Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q1 2017 Earnings Presentation
25 slides from Cardinal Health's earnings presentation, Oct 31, 2016
Slide 1: Q1 FY2017 Earnings Investor/Analyst Call
Q1 FY2017 Cardinal Health, Inc. Earnings Investor/Analyst call October 31, 2016 © Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
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: Q1 FY2017 results
Q1 FY2017 results © Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 4: Q1 FY17 financial summary
Q1 FY17 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q1 FY17 Q1 FY16 Q1 FY17 Q1 FY16 Revenue $32,039 $28,055 N/A N/A % change 14% increase YoY 17% increase YoY Operating Earnings $535 $620 $669 $737 % change 14% decrease YoY 33% increase YoY 9% decrease YoY 30% increase YoY Ratio to revenue
Slide 5: Q1 FY17 Pharmaceutical segment business analysis
Q1 FY17 Pharmaceutical segment business analysis Q1 FY17 ($M) Q1 FY16 ($M) YoY Change Revenue $28,762 $25,140 14% Segment Profit $534 $657 (19)% Segment 1.86% 2.62% -76 bps Profit Margin Highlights: • Revenue for the Pharmaceutical segment increased 14 percent to $28.8 billion due to growth from net
Slide 6: Q1 FY17 Medical segment business analysis
Q1 FY17 Medical segment business analysis Q1 FY17 ($M) Q1 FY16 ($M) YoY Change Revenue $3,279 $2,919 12% Segment Profit $127 $101 26% Segment 3.87% 3.45% +42 bps Profit Margin Highlights: • Revenue for the Medical segment increased 12 percent to $3.3 billion driven by contributions from acquisitions
Slide 7: Q1 FY17 GAAP to non-GAAP adjustments
Q1 FY17 GAAP to non-GAAP adjustments1,2 Q1 FY 2017 Q1 FY 2016 3 Operating Net Earnings Operating Net Earnings 3 Diluted EPS 3 Diluted EPS 3 Earnings ($M) ($M) Earnings ($M) ($M) GAAP $535 $309 $0.96 $620 $383 $1.15 Restructuring and employee severance 9 5 0.02 12 7 0.02 Amortization and other acquis
Slide 8: FY2017 Outlook
FY2017 Outlook The company presents its outlook for fiscal 2017 non-GAAP EPS, non-GAAP effective tax rate and other forward-looking goals on the following pages. The company does not provide a GAAP EPS or GAAP effective tax rate outlook because it is unable to reliably forecast many of the items tha
Slide 9: FY17 financial expectations
FY17 financial expectations FY2017 Outlook FY2016 Actual High-single digit Revenue percentage growth vs. PY $121.5B Non-GAAP $5.40 to $5.60 $5.24 Diluted EPS Red font indicates a change since previous guidance. 9 © Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 10: FY17 corporate assumptions
FY17 corporate assumptions FY2017 Outlook FY2016 Actual Non-GAAP effective tax rate 35% - 37%1 36.0%4 Diluted weighted average Shares outstanding 320M – 322M2 330M Interest and other, net $190M - $205M $183M Capital expenditures $400M - $450M $465M Acquisition-related intangible amortization ~$385M
Slide 11: Pharmaceutical segment FY17(E)
Pharmaceutical segment FY17(E) • High-single digit percentage increase in revenue versus prior year • Full-year segment profit down mid-to-high single digits versus prior year and back half-weighted • Q2FY17 segment profit decline expected to be relatively in line with Q1FY17 segment profit decline
Slide 12: Medical segment FY17(E)
Medical segment FY17(E) • Mid-single digit percentage increase in revenue vs. prior year • Double-digit segment profit growth vs. prior year Key assumptions • Cordis accretive by >$0.15 vs. prior year; net of transaction-related interest expense of $0.07-$0.08; increasingly accretive thereafter • Ab
Slide 13: Cardinal Health outlook
Cardinal Health outlook FY17 non-GAAP EPS growth contribution Business growth1 0% - 3% Capital deployment 3% - 4% Total company growth 3% - 7% Multi-year aspirations Non-GAAP EPS growth 10% – 15% Dividend payout2 30% – 35% 1Defined as growth excluding acquisitions and share repurchase completed in F
Slide 14: Appendix: GAAP to Non-GAAP reconciliation statements and supplemental information
Appendix Q1 FY2017 trailing five quarters, GAAP to Non-GAAP reconciliation statements and supplemental financial information © Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 15: Q1 FY2017 segment analysis
Q1 FY2017 segment analysis Pharmaceutical segment Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Revenue 25,140 28,287 27,527 28,177 28,762 ($M) Segment Profit 657 627 660 542 534 ($M) Medical segment Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Revenue 2,919 3,162 3,138 3,210 3,279 ($M) Segment Profit 101 106
Slide 16: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Operating Provision for Net Diluted Operating Earnings Earnings Before Incom e Net Earnings 1 Diluted EPS1 Earnings Grow th Rate Incom e Taxes Taxes Earnings 1 Grow th Rate EPS1 Grow th Rate (in millions, except per common share a
Slide 17: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Net Earnings Net Earnings from Operating Provision for from Continuing Diluted Operating Earnings Earnings 1 Before Incom e Continuing Operations 2 Diluted EPS1,2 Earnings Grow th Rate Incom e Taxes Taxes Operations 2 Grow th Rate
Slide 18: Total Company Business Analysis
Cardinal Health, Inc. and Subsidiaries Total Com pany Business Analysis Non-GAAP First Quarter First Quarter (in millions) 2017 2016 2017 2016 Revenue Amount $ 32,039 $ 28,055 Grow th rate 14 % 17 % Operating earnings Amount $ 535 $ 620 $ 669 $ 737 Grow th rate (14)% 33 % (9)% 30 % Net earnings attr
Slide 19: Segment Business Analysis
Cardinal Health, Inc. and Subsidiaries Segm ent Business Analysis First Quarter First Quarter (in millions) 2017 2016 (in millions) 2017 2016 Pharm aceutical Medical Revenue Revenue Amount $ 28,762 $ 25,140 Amount $ 3,279 $ 2,919 Grow th rate 14 % 19 % Grow th rate 12 % 2% Segm ent profit Segm ent p
Slide 20: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation First Quarter (in millions) 2017 2016 GAAP return on equity 19.0 % 24.0 % Non-GAAP return on equity Net earnings attributable to Cardinal Health, Inc. $ 309 $ 383 Restructuring and employee severance, net of tax 5 7 Amortization a
Slide 21: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation First Quarter (in millions) 2017 2016 GAAP effective tax rate 37.3 % 32.3 % Non-GAAP effective tax rate Earnings before income taxes $ 494 $ 568 Restructuring and employee severance 9 12 Amortization and other acquisition-related
Slide 22: GAAP / Non-GAAP Reconciliation Fiscal Year
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Fiscal Year (in millions) 2016 GAAP effective tax rate 37.1 % Non-GAAP effective tax rate Earnings before income taxes $ 2,276 Restructuring and employee severance 25 Amortization and other acquisition-related costs 459 Impairment
Slide 23: Forward Looking non-GAAP Measures
Cardinal Health, Inc. and Subsidiaries Forward Looking non-GAAP Measures In this presentation, the Company presents its outlook for fiscal 2017 non-GAAP EPS and non-GAAP Effective Tax Rate (ETR). The Company does not provide EPS or ETR outlook, which are the most directly comparable GAAP measures to
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 Cardinal Health, Inc. shareholders’ equity). Interest and Other, net: other (income)/expense, net plus interest expense, net. Net Debt: a
Slide 25: Definitions
Cardinal Health, Inc. and Subsidiaries Definitions Non-GAAP Net Earnings attributable to Cardinal Health, Inc. or "Non-GAAP Net Earnings": net earnings attributable to Cardinal Health, Inc. excluding (1) LIFO charges/(credits), (2) restructuring and employee severance, (3) amortization and other acq