Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Merger or Acquisition (September 2008)
43 slides from Cardinal Health's merger presentation, Sep 29, 2008
Slide 1: Essential to care
Essential to care Exhibit 99.2 September 29, 2008
Slide 2: Forward-looking statements and GAAP reconciliation
Forward-looking statements and GAAP reconciliation This presentation contains forward-looking statements addressing expected financial results of Cardinal Health, the planned spin-off of Cardinal Health’s clinical and medical products businesses as a separate company, the expected financial results
Slide 3: Creating SpinCo: Decision to spin-off CMP
Creating SpinCo: Decision to spin-off CMP
Slide 4: Disciplined review process and rationale
Disciplined review process and rationale • Disciplined review involving Board of Directors, executive leadership team and experienced external advisors • Separation of businesses will better position each to realize its long-term potential - Sharper strategic vision and enhanced management focus - E
Slide 5: Steps to completion
Steps to completion • File Form 10 Registration Statement for SpinCo with SEC in Q3FY09 (est.) – SEC will declare Form 10 effective when review complete • Seek confirmation on the tax-free nature of the transaction from appropriate authorities • Complete separation and related agreements • Board dec
Slide 6: Capital structure and capital deployment
Capital structure and capital deployment • We plan to: – For Cardinal Health in FY09: • Share repurchases to no more than offset equity compensation issuances • Continue regular $0.14 quarterly dividend until the spin-off is completed – For Cardinal Health Post-Spin-off: • Have a balance sheet, fina
Slide 7: Leadership teams
Leadership teams Cardinal Health SpinCo Clinical and Medical Products CEO: George Barrett, ~ 25 years in healthcare CFO: Jeff Henderson, ~ 10 years in healthcare CEO, pharmacy supply chain solutions*: Mike Kaufmann, ~ 17 years in healthcare CEO, medical / surgical solutions*: Mike Lynch, ~ 24 years
Slide 8: Business structure
Business structure Cardinal Health (RemainCo) Clinical and Medical Products (CMP) SpinCo *Includes Specialty Distribution **Cardinal Health is continuing to conduct an analysis of Pharmacy Services and Medicine Shoppe International to evaluate their future strategic fit. Healthcare Supply Chain Serv
Slide 9: Cardinal Health post-spin business portfolio
Cardinal Health post-spin Business portfolio Cardinal Health Post-Spin Pharma and Specialty distribution U.S. / Canada Med Supply Distribution Medicine Shoppe Int’l** Nuclear/ Specialty Pharma Pharmacy Services** Operating Room related products/ services >$90B FY09 pro forma revenue* Improve healthc
Slide 10: SpinCo business portfolio
SpinCo business portfolio SpinCo Clinical and Medical Products Infusion Dispensing Respiratory and Neurocare Medical Specialties (surgical products) Infection Prevention Clinical Services >$4B FY09 pro forma revenue* Improving lives through better technology at the point of care *An estimate of the
Slide 11: Key milestones
Key milestones Expected record date Q4 FY09? Expected effective date Q4 FY09 / Q1 FY10? Announcement of exploration Aug. 7, 2008 Announcement of Board decision to pursue Sept. 29, 2008 Q1 FY09 earnings Oct. 29, 2008 Annual analyst & investor day May 8, 2009 Expected Form 10 filing Q3 FY09 Annual sha
Slide 12: Why invest in current Cardinal Health?
Why invest in current Cardinal Health? Two industry-leading business … With talented, experienced management … Well-positioned to drive future growth … With a focus on and commitment to … Delivering value to shareholders.
Slide 13: The Landscape: U.S. healthcare costs are rising at alarming rate
The Landscape: U.S. healthcare costs are rising at alarming rate • US projected to spend over $2.2 trillion on healthcare in 2007 (16.2% of GDP) • Healthcare spending has risen at a rate 2.4% faster than GDP since 1970 • CMS estimates that by 2016 US healthcare spending will nearly double, exceeding
Slide 14: The Landscape: Errors and inefficiencies plague the system
The Landscape: Errors and inefficiencies plague the system Source: C. Buck, GE, 2007 U.S. industry Best-in-Class Anesthesia-related fatality rate Airline baggage handling Breast cancer screening (65-69) Adverse drug events Hospital-acquired infections 1,000 10,000 100,000 1,000,000 Defects per milli
Slide 15: Cardinal Health (Post-Spin)
Cardinal Health (Post-Spin)
Slide 16: Cardinal Health post-spin business portfolio
Cardinal Health post-spin Business portfolio Cardinal Health Post-Spin Pharma and Specialty distribution U.S. / Canada Med Supply Distribution Medicine Shoppe Int’l** Nuclear/ Specialty Pharma Pharmacy Services** Operating Room related products/ services >$90B FY09 pro forma revenue* Improve healthc
Slide 17: The Business Case: Significant footprint and scale
The Business Case: Significant footprint and scale • 90% of U.S. hospitals use our products or services • More than 50,000 deliveries are made each day to 40,000 customer sites in U.S. • Leading distributor of U.S. prescriptions, medical/surgical and lab products through our system • Largest U.S. nu
Slide 18: Our value proposition
Our value proposition • Large, deep and broad footprint across health channels – Retail, hospital, sub-acute, mail-order, ambulatory • Provide products / services that empower doctors, pharmacists and nurses to focus on what’s most important patients • Our scale and breadth position us to help reduc
Slide 19: Growth drivers
Growth drivers • Pressure on healthcare system to be more accessible, more productive, higher quality and safer • Demographics – aging population demands more health care products / services • Increasing use of generic pharmaceuticals • Opportunities to increase formulary-type Cardinal Health privat
Slide 20: Solutions throughout the pharma distribution channel
We provide valuable solutions throughout the pharma distribution channel Aligning offerings Suppliers Customers Retail Independents • Pharmaceutical/ distribution services • Pharmacy brands • Leader® brand • Rx purchasing programs • FirstScript – customized Autoshipment to stock new brand or generic
Slide 21: For example…
For example… Retail Independent Pharmacy “CEO” = Pharmacist Increasing marketshare Leader® increases market share and establishes strong brand recognition by optimizing advertising strategies, implementing effective store signage and providing a profitable private label line. Improving reimbursement
Slide 22: Solutions throughout the medical/surgical distribution channel
And we provide valuable solutions throughout the medical/surgical distribution channel • Leading position in acute care • Meaningful presence in lab setting • Focused on critical areas of hospital from quality and economic standpoint – Operating room – Presource ® , convertors, fluid management, glo
Slide 23: For example…
For example… Logistics and replenishment Valuelink – leading just-in-time inventory solution Optifreight – help customers manage freight costs Custom solutions Product Portfolio Broad portfolio of brand / proprietary products Expanding private label line Operational improvements Order-to-cash and SG
Slide 24: FY09 priorities and key initiatives
Improve the quality and productivity of healthcare Enabled through information, insight and technology FY09 priorities and key initiatives Sweeten our mix (customer and product) Innovate to improve customer loyalty by segment Rebuild a winning culture Invest and execute flawlessly to build core capa
Slide 25: Near-term performance indicators
Near-term performance indicators • Increase direct-store-door sales • Resolve anti-diversion challenges • Increase proprietary generic Source program sales • Maintain U.S. medical distribution momentum and grow the private label
Slide 26: “Reanalcth
“Reanalcth Essential to care™ CardinalHealth
Slide 27: SpinCo business portfolio
SpinCo business portfolio SpinCo Clinical and Medical Products Infusion Dispensing Respiratory and Neurocare Medical Specialties (surgical products) Infection Prevention Clinical Services >$4B FY09 pro forma revenue* Improving lives through better technology at the point of care *An estimate of the
Slide 28: Quality and patient safety issues abound
Quality and patient safety issues abound • Hospital costs alone from adverse drug events are estimated at $3-6B – Excludes costs associated with patient injury and legal claims • Hospital infections add an estimated $30B to the nation’s hospital costs annually • Costs are largely borne by the provid
Slide 29: CMP is uniquely positioned to focus on key issues…
CMP is uniquely positioned to focus on key issues… Improve medication management Enhance infection prevention • Integrating our offers and knowledge to manage all medications • Uniquely positioned to improve safety and productivity Minimize risk and cost of procedures Help hospitals identify patient
Slide 30: …with industry leading positions
…with industry leading positions • Global leader in medication safety and infusion systems • Largest U.S. hospital footprint in dispensing systems • Largest acute-care respiratory company worldwide • Industry’s most comprehensive medication management solution • Leader in hospital-acquired infection
Slide 31: In key product areas, critical to care…
In key product areas, critical to care… Dispensing Ventilation Infection Prevention Infusion Surgical instruments
Slide 32: Dispensing: significant portion of installed U.S. base
Renewal rates on 5-year leases are 95 – 99% …such as dispensing, where we have a significant portion of the installed U.S. base CAH • Significantly outperform competition – Revenue growth – Operating margin • Strong domestic demand – Committed contracts and strong backlog provide continuous momentum
Slide 33: Infusion: took >60% of business from competition in FY08
And infusion, where we took >60% of business from competition in FY08 Disposable contracts create 5-year annuity stream for infusion pumps • Continued both premium pricing / gains in placements – 37% of U.S. installed base – 63% of U.S. placements • Strong international expansion – Expanded manufact
Slide 34: World's largest acute-care respiratory company
Combined with being world’s largest acute-care respiratory company • Industry leadership – Ventilation leader - 50% growth in VIASYS installed base in past 3 years – Leading cardiopulmonary testing platform • Leading innovator – Leading technology in ventilation (critical care & portable) and diagno
Slide 35: Strong player in infection prevention
And a strong player in infection prevention, with next-generation products • Innovation – Leading-edge infection prevention continuum in development • Revenue expansion – Expanding demand for infection detection and prevention – Enturia acquisition – International penetration • Margin expansion – Mi
Slide 36: CMP (SpinCo) key near- to mid-term priorities
CMP (SpinCo) key near- to mid-term priorities 1 2 3 4 Drive innovation and clinical differentiation – R&D pipeline is loaded - expecting to launch ~45-50 new products and enhanced solutions over the next 18 months Use industry leading positions to accelerate growth – Grow international sales by expa
Slide 37: “Reanalcth
“Reanalcth Essential to care™ CardinalHealth
Slide 38: Total company FY 2009 priorities
Total company FY 2009 priorities • Achieve FY09 operational and financial objectives • Resolve outstanding regulatory issues • Enhanced investment in R&D and IT • Return HSCS to steady growth • Successfully complete integrations (VIASYS, Enturia, Borschow) • Efficiently execute a spin-off of the CMP
Slide 39: FY09 financial goals
FY09 financial goals >20% >10% Clinical and Medical Products (CMP) Flat to (5%) >6% Healthcare Supply Chain Services (HSCS) Profit Growth Revenue Growth Segment $3.80 - $3.95 Non-GAAP EPS : 6-7% Total revenue growth: August 7, 2008 Non-GAAP diluted earnings per share from continuing operations
Slide 40: FY09 assumptions update
FY09 assumptions update • Capital deployment – Share repurchases to no more than offset equity compensation issuances – Continue regular $0.14 quarterly dividend until spin-off is completed • Portfolio rationalization/review – MedSystems sale closed 8/29/08 – Tecomet sale closed 9/26/08 – Review of
Slide 41: Summary: So why invest in current Cardinal Health now?
Summary: So why invest in current Cardinal Health now? Two industry-leading business … With talented, experienced management … Well-positioned to drive future growth … With a focus on and commitment to … Delivering value to shareholders.
Slide 42: ‘CardinalHealth
‘CardinalHealth Fssential to care”
Slide 43: Cardinal Health
> a CardinalHealth Essential to care™
Cardinal Health — Merger or Acquisition (September 2008) on 6ix