Cardinal Health Reports First-Quarter Results

Cardinal Health Reports First-Quarter Results
-- Revenue increases 10 percent to $26.8 billion -- Operating earnings increase 13 percent to $412 million, or 16 percent to $442 million on a non-GAAP basis (1) -- Diluted earnings per share from continuing operations increase 11 percent to $0.73 on a non-GAAP basis (2) 

DUBLIN, Ohio, Oct. 27, 2011 /PRNewswire via COMTEX/ -- Cardinal Health today reported fiscal year 2012 first-quarter revenue of $26.8 billion and an 11 percent increase in non-GAAP diluted earnings per share (EPS) to $0.73. On a GAAP basis, diluted EPS from continuing operations declined 19 percent to $0.68, reflecting a prior-year gain of $0.21 from the sale of CareFusion stock. Strong revenue growth was driven by 10 percent revenue increases in both the Pharmaceutical and Medical segments. Results reflected 16 percent growth in non-GAAP operating earnings, led by a 19 percent increase in Pharmaceutical segment profit.

"Our fiscal 2012 has started with a solid first quarter, driven by strong revenue gains from both of our segments, continued progress on our margin initiatives and contributions from our recent acquisitions," said George Barrett, chairman and chief executive officer of Cardinal Health. "While we're pleased with the performance of our business in this first quarter, we're even more excited about the growth in strategic priority areas including specialty, positron emission tomography, generics, ambulatory, preferred medical products and China. Our progress in these areas provides increasing confidence that we're positioning well for future growth."

The company reaffirmed its fiscal 2012 outlook for non-GAAP diluted earnings per share of $3.04 to $3.19.

Q1 FY12 SUMMARY

 

       
                                                        Q1 FY12       Q1 FY11       Y/Y
                                                        ------------- ------------- -----
        Revenue                                         $26.8 billion $24.4 billion 10%
        ----------------------------------------------- ------------- ------------- -----
        Operating Earnings                              $412 million  $364 million  13%
        ----------------------------------------------- ------------- ------------- -----
        Non-GAAP Operating Earnings                     $442 million  $382 million  16%
        ----------------------------------------------- ------------- ------------- -----
        Earnings from Continuing Operations             $237 million  $294 million  (19)%
        ----------------------------------------------- ------------- ------------- -----
        Non-GAAP Earnings from Continuing Operations(3) $256 million  $231 million  11%
        ----------------------------------------------- ------------- ------------- -----
        Diluted EPS from Continuing Operations          $0.68         $0.84         (19)%
        ----------------------------------------------- ------------- ------------- -----
        Non-GAAP Diluted EPS from Continuing Operations $0.73         $0.66         11%
        ----------------------------------------------- ------------- ------------- -----
       

 


        As previously announced, the company's non-GAAP operating earnings, non-GAAP earnings
        from continuing operations and non-GAAP diluted EPS from continuing operations definitions
        exclude amortization of acquisition-related intangible assets for all periods presented.
       

 

SEGMENT RESULTS

Pharmaceutical segment

Revenue for the Pharmaceutical segment increased 10 percent to $24.4 billion, including significant contribution from acquisitions completed in FY11 and growth from existing customers. Segment profit increased 19 percent to $363 million, reflecting the contribution of the acquisitions and the performance of generics programs.

 

       
                       Q1 FY12       Q1 FY11       Y/Y
                       ------------- ------------- ---
        Revenue        $24.4 billion $22.3 billion 10%
        -------------- ------------- ------------- ---
        Segment Profit $363 million  $306 million  19%
        -------------- ------------- ------------- ---
       

 

Medical segment

Revenue for the Medical segment increased 10 percent to $2.4 billion, primarily driven by growth from existing and net new customers and the transition of CareFusion from fee-for-service to traditional distribution agreement. As anticipated, segment profit declined 5 percent to $79 million, as profit increases from the company's preferred products programs and the volume relating to both existing and net new customers were negatively offset by commodity costs and the impact associated with the previously disclosed Presource® kit matter.

 

       
                       Q1 FY12      Q1 FY11      Y/Y
                       ------------ ------------ ----
        Revenue        $2.4 billion $2.2 billion 10%
        -------------- ------------ ------------ ----
        Segment Profit $79 million  $84 million  (5)%
        -------------- ------------ ------------ ----
       

 

ADDITIONAL FIRST-QUARTER AND RECENT HIGHLIGHTS

Agreement to acquire Futuremed Healthcare Products in Canada, a distributor of medical disposables and specialized equipment to the long-term care channel, enhancing capability to serve and deliver greater value to customers across the continuum of care in Canada.

Launch of the new Protexis(TM) Latex Hydrogel surgical gloves -- sterile latex, powder-free surgical gloves with hydrogel coating -- and the new Protexis(TM) brand name for the company's powder-free surgical glove portfolio.

Specialty Solutions P4 Healthcare business and Keystone Mercy Health Plan partnership in an evidence-based program to improve cancer care for Medicaid patients in Southeastern Pennsylvania.

Repurchase of $300 million in Cardinal Health shares.

CONFERENCE CALL

Cardinal Health will host a webcast and conference call today at 8:30 a.m. Eastern to discuss first-quarter results and its future outlook. To access the call and corresponding slide presentation, go to the Investors page at cardinalhealth.com/investors. The call can also be accessed by dialing 617.213.8835 passcode 25843607. Presentation slides and an audio replay will be archived on the website after the conclusion of the meeting. The audio replay will also be available until Nov. 27 by dialing 617-801-6888, passcode 72444146.

UPCOMING EVENTS

Credit Suisse Healthcare Conference on Nov. 9 at the Arizona Biltmore Hotel in Phoenix at 10:30 a.m. Eastern

Oppenheimer Healthcare Conference on Dec. 13 at the New York Waldorf Astoria in New York at 2:30 p.m. Eastern

At these events, Cardinal Health executives will discuss the company's diverse products and services, company performance and strategies for continued growth. To access more details and live webcasts of these events, including remarks, go to the Investors page at cardinalhealth.com.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. /quotes/zigman/135665/quotes/nls/cah CAH +0.43% is a $103 billion health care services company that improves the cost-effectiveness of health care. As the business behind health care, Cardinal Health helps pharmacies, hospitals, ambulatory surgery centers and physician offices focus on patient care while reducing costs, enhancing efficiency and improving quality. Cardinal Health is an essential link in the health care supply chain, providing pharmaceuticals and medical products to more than 60,000 locations each day. The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company supports the growing diagnostic industry by supplying medical products to clinical laboratories and operating the nation's largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #19 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com.

(1) Non-GAAP operating earnings: Operating earnings excluding (1) restructuring and employee severance, (2) acquisition-related costs (including amortization of acquisition-related intangible assets), (3) impairments and loss on sale of assets, (4) litigation (recoveries)/charges, net, and (5) Other Spinoff Costs included within distribution, selling, general and administrative expenses.

(2) Non-GAAP diluted EPS from continuing operations: Non-GAAP earnings from continuing operations divided by diluted weighted average shares outstanding.

(3) Non-GAAP earnings from continuing operations: Earnings from continuing operations excluding (1) restructuring and employee severance, (2) acquisition-related costs (including amortization of acquisition-related intangible assets), (3) impairments and loss on sale of assets, (4) litigation (recoveries)/charges, net, (5) Other Spinoff Costs and (6) gain on sale of CareFusion stock, each net of tax

Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, analyst presentations and financial information regarding Cardinal Health is routinely posted and accessible on the Investors page at cardinalhealth.com.

Cautions Concerning Forward-Looking Statements

This news release contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue," and similar expressions, and include statements reflecting future results or guidance, statements of outlook and expense accruals. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include (but are not limited to) uncertainties related to demand for Cardinal Health's products and services; uncertainties relating to Cardinal Health's ability to achieve the expected benefits from the acquisitions of Kinray, Yong Yu, P4 Healthcare and Futuremed; uncertainties due to government health care reform including federal health care reform legislation; competitive pressures in Cardinal Health's various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; the timing of generic and branded pharmaceutical introductions and the frequency or rate of branded pharmaceutical price appreciation or generic pharmaceutical price deflation; changes in the distribution patterns or reimbursement rates for health care products and/or services; the effects of any investigation by any regulatory authority; and changes in the cost of commodities such as oil-based resins, cotton, latex and diesel fuel. Cardinal Health is subject to additional risks and uncertainties described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports. This news release reflects management's views as of Oct. 27, 2011. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

 

                                                                                                                       Schedule 1
                                                                                                                       ----------
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
                                                                                         First Quarter
                                                                                         ----------------------------
        (in millions, except per Common Share amounts)                                   2012           2011           % Change
        ----------------------------------------------                                   -------------  -------------  ----------
        Revenue                                                                          $ 26,792.0     $ 24,437.5     10 %
        Cost of products sold                                                            25,707.5       23,475.3       10 %
        Gross margin                                                                     1,084.5        962.2          13 %
        Operating expenses:
        Distribution, selling, general and administrative expenses                       643.3          581.5          11 %
        Restructuring and employee severance                                             3.4            1.8            N.M.
        Acquisition-related costs                                                        27.4           11.7           N.M.
        Impairments and loss on sale of assets                                           1.3            1.9            N.M.
        Litigation (recoveries)/charges, net                                             (3.2)          1.4            N.M.
        Operating earnings                                                               412.3          363.9          13 %
        Other (income)/expenses, net                                                     3.8            (7.5)          N.M.
        Interest expense, net                                                            23.5           22.0           7 %
        Gain on sale of investment in CareFusion                                         -              (74.8)         N.M.
        Earnings before income taxes and discontinued operations                         385.0          424.2          (9)%
        Provision for income taxes                                                       147.9          129.8          14 %
        Earnings from continuing operations                                              237.1          294.4          (19)%
        Earnings/(loss) from discontinued operations (net of tax expense of $0.8 million
        and $0.0 million for the first quarter of fiscal 2012 and 2011, respectively)    (0.3)          0.4            N.M.
        Net earnings                                                                     $      236.8   $      294.8   (20)%
                                                                                         -------------  -------------
        Basic earnings per Common Share:
        Continuing operations                                                            $        0.69  $        0.84  (19)%
        Discontinued operations                                                          -              -              N.M.
        Net basic earnings per Common Share                                              $        0.69  $        0.84  (19)%
        Diluted earnings per Common Share:
        Continuing operations                                                            $        0.68  $        0.84  (19)%
        Discontinued operations                                                          -              -              N.M.
        Net diluted earnings per Common Share                                            $        0.68  $        0.84  (19)%
        Weighted average number of Common Shares outstanding:
        Basic                                                                            344.8          348.9
        Diluted                                                                          349.4          351.9
       

 


                                                                                                      Schedule 2
                                                                                                      ------------
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                 September 30,        June 30,
        (in millions)                                                            2011                 2011
        ------------------------------------                                     -------------------  ------------
                                                                                 (UNAUDITED)
        Assets
        Cash and equivalents                                                     $           2,010.6  $    1,929.3
        Trade receivables, net                                                   6,232.6              6,155.7
        Inventories                                                              7,497.2              7,334.2
        Prepaid expenses and other                                               982.8                896.7
        Total current assets                                                     16,723.2             16,315.9
                                                                                 -------------------  ------------
        Property and equipment, net                                              1,494.0              1,512.2
        Goodwill and other intangibles, net                                      4,249.3              4,259.0
        Other assets                                                             716.5                758.8
        Total assets                                                             $         23,183.0   $  22,845.9
        Liabilities and Shareholders' Equity
        Accounts payable                                                         $         11,748.9   $  11,331.5
        Current portion of long-term obligations and other short-term borrowings 333.1                326.7
        Other accrued liabilities                                                1,714.6              1,711.3
        Total current liabilities                                                13,796.6             13,369.5
                                                                                 -------------------  ------------
        Long-term obligations, less current portion                              2,195.0              2,175.3
        Deferred income taxes and other liabilities                              1,477.5              1,452.5
        Total shareholders' equity                                               5,713.9              5,848.6
        Total liabilities and shareholders' equity                               $         23,183.0   $  22,845.9
       

 


                                                                                                               Schedule 3
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                                                                                  First Quarter
                                                                                                  --------------------------
        (in millions)                                                                             2012         2011
        --------------------------------------------                                              -----------  -------------
        CASH FLOWS FROM OPERATING ACTIVITIES:
        Net Earnings                                                                              $    236.8   $       294.8
        (Earnings)/loss from discontinued operations                                              0.3          (0.4)
        Earnings from continuing operations                                                       237.1        294.4
                                                                                                  -----------  -------------
        Adjustments to reconcile earnings from continuing operations to net cash from operations:
        Depreciation and amortization                                                             78.2         68.5
        Gain on sale of investment in CareFusion                                                  -            (74.8)
        Impairments and loss on sale of assets                                                    1.3          1.9
        Share-based compensation                                                                  19.8         21.4
        Provision for bad debts                                                                   0.9          2.7
        Change in operating assets and liabilities, net of effects from acquisitions:
        Increase in trade receivables                                                             (69.3)       (272.3)
        Increase in inventories                                                                   (160.9)      (731.8)
        Increase in accounts payable                                                              409.8        1,033.1
        Other accrued liabilities and operating items, net                                        (12.7)       (125.4)
        Net cash provided by operating activities-continuing operations                           504.2        217.7
        Net cash used in operating activities-discontinued operations                             -            (0.7)
        Net cash provided by operating activities                                                 504.2        217.0
                                                                                                  -----------  -------------
        CASH FLOWS FROM INVESTING ACTIVITIES:
        Acquisition of subsidiaries, net of cash acquired                                         (7.3)        (559.9)
        Additions to property and equipment                                                       (44.3)       (61.9)
        Proceeds from sale of CareFusion common stock                                             -            705.9
        Proceeds from maturities of held-to-maturity securities                                   10.0         -
        Net cash provided by/(used in) investing activities-continuing operations                 (41.6)       84.1
        Net cash provided by investing activities-discontinued operations                         -            -
        Net cash provided by/(used in) investing activities                                       (41.6)       84.1
                                                                                                  -----------  -------------
        CASH FLOWS FROM FINANCING ACTIVITIES:
        Net change in short-term borrowings                                                       (5.0)        -
        Reduction of long-term obligations                                                        (0.5)        (0.4)
        Proceeds from issuance of Common Shares                                                   18.1         8.4
        Tax disbursements from share-based compensation                                           (21.6)       (14.1)
        Excess tax benefit from exercises of stock options                                        4.9          2.0
        Dividends on Common Shares                                                                (77.2)       (70.3)
        Purchase of treasury shares                                                               (300.0)      (269.8)
        Net cash used in financing activities-continuing operations                               (381.3)      (344.2)
        Net cash provided by financing activities-discontinued operations                         -            -
        Net cash used in financing activities                                                     (381.3)      (344.2)
                                                                                                  -----------  -------------
        Net increase/(decrease) in cash and equivalents                                           81.3         (43.1)
        Cash and equivalents at beginning of period                                               1,929.3      2,755.3
        Cash and equivalents at end of period                                                     $ 2,010.6    $    2,712.2
       

 


                                                                                      Schedule 4
                                                                                      ------------------------------
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        BUSINESS ANALYSIS
        TOTAL COMPANY
                                                                        Non-GAAP
                                            First Quarter               First Quarter
                                            --------------------------  --------------------------------------------
        (in millions)                       2012          2011          2012          2011
        -----------------                   ------------  ------------  ------------  ------------------------------
        Revenue
        Amount                              $ 26,792      $ 24,438
        Growth Rate                         10 %          (1)%
        Operating Earnings
        Amount                              $      412    $      364    $ 442         $          382
        Growth Rate                         13 %          52 %          16 %          17 %
        Earnings from Continuing Operations
        Amount                              $      237    $      294    $ 256         $          231
        Growth Rate                         (19)%         N.M.          11 %          18 %
        Refer to the GAAP/Non-GAAP Reconciliation for definitions and calculations supporting the Non-GAAP balances.
       

 


                                                                                                                                                                                                                                                                    Schedule 5
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        SEGMENT BUSINESS ANALYSIS
                                                                    First Quarter                                                                                                                       First Quarter
                                                                    ----------------------------------------------------------------------                                                              ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        (in millions)                                               2012                                                        2011        (in millions)                                               2012                                                        2011
        ----------------------------------------------------------  ----------------------------------------------------------  ----------  ----------------------------------------------------------  ----------------------------------------------------------  ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        PHARMACEUTICAL                                                                                                                      MEDICAL
        Revenue                                                                                                                             Revenue
        Amount                                                      $ 24,418                                                    $ 22,273    Amount                                                      $ 2,380                                                     $       2,169
        Growth Rate                                                 10 %                                                        (1)%        Growth Rate                                                 10 %                                                        (3)%
        Mix                                                         91 %                                                        91 %        Mix                                                         9 %                                                         9 %
        Segment Profit                                                                                                                      Segment Profit
        Amount                                                      $      363                                                  $      306  Amount                                                      $      79                                                   $            84
        Growth Rate                                                 19 %                                                        45 %        Growth Rate                                                 (5)%                                                        (27)%
        Mix                                                         82 %                                                        79 %        Mix                                                         18 %                                                        21 %
        Segment Profit Margin                                       1.49 %                                                      1.37 %      Segment Profit Margin                                       3.32 %                                                      3.85 %
        Refer to definitions for an explanation of calculations.
        Total consolidated revenue for the three months ended September 30, 2011 was $26,792 million, which included total segment revenue of $26,798 million and Corporate revenue of $(6) million. Total consolidated revenue for the three months ended September 30, 2010 was $24,438 million, which included total segment revenue of $24,442 million and Corporate revenue of $(4) million.  Corporate revenue consists primarily of elimination of inter-segment revenue.
        Total consolidated operating earnings for the three months ended September 30, 2011 were $412 million, which included total segment profit of $442 million and Corporate costs of $(30) million. Total consolidated operating earnings for the three months ended September 30, 2010 were $364 million, which included total segment profit of $390 million and Corporate costs of $(26) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs, impairments and loss on sale of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.
       

 


                                                                                                      Schedule 6
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        SCHEDULE OF NOTABLE ITEMS
                                                                          First Quarter
                                                                          ----------------------------------------------------------------
        (in millions, except per Common Share amounts)                    2012                        2011
        ----------------------------------------------                    --------------------------  ------------------------------------
        Restructuring and Employee Severance
        Restructuring and employee severance                              $   (3.4)                   $      (1.8)
        Tax benefit                                                       1.3                         0.6
        Restructuring and employee severance, net of tax                  $   (2.1)                   $      (1.2)
        Decrease to diluted EPS from continuing operations                $ (0.01)                    $         -
        Acquisition-Related Costs
        Amortization of acquisition-related intangible assets             $ (18.9)                    $    (10.3)
        Tax benefit                                                       6.4                         3.8
        Amortization of acquisition-related intangible assets, net of tax $ (12.5)                    $      (6.5)
        Decrease to diluted EPS from continuing operations                $ (0.04)                    $    (0.02)
        Other acquisition-related costs                                   $   (8.6)                   $      (1.3)
        Tax benefit                                                       3.0                         0.2
        Other acquisition-related costs, net of tax                       $   (5.6)                   $      (1.1)
        Decrease to diluted EPS from continuing operations                $ (0.02)                    $         -
        Total acquisition-related costs (1)                               $ (27.4)                    $    (11.7)
        Tax benefit (1)                                                   9.4                         4.0
        Total acquisition-related costs, net of tax (1)                   $ (18.0)                    $      (7.7)
        Decrease to diluted EPS from continuing operations (1)            $ (0.05)                    $    (0.02)
        Impairments and Loss on Sale of Assets
        Impairments and loss on sale of assets                            $   (1.3)                   $      (1.9)
        Tax benefit                                                       0.5                         0.7
        Impairments and loss on sale of assets, net of tax                $   (0.8)                   $      (1.2)
        Decrease to diluted EPS from continuing operations                $      -                    $         -
        Litigation (Recoveries)/Charges, Net
        Litigation (recoveries)/charges, net                              $    3.2                    $      (1.4)
        Tax benefit/(expense)                                             (1.2)                       0.6
        Litigation (recoveries)/charges, net, net of tax                  $    2.0                    $      (0.8)
        Increase to diluted EPS from continuing operations                $  0.01                     $         -
        Other Spin-Off Costs
        Other spin-off costs (2)                                          $   (0.6)                   $      (1.6)
        Tax benefit                                                       0.2                         0.6
        Other spin-off costs, net of tax                                  $   (0.4)                   $      (1.0)
        Decrease to diluted EPS from continuing operations                $      -                    $         -
        Gain on Sale of CareFusion Stock
        Gain on sale of CareFusion stock                                  $      -                    $     74.8
        Tax expense                                                       -                           -
        Gain on sale of CareFusion stock, net of tax                      $      -                    $     74.8
        Increase to diluted EPS from continuing operations                $      -                    $     0.21
        Weighted Average Number of Diluted Shares Outstanding             349.4                       351.9
        (1) The sum of components may not equal the total due to rounding.
        (2) Other spin-off costs are included within distribution, selling, general and administrative expenses for all periods presented.
       

 


                                                                                                 Schedule 7
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        ASSET MANAGEMENT ANALYSIS
                                                               First Quarter
                                                               --------------------------------------------------------------------------
                                                               2012                              2011
                                                               --------------------------------  ----------------------------------------
        Days Sales Outstanding                                 20.6                              19.9
        Days Inventory on Hand                                 23.0                              23.8
        Days Payable Outstanding                               36.1                              35.4
        Net Working Capital Days                               7.5                               8.3
        Debt to Total Capital                                  31 %                              29 %
        Net Debt to Capital                                    8 %                               (12)%
        Return on Equity                                       16.4 %                            22.4 %
        Non-GAAP Return on Equity                              17.7 %                            17.6 %
        Effective Tax Rate from Continuing Operations          38.4 %                            30.6 %
        Non-GAAP Effective Tax Rate from Continuing Operations 38.1 %                            37.1 %
        Refer to the GAAP/Non-GAAP Reconciliation for Non-GAAP calculations. Refer to DSO, DIOH and DPO for definitions and calculations.
       

 


                                                                                                                                                                                                         Schedule 8
                                                                                                                                                                                                         ---------------------
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        GAAP / NON-GAAP RECONCILIATIONS
        (in millions, except per Common Share amounts)
                                               First Quarter 2012
                                               -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Operating             Operating             Earnings              Provision             Earnings              Earnings              Diluted               Diluted
                                               Earnings              Earnings              Before                for                   from                  from                  EPS from              EPS from
                                                                     Growth                Income                Income                Continuing            Continuing            Continuing            Continuing
                                                                     Rate                  Taxes and             Taxes (1)             Operations            Operations            Operations            Operations
                                                                                           Discontinued                                                      Growth Rate                                 Growth Rate
                                                                                           Operations
                                               --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
                                               --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
        GAAP                                   $        412          13 %                  $               385   $        148          $           237       (19)%                 $          0.68       (19)%
        -------------------------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
        Restructuring and Employee Severance   $            3                              $                   3 $            1        $               2                           $          0.01
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Acquisition-Related Costs (2)          $          27                               $                 27  $            9        $             18                            $          0.05
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Impairments and Loss on Sale of Assets $            1                              $                   1 $            1        $               1                           $             -
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Litigation (Recoveries)/Charges, net   $           (3)                             $                 (3) $          (1)        $             (2)                           $        (0.01)
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Other Spin-Off Costs                   $            1                              $                   1 $            -        $               -                           $             -
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Gain on Sale of CareFusion Stock       $           -                               $                 -   $          -          $             -                             $             -
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Non-GAAP                               $        442          16 %                  $               415   $        158          $           256       11 %                  $          0.73       11 %
        -------------------------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
                                               First Quarter 2011
                                               -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Operating             Operating             Earnings              Provision             Earnings              Earnings              Diluted               Diluted
                                               Earnings              Earnings              Before                for                   from                  from                  EPS from              EPS from
                                                                     Growth Rate           Income                Income                Continuing            Continuing            Continuing            Continuing
                                                                                           Taxes and             Taxes (1)             Operations            Operations            Operations            Operations
                                                                                           Discontinued                                                      Growth Rate                                 Growth Rate
                                                                                           Operations
                                               --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
                                               --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
        GAAP                                   $        364          52 %                  $               424   $        130          $           294       N.M.                  $          0.84       N.M.
        -------------------------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
        Restructuring and Employee Severance   $            2                              $                   2 $            1        $               1                           $             -
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Acquisition-Related Costs (2)          $          12                               $                 12  $            4        $               8                           $          0.02
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Impairments and Loss on Sale of Assets $            2                              $                   2 $            1        $               1                           $             -
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Litigation (Recoveries)/Charges, net   $            1                              $                   1 $            1        $               1                           $             -
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Other Spin-Off Costs                   $            2                              $                   2 $            1        $               1                           $             -
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Gain on Sale of CareFusion Stock       $           -                               $               (75)  $          -          $           (75)                            $        (0.21)
        -------------------------------------- ---------------------                       --------------------- --------------------- ---------------------                       ---------------------
        Non-GAAP                               $        382          17 %                  $               368   $        136          $           231       18 %                  $          0.66       22 %
        -------------------------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
        The sum of the components may not equal the total due to rounding.
        (1) We apply varying tax rates depending upon the tax jurisdiction where the items are incurred.
        (2) Acquisition-related costs include amortization of acquisition-related intangible assets and other acquisition-related costs. See Schedule 6 - Schedule of Notable Items for additional detail.
       

 


                                                                                                                                                                  Schedule 9
                                                                                                                                                                  ---------------------------------------------
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        GAAP / NON-GAAP RECONCILIATION
                                                                                          First Quarter
                                                                                          ----------------------------------------------------------------------
        (in millions)                                                                     2012                                            2011
        --------------------------------------------------------------------------------  ----------------------                          ----------------------
        GAAP Return on Equity                                                             16.4 %                                          22.4 %
        Non-GAAP Return on Equity
        Net earnings                                                                      $    236.8                                      $    294.8
        Restructuring and employee severance, net of tax, in continuing operations (1)    2.1                                             1.2
        Acquisition-related costs, net of tax, in continuing operations (1)               18.0                                            7.7
        Impairments and loss on sale of assets, net of tax, in continuing operations (1)  0.8                                             1.2
        Litigation (recoveries)/charges, net, net of tax, in continuing operations (1)    (2.0)                                           0.8
        Other spin-off costs, net of tax, in continuing operations (1)                    0.4                                             1.0
        Gain on sale of CareFusion stock, net of tax (1)                                  -                                               (74.8)
        CareFusion net (earnings)/loss in discontinued operations (1, 2)                  0.3                                             -
                                                                                          ----------------------                          ----------------------
        Adjusted net earnings                                                             $    256.4                                      $    231.9
        Annualized                                                                        $ 1,025.6                                       $    927.6
                                                                                          First                   Fourth                  First                   Fourth
                                                                                          Quarter                 Quarter                 Quarter                 Quarter
                                                                                          ----------------------  ----------------------  ----------------------  ---------------------------------------------
                                                                                          2012                    2011                    2011                    2010
                                                                                          ----------------------  ----------------------  ----------------------  ---------------------------------------------
        Total shareholders' equity                                                        $ 5,713.9               $ 5,848.6               $ 5,239.0               $    5,276.1
        Divided by average shareholders' equity                                           $ 5,781.3                                       $ 5,257.6
        Non-GAAP Return on Equity                                                         17.7 %                                          17.6 %
        (1) We apply varying tax rates depending upon the tax jurisdiction where the items are incurred.
        (2) To properly reflect the impact of the spin-off, on a non-GAAP basis, CareFusion net earnings included in discontinued operations are excluded from adjusted net earnings for all periods presented.
       

 


                                                                                                                                                                                                                      Schedule 10
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        GAAP / NON-GAAP RECONCILIATION
                                                                                                                                                                                                       First Quarter
                                                                                                                                                                                                       ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        (in millions)                                                                                                                                                                                  2012           2011
        ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------  -------------  ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        GAAP Effective Tax Rate from Continuing Operations                                                                                                                                             38.4 %         30.6 %
        Non-GAAP Effective Tax Rate from Continuing Operations
        Earnings before income taxes and discontinued operations                                                                                                                                       $    385.0     $         424.2
        Restructuring and employee severance                                                                                                                                                           3.4            1.8
        Acquisition-related costs                                                                                                                                                                      27.4           11.7
        Impairments and loss on sale of assets                                                                                                                                                         1.3            1.9
        Litigation (recoveries)/charges, net                                                                                                                                                           (3.2)          1.4
        Other spin-off costs                                                                                                                                                                           0.6            1.6
        Gain on sale of CareFusion stock                                                                                                                                                               -              (74.8)
        Adjusted earnings before income taxes and discontinued operations                                                                                                                              $    414.5     $         367.8
        Provision for income taxes (1)                                                                                                                                                                 $    147.9     $         129.8
        Restructuring and employee severance tax benefit (1)                                                                                                                                           1.3            0.6
        Acquisition-related costs tax benefit (1)                                                                                                                                                      9.4            4.0
        Impairments and loss on sale of assets tax benefit (1)                                                                                                                                         0.5            0.7
        Litigation (recoveries)/charges, net tax expense (1)                                                                                                                                           (1.2)          0.6
        Other spin-off costs tax benefit (1)                                                                                                                                                           0.2            0.6
        Gain on sale of CareFusion stock tax expense (1)                                                                                                                                               -              -
        Adjusted provision for income taxes                                                                                                                                                            $    158.1     $         136.3
        Non-GAAP Effective Tax Rate from Continuing Operations                                                                                                                                         38.1 %         37.1 %
                                                                                                                                                                                                       First Quarter
                                                                                                                                                                                                       ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                       2012           2011
                                                                                                                                                                                                       -------------  ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        Debt to Total Capital                                                                                                                                                                          31 %           29 %
        Net Debt to Capital
        Current portion of long-term obligations and other short-term borrowings                                                                                                                       $    333.1     $         233.6
        Long-term obligations, less current portion                                                                                                                                                    2,195.0        1,906.4
        Debt                                                                                                                                                                                           $ 2,528.1      $      2,140.0
        Cash and equivalents                                                                                                                                                                           (2,010.6)      (2,712.2)
        Net debt                                                                                                                                                                                       $    517.5     $        (572.2)
        Total shareholders' equity                                                                                                                                                                     5,713.9        5,239.0
        Capital                                                                                                                                                                                        $ 6,231.4      $      4,666.8
        Net Debt to Capital                                                                                                                                                                            8 %            (12)%
        (1) We apply varying tax rates depending upon the tax jurisdiction where the items are incurred.
        Forward-Looking Non-GAAP Financial Measures
        We present non-GAAP earnings from continuing operations and non-GAAP effective tax rate from continuing operations (and presentations derived from these financial measures, including per share calculations) on a forward-looking basis. The most directly comparable forward-looking GAAP measures are earnings from continuing operations and effective tax rate from continuing operations. We are unable to provide a quantitative reconciliation of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures because we cannot reliably forecast restructuring and employee severance, acquisition-related costs, impairments and loss on sale of assets, litigation (recoveries)/charges, net, and other spin-off costs, which are difficult to predict and estimate and are primarily dependent on future events. Please note that the unavailable reconciling items could significantly impact our future financial results.
       

 


                                                                                                                                        Schedule 11
        CARDINAL HEALTH, INC. AND SUBSIDIARIES
                                                                        First Quarter
                                                                        ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        (in millions)                                                   2012                                                            2011
        --------------------------------------------------------------  --------------------------------------------------------------  ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        Days Sales Outstanding                                          20.6                                                            19.9
        Days Inventory on Hand
        Inventories                                                     $   7,497.2                                                     $      7,087.5
        Cost of products sold                                           $ 25,707.5                                                      $    23,475.3
        Chargeback billings                                             3,609.8                                                         $      3,289.1
        Adjusted cost of products sold                                  $ 29,317.3                                                      $    26,764.4
        Adjusted cost of products sold divided by 90 days               $      325.7                                                    $         297.4
        Days of Inventory on Hand                                       23.0                                                            23.8
                                                                        --------------------------------------------------------------  ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        Days Payable Outstanding
        Accounts payable                                                $ 11,748.9                                                      $    10,532.3
        Cost of products sold                                           $ 25,707.5                                                      $    23,475.3
        Chargeback billings                                             3,609.8                                                         3,289.1
        Adjusted cost of products sold                                  $ 29,317.3                                                      $    26,764.4
        Adjusted cost of products sold divided by 90 days               $      325.7                                                    $         297.4
        Days Payable Outstanding                                        36.1                                                            35.4
                                                                        --------------------------------------------------------------  ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        Net Working Capital Days                                        7.5                                                             8.3
        Days Sales Outstanding: trade receivables, net divided by (monthly revenue divided by 30 days).
        Days Inventory on Hand: inventory divided by ((quarterly cost of products sold plus chargeback billings) divided by 90 days). Chargeback billings are the difference between a product's wholesale acquisition cost and the contract price established between pharmaceutical manufacturers and the end customer.
        Days Payable Outstanding: accounts payable divided by ((quarterly cost of products sold plus chargeback billings) divided by 90 days). Chargeback billings are the difference between a product's wholesale acquisition cost and the contract price established between pharmaceutical manufacturers and the end customer.
        Net Working Capital Days: days sales outstanding plus days inventory on hand less days payable outstanding.
       

 


        CARDINAL HEALTH, INC. AND SUBSIDIARIES
        DEFINITIONS
        GAAP
        Debt:  long-term obligations plus short-term borrowings
        Debt to Total Capital:  debt divided by (debt plus total shareholders' equity)
        Diluted EPS from Continuing Operations:  earnings  from continuing operations divided by diluted weighted average shares outstanding
        Effective Tax Rate from Continuing Operations:  provision for income taxes divided by earnings before income taxes and discontinued operations
        Gain on Sale of CareFusion Stock: realized gains from the sale of our ownership of CareFusion common stock retained in connection with the spin-off
        Other Spin-Off Costs: costs incurred in connection with our Spin-Off of CareFusion which are included in distribution, selling, general and administrative expenses
        Segment Profit:  segment revenue minus (segment cost of products sold and segment distribution, selling, general and administrative expenses)
        Segment Profit Margin:  segment profit divided by segment revenue
        Segment Profit Mix:  segment profit divided by total segment profit for all segments
        Return on Equity:  annualized net earnings divided by average shareholders' equity
        Revenue Mix:  segment revenue divided by total segment revenue for all segments
        NON-GAAP
        Net Debt to Capital:  net debt divided by (net debt plus total shareholders' equity)
        Net Debt:  debt minus (cash and equivalents)
        Non-GAAP Diluted EPS from Continuing Operations:  non-GAAP earnings from continuing operations divided by diluted weighted average shares outstanding
        Non-GAAP Diluted EPS from Continuing Operations Growth Rate: (current period non-GAAP diluted EPS from continuing operations minus prior period non-GAAP diluted EPS from continuing operations) divided by prior period non-GAAP diluted EPS from continuing operations
        Non-GAAP Earnings from Continuing Operations:  earnings from continuing operations excluding (1) restructuring and employee severance, (2) acquisition-related costs (including amortization of acquisition-related intangible assets), (3) impairments and loss on sale of assets, (4) litigation (recoveries)/charges, net, (5) Other Spin-Off Costs and (6) gain on sale of CareFusion stock, each net of tax
        Non-GAAP Earnings from Continuing Operations Growth Rate:  (current period non-GAAP earnings from continuing operations minus prior period non-GAAP earnings from continuing operations) divided by prior period non-GAAP earnings from continuing operations
        Non-GAAP Effective Tax Rate from Continuing Operations:  (provision for income taxes adjusted for (1) restructuring and employee severance, (2) acquisition-related costs (including amortization of acquisition-related intangible assets), (3) impairments and loss on sale of assets, (4) litigation (recoveries)/charges, net, (5) Other Spin-Off Costs and (6) gain on sale of CareFusion stock) divided by (earnings before income taxes and discontinued operations adjusted for (1) restructuring and employee severance, (2) acquisition-related costs (including amortization of acquisition-related intangible assets), (3) impairments and loss on sale of assets, (4) litigation (recoveries)/charges, net, (5) Other Spin-Off Costs and (6) gain on sale of CareFusion stock)
        Non-GAAP Operating Earnings:  operating earnings excluding (1) restructuring and employee severance, (2) acquisition-related costs (including amortization of acquisition-related intangible assets), (3) impairments and loss on sale of assets, (4) litigation (recoveries)/charges, net and (5) Other Spin-Off Costs included within distribution, selling, general and administrative expense
        Non-GAAP Operating Earnings Growth Rate:  (current period non-GAAP operating earnings minus prior period non-GAAP operating earnings) divided by prior period non-GAAP operating earnings
        Non-GAAP Return on Equity:   (annualized current period net earnings excluding (1) restructuring and employee severance, (2) acquisition-related costs (including amortization of acquisition-related intangible assets), (3) impairments and loss on sale of assets, (4) litigation (recoveries)/charges, net, (5) Other Spin-Off Costs, (6) gain on sale of CareFusion stock and (7) CareFusion net earnings in discontinued operations, each net of tax) and divided by average shareholders' equity
       

 

SOURCE Cardinal Health

 

Suggested Articles

An online pharmacy has again criticized FDA action after tipping off regulators to the existence of a dangerous impurity in Zantac and other antacids.

A group of senators is asking the FTC to take a careful look at pharma mergers given the cost of drugs in the U.S.

Life’s been tough for J&J's prostate cancer med Erleada in its battle with Pfizer-Astellas’ Xtandi. A new FDA nod could help level the playing field.…