cardinal health Q2 2008 Earnings Transcript

F I N A L T R A N S C R I P T

CAH - Q2 2008 Cardinal Health, Inc. Earnings Conference Call

Event Date/Time: Jan. 29. 2008 / 8:30AM ET

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C O R P O R A T E P A R T I C I P A N T S

Bob ReflogalCardinal Health, Inc. - President, IR

Kerry ClarkCardinal Health, Inc. - President, CEO

Jeff HendersonCardinal Health, Inc. - CFO

George BarrettCardinal Health, Inc. - CEO

Dave SchlotterbeckCardinal Health, Inc. - CEO, Clinical and Med. Products

C O N F E R E N C E C A L L P A R T I C I P A N T S

Glen SantangeloCredit Suisse - Analyst

Tom GallucciMerrill Lynch - Analyst

Ricky GoldwasserUBS - Analyst

Ross MukenDuetche Bank - Analyst

Randall StanickyGoldman Sachs - Analysts

Larry MarshLehman Brothers - Analyst

Lisa GillJP Morgan Securities - Analyst

Robert WilloughbyBanc of America - Analyst

Charles BooradyCitigroup - Analyst

Steve HalperThomas Weisel Partners - Analyst

John RansomRaymond James & Associates - Analyst

John KregerWilliam Blair & Co. - Analyst

Eric ColdwellRobert Baird - Analyst

Charles RyeeCIBC World Markets - Analyst

P R E S E N T A T I O N

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Jan. 29. 2008 / 8:30AM, CAH - Q2 2008 Cardinal Health, Inc. Earnings Conference Call


Operator

Good day, ladies and gentlemen, welcome to the Second Quarter, 2008, Cardinal Health Inc. earnings conference call. My nameis Eric, and I will be your coordinator for today. (OPERATOR INSTRUCTIONS) I would now like to turn your presentation over toyour host for today's call, Bob Reflogal, Vice President of Investor Relations.

Bob Reflogal - Cardinal Health, Inc. - President, IR

Thanks, Eric. Good morning everyone and welcome to Cardinal Health fiscal 2008 Second Quarter conference call. Our remarkstoday will be focused on the company's consolidated and business segment results for the quarter which are included in thepress release and attach financial tables. If any of you have not yet received a copy of our earnings release or financial attachment,you can access it over the internet at our investor page at www.cardinalhealth.com. Additionally, there are a handful of slidesthat we will be reviewing which can also be found on the web site.

After the formal remarks, we will open up the phone lines for your questions. As always we ask that you limit yourself to onequestion at that time. During the course of this call, we may make forward-looking statements. The matters addressed in thestatements are subject to risk and uncertainties that could actual results to differ materially from those projected or implied.Please see our press release and SEC filings for a description of those risk factors. In addition we will reference non-GAAP financialmeasures. Information about these non-GAAP measures is included at the end of this presentation and posted on CardinalHealth's investor page. At this time I would like to turn this call over to Cardinal Health's Chairman and CEO, Kerry Clark. Kerry.

Kerry Clark - Cardinal Health, Inc. - President, CEO

Thanks, Bob. Good morning, everyone. With me today are Dave Schlotterbeck, Vice Chairman and CEO of our clinical and medicalproducts sector, Jeff Henderson our CFO and outgoing interim CEO of the Healthcare Supply Chain Services Sector and GeorgeBarrett our newly appointed Vice Chairman and CEO of Healthcare Supply Chain Services who joined the company yesterday.I want to start today's call by talking about our earnings outlook for all of fiscal 2008. Then Jeff will provide some detail aboutthe second quarter. I think it is important to note that we have three of our four segments performing on track. These segmentsare Supply Chain Medical, Clinical Technologies and Service and Medical Products and Technologies. All three are enjoyingstrong revenue growth and margins that are are expanding. These businesses will account for almost 50% of our operatedearnings this year and collectively, we expect they will grow profit about 20% for the year. All are shaping up for a strong secondhalf and of course these segments remain a strength for the company. But as I said last quarter, we are facing a number ofchallenging in our Supply Chain Pharma business. Despite revenue growth of 5% versus a year ago in the first half of the year,operating earnings were down 9% from year ago. Q2 was generally in line with what with we advised three months ago. Theissues affecting the Supply Chain Pharma business in the first half are the same as we talked about on last quarters call, thetiming of new launches and deflationary environment in the generics market. Branded price increases a year ago in Q2, theimpact of repricing some of our larger contracts last spring which with had an impact on our first half results and some supplyand pricing challenges in our radio pharmaceutical business. And of course, poor execution in winning new DFE business,generic penetration, and reducing our SG&A expenses remain the same as we talked last quarter. This latter point is importantto understand-- understanding our first half results, because, while we had forecast the impact of contract renewals, we wereunable to offset the effects of these renewals in other parts of the business. We discussed all of these factors in our call lastquarter so there should not be any surprises about the first half.

Turning to the second half; however, we believe we need to make some significant changes to our forecast for Supply ChainPharma, and that is why we are. taking our guidance down at this time. While we expect to see a moderation in the rate ofdecline, segment profit will now be below year ago for the full year in Supply Chain Pharma. This is the primary reason for ourguidance revision to a range of $3.75 to $3.85. Let me explain why. Over the last nine months, we have renewed all our largecontracts. KMart, Kroger and CVS last spring, and we just renewed our Walgreen's contract earlier than expected. All of theserenewals were long standing contracts and all have been renewed at what we would consider current market rates. Having






these renewals at hand, puts a lot of stability under our business going forward for at least the next 12 months. However,collectively, they will have an impact of more than $140 million on fiscal 2008.

As I said earlier, our prior expectation was that a vast amount of last springs renewals would be covered through improvedbusiness in the balance of our customers and certain expectations on the impact of branded price increases and generics activity.However, we have just completed an in-depth review of the prior forecast and have determined we need to reduce that forecastto now-- what we now think is most likely. And of course, the impact of the Walgreen's renewal is net extra. In addition, we wereaffected by suspensions of our controlled substance licenses at three facilities that led to remediation actions that we are takingacross the entire network. These steps will strengthen our anti-diversion controls for all customers. I want to emphasize howimportant this work is to our mission. The safety and security of the pharmaceutical supply chain is core to our business and itsprotection is an important public policy priority for all of us. This matter will result in additional expenses on some lost business.

We are forecasting a $30 million reduction in operating earnings for the year, more than half of which are expenses. While wecontinue to engage in discussions with the DEA it is not possible to say exactly when this matter will be resolved. Now I willturn to our go forward plans for Supply Chain Pharma. Let me start by level setting on the current environment. We expect tosee mid single digit revenue increases over the balance of the fiscal year. I want to underscore the stability we expect amongour large customers over at least the next 12 months. Second, we do not expect-- excuse me-- Second, we do expect a midsingle digit average increase in branded Pharma prices over the next 12 months. And third, while with we have also reducedour generics forecast, we expect the next 12 months will be good for generic merchandising margin. Increasing our genericbusiness is one of our most important priorities. As you know we've been working to build out our capabilities in this area.

With that as background, here are the steps we have taken to improve our execution. We have a strong sector in segmentleadership team now fully in place. In addition we have removed layers of management to flatten the organization and put ourleaders closer to our customers. This is a more efficient and customer-focused structure. Our generic programs for retailindependents and hospitals are being well received including a new program we launched earlier in the fiscal year. As a result,our generic unit sales to retail independent pharmacies and hospitals are up 10% to 15%. We expect to increase momentumas we move through the next 12 months and new generic products are launched.

As we enter the second half of the year, we are now seeing the benefits of our SG&A controls, and we will be below our budgetfor the year. We are also coming to completion of an extensive industry SG&A bench market study with an outside firm andexpect this work to guide us on identifying new opportunities as we move into fiscal '09. Before I leave Supply Chain Pharma,let me make a few comments on nuclear which is included in this segment. Some of the supply problems experienced aroundthe holiday season have pretty much cleared up. We have also been able to make some pricing, supplier and cost adjustments.But there still may be some additional volatility in the business leading into next year's important generic event.

Looking at the company as a whole, I want to emphasize that we have a very strong business model and a vibrant and growinghealth care industry. We need to make some adjustments, but that does not change our view that we are in great businesseswith excellent market potential. We are differentiated by our portfolio of high growth and high margin clinical and medicalproducts in one sector. And our supply chain services in the other sector delivers excellent cash flow, outstanding returns andis well positioned to prosper as demand for healthcare products and services continues to grow. Now, let me turn to our resultsfor second quarter. Revenue increased 7% to $23 billion and non-GAAP EPS was up 8% to $0.90. This is consistent with whatwe had expected and communicated. In health care, supply chain services sector, revenue rose 6% to $22.4 billion but profitsdeclined 19.5% to $330 million. I have already talked about the major factors that have contributed to the profit decline, so Iwon't say anymore here.

The clinical and medical products sector was an exceptional value driver and continues to differentiate us in the market. In Q2,CMP accounted for 36% of our profit, so it plays a substantial role in our overall results. We have a leadership position in patientsafety and infection prevention products, both essential and rapidly growing segments of healthcare. A strong position hasreflected a gain in our Q2 revenue growth for the sector which increased 24% and profits which rose 32%. Now I will turn it overto Jeff to discuss our segment results in more detail.






Jeff Henderson - Cardinal Health, Inc. - CFO

Thanks, Kerry. Good morning everyone, and thanks for joining us. Today we're going to talk about our consolidated and segmentresults for the quarter, update you on our key financial drivers and I would like to spend more time going through our outlookfor the remainder of the year.

Let's start with the consolidated results of the quarter. Please note that my comments will reflect the financial results fromcontinuing operations on a non-GAAP basis. Consolidated revenues were up 7% to 23.3 billion, and operating earnings weredown 3% to $526 million which, as expected, reflects the Pharma segment challenges we highlighted during our Q1 call. I willdiscuss this in greater detail later. Earnings and continuing operations for the quarter were $329 million also down 3% overprior year. Diluted non-GAAP EPS was up 8% to $0.90 reflecting a leverage we were able to deliver via our capital deploymentstrategy. Operating cash flow for the quarter was negative $26 million. The negative cash flow this quarter was driven primarilyby unique quarter end [and] timing of payments at that impacted our cash flow by approximately $250 million. Return in equitywas 19.4% up 420 basis points over the same period last year. Now, turning to the next slide. During the quarter, special itemstotaled $30 million which impacted diluted EPS by $0.05. The $30 million was comprised predominantly of restructure-relatedcharges including $14 million associated with the [Magob] Park transition. The $23 million gain on sale of steak in OTN is includedin impairments and other.

Now I would like to switch to the performance of the individual business segments. Within the Supply Chain Pharma, revenuefor the second quarter increased 6% to $20.4 billion. Revenue from bulk customers was up 12% and non-bulk revenue was up1%. Non-bulk revenue growth was effected by previously discussed ESP losses, which occurred in Q2 and Q3 of last year. Segmentprofit was down 21% to $258 million, largely consistent with what I had spoken about during our Q1 call. Primary drivers weregeneric market conditions, timing of brand price increases and the on-going impact of previously announced customer repricings.We continue to see progress in our effective use of capital. We are pleased that our tangible capital was down approximately14% over Q2 of last year. However, due to the profit decline, economic profit margin decreased 27 basis points versus last year.

Turning to slide eight, we continue to make great progress in Supply Chain Medical. Segment revenue was $2 billion, an increaseof 8% over the prior year. Continue the momentum from Q1 providing further confidence that our turn around is on track..Total segment profit for the quarter was $72 million, down 13% over Q2 of '07. Profit in the quarter was impacted by the refinedcorporate cost allocation, which negatively affected growth in that quarter by approximately seven percentage points andsoftness within our surgical kitting business. We have also substantially completed the first wave of our business transition fromIllinois to Ohio. As we look forward, there's real momentum in the business, we continue to expect to return to positiveyear-over-year growth in the second half.

Now, turning to the CMP sector and first the medical products and technology sector. Revenue increased 47% to $667 million,on strong sales of infection prevention products and surgical instruments and the VIASYS acquisition. Segment profit was up46% to $69 million with the addition of VIASYS and improved operating leverage in the legacy business. There is good momentumestablished in our infection prevention line. We saw growth in the quarter from our Converter drapes and gowns and our Esteemgloves. There is good momentum established in our infection-prevention line. We saw growth in the quarter from our Converterdrapes and gowns and our Esteem gloves. We have now converted 100 hospitals exclusively to our proprietary latex-free, Esteemmicro surgical gloves. I am happy to report that the integration of VIASYS continues to go extremely well and synergy capturefor FY '08 is ahead of schedule. VIASYS was a substantial contributor to MPT in Q2 and we are very optimistic about our pipelineof 13 new VIASYS product introductions planned for this calendar year. On top of all this, the team has been able to lower daysof inventory in the business by 13 days since last quarter. All in all, the MPT did wonderful job integrated VIASYS and drivinggrowth and value enhancement across their businesses.

Moving on to slide number ten, clinical technology and services had another great quarter. Segment revenue was $715 millionup 8% over the prior year, driven by strong double digit for our Pyxis and Alaris products. Growth was dampened by a slowdown in pharmacy operations. Excluding this business, CTS revenue was up 19%. Interestingly we saw a nice pick up in our






Canadian operations where sales of Pyxis and Alaris products rose 65%. We are seeing very good traction in this market for CTSproducts through relationships we have in the hospital distribution side of our business, continued validation of the impact ofone Cardinal Health on the customer side. Segment profit was $115 million up 26% driven by a favorable mix of higher marginproducts and improved operating leverage. This was somewhat dampened by the additional $10 million charge we took in thequarter related to the Alaris pump module voluntary recall. This brings a total reserve to $14 million including the $4 millionwe reserve in Q1.

Overall, the Alaris voluntary pump recall is moving forward. We continue to work with the FDA and have started the pumpinspection process. We have identified an additional 5,000 to 6,000 pumps that we believe should be inspected as part of thisvoluntary recall and are currently in discussion with the FDA on this. We believe our current reserve is adequate to support therecall as planned. Overall we are very happy with the performance of CTS and the execution we're seeing. Segment profit margincontinues to expand with a 2 percentage point improvement over Q2 of FY '07. Now I would like to turn to the key the keyfinancial levers we focus on to drive both growth and returns for the business and our shareholders, which are balance sheetmanagement, capital deployment and our capital structure. We again made meaningful progress among all these dimensionsin the quarter. Return on invested capital was up 156 basis points versus Q 2 of last year.

For the quarter we repurchased almost $350 million in shares, bringing our total repurchase for the first half of FY '08 to $942million. Similar to last quarter we were operating with our debt to total capital at the top end of our target range with a ratioof 36%. Clearly the desired outcome of our financial strategy is enhancing returns, and we were able to deliver on that goalwith a non-GAAP return equity in Q2 of 19.4% which is an increase of 420 basis points over last year and almost 200 basis pointsover the non-GAAP ROE last quarter.

Moving on to our outlook for the remainder of FY '08. As Kerry noted, we are lowering and narrowing our guidance for non-GAAPdeluded EPS from continuing operations to $3.75 to $3.85 driven by continued challenges in our Supply Chain Pharma segment.While we are clearly disappointed in this action, many positives remain. Three of four segments are expected to perform in lineor better than our expectations. As such, current segment profit guidance for CTS, MPT, and Supply Chain Medical remainunchanged and we continue to expect a strong second half across those three segments. And, overall our updated guidancestill represents double digit EPS growth for shareholders.

Now, let me build on Kerry's comments regarding our revised outlook for Supply Chain Pharma. As he noted there are fourprimary factors that, when combined, effectively reduced our outlook in Pharma by 110 to $120 million. First is the increasedcost and impact of our controlled substance anti-diversion efforts. Currently we're estimating this to have at least a $30 millionimpact on segment profits for the full fiscal year. Much of this cost relates to the investment we are make to put in place,enhanced controls to address the diversion of controlled substances. In addition, efforts rectifying this issue have created adistraction with the organization that has slowed some of the momentum we gained in Q2. The remaining factors include arevised outlook for our generics business, branded fees and price increases and the impact of more recent customer repricings.Together these accounted for approximately 80 to $90 million of forecast revisions. I have worked with a new managementteam over the past several months to take a hard look at results to date, trends, and market conditions to come up with theserevised assumptions. Generics and branded margin, we felt we were too optimistic based on events of the last several monthsand our latest intellegence on the remainder of the year. So, we have adjusted the forecast to actively reflect our current andbest view of reality.

Now I would like to turn to our financial goals. I have mentioned much of this on prior slides, but I do want to highlight a fewkey points. First for fiscal 2008, with the changes I just discussed, we now expect overall company revenue growth to be 7%this year. EPS is being lowered and narrowed to $3.75 to $3.85 per share. As always, this guidance excludes any potential impactfrom the ongoing portfolio optimization reviews. As you can see from the left side of the financial goals slide we have notformally made any changes as we review and update our long-term goals annually. Our organization is still working and incentedtoward achieving these aspirations. However, we will be entering our planning cycle soon, and as we do annually, we will needto review a few of our long-term growth expectations in light of the revised FY '08 forecast for Supply Chain Pharma. So with






that, I would like to take a minute as a former interim CEO of CHCS to recognize George Barrett. Welcome to the team and I willturn the call over to him to make a few comments. George.

George Barrett - Cardinal Health, Inc. - CEO

Thanks, Jeff, and, good morning everyone. As you have heard this morning, we've got some challenges which will no doubtoccupy my attention in the short term. We are in the business where execution is critical, and we need to do a better. job of it.Having said this, let me tell you something about why I am excited about being here. Because of the scale and the significanceof our position in multiple segments, we have a unique opportunity to implement the delivery of health services and productsthroughout the system. Particularly at that time when change is the rule of the day.

I will try to focus on two basic issues, first, improving our operational execution, and second, creating a single-minded commitmentto value creation for our customers and our center business partners. Although I come out of a different part of the healthsystem I am hopeful my experience in addressing these very things will serve us here. I look forward to getting a chance to meetthose of you I don't know and reconnecting with many of you with whom I have worked over the years. I think I'll turn the callback to Bob for Q and A.


Eric, we're ready for questions.

Q U E S T I O N S A N D A N S W E R S

Operator

(OPERATOR INSTRUCTIONS) Your first question comes from the line of Glen Santangelo, Credit Suisse. Please proceed.

Glen Santangelo - Credit Suisse - Analyst

Kerry, just a couple of quick questions on the drug distribution business. You said earlier in the call, you renegotiated the CVSbusiness last spring. Can you remind us what some of the terms of that renegotiation are and it is my understanding you hadto renegotiate that in fiscal '09, is that not true.


What we did-- I can't give you the terms of the contract. We did receive an increased allocation of business during that renewal,and yes, it is our understanding in summer '09 there will be another round of discussions with CVS at that time.


Okay. Then the $30 million that you are suggesting that, the cost related to the DEA how much of that have you alreadyrecognized in fiscal '02, the fiscal second quarter versus what's going to have to be recognized in the back half.


There's only about-- just a-- really a very small amount in Q2. These numbers are all directed towards the back half.







Okay, and then just my last question and then I will jump off. Regarding your revenue growth in mid-single digits. For severalquarters now, we have seen your bulk revenues growing at a double digit pace while your DSD revenues are basically very lowsingle digits, and you cited a couple of customer losses last year. Is there any sort of shift going on within your customer baselike with CVS, Kroger, K-Mart,? Some DSD sales shifting to bulk or is there something else going on.


No. We don't see any shift within our contracts with our bigger customers on DSD to bulk, but, we have had, as we have saidbefore, some lost DSD business in the retail (inaudible) small chains which we addressed last quarter. That still persist throughnow. But clearly, a lot of the focus on the DEA has -- as with the anti-diversion issue, has really had our folks in the fields workingon that while our customers-- we haven't been able to make as much progress in recovering that as we thought.


Okay, thank you.


Next question.

Operator

Your next question comes from the line of Tom Gallucci, with Merrill Lynch. Please proceed.

Tom Gallucci - Merrill Lynch - Analyst

Good morning, thank you\. Just about the guidance, either for Kerry or Jeff,. It sounds like Walgreens is incremental to whatyou were thinking about before, the $30 million on the DEA but I think, Jeff, you said on branded and generics you were sortof too optimistic, I think, in prior guidance. Can you give us a little more granularity on both the generic and the brands wheremaybe you were too optimistic or what's changed and what your new expectations actually are in those areas?


Sure, Tom. Good morning. Thanks for the question. Clearly over the last two to three months since I have been the interim CEOof CHCS, I have had an opportunity to dive more deeply, with the new management team, into our current results, trends, andassumptions for the last six months of FY '08 as we have gone through that, particularly as we have gone through sort of thecritical December to January period where a fair amount of activity happens particularly on the branded side. It became clearthat some of our assumptions regarding both generics and branded were too optimistic based on that latest data. And, let mejust give you a couple of examples.

First of all, there was one fairly significant branded manufacturer that did not do a price increase anywhere near the size wehad anticipated in December or early January. It is doubtful we will see that for the remainer of fiscal '08. So that was a specificpiece. And then I would say, just more generally as we look at our entire portfolio of branded manufacturers and expected priceincreases, it was clear that based on the trends we saw in December and January, although still relatively healthy, they werenot going rise at a level we had been anticipating earlier in the year.






On the generics side, our assumptions for generic launches include both sort of the very well known public launches, such asFosamax which remains intact. But also included is other at-risk launches that, we assess based on our confidential discussionswith generic manufacturers, and we base our forecast on those discussions. And, the intelligence we gain from them and othersregarding the likelihood of launches or at-risk launches or delays in launches. Again, based on what we saw in November,December and early January, and based on updated discussions with those manufacturers, it was clear that a few of those,including at least one two fairly substantial generic launches, were not going to-- were not likely to happen for the remainer ofFY '08.


Those were sort of at risk launches you were guessing at before?


Generally, yes.


Okay, I just want to clarify one thing, you had said K-Mart, Kroger, CVS, Walgreens, say collectively that's $140 million impact.And, is it proper to characterize K-Mart as being out sized relatively given the unique circumstances for that contract?.


Tom, that is correct. The impact of our repricings which primarily is driven by the four major accounts that you mentioned, doeshave an FY '08 negative impact of $140 million. I don't want quantify the individual pieces but, you know, with respect to yourquestion, on K-Mart, it is clearly that our original contract with K-Mart was done several years ago when they were in a differentsituation. We renegotiated in the spring of last year at essentially current market prices.


Okay.


Thank you so much, Tom


Next question.

Operator

Next question comes from the line of Ricky Goldwasser with UBS. Please proceed. Yes, good morning.






Ricky Goldwasser - UBS - Analyst

One question. As you were going through the guidance for the second half of year, did George have a roll in revising expectationsand providing some insight as to the generic landscapes?


No, he did not, Ricky.


Okay. So as far really it is kind of like looking at expectations are we expecting George to take more of the role when you providea fiscal year '09 guidance or do you think there's still potential some revisions ahead?


You are referring to FY '09, Ricky. Good morning, by the way. This is Jeff.


Morning, Jeff.


Clearly over the next three or four months we are going through our long term and short term planning processes. As the newCEO of our biggest sector, clearly George is going to have a very important input and say into what our realistic expectationsare for the next several years, so, yes, he will play an important role.


So, I guess the question is, is George's role really kind of kicks in when you are going through the fiscal year '09 guidance.


Yes, but by the time we issue guidance for fiscal '09, George will have been here plenty of time by then, and I'm sure will havea very significant input into that.


Operator, next question.

Operator

Your next question comes from the line of Ross Muken, Deutche Bank. Please proceed.






Ross Muken - Duetche Bank - Analyst

(lost sound) -- changes that have happened over the last several months, do you think the team that you currently have in placewith George now joining and Scott having joined a bit of time ago, rounds out, at least the supply chain piece of the businessand this is sort of the team to go forward with?


Yeah, Ross, hi good morning. Kerry here. You just kind of kicked off. We didn't get your opening comments but yes we now feelthat we have got the leadership team in place. And, throughout the organization, and you know, obviously we are going tolook for opportunities to continue to strengthen where we have outages, but by and large the team is in place.

Ross Muken - Duetche Bank - Analyst

And, in term of the clinical business on the brighter side of things, obviously performance there has continued very strong.Could you talk about some of the key trends you are seeing in both just Alaris and sort of the momentum you have enteringinto the back half of the year?


Ross, thanks a lot. I will ask Dave to make a few comments on that, if you don't mind.

Dave Schlotterbeck - Cardinal Health, Inc. - CEO, Clinical and Med. Products

Certainly can. Continue to see strength in Alaris particularly in the (inaudible) market. Texas continues a strong path. We areseeing a lot of strength in our basic MPT businesses and VIASYS continues to perform above our expectations. I think we havementioned that we do see a number of new product introductions coming out of VIASYS and these are really designed in theventilator space to begin to create a razor-- razor blade business. One of these products was shown at a conference in December.It was called the Palm Top ventilator. This product is the first of its kind. It's the smallest, it's the lighter ICU-type product designedalso to follow the patient into the home. So, overall in momentum I am very, very positive about where this sector is going.


Thanks, Ross. Operator, next question.

Operator

The next question comes from the line of Randall Stanicky, with Goldman Sachs. Please proceed.

Randall Stanicky - Goldman Sachs - Analysts

Great. Thanks a lot. And, George, I'm not sure if you're there, but if you are, welcome to the services side of the world. Jeff, canI just follow up on a previous question? As you think about the components to outlook, it is not clear what has changed. If wethink about the branded price, inflation is down, you are thinking a mid single digit outlook there, is there a potential timingissue if you think about the fiscal versus calendar year and then on the generic side, can you characterize, maybe moreconservatism in the outlook, relative to before or would you-- are there specific launches, I know you mentioned at-risk launchesthat have been pulled from the forecast, but It is not clear there's a lot of movement in the generic pipeline outlook for the year.







Good morning, Randall, thanks for the question. First of all, on branded side, it really relates to the specific brand increases thatwe are seeing for the companies that we still have the viable model with. And so it's less of a-- the overall complete portfolioof branded price increases that we are seeing and more about the specific companies that, we are still contingent-- still havecontingent fees related to. As I said, there was one large manufacturer that did a very minimal price increase. We were expectingsomething more substantial for FY '08.

And then just generally across the portfolio of companies that we still have contingent arrangements with, we did not quitesee the pick up in December and January that at least we were anticipating. That all said we still view the overall branded priceincrease portfolio as being relatively healthy. It was just as our specific portfolio reflects itself in our financials, we were notseeing the type of increases that we were counting on for a full fiscal year. May some of that happen next fiscal year? Sure. Imean it is now a possibility that some of this is timing, but I think the current forecast is a realistic view, at least our view of theworld based on our portfolio.

On the generic side, yeah, there were a couple of very specific, relatively large launches that we had anticipated based on ourdiscussions with generic manufacturers and for various reasons including the status of patent challenges et cetera, they nolonger appear likely in our FY '08. Could they still happen? Sure. Could we be wrong on the down side and be positively surprised?Yes, that's always a possibility. One of the things about this business is that, your forecast is only good for about half an hoursometimes until you get the latest data from the courts or from the generic manufacturers regarding what they're going to goat-risk with. I suspect some of the things that we pushed out of our FY '08 will happen in FY '09 and we will have to watch thoseclosely and continue our discussions and see how those show up in our numbers eventually.


I know you are not giving fiscal '09 guidance at this point, but as you look and extend, there's obviously a lot of time anddiscussion here, as you look to the back half of calendar '08, do you feel like the momentum is at least turning around? Can youcharacterize for us, what inning with George coming in here as you look at the Pharma distribution. Obviously this is the thirdrevision outlook now, in a certain number of months. Do you feel like we are into the late innings in terms of what you need todo to get that business turned around.


Randall, Kerry here, good morning. I think we underneath all of this noise of the repricings,we really just need to, as much as Idon't like where we are, in the sense of-- we have gone through a lot of major repricings and frankly, we thought we wouldhave enough puts and calls to offset those. Clearly in putting together our approach, we ended up getting a little too far aheadof ourself on thinking about the impact of branded price increases and generic activity. Now we've got that back down to--what should I say, it's probably fairly close to what the industry consensus-- what we read in all your materials and so forth.

So. I think there's the core elements going forward are pretty much aligned with how a lot of people see the market goingforward. But underneath that, there's a lot of good stuff because we are with customers who are growing and growing theirmarket share. We are winning with the winning customers. That's important,. Number two is-- it is very clear that our customerfacing organization is starting to create connections that we've not had before and through that we are learning about newbusiness opportunities and how we can do better work with each of our customers. George talked about the importance ofdoing a better job of creating value for our customers and value for our vendors. We have made changes in generic programwhich we started to get some traction on.






Of course the anti-diversion issue has distracted us. But, if we can look beyond the repricings and the anti-diversion, I think weare going to enter a base period of a fair amount of stability with the big contracts behind us, with the opportunity to work onimproving our generic penetrations. the opportunity of creating better value for our customers and for our vendors. So, I lookbeyond the noise, and plot out how you see those things coming sort of quarter by quarter. I think underneath it, there's nothingthat's really-- suggests that the business is on a downward trajectory on its core basic elements. It feels like we have a level ofstability and how we are going to market and that ought to get better. I know it's a long, convoluted way and I didn't give youany of the specific numbers you were exactly looking for, but I do feel that underneath all of this noise, there's a lot of things,we are winning with winning customers, we have got a lot t of improvements when we go to market. We have a better go tomarket program in our generic program and as these other issues start to anniversary, we should be on a much more solidfooting.


It is fair to say, George is entering a late innings game if you will?


I guess you can characterize it as that, but no, I think that there's no-- I don't want to be glib on anything. We have our work cutout for us on many fronts. George is going to bring a lot of value on many fronts. George is going bring enormous value, notonly to what we do with the Supply Chain Pharma but also our Supply Chain Medical. He's bringing a tremendous amount ofbreadth and dept and skills that are going to affect the entire supply chain business. We are look not just only for him to makean impact here. He's got skills and capables, but we are looking for George to be impacting much more broadly across the wholesupply chain part of our business.


Thanks, Randall. Operator, next question.

Operator

Your next question comes from the line of Larry Marsh with Lehman Brothers. Please proceed.

Larry Marsh - Lehman Brothers - Analyst

Thanks, and good morning. A guess a quick question for George and maybe Kerry. I need a clarification for Jeff on Walgreens.George, you talked about the opportunity of Cardinal and Kerry elaborated on this with operation and value proposition. Wouldyou describe a major value opportunity to be a much more robust and scaled generics offering overtime from Cardinal givenyour experience from the supply world?.


Hey Larry, it Kerry. It is a very legitimate question, but it is not really something that is fair to ask George today. We know wehave opportunities in this area but we have not embarked on nor are we foreshadowing a major change in what we're doingin generics. We want to do what we are doing better. We know we have opportunities to be more-- to provide more value toour manufacturers and to our customers but we are not sitting here today getting ready to unveil a big new change in generics.I would like to answer that on George's behalf here, which is, we are going to do better, execute better, we are going to havebetter programs, but at this point in time we are, it is continuing what we have launched.







Okay. Just to clarify that and then with Jeff, has there been any changes in your management in the generics program at Cardinalyet?


Well we still have Frank Segrave who leads that business for us and he has got a good team under him. Obviously, we want tocontinue to grow our capabilities in that place. We have a team in place with some respected people in the industry leading it.


Okay, thank you. Just a clarification, I guess for Jeff. When did the repricing of Walgreens go into effect specifically and then onslide 7, you know you illude to substantial new business with this early renewal, can you elaborate on that and how we reconcilethat with the revenue take down to 7% that you gave us versus what you said in November?


Yeah, Larry. First of all, for competitive reasons, I don't want to get into the specifics of the Walgreen renewal. All I will say is thatour previous contract came due in the summer of '08, we have announced an early renewal, for competitive reasons I don'twant to give you the exact date of that effective date of the renewal but it has a significant impact on our FY '08 financials orwe wouldn't have highlighted it today.

In terms of substantial business, the reality, it is going to be a transition period for that over the next six months. So, I wouldn'texpect all that to materialize in FY '08, that will transition as we head into FY '09. I do want to highlight, though, that this was avery significant event for us and Walgreens and they gave indication that we are very strong partners. We are their primarydistributor now for the U.S. and I think having this long-term contract under both our belts gives us a great source of stabilityto grow our partnership from and we're very pleased to be able to serve Walgreens.


Thanks, Larry. Operator, next question.

Operator

Your next question comes from the line of Lisa Gill with JPMorgan Securities. Please proceed.

Lisa Gill - JP Morgan Securities - Analyst

Thanks very much. Good morning. Just as a clarification on what you just said around Walgreens. Does that mean that you tooksome of this business from another distributor or is it some of the business that they were doing themselves just so we understandthat.







Yeah, again I don't want to go into too much detail. But, the additional business we are taking on is not coming wholly fromWalgreens itself. I expect there is a slight market shift there.

Lisa Gill - JP Morgan Securities - Analyst

Okay. Great. I just had two follow up questions. First, you touched a little bit, I think, Kerry on nuclear pharmacy, and where youwere in there. Can you just talk about the expectations around the generic launch of Cardiolite and what's currently in yourexpectations it seems like a fiscal '09 event and just secondly, Dave Schlotterbeck, I think you're still on the phone, Baxter ontheir most recent quarterly call talked about their pump coming back to the market in the next couple of months. I am wonderingif you can comment on your expectations from a competitive standpoint, as they've been out for a long time.


Okay, Lisa. The the pediatric extension was granted, so this now takes the event into the summer. So, that's that point. And Ithink the second point is at this point in time, Vista is a new player in the marketplace. We are in active negotiations with themand other people regarding the generic event. Our expectation is that it will be a very positive event for us next fiscal year. And,for the balance of this year we are expecting stability to descent growth depending on the volatility we see in the second half.So. I think everything seems to be unfolding as expected there.


To your question, Lisa, on Baxter, competitively their practice has been-- and they have been very good at focusing on smallerhospitals, typically 150 to 200 beds or less and so I would expect that they would continue their efforts there, which would have,in my view, a very modest effect on the growth that we have been seeing in Alaris which has focused on the primarily the largerhospitals and the aging institutions and the large IBMs. So this is not something that gives me any pause and my expectationsare that we will continue to take market share.


Thank, Lisa. Eric, next question.

Operator

Your next question comes from the line of Robert Willoughby with Banc of America. Please proceed.

Robert Willoughby - Banc of America - Analyst

Thank you. George, is it possible to comment on your incentive compensation, what metrics it is actually tied to and any senseof maybe Kerry, if that compensation program is any different than George's predecessors.


Bob, George is tied into the same incentive plan that all the senior leadership is at Cardinal. There are are short-term incentiveswhich are based on our ability to deliver return on tangible capital and operating earnings performance and our longer termincentive is a three year plan recently introduced that is exclusively on the ability to grow economic profit for the company. So






George and Dave and Jeff and I and many others of the leadership team are tied into that plan. So Grege is on line with everybody'sprogram.


Okay. And Jeff, did you comment on a tax rate going forward?


Yeah, it is basically what we said previously, Bob, we're going to have quarterly fluctuations but I think a rate for the year in the32 to 32.5% range is still pretty much what we are expecting for FY '08.


Great. Thank you.


Thanks, Bob. Operator, next question.

Operator

Your next question comes from the line of Charles Boorady with Citigroup, please proceed.

Charles Boorady - Citigroup - Analyst

Thanks. Morning. With Walgreens, it sounds like a bit of a mixed message in terms of substantial new business yet it was repriced.So. we get a sense for margin trends. Can you just put the two together and give us a sense of whether going forward recognizingthe new business is going to take some time to ramp up. But going forward, when you put together the top line pressure withthe substantial new business, is this relationship going to be better for you on the bottom line going forward or neutral orslightly negative?


Charles, thanks for the question but hopefully you understand, it is really difficult for us to comment on specific contract renewalsfor competitive reasons. All I can say is, it was priced at market. I think both Walgreens and ourselves are very happy with thenew agreement and we will go forward, serve them well and continue to drive value on both sides. I don't want to get morespecific than that.


The only thing I would throw in on that, Charles, is first of all, we, while no question, there was an opportunity for Walgreens toreprice the contract, the fact that they chose to do it with Cardinal, the fact that they want to do it, I think is also-- is a sign thatthey feel that we can execute and meet their needs and feel that we have a lot of capabilities that we can work with them tohelp grow their business and add value in new places. So, I see it. It was much more than just an economic deal. I think it wasa resealing and growing of the partnership and that creates opportunities down the road for us as well.






Charles Boorady - Citigroup - Analyst

Can you give an example of what some of the substantial new business is in terms of new services you will be providing or justtaking more share of existing services that some others were involved in as well?


There are some just projects we have identified with the company that they're anxious to work with us on. I have to leave it atthat.


Thanks, Charles. Operator, next question.

Operator

Your next question comes from the line of Steve Halper with Thomas Weisel Partners. Please proceed.

Steve Halper - Thomas Weisel Partners - Analyst

Yeah, hi, good morning. With NCTS, what's the problem with the pharmacy services business because it appears as though itis kind of marred and otherwise a pretty solid quarter at Alaris and Pyxis.


That's yours, Dave


Yes. I wouldn't say it is a problem. It has been a relatively flat business for a number of years now. We consider it to be strategicallyvaluable because of the insights that it provides us to around the pharmacy and clinical operations of the hospital. And theissue is that being the size that it is of nearly a billion dollars in revenue and relatively flat, that it does temper the top line andthe bottom line growth rates for CTS. Now, none the less, CTS still recorded a 26% increase in operating earnings over a yearago and I think that, I think that's a pretty darn good performance.

Steve Halper - Thomas Weisel Partners - Analyst

Just to follow up, you know, is there any way for you to actually try to grow that pharmacy services business?


We have some new offerings that we think overtime will catch on that we have been seeing some nice growth in, and it is aremote pharmacy review service which allows smaller hospitals to essentially have a pharmacist review their physicians'medication orders on a 24 hour a day basis through a centralized facility that will handle a number of hospitals. So, this issomething that we have seen a very good response from the marketplace. We think this will help us get the top line moving in






that business as opposed to the traditional approach which has basically been to send in folks and take over the actual pharmacyof the hospital. So, yeah, we are working a number of avenues there.


Thanks, Steve. Operator, next question.

Operator

Next question comes from the line of John Ransom with Raymond James and Associates. Please proceed.

John Ransom - Raymond James & Associates - Analyst

Hi, good morning. In your drug distribution business, I know one of the goals was to increase the generic recapture, and oneof the tools you have now is an IT system that helps you measure profit by customer.. To use the baseball analogy, where doyou think you are in that process of recapture and as the tools and incentives, have you seen any measurable return yet fromhaving new tools in the (inaudible).


Hey, John, good question. Thanks. Since Kerry and I have Canadian we will express in terms of hockey periods. I would say we'rein the second period of that right now-- beginning the second period. Let me tell you what we've done so far. We have rundetailed account by account profitability now for our retail independents and in hospital customers. We have now sat downand shared that with the sales teams. We identified close to 100 accounts that were questionable in terms of profitability. Aswe've gotten through that with the sales teams, we have given specific direction to address those accounts and we will bemonitoring that over the next couple of months. and seeing the progress that we make. We will expand that profitability analysisto our entire chain of customers and set up a regular program of review of the progress against that. So, again, start of thesecond period, we are off to a great start.


And then I am glad you didn't do a curling analogy. That would have been tough. The other thing. I know you don't want totalk about wag, but is it safe to assume at least the wag is in there for the full back half of the fiscal, at least a January 1 timeframe as an assumption.


Again, John, for competitive reasons and confidentiality, I can't comment on that.


I am trying to understand why the timing is a Kremlin secret. That doesn't seem to be anything that would be unusual toannounce.







John, Kerry here. This is really, we are, respecting Walgreens' wishes on this specific detail.


Thanks, John. Okay. Next question.

Operator

Your next question comes from the line of John Kreger with William Blair and Company. Please proceed.

John Kreger - William Blair & Co. - Analyst

Hi, thanks very much. Two quick questions on the drug distribution side. Kerry, you mentioned a few times on the call that youthink execution has been an issue, Can you just be a little more specific on where you think the execution is lacking and then,I guess a question for Jeff, can you give us a sense within the drug distribution business, the percent of the books that is nowon contingency basis, versus the traditional by hold?


Morning John. So, these are things we mentioned the last time, but they would include in the retail independent and the hospitalspace is insuring that we have a profitable business on each of our customers which is one as we just talked about in theprevious-- a lot of it has to do with, generic penetration and following up to make sure that we are in line with contract complianceand I think there's a broader issue, too, even on our larger national (inaudible). It is really working follow on plans and makingsure we continue to develop the business as we go forward.

So, in essence, it has to do with really, a more robust sales process, throughout the organization, that keeps the contracts fromjust being contracts but becoming a place, a beginning point to develop strong, deep customer relationships where we cangrow our businesses and mutually and identify new areas. These are the areas we are really focusing on. What we did primarilyjust to again summarize, was we flattened the organization to make sure particularly Scott and his channel leadership are veryin touch with customers. We are trying to reach out to them. That has been implemented and is underway as well. I will alsojust reinforce, that we have had some-- as we have been working on the anti-diversion issue, this has slowed our traction therebecause we've had to work control issues with every single customer. So we are a little behind where we would really like tobe on that. But, those are the key things: flatter organization, stronger sales process, in depth and continual growing and focusingon growing our business with each of our customers, insuring that we have them also the right amount of generics business.Those are the key parts.


Thanks.


John, a response to your second part of your question, about 20 to 25% of our branded margin is still on a contingent basis. Iwas going to give you an exact number today, 22%.







Thanks very much.



Operator

Your next question comes from the line of Eric Coldwell of Robert W. Baird Please proceed.

Eric Coldwell - Robert Baird - Analyst

A couple of quick questions I will handle them distinctly. First off, I think (inaudible) channel checks it appears as though if [F.Doman] integration did not go as well as perhaps would have been expected and maybe a substantial amount of that acquiredrevenue went away. I guess my question is what did you learn from that process and what did those smaller communitypharmacies tell you they wanted from Cardinal as they were perhaps shifting to other suppliers?


It is Jeff. Thanks for the question. I would say generally, we retained the customers we expected to retain. So, I'm not sure there'sa huge our Doman acquisition is on track. We did lose one large account which we anticipated at the time that we did the deal.Other than that, I would say generally we retained the customers we expected to retain, So, I'm not sure there's a huge lessonlearned here other than obviously it is important before you do deals like this that you have a good understanding of whichcustomers you are going to be able to keep and which ones you can't.

And, obviously maintain stability in the sales force to the maximum extent possible because particularly for some of theseregional accounts, the accounts are very much linked to the sales people. So insuring we have a smooth transition and treatemployees well is critical for all our acquisitions. Also point out this was a relatively small tuck-in. So, although any time youlose a customer, it is a significant event because we want to keep 100% of them, overall, it is not having a huge impact on ourbusiness one way or the other but generally it is on plan.


Jeff, during your prepared comments, you mentioned that guidance is obviously exclusive of any new portfolio optimizationinitiatives. Are there any specific things you are targeting right now. Are you working on any portfolio events that maybe wewill see news on in next few months.


Eric, I would say part of the process here at the company is always to be looking at it. So, no matter when you ask me thatquestion I would say we would be looking at things. You always want to look at businesses that perhaps are not giving us thereturn or adding the strategic fit that we need for the overall portfolio. And, that will be a continual process. At this point, surethere's a couple of businesses we are looking at closely, we are not prepared to talk about those specifically.







Other than you shall not expect anything that really stuns or surprises you. There's a whole host of businesses that sort of a fallout of our core businesses, Obviously, the market-- there are some businesses that I would describe as-- they're not strategic,but you've got to have the right conditions and you've got to have a buyer and a seller and it works out. But, I would say, wecontinue to work that, but there are a few things that are on our docket but nothing you would find in the category of reallybig or surprising.


Thank you, and just one more final question if I might. We have talked a lot about the management change and SDS Pharma.You've also mentioned the distractions with the DE A and other issues. We've seen some headlines that perhaps there's moreunion activity, more teamsters activity around warehouse and delivery personnel. I am curious whether Cardinal is facing anyissues with employee relations or any changes in the makeup of perhaps union related employees or union activities.


There's obviously a good question to ask. We have had some union activity at a handful of supply chain medical facilities.Although on the other hand we just recently won a big vote where the union was not accepted. So we have a handful of placesbut nothing that I don't think we can work through and it is in-- in the supply chain medical area. As I said we are also makingprogress. We had one where the union was not ratified by the employee. So, I don't think it is anything to worry about.



Operator

Your next question comes from the line of Charles Ryee, with Openheimer. please proceed.

Charles Ryee - CIBC World Markets - Analyst

Thanks for taking my question. Actually just one quick question here on the medical distribution. Actually, you made somecomments about expecting year-over-year growth. to improve as we move into the back half. Does that include the change inthe cost allocation?


Yeah. The comment was that we expect a return to positive growth in the second half of the year for Supply Chain Medical Thatwould include the corporate cost allocation (inaudible).


Operator, we have time for one more question. I think we -- Are there anymore in the queue, operator?






Operator

We are showing no more questions in the queue at this time.


Okay. Thank you. Well, I know we are past our time I'll just make a few quick comments as we wrap up. I just want to reiteratethat the gain. That we have three of the four segments which are on track, Supply Chain Medical, Clinical Technology Services,Medical Products and Technologies, these businesses do account for 50% of our operating earnings for the fiscal year on anaverage basis and they are going to grow about 20% for the year. We are feeling very good about those businesses. SupplyChain Pharma, we fell the need to reduce our second half forecast but I do believe we have a very strong core business.

We have completed contract renewals with our biggest customers. The market dynamics are looking favorable going forward.We made or are in the process of making the changes to improve execution that will begin to show improvement in the secondhalf. The revised EPS while down, still it represents 10 to 13% on the fiscal year. I think, more importantly, we are feeling verygood about operating in a growing industry, we are very strong fundamentals, especially when the broader markets are arebecoming volatile. We also feel very positive about our outlook for the mid and longer term, the diversity of our health careproducts and services is a strength that differentiates Cardinal and we are looking forward demonstrating that as we returnboth sectors to performance levels we expect. So thank you very much for joining us this morning. And, operator, this concludesour call.. Thank you for your participation in today's conference.

Operator

You may now disconnect. Have a good day.

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Cover PageCorporate ParticipantsBob Reflogal (16 Turns)Kerry Clark (22 Turns)Jeff Henderson (18 Turns)George Barrett (1 Turn)Dave Schlotterbeck (4 Turns)

Conference Call ParticipantsGlen Santangelo (4 Turns)Tom Gallucci (4 Turns)Ricky Goldwasser (4 Turns)Ross Muken (2 Turns)Randall Stanicky (3 Turns)Larry Marsh (3 Turns)Lisa Gill (2 Turns)Robert Willoughby (3 Turns)Charles Boorady (2 Turns)Steve Halper (2 Turns)John Ransom (3 Turns)John Kreger (3 Turns)Eric Coldwell (3 Turns)Charles Ryee (1 Turn)

PRESENTATION1. Operator2. Bob Reflogal3. Kerry Clark4. Jeff Henderson5. George Barrett6. Bob Reflogal

QUESTIONS AND ANSWERS1. Operator2. Glen Santangelo3. Kerry Clark4. Glen Santangelo5. Kerry Clark6. Glen Santangelo7. Kerry Clark8. Glen Santangelo9. Bob Reflogal10. Operator11. Tom Gallucci12. Jeff Henderson13. Tom Gallucci14. Jeff Henderson15. Tom Gallucci16. Jeff Henderson17. Tom Gallucci18. Kerry Clark19. Bob Reflogal20. Operator21. Ricky Goldwasser22. Kerry Clark23. Ricky Goldwasser24. Jeff Henderson25. Ricky Goldwasser26. Jeff Henderson27. Ricky Goldwasser28. Jeff Henderson29. Bob Reflogal30. Operator31. Ross Muken32. Kerry Clark33. Ross Muken34. Kerry Clark35. Dave Schlotterbeck36. Bob Reflogal37. Operator38. Randall Stanicky39. Jeff Henderson40. Randall Stanicky41. Kerry Clark42. Randall Stanicky43. Kerry Clark44. Bob Reflogal45. Operator46. Larry Marsh47. Kerry Clark48. Larry Marsh49. Kerry Clark50. Larry Marsh51. Jeff Henderson52. Bob Reflogal53. Operator54. Lisa Gill55. Jeff Henderson56. Lisa Gill57. Kerry Clark58. Dave Schlotterbeck59. Bob Reflogal60. Operator61. Robert Willoughby62. Kerry Clark63. Robert Willoughby64. Jeff Henderson65. Robert Willoughby66. Bob Reflogal67. Operator68. Charles Boorady69. Jeff Henderson70. Kerry Clark71. Charles Boorady72. Kerry Clark73. Bob Reflogal74. Operator75. Steve Halper76. Kerry Clark77. Dave Schlotterbeck78. Steve Halper79. Dave Schlotterbeck80. Bob Reflogal81. Operator82. John Ransom83. Jeff Henderson84. John Ransom85. Jeff Henderson86. John Ransom87. Kerry Clark88. Bob Reflogal89. Operator90. John Kreger91. Kerry Clark92. John Kreger93. Jeff Henderson94. John Kreger95. Bob Reflogal96. Operator97. Eric Coldwell98. Jeff Henderson99. Eric Coldwell100. Jeff Henderson101. Kerry Clark102. Eric Coldwell103. Kerry Clark104. Bob Reflogal105. Operator106. Charles Ryee107. Jeff Henderson108. Bob Reflogal109. Operator110. Kerry Clark111. Operator

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Economy & Finance

cardinal health Q2 2008 Earnings Transcript