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Cardinal Health shares moving to the upside here. We're looking at gains of just about 4 and a half percent. This comes on the heels of its most recent earnings report. The company posting better than expected results, revenue jumping 12% from a year ago. Company also announcing key new partnerships with both the CVS Health and grocery store chain Publix. Here with more, we want to bring in Aaron Alt. He is Cardinal Health Chief Financial Officer, Aaron. It's great to have you here. Congratulations on what looks to be a very strong quarter here for Cardinal Health. I'm curious once you look underneath the hood, just give us a better sense of some of the trends that we are seeing and how you see that momentum carrying over into the second half of the year.

Well, great. Thanks for having me. Delighted to be here. And I want to start with a big thank you to the entire Cardinal team because as you called out, what we're really showing is momentum here at Cardinal Health. We've had a big day. We announced EPS growth of 29%. We announced free cash flow or adjusted free cash flow of $4 billion as well as momentum in our pharmacy business, as well as and the fact that our global medical products and distribution business also hit the very closely watched target of its improvement plan. So a lot of things going on. We're seeing a strong pharmaceutical environment, we're seeing innovation continuing through the industry, we're seeing good generic performance, which is a core part of our portfolio, a key part of our partnership with CVS, and during our fourth quarter, everything was ticking the way we needed it to because then we also turned around and raised our guidance for fiscal year 25 reflective of the confidence we have in the team, the confidence we have in the plan, and the confidence we have in the healthcare environment in which we participate.

I'm curious about this CVS partnership because CVS has had a tough couple of quarters, just to be direct. What is your thinking on that partnership and the degree to which you feel comfortable with it given the challenges that CVS is experiencing?

Uh, CVS is a strong competitor in the marketplace. We have a long-standing partnership with CVS, whether it's on the retail distribution or on the uh, the Red Oak sourcing partnership we have, which is industry-leading around ensuring that CVS's customers and our customers have access to the prescriptions, the generic goods when they need them at the lowest cost. I'm never going to, I'm never going to bet against CVS. Look, um, we continue to double down and invest with them. We, we announced today the Averon partnership is really part of our specialty offering. It's really around how does CVS and how, how does Cardinal Health together ensure that like on generics and biosimilars, know our customers, our clients have access to biosimilars at when they need them at the lowest cost.

And when you take a look at some of the trends that we've seen, more broadly speaking across the sector, really across the board this earning season, we've seen less mentions of inflation, consumer pricing in these earnings reports. I was just going through your transcript, you did mention some of the progress that you have been seeing on inflation. I'm curious how big of a factor the persistent inflation is to your business right now? And when you talk about some of that progress that you have been seeing, do you expect it to, I guess rapidly start to mitigate here in the second half of the year?

Yeah, you know, inflation has been a factor for us for the last several quarters and something we've had to manage differently across different parts of the portfolio. It will be with us forever. The only degree is how big will it be, in particular when you're operating a business like we are with a 1% margin, your ability to either control the inflation or react to it adeptly is so important. And so our focus has been on partnering with our suppliers, partnering with our customers to ensure that we're being compensated for the services we're providing to them and we're sharing the relative impact of any inflation that comes down the board. We've been pleased to see some reductions in inflation. At the same time, we've been pleased to be able to increase our flexibility to react to that inflation as it comes for the board. We are confident in the environment we're operating and we're confident that we can, that we can address that inflation, and that's why today we actually raised our guidance across the enterprise from a profitability perspective and raised our uh, we reinforced the plan for our medical products and distribution business, which is, which has been very inflation focused in the past.

Aaron, let's stick with the macro picture here because we, we've been talking about just a higher risk of recession. Ultimately does that have a significant impact to your business or is Cardinal Health positioned well that you will be able to navigate any sort of challenging times?

Yeah. Uh, my reaction is that people's healthcare needs don't keep an eye on the stock market, right? The point is is that when people need health care, we want to be the ones to efficiently and effectively and safely move the products around the distribution network so that their doctors can prescribe what they need from a pharmaceutical perspective or from a procedural perspective. And so I wouldn't say we're, you know, uh, I wouldn't say we're recession proof that way. I wouldn't say that we're um, outlying that respect, but what I would observe is that from a business model perspective, people need our services regardless of what's going on in the broader world.

All right, Aaron. We're going to have to leave it there. Thank you so much for joining us. Really appreciate it.

Thank you so much.

That was Aaron Alt. He is Cardinal Health Chief Financial Officer.