Pharma Segment Guidance Raise
Q: What drove the 300 bps pharma guidance increase?
A: The strong Q1 performance led us to raise our pharma guidance to our long-term target of 4% to 6% profit growth. This was driven by broad-based demand, effective management of customer transitions, and increased contributions from brand and specialty products. GLP-1s added about 4 percentage points to revenue growth but were not a significant driver of earnings.

Medical Segment Unexpected Costs
Q: How will health and wellness costs affect Medical's outlook?
A: We updated our Medical guidance to $140 million to $175 million, reflecting $45 million in unanticipated health and wellness costs in Q1. These costs were due to actuarial errors and unusually high claims. We continue to execute our improvement plan and expect sequential quarterly improvements.

GLP-1 Impact on Financials
Q: Did GLP-1s contribute to guidance uptick?
A: GLP-1s contributed 5% to our 16% Q1 revenue growth but are not a meaningful driver of earnings . Our economics on GLP-1s remain stable, and inventory levels have not fluctuated significantly.

Impact of Drug Price Reductions
Q: How will price cuts (e.g., STELARA) affect you?
A: Our model operates on a fixed fee basis. When brand companies lower prices, our dollar fee remains unchanged. We don't expect significant impact from drug price reductions, as seen with insulin price cuts.

Supply Chain and Tariff Risks
Q: Are tariffs impacting your costs?
A: Tariffs will raise costs, especially on products sourced from China. Less than 10% of our products come from China. We anticipate some price increases due to tariffs but are working on solutions to minimize the impact.

Simplification Efforts and Cost Savings
Q: Can you discuss your simplification initiatives?
A: Simplification is core to our strategy across all businesses. We are continuously finding ways to be more efficient, such as automation investments leading to record metrics in quality, service, and safety.

Nuclear Supply Disruption
Q: What's the timeline for nuclear supply issues?
A: Three of six reactors in Europe are down, affecting moly-99 supply. We expect the reactors to resume operations within the next couple of weeks, resolving the issue this quarter. We have not changed our full-year guidance due to this.

Competitive Intensity in Medical Segment
Q: Is competition increasing in Medical?
A: The market remains competitive but stable. The loss of regions in the VA program was of relatively low margin and is part of normal customer rotation.

Gross Margin Improvements
Q: How did gross margins improve this quarter?
A: While gross margin rate improved due to losing a low-margin customer, we focus on gross margin dollars over rate. We manage the balance between SG&A and gross margin to drive profitability.

Generics Market Dynamics
Q: What's happening in the generic drug market?
A: We saw good volumes in generics with consistent market dynamics. There was strength in utilization but nothing extraordinary in pricing.

Hurricane Impact and Utilization Trends
Q: Are hurricanes affecting procedure volumes?
A: We haven't seen meaningful impacts from hurricanes. Utilization remains consistent, though not as strong as in pharma. We are guiding for a normal utilization environment.

Election Outcome Impacts
Q: How might the election outcome affect you?
A: We believe in affordable access to healthcare and see this as a priority across parties. Tariffs could impact prices, but we feel well-positioned to work with any administration.

Pharma Guidance Details
Q: Should we annualize Q1 favorability in guidance?
A: Our guidance anticipates a more normalized level of growth in Q2–Q4. Part of Q1's favorability was due to favorable mix and strong volume, which may not continue at the same level.