Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q1 FY2023 Earnings Presentation
22 slides from Cardinal Health's earnings presentation, Nov 4, 2022
Slide 1: Q1 FY23 Cardinal Health, Inc. Earnings Call
Q1 FY23 Cardinal Health, Inc. Earnings Call November 4, 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: Q1 results
Q1 results 3
Slide 4: Q1 FY23 financial summary
Q1 FY23 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q1 FY23 Q1 FY23 Revenue $49,603 N/A % change 13% Gross Margin $1,614 $1,614 % change (2)% (2)% SG&A $1,197 $1,191 % change 7% 7% Operating Earnings1 $137 $423 % change (67)% (20)% Interest and Other2 $27 % change (25)% N/A Net Earnings3 $
Slide 5: Q1 FY23 Pharmaceutical segment results
Q1 FY23 Pharmaceutical segment results Q1 FY23 ($M) Q1 FY22 ($M) YoY change Revenue $45,828 $39,822 15% Segment profit $431 $406 6% Segment profit margin 0.94% 1.02% -8 bps Drivers: Revenue + Pharmaceutical Distribution and Specialty • Primarily branded pharmaceutical sales growth from existing and
Slide 6: Q1 FY23 Medical segment results
Q1 FY23 Medical segment results Q1 FY23 ($M) Q1 FY22 ($M) YoY change Revenue $3,778 $4,149 -9% Segment profit1 -$8 $123 N.M. Segment profit margin1 -0.21% 2.97% -318 bps Drivers: Revenue - Products and distribution sales: primarily PPE pricing and volumes - Divestiture of Cordis + at-Home Solutions
Slide 7: FY23 outlook
FY23 outlook 7
Slide 8: FY23 financial expectations
FY23 financial expectations FY23 outlook FY22 actual Non-GAAP EPS $5.05 - $5.40 $5.06 Interest and Other $140M - $160M $165M Previously $140M - $170M Non-GAAP ETR 23.0% - 24.0% 22.1% Previously 23% - 25% Diluted weighted average 262M - 264M 280M shares outstanding Previously 262M – 266M Share repurc
Slide 9: FY23 segment outlook
FY23 segment outlook Segment Revenue Segment Profit Pharmaceutical 10% to 14% growth 2% to 5% growth Medical 3% to 6% decline Flat to 20% decline1 Previously 10% growth to 10% decline Bold indicates an update to the FY23 outlook provided on August 11, 2022. 1The updated Medical segment profit outloo
Slide 10: 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 11: 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 12: 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 13: Relentless focus on shareholder value
Relentless focus on shareholder value Enterprise-wide efforts aimed at maximizing and sustaining value at Cardinal Health FY23 Value Creation Initiatives to-Date Active & Ongoing Value Creation Initiatives ✓ Initiated $1B accelerated share repurchase ➢ Business Review Committee actively program in Q
Slide 14: Appendix
Appendix 14
Slide 15: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries 1 GAAP / Non-GAAP Reconciliation Gross Operating Earnings 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 2 3 3 Margin Rate SG&A Ra
Slide 16: 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 Operating Earnings Before (Benefit from) Net Earnings3 Effective EPS 3 Gross Growth Growth Earnings/ Growth Income Income Earnings/ Growth Tax Diluted Grow
Slide 17: 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 First Quarter (in millions) 2023 GAAP - Cash Flow Categories Net cash provided by operating activities $ 23 Net cash used in investing activities (70) Net cash used in financing
Slide 18: 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 19: Segment Information First Quarter
Cardinal Health, Inc. and Subsidiaries Segment Information First Quarter (in millions) 2023 2022 (in millions) 2023 2022 Pharmaceutical Medical Revenue Revenue Amount $ 45,828 $ 39,822 Amount $ 3,778 $ 4,149 Growth rate 15 % 13 % Growth rate (9)% 5% Segment profit Segment profit Amount $ 431 $ 406 A
Slide 20: 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 21: 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 22: 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