perspective and where we’re going from an overall guidance perspective, we view that as a key sign of positive progress.
Operator: Thank you very much, gentlemen. [Indiscernible]. Our next question is going to be coming from Erin Wright of Morgan Stanley. Please go ahead.
Erin Wright: Great, thanks. On the drug pricing front, you do continue to mention generics as a key driver. Are you still seeing that using deflationary dynamics that others have noted too? And how material is that for you and also how sustainable is it you know what are some of the key drivers that you’re looking at there? And how are you thinking about that for the balance of the year, as well as we think about the quarterly cadence here for that that U.S. pharma or for the pharma segment particularly with the COVID dynamics too? Thanks.
Jason Hollar: Appreciate the question. I think as we called out in commenting on the strong quarter that our pharma business had was that the continued consistent market dynamics within the generic space matched with volume, strong volume was a reason for — one of the reasons for success in the business. We often talk about the two sides of the equation being in balance and indeed that’s what we continue to see within our generic business and that is indeed a core component of our guidance for the pharma as we carry forward. One last reminder, I do want to remind that last quarter we actually took our pharma guidance up from a profit perspective to 7% to 9%. Thank you.
Operator: Thank you, sir. We’ll now move to Allen Lutz calling from Bank of America. Please go ahead.
Allen Lutz: Good morning and thanks for taking the question. Can you talk about growth of SG&A in the quarter? You flagged incremental investments in the business and higher selling costs. Can you unpack exactly what those expenses are? And then how should we think about SG&A growth for the remainder of the year? Thanks.
