Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q4 2023 Earnings Presentation
27 slides from Cardinal Health's earnings presentation, Aug 15, 2023
Slide 1: Q4 FY23 Earnings
Q4 FY23 Earnings Cardinal Health, Inc. August 15, 2023 © 2023 Cardinal Health. All Rights Reserved.
Slide 2: Cautions Concerning Forward-Looking Statements
• Q4 FY23 Earnings 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 identified by words such as "expect,"
Slide 3: FY23 highlights
• Q4 FY23 Earnings FY23 highlights Strategy, Capital FY23 financial portfolio and Governance deployment performance operations Executed simplification Returned over $2.5B Delivered 14% Appointed four new actions and made key to shareholders in FY23 non-GAAP EPS growth independent Board leadership ch
Slide 4: Q4 results
Q4 results 4 © 2023 2022 Cardinal Health. All Rights Reserved.
Slide 5: Q4 FY23 financial summary
• Q4 FY23 Earnings Q4 FY23 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q4 FY23 Q4 FY23 Revenue $53,453 N/A % change 13% Gross Margin $1,827 $1,827 % change 14% 14% SG&A $1,267 $1,267 % change 10% 10% Operating Earnings1 $137 $560 % change N.M. 24% Interest and Other2 $16 N/A % change (75)%
Slide 6: Q4 FY23 Pharmaceutical segment results
• Q4 FY23 Earnings Q4 FY23 Pharmaceutical segment results Q4 FY23 Q4 FY22 YoY change Revenue $49,699 $43,337 15% Segment profit $504 $451 12% Segment profit margin 1.01% 1.04% -3 bps Drivers: Revenue Segment profit + Brand and specialty pharmaceutical sales growth + Generics program from existing cu
Slide 7: Q4 FY23 Medical segment results
• Q4 FY23 Earnings Q4 FY23 Medical segment results Q4 FY23 Q4 FY22 YoY change Revenue $3,755 $3,769 0% Segment profit $82 -$16 N.M. Segment profit margin 2.18% -0.42% +260 bps Drivers: Revenue Segment profit - Products and Distribution sales: PPE volumes and pricing + Improvement in net inflationary
Slide 8: FY23 results
FY23 results 8 © 2023 2022 Cardinal Health. All Rights Reserved.
Slide 9: FY23 financial summary
• Q4 FY23 Earnings FY23 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) FY23 FY23 Revenue $205,012 N/A % change 13% Gross Margin $6,889 $6,889 % change 5% 5% SG&A $4,834 $4,832 % change 6% 6% Operating Earnings1 $727 $2,057 % change N.M. 3% Interest and Other2 $89 N/A % change (46)% Net Earnin
Slide 10: FY23 Pharmaceutical segment results
• Q4 FY23 Earnings FY23 Pharmaceutical segment results FY23 FY22 YoY change Revenue $190,009 $165,491 15% Segment profit $1,999 $1,770 13% Segment profit margin 1.05% 1.07% -2 bps Drivers: Revenue Segment profit + Brand and specialty pharmaceutical sales + Generics program growth from existing and n
Slide 11: FY23 Medical segment results
• Q4 FY23 Earnings FY23 Medical segment results FY23 FY22 YoY change Revenue $15,014 $15,887 -5% Segment profit $111 $216 -49% Segment profit margin 0.74% 1.36% -62 bps Drivers: Revenue Segment profit - Products and Distribution sales: - Lower Products and Distribution volumes and primarily PPE volu
Slide 12: FY24 outlook
FY24 outlook 12 © 2023 Cardinal Health. All Rights Reserved.
Slide 13: FY24 financial expectations
• Q4 FY23 Earnings FY24 financial expectations FY24 FY23 outlook actual Non-GAAP EPS $6.50 - $6.75 $5.79 Previously $6.45 - $6.70 Interest and Other $110M - $130M $89M Non-GAAP ETR 23.0% - 25.0% 22.8% Diluted weighted average shares 250M - 253M 262M outstanding Previously 250M - 254M Share repurchas
Slide 14: Pharmaceutical segment FY24 guidance
Q4 FY23 Earnings Revenue and segment profit Pharmaceutical Revenue growth of Segment profit growth of segment 10% to 12% 1 4% to 6% FY24 guidance Key Assumptions2: • Anticipate contribution from manufacturer price increases to be in line with FY22 (do not anticipate repeat of modest FY23 benefit) •
Slide 15: Medical segment FY24 guidance
Q4 FY23 Earnings Revenue and segment profit Medical Revenue growth of Segment profit of segment ~3% ~$400M FY24 guidance Key Assumptions1: • Increased contributions from Medical Improvement Plan initiatives • Exit FY24 mitigating gross impact of inflation • Year-over-year improvement in internationa
Slide 16: Medical Improvement Plan
• Q4 FY23 Earnings Medical Improvement Plan The journey to $650M+ in segment profit by FY26 Growth Target Strategic priorities Areas of focus 1 FY23-FY26 1 Mitigate inflation and global Offset with mitigation initiatives supply chain constraints • Exit FY24 offsetting gross impact ~$300M 2 Grow Card
Slide 17: Our long-term targets: FY24-26
Q4 FY23 Earnings Our long-term targets: FY24-26 (FY23 Baseline) 4% to 6% $650M+ at least 12% to 14% Growth CAGR in FY26 $2B Growth CAGR Pharma Medical Share non-GAAP diluted Segment Profit Segment Profit repurchases1 EPS growth 1Includes $500M of share repurchases executed in June 2023, plus at leas
Slide 18: Disciplined Capital Allocation Framework
Q4 FY23 Earnings Table stakes Investing back into the business to drive organic growth Disciplined Maintain investment grade balance sheet Capital Allocation Baseline return of capital to shareholders ▪ Continue to grow the dividend Framework ▪ Base share repurchases FY24 – FY26 Opportunistic levers
Slide 19: Strategic priorities
• Q4 FY23 Earnings Strategic priorities Ruthless prioritization, resilient core and relentless focus 1 Build upon the growth and resiliency of Pharmaceutical Segment • Generate stable, low-single digit 2 Execute Medical Improvement Plan initiatives • Fully mitigate gross impact of 3 Relentless focus
Slide 20: Appendix
Appendix 20 © 2023 Cardinal Health. All Rights Reserved.
Slide 21: GAAP / Non-GAAP Reconciliation, Fourth Quarter 2023
Cardinal Health, Inc. and Subsidiaries 1 GAAP / Non-GAAP Reconciliation Earnings/ Gross Operating (Loss) Provision for/ Net Diluted 2 3 Margin SG&A Earnings Before (Benefit from) Net Earnings Effective EPS 3 Gross Growth Growth Operating Growth Income Income Earnings/ Growth Tax Diluted Growth 2 3 3
Slide 22: GAAP / Non-GAAP Reconciliation, Fiscal Year 2023
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation1 Earnings/ Gross Operating (Loss) Net Diluted 2 3 Margin SG&A Operating Earnings Before Provision for Net Earnings Effective EPS 3 Gross Growth Growth Earnings/ Growth Income Income Earnings/ Growth Tax Diluted Growth 2 3 3,4 Marg
Slide 23: 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 Fiscal Year (in millions) 2023 2022 GAAP - Cash Flow Categories Net cash provided by operating activities $ 2,839 $ 3,122 Net cash provided by/(used in) investing ac
Slide 24: Segment Information
Cardinal Health, Inc. and Subsidiaries Segment Information Fourth Quarter (in millions) 2023 2022 (in millions) 2023 2022 Pharmaceutical Medical Revenue Revenue Amount $ 49,669 $ 43,337 Amount $ 3,755 $ 3,769 Growth rate 15 % 13 % Growth rate -% (11)% Segment profit Segment profit Amount $ 504 $ 451
Slide 25: 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 26: 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 27: Notes on LIFO charges and surgical gown recall
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 meaningfully influenced by customer buying behavior immediat