Cardinal Health Inc (CAH) September 2026 Conference Transcript

Okay. Yeah, thanks everyone for joining us today. Really pleased to have Cardinal Health here to join us. Cardinal Health, as you know, is a drug distributor, a provider of pharma-focused services, and then operates some other interesting businesses outside of the pharma domain as well. With us from the company, CFO, Aaron Hall, thanks for joining us. And David Frost from Investor Relations. I believe David wants to read a prepared statement, and then we can go right into the discussion from there.

Thanks for hosting us, Steve. It's great to be here. And as you mentioned before, again, a little housekeeping. We will be making forward-looking statements today, which are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied. For description of these factors, please review our SEC filings, which can be found on our Investor Relations website at IR.CardinalHealth.com. All right, let's get started.

Mind if I give a couple introductory remarks? I'd love you. And so, good morning. I see many familiar faces in the room. Good to see you all again. I'm looking forward to the cross-examination that will ensue over the course of the rest of today, knowing this crowd. I smiled as Steve was talking about our business because no doubt you've heard Jason Haller and I now describing our business a little bit differently, which is we view the portfolio we have and we're evolving to as being the beginning, the middle, and the end of the healthcare ecosystem and believe that we have an increasingly important and relevant role to play across the full spectrum of American healthcare. Now, those of you that are paying attention to our business and our story know that we just delivered Q4 results, which were very strong, right? And they ended, they capped a year for fiscal 26 for us, which was also very strong, driven by a couple of key parts of our business, certainly the specialty business, which grew at double digits. We surpassed $50 billion in the year in specialty. That's a key sign of progress against our strategy. Our generics business was quite strong as well. But really what we saw was strong demand across our entire portfolio in Q4 and, indeed, over the course of the year. Indeed, we saw outsized demand in the first half of last year as well. And so I want to be reflective of the fact that we have just released excellent results capping our fiscal 26. We also issued guidance for fiscal 27, which is above our long-range guide from an EPS perspective. If you think back to our investor day, our investor day EPS, adjusted EPS guide, I guess we call it non-GAAP here, is 12% to 14% growth, and we guided fiscal 27 at 13% to 15% growth, driven by a couple of assumptions I'm sure we'll talk about, so I won't drain them now. But just to call it the fact that we are expecting a very positive year in fiscal year 27, that's partly because we're executing on the strategy we laid out. First investor day, three or four years ago, most recent investor day, the strategy hasn't really evolved. We're doing what we said we would do, executing against it reporting back. Strong operational momentum. Service levels are at their highest levels ever across our businesses. We're executing against the integration on the MSOs that we've acquired over time as well. And we're investing against the growth businesses, which I hope we get a chance to talk about, particularly around the at-home business, where we recently announced a couple of acquisitions. And so we're integrating those now as well. Coming back to really where I started, which is the beginning, middle, and the end. And our business has proven to be incredibly resilient, notwithstanding economic factors, notwithstanding the regulatory change, notwithstanding uncertainty. We are able to leverage our full portfolio, and that's part of why we believe so strongly in the future for Cardinal Health. Over to you.

So did you like the description, or should I change that for next year?

Well, I now call us the beginning, the middle, the end of that, but the 10K has to govern, I suppose.

Okay, fair enough. All right, so maybe to start and expand a little bit on the point you made you know about q4 when we look at the the pharma and specialty solutions segment you know your segment profit growth there you know obviously closely are quite strong at least on an underlying organic basis you know it seems like to us you know it's potentially a bit over double the normalized lrp for the business can you expand a little bit on some of the key drivers of the outperformance it may be how you think about the components that potentially have the most potential to kind of recur and become maybe become part of the business over the next a couple of quarters still, maybe things that could have less opportunity for recurrence.

Sure, happy to. For us, the pharma business had a very successful year because we saw that strong demand in specialty, which is a higher growth part of their business, higher margin part of the business for us. We also saw a strong demand, good volumes in the generics part of our portfolio. And when those two things are doing well, we are going to have a good month, a good quarter within the pharma business. But we also saw strong demand across all the other parts of the pharmaceutical portfolio as well. The core distribution, the consumer health parts of the business, specialty pharmacy, those were all humming during the quarter. And so we were delighted with that. We also are starting to see the benefit of the acquisitions we've done. We have talked about the fact that we've onboarded the distribution across the MSOs. That is certainly helpful to the cause. We've been adding capabilities as well that are on a higher margin rate. And so the pieces of the strategy coming together have been what's really supported the profit delivery in Q4 and indeed for all of fiscal year 26. Now the guide for fiscal 27 you also asked about, and the good news is, is the strategy isn't changing. And indeed the trends that we believe will drive to the good news consistent with our guide for fiscal 27 are also tied into of those same things, right? We are guiding strong but not outsized demand. You heard me say earlier that the first half of fiscal 26, we saw increased demand. That's not our guide. We're assuming that the secular trends will continue, prescription strength will continue, and we'll see strong demand across the portfolio. We are assuming excellent growth within the specialty portfolio, as we talked about. Generics will continue to have the benefit that we saw in 26, 26, right, the generic benefit, LOE, et cetera, 26 and 27 were both good. It really gets to be good in 28 and 29. We can talk more about that down the road if you like. But we continue to see that as a positive factor led just by operational execution and the momentum that we've built in the business.

Yeah, that's a good place to take it next. Obviously, you provided guidance for pharma and specialty solutions and helped us to break out the M&A components. We can kind of see the underlying there. And the underlying organic growth is at the high end of the LRP, and you're also noting at the same time that you're not assuming that, you know, that necessarily requires any kind of above-average utilization environment, which I think is a reasonably prudent assumption. So as we do think about what allows you to be at the high end of the range without making that type of assumption, you may expand on that point a little bit more.

Well, we call it high end of the range for the first quarter in pharma, and that's driven in no small part by the fact that we will lap our Solaris acquisition in Q2. And so we wanted to be reflective of the relative timing of that. But also we did guide 2% to 3% profit growth from acquisitions over the year, which is down from fiscal year 26 because we don't guide M&A that we have not already announced or completed in that way. And so we are not assuming in our guidance that we are doing significant M&A in the year. you're all aware from the excellent cash flow we had in fiscal year 26 and indeed the strong cash balances that we had at the end of fiscal 26 that we are blessed with financial flexibility such that we could do M&A on the right terms at the right price of the year if we found the right strategic asset. Otherwise, we will roll that cash back through our disciplined capital allocation framework and also be looking at additional return of capital shareholders. Got it.

And then, And, you know, across really, you know, both your business and your competitors' businesses, there's a big focus at the moment on the timing of kind of large customer renewals. Obviously, that's a normal part of your business. You have business, you know, renewing all the time. I guess how should we think about the dynamics around kind of large customer renewals as different from maybe more ordinary course of business? And, you know, what's a realistic window for when the investment community might start to kind of learn more about how all this is trending? Sure.

I'm going to start with a general observation, which is we discuss, negotiate, collaborate with our suppliers and our customers every day, right? And contract negotiations are not a one and done. They're not a just in this one week period during the year. We have a constant rolling cycle of negotiations with both the suppliers and the customers as we seek to ensure that we're creating value across the full ecosystem. And so whether we're talking about the IRA, which wasn't your question, but I'm sure we'll come to it, or we're talking about large customer renewals, what I want you to walk away with is the understanding that we're on it, right? We believe we have a strong relationship with our customers. We are always focused on how can we do more for them from a service-level perspective? How can we drive our own revenue and profitability by virtue of having a value-creating, not just a transactional relationship with our customers and suppliers? And I would point out that during our fourth quarter, we did announce that we did renew the Kroger contract, which is our second largest customer within the pharma business. And we renewed the largest customer within our G&BD business. And so there are a couple of data points that, to my point, indeed, were on it and working Now, with respect to other customer renewals that are out there, I imagine you're probably asking me about CVS. And so I can only tell you this, which is we believe we have a strong relationship with CVS. We work with them every day to how can we better support them over the course. of their, the variety of their businesses. And they will ultimately decide when they renew their contracts. But we feel good about our relationship with them and indeed with our other large customers as well.

Okay, fantastic, thanks for that. Then you mentioned the generics business has been a quite strong contributor to results. How should we think about market dynamics in Red Oak and what you're expecting over the balance of your current fiscal year? And then as we start to think about, you know, some of the upcoming small molecule LOE kind of pipeline, like how does the company think about the cadence of opportunities in that business?

We view Red Oak as a competitive strength. Many of you have heard me talk about the fact that the dual mission of access and affordability is demonstrated by Red Oak to us every day. It's our joint venture with CVS that goes through calendar 29. So we've got a couple more years on that as well. And we believe it's been a real benefit, not just to CVS and to Cardinal, but indeed to ultimately the provider and the patients as well, because we are the largest purchaser. We lean in differently. We're willing to provide long-term commitments leading to that better access, better cost. And what that means is that when other people are short, they come to us, which is also a business opportunity for Cardinal and the Red Oak team as well. 26 was a positive year from a generics. While we had consistent market dynamics, which means that we're able to manage to the average margin per unit, that's how we manage the business, we saw strong volumes. And so that contributed to our profitability in a very positive way. And we are anticipating that unit growth or that the utilization within generics will be a touch above our long-term guide from a generic unit perspective in fiscal 27 as well. I commented on that in our earnings call. Where the real interesting thing happens, though, is in fiscal 28 and fiscal 29 because we see a surge of LOE opportunity coming. And so while 26 and 27 will be roughly equivalent, positive versus prior years, 28 and 29 is where we will see some real benefit.

Got it. Well, maybe that's the right question to ask now is just when you think about some of these longer-dated biosimilar opportunities, I think you're alluding more to Part B than Part D, but correct me if that's not the right way to be framing it. Because how are you thinking about, you know, the ways that this potentially could impact the business both, you know, maybe more of the, what I describe, I guess, more of the core distribution business, how it could impact MSOs. And I guess how do you think about the interaction of, like, IRA on some of these opportunities and whether that, you know, there's a potential chance that that could, you know, dampen it or maybe enhance it in certain cases.

Yeah, I mean, look, overall, biosimilars, we view as being a very early innings story for us. And, you know, David, why don't you take this one?

Yeah, I think we've been relatively consistent with our communication on biosimilars. I think it's a profit opportunity for us. It's not one that has risen to the same level as some of our other profit drivers, which is why you probably don't hear us talk about it as frequently. But the performance would be a part of our total specialty performance, which Erin just commented, FY26 grew 25%, surpassed $50 billion for the first time. So a nice tailwind for the business overall. We view that as relatively early in its maturation. So I think it can continue to evolve, but it's a rising tide. So it has potential benefit for, you know, patients as well as, you know, our model in the ecosystem. As it relates to IRA, which you brought up, and the Part B side of the house, I think, you know, still a little bit weighs out before that will actually go live. So we'll need to see how it plays. But fundamentally, I think we believe that we're aligned with the administration's intent. Increased access, increased affordability. And we don't believe that their intention is to impact community practitioners. The outcomes that occur at that side of care as well as the cost overall, you know, leads to viable interest in maintaining its viability. So I think overall we expect that to be something that is top of mind as we continue and we'll have to see how that plays out. And I think the third part of your question was our MSOs.

Yeah, how do you think about the MSO potential impacts financially?

Yeah, yeah. So I would highlight maybe just a couple of things. The specialties that we have focused on within MSOs, notably within the Specialty Alliance, gastroenterology, urology, those MSOs have a more diversified revenue profile. So the drug spend component is a little bit smaller, roughly a third in comparison with something like oncology, which might be closer to 80-90%. So the overall exposure there, especially when you're looking at IRAs translation to that, becomes a percent of a percent and isn't as material. But that said, we still are aligned to the overall intent that I was speaking to before. So I think the biosimilar piece is an opportunity for the MSO space. I think the IRA exposure is something that we're closely monitoring, but believe that the overall expectation is that we're aligned with the administration's goals.

Okay, fantastic. And then, you know, as we think about another facet of the IRA, I mean, obviously the company is pretty, you know, pretty clear that 2026 cohort of IRA press negotiations, you know, were something that you were able to deal with as you, you know, recontracted with manufacturers and, you know, make clear the value provided is not changing as well to these changes. I guess as we think about the future cohorts here of IRA, and I'm assuming these discussions are well underway for 2027 at this point, is there any reason to think that any of these discussions could ultimately result in a different outcome or equal level of confidence on 2027 at this point?

We are expressing the same level of confidence on the impact for January 27 as we did for January 26. And you're right, those conversations aren't yet to come. Many of them are already underway as manufacturers make choices and we talk about the knock-on consequences of if they're going to adjust their WAC, what does that mean from overall contract because we will be compensated for the services we're providing. We have a decades-long history of, along with others in our industry, of proving that those conversations can be productive to ensure that we are not negatively impacted by a manufacturer's decision to reduce the WAC price. Okay.

And then to come to the MSO business, we touched on this a little bit. Obviously, you have a bit of a different MSO strategy than perhaps some of your peers more focused on therapeutic areas that have kind of overall less drug spend running through the practice. I guess as you think about strategically why these are the right fit for Cardinal, I guess like how is that tracking relative to initial business cases that you've built out and just generally like success attracting providers into these platforms and growing the business?

Yeah. The MSOs are the downstream part of our specialty business. As you're thinking about specialty as a whole, which is growing double-digit at a higher margin rate for us, it's important that we be exposed upstream, also continue to grow our share within the specialty distribution core of who Cardinal has been historically, and then downstream with the MSOs and the provider network as well, along with data, RWE, the other elements that go around That's a frothy ecosystem for Cardinal to operate in, given the scale, the financial backing, the technology that we bring to that, both organically and through the acquisitions we've done. We are not quite tilapping the Solaris deal, which was our last large MSO acquisition. That happens in November, I believe. We're a little bit over a year now within GIA, a little bit over a year within UA as well. And so we're heads down doing the integration across the businesses as well, thinking through how do we further advance our autoimmune strategy within MSOs and specialty more broadly as well. And so feeling good about where we're going and the potential that those businesses bring to the portfolio as we carry forward. Naturally, all of the dynamics we've already been talking about as far as drug spend and pricing and doctors and the ecosystem and recruiting, to your point, Those are all things that we're very focused on in building the plans going forward. But we continue to have the conviction that the MSOs, by specialty area, that we can help create a lot of value for the ecosystem and for the doctors by bringing our scale, by bringing the efficiencies, by bringing all those pieces together. But heads down, focused forward.

I guess when you think about, you know, growing provider count in those businesses, I guess, can you speak at a high level to maybe what your expectations are for what, you know, growth in provider count looks like over the next couple of years? And then as we think about, you know, the composition of that growth, how much of that do you think comes kind of organically, given that it's a very attractive platform to physicians versus, you know, what might require more of like a capital component to it?

Yeah, I don't think we've guided the MSOs by provider. Obviously, we want to increase the number of providers over time, tactically and strategically, both by therapy area. We're very focused on gastroenterology and urology within the Specialty Alliance, and then on oncology, both Medonc and Radonc within the Navista network as well. And so we don't view it as an either-or in that part of why we liked the assets we acquired was the capabilities they had to go into the marketplace in recruiting, right? There is a shortage of doctors more broadly across the American healthcare system. And when you operate at scale, when you have the resources that we help to bring, we believe that we can facilitate TSA and Navista actually adding organically to the doctor count in the right areas with the right specialties to be able to do that. And then M&A will continue to be a tool that we will deploy in the right way, either to add density within market, to bring in new therapy areas, or to drive the geographic expansion to the point of my very point of scale. We can really drive some value creation during that. And so we are partnered with the leadership teams of those businesses to talk about what are those right acquisitions. I think we said we had done four more tuck-ins in the fourth quarter in the specialty alliance as well. And while we don't guide M&A, as I called out earlier, we will certainly enable the tuck-in acquisitions that help to drive that density or geographic growth.

Okay, perfect. And then maybe now pivot to some of the other parts of the portfolio. Just maybe help us understand, GMPD, obviously, there's a lot of moving parts at a macro level and, I guess, regulatory or legal level that have kind of impacted that business over the past couple of years. As you think about the guidance that you laid out for fiscal 2027, I guess, what are the key assumptions, I guess, what are you assuming with regards to Cardinal brand growth on both, I guess, the volume and the pricing side and how much of the profitability improvement that you're going to drive to comes from the remaining GMPD improvement items that are still annualized or kind of in front of you prospectively?

The GMPD business is a complex business with a very simple strategy, which is do what we do better than we've done it over time, drive better customer support, drive better penetration of the Cardinal Health brand and the contracts we have, achieve the new contracts we believe we can win, and really grow that Cardinal Health brand presence. And so we're expecting to grow Cardinal Health brand a touch above, you know, market utilization rates.

You know, that's positive progress for as well.

While at the same time continue to execute on the cost optimization and simplification elements that we've been pursuing relentlessly for the last couple of years with some success, right? At the same time, of course, we have to manage tariffs, you know, the ever-changing tariff environment. You all will have noticed that we did call out that we were booking the return of the IEPA tariffs in our fourth quarter. There are different tariffs still impacting the business. At the same time that we have commodity costs that will vary over the course of the year based on how long the conflict of Iran continues as well. And so we're managing all of that. our guide was up I think about 50 which is what we had said from a long-term perspective we aspire to do every year and so the actual profit guide is 220 to 240 for the year but we're just head down and focused on getting it done okay great and then maybe to pivot into the other business portfolio maybe starting us with nuclear and theranostics it's been a very positive contributor to growth as you've expanded your you know your pet and theranostics presence is What are the key drivers of this growth going forward?

I guess where are we in terms of innings maybe on the opportunity set there? And also from what I understand, this is a pretty big fixed cost business. I guess how do we think about kind of incremental margins and maybe opportunities to get leverage over some of the infrastructure you need in that business?

We're excited about the nuclear business. David, why don't you take this one?

Yeah, and I was just going to comment. G&PD is 200 to 220 on the forward guide. And from a Theranostics perspective, we're very excited with the nuclear business. nuclear overall has been living up to the moniker of its categorization as a growth operating unit within the broader enterprise and it has you know the low energy component of the business which is specced and is a strong foundation and national leadership position has been performing well but the theranostics and pet component of this portfolio that i just mentioned is what has been driving a lot of the growth and what we're even more excited about i think in fy25 investor day We laid out that that portion of the portfolio represented roughly half the total revenue, and we expected it to get to two-thirds by FY28. To achieve that goal, it needs to grow roughly a 20% kegger. In FY26, we saw therinoxics grow close to 30%, so a clip ahead of those expectations. As you think about the forward-looking opportunities, the pipeline remains robust. So we have more than 70 products in the pipeline in terms of either manufacturing or commercial development and partnership with, you know, a buyer-farmer partners. and to achieve those rates and those outcomes that I'm speaking to, only a handful of the products need to hit, and they need to be singles and doubles, not home runs. So we remain bullish on that opportunity and see great things for nuclear.

And then I guess just anything in the financial profile of the business and just how to think about it as it grows. Are there big fixed costs that you think you can start to get more leverage on?

Yeah, we've continued to make the right investments to expand, especially within the pet manufacturing capabilities or you know some of the theranostic molecules that require a specific manufacturing sites and locations so yes we're preparing to scale making the right investments you know but the business is growing rapidly so we'll continue to adapt to that okay great and then if we move to the at-home business you've benefited a lot from the integration of EDS and now you're doing the acquisition of diabetes health from ADAPT.

Help us with the strategic fit here, particularly now that maybe more so in the ADAPT business because we've heard from you more on ADS and maybe the synergies that you're driving and potential for further room in organic growth in this business.

Sure. First of all, we love diabetes from a therapy area that we can serve. We are equally excited about urology, you know, hypostomy, nutrition, delivery. Those are the focus areas for our at-home business. And the ADSG acquisition is a great second step for us. And I say that because the first step for us was actually realigning the at-home business, where we changed the geographic location of our distribution nodes to ensure that we could get to the patients faster. We built new distribution nodes that are highly automated and highly efficient to bring our costs down. And now what we've been doing, and this is part of why ADSG was so helpful, is now we've been adding scale, right? What we are moving through our buildings is not wheelchairs and crutches and big bulky items. We are moving items that are relatively compact, relatively efficient to store, cube space is efficient and to move them through our network with our best in class, you know, rates. And as we've been doing the deals, we've actually now been adding scale on top of that. And the ADSG acquisition, for instance, I think it was the revenue increase was over 30%, but it used 2% of our cube space. And that gives you a sense of how we were able to really push through the synergy of that deal. And we're very happy with how that acquisition has gone. Later on top of that, of course, we announced the acquisition of Strive, which is a smaller competitor, but in urology to really add scale within the urology part of our at-home business. Don't lose sight of the fact that we are strong in urology and other parts of our portfolio as well. That is equally intentional as to why we invested in the urology part of the portfolio here. And then the diabetes part of the ADAPT business. And while Strive has closed, the ADAPT asset has not yet closed. That's somewhere after the turn of the year. But the same thing will be true, which is we're bringing both new capabilities, some new talent, and scale within the categories that we are very focused upon.

Okay, great.

And then I guess a couple on the regulatory front with the at-home business. I guess it seems like maybe near-term potential benefit if CMS covers type 2 non-insulin using diabetes. Any early thoughts on how that may or may not impact the business? And I guess secondarily, to the extent that we see Medicare competitive bidding for CGM and insulin pumps, I think that's more of a 2028 item. I guess how do you think about managing the impact of that and what it could be on the business?

Well, we view it as opportunity, right? Whether it is patient self-paying or the increasing access to coverage for the items that we're selling, we're all in favor of that access. It supports our business. And if you go back to what I was saying earlier, as the administration is changing coverage with CMS, as the administration is changing regulation around this space to combat waste, broad abuse, at the same time they're trying to drive that access, right? Who would be their best partner other than the large corporate that has a robust compliance program that operates at scale, that can bring costs down? So we think we are well situated to be a very productive force in the industry, both competitively, but then also as the competitive bidding and the other regulations change around us.

And then just to touch on Opti, for you to kind of round out the other discussion. You've been expanding into outbound shipping and also expanding into the non-acute space. It seems like those are higher growth than the traditional inbound shipping. I guess overall, how's the OptiFreight strategy playing out, and how are you thinking about growth there and the balance of this year?

I think I've called OptiFreight the little engine that keeps on giving during our earnings calls, and so we're excited about what that team is doing. It's a different business model for us. We continue to invest in both the technology that underlies the business as well as the user experience in the acute environment. And so we have high hopes for OptiFreight to be a very positive contributor to our other growth businesses.

And then, you know, as we think about, you know, one of the things that's, I think, been a really important part of the financial story for the past couple of years has really been cost discipline across the company. You know, I guess as you think about what the key drivers have been and kind of the future opportunities set on costs, like how is the company looking at opportunities to get more efficient and then kind of goes, you know, dovetails a little bit with this. You know, how are you using, like, AI to both, you know, make the business run better from a growth perspective and also a cost perspective moving forward?

Yeah, let me start with cost and then move to AI. Look, we run a, in aggregate, we run a 1% margin business, and you're not going to be successful running a 1% margin business if you aren't relentlessly focused on how do you simplify your business and how do you bring your cost down while driving performance, right? You can't sacrifice performance, so that has a different effect. And so we are very focused. GMPD has proven it can be done. Similarly, the pharma team, notwithstanding the investments we've made there and the success they've had, they've also had a rigorous program of constantly assessing how do we operate and where can we bring those costs down. And that is operating both at the segment level, the five business level, but also within the enterprise whole. Jason Holler, our CEO, is very focused on what our cost profile may be. Now, AI can be an enabler of cost, but frankly, it's also an enabler of us making faster, better decisions across the portfolio as well, leveraging the data that we have. And so whether it's AI initiatives within the MSOs to better diagnose, to drive productivity with the doctors, or AI within how we run our supply chain to optimize how we think about our inventory purchasing, or AI within our investor relations functions. and I'm actually AI. Sorry, a little bit of a joke there. No one laughed. But the point is that we are deploying AI across the portfolio, but carefully, right? We are a large, complex business, and we haven't rolled it out across the enterprise yet. That is certainly opportunity, but we do have a lot underway.

And then maybe to come into capital deployments been a really important part of the strategy, especially given the really strong cash flow of the company generates as we think about you know your key capital deployment priorities over the next couple of years I guess what would you kind of stake those out as and to the extent there's a contrast to draw it all with the capital deployment profile the company over the past three to five years and what would those key distinction points be yeah well the first thing I can tell you before we even get to capital deployment is we have a relentless focus on continuing to increase the amount of cash that we're generating right we've seen good success in the last several years on that last year particular with is a $5 billion we reported or so at the end of the year.

Our strategy hasn't changed as far as what we're going to do with it in that we are first going to invest in the business. We committed or we guided that we're going to invest $700 million or so in fiscal year 27. That's more than this past year, which was more than the year before that, which is more than the year before that. You sense the trend of we're investing for the future profit potential in the business while at the same time growing the profit, right? And we're trying to create that virtuous cycle of we're investing now for the future profit, you know, three, seven, nine, 12 quarters out so that we always have good opportunities there. After that, we're going to protect our balance sheet. But as we talked about in Q4, we're at or within our targeted leverage range. And so there are not actions we need to take to bring ourselves back into compliance there. And that's a mix of return to capital shareholders. We are a dividend aristocrat and we committed to return to buy back at least a billion dollars of shares in fiscal year 27. That's up from our commitments the last couple of years, and I think you've seen us do that as cash has been available. If we have not had other uses, we've increased the amount that we've been buying back while also looking at M&A, right? And we're going to be smart about M&A. We're going to be smart about if we don't have M&A, how much cash do we need to run the business? Otherwise, we will look at incremental return of capital to shareholders.

And in terms of being smart about M&A, I mean, obviously you've done MSOs, You've done assets for the other business, particularly at home. How do you think holistically about what the opportunity is on the M&A side and, again, what that might be similar to or different than it's been in the recent past?

I think it's unlikely you'll see us add a fourth leg to the stool, so to speak. We have been successful in sticking to our strategy and adding capabilities and adding things which have connective tissue to the rest of our portfolio. And so as you think about where we might play, certainly within the biopharma services part of the portfolio, which is a key part of our specialty portfolio, we may do some M&A, as I call that, tuck-ins around the MSO, part of our portfolio. Certainly, we've done some M&A in the other parts of our business. They have access to our balance sheet. That's part of why they have been growing as fast as they have been as well. But we're going to be very – we're going to be consistent with our strategy is what I would say.

I think that's all the time we have time for. Thanks so much for joining us today. I really appreciate the discussion.

Thank you.