Jason Hollar: Yeah. I think the competitive environment, I’m not sure I’d put much into that. Our performance within this industry has improved dramatically. I referenced in my comments, the customer loyalty scores improve — have improved consistently and dramatically from the bottom of the pandemic a couple of years ago. So, our performance is noticeable. Our customers are feeling it. That customer loyalty index, the scores behind it improving, because we have — we have the low back order, we have product availability, we have great service levels. We’re very engaged from a sales force perspective. So we’re out there now selling instead of reacting to the challenges of the pandemic. So our customers are feeling that. We have very stable win/loss types of rates.
We’re growing at least with the market now. So it’s more of us showing up, I think, the right way than the market being overly growing more or growing less. The market utilization continues to be more and more normalized. So there’s maybe a little bit of volatility here and there, but it’s much more normalized compared to where it has been in the last several years. So, not — that — and that’s the environment we like. We like to see predictable, consistent lower-single digit type of utilization rates that we can grow a little bit above that through our mix and other actions. And then, of course, as Aaron highlighted, the single biggest driver, not only this past year, but that — what we expect at least in the first half of next year, would be just the lapping of the inflation impacts and everything we’ve done to mitigate that.
Which — that’s another thing that’s helpful for us to get that behind us so that we’re focused on selling and talking to our customers about the value that we can help provide them, as opposed to dealing with inflationary fluctuations that have occurred in the past. So we’re well-positioned to now drive the other elements of the medical — the GMPD Improvement Plan, which is the ongoing simplification, the ongoing cost reductions, but just continuing to really prioritize more than anything the Cardinal Health brand volume growth.
Matt Sims: Next question, please.
Operator: Yes, sir. The next question will be coming from Stephen Baxter, calling from Wells Fargo. Please go ahead.
Stephen Baxter: Hi, thanks. Just one quick confirmation and the actual question. I think what you’re suggesting is that beyond fiscal 2025, there is no direct or indirect impact from the Optum contract loss to contemplate. Just wanted to confirm that point, that there’s not any kind of earnings contribution from a transitional period inside the 2025 thinking. And then the actual question is just on the Other segment. The revenue growth has been quite strong. It’s taken a little bit for the profit growth to kind of catch up to your long-term expectations. Just remind us what the key kind of moving parts are there to accelerate the profit growth in the next couple of years. Thanks.
Aaron Alt: So, an answer to your first question, our guide today does confirm the long-term growth within the Pharma business of 4% to 6%. It will be off a lower base in fiscal ’25 as we grow at least the 1%. We’ve not commented on an absolute dollar basis, but we will provide more context on that when we get to our year end results and final guidance for fiscal ’25 during our August earnings call. With respect to the Other business, we are pleased with what we’re seeing so far. We re-segmented the operation to create additional transparency, focus, and accountability, and I referenced in my prepared remarks that we are already seeing the benefit of that. The topline results are good, right? And we guided 6% to 8% profit growth for this year.
We were a little bit lower than that in Q3 for the businesses aggregating in Other so far. And of course, we had the impact of some of the non-recurring adjustments that we called out in Q2 tied to the at-Home business, which reports into Other in the second quarter. But I want to emphasize, we did confirm that we are expecting to achieve the higher results, the 8% to 10% for fiscal ’24 and we confirm the high end of that range for fiscal ’25, as Jason digs in with the businesses now reporting directly to them and as we invest as an enterprise against setting those businesses up for a higher growth trajectory.
Jason Hollar: Yeah. Just a couple of things to add. First, on the first question, just to be real explicit, given it’s a cliff event customer transition that we are anticipating for July 1, we’d anticipate that that would be largely in fiscal ’25 results and there’s nothing that we’re calling out or indicating at this point that would carry over into ’26. And as it relates to the Other businesses, how I think about them, they’re each growing very nicely. They each have strong industry, strong sectors of the industry that are benefiting from their own individual secular tailwinds. So, they each have different reasons for their growth. But ultimately, it’s because that each of these three areas provide a real interesting value proposition to customers and, ultimately, to the patients.
And each of these three, we have a leadership position in. So we’re not only benefiting from that secular trend, but we’re leading and maintaining or growing our own fair share within it. So we’re well positioned for each one of these three and why we have confidence about them. We are investing into them, as Aaron highlighted. That’s driving the growth that we believe will be driving long-term profitability as well.
Matt Sims: Next question, please.
Operator: Yes, sir. The next question will be coming from Charles Rhyee of TD Cowen. Please go ahead. Your line is open.
Lucas Romanski: Hi. This is Lucas on for Charles. I wanted to ask about Cardinal Health brand and get a sense of where we’re at on the path to realizing $50 million in targeted growth by fiscal ’26. I understand that you’ve expanded the number of products you offer under private label and that you’re starting to see momentum in growing volumes. Can you help us understand how much of that $50 million has already been realized? And then how much we should expect you guys to realize in fiscal ’25? Thanks.
Jason Hollar: Yeah. So I’d — the — it’s a — we inflected a couple of quarters ago, right? You saw that with our overall revenue growth that is partly driven by the Cardinal Health brand volume growth. So we saw, for example, this quarter, our revenue growth of 4% was pro-rated within that national brand, as well as Cardinal Health brand, so, we’re seeing distribution stabilize. We’re seeing that. We’ve won some business there that has allowed us to grow at or a little bit better than the market. So, overall, we’re seeing that this business has now stabilized at a growth consistent with the market. We expect that to continue. This is something that we do have as a component of that growth. As Aaron highlighted, the single biggest driver of profit performance for ’25 — from ’24 to ’25 is the annualization, the carryover of the inflationary pressure.
So that’s the biggest item of that implied $100 million, $110 million year-over-year profit improvement. Then beyond that, you have Cardinal Health brand volume growth, cost reductions, and other actions. And so, it is a component, it’s not the biggest component. And then it would be a — from ’25 to ’26, the primary components that then drive that growth would be Cardinal Health brand volume, as well as further cost reductions as we continue to look to streamline and optimize our footprint, as well as our other supporting cost. So, we’re not going to break out the individual pieces there, but those are the biggest pieces then when you go from ’25 to ’26.
Matt Sims: Next question, please.
Operator: Yes, sir. Our last question today will be coming from Daniel Grosslight of Citi. Please go ahead. Your line is open.
Daniel Grosslight: Hey, guys. Most of my questions have been asked, but I was hoping to just get an update on Navista and any metrics you’re able to share on the market adoption you’re seeing there, number of providers aligned to it, etc. And I know one of the key strategic objectives of the Specialty Networks acquisition was to kind of integrate some of their technology, notably PSS Analytics (ph) into Navista and other specialty assets. I’m also curious if you can provide an update on how quickly you can integrate that technology and Murphy, you’ve already kind of started on that path. Thank you.
Jason Hollar: Yeah. Thanks for the question, Daniel. And so, with Navista, we are on track to everything that we’ve laid out first raising this about a year ago. I mean, as I think about the progress we’ve made, I’d break it into a few key buckets. First of all — first and foremost, we’ve hired and brought in a fantastic team, a great mixture of internal and external talent, really drawing from industry those that have done this before and understand what that looks like, but also using our own expertise that have been more focused in other therapeutic areas, but a nice augmentation of the two. And then that new team quickly went to work and defined what went in front of our customers and prospective customers and really listened as to what is it that they need to run their practice, their business more efficiently, more effectively.
And it was through that work that we then came to the final point, which is defining the tools, the capabilities that we are building within Navista. So, we didn’t just go off and build it. We are building it around what the customers are demanding that they need, those community oncologists, those independent community oncologists, really looking at differentiating for what they need to run their business, both again, efficiently, but also effectively to further improve upon the lives of their patients. So that is the work that’s been done, and we are every day building out more elements of this. So I wouldn’t think about it as a particular date that everything goes live and we suddenly have this influx of volume. This is the type of thing that builds out our capability over time in different ways and working with our current customers, as well as the prospective ones to layer in when they come into this network and which services they utilize within the network.
So that leads you to the Specialty Networks piece, which I would think about it as we now have an internal technology and capability set that’s augmenting what we had before. But Navista always approached this in terms of the best of the best in the industry. Using what we have is great, but we also are using a lot of third-party partners to bring in their tools and capabilities, because we’re going to put the customers’ needs first, the providers’ needs first and then build around that. So we do see that there is a role for Specialty Networks and their PPS Analytics platform, but we’re not going to make that the priority. We’re going to listen to the customers and then determine which pieces of that to bring into that network. So we haven’t finalized those decisions as it relates to Specialty Networks.
But what I will tell you, on day one, just having that team’s insight and expertise has been very beneficial to our own Navista team. So having — and I mentioned this when we announced the acquisition of Specialty Networks. Yeah, the assets are fantastic. The business is fantastic. But the most important thing for us was the leadership team and the capabilities that they’re bringing along with it is every bit as great as what we thought it was when we made the announcement. And we’re seeing that with boots on the ground now as we work, not just within Navista, but with the broader business to further improve our capabilities across all the therapeutic areas.
Operator: Thank you very much, gentlemen. Ladies and gentlemen, that will conclude today’s question-and-answer session. I turn the call back over to Mr. Jason Hollar for any additional or closing remarks. Thank you.
Jason Hollar: Yeah. Thank you. Just to close, appreciate everyone spending some time with us this morning. We hope the overall message that you took away from the call today is that we have a strong and resilient business and a very clear plan for us for ’25 and ’26, and we’re excited about the opportunities and ensuring that our customers and their patients continue to get fantastic service. So thanks again for joining us today and have a great day.
Operator: Thank you very much. Ladies and gentlemen, that concludes today’s presentation. Thank you for your attendance. You may disconnect. Have a good day and goodbye.
