Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Investor Day (June 2009)
62 slides from Cardinal Health's investor day presentation, Jun 2, 2009
Slide 1: Analyst and Investor Meeting June 2, 2009
Analyst and Investor Meeting June 2, 2009 © 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. NYSE: CFN Exhibit 99.2
Slide 2: Forward Looking Statements
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. 3 Forward Looking Statements These presentations contain forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These matters are
Slide 3: David L. Schlotterbeck, Chairman and CEO
David L. Schlotterbeck Chairman and CEO
Slide 4: Key Themes
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. 1 2 3 Key Themes Large, global, growing opportunities Competitive advantage, leadership across all categories Clear growth drivers – Innovation – Align to execute – Expand margins
Slide 5: Afternoon Agenda
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Afternoon Agenda Dave Schlotterbeck Chairman, CEO Dwight Winstead Chief Operating Officer Ed Borkowski Chief Financial Officer Dave Schlotterbeck Dwight Winstead Ed Borkowski Jim Hinrichs, Controller Segment presidents 2:
Slide 6: Why Invest in Us?
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Why Invest in Us? Among largest med-tech companies with global reach and longstanding customer relationships Industry leadership across all categories Aligned with pressing trends in healthcare, differentiated strategy St
Slide 7: Seasoned Management Team
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. E x p e r i e n c e Seasoned Management Team Proven leadership in sales & marketing, operations, finance, M&A, R&D/innovation Dave Schlotterbeck, Chairman & CEO Dwight Winstead, COO Ed Borkowski, CFO Vivek Jain, President
Slide 8: Scale as an Independent Company
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Revenue Op earnings R&D Spend Patents/pending Direct operations Customers Employees Headquarters Ticker 1. Pro forma FY08 (Amendment #1 to Form 10, May 14, 2009) S c a l e As an Independent Company $3.77B $537M ~$157M ~3,
Slide 9: Targeting a Large Global Opportunity
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. >$15 B global opportunity 1 Estimated worldwide opportunity in 2010: industry sources, CareFusion Corporation analysis 1 S c a l e Targeting a Large Global Opportunity Insurance providers Acute care hospitals Outpatient s
Slide 10: Macro Trends Play to Strengths
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. 1. The World Health Report 2006, “Working together for health”, pp 11-12. Play to our strengths F o c u s Macro Trends Play to Strengths • Rising healthcare costs, declining reimbursement and funding • Increase in global
Slide 11: Need Has Never Been Greater
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Source: C. Buck, GE, 2007 1,000 10,000 100,000 1,000,000 U.S. industry Best-in-Class Anesthesia- related fatality rate Airline baggage handling Breast cancer screening Adverse drug events Hospital-acquired infections Defe
Slide 12: Addressing Critical Market Needs
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. 1. Institute of Medicine. Preventing medication errors. Aspen P, Wolcott J, Bootman L, Cronenwell LR, Eds. 2006; Washington DC: National Academic Press. 2. Creation of a better medication safety culture in Europe: Buildin
Slide 13: Our Mission
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. F o c u s Our Mission Deliver clinically proven products and services that measurably improve the productivity and safety of healthcare globally
Slide 14: Creating a New Industry Leader
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Leader Leader Leader Leader Leader Leader Leader P o r t f o l i o Creating a New Industry Leader Medication safety and infusion systems Dispensing systems Worldwide acute-care respiratory Hospital-acquired infection (HAI
Slide 15: Positive Patient Identification
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. P o r t f o l i o Positive Patient Identification • Tissue and implant tracking • Bar-code medication administration • Nursing documentation • Blood transfusion tracking • Patient lab and specimen collection • Infant care
Slide 16: CareFusion Growth Engine
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. ~20% I n n o v a t i o n CareFusion Growth Engine 6-7% ~ 4% Today Long-Term Goal 2010 Revenue from 2007-2009 new product introductions New Product revenue R&D as % of Sales
Slide 17: Expanding Traditional Markets
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Data & Analytics Clinical Connectivity Patient Event Advisor EnVe Ventilator VAP bundle ‘09 ~40 new products Core products Agile information management Next-generation medication management ‘12 Remote device programming I
Slide 18: EnVe Ventilator
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. I n n o v a t i o n EnVe Ventilator • Full featured Critical Care Ventilator for pediatric and adult patients • 9 ½ lbs compared to products in the same class at 80 – 90 lbs. • Well positioned in largest segment in ventil
Slide 19: Patient Event Advisor
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. I n n o v a t i o n Patient Event Advisor • Monitors patients for adverse reactions in near real time • Warns of inappropriate medications ordered • Focuses pharmacist resources • Provides workflow documentation • Reports
Slide 20: Near-Term Considerations
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Near-Term Considerations • FY09 – American Hospital Association reports 80% of hospitals deferring some portion of capital spend (April 2009) – spending deferral affecting FY09 – CMP segment profit down 7-11% from FY08 •
Slide 21: Future Revenue, Earnings Trends
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Future Revenue, Earnings Trends Revenue • Longer term revenue trend expected to outpace growth of core markets • Long-term growth goal: mid-single digits Earnings • Post-spin baseline set in FY10 • Operating earnings long
Slide 22: Why Invest in Us?
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Why Invest in Us? Among largest med-tech companies with global reach and longstanding customer relationships Industry leadership across all categories Aligned with pressing trends in healthcare, differentiated strategy St
Slide 23: Dwight Winstead, Chief Operating Officer
Dwight Winstead Chief Operating Officer
Slide 24: Agenda
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Agenda Reporting segments • Why we win • How we grow Value drivers • Organized to execute • Expand margins
Slide 25: Two Segments with Scale, Leadership
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Critical Care Technologies Medical Technologies and Services 1 Data is unaudited pro forma information prepared on the same basis as the pro forma condensed combined financial statements included in the Amendment No. 1 to
Slide 26: Positioned in Large $15 Billion Worldwide Opportunity
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. $7B $8B Worldwide opportunity growing 5% annually 1 Estimated worldwide opportunity in 2010: industry sources, CareFusion Corporation analysis Positioned in Large $15 Billion Worldwide Opportunity Dispensing Infusion Resp
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Slide 31: Critical Care Technologies Segment Value Proposition
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Critical Care Technologies Segment Critical Care Technologies Segment Value Proposition Respiratory Dispensing Infusion Reduced time to first dose, control cost and diversion Pyxis ®
Slide 32: Pyxis Dispensing: Why We Win
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. 1 HIMSS Analytics, April 2009 2 MD Buyline Pyxis D i s p e n s i n g Why We Win Leadership • 7 of every 10 automated medication dispensing machines are Pyxis ® MedStation ® systems Innovation • Extensive history of “first
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Slide 35: Alaris Infusion: Why We Win
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Alaris I n f u s i o n Why We Win Leadership • Proven systems with largest installed base – created “smart pump” • Comprehensive IV medication safety system • Global presence Product differentiation • Only modular system,
Slide 36: Alaris Infusion: Growth Imperatives
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Alaris I n f u s i o n Growth Imperatives • Adding new value to large, installed base • Expand available market with new offerings - Tight glycemic control - Connectivity with HIT systems - Data analytics
Slide 37: Alaris Regulatory Update
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Alaris Regulatory Update History • February 2007 – Alaris SE pumps in the U.S. • February 2009 – Amended consent decree, infusion pumps in the U.S. Key requirements • Submit corrective action plan • Independent inspection
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Slide 41: Respiratory Value Proposition
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Critical Care Technologies Segment Leading technology to improve outcomes in adult and neonatal ventilation Value Proposition AVEA ® Pulmonetic Systems™ Jaeger ® Respiratory Dispensing Infusion
Slide 42: Respiratory: Why We Win
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. R e s p i r a t o r y Why We Win Leadership • Breadth and depth of product offering • Leading global brands • Proven clinical outcomes Customer Support • Skilled clinical sales force • Clinical implementation and educatio
Slide 43: Respiratory: Growth Imperatives
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. R e s p i r a t o r y Growth Imperatives • Execute on new product and feature roadmap, upgrade installed base • Launch clinically differentiated consumables internationally • Further expand ventilator portfolio – adult/pe
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Slide 45: Infection Prevention: Why We Win
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. I n f e c t i o n P r e v e n t i o n Why We Win Leadership, measurable outcomes • Broadest offering of clinically proven products - ChloraPrep: Standard of care 2% chlorhexidine-gluconate antiseptic system - Skin-prep pr
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Slide 47: Key Segment Priorities
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Critical Care Technologies Medical Technologies and Services Key Segment Priorities • Maintain, expand U.S. competitive position • Align for global growth • Demonstrate strength of new quality system • R&D, Innovation • D
Slide 48: Operational Priorities
Operational Priorities © 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved.
Slide 49: Organized to Execute
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Organized to Execute • Clear sales focus – Product sales, marketing aligned with global segments • New emphasis on alternate sales channels – Telesales unit – Channel partners • Global alignment – Reduce layers between re
Slide 50: Expand Operating Margins
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. 1 2 3 4 Expand Operating Margins Manufacturing optimization – Aggressive operational excellence goals – Optimize capabilities across network Strategic sourcing – Driving toward fewer suppliers – Greater volume to drive co
Slide 51: Key Themes
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. 1 2 3 Key Themes Large, global, growing opportunities Competitive advantage, leadership across all categories Clear growth drivers – Innovation – Align to execute – Expand margins
Slide 52: Ed Borkowski, Chief Financial Officer
Ed Borkowski Chief Financial Officer • Early perspectives • Spin-off transaction detail • CareFusion P&L • Capital strategy
Slide 53: Introduction
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Introduction • Personal background and experience - 20 years in healthcare finance - Formerly CFO of Mylan Inc. • Why CareFusion? - The med tech space - Opportunity to help grow another healthcare company - Managerial and
Slide 54: Near-Term Focus
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Near-Term Focus • Learn the business, the organization, the team • Ensure “stand-up” capabilities in key financial areas for an independent, publicly traded company - Audit, tax, treasury, IR, etc. • Finalize and execute
Slide 55: Spin-off Transaction Plans
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Spin-off Transaction Plans • CAH will spin-off at least 80% of CFN outstanding shares through a pro-rata distribution to CAH shareholders – Cardinal Health required to dispose of remaining stake in CareFusion within 5 yea
Slide 56: Prospective Credit Ratings
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Prospective Credit Ratings • A criteria for the spin-off is assignment of investment grade ratings from leading credit rating agencies • Cardinal Health meets regularly with the credit rating agencies, and they are famili
Slide 57: CFN Historical Pro Forma P&L
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. (1) EPS for 2006 and 2007 is based on Form 10 Pro Forma amounts for the respective years and assumes ~450M diluted shares outstanding (2) Source: CFN Form 10 Amendment 1 (3) CFN Calculations CFN Historical Pro Forma P&L C
Slide 58: Near-Term Expectations
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Near-Term Expectations • FY09 CMP segment profit goal: -7% to -11% – Translates to approximately the same range for CFN pro forma operating earnings excluding stand-up, restructuring, merger integration costs • FY10 : - R
Slide 59: Longer-Term Expectations
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Longer-Term Expectations FY10 becomes the new baseline for comparability going forward Beyond FY10: • Revenue growth: mid-single digits • R&D: growing faster than revenue • Earnings: – Operating earnings grow 11% to 15% •
Slide 60: Capital and Financial Strategy
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Capital and Financial Strategy • We are committed to maintaining investment grade credit ratings and prudent financial management practices • Earnings will be retained to finance growth – research and development as % of
Slide 61: Disciplined Approach to Capital Management
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. Disciplined Approach to Capital Management • Primary Objective: Maintain financial strength and flexibility – Enable investment in the business – Opportunistic acquisition – Reduce debt balances • Maximizing earnings and
Slide 62: Key Themes
© 2009 CareFusion Corporation or one of its subsidiaries. All rights reserved. 1 2 3 Key Themes Large, global, growing opportunities Competitive advantage, leadership across all categories Clear growth drivers – Innovation – Align to execute – Expand margins