Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q2 FY2008 Earnings Presentation
22 slides from Cardinal Health's earnings presentation, Jan 29, 2008
Slide 1: Q2 FY 2008 Earnings Call - Essential to care
Exhibit 99.3 Q2 FY 2008 Earnings Call FY 2008 Essential to care January 29, 2008
Slide 2: Forward-looking statements and GAAP reconciliation
Forward-looking statements and GAAP reconciliation This presentation contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These matters are subject to risks and uncertainties that could cause actual
Slide 3: Agenda
Agenda Opening remarks Kerry Clark Chairman and Chief Executive Officer Financial overview Jeff Henderson Chief Financial Officer Q&A 3
Slide 4: Financial Overview
Financial Overview • FY 2008 Q2 Results – Consolidated • FY 2008 Q2 Results – Business Segments • Key Financial Value Drivers • FY 2008 Financial Targets and Goals 4
Slide 5: Q2 FY 2008 Recap
Q2 FY 2008 Recap GAAP Basis Non-GAAP Basis % 1 % 1 ($M) Change ($M) Change Revenue $23,283 7% Operating Earnings $519 1% $526 (3%) Earnings from continuing ops $325 3% $329 (3%) Diluted EPS from continuing ops $0.89 16% $0.90 8% Operating cash flow ($26) Return on equity 18.3% 19.4% 1% change over p
Slide 6: Q2 Operating Earnings and EPS
Q2 Operating Earnings and EPS Q2 FY 2008 Q2 FY 2007 Operating Diluted EPS from Operating Diluted EPS from Earnings/(Loss) Continuing Earnings/(Loss) Continuing ($M) Operations ($M) Operations GAAP Consolidated $519 $0.89 $512 $0.77 Special Items ($30) ($0.05) ($20) ($0.03) Impairment Charges & Other
Slide 7: Healthcare Supply Chain Services – Pharmaceutical Business Analysis
Healthcare Supply Chain Services – Pharmaceutical Business Analysis Q2 FY08 Q2 FY07 ($M) ($M) % Change Revenue 20,351 19,238 6% Segment Profit 258 328 (21%) Highlights: • Revenue up 6% on new revenue from existing bulk customers • Segment profit down 21%, driven by generic market conditions, timing
Slide 8: Healthcare Supply Chain Services – Medical Business Analysis
Healthcare Supply Chain Services – Medical Business Analysis Q2 FY08 Q2 FY07 ($M) ($M) % Change Revenue 2,015 1,872 8% Segment Profit 72 82 (13%) Highlights: • Revenue up 8% on increased sales momentum to hospital, laboratory, and ambulatory customers • Segment profit down 13%, driven by the previou
Slide 9: Medical Products and Technologies Business Analysis
Medical Products and Technologies Business Analysis Q2 FY08 Q2 FY07 ($M) ($M) % Change Revenue 667 455 47% Segment Profit 69 47 46% Highlights: • Revenue up 47%, driven by the VIASYS acquisition and strong sales of infection prevention products and surgical instruments • Segment profit up 46% on the
Slide 10: Clinical Technologies and Services Business Analysis
Clinical Technologies and Services Business Analysis Q2 FY08 Q2 FY07 ($M) ($M) % Change Revenue 715 662 8% Segment Profit 115 92 26% Highlights: • Revenue up 8% over prior year on strong demand for Pyxis dispensing and supply products and strength in Alaris infusion products, dampened in part by a s
Slide 11: Key Financial Value Drivers
Key Financial Value Drivers Balance sheet management – Portfolio optimization process continues – Non-GAAP ROIC up 156 bps vs. Q2 last year Capital deployment st – $350M in share buyback completed in Q2, $942M repurchased during the 1 half of FY08 Capital structure – Debt to total capital increased
Slide 12: FY08 Outlook
FY08 Outlook 1 Lowering and narrowing EPS guidance to $3.75 – $3.85 on continued Supply Chain Pharma challenges; other segments performing in-line or better than expectations Continued margin expansion and sales growth for Alaris and Pyxis CTS products; revenue dampened by pharmacy management slow d
Slide 13: Financial Goals
Financial Goals FY08 – FY10 Goals4 FY08 Guidance Established June 27, 2007 January 29, 2008 Revenue: + 8 - 10% ~ 7% EPS¹: + 12 - 16% $3.75 - $3.85 per share Segment Segment Revenue FY08 profit growth vs. long-term goal Profit HSCS - Pharma + 7 - 10% + 7 - 10% Below range² HSCS - Medical + 4 - 7% + 6
Slide 14: Q&A
O&A CardinalHealth Essential to care™ ssential to c
Slide 15: Cardinal Health - Essential to care
Se CardinalHealth Essential to care™
Slide 16: GAAP / Non-GAAP Reconciliation - Operating Earnings
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Second Quarter 2008 Year-to-Date 2008 Impairment Impairment Special Charges and Special Charges and (in millions, except per Common Share amounts) GAAP Items Other Non-GAAP GAAP Items Other Non-GAAP Operating Earnings Amount $ 519
Slide 17: GAAP / Non-GAAP Reconciliation - Return on Equity
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Second Quarter Year-to-Date (in millions) 2008 2007 2008 2007 GAAP Return on Equity 18.3% 34.1% 17.4% 23.5% Non-GAAP Return on Equity Net earnings $ 324.7 $ 739.3 $ 626.5 $ 1,010.0 Special items, net of tax, in continuing operatio
Slide 18: GAAP / Non-GAAP Reconciliation - Effective Tax Rate
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Second Quarter Year-to-Date (in millions) 2008 2007 2008 2007 GAAP Effective Tax Rate from Continuing Operations 30.7% 34.2% 31.4% 32.0% Non-GAAP Effective Tax Rate from Continuing Operations Earnings before income taxes and disco
Slide 19: GAAP / Non-GAAP Reconciliation - Healthcare Supply Chain Services
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION HEALTHCARE SUPPLY CHAIN SERVICES Pharmaceutical First Quarter Fiscal 2008 Second Quarter Fiscal 2008 Fiscal 2008 (in millions) July August September Total October November December Total YTD Economic Profit Margin Segment profit $
Slide 20: Segment profit, effective tax rate and NOPAT
Segment profit $ 64.1 $ 81.9 $ 146.1 Effective tax rate from continuing operations 29.8% 29.8% 29.8% Net operating earnings, after-tax (NOPAT) $ 45.0 $ 57.5 $ 102.5 Total assets $ 2,442.1 $ 2,437.6 $ 2,456.6 $ 2,492.0 $ 2,525.1 $ 2,505.1 Less: assets from discontinued operations — — — — — — Less: ac
Slide 21: GAAP / Non-GAAP Reconciliation - Clinical Technologies and Services revenue
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Second Quarter (in millions) 2008 2007 Clinical Technologies and Services revenue growth 8% Clinical Technologies and Services revenue $ 714.5 $ 662.4 Less: Pharmacy Services business unit revenue (205.5) (233.5) Clinical Technolo
Slide 22: Definitions
CARDINAL HEALTH, INC. AND SUBSIDIARIES DEFINITIONS GAAP Debt: long-term obligations plus short-term borrowings Debt to Total Capital: debt divided by (debt plus total shareholders’ equity) Diluted EPS from Continuing Operations: earnings from continuing operations divided by diluted weighted average