Thanks everyone for joining us today. Really pleased to have Cardinal Health here to join us. Cardinal Health, as you know, is a drug distributor, a provider of pharma-focused services, and then operates some other interesting businesses outside of the pharma domain as well. With us from the company, CFO, Aaron Alt. Thanks for joining us, and David Frost from investor relations. I believe David wants to read a prepared statement, and then we can go right into the discussion from there.
Perfect. Yeah. Thanks for hosting us, Steve. It's great to be here. As you mentioned before we began, a little housekeeping. We will be making forward-looking statements today, which are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied. For a description of these factors, please review our SEC filings, which can be found on our investor relations website at ir.cardinalhealth.com. All right, let's get started.
Mind if I give a couple introductory remarks?
I'd love you to.
Good morning. I see many familiar faces in the room. Good to see you all again. I am looking forward to the cross-examination that will ensue over the course of the rest of today, knowing this crowd. I smiled as Steve was talking about our business because, no doubt you have heard Jason Hollar or I now describing our business a little bit differently, which is we view the portfolio we have and we are evolving to as being the beginning, the middle, and the end of the healthcare ecosystem, and believe that we have an increasingly important and relevant role to play across the full spectrum of American healthcare. Now, those of you that are paying attention to our business and our story know that we just delivered Q4 results, which were very strong.
They capped a year for FY 2026 for us, which was also very strong, driven by a couple of key parts of our business. Certainly, the specialty business, which grew at double digits. We surpassed $50 billion in the year-end specialty. That is a key sign of progress against our strategy. Our generics business was quite strong as well. Really what we saw was strong demand across our entire portfolio in Q4, and indeed over the course of the year. Indeed, we saw outsized demand in the first half of last year as well. I want to be reflective of the fact that we have just released excellent results, capping our FY 2026. We also issued guidance for FY 2027, which is above our long-range guide from an EPS perspective.
If you think back to our investor day, our investor day EPS, adjusted EPS guide, I guess we call it non-GAAP here, is 12%-14% growth, and we guided FY 2027 at 13%-15% growth, driven by a couple assumptions I am sure we will talk about, so I will not drain them now.
Thank you.
But just to call out the fact that we are expecting a very positive year in fiscal year 2027. That's partly because we're executing on the strategy we laid out. First Investor day, three or four years ago, most recent Investor day, the strategy hasn't really evolved. We're doing what we said we would do, executing against it and reporting back. Strong operational momentum. Service levels are at their highest levels ever across our businesses. We're executing against the integration on the MSOs that we've acquired over time as well. And we're investing against the growth businesses, which I hope we get a chance to talk about.
Yeah.
Particularly around the at-home business, where we recently announced a couple of acquisitions, and so we're integrating those now as well. Coming back to really where I started, which is the beginning, middle, and the end, and our business has proven to be incredibly resilient, notwithstanding economic factors, notwithstanding regulatory change, notwithstanding uncertainty. We are able to leverage our full portfolio, and that's part of why we believe so strongly in the future for Cardinal Health. Over to you.
Did you like the description, or should I change that for next year?
Well, I now call us the beginning, the middle, and the end of that.
Okay.
The 10-K has to govern, I suppose.
Okay, fair enough. All right. To start and expand a little bit on the point you made about Q4. When we look at the Pharmaceutical and Specialty Solutions segment, your segment profit growth there, obviously closed the year quite strong, at least on an underlying organic basis. It seems like to us, it's potentially a bit over double the normalized LRP for the business. Can you expand a little bit on the key drivers of the outperformance and maybe how you think about the components that potentially have the most potential to recur and maybe become part of the business over the next couple of quarters still? And maybe things that could have less opportunity for recurrence.
Sure. Happy to. For us, the Pharma business had a very successful year because we saw that strong demand in specialty, which is a higher growth part of the business, higher margin part of the business for us. We also saw strong demand, good volumes, in the generics part of our portfolio.
When those two things are doing well, we are going to have a good month, a good quarter within the Pharma business. We also saw strong demand across all the other parts of the Pharmaceutical portfolio as well. The core distribution, the consumer health parts of the business, Specialty pharmacy. Those were all humming during the quarter, and so we were delighted with that. We also are starting to see the benefit of the acquisitions we've done.
Now, we have talked about the fact that we've onboarded the distribution across the MSOs. That is certainly helpful to the cause. We've been adding capabilities as well that are on a higher margin rate. The pieces of the strategy coming together have been what's really supported the profit delivery in Q4, and indeed for all of fiscal year 2026. Now, the guide for fiscal 2027 you also asked about, and the good news is, the strategy isn't changing. Indeed, the trends that we believe will drive to the good news, consistent with our guide for fiscal 2027, are also tied into those same things, right? We are guiding strong but not outsized demand. You heard me say earlier that the first half of fiscal 2026, we saw increased demand. That's not our guide.
We're assuming that the secular trends will continue, prescription strength will continue, and we'll see strong demand across the portfolio. We are assuming excellent growth within the specialty portfolio, as we talked about. Generics will continue to have the benefit that we saw in 2026, right? The generic benefit, LOE, et cetera, 2026 and 2027 were both good. It really gets to be good in 2028 and 2029. We can talk more about that
Yeah
down the road if you like. But we continue to see that as a positive factor, led just by operational execution and the momentum that we've built in the business.
Yeah, that's a good place to take it next. Yeah, obviously, you provided guidance for Pharmaceutical and Specialty Solutions, and helped us to break out the M&A components. We can kind of see the underlying there. The underlying organic growth is at the high end of the LRP, and you're also noting at the same time that you're not assuming that that necessarily requires any kind of above-average utilization environment, which I think is a reasonably prudent assumption. So, as we do think about what allows you to be at the high end of the range without making that type of assumption, may you expand on that point a little bit more?
Well, we call it high end of the range for the first quarter in pharma, and that's driven in no small part by the fact that we will lap our Solaris acquisition in Q2.
Yep.
We wanted to be reflective of the relative timing of that. Also, we did guide 2% to 3% profit growth from acquisitions over the year, which is down from fiscal year 2026 because we don't guide M&A that we have not already announced or completed in that way. We are not assuming in our guidance that we are doing significant M&A in the year. You're all aware from the excellent cash flow we had in fiscal year 2026, and indeed, the strong cash balances that we had at the end of fiscal 2026, that we are blessed with financial flexibility, such that we could do M&A on the right terms at the right price over the year if we found the right strategic asset. Otherwise, we will roll that cash back through our disciplined capital allocation framework, and also be looking at additional return of capital to shareholders.
Okay, got it. Then, across really, both your business and your competitors' businesses, there's a big focus at the moment on the timing of kind of large customer renewals. Obviously, that's a normal part of your business. You have business renewing all the time. I guess, how should we think about the dynamics around large customer renewals as different from maybe more ordinary course of business? What's a realistic window for when the investment community might start to learn more about how all this is trending?
Sure. I'm going to start with a general observation, which is we discuss, negotiate, collaborate with our suppliers and our customers every day, right? Contract negotiations are not a one and done. They're not a just in this one-week period during the year. We have a constant rolling cycle of negotiations with both the suppliers and the customers as we seek to ensure that we're creating value across the full ecosystem. So, whether we're talking about the IRA, which wasn't your question,
but I'm sure we'll come to it, or we're talking about large customer renewals, what I want you to walk away with is the understanding that we're on it, right? We believe we have a strong relationship with our customers. We are always focused on how can we do more for them from a service level perspective. How can we drive our own revenue and profitability by virtue of having a value creating, not just a transactional relationship with our customers and suppliers. I would point out that during our fourth quarter, we did announce that we did renew the Kroger contract, which is our second largest customer within the pharma business, and we renewed the largest customer within our GMPD business. So there are a couple of data points that, to my point, indeed, we're on it and working on it.
Now, with respect to other customer renewals that are out there, I imagine you're probably asking me about CVS. I can only tell you this, which is we believe we have a strong relationship with CVS. We work with them every day to how can we better support them over the course of the variety of their businesses. They will ultimately decide when they renew their contracts. But we feel good about our relationship with them and indeed with our other large customers as well.
Okay. Fantastic. Thanks for that. You mentioned the generics business has been a quite strong contributor to results. I guess, how should we think about market dynamics in Red Oak and what you're expecting over the balance of your current fiscal year? As we start to think about some of the upcoming small molecule LOE kind of pipeline, how is the company thinking about the cadence of opportunities in that business?
We view Red Oak as a competitive strength. Many of you have heard me talk about the fact that the dual mission of access and affordability is demonstrated by Red Oak to us every day. It is our joint venture with CVS that goes through calendar 2029, so we got a couple more years on that as well, and we believe it has been a real benefit, not just to CVS and to Cardinal, but indeed to ultimately the provider and the patients as well because we are the largest purchaser. We lean in differently. We are willing to provide long-term commitments leading to that better access, better cost, and what that means is that when other people are short, they come to us, which is also a business opportunity for Cardinal and the Red Oak team as well. 2026 was a positive year from a generics.
While we had consistent market dynamics, which means that we are able to manage to the average margin per unit. That is how we manage the business. We saw strong volumes, and so it contributed to our profitability in a very positive way, and we are anticipating that unit growth within, or that the utilization within generics will be a touch above our long-term guide from a generic unit perspective in fiscal 2027 as well. I commented on that in our earnings call.
Where the real interesting thing happens, though, is in fiscal 2028 and fiscal 2029 because we see a surge of LOE opportunity coming. While 2026 and 2027 will be roughly equivalent positive versus prior years, 2028 and 2029 is where we will see some real benefit.
Got it. Well, maybe that's the right question to ask now is just when you think about some of these longer-dated biosimilar opportunities, I think you're alluding more to Part B than Part D, but correct me if that's not the right way to be framing it. Just how are you thinking about the ways that this potentially could impact the business both maybe more of what I'd describe as more the core distribution business, how it could impact MSOs, and I guess how do you think about the interaction of IRA on some of these opportunities and whether there's a potential chance that that could dampen it or maybe enhance it in certain cases?
Yeah, look, overall biosimilars we view as being a very early innings story for us.
Yeah.
David, why don't you take this one?
Yeah. I think we've been relatively consistent with our communication on biosimilars. I think it's a profit opportunity for us. It's not one that has risen to the same level as some of our other profit drivers, which is why you probably don't hear us talk about it as frequently. But the performance would be a part of our total specialty performance, which Aaron just commented, FY 2026 grew 25%, surpassed $50 billion for the first time. So, a nice tailwind for the business overall. We view that as relatively early in its maturation, so I think it can continue to evolve. But it's a rising tide, so it has potential benefit for patients as well as our model in the ecosystem.
As it relates to IRA, which you brought up, and the Part B side of the house, I think still a little bit ways out before that will actually go live, so we'll need to see how it plays. But fundamentally, I think we believe that we're aligned with the administration's intent. Increase access, increase affordability. We don't believe that their intention is to impact community practitioners. The outcomes that occur at that side of care as well as the cost overall leads to a viable interest in maintaining its viability. I think overall, we expect that to be something that is top of mind as we continue, and we'll have to see how that plays out.
Okay.
I think the third part of your question was our MSOs?
Yeah.
Yeah.
How do you think about the MSO potential impacts financially?
Yeah. So, I would highlight maybe just a couple of things. The specialties that we have focused on within MSOs, notably within The Specialty Alliance, gastroenterology, urology, those MSOs have a more diversified revenue profile. The drug spend component is a little bit smaller, roughly a third in comparison with something like oncology, which might be closer to 80%-90%. So the overall exposure there, especially when you're looking at IRA's translation to that, becomes a percent of a percent and isn't as material. That said, we still are aligned to the overall intent that I was speaking to before. I think the biosimilar piece is an opportunity for the MSO space. I think the IRA exposure is something that we're closely monitoring, but believe that the overall expectation is that we're aligned with the administration's goals.
Okay, fantastic. As we think about another facet of the IRA, obviously the company is pretty clear that 2026 cohort of IRA price negotiations were something that you were able to deal with as you recontracted with manufacturers and made clear the value provided is not changing as a result of these changes. I guess, as we think about the future cohorts here of IRA, and I'm assuming these discussions are well underway for 2027 at this point, is there any reason to think that any of these discussions could ultimately result in a different outcome or equal level of confidence on 2027 at this point?
Yeah, we are expressing the same level of confidence on the impact for January 2027, as we did for January 2026. You're right, those conversations aren't yet to come. Many of them are already underway as manufacturers make choices and we talk about the knock-on consequences of if they're going to adjust their WAC, what does that mean from our overall contract, because we will be compensated for the services we're providing, right? We have a decades-long history, along with others in our industry, of proving that those conversations can be productive to ensure that we are not negatively impacted by a manufacturer's decision to reduce the WAC price.
Okay. To come to the MSO business, we touched on this a little bit. Obviously, you have a bit of a different MSO strategy than perhaps some of your peers, more focused on therapeutic areas that have kind of overall less drug spend running through the practice. I guess as you think about strategically why these are the right fit for Cardinal, how is that tracking relative to the initial business cases that you've built out and just generally, success attracting providers into these platforms and growing the business?
Yeah. The MSOs are the downstream part of our Specialty business. As you're thinking about specialty as a whole, which is growing double digit at a higher margin rate for us, it's important that we be exposed upstream. Also continue to grow our share within the specialty distribution core of who Cardinal has been historically, and then downstream with the MSOs and the provider network as well, along with data, RWE, the other elements that go around it. That's a frothy ecosystem for Cardinal to operate in, given the scale, the financial backing, the technology that we bring to that, both organically and through the acquisitions we've done. We are not quite to lapping the Solaris deal, which was our last-
Yeah
large MSO acquisition. That happens in November, I believe. We're a little bit over a year now within GI Alliance, a little bit over a year within United Urology Group as well. We're heads down doing the integration across the businesses as well, thinking through how do we further advance our autoimmune strategy within MSOs and specialty more broadly as well. Feeling good about where we're going and the potential that those businesses bring to the portfolio as we carry forward. Naturally, all of the dynamics we've already been talking about as far as drug spend and pricing and doctors and the ecosystem and recruiting, to your point, those are all things that we're very focused on in building the plans going forward.
We continue to have the conviction that the MSOs, by specialty area, that we can help create a lot of value for the ecosystem and for the doctors by bringing our scale, by bringing the efficiencies, by bringing all those pieces together. Heads down, focused forward.
Great. I guess when you think about growing provider count in those businesses, can you speak at a high level to maybe what your expectations are for what growth in provider count looks like over the next couple of years? Then as we think about the composition of that growth, how much of that do you think comes kind of organically, given that it's a very attractive platform to physicians, versus what might require more of a capital component to it?
Yeah. I don't think we've guided the MSOs by provider. Obviously, we want to increase the number of providers over time. Tactically and strategically, both by therapy area, we're very focused on gastroenterology and urology within The Specialty Alliance, and then in oncology, both med onc and rad onc within the Navista network as well. We don't view it as an either/or, in that part of why we liked the assets we acquired was the capabilities they had to go into the marketplace in recruiting, right? There is a shortage of doctors more broadly across the American healthcare system. When you operate at scale, when you have the resources that we help to bring, we believe that we can facilitate TSA and Navista actually adding organically to the doctor count in the right areas with the right specialties to be able to do that.
M&A will continue to be a tool that we will deploy in the right way, either to add density within market, to bring in new therapy areas, or to drive the geographic expansion to my very point of scale. We can really drive some value creation in doing that. We are partnered with the leadership teams of those businesses to talk about what are those right acquisitions.
I think we said we'd done four more tuck-ins in the fourth quarter in The Specialty Alliance as well. While we don't guide M&A, as I called out earlier, we will certainly enable the tuck-in acquisitions that help to drive that density or geographic growth.
Okay, perfect. Then maybe now to pivot to some of the other parts of the portfolio. Just maybe help us understand GMPD. Obviously, there's a lot of moving parts at a macro level, and I guess regulatory or legal level, that have kind of impacted that business over the past couple of years. As you think about the guidance that you laid out for fiscal 2027, and I guess what are the key assumptions? What are you assuming with regards to Cardinal Health brand growth on both, I guess, the volume and the pricing side, and how much of the profitability improvement that you're going to drive comes from the remaining GMPD improvement items that are still annualizing or are kind of in front of you prospectively?
The GMPD business is a complex business with a very simple strategy, which is do what we do better than we've done it over time, drive better customer support, drive better penetration of the Cardinal Health brand and the contracts we have, achieve the new contracts we believe we can win, and really grow that Cardinal Health brand presence. We're expecting to grow Cardinal Health brand a touch above market utilization rates.
That's positive progress for us as well, while at the same time continue to execute on the cost optimization and simplification elements that we've been pursuing relentlessly for the last couple of years with some success. At the same time, of course, we have to manage tariffs, the ever-changing tariff environment. You all will have noticed that we did call out that we were booking the return of IEEPA tariffs in our fourth quarter.
Yeah.
There are different tariffs still impacting the business. At the same time that we have commodity costs that will vary over the course of the year based on how long the conflict with Iran continues as well. We're managing all of that. Our guide was up, I think about 50, which is what we had said from a long-term perspective we aspire to do every year. The actual profit guide is $2.20-$2.40 for the year. But we're just head down and focused on getting it done.
Okay, great. Then maybe to pivot into the other business portfolio, maybe starting, I guess, with nuclear and theranostics. It's been a very positive contributor to growth as you've expanded your PET and theranostics presence. I guess, what are the key drivers of this growth going forward? I guess where are we in terms of innings maybe and the opportunity set there? Also, from what I understand, this is a pretty big fixed cost business. I guess, how do we think about kind of the incremental margins and maybe opportunities to get leverage over some of the infrastructure you need in that business?
We're excited about the nuclear business. David, why don't you take this one?
Yeah, I was just going to comment, GMPD's $200 million-$220 million.
Okay
on the forward guide. From a theranostics perspective, we're very excited with the nuclear business. Nuclear overall has been living up to the moniker of its categorization as a growth operating unit within the broader enterprise. It has the low energy component of the business, which is SPECT, and there's a strong foundation, a national leadership position, and it's been performing well. But the theranostics and PET component of this portfolio that I just mentioned is what has been driving a lot of the growth and what we're even more excited about. I think in FY 2025 at Investor Day, we laid out that that portion of the portfolio represented roughly half the total revenue, and we expected it to get to two thirds by FY 2028. To achieve that goal, it needs to grow at roughly a 20% CAGR.
In FY 2026, we saw theranostics grow close to 30%, so a clip ahead of those expectations. As you think about the forward-looking opportunities, the pipeline remains robust. We have more than 70 products in the pipeline in terms of either manufacturing or commercial development in partnership with Biopharma partners. To achieve those rates and those outcomes that I'm speaking to, only a handful of the products need to hit, and they need to be singles and doubles, not home runs. We remain bullish on that opportunity and see great things for nuclear.
Okay. And then, I guess just anything on the financial profile of the business and just how to think about it as it grows. Are there big fixed costs that you think you can start to get more leverage on?
Yeah. We've continued to make the right investments to expand-
Yeah
especially within the PET manufacturing capabilities or some of the theranostic molecules that require specific manufacturing sites and locations. So, yes, we're preparing to scale, making the right investments, but the business is growing rapidly, so we'll continue to adapt to that.
Okay, great. Then if we move to the at-home business, you've benefited a lot from the integration of Advanced Diabetes Supply, and now you're doing the acquisition of AdaptHealth's Diabetes Health business from AdaptHealth. Help us with the strategic fit here, particularly now that maybe even more so on the AdaptHealth business, as we've heard from you more on Advanced Diabetes Supply and maybe the synergies that you're driving and potential for further room in organic growth in this business.
Sure. First of all, we love diabetes, from a therapy area that we can serve. We are equally excited about urology, ostomy, nutrition, delivery, those are the focus areas for our at-home business. The ADSG acquisition is a great second step for us.
I say that because the first step for us was actually realigning the at-home business, where we changed the geographic location of our distribution nodes to ensure that we could get to the patients faster. We built new distribution nodes that are highly automated and highly efficient to bring our costs down. Now what we've been doing, and this is part of why ADSG was so helpful, is now we've been adding scale. What we are moving through our buildings is not wheelchairs and crutches and big, bulky items. We are moving items that are relatively compact, relatively efficient to store, cube spaces efficient, and to move them through our network with our best-in-class rates. As we've been doing the deals, we've actually now been adding scale on top of that.
The ADSG acquisition, for instance, I think the revenue increase was over 30%, but it used 2% of our cube space. That gives you a sense of how we were able to really push through the synergies of that deal, and we're very happy with how that acquisition has gone. Layered on top of that of course, we announced the acquisition of Strive, which is a smaller competitor, but in urology, to really add scale within the urology part of our at-home business. Don't lose sight of the fact that we are strong in urology and other parts of our portfolio as well. That is equally intentional as to why we invested in the urology part of the portfolio here. The diabetes part of the Adapt business. While Strive has closed, the Adapt asset has not yet closed.
That's somewhere after the turn of the year. The same thing will be true, which is we're bringing both new capabilities, some new talent, and scale within the categories that we are very focused upon.
Okay, great. I guess a couple on the regulatory front with the at-home business. I guess, seems like maybe near term potential benefit if CMS covers type 2 non-insulin using diabetes. So any early thoughts on how that may or may not impact the business? I guess secondarily, to the extent that we see Medicare Competitive Bidding for CGM and insulin pumps, I think that's more of a 2028 item. I guess, how do you think about managing the impact of that and what it could be on the business?
Well, we view it as opportunity, right? Whether it is patient self-paying or the increasing access to coverage for the items that we are selling, we are all in favor of that access. It supports our business. If you go back to what I was saying earlier, as the administration is changing coverage with CMS, as the administration is changing regulation around the space to combat waste, fraud, abuse, at the same time, they are trying to drive that access, right? Who would be their best partner other than the large corporate that has a robust compliance program that operates at scale, that can bring costs down? We think we are well-situated to be a very productive force in the industry, both competitively, but then also as the Competitive Bidding Program and the other regulations change around us.
Okay. Just to touch on OptiFreight to kind of round out the other discussion. You have been expanding into outbound shipping, and also expanding into the non-acute space. It seems like those are higher growth than a traditional inbound ship-in. I guess overall, how is the OptiFreight strategy playing out, and how are you thinking about growth there in the balance of this year?
I think I have called OptiFreight the little engine that keeps on giving during our earnings calls.
Yeah.
We're excited about what that team is doing. It's a different business model for us. We continue to invest in both the technology that underlies the business, as well as the user experience in the acute environment. We have high hopes for OptiFreight to be a very positive contributor to our other growth businesses.
Okay. As we think about one of the things that's, I think, been a really important part of the financial story for the past couple of years has really been cost discipline across the company. I guess as you think about what the key drivers have been and kind of the future opportunities set on costs, I guess, how is the company looking at opportunities to get more efficient? Then kind of dovetails a little bit with this, how are you using AI to both make the business run better from a growth perspective and also a cost perspective moving forward?
Yeah. Let me start with cost and then move to AI. Look, in aggregate, we run a 1% margin business. You're not going to be successful running a 1% margin business if you aren't relentlessly focused on how do you simplify your business and how do you bring your cost down, while driving performance. You can't sacrifice performance, or that has a different effect. We are very focused. GMPD has proven it can be done. Similarly, the pharma team, notwithstanding the investments we've made there and the success they've had, they've also had a rigorous program of constantly assessing how do we operate and where can we bring those
Yeah
costs down. That is operating both at the segment level, at the five business level, but also within the enterprise whole. Jason Hollar, our CEO, is very focused on what our cost profile may be. AI can be an enabler of cost, but frankly, it's also an enabler of us making faster, better decisions across the portfolio as well, leveraging the data that we have. So, whether it's AI initiatives within the MSOs to better diagnose, to drive productivity within the doctors, or AI within how we run our supply chain to optimize how we think about our inventory purchasing, or AI within our investor relations functions. I'm actually AI. Sorry, a little bit of joke there.
I get it. Yeah.
No one laughed. The point is that we are deploying AI across the portfolio, but carefully. We are a large, complex business. We haven't rolled it out across the enterprise yet. That is certainly an opportunity, but we do have a lot underway.
Okay. Then maybe to comment, capital deployment's been a really important part of the strategy, especially given the really strong cash flow the company generates. As we think about your key capital deployment priorities over the next couple of years, I guess, what would you kind of stake those out as? To the extent there's a contrast to draw at all with the capital deployment profile of the company over the past, call it three to five years, what would those key distinction points be?
Yeah. Well, the first thing I can tell you before we even get to capital deployment is we have a relentless focus on continuing to increase the amount of cash that we're generating. We've seen good success in the last several years on that, last year in particular with the $5 billion we reported or so at the end of the year. Our strategy hasn't changed as far as what we're going to do with it, in that we are first going to invest in the business. We committed or we guided that we're going to invest $700 million or so in fiscal year 2027. That's more than this past year, which is more than the year before that, which is more than the year before that.
You sense the trend of we're investing for the future profit potential in the business, while at the same time growing the profit. We're trying to create that virtuous cycle of we're investing now for the future profit three, seven, nine, 12 quarters out so that we always have good opportunities there. After that, we're going to protect our balance sheet, but as we talked about in Q4, we're within our targeted leverage range, so there are not actions we need to take to bring ourselves back into a compliance there. Then it's a mix of return of capital to shareholders. We are a Dividend Aristocrat, and we committed to buy back at least $1 billion of shares in fiscal year 2027. That's up from our commitments the last couple of years, and I think you've seen us do that.
As cash has been available, if we have not had other uses, we have increased the amount that we have been buying back while also looking at M&A, right?
Yeah.
We are going to be smart about M&A. We are going to be smart about, if we do not have M&A, how much cash do we need to run the business. Otherwise, we will look at incremental return of capital to shareholders.
Great. In terms of being smart about M&A, obviously you have done MSOs, you have done assets for the other business, particularly at home. I guess, how do you think holistically about what the opportunity is on the M&A side, and again, what that might be similar to or different than it has been in the recent past?
Yeah. I think it is unlikely you will see us add a fourth leg to the stool, so to speak. We have been successful in sticking to our strategy and adding capabilities and adding things which have connective tissue to the rest of our portfolio. So as you think about where we might play, certainly within the Biopharma Services part of the portfolio, which is a key part of our specialty portfolio. We may do some M&A, as I call that, tuck-ins around the MSO part of our portfolio. Certainly, we've done some M&A in the other parts of our business. They have access to our balance sheet. That's part of why they have been growing as fast as they have been as well. We're going to be consistent with our strategy is what I would say.
Okay. Fantastic. I think that's all the time we have time for. Thanks so much for joining us today. I really appreciate the discussion.
Thank you all.