Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q3 FY2008 Earnings Presentation
24 slides from Cardinal Health's earnings presentation, May 1, 2008
Slide 1: Q3 FY 2008 Earnings Call
Exhibit 99.3 Q3 FY 2008 Earnings Call FY 2008 Essential to care May 1, 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-P Comments George Barrett Vice Chairman and CEO Healthcare Supply Chain Services Q&A Kerry Clark Jeff Henderson George Barrett Dave Schlotterbeck Vice Chairman and C
Slide 4: Financial Overview
Financial Overview • FY 2008 Q3 Results – Consolidated • FY 2008 Q3 Results – Business Segments • Key Financial Value Drivers • FY 2008 Q4 and Full Year Financial Targets and Comments 4
Slide 5: Q3 FY 2008 Recap
Q3 FY 2008 Recap GAAP Basis Non-GAAP Basis % % 1 ($M) Change 1 ($M) Change Revenue $22,910 5% 2 Operating earnings $577 n.m $613 1% 2 Earnings from continuing ops $366 n.m $390 - Diluted EPS from continuing ops $1.02 n.m 2 $1.08 13% Operating cash flow $897 Return on equity 19.6% 21.3% 1% change ove
Slide 6: Q3 Operating Earnings and EPS
Q3 Operating Earnings and EPS Q3 FY 2008 Q3 FY 2007 Operating Diluted EPS from Operating Diluted EPS from Earnings/(Loss) Continuing Earnings/(Loss) Continuing ($M) Operations ($M) Operations GAAP Consolidated $577 $1.02 ($10) ($0.01) Special Items $36 $0.06 $612 $0.96 Impairment Charges & Other $1
Slide 7: Business Analysis: Healthcare Supply Chain Services – Pharmaceutical
Healthcare Supply Chain Services – Pharmaceutical Business Analysis Q3 FY08 Q3 FY07 ($M) ($M) % Change Revenue 19,894 19,246 3% Segment Profit 300 380 (21%) Highlights: • Revenue up 3% on increased sales to existing bulk customers • Segment profit down 21%, driven by customer repricings, controlled
Slide 8: Business Analysis: Healthcare Supply Chain Services – Medical
Healthcare Supply Chain Services – Medical Business Analysis Q3 FY08 Q3 FY07 ($M) ($M) % Change Revenue 2,066 1,907 8% Segment Profit 93 89 5% Highlights: • Revenue up 8% on increased penetration and sales to existing hospital, laboratory, and ambulatory customers • Segment profit up 5%, driven by s
Slide 9: Business Analysis: Medical Products and Technologies
Medical Products and Technologies Business Analysis Q3 FY08 Q3 FY07 ($M) ($M) % Change Revenue 679 458 48% Segment Profit 80 47 72% Highlights: • Revenue up 48%, driven by the VIASYS acquisition (38 pps) and growth within the core infection prevention and medical specialty businesses (10 pps), inclu
Slide 10: Business Analysis: Clinical Technologies and Services
Clinical Technologies and Services Business Analysis Q3 FY08 Q3 FY07 ($M) ($M) % Change Revenue 747 674 11% Segment Profit 127 98 29% Highlights: • Revenue up 11% over prior year on strong installation for Pyxis medication and supply dispensing products and Alaris infusion products, dampened in part
Slide 11: Key Financial Value Drivers
Key Financial Value Drivers Balance sheet management – Days of inventory on hand declined from 29 to 27 days Q3 FY08 vs. Q3 FY07 – Portfolio optimization process continues – Non-GAAP ROIC up 5 bps vs. Q3 of prior year Capital deployment – $150M in share buyback completed in Q3, $1.1B repurchased dur
Slide 12: FY08 Outlook
FY08 Outlook Expect to achieve right about the mid-point of non-GAAP EPS guidance of $3.75 – $3.85, excluding $0.01 - $0.02 dilutive impact of Enturia. In Q4, continued Supply Chain Pharma (HSCS-P) challenges positively balanced with HSCS-M, CTS and MPT performance: Challenges from repricings and co
Slide 13: Financial Goals
Financial Goals FY08 Guidance - May 1, 2008 Revenue: approximately 5% Non-GAAP EPS1: about mid-point of $3.75 - $3.85 per share, excluding $0.01 - $0.02 dilutive impact of Enturia FY09 guidance part of Q4 FY08 earnings release/conference call in August 1 Non-GAAP diluted EPS from continuing operatio
Slide 14: Q&A
O&A CardinalHealth Essential to care™ ssential to c
Slide 15: Appendix
Se CardinalHealth Essential to care™
Slide 16: Business Analysis: Healthcare Supply Chain Services
Healthcare Supply Chain Services Business Analysis Healthcare Supply Chain Services – Pharmaceutical Q3FY07 Q4FY07 Q1FY08 Q2FY08 Q3FY08 Q3FY08/ Q3FY07 % change Revenue $19,246 $19,556 19,221 $20,351 $19,894 3% ($M) Segment $380 $303 $305 $258 $300 -21% Profit ($M) Healthcare Supply Chain Services –
Slide 17: Business Analysis: Clinical and Medical Products
Clinical and Medical Products Business Analysis Medical Products and Technologies Q3FY07 Q4FY07 Q1FY08 Q2FY08 Q3FY08 Q3FY08/ Q3FY07 % change Revenue $458 $500 $623 $667 $679 48% ($M) Segment $47 $58 $57 $69 $80 72% Profit ($M) Clinical Technologies and Services Q3FY07 Q4FY07 Q1FY08 Q2FY08 Q3FY08 Q3F
Slide 18: GAAP / Non-GAAP Reconciliation: Operating Earnings
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Third Quarter 2008 Year-to-Date 2008 Impairment Impairment Charges Non- Charges Non- (in millions, except per Common Share amounts) GAAP Special Items and Other GAAP GAAP Special Items and Other GAAP Operating Earnings Amount $ 57
Slide 19: GAAP / Non-GAAP Reconciliation: Return on Equity
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Third Quarter Year-to-Date (in millions) 2008 2007 2008 2007 GAAP Return on Equity 19.6% 0.9% 18.1% 16.3% Non-GAAP Return on Equity Net earnings $ 356.0 $ 19.0 $ 982.6 $ 1,028.9 Special items, net of tax, in continuing operations
Slide 20: GAAP / Non-GAAP Reconciliation: Effective Tax Rate
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Third Quarter Year-to-Date (in millions) 2008 2007 2008 2007 GAAP Effective Tax Rate from Continuing Operations 32.9% 88.2% 32.0% 29.3% Non-GAAP Effective Tax Rate from Continuing Operations Earnings before income taxes and discon
Slide 21: GAAP / Non-GAAP Reconciliation: Clinical Technologies and Services revenue
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Third Quarter (in millions) 2008 2007 Clinical Technologies and Services revenue growth 11% Clinical Technologies and Services revenue $ 746.6 $ 674.3 Less: Pharmacy Services business unit revenue (212.7) (226.3) Clinical Technolo
Slide 22: GAAP / Non-GAAP Reconciliation: Healthcare Supply Chain Services
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION Third Quarter (in millions) 2008 2007 HEALTHCARE SUPPLY CHAIN SERVICES Revenue Pharmaceutical $19,894 $19,246 Medical 2,066 1,907 Total Sector Revenue $21,960 $21,153 Sector Growth Rate 4% Profit Pharmaceutical $ 300 $ 380 Medical
Slide 23: GAAP / Non-GAAP Reconciliation: Economic Profit Margin
CARDINAL HEALTH, INC. AND SUBSIDIARIES GAAP / NON-GAAP RECONCILIATION (in millions) HEALTHCARE SUPPLY CHAIN SERVICES Pharmaceutical Fiscal Fiscal Third Quarter Fiscal 2008 2008 Third Quarter Fiscal 2007 2007 January February March Total YTD January February March Total YTD Economic Profit Margin Seg
Slide 24: Definitions
CARDINAL HEALTH, INC. AND SUBSIDIARIES DEFINITIONS GAAP Debt: long-term obligations plus short-term borrowings Debt to Total Capital: debt divided by (debt plus total shareholders’ equity) Diluted EPS from Continuing Operations: earnings / (loss) from continuing operations divided by diluted weighte