WEBVTT 00:00:00.000 --> 00:00:02.560 Welcome back to the Deep Dive. Today, our mission 00:00:02.560 --> 00:00:07.139 is to cut through all the noise and really surface 00:00:07.139 --> 00:00:09.820 the vital statistics and the critical controversies 00:00:09.820 --> 00:00:13.419 around a company that is, well, it's so large, 00:00:13.500 --> 00:00:15.759 so essential, but at the same time, so invisible. 00:00:16.219 --> 00:00:18.660 Most of us interact with its products every single 00:00:18.660 --> 00:00:21.280 day and we don't even know its name. We are diving 00:00:21.280 --> 00:00:24.760 deep into Cardinal Health. It's the perfect topic 00:00:24.760 --> 00:00:26.679 for a Deep Dive, really, because Cardinal Health 00:00:26.679 --> 00:00:29.679 isn't just a company. It's... It's basically 00:00:29.679 --> 00:00:32.560 health care infrastructure. And the scale of 00:00:32.560 --> 00:00:35.179 that infrastructure is just staggering. I mean, 00:00:35.200 --> 00:00:36.899 you can think of them as the logistical arteries 00:00:36.899 --> 00:00:39.579 that supply literally hundreds of thousands of 00:00:39.579 --> 00:00:42.340 medical facilities. But, and this is the core 00:00:42.340 --> 00:00:45.079 of it. They are also a central figure in some 00:00:45.079 --> 00:00:48.859 of the biggest legal and, frankly, moral controversies 00:00:48.859 --> 00:00:50.780 of the last decade. Yeah, especially the U .S. 00:00:50.799 --> 00:00:53.159 opioid epidemic. Especially that. So we have 00:00:53.159 --> 00:00:55.820 put together a comprehensive stack of sources. 00:00:55.920 --> 00:00:58.460 We're talking articles, legal filings, financial 00:00:58.460 --> 00:01:02.259 reports to give you, the listener, a shortcut. 00:01:02.810 --> 00:01:06.349 to understanding this complexity. Our mission 00:01:06.349 --> 00:01:09.349 is to move beyond the surface level facts and 00:01:09.349 --> 00:01:12.129 give you a really crystal clear, granular look 00:01:12.129 --> 00:01:16.069 at the role, the sheer size, and the complicated 00:01:16.069 --> 00:01:19.030 legal history of this corporate behemoth. I think 00:01:19.030 --> 00:01:21.069 we have to start with the scale. We have to. 00:01:21.150 --> 00:01:23.010 Because the difference between the company's 00:01:23.010 --> 00:01:26.250 size and its public profile is just. It's one 00:01:26.250 --> 00:01:27.769 of the most remarkable things about them. Okay, 00:01:27.790 --> 00:01:30.030 so let's establish that scale. They're headquartered 00:01:30.030 --> 00:01:32.819 in Dublin, Ohio. And Cardinal Health is not just 00:01:32.819 --> 00:01:34.560 a big company. It's one of the highest revenue 00:01:34.560 --> 00:01:36.760 generating companies in the entire United States. 00:01:36.920 --> 00:01:38.859 When you look at the Fortune 500 list, they're 00:01:38.859 --> 00:01:41.159 right up there. Number 15. Number 15 in the entire 00:01:41.159 --> 00:01:43.299 country. I mean, that puts them in the same league 00:01:43.299 --> 00:01:47.540 as giants like Marathon, Petroleum, Boeing. Companies 00:01:47.540 --> 00:01:49.879 you see. Exactly. Companies with visible products. 00:01:50.019 --> 00:01:53.719 Yeah. But Cardinal Health is sort of the silent 00:01:53.719 --> 00:01:56.959 engine behind the scenes. And the revenue figure 00:01:56.959 --> 00:01:59.409 that goes with that rank is. Yeah. It's hard 00:01:59.409 --> 00:02:01.129 to get your head around. Our sources project 00:02:01.129 --> 00:02:05.769 their 2025 revenue at a staggering $223 billion. 00:02:06.530 --> 00:02:09.509 $223 billion. Yeah. We're approaching a quarter 00:02:09.509 --> 00:02:12.610 of a trillion dollars just flowing through a 00:02:12.610 --> 00:02:14.930 logistics and distribution operation. It's a 00:02:14.930 --> 00:02:18.490 critical piece of the national GDP. And to manage 00:02:18.490 --> 00:02:24.550 that, they employ 57 ,700 people globally. That's 00:02:24.550 --> 00:02:27.009 the 2025 projection. Wow. And that workforce 00:02:27.009 --> 00:02:29.150 is just dedicated to making sure those critical 00:02:29.150 --> 00:02:31.009 supplies get where they need to go. Without fail. 00:02:31.129 --> 00:02:34.090 Okay, so you can't have $223 billion in motion 00:02:34.090 --> 00:02:35.990 with just one function. You call them the plumbing, 00:02:36.050 --> 00:02:38.229 the infrastructure. So what are these invisible 00:02:38.229 --> 00:02:40.699 functions that are actually performing? Our sources 00:02:40.699 --> 00:02:42.719 break it down into three main pillars. That's 00:02:42.719 --> 00:02:44.580 right. The first, and it's the most traditional 00:02:44.580 --> 00:02:46.419 one, is the distribution of pharmaceuticals and 00:02:46.419 --> 00:02:48.360 medical products. This is the heavy lifting of 00:02:48.360 --> 00:02:51.620 logistics. Getting everything from simple gauze 00:02:51.620 --> 00:02:54.479 to complex temperature -sensitive vaccines to 00:02:54.479 --> 00:02:56.520 the right place at the right time. They serve 00:02:56.520 --> 00:03:00.280 over 100 ,000 locations. 100 ,000. Yeah, that's 00:03:00.280 --> 00:03:03.099 a network that spans major hospitals, regional 00:03:03.099 --> 00:03:06.219 chains, tiny independent clinics, all of it. 00:03:06.400 --> 00:03:09.039 So that's the core logistics piece. But they're 00:03:09.039 --> 00:03:11.240 not just a middleman, right? The second pillar 00:03:11.240 --> 00:03:13.020 shows they're much more integrated than that. 00:03:13.099 --> 00:03:16.139 They have a manufacturing arm. Precisely. They're 00:03:16.139 --> 00:03:18.719 heavily involved in manufacturing medical and 00:03:18.719 --> 00:03:20.360 surgical products. We're talking about essentials, 00:03:20.620 --> 00:03:24.199 gloves, surgical apparel, fluid management products. 00:03:24.319 --> 00:03:27.259 Things you'd see in any hospital room. Any procedure. 00:03:27.560 --> 00:03:30.259 If you've ever had a routine procedure in a hospital, 00:03:30.439 --> 00:03:33.319 it is highly probable that a Cardinal Health 00:03:33.319 --> 00:03:35.560 manufactured item was used on you. They don't 00:03:35.560 --> 00:03:37.400 just move products. They actually make a lot 00:03:37.400 --> 00:03:40.219 of these absolutely vital. And the third pillar, 00:03:40.319 --> 00:03:41.860 this is the one that I find really compelling 00:03:41.860 --> 00:03:44.300 because it speaks to their sophistication. The 00:03:44.300 --> 00:03:46.780 network of radiopharmacies. They operate one 00:03:46.780 --> 00:03:48.960 of the largest in the entire U .S. This is a 00:03:48.960 --> 00:03:51.159 point that people often miss when they talk about 00:03:51.159 --> 00:03:55.139 distributors, but it's so crucial. A radiopharmacy 00:03:55.139 --> 00:03:57.460 isn't just, you know, stocking pills on a shelf. 00:03:57.620 --> 00:04:00.520 No. You're handling, preparing, and distributing 00:04:00.520 --> 00:04:04.000 short half -life isotopes. These are specialized 00:04:04.000 --> 00:04:07.620 drugs that are literally decaying as they're 00:04:07.620 --> 00:04:09.620 racing against the clock to get to a patient. 00:04:09.740 --> 00:04:12.439 Used for diagnostics, right? Like PE scans and 00:04:12.439 --> 00:04:14.780 things like that. Exactly. And for some targeted 00:04:14.780 --> 00:04:17.600 cancer treatments. A general logistics company 00:04:17.600 --> 00:04:21.259 just cannot do this. It requires incredibly specific 00:04:21.259 --> 00:04:24.819 regulatory compliance, specialized transport, 00:04:25.060 --> 00:04:27.579 minute -by -minute scheduling. It's a whole different 00:04:27.579 --> 00:04:29.339 level. And the fact that they can manage that 00:04:29.339 --> 00:04:31.939 just underscores why we call them essential infrastructure. 00:04:32.620 --> 00:04:34.420 just moving Tylenol. They're moving materials 00:04:34.420 --> 00:04:36.839 where a one -hour delay could make the product 00:04:36.839 --> 00:04:39.199 completely useless. That's specialized function, 00:04:39.420 --> 00:04:42.139 the radiopharmacy network. It's a perfect illustration 00:04:42.139 --> 00:04:44.980 of how necessary they are. And when you connect 00:04:44.980 --> 00:04:47.939 that back to their overall ubiquity, well, the 00:04:47.939 --> 00:04:49.920 picture becomes very clear. So let's tie it all 00:04:49.920 --> 00:04:51.639 together for the listener. Why should you care 00:04:51.639 --> 00:04:54.889 about the name Cardinal Health? Well, our sources 00:04:54.889 --> 00:04:57.189 mention a specific, really striking statistic 00:04:57.189 --> 00:04:59.930 that just captures their dominance. Cardinal 00:04:59.930 --> 00:05:02.550 Health provides medical products to over 75 % 00:05:02.550 --> 00:05:05.110 of hospitals in the United States. That's the 00:05:05.110 --> 00:05:08.670 mic drop moment. Three out of every four hospital 00:05:08.670 --> 00:05:11.009 systems in this country rely on Cardinal Health 00:05:11.009 --> 00:05:13.250 for their daily operations, their efficiency, 00:05:13.509 --> 00:05:16.310 their pricing, their compliance. It all directly 00:05:16.310 --> 00:05:19.529 impacts the speed, the cost, and the safety of 00:05:19.529 --> 00:05:21.730 patient care for almost everyone. There are influences 00:05:21.730 --> 00:05:23.930 everywhere, even if their logo isn't. Exactly. 00:05:24.110 --> 00:05:27.410 Pervasive. Okay. So with that scale firmly established, 00:05:27.689 --> 00:05:31.709 a $223 billion company serving 75 % of hospitals, 00:05:31.949 --> 00:05:34.550 let's pivot. Let's trace the journey of how this 00:05:34.550 --> 00:05:37.329 giant was actually built, because it didn't start 00:05:37.329 --> 00:05:40.449 in medicine at all. Not even close. The history 00:05:40.449 --> 00:05:42.750 is just a textbook example of a dramatic corporate 00:05:42.750 --> 00:05:46.129 pivot. The company was founded in 1971 by a man 00:05:46.129 --> 00:05:48.610 named Robert D. Walter, but it wasn't Cardinal 00:05:48.610 --> 00:05:51.129 Health. It was Cardinal Foods. Cardinal Foods, 00:05:51.209 --> 00:05:53.410 a food wholesaler. Exactly what it sounds like, 00:05:53.430 --> 00:05:55.990 just a food wholesaler. It's hard to draw a line 00:05:55.990 --> 00:05:58.910 from distributing, I don't know, canned goods 00:05:58.910 --> 00:06:01.709 in Ohio to distributing radioactive isotopes. 00:06:01.790 --> 00:06:04.459 It is. But the shift came pretty quickly. In 00:06:04.459 --> 00:06:07.459 1979, they made the move that defined everything. 00:06:07.879 --> 00:06:10.279 Walter acquired the Bailey Drug Company. And 00:06:10.279 --> 00:06:12.639 that's the entry point. That single action opened 00:06:12.639 --> 00:06:15.560 the door to drug wholesaling. So suddenly the 00:06:15.560 --> 00:06:17.759 company had two completely different massive 00:06:17.759 --> 00:06:22.060 logistical chains to manage. food, and pharmaceuticals. 00:06:22.060 --> 00:06:23.759 And once they got a taste of the pharma side, 00:06:24.060 --> 00:06:26.600 they hit the gas. They went public on Nasdaq 00:06:26.600 --> 00:06:30.819 in 1983. And then in 1988, Walter sold off the 00:06:30.819 --> 00:06:33.139 original food business to Roundy's. A complete 00:06:33.139 --> 00:06:35.629 commitment to the new direction. the divestiture 00:06:35.629 --> 00:06:38.970 finalized that strategic shift and by 1994 the 00:06:38.970 --> 00:06:40.910 transformation was complete when they officially 00:06:40.910 --> 00:06:42.889 changed the name to cardinal health but they 00:06:42.889 --> 00:06:44.569 hadn't just changed their name by that point 00:06:44.569 --> 00:06:46.290 they were already the third largest pharmaceutical 00:06:46.290 --> 00:06:48.889 wholesaler in the entire country an incredible 00:06:48.889 --> 00:06:51.370 rise and the growth trajectory during that period 00:06:51.370 --> 00:06:54.490 is just It's almost hard to believe. Sales went 00:06:54.490 --> 00:06:58.370 from $1 .2 billion in 1991 to $8 .99 billion 00:06:58.370 --> 00:07:01.870 in 1996. A nearly eightfold increase in just 00:07:01.870 --> 00:07:04.730 five years. It was a combination of massive market 00:07:04.730 --> 00:07:09.050 demand and just the realization that controlling 00:07:09.050 --> 00:07:11.629 logistics in the health care sector was incredibly 00:07:11.629 --> 00:07:14.829 profitable. That boom period laid the foundation 00:07:14.829 --> 00:07:17.579 for the M &A strategy that has... defined them 00:07:17.579 --> 00:07:19.839 ever since. Aggressively buying up the competition. 00:07:20.199 --> 00:07:22.259 And diversifying into new essential sectors. 00:07:22.500 --> 00:07:25.540 So with that kind of hyper growth, the leadership 00:07:25.540 --> 00:07:27.699 had to evolve, too. We see them bringing in some 00:07:27.699 --> 00:07:31.199 serious corporate management expertise. R. Carey 00:07:31.199 --> 00:07:33.379 Clark, a former executive from Procter & Gamble, 00:07:33.459 --> 00:07:35.500 a company known for its supply chain mastery, 00:07:35.779 --> 00:07:39.959 he became CEO in 2006. That signals a move to... 00:07:40.170 --> 00:07:42.269 you know, institutionalize that massive scale. 00:07:42.509 --> 00:07:44.569 And he was followed by George S. Barrett in 2008 00:07:44.569 --> 00:07:47.430 and then Michael Kaufman in 2018. Right. The 00:07:47.430 --> 00:07:49.269 turnover at the top just speaks to the dynamic 00:07:49.269 --> 00:07:51.569 high pressure world these distributors operate 00:07:51.569 --> 00:07:53.910 in. So let's dig into that core DNA you mentioned, 00:07:54.170 --> 00:07:56.949 strategic acquisitions and divestitures. This 00:07:56.949 --> 00:07:59.790 was a deliberate plan to consolidate power. Where 00:07:59.790 --> 00:08:02.589 do we see the first big move beyond just moving 00:08:02.589 --> 00:08:05.069 boxes of drugs? One of the most important early 00:08:05.069 --> 00:08:08.829 moves was 1995. They acquired Medicine Shop International. 00:08:09.449 --> 00:08:11.889 And what's crucial here is that this was the 00:08:11.889 --> 00:08:14.610 country's largest franchisor of retail pharmacies. 00:08:14.750 --> 00:08:17.529 And our source notes, this was their first non 00:08:17.529 --> 00:08:20.709 -distribution acquisition. So you, as a listener, 00:08:20.790 --> 00:08:23.269 should see this as a move toward horizontal integration. 00:08:23.490 --> 00:08:25.329 They're not just supplying the pharmacies anymore. 00:08:25.569 --> 00:08:28.129 They own a piece of the retail end. They're getting 00:08:28.129 --> 00:08:30.629 a valuable feedback loop on consumer demand, 00:08:30.930 --> 00:08:34.029 on pricing. They understood the value of controlling 00:08:34.029 --> 00:08:37.570 the endpoints. Then came the tech leap. In 1986, 00:08:37.830 --> 00:08:41.450 they acquired Pixis Corporation for $867 million. 00:08:41.909 --> 00:08:44.950 Pixis. This was truly forward -thinking for the 00:08:44.950 --> 00:08:47.889 mid-'90s. Pixis developed those automated pill 00:08:47.889 --> 00:08:50.190 dispensers for hospitals. The high -tech cabinets 00:08:50.190 --> 00:08:52.830 you see on TV where nurses scan their badge to 00:08:52.830 --> 00:08:55.139 get medication. That's them. And this acquisition 00:08:55.139 --> 00:08:57.879 was a fundamental strategic shift. They were 00:08:57.879 --> 00:09:00.139 moving from being just a provider of goods to 00:09:00.139 --> 00:09:02.480 the hospital to being a critical partner within 00:09:02.480 --> 00:09:04.320 the hospital's workflow. They made themselves 00:09:04.320 --> 00:09:07.120 indispensable. Sticky, as they say in business. 00:09:07.440 --> 00:09:09.860 Very sticky. This was about digital integration, 00:09:10.059 --> 00:09:12.340 not just trucking. And from there, the pattern 00:09:12.340 --> 00:09:15.909 just solidifies. In 1999, they bought Allegiance 00:09:15.909 --> 00:09:17.850 Healthcare, a big medical products manufacturer. 00:09:18.350 --> 00:09:20.909 Then back to pure distribution consolidation 00:09:20.909 --> 00:09:23.809 in 2001 with Bindley Western Industries. So the 00:09:23.809 --> 00:09:27.039 pattern is. Acquire tech that embeds you in the 00:09:27.039 --> 00:09:29.740 hospital, acquire manufacturing to control supply 00:09:29.740 --> 00:09:32.480 costs, and aggressively buy up the competition 00:09:32.480 --> 00:09:35.200 to control market share. Exactly. But it wasn't 00:09:35.200 --> 00:09:37.960 just about buying. They also did strategic spinoffs 00:09:37.960 --> 00:09:41.200 to unlock value. Right, like Carefusion. In 2009, 00:09:41.379 --> 00:09:44.179 they spun off their clinical and medical products 00:09:44.179 --> 00:09:46.919 businesses into this new independent company. 00:09:47.139 --> 00:09:49.100 It's a classic corporate move at that scale. 00:09:49.419 --> 00:09:51.279 You build up a division, you optimize it, you 00:09:51.279 --> 00:09:53.559 leverage the tech you bought, like Pyxis, and 00:09:53.559 --> 00:09:55.899 then you spit it off as its own valuable, focused 00:09:55.899 --> 00:09:58.639 entity. It generates a ton of capital and lets 00:09:58.639 --> 00:10:00.720 Cardinal streamline its focus, even as it keeps 00:10:00.720 --> 00:10:02.860 expanding elsewhere. And speaking of expansion, 00:10:03.100 --> 00:10:06.240 the 2010s saw a big push into two areas, global 00:10:06.240 --> 00:10:09.679 reach and specialty pharma. Absolutely. In 2010, 00:10:09.919 --> 00:10:12.440 they bought Healthcare Solutions, holding for 00:10:12.440 --> 00:10:15.440 over half a billion dollars. This was a specialty 00:10:15.440 --> 00:10:17.419 pharmaceutical services company. And specialty 00:10:17.419 --> 00:10:19.799 pharma, we're talking expensive, complex drugs. 00:10:19.940 --> 00:10:22.559 That's a higher margin business. A much higher 00:10:22.559 --> 00:10:25.080 margin business. It requires totally different 00:10:25.080 --> 00:10:27.840 logistics. So this is a move up the value chain. 00:10:28.000 --> 00:10:30.759 That same year, they also bought a company called 00:10:30.759 --> 00:10:33.399 Kinray, which boosted their presence in the independent 00:10:33.399 --> 00:10:37.279 pharmacy market by 40 percent. Just pure market 00:10:37.279 --> 00:10:39.720 share domination. It is. In distribution, scale 00:10:39.720 --> 00:10:42.039 is king. It translates directly to purchasing 00:10:42.039 --> 00:10:44.960 power. But their global moves showed a bit of... 00:10:45.899 --> 00:10:48.440 Volatility in their strategy. They acquired Yong 00:10:48.440 --> 00:10:50.799 Yu, a Chinese drug distributor. Which they then 00:10:50.799 --> 00:10:54.080 sold in 2017 for $1 .2 billion. Right. It shows 00:10:54.080 --> 00:10:55.799 they're willing to test these massive global 00:10:55.799 --> 00:10:58.200 markets and then get out quickly if the sit isn't 00:10:58.200 --> 00:11:00.419 right. It's high stakes corporate betting. And 00:11:00.419 --> 00:11:02.299 we see that same volatile pattern, but even more 00:11:02.299 --> 00:11:05.129 dramatically in the medical device sector. In 00:11:05.129 --> 00:11:08.129 2015, they acquired Johnson & Johnson's Cordis 00:11:08.129 --> 00:11:12.850 division for $1 .94 billion. A huge deal. Cordis 00:11:12.850 --> 00:11:15.190 is a major player in cardiology and endovascular 00:11:15.190 --> 00:11:17.750 devices. This put them in direct competition 00:11:17.750 --> 00:11:21.009 in a very high -end, complex manufacturing space. 00:11:21.389 --> 00:11:23.789 So let's pause on that Cordis deal. They spent 00:11:23.789 --> 00:11:27.009 nearly $2 billion in 2015. And then they sold 00:11:27.009 --> 00:11:29.870 it just six years later, in 2021, for $1 billion. 00:11:30.210 --> 00:11:32.289 So that's a loss of almost a billion dollars 00:11:32.289 --> 00:11:34.960 on the acquisition price alone. Right. Not even 00:11:34.960 --> 00:11:37.200 counting operational costs or investments they 00:11:37.200 --> 00:11:40.360 made during those six years. That level of rapid 00:11:40.360 --> 00:11:43.559 multibillion dollar churn isn't an accident. 00:11:43.720 --> 00:11:45.899 It seems to be part of how these massive companies 00:11:45.899 --> 00:11:48.870 operate. And yet, even with that huge loss. They 00:11:48.870 --> 00:11:51.590 doubled down. In 2017, they made another massive 00:11:51.590 --> 00:11:54.370 play, buying the patient product portfolio from 00:11:54.370 --> 00:11:58.169 Medtronic for $6 .1 billion. You did. So despite 00:11:58.169 --> 00:12:00.269 the loss on Cordis, they were still committed 00:12:00.269 --> 00:12:02.409 to reshaping their footprint through these enormous 00:12:02.409 --> 00:12:04.730 deals. They're constantly testing where the next 00:12:04.730 --> 00:12:06.269 layer of value is going to be. And that brings 00:12:06.269 --> 00:12:10.090 us right up to today, 2024 -2025. The M &A cycle 00:12:10.090 --> 00:12:13.149 is still going. What's the recent focus? It seems 00:12:13.149 --> 00:12:15.929 to be shifting toward specialized patient services 00:12:15.929 --> 00:12:19.679 outside the hospital. In 2024, they acquired 00:12:19.679 --> 00:12:23.480 Advanced Diabetes Supply Group, or ADSG, for 00:12:23.480 --> 00:12:27.399 $1 .1 billion. They merged it into their at -home 00:12:27.399 --> 00:12:29.980 solutions business. So a big push into the home 00:12:29.980 --> 00:12:32.590 delivery and chronic care market. Exactly. And 00:12:32.590 --> 00:12:36.190 then in 2025, another major cash outlay. 75 % 00:12:36.190 --> 00:12:40.629 stake in Solaris Health for $1 .9 billion. Solaris 00:12:40.629 --> 00:12:42.769 is the largest urology management services organization 00:12:42.769 --> 00:12:45.629 in the U .S. So they're moving beyond just products 00:12:45.629 --> 00:12:47.710 and into managing the clinical practices themselves. 00:12:48.070 --> 00:12:50.330 They're becoming an honor of the actual clinical 00:12:50.330 --> 00:12:52.649 management infrastructure. It's a huge strategic 00:12:52.649 --> 00:12:55.399 evolution. Before we move to the controversies, 00:12:55.399 --> 00:12:57.179 there's one more partnership we have to highlight 00:12:57.179 --> 00:12:59.659 that underpins their financial power. Red Oak 00:12:59.659 --> 00:13:01.519 Sourcing. This is a joint venture they formed 00:13:01.519 --> 00:13:04.500 with CVS Caremark back in 2014. Red Oak Sourcing. 00:13:04.500 --> 00:13:06.700 It's often called the largest generic drug sourcing 00:13:06.700 --> 00:13:09.120 operation in the United States. And that is critical 00:13:09.120 --> 00:13:11.320 because generic sourcing is where distributors 00:13:11.320 --> 00:13:13.659 make a huge portion of their profits. So how 00:13:13.659 --> 00:13:15.340 does it actually work? Break it down for the 00:13:15.340 --> 00:13:18.320 listener. It's pure purchasing leverage. Pure 00:13:18.320 --> 00:13:20.679 volume. You have CVS, one of the biggest pharmacy 00:13:20.679 --> 00:13:22.879 chains in the world. And you have Cardinal Health, 00:13:23.059 --> 00:13:25.960 a dominant national distributor. They combine 00:13:25.960 --> 00:13:28.080 their purchasing needs into this one entity, 00:13:28.240 --> 00:13:31.059 Red Oak. And then they go to the generic. drug 00:13:31.059 --> 00:13:33.620 manufacturers. And they can demand massive discounts 00:13:33.620 --> 00:13:36.100 because of their collective enormous volume. 00:13:36.360 --> 00:13:39.620 They are basically dictating global supply chain 00:13:39.620 --> 00:13:43.100 pricing for generics that end up in the U .S. 00:13:43.159 --> 00:13:45.580 So that partnership gives them immense power 00:13:45.580 --> 00:13:48.559 and creates a huge barrier to entry for any potential 00:13:48.559 --> 00:13:51.720 competitor. Immense power. So we've established 00:13:51.720 --> 00:13:53.720 the scope. They are massive. They're essential. 00:13:54.000 --> 00:13:56.240 And they are constantly restructuring through 00:13:56.240 --> 00:13:58.980 these multibillion dollar deals. Now, we have 00:13:58.980 --> 00:14:00.679 to talk about the controversy. that have not 00:14:00.679 --> 00:14:03.080 only defined their public profile, but have also 00:14:03.080 --> 00:14:05.419 completely reshaped their financials. Right. 00:14:05.480 --> 00:14:07.419 The only thing that seems to grow faster than 00:14:07.419 --> 00:14:10.399 their revenue is their legal liability. And that 00:14:10.399 --> 00:14:12.080 brings us to the elephant in the room, their 00:14:12.080 --> 00:14:14.799 central role in the U .S. opioid epidemic. This 00:14:14.799 --> 00:14:17.460 is Section 3, the deep dive into controversy. 00:14:17.940 --> 00:14:20.799 When you are a $200 billion enterprise operating 00:14:20.799 --> 00:14:23.059 at the intersection of profit and public health, 00:14:23.320 --> 00:14:26.899 regulatory battles just. They become part of 00:14:26.899 --> 00:14:28.919 the business model. And the source material provides 00:14:28.919 --> 00:14:30.960 a really stunning allegation that makes this 00:14:30.960 --> 00:14:33.580 whole thing concrete. It's from a 2020 Oklahoma 00:14:33.580 --> 00:14:37.059 lawsuit against the big three distributors, Cardinal, 00:14:37.100 --> 00:14:39.759 McKesson and Amerisource Bergen. The allegation 00:14:39.759 --> 00:14:42.490 was specific and it was shocking. They claimed 00:14:42.490 --> 00:14:44.769 these three companies provided enough opioids 00:14:44.769 --> 00:14:47.769 to Bryan County that every adult resident there 00:14:47.769 --> 00:14:52.830 could have had 144 hydrocodone tablets. 144 hydrocodone 00:14:52.830 --> 00:14:55.509 tablets for every single adult resident in a 00:14:55.509 --> 00:14:58.110 small rural county in Oklahoma. Think about that. 00:14:58.129 --> 00:15:00.590 That wasn't just a random number. It was a specific 00:15:00.590 --> 00:15:03.659 data point used in court to demonstrate. alleged 00:15:03.659 --> 00:15:07.480 negligence or willful blindness to the insane 00:15:07.480 --> 00:15:09.879 volume of controlled substances being pumped 00:15:09.879 --> 00:15:11.740 into these small communities. Because under the 00:15:11.740 --> 00:15:14.059 Controlled Substances Act, their job is to report 00:15:14.059 --> 00:15:16.639 suspicious orders. It is their statutory duty. 00:15:16.779 --> 00:15:20.960 And an order for 144 pills per person is, by 00:15:20.960 --> 00:15:24.299 any definition, suspicious. The lawsuits allege 00:15:24.299 --> 00:15:26.740 they systematically failed in that duty and that 00:15:26.740 --> 00:15:28.740 failure required a financial reckoning. And that 00:15:28.740 --> 00:15:31.200 reckoning came in waves. The first one our sources 00:15:31.200 --> 00:15:34.320 mentioned is from December 2016. Cardinal settled 00:15:34.320 --> 00:15:37.539 for $44 million. Which in hindsight was pocket 00:15:37.539 --> 00:15:40.139 change compared to what was coming. The massive 00:15:40.139 --> 00:15:42.299 national settlement was announced in July 2021 00:15:42.299 --> 00:15:45.899 and finalized in January 2022. This was the big 00:15:45.899 --> 00:15:48.480 one. The big one. Cardinal agreed to pay $6 .4 00:15:48.480 --> 00:15:51.720 billion over 18 years as part of a total $26 00:15:51.720 --> 00:15:54.740 billion settlement with J &J, AmerisourceBergen, 00:15:54.799 --> 00:15:58.639 and McKesson. $6 .4 billion. It's an almost impossible 00:15:58.639 --> 00:16:01.500 number to conceptualize, but the context here 00:16:01.500 --> 00:16:03.860 is vital because in a way this was a strategic 00:16:03.860 --> 00:16:06.679 move. A hugely strategic move. The force notes 00:16:06.679 --> 00:16:08.600 that by agreeing to this, the companies were 00:16:08.600 --> 00:16:10.929 capping their liability. The maximum potential 00:16:10.929 --> 00:16:13.090 penalties, if the states had gone to court on 00:16:13.090 --> 00:16:15.470 every count, could have reached up to $95 billion. 00:16:15.850 --> 00:16:18.889 So $26 billion, as massive as it is, was seen 00:16:18.889 --> 00:16:21.049 as a financial win because it avoided a potential 00:16:21.049 --> 00:16:25.210 $95 billion catastrophe. Exactly. The settlement 00:16:25.210 --> 00:16:27.809 converted uncertain, potentially existential 00:16:27.809 --> 00:16:30.850 legal exposure into a predictable long -term 00:16:30.850 --> 00:16:33.889 operational cost. But the story doesn't end there. 00:16:33.990 --> 00:16:36.559 The litigation continues. We see that in the 00:16:36.559 --> 00:16:38.940 2024 numbers, a settlement with health plans 00:16:38.940 --> 00:16:42.759 for $92 .7 million, a separate one with the city 00:16:42.759 --> 00:16:47.019 of Baltimore for $152 .5 million. These are still 00:16:47.019 --> 00:16:49.840 huge liabilities being resolved years later. 00:16:50.059 --> 00:16:51.940 And we also have to mention the 2022 derivative 00:16:51.940 --> 00:16:54.720 suit. This is when shareholders sue the company's 00:16:54.720 --> 00:16:56.919 own directors, alleging they failed in their 00:16:56.919 --> 00:16:58.960 duties. And cost the shareholders money. Right. 00:16:59.059 --> 00:17:03.059 And that suit settled for $124 million. So the 00:17:03.059 --> 00:17:06.039 shareholders themselves successfully argued that 00:17:06.039 --> 00:17:08.500 the board's failure to manage this risk cost 00:17:08.500 --> 00:17:11.039 them directly. So this extreme financial liability 00:17:11.039 --> 00:17:14.440 brings us to the next point, the lobbying. When 00:17:14.440 --> 00:17:16.740 you're facing billions in penalties, you use 00:17:16.740 --> 00:17:18.619 your financial power to try and change the rules 00:17:18.619 --> 00:17:21.019 of the game. And they did. The sources show that 00:17:21.019 --> 00:17:23.460 Cardinal, along with McKesson and AmerisourceBergen, 00:17:23.579 --> 00:17:27.539 spent $13 million between 2014 and 2016 lobbying 00:17:27.539 --> 00:17:29.619 Congress. And they had a very specific target 00:17:29.619 --> 00:17:33.009 for that money. A very specific target. A bill 00:17:33.009 --> 00:17:35.829 from Congressman Tom Marino called the Ensuring 00:17:35.829 --> 00:17:38.069 Patient Access and Effective Drug Enforcement 00:17:38.069 --> 00:17:41.970 Act. The name sounds positive, but its impact 00:17:41.970 --> 00:17:45.549 on enforcement was profound. OK, explain how 00:17:45.549 --> 00:17:47.670 that bill actually changed things. What was the 00:17:47.670 --> 00:17:50.250 mechanism? The bill was signed into law by President 00:17:50.250 --> 00:17:53.539 Obama in 2016. and it basically made it much 00:17:53.539 --> 00:17:56.180 harder for the DEA to take immediate action against 00:17:56.180 --> 00:17:59.680 distributors. Before the law, the DEA could issue 00:17:59.680 --> 00:18:02.359 an immediate suspension order if it found a distributor 00:18:02.359 --> 00:18:05.140 posed an imminent danger to the public. A pretty 00:18:05.140 --> 00:18:07.460 low bar if you see something dangerous. A necessary 00:18:07.460 --> 00:18:10.440 bar. The new law raised that bar significantly. 00:18:10.480 --> 00:18:13.440 It required the DEA to prove a pattern of repeated 00:18:13.440 --> 00:18:16.779 or egregious violations. So they moved the goalposts, 00:18:16.779 --> 00:18:19.180 making it much harder for the DEA to quickly 00:18:19.180 --> 00:18:21.349 shut down the flow of suspicious orders. And 00:18:21.349 --> 00:18:22.910 here is where the story gets really interesting, 00:18:22.990 --> 00:18:25.130 because the DEA investigations before this bill 00:18:25.130 --> 00:18:27.529 was passed give us concrete examples of these 00:18:27.529 --> 00:18:29.730 failures. We have a clear timeline. The timeline 00:18:29.730 --> 00:18:33.150 starts in 2008. Cardinals agreed to pay $34 million 00:18:33.150 --> 00:18:36.490 in civil penalties for failing to report suspicious 00:18:36.490 --> 00:18:39.750 hydrocodone orders. But the money wasn't the 00:18:39.750 --> 00:18:42.210 biggest issue. It was the operational halt that 00:18:42.210 --> 00:18:44.609 came before it. The 10 -month DEA suspension 00:18:44.609 --> 00:18:47.470 of three of their facilities, one in Lakeland, 00:18:47.529 --> 00:18:49.910 Florida, one in New Jersey, and one in Washington. 00:18:50.569 --> 00:18:52.809 For a logistics company, a 10 -month suspension 00:18:52.809 --> 00:18:55.829 of three major hubs is catastrophic. It's an 00:18:55.829 --> 00:18:58.549 immediate, punishing consequence. But the lesson, 00:18:58.569 --> 00:19:01.549 it seems, wasn't learned. Because in 2012, four 00:19:01.549 --> 00:19:04.730 years later, the DEA again suspended the license 00:19:04.730 --> 00:19:07.390 of that same Lakeland, Florida distribution center. 00:19:07.829 --> 00:19:10.410 This time for allowing four specific pharmacies, 00:19:10.529 --> 00:19:13.690 including two CVS stores, to buy what the DEA 00:19:13.690 --> 00:19:16.349 called excessive amounts of oxycodone. And this 00:19:16.349 --> 00:19:18.650 time, Cardinal fought back hard. They got a temporary 00:19:18.650 --> 00:19:20.630 restraining order against the DEA to try and 00:19:20.630 --> 00:19:22.789 keep the facility open. But the federal district 00:19:22.789 --> 00:19:24.890 court ultimately sided with the government. And 00:19:24.890 --> 00:19:27.349 the court's reasoning is key here. The court 00:19:27.349 --> 00:19:29.529 agreed with the DEA that Cardinal's activities 00:19:29.529 --> 00:19:32.009 represented an imminent danger to the public. 00:19:37.630 --> 00:19:40.970 an immediate threat to public safety. And our 00:19:40.970 --> 00:19:43.130 sources have a fascinating anecdote from that 00:19:43.130 --> 00:19:46.049 time that reveals the political pressure happening 00:19:46.049 --> 00:19:48.609 behind the scenes. Right. Deputy Attorney General 00:19:48.609 --> 00:19:51.890 James M. Cole met with the DEA chief at the time, 00:19:51.930 --> 00:19:54.630 Joseph Ranazzisi, about the Cardinal investigation. 00:19:54.950 --> 00:19:58.329 And Cole suggested Ranazzisi should, quote, listen 00:19:58.329 --> 00:20:00.769 to what Cardinal had to say. This is a critical 00:20:00.769 --> 00:20:03.519 insight. Ren Azizi was the guy issuing these 00:20:03.519 --> 00:20:05.700 suspension orders. He was aggressively enforcing 00:20:05.700 --> 00:20:08.079 the law. The intervention from the deputy AG 00:20:08.079 --> 00:20:11.440 suggests a powerful tension. The DEA was battling 00:20:11.440 --> 00:20:13.720 not just the company's lawyers, but potentially 00:20:13.720 --> 00:20:15.900 political influence from the highest levels of 00:20:15.900 --> 00:20:17.579 the Justice Department. The message was clear. 00:20:17.980 --> 00:20:20.759 Slow down. And when you look at that in the context 00:20:20.759 --> 00:20:22.799 of the lobbying for the Marino bill a few years 00:20:22.799 --> 00:20:25.319 later, you see a pattern. A pattern of institutional 00:20:25.319 --> 00:20:27.940 resistance to tough enforcement. And this pattern 00:20:27.940 --> 00:20:29.779 of compliance challenges wasn't just with the 00:20:29.779 --> 00:20:32.839 opioid crisis. It extends to the FDA and even 00:20:32.839 --> 00:20:34.839 their own internal accounting. Let's start with 00:20:34.839 --> 00:20:36.920 the FDA. This was about their manufactured medical 00:20:36.920 --> 00:20:40.599 devices. In 2006, Cardinal Health had to stop 00:20:40.599 --> 00:20:43.420 producing the All -RSSE infusion pump after the 00:20:43.420 --> 00:20:46.650 FDA seized about 1 ,300 of them. Infusion pumps 00:20:46.650 --> 00:20:49.329 are critical devices. The FDA seizing them implies 00:20:49.329 --> 00:20:52.650 a really serious safety or quality concern. It 00:20:52.650 --> 00:20:55.029 forced Cardinal into immediate regulatory action. 00:20:55.170 --> 00:20:58.170 Which resulted in a consent decree in 2007. That's 00:20:58.170 --> 00:21:00.029 a legally binding agreement where the company 00:21:00.029 --> 00:21:02.710 has to basically let the FDA oversee its operations 00:21:02.710 --> 00:21:04.930 to guarantee safety. It's intense regulatory 00:21:04.930 --> 00:21:06.970 monitoring. And then after more inspections, 00:21:07.069 --> 00:21:08.950 they had to enter into another consent agreement 00:21:08.950 --> 00:21:12.619 in 2009. So this show's repeated. serious regulatory 00:21:12.619 --> 00:21:15.000 interventions over several years. And finally, 00:21:15.059 --> 00:21:17.099 there were the accounting concerns. In September 00:21:17.099 --> 00:21:19.519 2004, the company announced it had to restate 00:21:19.519 --> 00:21:21.519 its past financial results for fiscal years, 00:21:21.779 --> 00:21:26.500 2001, 2002, 2003, and most of 2004, all revised 00:21:26.500 --> 00:21:29.319 downward. Restating nearly four years of financials 00:21:29.319 --> 00:21:31.640 is a massive red flag for investors and regulators. 00:21:32.000 --> 00:21:34.480 This came after an accounting review and a federal 00:21:34.480 --> 00:21:36.599 investigation. So while analysts at the time 00:21:36.599 --> 00:21:39.440 called it troubling yet limited in scope, it 00:21:39.440 --> 00:21:41.809 adds another dimension to this. pattern of compliance 00:21:41.809 --> 00:21:44.430 and oversight challenges. It does. So we've established 00:21:44.430 --> 00:21:47.390 Cardinal Health as a giant, defined by two massive 00:21:47.390 --> 00:21:51.109 themes, relentless complex growth through M &A 00:21:51.109 --> 00:21:54.960 and profound regulatory controversy. So now let's 00:21:54.960 --> 00:21:56.920 look at the actual financial footprint to see 00:21:56.920 --> 00:21:59.019 how those two forces collided. This is critical 00:21:59.019 --> 00:22:01.500 because the numbers tell a story that the legal 00:22:01.500 --> 00:22:04.819 filings can't. We have detailed financial stats 00:22:04.819 --> 00:22:08.599 from 2005 right up to 2025 forecasts, and they 00:22:08.599 --> 00:22:10.740 let us see the direct impact of all this. And 00:22:10.740 --> 00:22:13.119 what stands out immediately is the relentless 00:22:13.119 --> 00:22:15.579 growth in revenue. The top line, you look at 00:22:15.579 --> 00:22:19.640 2012, it's $107 billion. By 2023, it's $205 billion, 00:22:19.940 --> 00:22:22.440 just constantly expanding. But that revenue growth 00:22:22.440 --> 00:22:24.190 hides incredible. incredible volatility in the 00:22:24.190 --> 00:22:26.369 profit. When you look at the net income column, 00:22:26.569 --> 00:22:29.250 the picture changes completely, especially after 00:22:29.250 --> 00:22:31.150 the opioid settlements start to hit the books 00:22:31.150 --> 00:22:33.390 around 2018. Absolutely. The net income just 00:22:33.390 --> 00:22:35.190 falls off a cliff. It goes from over $7 billion 00:22:35.190 --> 00:22:38.769 in 2018 down to just $1 .36 billion in 2019. 00:22:39.009 --> 00:22:41.710 That's a massive drop. And it happens precisely 00:22:41.710 --> 00:22:44.190 as the opioid liability pressure intensified. 00:22:44.269 --> 00:22:47.640 And it gets even starker. Look at 2020 and 2022. 00:22:48.079 --> 00:22:51.119 Despite soaring revenue, Cardinal Health reported 00:22:51.119 --> 00:22:54.559 something amazing for a company this big. A negative 00:22:54.559 --> 00:22:58.720 net income, a loss, $3 .7 billion lost in 2020 00:22:58.720 --> 00:23:01.319 and another loss of nearly a billion dollars 00:23:01.319 --> 00:23:04.740 in 2022. This is a classic indicator that huge 00:23:04.740 --> 00:23:07.500 structural liabilities like those multi -billion 00:23:07.500 --> 00:23:10.920 dollar settlements are essentially. eating all 00:23:10.920 --> 00:23:13.200 the revenue from the core business. You have 00:23:13.200 --> 00:23:15.339 a massive top line, but a bottom line that's 00:23:15.339 --> 00:23:17.619 bleeding red. The settlements literally transform 00:23:17.619 --> 00:23:20.680 profits into debt. And the 2025 figures show 00:23:20.680 --> 00:23:22.900 a really startling paradox on their balance sheet. 00:23:23.019 --> 00:23:26.339 Total assets are $53 billion, but the total equity 00:23:26.339 --> 00:23:29.420 figure is negative $2 .8 billion. Negative total 00:23:29.420 --> 00:23:31.559 equity. That's a genuinely striking statistic. 00:23:31.640 --> 00:23:33.400 Let's break that down for the listener. Total 00:23:33.400 --> 00:23:35.400 equity is basically what the company would be 00:23:35.400 --> 00:23:37.700 worth to shareholders if you sold all the assets 00:23:37.700 --> 00:23:39.259 and paid off all the debts. So if it's negative 00:23:39.259 --> 00:23:41.750 $2 .8 billion, what does that mean? It means 00:23:41.750 --> 00:23:44.250 the company's total liabilities, what they owe 00:23:44.250 --> 00:23:46.269 to creditors, vendors, and critically, those 00:23:46.269 --> 00:23:49.390 long -term settlement obligations, actually exceed 00:23:49.390 --> 00:23:52.490 the value of its total assets. They are technically 00:23:52.490 --> 00:23:54.930 leveraged beyond their book value. So you have 00:23:54.930 --> 00:23:57.470 one of the 15 largest companies in the U .S. 00:23:57.470 --> 00:24:00.509 controlling the supply chain for 75 % of hospitals 00:24:00.509 --> 00:24:06.289 with $223 billion in revenue. But on paper, they 00:24:06.289 --> 00:24:08.910 are carrying more debt and liabilities than asset 00:24:08.910 --> 00:24:12.150 value. It is the long shadow of those multi -billion 00:24:12.150 --> 00:24:14.890 dollar legal settlements. It's a powerful illustration 00:24:14.890 --> 00:24:17.789 of the true cost of these controversies. A $6 00:24:17.789 --> 00:24:20.690 .4 billion settlement, even paid over 18 years, 00:24:20.869 --> 00:24:23.670 can completely reshape a Fortune 15 balance sheet. 00:24:24.119 --> 00:24:26.200 Now, to be balanced, we do need to acknowledge 00:24:26.200 --> 00:24:28.339 the Cardinal Health Foundation, their charitable 00:24:28.339 --> 00:24:30.619 arm, which provides a counterpoint to all of 00:24:30.619 --> 00:24:33.579 this. It's a necessary part of any major corporation's 00:24:33.579 --> 00:24:35.900 role, and their foundation is active. They focus 00:24:35.900 --> 00:24:38.279 on health -related causes. They have annual product 00:24:38.279 --> 00:24:40.920 donations of over $9 million that go to international 00:24:40.920 --> 00:24:43.160 relief organizations. They also have a matching 00:24:43.160 --> 00:24:46.099 funds program for employees, up to $1 ,000, which 00:24:46.099 --> 00:24:48.660 encourages internal giving. And in the U .S., 00:24:48.660 --> 00:24:51.769 they started the E3 grant program in 2008. Over 00:24:51.769 --> 00:24:54.029 seven years, they invested more than $7 million 00:24:54.029 --> 00:24:57.490 in over 200 hospitals and health systems, focusing 00:24:57.490 --> 00:24:59.910 on improving patient safety and efficiency. And 00:24:59.910 --> 00:25:02.730 there's a specific example in our sources, a 00:25:02.730 --> 00:25:06.109 $3 million contribution in 2015 to the Solutions 00:25:06.109 --> 00:25:08.710 for Patient Safety Project, which supports initiatives 00:25:08.710 --> 00:25:11.150 in children's hospitals. So this charitable giving 00:25:11.150 --> 00:25:13.250 is part of their ecosystem. It provides tangible 00:25:13.250 --> 00:25:16.230 benefits and potentially mitigates some of the 00:25:16.230 --> 00:25:18.829 negative public perception from the controversies. 00:25:18.849 --> 00:25:21.109 It shows the scale of the resources they have, 00:25:21.190 --> 00:25:23.210 even when their bottom line is under so much 00:25:23.210 --> 00:25:25.849 pressure. Which brings us to our final synthesis. 00:25:26.480 --> 00:25:29.119 We've seen these two massive contradictory stories. 00:25:29.180 --> 00:25:31.960 The story of Cardinal Health as an utterly essential 00:25:31.960 --> 00:25:35.099 piece of global logistics, serving three quarters 00:25:35.099 --> 00:25:37.680 of all U .S. hospitals. And we've contrasted 00:25:37.680 --> 00:25:39.539 that with a story of a company defined by profound 00:25:39.539 --> 00:25:42.500 regulatory friction and a massive financial reckoning. 00:25:42.740 --> 00:25:46.279 The $26 billion opioid settlement, the lobbying, 00:25:46.480 --> 00:25:49.220 the facility suspensions, it just embodies this 00:25:49.220 --> 00:25:51.880 tension between a profit -driven enterprise and 00:25:51.880 --> 00:25:54.190 public health responsibility. And running underneath 00:25:54.190 --> 00:25:56.950 all of this is the M &A strategy that made them 00:25:56.950 --> 00:25:59.869 so big in the first place. This constant cycle 00:25:59.869 --> 00:26:03.289 of buying, divesting, and restructuring. Which 00:26:03.289 --> 00:26:06.250 leads perfectly to our final provocative thought 00:26:06.250 --> 00:26:09.450 for you, the listener, to mull over. We talked 00:26:09.450 --> 00:26:11.170 about this history of aggressive acquisition 00:26:11.170 --> 00:26:13.650 and divestiture and the financial volatility 00:26:13.650 --> 00:26:15.809 it creates. Right. Let's bring back those examples. 00:26:16.049 --> 00:26:18.349 They bought the Chinese distributor Yongyu and 00:26:18.349 --> 00:26:21.009 quickly sold it. More dramatically, they bought 00:26:21.009 --> 00:26:23.829 Cordis for nearly $2 billion and sold it six 00:26:23.829 --> 00:26:26.750 years later for $1 billion, a nearly billion 00:26:26.750 --> 00:26:29.230 -dollar loss. And we also saw the recent billion 00:26:29.230 --> 00:26:31.809 -dollar acquisition of the diabetes supply group 00:26:31.809 --> 00:26:35.089 and the almost $2 billion outlay for the urology 00:26:35.089 --> 00:26:38.319 management company. These are major bets on highly 00:26:38.319 --> 00:26:40.480 specialized sectors. So the question becomes, 00:26:40.680 --> 00:26:44.039 given this highly dynamic, high risk nature of 00:26:44.039 --> 00:26:46.839 these huge transactions, is the primary strategy 00:26:46.839 --> 00:26:48.640 of a company like Cardinal Health fundamentally 00:26:48.640 --> 00:26:51.160 about integrating essential services for the 00:26:51.160 --> 00:26:54.400 long term stability of the supply chain? Or is 00:26:54.400 --> 00:26:57.019 the strategy increasingly defined by this rapid 00:26:57.019 --> 00:27:00.700 constant cycle of. buying restructuring and then 00:27:00.700 --> 00:27:03.859 divesting huge divisions moving from distribution 00:27:03.859 --> 00:27:06.740 to devices to services and back again with the 00:27:06.740 --> 00:27:10.200 goal of perpetual if volatile growth and does 00:27:10.200 --> 00:27:12.960 that strategy even if it's profitable in the 00:27:12.960 --> 00:27:15.920 short term, actually compromise the long -term 00:27:15.920 --> 00:27:18.740 stability and core focus of these vital infrastructure 00:27:18.740 --> 00:27:20.559 companies. Especially when it's coupled with 00:27:20.559 --> 00:27:23.920 such immense legal liability. Exactly. That complexity, 00:27:24.079 --> 00:27:26.619 where the quest for diversified growth intersects 00:27:26.619 --> 00:27:28.920 with the cost of immense liability and potentially 00:27:28.920 --> 00:27:31.000 leaves a company with negative equity, despite 00:27:31.000 --> 00:27:33.579 being essential infrastructure, that is the true 00:27:33.579 --> 00:27:35.920 landscape of modern healthcare logistics. Think 00:27:35.920 --> 00:27:38.099 about that as you consider where the power really 00:27:38.099 --> 00:27:40.400 lies in the American healthcare system. We've 00:27:40.400 --> 00:27:42.450 completed... our deep dive into cardinal health. 00:27:42.589 --> 00:27:43.529 Thank you for joining us.