Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q3 2023 Earnings Presentation
23 slides from Cardinal Health's earnings presentation, May 4, 2023
Slide 1: Q3 FY23 Cardinal Health, Inc. Earnings Call
Q3 FY23 Cardinal Health, Inc. Earnings Call May 4, 2023
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: Q3 results
Q3 results 3
Slide 4: Q3 FY23 financial summary
Q3 FY23 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q3 FY23 Q3 FY23 Revenue $50,487 N/A % change 13% Gross Margin $1,785 $1,785 % change 6% 6% SG&A $1,179 $1,179 % change 4% 4% Operating Earnings $572 $606 % change N.M. 11% Interest and Other1 $28 % change (32)% N/A Net Earnings2 $345 $447
Slide 5: Q3 FY23 Pharmaceutical segment results
Q3 FY23 Pharmaceutical segment results Q3 FY23 ($M) Q3 FY22 ($M) YoY change Revenue $46,809 $40,957 14% Segment profit $600 $487 23% Segment profit margin 1.28% 1.19% +9 bps Drivers: Revenue + Brand and specialty pharmaceutical sales growth from existing customers Segment profit + Generics program +
Slide 6: Q3 FY23 Medical segment results
Q3 FY23 Medical segment results Q3 FY23 ($M) Q3 FY22 ($M) YoY change Revenue $3,684 $3,884 -5% Segment profit $20 $59 -66% Segment profit margin 0.54% 1.52% -98 bps Drivers: Revenue - Products and Distribution sales: primarily PPE volumes and pricing Segment profit - Lower Products and Distribution
Slide 7: FY23 outlook
FY23 outlook 7
Slide 8: FY23 financial expectations
FY23 financial expectations FY23 outlook FY22 actual Non-GAAP EPS $5.60 - $5.80 $5.06 Previously $5.20 - $5.50 Interest and Other $95M - $105M $165M Previously $115M - $130M Non-GAAP ETR 22.0% - 23.0% 22.1% Previously 23.0% - 24.0% Diluted weighted average 262M - 263M 280M shares outstanding Previou
Slide 9: FY23 segment outlook
FY23 segment outlook Segment Revenue Segment Profit Pharmaceutical 14% to 15% growth 10.5% to 12% growth Previously 13% to 15% growth Previously 4% to 6.5% growth Medical ~6% decline ~50% decline Previously 3% to 6% decline Previously flat to 20% decline Bold indicates an update to the FY23 outlook
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 1. Mitigate Inflation and Global Supply Chain Constraints ~$300M Exit FY23 offsetting at least 50% of gross impact Exit FY24 offsetting
Slide 11: FY23 strategic priorities
FY23 strategic priorities • Mitigate inflation and global supply chain constraints Execute Medical • Optimize and grow Cardinal Health Brand portfolio 1 Improvement • Accelerate growth businesses, primarily at-Home Solutions Plan initiatives • Drive simplification and continued cost optimization • P
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 Deployed $1.5B for share repurchases Business Review Committee actively through Q3 reviewi
Slide 14: Appendix
Appendix 14
Slide 15: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation1 Earnings/ Gross Operating (Loss) Net Diluted Margin SG&A2 Operating Earnings Before Provision for Net Earnings3 Effective EPS 3 Gross Growth Growth Earnings/ Growth Income Income Earnings/ Growth Tax Diluted Growth Margin Rate SG
Slide 16: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation1 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 Growt
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 Third Quarter Year-to-Date (in millions) 2023 2023 GAAP - Cash Flow Categories Net cash provided by operating activities $ 1,361 $ 1,981 Net cash used in investing activities (9
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
Cardinal Health, Inc. and Subsidiaries Segment Information Third Quarter (in millions) 2023 2022 (in millions) 2023 2022 Pharmaceutical Medical Revenue Revenue Amount $ 46,809 $ 40,957 Amount $ 3,684 $ 3,884 Growth rate 14 % 17 % Growth rate (5)% (7)% Segment profit Segment profit Amount $ 600 $ 487
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 that drive last-in first-out ("LIFO") inventory charges or credits, such as pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels (which can be
Slide 23: Definitions continued
Cardinal Health, Inc. and Subsidiaries Definitions continued 8 Litigation recoveries or charges, net are excluded because they often relate to events that may have occurred in prior or multiple periods, do not occur in or reflect the ordinary course of our business and are inherently unpredictable i