Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q3 FY2018 Earnings Presentation
22 slides from Cardinal Health's earnings presentation, May 3, 2018
Slide 1: Q3 FY18 Earnings Investor/Analyst call
Q3 FY18 Cardinal Health, Inc. Earnings Investor/Analyst call May 3, 2018 © Copyright 2018, 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: Q3 FY18 results
Q3 FY18 results © Copyright 2018, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 4: Q3 FY18 financial summary
Q3 FY18 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q3 FY18 Q3 FY17 Q3 FY18 Q3 FY17 Revenue $33,633 $31,821 N/A N/A % change 6% increase YoY 4% increase YoY Operating Earnings $546 $605 $781 $759 % change 10% decrease YoY 8% decrease YoY 3% increase YoY 4% decrease YoY Ratio to revenue 1.6
Slide 5: Q3 FY18 Pharmaceutical segment business analysis
Q3 FY18 Pharmaceutical segment business analysis Q3 FY18 ($M) Q3 FY17 ($M) YoY Change Revenue $29,720 $28,406 5% Segment Profit $596 $611 (3)% Segment 2.00% 2.15% -15 bps Profit Margin Highlights: • Revenue increase due to sales growth from pharmaceutical and specialty distribution customers. This w
Slide 6: Q3 FY18 Medical segment business analysis
Q3 FY18 Medical segment business analysis Q3 FY18 ($M) Q3 FY17 ($M) YoY Change Revenue $3,916 $3,418 15% Segment Profit $199 $148 34% Segment 5.09% 4.34% +75 bps Profit Margin Highlights: • Revenue increase was driven primarily by the acquisition of the Patient Recovery business. • Segment profit in
Slide 7: Q3 FY18 GAAP to non-GAAP adjustments
Q3 FY18 GAAP to non-GAAP adjustments1 Q3 FY18 Q3 FY17 2 Gross Operating Net Earnings Gross Operating Net Earnings2 Diluted EPS2 Diluted EPS2 Margin ($M) Earnings ($M) ($M) Margin ($M) Earnings ($M) ($M) GAAP $1,913 $546 $255 $0.81 $1,728 $605 $381 $1.20 LIFO charges/(credits) - - - - (9) (9) (5) (0.
Slide 8: FY18 Outlook
FY18 Outlook The company presents its outlook for fiscal 2018 non-GAAP EPS and non-GAAP effective tax rate 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 that the company excludes from GAA
Slide 9: FY18 financial expectations
FY18 financial expectations FY18 Outlook FY17 Actual Mid-single digit Revenue percentage growth vs. PY $130.0B Non-GAAP EPS $4.85 to $4.95 $5.40 Red font indicates a change since 2/8/18. 9 © Copyright 2018, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
Slide 10: FY18 corporate assumptions
FY18 corporate assumptions FY18 Outlook FY17 Actual Non-GAAP effective tax rate 32% - 34%1 32.6%3 Diluted weighted average Shares outstanding 315M - 316M 320M Interest and other, net $330M - $350M $197M Capital expenditures $400M - $430M $387M Acquisition-related intangible $575M $392M amortization2
Slide 11: Pharmaceutical segment FY18(E)
Pharmaceutical segment FY18(E) • Low- to mid-single digit percentage increase in revenue versus prior year • Full-year segment profit down high-single to low-double digits versus prior year Key assumptions • Generic drug price assumption of mid-to-high single digit deflation for full fiscal year • B
Slide 12: Medical segment FY18(E)
Medical segment FY18(E) • High-teens percentage increase in revenue versus prior year • Strong double-digit segment profit growth versus prior year Key assumptions • Patient Recovery business acquisition completed in July 2017, accretive to FY18; integrated into Cardinal Health Branded products upon
Slide 13: Appendix: Q3 FY18 trailing five quarters, GAAP to Non-GAAP reconciliation
Appendix Q3 FY18 trailing five quarters, GAAP to Non-GAAP reconciliation statements and supplemental financial information © Copyright 2018, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 14: Q3 FY18 segment analysis
Q3 FY18 segment analysis Pharmaceutical segment Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Revenue 28,406 29,552 28,920 31,146 29,720 ($M) Segment Profit 611 505 467 514 596 ($M) Medical segment Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Revenue 3,418 3,416 3,724 4,044 3,916 ($M) Segment Profit 148 138 12
Slide 15: Cardinal Health, Inc. and Subsidiaries GAAP/Non-GAAP Reconciliation
Cordinal Health, Inc. and Subsidiaries GAAP# Non-GAAP Reconciliation" Grose Margin Operating Net Effective Diluted Gross Growth Operating Earrings «Earnings Before Income Not Earnings? Tox Diluted Pst Mergin Pate Earrings Growth Rate Income Taxes Toxes Earnings? _ Granth Rate Fate EPSt Growth Rate ‘
Slide 16: Cardinal Health, Inc. and Subsidiaries GAAP/Non-GAAP Reconciliation
Cardinal Health, Ine. and Subsidiaries GAAP? Non-GAAP Reeconcil Operating Net Ettective Ditutedt Grove Operating Earnings «Earnings Before Income Net Earnings? Tax Diluted EPs? Margins Eernings Growth Rate Income Taxes Toxes Eamings* —_Gronth Rete Fate EpSt Growth Rate Year-to-Date 2018 GAAP A AaG 1
Slide 17: Segment Information
Cardinal Health, Inc. and Subsidiaries Segment Information Third Quarter Third Quarter (in millions) 2018 2017 (in millions) 2018 2017 Pharmaceutical Medical Revenue Revenue Amount $ 29,720 $ 28,406 Amount $ 3,916 3,418 Growth rate 5% 3% Growth rate 15% 9% Segment profit Segment profit Amount $ 596
Slide 18: GAAP/Non-GAAP Reconciliation: effective tax rate
Cardinal Health, Inc. and Sub: GAAP # Non-GAAP Reconcili: Third Quarter ‘Year-to-Date Fiscal Year fin millions} 2018 207 2018 207 2017 GAAP effective tax rate 45.1% 323% (48.61% BA% 27% Non-GAAP effective tax rate Eamings before income taxes $ 44S 564 959 1543 1924 LIFO chargesi{credits) : (3) - - :
Slide 19: GAAP/Non-GAAP Reconciliation Fiscal Year 2017
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Gross Margin Operating Provision for Net Diluted Gross Growth Operating Earnings Earnings Before — Income Net Eamings? Diluted EPs? Margin Rate Eamings GrowthRate _ Income Taxes Taxes Eamings’_GrowthRate _Eps**“__ Growth Rate (inm
Slide 20: 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 2018 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 21: 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 22: 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