Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q3 FY2014 Earnings Presentation
24 slides from Cardinal Health's earnings presentation, May 1, 2014
Slide 1: Q3 FY2014 earnings investor/analyst call
Q3 FY2014 earnings investor/analyst call May 1, 2014 © Copyright 2014, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 2: Forward-looking statements and GAAP reconciliation
Forward-looking statements and GAAP reconciliation 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 ident
Slide 3: Financial summary
Q3 FY2014 Financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q3 FY14 Q3 FY13 Q3 FY14 Q3 FY13 Revenue $21,427 $24,552 % change (13)% (9)% Operating earnings $508 $475 $561 $579 % change 7% (10)% (3)% 11% Ratio to revenue 2.37% 1.94% 2.62% 2.36% Earnings from continuing ops $315 $346 $349 $412 % ch
Slide 4: Pharmaceutical segment business analysis
Q3 FY2014 Pharmaceutical segment business analysis Q3 FY14 Q3 FY13 % Change ($M) ($M) Revenue $18,762 $22,070 (15)% Segment profit $452 $498 (9)% Segment profit margin 2.41% 2.26% Highlights: • Revenue decreased 15% vs. last year due to the continuing impact of the expiration of the Walgreens contra
Slide 5: Medical segment business analysis
Q3 FY2014 Medical segment business analysis Q3 FY14 Q3 FY13 % Change ($M) ($M) Revenue $2,657 $2,484 7% Segment profit $111 $100 11% Segment profit margin 4.16% 4.01% Highlights: • Revenue for the Medical segment was up 7 percent to $2.7 billion, driven by the home health platform, reflecting the Ma
Slide 6: GAAP to non-GAAP reconciliation
Q3 FY2014 GAAP to non-GAAP reconciliation Q3 FY 2014 Q3 FY 2013 Earnings from Diluted EPS Earnings from Diluted EPS Operating Operating Continuing from Continuing Continuing from Continuing Earnings ($M) Earnings ($M) Operations ($M) Operations Operations ($M) Operations GAAP $508 $315 $0.91 $475 $3
Slide 7: FY2014 outlook
FY2014 outlook © Copyright 2014 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 7 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 8: FY2014 financial expectations
May 1, 2014 FY2014 financial expectations FY2014 non-GAAP EPS from continuing operations: $3.75 - $3.85 © Copyright 2014, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 8 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 9: Updated FY2014 corporate assumptions
May 1, 2014 Updated FY2014 corporate assumptions FY14 outlook FY13 actual Diluted weighted-average 345M - 347M 344.5M shares outstanding Interest and other, net $90M - $100M $108M Capital expenditures $245M - $265M $195M Amortization of acquisition- ~$184M or ~$0.341 $118M or $0.22 related intangibl
Slide 10: © Copyright 2014 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO
© Copyright 2014 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 11: Q3 FY2014 trailing five quarters and GAAP to Non-GAAP reconciliation statements
Q3 FY2014 trailing five quarters and GAAP to Non-GAAP reconciliation statements © Copyright 2014 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health. 11
Slide 12: Segment analysis
Q3 FY2014 Segment analysis Pharmaceutical segment Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Revenue 22,070 22,783 21,813 19,443 18,762 ($M) Segment Profit 498 395 433 482 452 ($M) Medical segment Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Q3 FY14 Revenue 2,484 2,697 2,711 2,799 2,657 ($M) Segment Profit 100 104
Slide 13: GAAP / Non-GAAP Reconciliation Third Quarter 2014
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Third Quarter 2014 Operating Earnings Before Provision Earnings Earnings from Diluted EPS Diluted EPS Earnings Income Taxes for from Continuing from from Continuing Operating Growth and Discontinued Income Continuing Operations Co
Slide 14: GAAP / Non-GAAP Reconciliation: return on equity
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Third Quarter (in millions) 2014 2013 GAAP return on equity 19.2 % 20.7 % Non-GAAP return on equity Net earnings $ 315 $ 345 Restructuring and employee severance, net of tax, in continuing operations 3 21 Amortization and other ac
Slide 15: GAAP / Non-GAAP Reconciliation: year-to-date return on equity
Schedule 12 Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Year-to-Date (in millions) 2014 2013 GAAP return on equity 19.6 % 18.9 % Non-GAAP return on equity Net earnings $ 932 $ 920 Restructuring and employee severance, net of tax, in continuing operations 16 24 Amortization
Slide 16: GAAP / Non-GAAP Reconciliation: effective tax rate
Schedule 10 Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Third Quarter Year-to-Date (in millions) 2014 2013 2014 2013 GAAP effective tax rate from continuing operations1 38.0 % 22.7 % 35.5 % 32.7 % Non-GAAP effective tax rate from continuing operations Earnings before income
Slide 17: GAAP / Non-GAAP Reconciliation Fiscal Year
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Fiscal Year (in millions) 2013 GAAP effective tax rate from continuing operations1 62.3 % Non-GAAP effective tax rate from continuing operations Earnings/(loss) before income taxes and discontinued operations $ 888 Restructuring a
Slide 18: GAAP / Non-GAAP Reconciliation: operating expenses
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Third Quarter Year-to-Date (in millions) 2014 2013 2014 2013 Distribution, selling, general and administrative expenses $ 736 $ 712 $ 2,233 $ 2,099 Restructuring and employee severance 5 33 25 39 Amortization and other acquisition
Slide 19: GAAP / Non-GAAP Reconciliation: operating earnings
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Third Quarter Year-to-Date (in millions) 2014 2013 2014 2013 Revenue $ 21,427 $ 24,552 $ 68,190 $ 75,673 GAAP operating earnings $ 508 $ 475 $ 1,498 $ 1,439 Restructuring and employee severance 5 33 25 39 Amortization and other ac
Slide 20: Schedule of Notable Items
Schedule 6 Cardinal Health, Inc. and Subsidiaries Schedule of Notable Items Third Quarter Year-to-Date (in millions, except per common share amounts) 2014 2013 2014 2013 Restructuring and employee severance $ (5) $ (33) $ (25) $ (39) Tax benefit 2 12 9 15 Restructuring and employee severance, net of
Slide 21: Asset Management Analysis
Schedule 7 Cardinal Health, Inc. and Subsidiaries Asset Management Analysis Third Quarter Year-to-Date 2014 2013 2014 2013 Days sales outstanding 20.2 23.5 Days inventory on hand 28.7 27.5 Days payable outstanding 39.0 39.8 Net working capital days 9.9 11.2 Debt to total capital 38 % 38 % Net debt t
Slide 22: Working capital days calculations
Cardinal Health, Inc. and Subsidiaries Third Quarter (in millions) 2014 2013 Days sales outstanding 20.2 23.5 Days inventory on hand Inventories, net $ 8,030 $ 8,328 Cost of products sold $ 20,130 $ 23,261 Chargeback billings 5,081 3,974 Adjusted cost of products sold $ 25,211 $ 27,235 Adjusted cost
Slide 23: Pharmaceutical segment revenue growth excluding Walgreens
Cardinal Health, Inc. and Subsidiaries The non-GAAP financial measure “Pharmaceutical segment revenue growth rate excluding revenue from Walgreens” was referenced on the earnings conference call held on May 1, 2014. The following is a reconciliation of the differences between this non-GAAP financial
Slide 24: Definitions
Cardinal Health, Inc. and Subsidiaries Definitions Debt: long-term obligations plus short-term borrowings. Debt to Total Capital: debt divided by (debt plus total shareholders’ equity). Interest and Other, net: other (income)/expense, net plus interest expense, net. Net Debt: a Non-GAAP measure defi