Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q4 FY2022 Earnings Presentation
28 slides from Cardinal Health's earnings presentation, Aug 11, 2022
Slide 1: Q4 FY22 Cardinal Health, Inc. Earnings Call
Q4 FY22 Cardinal Health, Inc. Earnings Call August 11, 2022
Slide 2: Forward-looking statements and GAAP reconciliation
Forward-looking statements and GAAP reconciliation Cautions Concerning Forward-Looking Statements This presentation contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be ident
Slide 3: FY22 highlights
FY22 highlights • Grew revenue 12% versus the prior year to $181B Financial Performance • Pharmaceutical segment profit grew 5% despite inflationary impacts • Generated $3.1B of operating cash flow • Returned $1.6B to shareholders through share repurchases and Capital dividends Deployment • Strength
Slide 4: Q4 results
Q4 results 4
Slide 5: Q4 FY22 financial summary
Q4 FY22 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q4 FY22 Q4 FY22 Revenue $47,103 N/A % change 11% Gross Margin $1,605 $1,605 % change 9% 11% SG&A $1,155 $1,155 % change 2% 2% Operating Earnings1 $36 $450 % change (78)% 41% Interest and Other2 $64 % change N.M. N/A Net Earnings3,4 $138 $
Slide 6: Q4 FY22 Pharmaceutical segment results
Q4 FY22 Pharmaceutical segment results Q4 FY22 ($M) Q4 FY21 ($M) YoY change Revenue $43,337 $38,344 13% Segment profit $451 $358 26% Segment profit margin 1.04% 0.93% +11 bps Drivers: Revenue + Pharmaceutical Distribution + Specialty Segment profit + Generics program + Brand sales mix + Favorable co
Slide 7: Q4 FY22 Medical segment results
Q4 FY22 Medical segment results Q4 FY22 ($M) Q4 FY21 ($M) YoY change Revenue $3,769 $4,246 -11% Segment profit -$16 -$63 75% Segment profit margin -0.42% -1.50% +108 bps Drivers: Revenue - Divestiture of Cordis - Products and distribution volumes Segment profit + Comparison to prior year PPE invento
Slide 8: FY22 results
FY22 results 8
Slide 9: FY22 financial summary
FY22 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) FY22 FY22 Revenue $181,364 N/A % change 12% Gross Margin $6,545 $6,547 % change (3)% (3)% SG&A $4,557 $4,557 % change 1% 1% Operating Earnings/(Loss)1 $(596) $1,990 % change N.M. (12)% Interest & Other2 $165 N/A % change 24% Net Earnings/(Lo
Slide 10: FY22 Pharmaceutical segment results
FY22 Pharmaceutical segment results FY22 ($M) FY21 ($M) YoY change Revenue $165,491 $145,796 14% Segment profit $1,770 $1,684 5% Segment profit margin 1.07% 1.15% -8 bps Drivers: Revenue + Pharmaceutical Distribution + Specialty Solutions Segment profit + Generics program + Improvement in volumes vs
Slide 11: FY22 Medical segment results
FY22 Medical segment results FY22 ($M) FY21 ($M) YoY change Revenue $15,887 $16,687 -5% Segment profit $216 $577 -63% Segment profit margin 1.36% 3.46% -210 bps Drivers: Revenue - Divestiture of Cordis - Products and distribution volumes + at-Home Solutions Segment profit - Products and distribution
Slide 12: FY23 outlook
FY23 outlook 12
Slide 13: FY23 financial expectations
FY23 financial expectations FY23 outlook FY22 actual Non-GAAP EPS $5.05 - $5.40 $5.06 Interest and other $140M - $170M $165M Non-GAAP ETR 23.0% - 25.0% 22.1% Diluted weighted average 262M - 266M 280M shares outstanding Share repurchases $1.5B - $2.0B $1.0B Capital expenditures ~$500M $387M Adjusted
Slide 14: FY23 Pharmaceutical segment outlook
FY23 Pharmaceutical segment outlook Revenue Segment Profit 10% to 14% growth 2% to 5% growth Key assumptions • Continued stability in overall pharmaceutical volumes and consistent market dynamics within our generics program • ~$50M headwind from inflationary supply chain costs, primarily in first ha
Slide 15: FY23 Medical segment outlook
FY23 Medical segment outlook Revenue Segment Profit 3% to 6% decline 10% decline to 10% growth Key assumptions • Similar ~$300M net impact from inflation, global supply constraints and mitigation actions (minimal year-over-year impact) • ~$475M of gross inflation and global supply chain constraints
Slide 16: FY22 to FY25 Medical Segment Profit Bridge
FY22 to FY25 Medical Segment Profit Bridge Targeting at least $650M in Medical segment profit by FY25 Segment Profit ~8% CAGR (in millions $) ~135 650+ ~300 ~515 ~300 Net (475) ~(300) 216 Net ~Flat ~215 +50 (50) +175 FY22 FY22 FY22 FY23 FY23 FY23 FY24 + FY25 FY24 + FY25 FY25 Actual Net Inflation and
Slide 17: Medical Improvement Plan
Medical Improvement Plan Targeting at least $650M in Medical segment profit by FY25 Foundational: returning to a normalized environment Area of focus FY22–25 Total Measurable Proof Point 1. Mitigate Inflation and Global ~$300M Fully offset with mitigation initiatives by FY25 Supply Chain Constraints
Slide 18: FY23 strategic priorities
FY23 strategic priorities • Execute our Medical Improvement Plan initiatives Optimize core • Continue to strengthen Pharmaceutical Distribution by prioritizing 1 businesses customer experience and further enhancing our generics program • Drive simplification to exceed 5-year, $750M cost savings goal
Slide 19: Long-term targets
Long-term targets Taking action to drive sustainable growth Pharma Low-single digit to mid-single digit segment profit growth Strengthening our core Pharmaceutical Distribution business 1. Y 2. yFueling our growth businesses: primarily Specialty Medical At least $650 million in segment profit by FY2
Slide 20: Our Cardinal Health Brand Medical Products Portfolio
Our Cardinal Health Brand Medical Products Portfolio 23 categories with 125K+ SKUs selling into every US Hospital and 50+ countries worldwide FY22 Revenue Breakdown Leading brands and Total Medical Segment clinically-differentiated products Including these key categories representing (in billions $)
Slide 21: Appendix
Appendix 21
Slide 22: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries 1 GAAP / Non-GAAP Reconciliation Earnings/ Gross Operating (Loss) Provision for/ Net Diluted Margin SG&A2 Earnings Before (Benefit from) Earnings3 Effective EPS 3 Gross Growth Growth Operating Growth Income Income Net Growth Tax Diluted Growth Margin Rate SG&A2
Slide 23: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries 1 GAAP / Non-GAAP Reconciliation Earnings/ Gross Operating (Loss) Provision for/ Net Diluted 2 3 3 Margin SG&A Operating Earnings Before (Benefit from) Net Earnings Effective EPS Gross Growth Growth Earnings/ Growth Income Income Earnings/ Growth Tax Diluted Gr
Slide 24: GAAP Cash Flow to Non-GAAP Adjusted Free Cash Flow
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation - GAAP Cash Flow to Non-GAAP Adjusted Free Cash Flow Fiscal Year (in millions) 2022 GAAP - Cash Flow Categories Net cash provided by operating activities $ 3,122 Net cash provided by investing activities 567 Net cash provided by f
Slide 25: Segment Information
Cardinal Health, Inc. and Subsidiaries Segment Information Fourth Quarter (in millions) 2022 2021 (in millions) 2022 2021 Pharmaceutical Medical Revenue Revenue Amount $ 43,337 $ 38,344 Amount $ 3,769 $ 4,246 Growth rate 13 % 15 % Growth rate (11)% 23 % 3 Segment profit Segment profit Amount $ 451 $
Slide 26: Forward Looking non-GAAP Measures
Cardinal Health, Inc. and Subsidiaries Forward Looking non-GAAP Measures In this document, the Company presents certain forward-looking non-GAAP metrics. The Company does not provide outlook on a GAAP basis because the items that the Company excludes from GAAP to calculate the comparable non-GAAP me
Slide 27: Definitions
Cardinal Health, Inc. and Subsidiaries Definitions Growth rate calculation: growth rates are determined by dividing the difference between current-period results and prior-period results by prior-period results. Interest and Other, net: other (income)/expense, net plus interest expense, net. Segment
Slide 28: Definitions Continued
Cardinal Health, Inc. and Subsidiaries Definitions Continued 1 LIFO charges and credits are excluded because the factors relating to last-in first-out ("LIFO") inventory charges or credits, such as pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels (which can b