Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q4 2024 Earnings Presentation
32 slides from Cardinal Health's earnings presentation, Aug 14, 2024
Slide 1: Q4 FY24 Earnings
Q4 FY24 Earnings Cardinal Health, Inc. August 14, 2024 © 2024 Cardinal Health. All Rights Reserved. 1 © 2024 Cardinal Health. All Rights Reserved. INTERNAL USE ONLY
Slide 2: Cautions Concerning Forward-Looking Statements
• Q4 FY24 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: FY24 highlights
• Q4 FY24 Earnings FY24 highlights Strategy, operations and Capital FY24 financial deployment performance Governance portfolio Announced company Returned $1.25B Delivered record non-GAAP Appointed new independent reorganization to shareholders in FY24 EPS, growth of 29% Board member with through sha
Slide 4: Q4 Results
Q4 Results © 2024 Cardinal Health. All Rights Reserved. 4 © 2024 Cardinal Health. All Rights Reserved. INTERNAL USE ONLY
Slide 5: Q4 FY24 financial summary
• Q4 FY24 Earnings Q4 FY24 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q4 FY24 Q4 FY24 Revenue $59,867 N/A % change 12% Gross Margin $1,882 $1,882 % change 5% 5% SG&A $1,277 $1,277 % change 2% 2% Operating Earnings $401 $605 % change N.M. 14% Interest and Other1 $10 N/A % change (38)% Net
Slide 6: Pharmaceutical and Specialty Solutions Q4 FY24 results
• Q4 FY24 Earnings Pharmaceutical and Specialty Solutions Q4 FY24 results Q4 FY24 ($M) Q4 FY23 ($M) YoY change Revenue $55,608 $49,373 13% Segment profit $482 $448 8% Segment profit margin 0.87% 0.91% (4) bps Drivers: Revenue Segment profit + Brand and specialty pharmaceutical sales growth + Generic
Slide 7: Global Medical Products and Distribution Q4 FY24 results
• Q4 FY24 Earnings Global Medical Products and Distribution Q4 FY24 results Q4 FY24 ($M) Q4 FY23 ($M) YoY change Revenue $3,109 $3,047 2% Segment profit $47 $7 N.M. Segment profit margin 1.51% 0.23% +128 bps Drivers: Revenue Segment profit + Volume growth from existing customers + Improvement in net
Slide 8: Other: NPHS, at-Home Solutions and OptiFreight
• Q4 FY24 Earnings Other: NPHS, at-Home Solutions and OptiFreight Q4 FY24 results Q4 FY24 ($M) Q4 FY23 ($M) YoY change Revenue $1,172 $1,020 15% Segment profit $111 $100 11% Segment profit margin 9.47% 9.80% (33) bps Drivers: Revenue Segment profit + Growth across the three operating segments + Perf
Slide 9: FY24 Results
FY24 Results © 2024 Cardinal Health. All Rights Reserved. 9 © 2024 Cardinal Health. All Rights Reserved. INTERNAL USE ONLY
Slide 10: FY24 financial summary
• Q4 FY24 Earnings FY24 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) FY24 FY24 Revenue $226,827 N/A % change 11% Gross Margin $7,414 $7,414 % change 8% 8% SG&A $5,000 $5,000 % change 4% 4% Operating Earnings $1,243 $2,414 % change 65% 16% Interest and Other1 $42 N/A % change (52)% Net Earni
Slide 11: Pharmaceutical and Specialty Solutions FY24 results
• Q4 FY24 Earnings Pharmaceutical and Specialty Solutions FY24 results FY24 ($M) FY23 ($M) YoY change Revenue $210,019 $188,814 11% Segment profit $2,015 $1,881 7% Segment profit margin 0.96% 1.00% (4) bps Drivers: Revenue Segment profit + Brand and specialty pharmaceutical sales + Generics program
Slide 12: Global Medical Products and Distribution FY24 results
• Q4 FY24 Earnings Global Medical Products and Distribution FY24 results FY24 ($M) FY23 ($M) YoY change Revenue $12,381 $12,222 1% Segment profit $92 $(147) N.M. Segment profit margin 0.74% -1.20% 194 bps Drivers: Revenue Segment profit + Volume growth from existing customers + Improvement in net in
Slide 13: Other: NPHS, at-Home Solutions and OptiFreight FY24 results
• Q4 FY24 Earnings Other: NPHS, at-Home Solutions and OptiFreight FY24 results FY24 FY23 YoY change Revenue $4,512 $4,021 12% Segment profit $423 $396 7% Segment profit margin 9.38% 9.85% (47) bps Drivers: Revenue Segment profit + Growth across the three operating segments + Performance of OptiFreig
Slide 14: FY25 Outlook
FY25 Outlook © 2024 Cardinal Health. All Rights Reserved. 14 © 2024 Cardinal Health. All Rights Reserved. INTERNAL USE ONLY
Slide 15: FY25 financial expectations
• Q4 FY24 Earnings FY25 financial expectations FY25 FY24 outlook actual Non-GAAP EPS $7.55 to $7.70 $7.53 Previously At least $7.50 Interest and Other $140M - $170M $42M Previously $160M - $190M Non-GAAP ETR 23.0% - 24.0% 21.7% Diluted weighted average shares ~243M 247M outstanding Previously 244M –
Slide 16: Pharmaceutical and Specialty Solutions FY25 guidance
Revenue and segment profit Pharmaceutical Revenue decline1 of Segment profit growth of and Specialty 4% to 6% 1% to 3% Previously At least 1% Solutions Key Assumptions: segment • Large customer contract expiration impact and mitigation actions generally consistent with prior commentary1: FY25 guidan
Slide 17: Global Medical Products and Distribution FY25 guidance
Revenue and segment profit Global Medical Revenue growth of Segment profit of Products and 3% to 5% ~$175M Distribution Key Assumptions: segment • Low single-digit utilization growth and incremental volume from onboarding of new distribution customer wins FY25 guidance • Increased contributions from
Slide 18: Other: NPHS, at-Home Solutions and OptiFreight FY25 guidance
Revenue and segment profit Other: Revenue growth of Segment profit growth of NPHS, 10% to 12% ~10% at-Home Solutions Key Assumptions: and OptiFreight • Nuclear and Precision Health Solutions: • Robust theranostics growth led by new product launches and above-market core FY25 guidance • growth, inclu
Slide 19: Strategic priorities
• Q4 FY24 Earnings Strategic priorities Ruthless prioritization, resilient core and relentless focus 1 Build upon the Execute GMPD Accelerate Relentless growth and resiliency of Pharmaceutical and Specialty 2 Improvement Plan initiatives 3 growth in key areas 4 focus on shareholder value creation So
Slide 20: Business and portfolio review update
• Q4 FY24 Earnings Business and portfolio review update Our preliminary GMPD conclusions Operational Strategy Value performance • GMPD and Pharmaceutical and Specialty • With ~$240M in year-over-year profit • Maximum shareholder value achieved through Solutions share some synergies by improvement in
Slide 21: GMPD improvement plan
• Q4 FY24 Earnings GMPD improvement plan Growth target Strategic priorities Areas of focus 1 FY23-FY26 Mitigate inflation and global Offset with mitigation initiatives 1 supply chain constraints • Exit FY24 offsetting gross impact ~$300M 2 Grow Cardinal Health Brand Optimize and grow Cardinal Health
Slide 22: Our long-term targets: FY24-26
Q4 FY24 Earnings Our long-term targets: FY24-26 (FY23 Baseline) 4% to 6% ~$300M 8% to 10% at least 12% to 14% Growth CAGR in FY26 Growth CAGR $2.5B Growth CAGR Pharma and Share non-GAAP diluted Specialty Solutions GMPD Other Segment Profit Segment Profit Segment Profit repurchases1 EPS growth No cha
Slide 23: Disciplined Capital Allocation Framework
Q4 FY24 Earnings Table stakes FY24 Results Investing back into the business to drive $511M in capex organic growth Disciplined Maintain investment Three positive outlook updates from credit rating agencies Completed annual Capital grade balance sheet opioid settlement payment and certain settlement
Slide 24: Compelling investment thesis
Q3 FY24 Earnings Compelling investment thesis Moving healthcare forward Pharmaceutical and Medical Products Other Growth Cash flow and Value creation Specialty Solutions and Distribution Areas capital deployment Relentlessly focused Resilient and growing business, Executing our plan to Favorable lon
Slide 25: Appendix
Appendix 25 © 2024 Cardinal Health. All Rights Reserved. 25 © 2024 Cardinal Health. All Rights Reserved. INTERNAL USE ONLY
Slide 26: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries 1 GAAP / Non-GAAP Reconciliation Gross Operating Earnings Net Diluted 2 3 3 Margin SG&A Earnings Before Provision for Net Earnings Effective EPS Gross Growth Growth Operating Growth Income Income Earnings/ Growth Tax Diluted Growth 2 3 3,4 Margin Rate SG&A Rate
Slide 27: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries 1 GAAP / Non-GAAP Reconciliation Gross Operating Earnings Net Diluted 2 3 3 Margin SG&A Earnings Before Provision for Earnings Effective EPS Gross Growth Growth Operating Growth Income Income Net Growth Tax Diluted Growth 2 3 3 Margin Rate SG&A Rate Earnings Ra
Slide 28: 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) 2024 2023 GAAP - Cash Flow Categories Net cash provided by operating activities $ 3,762 $ 2,844 Net cash provided by/(used in) investing ac
Slide 29: Segment Information
Cardinal Health, Inc. and Subsidiaries Segment Information Fourth Quarter Pharmaceutical and Specialty Solutions Global Medical Products and Distribution Other (in millions) 2024 2023 2024 2023 2024 2023 Revenue Amount $ 55,608 $ 49,373 $ 3,109 $ 3,047 $ 1,172 $ 1,020 Growth rate 13 % 15 % 2% (2)% 1
Slide 30: 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 31: 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 32: 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