Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q4 FY2008 Earnings Presentation
35 slides from Cardinal Health's earnings presentation, Aug 7, 2008
Slide 1: Essential to care Q4FY2008 and FY2009E Investor/Analyst Call
Essential to care Q4FY2008 and FY2009E Investor/Analyst Call Exhibit 99.3 August 7, 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 HSCS Comments George Barrett Vice Chairman and CEO Healthcare Supply Chain Services CMP Comments Dave Schlotterbeck V ice Chairman and CEO Clinical and Medical Products Q
Slide 4: Cardinal Health: Essential to care
‘CardinalHealth Fssential to care”
Slide 5: Q4 FY2008 Financial Review
Q4 FY2008 Financial Review $22,926 $543 $330 $0.92 $247 17% ($M) 3% 29% 39% 51% % Change GAAP Basis $568 $348 $0.97 18% ($M) 6% 1% 9% % Change Non-GAAP Basis % change over prior year quarter Revenue Operating earnings Earnings from continuing ops Diluted EPS from continuing ops Operating cash flow R
Slide 6: Q4 FY2008 Operating Earnings and EPS
Q4 FY2008 Operating Earnings and EPS Operating Earnings/(Loss) ($M) Diluted EPS from Continuing Operations Operating Earnings/(Loss) ($M) Diluted EPS from Continuing Operations GAAP Consolidated $543 $0.92 $421 $0.61 Special Items $35 $0.06 $118 $0.28 Impairment Charges & Other ($10) ($0.01) ($1) --
Slide 7: Healthcare Supply Chain Services Analysis
Healthcare Supply Chain Services Analysis Revenue Segment Profit Q4 FY08 ($M) 19,556 Q4 FY07 ($M) 1% (15%) % Change Revenue Segment Profit 1,929 8% (3)% Pharmaceutical Medical/Surgical 19,819 2,082 FY08 ($M) 76,573 1,300 FY07 ($M) 4% (14%) % Change 79,284 1,122 Q4 FY08 ($M) Q4 FY07 ($M) % Change FY0
Slide 8: Clinical and Medical Products Analysis
Clinical and Medical Products Analysis Revenue Segment Profit 46% 63% MPT CTS Revenue Segment Profit 3% 8% Q4 FY08 ($M) Q4 FY07 ($M) % Change Q4 FY08 ($M) Q4 FY07 ($M) % Change FY08 ($M) FY07 ($M) % Change 2,687 8% 29% 2,890 FY08 ($M) 2,696 FY07 ($M) 1,836 % Change 47% 52%
Slide 9: Full Year FY08 Financial Review
Full Year FY08 Financial Review $91,091 $2,129 $1,325 $3.64 $1,559 18% ($M) 5% 55% 58% 76% % Change GAAP Basis $2,219 $1,385 $3.80 19% ($M) 3% -- 11% % Change Non-GAAP Basis % change over prior year quarter Revenue Operating earnings Earnings from continuing ops Diluted EPS from continuing ops Opera
Slide 10: Full Year FY08 Operating Earnings and EPS
Full Year FY08 Operating Earnings and EPS Operating Earnings/(Loss) ($M) Diluted EPS from Continuing Operations Operating Earnings/(Loss) ($M) Diluted EPS from Continuing Operations GAAP Consolidated $2,129 $3.64 $1,374 $2.07 Special Items $123 $0.21 $772 $1.31 Impairment Charges & Other ($32) ($0.0
Slide 11: Key Financial Value Drivers FY2008
Key Financial Value Drivers FY2008 Balance sheet management – Days of inventory declined from 28 to 25 days Q4FY07 vs. Q4FY08 – FY08 non-GAAP ROIC of 8.1% Capital deployment – Repurchased $1.1B in FY08 – Increased dividend by 17% to $0.14 per quarter in June 2008 Capital structure – Debt to total ca
Slide 12: FY2009 Estimates / Assumptions
FY2009 Estimates / Assumptions * * * * * *
Slide 13: 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 ¹ : 6-7% Total revenue growth: August 7, 2008 Non-GAAP diluted earnings per share from continuing operations
Slide 14: FY09 Total Corporate Assumptions
FY09 Total Corporate Assumptions August 7, 2008 361M – 362M Diluted weighted average shares outstanding Approximately 34% Non-GAAP effective tax rate $180M - $190M Interest and other NOTE: This outlook assumes that the potential separation of the Company’s clinical and medical products businesses do
Slide 15: FY09 Segment-Related Assumptions: Healthcare Supply Chain Services
FY09 Segment-Related Assumptions August 7, 2008 Healthcare Supply Chain Services Bulk revenue growth likely to exceed non-bulk Nuclear: assumes generic event; participation as distributor, not as manufacturer DEA settlement discussions ongoing in H1 Risk-adjusted “basket” of generic launches Expect
Slide 16: FY09 Segment-Related Assumptions: Clinical and Medical Products
FY09 Segment-Related Assumptions August 7, 2008 Clinical and Medical Products Enturia accretive Fully reserved for Alaris remediation, resolved by CalYE08 Viasys synergy goals ahead of schedule R&D investments
Slide 17: FY09(E) Revenue Product Information
FY09(E) Revenue Product Information HSCS CMP ALL OTHER • Distribution of pharmaceutical, radiopharmaceutical & OTC products • Distribution of medical, surgical and laboratory products & medical procedure kits • Bulk v. non-bulk • Intravenous medication safety & infusion delivery systems • Medication
Slide 18: Healthcare Supply Chain Services (HSCS)
Healthcare Supply Chain Services (HSCS) * * * * * *
Slide 19: HSCS: Turnaround Plan
HSCS: Turnaround Plan • Focus on execution • More effectively segment our business to target the right opportunities • Improve and simplify our generic programs and better integrate them into overall offerings • Re-invigorate our value proposition
Slide 20: HSCS: Deep Customer Segmentation
HSCS: Deep Customer Segmentation Aligning offerings Suppliers Customers Retail Ind. • Pharmaceutical/ Distribution services • Pharmacy brands • Rx Purchasing Programs • FirstScript – Customized Autoshipment to stock new Brand or Generic items fast • Front-end Purchasing & Merchandising • Managed Car
Slide 21: Clinical and Medical Products (CMP)
Clinical and Medical Products (CMP) * * * * * * *
Slide 22: CMP: Competitive Advantages
CMP: Competitive Advantages • Global leader in medication safety and infusion systems • Largest U.S. hospital footprint in dispensing systems • Largest acute-care respiratory company worldwide • Leading provider of disposables used in surgical suite • Industry’s only enterprise-wide medication manag
Slide 23: CMP: Winning Vision
CMP: Winning Vision Improve Medication Management Enhance Infection Prevention • Integrating our offers and knowledge to manage all medications • Uniquely positioned to improve safety & productivity Minimize risk and cost of procedures Aligning with top hospital concerns to be a leading provider of
Slide 24: Cardinal Health: Essential to care
‘CardinalHealth Fssential to care”
Slide 25: FY 2009 Priorities
FY 2009 Priorities • Resolve outstanding regulatory issues • Continue to invest in enhancing quality and regulatory systems • Return HSCS to steady growth • Continue to invest in CMP growth • Complete integrations (Viasys, Enturia, Borschow) Mission: to make healthcare safer and more productive Miss
Slide 26: Cardinal Health: Essential to care
‘CardinalHealth Fssential to care”
Slide 27: Cardinal Health: Essential to care
> a CardinalHealth Essential to care™
Slide 28: Q4FY08 Trailing Five Quarters
Q4FY08 Trailing Five Quarters * * * * * *
Slide 29: Healthcare Supply Chain Services Analysis: Q4FY08
Healthcare Supply Chain Services Analysis: Q4FY08 $258 $19,819 Q4FY08 $300 $19,894 Q3FY08 $258 $20,351 Q2FY08 (15)% 1% Q4FY08/ Q4FY07 % change $305 $303 Segment Profit ($M) 19,221 $19,556 Revenue ($M) Q1FY08 Q4FY07 Healthcare Supply Chain Services – Pharmaceutical $81 $2,082 Q4FY08 $93 $2,066 Q3FY08
Slide 30: Clinical and Medical Products Analysis: Q4FY08
Clinical and Medical Products Analysis: Q4FY08 $95 $727 Q4FY08 $80 $679 Q3FY08 $69 $667 Q2FY08 63% 46% Q4FY08/ Q4FY07 % change $57 $58 Segment Profit ($M) $623 $500 Revenue ($M) Q1FY08 Q4FY07 Medical Products and Technologies $156 $780 Q4FY08 $127 $747 Q3FY08 $116 $715 Q2FY08 8% 3% Q4FY08/ Q4FY07 %
Slide 31: 3-Year, Quarterly, Historical Financial Data Recast in Current, Revised Structure
3-Year, Quarterly, Historical Financial Data Recast in Current, Revised Structure The following slides contain historical segment information that reflect a change in the Company’s reportable segments effective July 1, 2008. Certain costs held at corporate have been allocated to the segments under t
Slide 32: Healthcare Supply Chain Services Segment Analysis: FY06 - FY08
Healthcare Supply Chain Services Segment Analysis: FY06 - 08 $1,392 $77,108 FY06 $382 $20,555 Q4FY06 $407 $329 $273 Segment Profit ($M) $19,579 $18,713 $18,260 Revenue ($M) Q3FY06 Q2FY06 Q1FY06 $1,548 $83,948 FY07 $366 $21,444 Q4FY07 $452 $394 $335 Segment Profit ($M) $21,120 $21,079 $20,305 Revenue
Slide 33: Clinical and Medical Products Segment Analysis: FY06 - FY08
Clinical and Medical Products Segment Analysis: FY06 - 08 $429 $3,102 FY06 $126 $850 Q4FY06 $116 $108 $79 Segment Profit ($M) $769 $756 $726 Revenue ($M) Q3FY06 Q2FY06 Q1FY06 $535 $3,542 FY07 $191 $1,017 Q4FY07 $132 $127 $86 Segment Profit ($M) $883 $862 $779 Revenue ($M) Q3FY07 Q2FY07 Q1FY07 $735 $
Slide 34: All Other Segment Analysis: FY06 - FY08
All Other Segment Analysis: FY06 - 08 $110 $1,138 FY06 $26 $282 Q4FY06 $28 $28 $28 Segment Profit ($M) $291 $288 $278 Revenue ($M) Q3FY06 Q2FY06 Q1FY06 $107 $1,151 FY07 $25 $286 Q4FY07 $26 $27 $28 Segment Profit ($M) $290 $295 $280 Revenue ($M) Q3FY07 Q2FY07 Q1FY07 $101 $1,190 FY08 $27 $288 Q4FY08 $
Slide 35: GAAP to Non-GAAP Reconciliation Statements
GAAP to Non-GAAP Reconciliation Statements * * * * * * * CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Fourth Quarter 2008 Fiscal Year 2008 (in millions, except per Common Share amounts) GAAP Special Items Impairment Charges and Other Non-GAAP GAAP Special Items Impairment Ch