Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q1 FY2008 Earnings Presentation
24 slides from Cardinal Health's earnings presentation, Nov 5, 2007
Slide 1: Q1 FY 2008 Earnings Call
Exhibit 99.3 Q1 FY 2008 Earnings Call FY 2008 Essential to care November 5, 2007
Slide 2: Forward-looking statements and GAAP reconciliation
Forward-looking statements and GAAP reconciliation This presentation contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These matters are subject to risks and uncertainties that could cause actual
Slide 3: Agenda
Agenda Opening remarks Kerry Clark Chief Executive Officer Financial overview Jeff Henderson Chief Financial Officer Q&A 3
Slide 4: Financial Overview
Financial Overview • FY 2008 Q1 Results – Consolidated • FY 2008 Q1 Results – Business Segments • Key Financial Value Drivers • FY 2008 Financial Targets and Goals • HSCS Priorities 4
Slide 5: Q1 FY 2008 Recap
Q1 FY 2008 Recap GAAP Basis Non-GAAP Basis % % ($M) Change¹ ($M) Change¹ Revenue $21,973 5% Operating Earnings $490 9% $512 8% Earnings from continuing ops $303 4% $318 3% Diluted EPS from continuing ops $0.82 15% $0.86 15% Operating cash flow $409 Return on equity 16.7% 17.5% 1% change over prior y
Slide 6: Q1 Operating Earnings and EPS
Q1 Operating Earnings and EPS Q1 FY 2008 Q1 FY 2007 Operating Diluted EPS from Operating Diluted EPS from Earnings/(Loss) Continuing Earnings/(Loss) Continuing ($M) Operations ($M) Operations GAAP Consolidated $490 $0.82 $451 $0.71 Special Items ($23) ($0.04) ($22) ($0.04) Impairment Charges & Other
Slide 7: Healthcare Supply Chain Services – Pharmaceutical Business Analysis
Healthcare Supply Chain Services – Pharmaceutical Business Analysis Q1 FY08 Q1 FY07 ($M) ($M) % Change Revenue 19,221 18,553 4% Segment Profit 305 289 6% Highlights: • Q1 revenue up 4% on new bulk revenue from existing customers and branded price inflation, partially offset by pharma market growth m
Slide 8: Healthcare Supply Chain Services – Medical Business Analysis
Healthcare Supply Chain Services – Medical Business Analysis Q1 FY08 Q1 FY07 ($M) ($M) % Change Revenue 1,921 1,806 6% Segment Profit 58 64 (10%) Highlights: • Q1 revenue up 6% on new customer sales and improving demand from hospital, laboratory, and ambulatory customers, somewhat offset by demand i
Slide 9: Medical Products and Technologies Business Analysis
Medical Products and Technologies Business Analysis Q1 FY08 Q1 FY07 ($M) ($M) % Change Revenue 623 424 47% Segment Profit 57 46 24% Highlights: • Q1 revenue up 47% driven by the VIASYS acquisition, new product launches, increased penetration of existing customers, and foreign exchange • Segment prof
Slide 10: Clinical Technologies and Services Business Analysis
Clinical Technologies and Services Business Analysis Q1 FY08 Q1 FY07 ($M) ($M) % Change Revenue 649 594 9% Segment Profit 98 51 91% Highlights: • Q1 revenue up 9% on continued strong demand for infusion and dispensing products • Segment profit up 91%, driven by favorable product mix driving higher g
Slide 11: Key Financial Value Drivers
Key Financial Value Drivers Balance sheet management – Days of inventory on hand declined from 30 to 28 days Q1 FY08 vs. Q1 FY07 – Portfolio optimization process ongoing – Non-GAAP ROIC up 157 bps vs. Q1 last year Capital deployment – $592M in share buyback completed in Q1, $720M since July 1st Capi
Slide 12: Outlook
Outlook • Reconfirming overall Non-GAAP EPS guidance of $3.95 to $4.15 • 3 of 4 segments on-track — no change • Lowering guidance on Supply Chain Pharma to “Below range” nd • Profit growth significantly weighted toward latter part of 2 half – Difficult Q2 compare in Pharma 12
Slide 13: Financial targets and goals
November 5, 2007 Financial targets and goals Long-Term Financial Goals One Year Targets Over FY'08 - FY'10 3 Year Period: Fiscal Year 2008 Revenue: + 8 - 10% In range Op Earnings¹: + 10 - 13% In range EPS²: + 12 - 16% $3.95 - $4.15 per share Segment Segment Revenue FY08 profit growth vs. long-term g
Slide 14: HSCS Priorities
HSCS Priorities HSCS – Medical: • Focus on acute care revenue growth and profitability • Leverage scale to lower product costs; expand off-shore sourcing • Continuing focusing on operational improvements in Presource ® kitting business • Complete McGaw Park transition HSCS – Pharmaceutical: • Drive
Slide 15: Q&A
O&A CardinalHealth Essential to care™ ssential to c
Slide 16: Cardinal Health Essential to care
— CardinalHealth Essential to care™
Slide 17: GAAP / Non-GAAP Reconciliation – Pharmaceutical
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION (in millions) HEALTHCARE SUPPLY CHAIN SERVICES Pharmaceutical First Quarter Fiscal 2008 First Quarter Fiscal 2007 July August September Total July August September Total Economic Profit Margin Segment profit $ 305.4 $ 288.7 Effect
Slide 18: GAAP / Non-GAAP Reconciliation – Medical
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION (in millions) HEALTHCARE SUPPLY CHAIN SERVICES Medical First Quarter Fiscal 2008 First Quarter Fiscal 2007 July August September Total July August September Total Economic Profit Margin Segment profit $ 57.5 $ 64.1 Effective tax r
Slide 19: GAAP / Non-GAAP Reconciliation – Clinical Technologies and Services
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION (in millions) CLINICAL AND MEDICAL PRODUCTS Clinical Technologies and Services First Quarter Fiscal 2008 First Quarter Fiscal 2007 July August September Total July August September Total Economic Profit Margin Segment profit $ 98.
Slide 20: GAAP / Non-GAAP Reconciliation – Medical Products and Technologies
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION (in millions) CLINICAL AND MEDICAL PRODUCTS Medical Products and Technologies First Quarter Fiscal 2008 First Quarter Fiscal 2007 July August September Total July August September Total Economic Profit Margin Segment profit $ 56.9
Slide 21: GAAP / Non-GAAP Reconciliation – Operating Earnings
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION First Quarter 2008 Impairment Charges (in millions, except per Common Share amounts) GAAP Special Items and Other Non-GAAP Operating Earnings Amount $ 490 $ 23 — $ 512 Growth Rate 9% 8% Provision for Income Taxes $ 144 $ 8 — $ 151
Slide 22: GAAP / Non-GAAP Reconciliation – Return on Equity
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION First Quarter (in millions) 2008 2007 GAAP Return on Equity 16.7% 12.8% Non-GAAP Return on Equity Net earnings $ 301.8 $ 270.7 Special items, net of tax, in continuing operations 14.8 16.3 Special items, net of tax, in discontinue
Slide 23: GAAP / Non-GAAP Reconciliation – Effective Tax Rate
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION First Quarter (in millions) 2008 2007 GAAP Effective Tax Rate from Continuing Operations 32.2% 29.5% Non-GAAP Effective Tax Rate from Continuing Operations Earnings before income taxes and discontinued operations $ 446.9 $ 413.4 S
Slide 24: Definitions
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