Good morning. My name is Lisa Gill, and I head healthcare services here at J.P. Morgan. It is with great pleasure this morning that we have with us Cardinal Health. With us, we have both CEO Jason Hollar, as well as CFO Aaron Alt. Aaron will make a forward-looking statement, and then Jason will go through a presentation, and then both gentlemen will join me for the Q&A component. With that, let me turn it over to Aaron.
Good morning, Lisa. Thank you for having us. I will be quick. A couple of housekeeping announcements. We did issue an 8-K this morning with a positive update to our guidance. So, Jason will be pleased to discuss that today, but of course, I have the usual CFO caveat of our books are still open. We are excited to release earnings on January 30th, and so we'll provide further updates on our business at that time. Jason and I will be making some forward-looking statements over the course of today. Of course, we refer you to our usual SEC filings for the full list of what our forward-looking statement, risks, and opportunities may be. All right, Jason, over to you.
All right, fantastic. Thanks for hosting us, Lisa, and thank you all for being here. Let me just kind of jump to the overall summary and key takeaways for the day. There's really everything we're going to go through falls into two key buckets. Number one, we are incredibly bullish about the healthcare industry and where it's going, especially where we participate in the secular trends that are, in some ways, unique to us, in some ways, benefiting a great broad cross-section of the industry, and then number two, we're proud of the progress that we've made to date, transforming this organization, being very aggressive to simplify and to prioritize where there's not only the greatest opportunity for further business growth, but importantly, also really driving a lot of value for our customers and ultimately patients.
Okay, so real quickly, who are we, what do we do, where do we stand in this incredibly broad industry? Well, the answer is really all the above. We are healthcare's crucial link. You can also think of us as the infrastructure that connects the end-to-end of this industry, all the way from the clinical to the operational side of that. So that means that we work with practically all manufacturers and innovators. And in some cases, we're the actual manufacturer and innovator, such as in areas as our nuclear radiopharmaceutical business, or of course, in our Med-Surg business, where we design, produce billions of dollars' worth of product. But in addition to that aspect and providing services on that side of the equation, we do the full suite of logistics services all the way to practically all types of customers and providers. Again, in some cases, we're the actual provider.
One good example is we deliver 5 million patients' products each year within our at-home business. So we go all the way into the patient's home. So that breadth is quite unique to us, and that gives us a lot of opportunities to connect all those dots throughout the logistics and distribution process. Now, how we do that is through an incredible array of different services, upstream with the manufacturers and innovators and downstream with those customers. And as you look at this list, there's a wide array of different types of services, whether it's kind of that core infrastructure and logistical and distribution capabilities, but it's also more and more and more complex aspects related to perhaps data technology, sophisticated 3PL types of activities. More and more, we're augmenting this not just with our organic investments, but also inorganic investments in areas like the MSOs and specialty physicians.
As I mentioned upfront, we're really bullish about the healthcare industry, especially where we participate. And that's for a number of reasons, but some of the more important secular trends, if you will, are listed here. And I'll start with one of the more important ones, which is just simple demographics, something that we can't control, but the aging of America is a very real thing. And that's been a nice tailwind for the industry for the last couple of decades. Over the last 20 years, the number of Americans over 65 years old, which is a sweet spot for the industry, has grown by 50%. And we anticipate, just based upon the demographic math, that that will continue to increase another 1 to 2% each year for the next 30 to 40 years, so another 50% increase.
That provides a nice ballast underneath the demand profile of our products and services that gives us confidence we can invest well into the future and know that that requirement is going to be there. But then you can't stop there. You got to think about that's just kind of table stakes. That's kind of the products that are available today. I'm sure what you're all seeing already at this conference and many other news feeds is that there's an incredible amount of innovation happening in our marketplace. That benefits us, right? That adds to that rising tide of volume that ultimately needs to solve those patients' problems. More complex volume that requires additional types of services, which is all fantastic growth for us. All right, so those first two really drive the volume.
Now, where that volume goes into different sites of care is what this third point is talking about. And that's another trend that is very specific to the industry where ultimately patients want to receive care either near their home or ideally in their home. Those types of activities we're well positioned for because of our existing specialty business, but also our at-home business that takes that distribution capability all the way into that home. So that ongoing trend is another one that not only facilitates that volume that we see will be increasing, but does so in areas that is a sweet spot of our organization. And then underpinning all that, of course, is just ongoing technology advancements.
This goes way beyond being more efficient through customer service and delivering a product and automation and all that, which continues to be very important to our business model, but more and more will be coming through the services that we actually sell to our customers and work with our partners on. Okay, well, this has resulted in a fantastic business. We now are over $220 billion of revenue expected for this fiscal year. It's notable that we are very focused on the United States. More than 99% of our revenue is U.S.-based. That's intentional. The number of countries in which we operate has reduced by more than 50% over the last several years because, frankly, we're excited and pleased with the prospects within our home country here, and we see less opportunity for scale going across the borders. So we'll continue to stay focused on this market.
It's clearly a 1 trillion-plus type of market opportunity, and we'll continue to look for opportunities to participate within that in different ways, but that will be our priority. We're pleased with the profile of where our revenue and, more importantly, the earnings are generated in the enterprise. Pharma and Specialty Solutions will always be the most significant part of our business. And while it's by far the lion's share of the revenue, it's a good chunk of our earnings, but we're pleased to see that being shared a bit with our other businesses. That's the At-Home Solutions, OptiFreight, and nuclear business. I often refer to them as small but mighty. Only 2% of our revenue, which, by the way, that does equate to $4 billion, so I'm not sure it's small in most comparisons. But importantly, it's 17% of our profit.
That's just given the nature of high-margin, high-growth businesses that are benefiting from many of those secular trends that I referenced just a moment ago. We're pleased with where those businesses are going and very much excited to continue to invest into them. We've had quite a nice run here over the last two and a half years. We've very much started two and a half years ago when I stepped into this role, focused on simplifying where we operate and taking those resources and not just putting them to the bottom line, but investing in areas of faster growth like those other growth businesses I just referenced, as well as our specialty business. That's generated solid operating earnings of 22% over the last couple of years. That's then translated to even greater EPS of 49%, driven by the strong cash flow.
We generated nearly $7 billion over the last two years in adjusted free cash flow, which has allowed us to pay down our debt a little bit, have higher cash balances for lower interest expense, as well as, of course, additional share repurchases that have bridged that 22% to the 49%. And of course, we've seen a nice return on our stock price as a result of those actions and the confidence that we have going forward. And this morning, as Aaron referenced, we announced that we see continued momentum in fiscal 2025. After last quarter's increase in guidance, we are indicating that we expect to be at the high end of that range, towards the high end of the $7.75-$7.90 EPS, driven by the strength and the resiliency that we're seeing in the pharma segment. Ultimately, we're seeing broad-based utilization growth throughout the whole enterprise.
It's faster than anticipated in the Pharma segment, so we're going to be raising that guidance. It's been quite strong within our other businesses, but pretty consistent to expectations, and while positive utilization growth in GMPD has been a little bit weaker than we had anticipated. Okay, our priorities are largely unchanged, but a little bit of an order rearrangement here, just reflecting the opportunities that are in front of us. First and foremost, like I indicated, we will continue to be prioritizing our Pharma and Specialty Solutions business. Not only is it a huge business, but the opportunities are immense in front of us, and we're going to continue to invest across the spectrum of their needs, but really focused on specialty.
Number two are those other growth areas, accelerating that growth further, investing organically for quite some time, and more recently in organic growth with a recent announcement in the at-home space, and then finally, and certainly still important, we will continue to focus on our transformation with GMPD. Very pleased with the progress to date. We had losses in this business just less than two years ago. Last year, we saw a dramatic improvement in earnings, a $240 million year-over-year improvement, and expectations to continue to drive improvements in the business going forward, and of course, all that is underpinned by our relentless focus on simplification and focusing on the higher growth areas where we can create more value for both our customers and ourselves.
Okay, so to have those types of results and to continue to have those results, we continue to prioritize our organic investments and our organic growth. And this is just a cross-section of some of the more interesting ones, but of course, there's a company of this size, we have them throughout the enterprise. When you look at this list, I would think about there's a good balance of just core blocking and tackling infrastructure, new DCs with higher automation and technology, pulling out the consumer health logistics so that we can be more efficient in the remaining DCs, more automation, especially in our at-home business where the products are ideal for that type of capability. But it's also getting into building out platforms and other capabilities.
Like we acquired, of course, Specialty Networks last year, and now we're investing in the PPS Analytics underneath that to take it beyond the urology focus that they had before. A fantastic team, fantastic capability that we continue to want to nurture for other therapeutic areas. Other investments in areas like nuclear continue to be similar to what you've heard from us in the past, but we're still in the earlier innings of this. So we're going to continue to invest and nurture in the possibilities and the growth that we see within that core theranostics and then the accompanying PET products that go along with it. Within the GMPD business, it's very much focused on a combination of growth and resiliency.
We continue to have some investments in resiliency, which is always important, but especially in the political environment which we have, where we need to make sure we have a very diverse global supply base so that we have not only a lot of product close to home, which we have the ability to manufacture about half of our product here in the U.S., but also recognizing that we need a very low-cost base because there continues to be a lot of pressure on our customers. So we need to balance that and do so while continuing to invest in the product through our R&D to improve our product vitality. But inorganic investments is really where we've leaned in more recently. As we've gotten more comfortable with a strong foundation and that operational performance improvements, we saw that now we can execute on some opportunities to accelerate the strategy.
Same strategy, very consistent strategy, but accelerating that. It started about a year ago with the acquisition of Specialty Networks, again focused on those technology stacks and capabilities of PPS Analytics to provide actionable insights to specialty physicians. More recently, in December, we closed on the Integrated Oncology Network acquisition to build out further the organic capabilities that we've recently created through the investments in Navista. I'll get into some more of the details and how that fits in with the strategy in a moment. Then more recently, two acquisitions, GI Alliance and ADSG, GI Alliance and specialty ADSG in the at-home solutions business, both that are expected to close by the end of our fiscal third quarter and very consistent with the strategies that I'll walk through in a moment. Okay, so let's start with the specialty strategy and how the three acquisitions fit into the strategy.
How I would start to think about this is looking at the center. We put the specialty physician, that community physician, at the center of everything that we're doing. And we think about their needs. What do they need to do to run their business? Well, and that's, I think, the best way to think about it because first things first, they really want to take care of their patients. They don't necessarily want to run the business. And so what we are doing here is providing them those capabilities, that support to allow them to remain independent, leverage our scale, but do so in a way that allows them to also prioritize their time with their patients. So for quite some time, the industry supported them well as it relates to broad distribution and contracting, and that's kind of the foundation of that support.
But they have much more varied and complex needs than that. We've also, for quite some time, supported them through our real-world evidence, through advanced data and technology solutions, but has gotten more recently with the acquisition of Specialty Networks, given us even greater capabilities through PPS Analytics to support those data needs and then provide that actionable insight to actually treating clinical outcomes with data. That also goes upstream, by the way, with the manufacturers to allow them to have actionable data so that they can better run their business. Now, more recently, what we've done is been more aggressive within the MSO side of it. So this is the administrative offerings that physician needs to run the business. So this is a lot more than just HR, finance, and IT type of support.
This is getting into the more complex support, revenue cycle management, physician recruiting, payer negotiations, but to do so and leveraging their common skill with their peer physicians. And that model has been around for a while as it relates to oncology. Again, we've been more aggressive with our organic and inorganic investments. And for that 40% of the market, we now have a wholly owned and controlled element of the oncology MSO space through Navista. More recently, what we've seen is that those oncologists have very specific and unique needs, and the other 60% especially have different and also unique needs that are unique from the oncologists. And so what we did is we said, "Okay, there's a better way to serve those requirements." And we looked in the marketplace and said, "Who's doing it the best?" And we already knew the GI Alliance team.
We worked with them very closely, very well. And while that business is prioritized to date in the gastroenterology space, we see that their needs are similar to some of the other specialty areas, namely rheumatology, urology, and neurology, but others as well. And we think that that platform can be utilized in ways to help other physicians in those other areas. So we're taking a very deliberate, intentional approach to two different platforms, one for oncology, one for other, the other 60% that we think will be well received by those specialty physicians. Now, the other acquisition that we recently announced, also expected to close in the third quarter, is on the At-Home Solutions side. This is ADSG, Advanced Diabetes—sorry, ADSG, yeah—Supply Group. And what got us interested about them is their strategy, their core principles of their strategy are very, very similar to our own.
It's depicted here on the left-hand side of this slide. When we looked at what they do today, it's similar to what we do today with our Edgepark business, which is provide medical supplies direct to people in their homes. They also focus on chronic illnesses, building the relationship with that patient and having the repeat nature of those orders. Importantly, what neither of us do is neither of us actually go into the home. We don't have our own people that go into the home. We don't have our own equipment, capital, rent, or leasing type of models. That's a very much more complex model. It's also much more capital-intensive. Their model is very capital-light, just like our own model.
And both of our models leverage the complex logistics capabilities that we have, and we're very strong in, of getting that product into those millions of people's homes each and every day. So when we brought those together and conceived that concept, it made a lot of sense. But we also saw there's a few differences that they have from our business that are also complementary in different ways. They're very strong with Medicare. We're very strong with the commercial payers, and so that we can learn from each other and have the best of the best solutions. But underpinning all this is our distribution capabilities. And I think the data point that puts into perspective one of the reasons we're so excited about this opportunity is just the efficiency of bringing these organizations together.
Given the common products and the scale that we already have, this is providing about $1 billion of incremental revenue. That's about a 33% increase for our At-Home Solutions business. And yet that will only utilize about 2% of our capacity, our distribution capacity. So 33% increase in revenue, 2% increase or utilization of our capacity. So really synergistic combination between the two businesses. And the cherry on top of this sundae is the fact that they're overweighted with diabetes, almost entirely diabetes products, and very much focused on CGM devices, which we are very confident will have a strong growth rate consistent with what we've seen the last several years, well into the future, given that there's still only 25%-30% of those that have access to these devices actually utilizing the devices.
So we anticipate that that double-digit growth rate will continue for the next several years at least. Okay, while we made these significant investments in our new M&A, they are very consistent with our disciplined capital allocation framework. We continue to prioritize those organic investments I talked about, also prioritize a strong investment-grade balance sheet and a baseline return of capital to our shareholders through about $1 billion each year, $500 million in dividends and $500 million in share repurchases. But given the nearly $7 billion of Adjusted Free Cash Flow that we generated over the last couple of years, we've had plenty of opportunistic levers available to us as well, which is where that M&A comes into place. But we're also providing for additional share repurchases to ensure that we take a balanced approach to that capital allocation.
So bringing everything together, it's really each of these businesses are the key tenets for our belief and our compelling investment thesis that you got to start with our largest, most significant business. We've had a fantastic run, inclusive of today's announcement in our Pharma and Specialty Solutions business, a fantastic industry, very resilient growth, and we're executing very well within that. Our other businesses of At-Home, Nuclear, and OptiFreight, also growing very quickly. We're growing our earnings nicely as well. But we continue to invest in these businesses to ensure that they continue to do so well into the future. And then certainly, and not least, the GMPD business, continue to drive that turnaround. Very pleased with the progress to date, but also know that there's a lot of opportunities still in front of us with that organization and that business.
We'll continue to stay very focused on the balance sheet to ensure that we not only generate substantial cash, but we do so in a way that's very responsible and then allocated appropriately, which we think will be one of the many core tenets to the value creation going forward. There's only so much we can get into in 40 minutes today, but wanted to at least tease a little bit that we'll be going obviously much, much deeper come June at our investor day, where we'll cover a number of key topics, some of which are listed here. But also importantly, we'll give you broader access to the management team at that time as well.
Great. Thank you so much, Jason, for all the detail. Also for the updated guidance today. We've seen strong pharmaceutical underlying trends in the last several quarters.
As I think about the updated guidance that you gave this morning, you did call out pharmaceutical and specialty. But are there specific areas or pockets of growth that you're seeing versus your initial expectation?
It really is broad, and so let me touch on a few of them, but it's going to be probably less than satisfying because it's just like my children. I'm going to want to make sure I don't miss one here because there's really not a weak spot there. You've heard from others even this morning with Dave Ricks; certainly GLP-1s are continuing to be a strong revenue driver. That's not real impactful for us on the bottom line, but branded was strong. Certainly, specialty was very strong. We continue to see, adjusted for the large customer non-renewal, very strong double-digit growth there across the board.
The generics volume and utilization was very strong. So, consumer health, I'm not really leaving much out, Lisa, and I'm not hiding behind anything. It's truly that broad. So what we're seeing, I think what it comes down to are those secular trends I walked through. When you think about the aging of America, when you think about the innovation, it's not in any one spot. It really is everywhere. And I don't know if there was some delay with some of this as a result of coming off of COVID. We're obviously several years out now, so I think that's much less. I think it really is driven by very much that innovation and the demographics that are underlying that.
So as I think about, you talked about COVID, and you talked about the COVID vaccines, and you've talked about that in the past.
Was that a significant contributor, or do we think of that more of a comparative headwind versus last year?
Yeah, let me clarify a few other points along with that. So no, COVID was as expected. So it was a headwind in our performance, but it was as expected. So we saw the volumes much weaker than the prior year. This is the quarter of which it's the most significant year-over-year impact. And nonetheless, we're seeing certainly favorable results here. Outside of that, the other thing to clarify is we do have our - we don't have our GI Alliance acquisition because we don't have a closing date. We do anticipate it to be within the third quarter, but we don't have specificity on that yet, so we haven't included that. Integrated Oncology is obviously much smaller, and that has been included in our guidance.
But this is really very much on the back of the strong utilization, the strong performance by the team.
And when we think about branded versus generic, there's always been a lot of focus around generic pricing, generic competition. You have a great purchasing consortium, Red Oak, with CVS. When we think about things like NADAC pricing, we think about competition in generics. Are you seeing anything different in the market today than your initial expectation?
We continue to be very pleased with the performance of Red Oak, which is our partnership with CVS in connection with our generic purchasing. As we've said now for the last several quarters, indeed the last several years, it's a consistent market dynamic for us where we are blessed with our ability to manage the generic profile to a consistent margin rate per unit that we match the buy and the sell.
And there's nothing notable in that except that as utilization increases, as Jason has called out, because we're able to manage the generic profile with stability, volume is accretive to our overall P&L. So we're quite pleased with that. And then on the branded side of the house, it's also the case that certainly in our first quarter, and indeed as we're calling out today, we've seen strong utilization within the branded portfolio. And you haven't asked me yet, but maybe I'll jump ahead. This is the time of year where people often ask us, "How is it going from a branded inflation pricing perspective?" And there again, it's a case of it's going about as we expected, right?
And so still early in the quarter, there's still more prints to come from the suppliers, but we're pleased that so far what we're seeing in the business is consistent with what we expected when we had provided our original guidance on many of the levers to save for the utilization being stronger than anticipated.
Jason, you made a comment about Eli Lilly presenting earlier today and Dave Ricks talking about strong growth in GLP-1s. We've heard you talk in the past that GLP-1s, while great on the revenue side, do not carry the same level of operating profit. A couple of questions. One, do you expect that to improve over time? And two, there is a lot of talk about oral GLP-1s potentially coming to the market over the next few years. Would that be a better product for yourself and the distributors?
Yeah, I think it's always an area of opportunity because it's fairly heavy use of our resources today. These are refrigerated products. They have some specialized requirements. And the fact that we're not able to talk about margin growth that comes along with it is something, of course, we'd like to improve over time. But what it does do is it does provide a lot of volume through our channel that makes us better, makes us more efficient. And at the end of the day, all innovation is going to be well received by us because that innovation, again, the volume helps us get better. That innovation, at some point in time, that becomes a generic product where we have a greater opportunity. There's always other services that we have great relationships with these organizations. Some products are lower margin than others.
So, we don't necessarily parse it product by product and have really strong desires that every product has to have a certain margin rate. We are very clear on customer by customer. And that's a part that we can control a lot more. And we look at the portfolio of products. And the fact that there's so much demand and so much utilization that's driven by this, it is a rising tide. It does benefit us. As it relates to your point on the oral solids, that's one where presumably what comes with it is a more simplified distribution process, which I would expect would be better for us so we could use that refrigeration capacity for other products and have less investments. I don't want to have expectations, though, that suddenly that happens and there's a wholesale change in the margin profile.
I think branded products in general usually carry lower margins. And so I wouldn't expect there to be fantastic differences that are going to be dramatic at that point in time. At least it is the case that as we talk about the utilization environment, GLP-1s continue to be a strong part of our portfolio. We called out in Q1 that of the 16% growth, about 5 percentage points was the GLP-1s. And we continue to lean into the category, and we continue to see that growth.
A big part of the second half of your fiscal 2025 is the benefit of the new $10 billion win that you have from a contracting perspective. How should we think about that from a mix? Is it primarily just traditional drug distribution? Is there specialty within that? And then do you have any incremental costs to bring that customer on board?
Yeah, great question. We are very excited both about the execution that our pharma team has been doing since the beginning of our fiscal year as we get ready for the back half of the year, which is where most of the $10 billion of new customer and customer new business is expected to come on board. We have commented that it is margin accretive to us. The customer that exited us was a much lower margin customer. So on balance across the portfolio of customers coming on board, people like Publix, people like BioPlus, etc., it is a better margin rate for us as well. And so we're pleased with that. Every customer, the timing is a little bit different. Our team has spent the last several months getting ready. We're now in our third quarter. We're starting to ramp that up.
We've already built the anticipated costs of those ramp-ups into our guide, and so there's nothing new there, but now for us, it's all about execute, execute, execute in the back half, both to land the year well and also set us up for a successful 2026.
Again, Jason, just kind of going back to your presentation, you talked about this aging population and driving pharmaceutical utilization. We look at IQVIA data. We continue to see strong utilization trends. You've just obviously updated your guidance around this. What do you think are some of the key components? Is it just GLP-1s? Is it a combination of GLP-1s and this aging population? How do we think about utilization? And is this the new normal to think about this kind of growth rate?
Yeah, I'm definitely a little cautious about calling it the new normal.
I mean, trees don't grow to the sky, especially as you think about the GLP-1s. I mean, there's going to be a flattening at some point. Now, I'm not going to attempt to quantify or define exactly when that is. But we've indicated that long-term growth rates, starting with the demographics, when you look at the demographic growth, that is 1%-2%. Okay? So anything above that is going to be for a different reason. Innovation will drive that delta. The timing of that, what comes in and when it comes in, is going to be really important. And you got to look at loss of exclusivity and all that. So I think our original strategy, our original long-term guidance had factored in most of those components. I know there's a lot of questions around the out-of-pocket maximums and with IRA. And that's something that might be a component.
I don't think it's the component. But we'll get smarter as we get to, hey, we've now turned a new calendar year, a new plan year. And so we'll see if there's an overhang that comes along with that. But of course, each year is going to have a little bit of its own dynamics. At the end of the day, there's not any one thing that's loud enough and bright enough to really explain why it's been quite so strong. And when you look back historically, that long-term growth rate has come pretty close to the demographic changes. And that's why I'm very reluctant to start to deviate from that. We'll accept the opportunity that's in front of us today, and we're going to do everything we can to deliver efficiently and effectively for our customers. But we're not banking on that as a continued type of tailwind.
The comment that you made around the out-of-pocket cost, just so everybody understands, is around IRA, where the out-of-pocket cost under Medicare Part D, in essence, is almost in half, right? It was $36.50 in 2024. It's going to go to $2,000 out-of-pocket. All of those people are the senior citizens, so the aging people using the drugs. So do you not have an anticipation that you'll see an increase in utilization in 2025? Because I think some investors are anticipating that we could see a nice utilization increase, especially for maybe some of the more expensive drugs that previously you're paying more out-of-pocket.
Yeah, it could be a component of that. We've seen over the last five years now very consistent double-digit specialty growth rates, ex-Optum. And so that's already very robust. We haven't seen that change because that out-of-pocket went down in 2024 as well.
And so we're seeing continued type of strength, so nothing really out of the normal there. What's a bit more unique that we're seeing in the last couple of quarters is in the generic space. It's also been very, very strong. And so that can't be explained by that because the price points are typically so low. So I think it's definitely beyond what's happening with IRA.
You touched a little on your M&A strategy, and you've done a number of transactions recently. How do these deals fit into your overall M&A framework? And how do we think about it from here? Have you acquired everything that you need to acquire? Is there still more things that you'd like to have?
Yeah. It's going to be a component of our capital allocation going forward, but it's not lost upon us that the amount that we've done recently is a bit more than what I think many people anticipated. The reality is we start with the strategy. We've been very clear on what our priorities are, and we've been clear that we're putting that physician, especially a physician, at the middle of what we're doing, and we're building out the tools around that. How I answer your question, though, is what we needed to do first and foremost was build out those capabilities and specifically those platforms, an oncology platform and another 60% multi-specialty platform. That is, I think, the heavier lift. I think that's a higher multiple type of acquisition, and it's a bit of a bigger acquisition.
It doesn't mean we're saying we're not going to look at any other businesses that are large to go on top of that. But the most important step for us was to build out the platform so that we have the full flexibility of supporting those physicians no matter what their needs are. So now we've got the size, scale, and most importantly, the team and expertise underneath these businesses that will drive us going forward. So that's a long way of saying from a strategy perspective, I think we don't need those big add-ons, but we do need the model to continue to grow at a rate, certainly at least at the rate of the market, at least with organic growth. And I think there's some opportunity to grow more aggressively through additional inorganic M&A, but I would not expect it to be at the same pace.
I would just add that the acquisitions for us were an and, not an or, because if you think through our discipline capital allocation framework, we start with the organic investments in the business, and Jason showed a slide earlier of all the places we're investing across our key priorities, and we are unrepentant. We continue to have that as the top of our discipline capital allocation framework where we are investing organically in the business to create the capability to drive the growth, to create the opportunity for us. We are blessed with a strong cash flow that allows us to accomplish at the same time our second priority, which is to protect our balance sheet. Our investment grade rating is important to us. While we have borrowed to fund about 75% of the acquisitions we've done, 25% is cash.
We also, as part of doing that, set up a capital structure which allows us to very rapidly pay that debt down to quickly get back into alignment to the new Moody's-based leverage ratio, which for us is 275-325. And so there's some more room there as well. We confirmed at the time of the acquisitions that we remain committed to completing the $750 million of share purchase in a year. Oh, by the way, that's on top of the growing dividend of the year, the $500 million or so that we'll pay out. So we'll give about $1 billion or a quarter back to shareholders of the year. And then to Jason's point, as we identify opportunities that we want to go after, we'll consider them further.
I know we only have five minutes left.
I want to make sure that we talk a little bit about GMPD. For those of you that don't know that, that's the medical segment of your business. Really, just a couple of questions here. One, we talked a lot about really strong utilization on the side of pharmaceuticals. Are you seeing something similar on the side of your medical business? Would be my first question.
Not really, and so that tells you that there's some differences. Obviously, the medical business, the GMPD business is overweighted towards elective procedures, and that's different than the pharmaceutical products where there's obviously some overlap. But that innovation in pharma is a differentiator that you just don't see in the GMPD side, so we do have similar demographic benefits, though. And so that's why we think long-term the right industry growth rate for GMPD is going to be in that low single digits.
They don't have that specialty type of kicker. And as I mentioned, in the quarter while we saw growth, it was a little bit less than we had anticipated. So we're certainly not seeing the outsized growth that we have seen in the pharma business and our other businesses for that matter, too.
We've had a lot of questions over the years. And as you know, I've followed the industry for a long time. It always feels much more stable on the drug distribution side of the business when we think about your three competitors or the three of you, the two other competitors. Whereas on the medical supply side, it feels almost more regional, and it can be more competitive than what we've seen in drug distribution. Am I characterizing that correctly? And are you seeing shifts in contracts more on that side of the business?
Yeah, I actually don't think so. I think no matter if you're looking at pharma or the medical side, in both cases, what's most important to our customers is fantastic service, broader capabilities. And value is always a component. But in each case, I would say that the value is always going to be low and less. You got to take care of the customers first and foremost. Now, I can certainly appreciate why it seems more volatile. From our P&L, it absolutely has. But I think that's a different point. That volatility is because of the business model in that we actually own the design, the manufacturing, the sourcing. And in the past, when we didn't have contracts that allowed us to adjust those prices, we took the full brunt of that volatility.
And on the pharma side, while we have very innovative services and products, a lot of the revenue and margin comes through distribution where we don't own that variability. With that said, not only with the contracting changes we've made, importantly, we've also invested heavily in a more resilient supply base because we recognize we can't just pass on whatever we want to our customers, even with the right contracts. So we make sure that we continue to have that diverse supply base, more and more exposure to nearshore and to some degree onshore. But ultimately, we have to have that balance. And it's a good reminder that that's just the Cardinal brand product side of it. That's about a third of our underlying revenue for that business. So the other two-thirds is a cost-plus type of arrangement.
When I think about the Cardinal Health brand, when we think about manufacturing, I know that you have some manufacturing outside of the U.S. How do we think about the potential tariffs under the Trump administration and any potential?
Yeah, it's something we're very focused on. Ultimately, we're confident in our ability to manage through that. There could be some volatility that comes through that, but we're in a much better position for two key reasons. Number one, we have diversified that supply base. So whatever tariffs happen are going to be less impactful than what they would have been otherwise. And a great example is the investments we made in our syringe business more recently to bring that onshore. We've exited countries like China. We don't manufacture there, and we have very little, less than 10% sourcing there today.
So those kind of higher tension points for tariffs, which, by the way, China already has tariffs for those products. So we've already managed through that piece. But then back to the other point is, at the end of the day, we make 1%-2% margin even on our GMPD side. It should be 3% plus type of margin. But even there, if you have a 10% tariff, you have a 25% tariff, and those products are being sourced in the low-cost countries today, that's going to result in price increases and inflation in the medical supply business. And it's why in the past there were a lot of exemptions for this product.
Well, I was just going to ask.
And I'm not going to predict that. But ultimately, our supply base is at least as diverse as the industries.
So we're going to be able to maintain our position within that and to have the appropriate pass-through on pricing long-term, but there could be some quarter-to-quarter adjustments.
Are you having those discussions around that? I mean, we've recently just met with some people from D.C. who had suggested that under the Bush administration, Bush II administration, they were able to exempt a number of those products.
Yeah. Well, we have some level of discussion, but this is, I think, best done by industry, trade associations, and others. And so we certainly support the broader industry in that discussion. We'll certainly make sure that our voice is being heard as we proceed.
We only have 20 seconds left, but anything that we didn't touch on or you want to leave people with today around Cardinal Health?
Just, I'll finish with what I started with, Lisa, which is I think the key that you're hearing today are those two takeaways that at least where we operate in the industry, obviously, we feel very good about it with our announcement today being toward that high end of that EPS range driven by our largest, most significant business. So we're executing well within a growing market, and we're pleased with the results and really excited about the strategies that we've laid out here with you today.
Great. Thank you so much. Thanks, everyone.