Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q4 FY2017 Earnings Presentation
30 slides from Cardinal Health's earnings presentation, Aug 2, 2017
Slide 1: Q4 FY2017 Earnings Investor/Analyst call
Q4 FY2017 Cardinal Health, Inc. Earnings Investor/Analyst call August 2, 2017 © Copyright 2017, 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: Q4 and FY2017 results
Q4 and FY2017 results © Copyright 2017, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 4: Q4 FY17 financial summary
Q4 FY17 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q4 FY17 Q4 FY16 Q4 FY17 Q4 FY16 Revenue $32,966 $31,384 N/A N/A % change 5% increase YoY 14% increase YoY Gross Margin $1,623 $1,665 $1,623 $1,614 % change 3% decrease YoY 14% increase YoY 1% increase YoY 11% increase YoY Ratio to revenue
Slide 5: Q4 FY17 Pharmaceutical segment business analysis
Q4 FY17 Pharmaceutical segment business analysis Q4 FY17 ($M) Q4 FY16 ($M) YoY Change Revenue $29,552 $28,177 5% Segment Profit $505 $542 (7)% Segment 1.71% 1.93% -22 bps Profit Margin Highlights: • Revenue for the Pharmaceutical segment increased 5 percent to $29.6 billion due to growth from Pharma
Slide 6: Q4 FY17 Medical segment business analysis
Q4 FY17 Medical segment business analysis Q4 FY17 ($M) Q4 FY16 ($M) YoY Change Revenue $3,416 $3,210 6% Segment Profit $138 $122 13% Segment 4.03% 3.81% +22 bps Profit Margin Highlights: • Revenue for the Medical segment increased 6 percent to $3.4 billion driven by contributions from new and existi
Slide 7: Q4 FY17 GAAP to non-GAAP adjustments
Q4 FY17 GAAP to non-GAAP adjustments1 Q4 FY 2017 Q4 FY 2016 Gross Operating Net Earnings 2 2 Gross Operating Net Earnings 2 Diluted EPS Diluted EPS 2 Margin ($M) Earnings ($M) ($M) Margin ($M) Earnings ($M) ($M) GAAP $1,623 $439 $274 $0.86 $1,665 $620 $333 $1.02 LIFO charges/(credits) - - - - (51) (
Slide 8: FY17 financial summary
FY17 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) FY17 FY16 FY17 FY16 Revenue $129,976 $121,546 N/A N/A % change 7% increase YoY 19% increase YoY Gross Margin $6,544 $6,543 $6,544 $6,543 % change 0% increase YoY 15% increase YoY 0% increase YoY 15% increase YoY Ratio to revenue 5.03% 5.38%
Slide 9: FY17 Pharmaceutical segment business analysis
FY17 Pharmaceutical segment business analysis FY17 ($M) FY16 ($M) YoY Change Revenue $116,463 $109,131 7% Segment Profit $2,187 $2,488 (12)% Segment 1.88% 2.28% -40 bps Profit Margin Highlights: • Revenue for the Pharmaceutical segment increased 7 percent to $116.5 billion due to growth from Pharmac
Slide 10: FY17 Medical segment business analysis
FY17 Medical segment business analysis FY17 ($M) FY16 ($M) YoY Change Revenue $13,524 $12,430 9% Segment Profit $572 $457 25% Segment 4.23% 3.68% +56 bps Profit Margin Highlights: • Revenue for the Medical segment increased 9 percent to $13.5 billion due to contributions from new and existing custom
Slide 11: FY17 GAAP to non-GAAP adjustments
FY17 GAAP to non-GAAP adjustments1 FY 2017 FY 2016 Gross Operating Net Earnings 2 2 Gross Operating Net Earnings 2 Diluted EPS Diluted EPS 2 Margin ($M) Earnings ($M) ($M) Margin ($M) Earnings ($M) ($M) GAAP $6,544 $2,120 $1,288 $4.03 $6,543 $2,459 $1,427 $4.32 Restructuring and employee severance -
Slide 12: FY2018 Outlook
FY2018 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 G
Slide 13: FY18 financial expectations
FY18 financial expectations FY2018 Outlook FY2017 Actual Mid-single digit Revenue percentage growth vs. PY $130.0B Non-GAAP $4.85 to $5.10 $5.40 Diluted EPS Note: Non-GAAP Diluted EPS for FY18 includes incremental discrete actions of $0.16 per share, the majority of which impacts our Pharmaceutical
Slide 14: FY18 corporate assumptions
FY18 corporate assumptions FY2018 Outlook FY2017 Actual Non-GAAP effective tax rate 35% - 37%1 32.6%3 Diluted weighted average Shares outstanding 319M - 320M 320M Interest and other, net $340M - $360M $197M Capital expenditures $500M - $540M $387M Acquisition-related intangible amortization ~$370M o
Slide 15: 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 low-double digits versus prior year Key assumptions • Generic drug price assumption of mid-single digit deflation for full fiscal year • Brand drug manufacturer
Slide 16: Medical segment FY18(E)
Medical segment FY18(E) • High-teens percentage increase in revenue vs. prior year • Strong double-digit segment profit growth vs. prior year Key assumptions • Patient Recovery Business acquisition completed in July 2017, accretive to FY18; integrated into Cardinal Health Branded products upon closi
Slide 17: A balanced approach with capital
A balanced approach with capital Capital Deployment Capital Expenditures Acquisitions1 Dividends Share Repurchases FY12 - FY16 $1.5B $7.0B $2.0B $3.3B FY17 $387M $132M $577M $600M Invested Returned $519M $1.2B for sustainable growth2 to our shareholders2 1Acquisitions are net of divestitures; does n
Slide 18: Appendix
Appendix Q4 FY2017 trailing five quarters, GAAP to Non-GAAP reconciliation statements and supplemental financial information © Copyright 2017, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 19: Q4 FY2017 segment analysis
Q4 FY2017 segment analysis Pharmaceutical segment Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Revenue 28,177 28,762 29,743 28,406 29,552 ($M) Segment Profit 542 534 537 611 505 ($M) Medical segment Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Revenue 3,210 3,279 3,410 3,418 3,416 ($M) Segment Profit 122 127
Slide 20: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation 1 Gross Margin Operating Provision for Net Diluted Gross Grow th Operating Earnings Earnings Before Incom e Net Earnings 2 Diluted EPS2 Margin Rate Earnings Grow th Rate Incom e Taxes Taxes Earnings 2 Grow th Rate EPS2,3,4 Grow th
Slide 21: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation 1 Gross Margin Operating Provision for Net Diluted Gross Grow th Operating Earnings Earnings Before Incom e Net Earnings 2 Diluted EPS2 Margin Rate Earnings Grow th Rate Incom e Taxes Taxes Earnings 2 Grow th Rate EPS2,3,4 Grow th
Slide 22: Total Company Business Analysis
Cardinal Health, Inc. and Subsidiaries Total Com pany Business Analysis Non-GAAP Fourth Quarter Fourth Quarter (in millions) 2017 2016 2017 2016 Revenue Amount $ 32,966 $ 31,384 Grow th rate 5% 14 % Gross m argin Amount $ 1,623 $ 1,665 $ 1,623 $ 1,614 Grow th rate (3)% 14 % 1% 11 % Operating earning
Slide 23: Segment Business Analysis Fourth Quarter
Cardinal Health, Inc. and Subsidiaries Segm ent Business Analysis Fourth Quarter Fourth Quarter (in millions) 2017 2016 (in millions) 2017 2016 Pharm aceutical Medical Revenue Revenue Amount $ 29,552 $ 28,177 Amount $ 3,416 $ 3,210 Grow th rate 5% 14 % Grow th rate 6% 12 % Segm ent profit Segm ent p
Slide 24: Segment Business Analysis Fiscal Year
Cardinal Health, Inc. and Subsidiaries Segm ent Business Analysis Fiscal Year Fiscal Year (in millions) 2017 2016 (in millions) 2017 2016 Pharm aceutical Medical Revenue Revenue Amount $ 116,463 $ 109,131 Amount $ 13,524 $ 12,430 Grow th rate 7% 20 % Grow th rate 9% 9% Segm ent profit Segm ent profi
Slide 25: GAAP / Non-GAAP Reconciliation Fourth Quarter
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Fourth Quarter (in millions) 2017 2016 GAAP return on equity 16.3 % 20.0 % Non-GAAP return on equity Net earnings attributable to Cardinal Health, Inc. $ 274 $ 333 LIFO charges/(credits), net of tax - (31) Restructuring and employ
Slide 26: GAAP / Non-GAAP Reconciliation Fiscal Year
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Fiscal Year (in millions) 2017 2016 GAAP return on equity 19.6 % 21.9 % Non-GAAP return on equity Net earnings from continuing operations attributable to Cardinal Health, Inc. $ 1,288 $ 1,427 Restructuring and employee severance,
Slide 27: GAAP / Non-GAAP Reconciliation Fourth Quarter
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Fourth Quarter Fiscal Year (in millions) 2017 2016 2017 2016 GAAP effective tax rate 25.8 % 41.8 % 32.7 % 37.1 % Non-GAAP effective tax rate Earnings before income taxes $ 374 $ 576 $ 1,924 $ 2,276 LIFO charges/(credits) - (51) -
Slide 28: 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. The Company does not provide EPS outlook, which is the most directly comparable GAAP measure to non-GAAP EPS, because changes in the items tha
Slide 29: 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 30: 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