Please standby, we’re about to begin. Good day, and welcome to the Cardinal Health, Inc. Third Quarter Fiscal Year 2021 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Kevin Moran, Vice President of Investor Relations. Please go ahead.

Good morning and welcome. Today, we’ll discuss Cardinal Health third quarter fiscal 2021 results, along with an update to our FY 2021 outlook. You can find today’s press release and presentation on the IR section of our website at ir.cardinalhealth.com. Joining me today are Mike Kaufmann, Chief Executive Officer; and Jason Hollar, Chief Financial Officer. During the call, we will be making forward-looking statements. The matters addressed in the statements are subject to the risks and uncertainties that could cause actual results to differ materially from those projected or implied. Please refer to our SEC filings and the forward-looking statements slide at the beginning of our presentation for a description of these risks and uncertainties. Please note that during the discussion today, our comments will be on a non-GAAP basis unless they are specifically called out as GAAP. GAAP to non-GAAP reconciliations for all relevant periods can be found in the schedules attached to our press release. During the Q&A portion of today’s call, we ask that you try and limit yourself to one question so that we can try and give everyone an opportunity. With that, I will now turn the call over to Mike.

Thanks Kevin and good morning everyone. Before I turn it over to Jason, I will provide a few high-level thoughts. We remain focused on serving our customers and their patients and continue to advance our strategic priorities. With our resilient business model, we are navigating the effects of the pandemic on our businesses. In the quarter, we continued to see strong demand for lab and PPE products and volume recovery in our nuclear business. Medical elective procedure utilization experienced some volatility, and we saw our ongoing COVID-19 related softness in generics volumes, which we now expect to extend into the next fiscal year. With this updated assumptions, we have revised our Pharma segment outlook. Despite the impacts of COVID-19, our business fundamentals are strong, demonstrated by the underlying growth we are seeing in both segments, and we continue to advance our strategic priorities including optimizing our supply chain and portfolio. As you saw in our recently announced agreement to sell the Cordis business. As we navigate the pandemic, our customer focus remains central to our activities. We deeply appreciate that it is our responsibility to serve health care providers, their patients and those on the front lines. Although the operating environment remains dynamic, it has reinforced our critical role in the supply chain. And it highlights opportunities for us to enhance our operations and evolve for future growth. I'll discuss some of the changes we are making later in my comments. But first I’ll turn it over to Jason to provide additional details on our results and outlook.

Thanks Mike. Good morning everyone. Before I dive into the current quarter as a reminder, we are now comparing against a prior year quarter that included a benefit from accelerated pharmaceutical sales and increased PPE demand due to the onset of COVID-19. Now for our consolidated third quarter results, total company revenue of $39.3 billion was in line with the prior year, consolidated gross margin for the period was $1.8 billion. SG&A decreased nearly 4% to $1.1 billion, demonstrating our enterprise-wide commitment to disciplined expense management. The net result for the quarter was operating earnings of $689 million, a decrease of 4% due to the impact of COVID-19, primarily concentrated in the Pharma segment. Adjusted for COVID-19, we estimate operating earnings would have grown mid-single digits in the quarter. Moving below the line, interest and other income and expense decreased significantly in the quarter, driven by multiple items, including an increase from the value of our deferred compensation plan investments, lower interest expense from prior period debt reduction and one-time investment gains. As we previously mentioned, deferred compensation gains or losses reported in interest and other are fully offset in corporate SG&A and net neutral to our bottom line. Average diluted shares outstanding were $294 million. Of note, during the quarter we repurchased $200 million of shares. Third quarter EPS was $1.53, which reflects an effective tax rate of 31.2%, approximately 5.5 percentage points above the prior year, due to the timing of discrete items. This includes adjustments for the resolution of all open issues with the IRS for fiscal years 2008 to 2010, as well as certain transfer pricing matters for fiscal years 2011 to 2014, which also impacted reserves for later years. Turning to cash flow in the balance sheet. We generated operating cash flow of $277 million, bringing our year-to-date operating cash flow to $1.8 billion. As a reminder, the day of the week in which the quarter ends affects point-in-time cash flows. We ended the quarter with a cash balance of $3.5 billion, and no outstanding borrowings on our credit facilities. Now for the segment results, beginning with Pharma on slide 5. Pharma segment revenue was flat at $35.1 billion. This reflects sales growth from pharmaceutical distribution and specialty solutions customers compared against the previously mentioned COVID-19 related sales acceleration in the prior year. Segment profit decreased 4% to $511 million, primarily due to COVID-19 related volume declines in our generics program, which was partially offset by a higher contribution from brand sales mix. Excluding the volume impacts, our generics program continued to see generally consistent market dynamics. Additionally, we were encouraged to see our Nuclear business continue its recovery as we saw an improvement in volumes as we exited the quarter. In Specialty, we continue to see year-over-year growth and we're excited about recent wins in our 3PL and Hub business. And the Pharma team remained focused on diligent expense management, delivering strong cost savings in the quarter. Now, I'm transitioning to Medical on slide six. Medical segment revenue increased 3% to $4.2 billion, driven primarily by a net positive impact from COVID-19 on products and distribution. As in prior quarters, we saw higher selling prices and volumes in PPE, as well as higher volumes in our Lab business partially offset by lower demand for surgical products resulting from reduced elective procedures. Segment profit decreased 2% to $174 million. During the quarter cost savings, including global manufacturing efficiencies were offset by a decline in products and distribution. Additionally, segment profits experienced a slight net negative impact due to COVID-19, driven by the sell-through of PPE safety stock in the prior year. Now, let me step back to help frame our performance sequentially within the context of the previously discussed factors. During the third quarter, demand for surgical products used in elective procedures averaged approximately 90% of pre-COVID-19 levels compared to the 95% average in the prior quarter. We saw choppiness, especially early in the quarter, consistent with the evolution of the virus in various geographies. But as we exited the third quarter, elective volumes rebounded back to around 95%. Our Lab business continued to experience a tailwind from increased demand for COVID-19 testing products. So, as expected, not quite at the peak level seen last quarter. Regarding PPE, we continue to see elevated volumes. In the quarter, we were successful in managing the significant cost increases that we've incurred to procure select PPE products. As we previously mentioned, many of our customers have chosen to leverage our supply assurance program to manage market uncertainties and we continue to expect timing variability, as we support our customers through this dynamic environment. Next, on slide eight, I will review updates to our fiscal 2021 outlook. Based on our performance to-date and increased visibility for the balance of the fiscal year, we are narrowing our EPS guidance to $5.90 to $6.05, which continues to reflect 10% EPS growth at the midpoint. We are making the following changes to our corporate assumptions. We now expect interest and other in the range of $145 million to $160 million, driven primarily by the deferred compensation favorability to-date, which as a reminder is all set above the line. We are narrowing our effective tax rate to 23.5% to 25%, reflecting the previously mentioned IRS resolutions. We expect diluted weighted average shares outstanding of approximately 294 million shares, which includes the repurchases completed during the quarter. Additionally, capital expenditures are now expected in the range of $400 million to $430 million. Moving to the segment outlooks on slide nine, we are updating our Pharma segment profit outlook to flat to down low single-digits due to updated expectations for COVID-19. Based on our third quarter exit rates and what we saw in April, we still expect brand pharmaceutical volumes to be at or near pre-COVID-19 levels as we exit the fiscal year, but we now expect the volume recovery of certain therapeutic classes within generics to extend into the end of calendar year 2021. As for the Medical segment, we continue to expect elective procedures to be at or near pre-COVID levels by the end of the fiscal year, as well as segment profit growth in the low to mid 20s percentage range for fiscal 2021. With respect to the enterprise, we now expect COVID-19 to be a minimal net year-over-year driver. This guidance assumes a meaningful year-over-year COVID-19 headwind for the Pharma segment, and a similar tailwind for the Medical segment. Before I conclude, let me take a moment to provide an update on capital allocation. We continue to manage our portfolio, and the balance sheet in a prudent manner, consistent with our priorities, while at the same time driving improved financial flexibility. We expect the sale of Cordis to close in the first quarter of our fiscal 2022. This transaction, along with a previously announced tax receivable is expected to generate nearly $2 billion of incremental proceeds in the first half of our fiscal 2022. We expect to utilize these proceeds in a manner consistent with our stated capital allocation priorities, investing in the business, maintaining a strong balance sheet, and returning cash to shareholders. With respect to our first priority, investing in the business to enable our strong pipeline of organic growth opportunities, we continue to be excited by the projects implied. We expect this to remain our highest focus for capital deployment and to continue to prioritize investments in these areas. Regarding the balance sheet, as previously communicated, we expect to repay $1.4 billion of debt on or before June 2022. Combined with prior repayments, this would represent a total debt reduction of nearly $5 billion over five years. While we will continue to evaluate additional opportunities to reduce debt, we anticipate our future repayments will be more modest as we approach our leverage target. At the same time, we are committed to our dividend, which remains an important component of our capital allocation strategy. With that in mind, our Board recently approved a 1% dividend increase for fiscal 2022. Outside of these three key priorities, we'll continue to evaluate tuck-in M&A within our strategic growth areas, and opportunistic share repurchases. As I mentioned, our improving financial flexibility enabled the deployment of capital for share repurchases during the third quarter. With that I'll turn it back over to Mike.

Thanks Jason. As I mentioned earlier, the last year has highlighted certain opportunities for growth, transformation and innovation. And we're confident that our strategic direction will deliver both short and long-term success. In Pharma, we are excited about the mid to long-term trajectory of the segment. Our business model is resilient. We're expecting strong, long-term growth in key areas like specialty and nuclear, both of which are rebounding well from prior COVID related impacts. And we are executing a robust pipeline of initiatives and R&D to support our customers' evolving needs. We also continue to invest in new technology solutions that enhance the customer experience and improve patient care. In specialty, our recently launched Navista Tech Solutions uses artificial intelligence to identify and match cancer patients to clinical trials. These insights enable oncologists to improve outcomes and reduce costs as they transition to value-based care. We are also offering digital solutions in the connected care businesses that we recently branded collectively as Outcomes. Each year, medication non-adherence costs the U.S. healthcare system over $500 billion and contributes to around 275,000 avoidable patient deaths. With Outcomes, we've created a digital ecosystem that unites pharmacists, payers and pharmaceutical companies to improve medication adherence, drive better outcomes and lower the cost of care. Outcomes currently supports a network of 23 million patients and more than 60,000 pharmacy sites nationwide and through continued growth is positioned to address the challenge of medication adherence. As I look towards the future, I am excited about these innovations across the segment that combine our heritage and strengths with new technologies to create unique solutions that support our customers' ever-changing needs and create long-term value across the continuum of care. Turning to Medical, we continue to enhance our operations to better serve our customers and their patients. For example, we continue to diversify the geographic concentration of our sourcing and invest in our self-manufacturing capabilities. This includes producing 15 million more safety needles and syringes, 20 million more isolation gowns, and 150 million more surgical and procedure masks annually in our own North American facilities. We are also supporting customers' inventory needs with stockpile-as-a-service storage solutions and partnering with the Strategic National Stockpile to store and distribute 80,000 pallets of critical PPE. We are incorporating robotics, automation and data analytics across our warehouse and distribution process. We are piloting various technologies and being thoughtful about how and where to scale them across our network. We also continue to invest in key areas across the segment. For example, we are expanding our lab kitting services to support home collection for a broad array of lab tests from wellness to infectious disease, and we are coupling these services with capabilities in our Cardinal Health at Home and OptiFreight businesses to maximize value and create differentiated solutions. By meeting the patient where they are, our lab kitting supports testing protocol adherence and detection of early onset disease, ultimately, lowering the cost of care. And in Medical Services, our OptiFreight Logistics business is launching innovative and comprehensive health care logistics offerings like our same-day solutions, which is being scaled nationally to support the time-critical logistics of our customers. Together, these work streams across medical position us to support our customers and drive long-term growth. Along with these work streams in each segment, we are also focused on enterprise-wide investments as well as advancing our capital allocation, portfolio optimization, and ESG priorities. We continue to invest in our delivery networks, cold chain capabilities and supply chain capacity and visibility. For example, we are partnering with FourKites, the largest predictive supply chain visibility platform to create a cognitive network spanning both pharma and medical that combines real-time supply chain visibility, machine learning, and artificial intelligence. This network facilitates inventory flow and gives our customers end-to-end visibility to see products in transit, enabling us to make any necessary adjustments for our customers in real time, so they can better serve their patients. Regarding our capital allocation priorities, we have strong momentum. We remain committed to investing for future growth, maintaining a strong balance sheet and returning capital to shareholders. We are on track to exceed our savings targets and are continuing to use some of these savings to reinvest in the business. We also remain focused on optimizing our portfolio. The pending sale of Cordis is progressing as expected and this divestiture enables us to simplify our operating model, further optimize our infrastructure and focus on our strategic growth areas where we are an advantaged owner. We are committed to our strategy as a global medical products and distribution leader and are focused on conducting business in markets and areas that align with our priorities. Finally, we're also advancing our environmental, social and governance activities. We recently partnered with AEP to power our global headquarters and our National Logistics Center with clean energy, and we remain deeply committed to advancing diversity, equity and inclusion at every level to ensure all of our employees can bring 100% of themselves to work every day. To close, I want to thank each of our employees whose commitment and ingenuity enable us to support our customers, their patients and our collective communities. With that, I'll pause to open it up for questions.

Thank you. And we'll go ahead and take our first question from Michael Cherny from Bank of America. Please go ahead.

Good morning and thanks for taking the question. I want to dive in a little bit to a comment you made about your expected growth on the EBIT ex COVID. I believe you said that would be mid-single digits. By my simple math, if you assume it's 5%, that gets you to roughly $66 million headwind versus the baseline. So along those lines, can you break down a little bit within that area, what some of the biggest drivers were of the underperformance? And then in particular, with regards to that question and the generic volumes, any more color you can give us on some of the classes that you expect to continue to contribute to weakness over the next couple of quarters?

Sure. Yeah, this is Jason. Let me start with your first question there. And your math is very accurate. That would represent right around $60 million of overall enterprise impact due to COVID. That is entirely in the Pharma segment. Within Medical, there was a very insignificant impact in the quarter due to COVID. Now there were a lot of moving pieces, pluses and minuses, but netted out for no significant impact within the quarter. As it relates to the Pharma business, that driver is driven by the generic volumes that Mike referenced in his comments and I referenced in my comments. And I think maybe, Mike, you can provide a little bit more color behind the second part of that question.

Yeah, Michael, thanks for the question. Regarding generics, remember that what we always talk about is our overall generics program, and what we're seeing now is that market dynamics are generally consistent. The only thing having any real material impact on the program right now is generic volumes in certain therapeutic classes related to COVID-19. If you've been following the IQVIA data and other sources, it's probably not hard to see that there are certain classes, particularly acute scripts, that we don't expect to return to pre-COVID levels before our fiscal year. We think that as kids go back to school, more people stop masking, and similar factors, the environment will generally return, but we don't see those specific therapeutic classes within generics returning to pre-COVID levels until the end of the calendar year. So overall, again, good and consistent market dynamics in the generic program, really just focused on those few classes related to COVID.

Got it. Thanks.

Next question.

And we'll go ahead and move on to our next question from Charles Rhyee from Cowen. Please go ahead.

Yes, thanks for taking the question. If I could follow up on that. When you say certain therapeutic classes related to COVID, are you referring to cold, cough and flu products and antibiotics, the kinds of generics we might not be seeing because we had a weak flu season and wouldn't expect until perhaps this coming flu season?

Yes, it's a great question, and I'll try to be helpful here. Yes, I would say flu season, as we know, has been light. But we've also said in the past, generally, if it were just flu season itself and just flu specific, it wouldn't be that big of a driver. It would be a negative for us, but it wouldn't be probably a material driver that we would call out. But you said it well at the beginning; it's really the broader list of categories. So, it's antibacterials, antibiotics, antivirals and pain meds, those generics and those categories are what we're seeing that have just not returned to pre-COVID levels. And if you look at the IQVIA data in these categories, what we're seeing both in our own data, as you can imagine, a lot of conversations across the various classes of trade, it's very consistent in what we're seeing in terms of those volumes coming back.

Thanks. If I could follow up real quick: were we seeing these dynamics last quarter? Or was more of this prescribed last year during COVID rather than this year? Or is it that people haven’t been going to the doctor, perhaps because of depression, and we still aren’t seeing them come back as much, and that’s what’s driving this? Thanks.

Yes, it's hard to know for sure, but I'll give you a couple of thoughts. One is I think it is somewhat related to physician office visits. Second, people are masking, social distancing, and washing their hands. People aren't playing sports at the same level, and all those things reduce injuries that lead to pain medications and related issues. So I think it's a combination of many factors adding up. We've been monitoring all the categories, and since the beginning of the year our assumption for guidance for both Pharma and the overall company has been that we'd get back to pre-COVID, at or near pre-COVID levels by June 30. It's good to know we're seeing that in brands, and we're still expecting that. We're seeing it in the majority of generics, particularly chronic generics. Those are coming back. But we were hoping to see more of a ramp from the other categories, and we're just not seeing it. So we believe it's important to look beyond March; we also reviewed our April data, and that drove us to change our Pharma guidance for this year.

Great. Thank you.

Next question.

We'll go ahead and move on to our next question from Ricky Goldwasser from Morgan Stanley. Please go ahead.

Hi, good morning. So my question is still on generics and pricing, clearly it's a big debate for investors now. So Mike, what are you seeing in terms of generic pricing, are you seeing accelerated deflation or any other trends, and also if you can talk a little bit about the sell-side, buy-side spread?

Yeah. Thanks, Ricky. Thanks for the question. As you know, it's really hard to get into individual components of the generics program, because as we've said for a while now, just calling out sell-side deflation without talking about the buy-side, the cost improvements or launches or overall volumes, you're really not giving a complete story. And that's why we've really been focused on just discussing how we see our overall generics program performing. And we really are seeing market dynamics are generally consistent with the only driver in the program I just mentioned being COVID-related volumes in certain categories.

Okay. And a follow-up question there. When we think about the sell-side, I think we also need to think about contract renewals that could change dynamics. Are there any contract renewals either for your book of business or across the industry that either renewed recently or there are upcoming that you can point us to, if there any?

Yeah. As far as contract renewals go, on the ones that we specifically talk about our three largest ones, which we have disclosed, those still have a couple of years left on them before there's any renewals of those contracts. And everything else as it relates to contract renewals for this year is generally tracking as expected. It's always one of those headwinds on a year-over-year basis, but everything is tracking as we expected at the beginning of this year.

Thank you.

And we'll move on to our next question from Robert Jones from Goldman Sachs. Please go ahead.

Great. Thanks for the question. I guess maybe just to move over to medical, Mike. Obviously, COVID has created a couple cross currents in that business as far as PPE and then the lack of utilization. Could you maybe just tell us where we are today as we think about those two broad buckets, the benefits that obviously you had and probably continue to see from PPE and testing versus the core business coming back as utilization starts to become more normal?

Yes. This is Jason. Thanks for the question. I'll start. Let's step back from a COVID perspective overall for the medical business. As I mentioned in my prior answer, overall for the quarter there was an insignificant impact related to COVID; there are a lot of moving pieces and I'll get into a couple of the key drivers. As a reminder, just like the Pharma comment earlier, there was a prior year pull-forward for PPE volume that we sold out of inventory. We do have a slight negative year-over-year impact related to the prior year tailwind that did not repeat in the current quarter. The pieces within the quarter that we saw were ongoing elective volume headwinds, and we saw a little deterioration from the prior quarter. In my prepared remarks, we said that utilization went down from 95% in the second quarter to closer to 90% in the third, but as I highlighted it did improve at the tail end and return to 95%. That was consistent with the surge in the virus, and we feel better about how we exited the quarter. We did not change our guidance for the medical business on this topic because we expected to be at or near pre-COVID levels by the end of the year. We continued to see strength in our lab business, although it was a little less than in the prior quarter, but still provided an offset. We also continue to see strong volumes with PPE, but you are comparing against a strong volume quarter last year. We had some favorability in the timing of recognition of the pricing cost associated with much higher PPE costs. Those dynamics remain somewhat fluid, but we still see higher costs and higher prices for some PPE products, especially gloves, with some moderation but generally still elevated. Anything else to add, Mike?

No that sums it up well.

Great. Thanks.

And we'll go ahead and move on to our next question from Steven Valiquette from Barclays. Please go ahead.

Hey, thanks, good morning, guys. So usually, when there is some negative supply/demand imbalance on commoditized products, it can impact price. With the softer generic volume in those categories that you mentioned, the antibacterials, antibiotics, etcetera, I would just visualize that both the buy side and the sell side pricing might come down simultaneously on those products in conjunction with the softer Rx demand. I'm curious if that's consistent with what you saw. I just want to confirm that one way or the other. Not to beat this topic to death, but I wanted to get some confirmation around that. Thanks.

Yes. That's a hard question to answer in the sense of the level of detail of looking at all of our both our buy side and sell side for all those individual categories. Nothing pops out to me related to that component of the driver. As I said, really, overall, the generic program market dynamics were generally consistent. It was more just a volume-related item on those categories. Nothing stands out in pricing, whether it be buy or sell that I would call out.

Okay. All right, thanks.

Thanks.

And we'll go ahead and move on to our next question from Lisa Gill from JPMorgan. Please go ahead.

Hey, thanks very much and good morning, Mike and Jason. Just really want to try to understand the puts and takes as we think about COVID going into 2022 from a comp perspective. Can you just remind us what the benefit or what the headwind has been for medical and pharmacy as we think about trying to model that going into next year?

Sure. Yes. I can start and then turn it over to Jason. As you know, our practice is that we're not providing formal guidance on 2022 until August, but we'll try to give you a little bit of color to be helpful. I'll start with the fact that we still feel really good about our growth areas. So when we think about specialty, at-home, nuclear, medical services and Outcomes, we feel really good about all of these businesses. We think they all have strong industry trends, strong outlooks, complementary capabilities to our businesses and we continue to adapt their offerings to focus on our customers' needs. So, I would say, we would still expect all of those growth areas to be positive drivers for next year. And then, let me have Jason give you a little bit of color on maybe a few of the other dynamics.

Sure. Thanks, Mike. To enable those types of growth areas, we are making investments in our business and will continue to do so. As we have invested more capital over the last several years, we expect increased depreciation to flow through, although we also expect to realize the benefits of those programs. Beyond investing, which remains our highest capital deployment priority, we are focused on debt reduction and returning capital to shareholders, including share repurchases that should provide a tailwind. Regarding COVID, we expect significant year-over-year movement. As a reminder, in fiscal 2020 we had roughly a $100 million headwind associated with COVID, which exceeded the impact in the entire fourth quarter. In this year’s prepared remarks we noted a relatively flat year-over-year COVID impact, implying roughly $100 million included in fiscal 2021. The key question is how that rolls off into 2022. We expect several areas to reach or approach pre-COVID levels by the end of the fiscal year, such as medical elective volumes and nuclear, and brand volumes are similar. Specific therapeutic drugs within generics are expected to be deferred until around the middle of fiscal 2022, so some impact will carry into next year. There will be other COVID-related moving pieces. We expect continued elevated demand for PPE and the lab business, but PPE pricing and cost timing remain important and we are monitoring those dynamics closely. Overall, by segment, the pharma business has the greatest headwind, with about $100 million built into this guidance, while the medical business is showing more of a tailwind. They will therefore behave differently next year. Finally, regarding the announced sale of Cordis, we anticipate that closing in the first quarter, hopefully earlier. We previously disclosed that the business carries about a $60 million to $70 million annualized earnings rate. As we get more specific on timing and details, we will provide more color on the impact for fiscal 2022.

Very helpful. Thank you.

And we'll move on to our next question from Eric Percher from Nephron Research. Please go ahead.

Thank you. Question on the Specialty business, it sounds like you're expecting that trend to normalize in that business. I want to ask how the profitability levels have been running in that business, whether you're seeing benefits from biosimilars. And of late, there's been a call out of maybe some of the oral solid products that are more specialty generic and biosimilars. Are you participating in economics on those?

Yes, I would say there's nothing I would call out that's dramatically changing in our Specialty, particularly as it relates to the sales of drugs into the physician office space that we're seeing generally consistent profitability. We are participating in the various different opportunities in there, whether it be actual generics that are in Specialty, the biosimilars. We're participating in all of those activities. We're seeing increased volumes on certain key drugs. And as you know, we've been saying for a while, we have seen oncology come back more quickly than the other areas, but we do expect all the classes of the trade at this point in time within Specialty to be at or near pre-COVID levels by the end of our fiscal year. And then as it goes to our upstream services businesses like our 3PL, our hub and other businesses, those businesses continue to perform well and compete very effectively in the marketplace.

Next question please.

And we'll move on to our next question from Jailendra Singh from Credit Suisse. Please go ahead.

Thanks and good morning. I was wondering if you could double click into manufacturing efficiencies you highlighted in the Medical segment. Can you provide some details there? And are any of those efficiencies in the Cordis business that will be rolling off versus your core business?

Yes, I mean we've clearly had manufacturing efficiencies in our Cordis business, like all of our manufacturing businesses. The team there has just done an excellent job across all of our 30 or more global manufacturing plants at driving efficiencies. There's nothing in particular about the Cordis efficiencies that would change the estimate that Jason just gave you that that business, when it rolls off, hopefully, in our early first quarter of next year would have about a $60 million or $70 million earnings associated with it.

Okay. Thank you.

We'll move on to our next question from George Hill from Deutsche Bank. Please go ahead.

Good morning guys. Thanks for taking the question. Jason, you kind of alluded to this already, but have you been able to fully capture the pricing gap that occurred earlier this year as it related to PPE and supplies in the medical business? And I guess also, could you update us on the supply side as we think about things like access to gloves and gowns to provide for your customers? And then I tack on at the end to relate to Jailendra's question, are there any dissynergies from the Cordis divestiture?

Sure. Yes. We have captured the cost increases. The supply assurance program we referenced was created to do exactly that: provide certainty of supply for our customers while working with them closely to ensure we can cover those costs. What I have said consistently over the last couple of quarters is that the timing of when that cost is recognized versus when the price is recognized can be uncertain and relatively volatile, and we continue to monitor and manage that. But the overall economics of the program are as expected and intended, which is to cover the cost. Regarding access to products, it continues to improve, but on the glove side it is still constrained, though improving day by day. Capacity is being added to provide more supply, but especially for gloves it is a longer process to bring that supply to market. As for Cordis and any dissynergies, I would not call them dissynergies. When we look at our overall cost structure and stranded costs there are items of that nature. But when we estimate the $60 million to $70 million, that is the all-in impact associated with that. We would not anticipate other issues. In fact, I would say the opposite. Part of what we have highlighted about this transaction is that it allows us to focus and simplify our operating structure around the remaining businesses, and we think it will create opportunities for additional synergies rather than dissynergies by improving cost efficiencies in what remains.

The only thing I would add to that, too, to be helpful is we have really invested in our overall own global manufacturing capabilities. And if you remember in my script, for instance, we're a large manufacturer of syringes. We've increased our capacity there by 15 million units on an annual basis. On gowns, we've added capacity to add 20 million more manufactured gowns a year. And our masks were increased by 150 million more masks a year annually; all in our own facilities, which are all either U.S. or near-U.S., they're all North American types of facilities. So, we've done, I think, a very excellent job in the Medical segment of increasing our capacity which really, I think, strengthens our supply chain. And we've also invested in our sourcing capabilities and broadened our relationships with suppliers. So, we feel really good about some of the changes and developments we've made in our overall supply chain in Medical.

Thank you.

And our last question comes from Kevin Caliendo from UBS. Please go ahead.

Thanks. Thanks for taking my question. I just want to go back to sort of the headwinds and tailwinds for fiscal 2022. If I'm sort of netting everything out, it sounds like COVID impact for Medical is going to be an incremental tailwind. Did I think about that right? Can we just go through that one more time?

Yes. For the Medical business, I would anticipate that the impact of COVID in the fiscal year, so not a year-over-year comparison, but just what's the impact of COVID will be a tailwind for this year. So, the question is, well, what are those same types of dynamics next year? Do we see more permanent longer-lasting PPE volumes, lab volumes? I've referenced the timing associated with the price and cost of PPE that could carry over into next year. But if it goes all back to what a pre-COVID world looked like, it would imply a headwind. Of course, we expect there to be a more significant tailwind opportunity on the Pharma side, but specifically to the Med business, that's the right way to look at it. And just one thing to add additional color to where I'm sure you're trying to go with the question, is that when we think about our full year guidance of the low to mid-20s percentage growth, obviously, we have within that some of that benefit I'm talking about. And just to be real clear, even if you back that out, we do have growth in the Medical business, but it is a key part of the growth that we're seeing this year as well.

Okay. Thank you.

And with that, that does conclude our question-and-answer session. At this time, I would like to turn the call over to Mike Kaufmann for closing remarks.

Yes, I just want to thank everyone for joining us today. We and the entire Cardinal Health team hope you and your family stay safe and well, and we look forward to speaking with you again soon.

And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.