Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — 2005 Raymond James Annual Institutional Investors Conference
23 slides from Cardinal Health's conference presentation, Mar 9, 2005
Slide 1: 2005 Raymond James Annual Institutional Investors Conference
Jim Hinrichs VP, Investor Relations March 9, 2005 2005 Raymond James Annual Institutional Investors Conference Cardinal Health
Slide 2: Forward-Looking and Adjusted Information
Forward-Looking and Adjusted Information Except for historical information, all other information in this presentation consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertai
Slide 3: Cardinal Health: A Health Care Leader
Cardinal Health A Health Care Leader Distribution, manufacturing, and services 55,000 associates on six continents Annual revenues: > $65 billion Operating earnings: ? $2.3 billion Strong balance sheet Strong cash flow Overall Corporate Strategy: Build a diverse portfolio of market leading businesse
Slide 4: Our Market: The Health Care Chain of Care
Hospitals Our Market The Health Care Chain of Care Distribution Medical and Surgical Products Distribution Pharmaceuticals Manufacturers Distributors Providers Drug Stores Super markets Doctor's Offices Clinics Hospitals
Slide 5: The Cardinal Health Business Model
Hospitals The Cardinal Health Business Model From Discovery to Recovery Distribution Medical and Surgical Products Distribution Pharmaceuticals Manufacturers Distributors Providers Create diverse, market-leading businesses in the health care chain which are integrated around the provider and manufac
Slide 6: The Cardinal Health Business Model: Pharmaceutical Distribution
PDPS Pharmaceutical Distribution Medicine Shoppe Hospitals The Cardinal Health Business Model From Discovery to Recovery Distribution Medical and Surgical Products Pharmaceuticals Manufacturers Distributors Providers Create diverse, market-leading businesses in the health care chain which are integr
Slide 7: The Cardinal Health Business Model: Clinical Technologies
Hospitals The Cardinal Health Business Model From Discovery to Recovery Distribution Medical and Surgical Products Pharmaceuticals Manufacturers Distributors Providers Create diverse, market-leading businesses in the health care chain which are integrated around the provider and manufacturer Drug St
Slide 8: The Cardinal Health Business Model: Medical and Surgical Products
Hospitals The Cardinal Health Business Model From Discovery to Recovery Hospitals Medical and Surgical Products Pharmaceuticals Manufacturers Distributors Providers Create diverse, market-leading businesses in the health care chain which are integrated around the provider and manufacturer Drug Store
Slide 9: The Cardinal Health Business Model: Pharmaceutical Technologies
PTS Oral Mfg Sterile Mfg Packaging Nuclear Pharmacy Formulation Consulting The Cardinal Health Business Model From Discovery to Recovery Medical and Surgical Products Pharmaceuticals Manufacturers Distributors Providers Create diverse, market-leading businesses in the health care chain which are int
Slide 10: First Half FY'05 Recap
Fiscal Year 2005 ($ millions) Q1 Q2 YTD % Revenues $17,796 $18,555 $36,351 15% Operating Earnings * 390 424 814 (26%) Net Earnings * 238 275 513 (27%) Diluted EPS * $0.55 $0.63 $1.18 (26%) Non-Recurring Charges ** $0.07 $0.10 $0.17 N.M. Diluted EPS excl. non-recurring charges ** $0.62 $0.73 $1.35 (1
Slide 11: Performance of significant businesses
Performance of significant* businesses Predictable Growth Approximate Percentage of FY '05 Earnings Model Change Significant Execution Issues Rx distribution Medicine Shoppe Med/Surg/lab distribution Specialty Rx distribution Med/Surg manufacturing Oral Technologies Nuclear Pharmacy Sterile Tech. Pa
Slide 12: Performance of significant businesses
Performance of significant* businesses MPS Med/Surg/lab distribution Med/Surg manufacturing Specialty Rx Distribution Rx distribution Medicine Shoppe PDPS PTS Oral Technologies Nuclear Pharmacy Sterile Technologies Packaging Services Intercare Predictable Growth ~50% Approximate Percentage of FY '05
Slide 13: Key FY'05 issue - Branded Rx Vendor Margin
Key FY '05 issue - Branded Rx Vendor Margin What's working? Strong revenue growth Stabilizing sell margin Strong generic profitability Cost structure lowest in history and industry Pharmaceutical Distribution What's not...yet: Branded Rx vendor margins
Slide 14: Key FY'05 issue - Branded Rx Vendor Margins: Actions
Key FY '05 issue - Branded Rx Vendor Margins Actions Educate manufacturers on our value and their Next Best Alternative Move manufacturers to compensation which is not contingent on price increases Goal to have completed contracts by 4/1/05 which convert a majority of branded vendor margin to non-co
Slide 15: Key FY'05 issue - Poor Sterile mfg. execution
Key FY '05 issue - Poor Sterile mfg. execution Pharmaceutical Technologies and Services Actions Work to resolve Puerto Rico manufacturing issues Focus on existing operational priorities Albuquerque New sterile manufacturing capacity (Brussels, North Raleigh) Restructuring - plant and facilities opti
Slide 16: Key FY'05 issue - Pyxis product performance
Key FY '05 issue - Pyxis(r) product performance Clinical Technologies and Services Actions New management team New MedStation? product launched in December '04 Restructuring of installation team and processes ongoing Productivity initiatives underway Manufacturing R&D SG&A Alaris? and Pyxis Products
Slide 17: Financial Outlook - FY05
Financial Outlook - FY05 Progress being made on all three key issues, however: Rx price increases and Rx inventory levels lower than expected Pyxis improvements and sterile progress slower than expected Expect full year FY 2005 EPS $3.20 - $3.40, excluding special items and non-recurring charges As
Slide 18: Financial Outlook - FY05
Fiscal Year 2005 Q1 Q2 2nd half Full Year Diluted EPS * $0.55 $0.63 Non-recurring charges Impairment and other $0.01 $0.09 Alaris inventory adjustment $0.03 $0.01 Latex litigation $0.03 - - Total non-recurring charges $0.07 $0.10 Diluted EPS excl. non-recurring charges * $0.62 $0.73 $1.85 - 2.05 $3.
Slide 19: Financial Outlook - FY06
Financial Outlook - FY06 Look for strong momentum building into FY 2006 Expect EPS growth considerably above long-term target of "mid-teens or better" based on: Confidence in signing FFS agreements Continued improvement at Pyxis and sterile, and Continued strong performance in other businesses
Slide 20: Long-Term Strategic Outlook
What do we expect to look like in five years? Long-Term Strategic Outlook Maintain 100% focus on health care Expand market leadership in distribution Medical, surgical, lab and Rx Greater focus on self-manufactured products Especially sterile Rx and differentiated med-surg products Greater focus on
Slide 21: Working together. For life.
FX male Working together. For life.”
Slide 22: GAAP/Non-GAAP Reconciliation
GAAP/Non-GAAP Reconciliation CARDINAL HEALTH, INC. - GAAP/NON-GAAP RECONCILIATION G inmilions) a @ Year-to-Date Eokaiing Exclating Exedaiing GAAP! Special Special GAAP! Special Special GAAP Special Special Base Teme Teme Base Heme tems © Basie Heme eme Specialliems Menger Related Costs wo go foe eae
Slide 23: Summary of Non-recurring charges (income)
Q1 FY'05 Q2 FY' 05 YTD FY' 05 Impairment charges and other: One Cardinal Health restructuring -- $ 67.8 $ 67.8 Synthetic lease -- 8.3 8.3 Other 3.8 6.9 10.7 Total impairment charges 3.8 83.0 86.8 Less: minority interest and other -- (19.4) (19.4) Net impairment charges 3.8 63.6 67.4 Alaris inventory
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