Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q1 FY2018 Earnings Presentation
25 slides from Cardinal Health's earnings presentation, Nov 6, 2017
Slide 1: Q1 FY2018 Earnings Investor/Analyst Call
Q1 FY2018 Cardinal Health, Inc. Earnings Investor/Analyst call November 6, 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: Q1 FY18 results
Q1 FY18 results © Copyright 2017, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 4: Q1 FY18 financial summary
Q1 FY18 financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q1 FY18 Q1 FY17 Q1 FY18 Q1 FY17 Revenue $32,641 $32,039 N/A N/A % change 2% increase YoY 14% increase YoY Operating Earnings $262 $535 $610 $669 % change 51% decrease YoY 14% decrease YoY 9% decrease YoY 9% decrease YoY Ratio to revenue 0
Slide 5: Q1 FY18 Pharmaceutical segment business analysis
Q1 FY18 Pharmaceutical segment business analysis Q1 FY18 ($M) Q1 FY17 ($M) YoY Change Revenue $28,920 $28,762 1% Segment Profit $467 $534 (13)% Segment 1.61% 1.86% -24 bps Profit Margin Highlights: • Revenue increase was due to sales growth from specialty and pharmaceutical distribution customers, w
Slide 6: Q1 FY18 Medical segment business analysis
Q1 FY18 Medical segment business analysis Q1 FY18 ($M) Q1 FY17 ($M) YoY Change Revenue $3,724 $3,279 14% Segment Profit $129 $127 1% Segment 3.45% 3.87% -42 bps Profit Margin Highlights: • Revenue increase was primarily driven by contributions from acquisitions and, to a lesser extent, new and exist
Slide 7: Q1 FY18 GAAP to non-GAAP adjustments
Q1 FY18 GAAP to non-GAAP adjustments1 Q1 FY 2018 Q1 FY 2017 Operating Net Earnings 2 2 Operating Net Earnings 2 Diluted EPS Diluted EPS 2 Earnings ($M) ($M) Earnings ($M) ($M) GAAP $262 $115 $0.36 $535 $309 $0.96 Restructuring and employee severance 132 85 0.27 9 5 0.02 Amortization and other acquis
Slide 8: 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 9: 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 9 © Copyright 2017, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
Slide 10: 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 318M - 319M 320M Interest and other, net $340M - $360M $197M Capital expenditures $500M - $540M $387M Acquisition-related intangible amortization ~$560M o
Slide 11: Pharmaceutical segment FY18(E)
Pharmaceutical segment FY18(E) • Low- to mid-single digit percentage increase in revenue versus prior year • Full-year segment profit down low-double digits versus prior year Key assumptions • Generic drug price assumption of mid-single digit deflation for full fiscal year • Brand drug manufacturer
Slide 12: Medical segment FY18(E)
Medical segment FY18(E) • High-teens percentage increase in revenue versus prior year • Strong double-digit segment profit growth versus prior year Key assumptions • Patient Recovery business acquisition completed in July 2017, accretive to FY18; integrated into Cardinal Health Branded products upon
Slide 13: Appendix: Q1 FY18 trailing five quarters, GAAP to Non-GAAP reconciliation
Appendix Q1 FY18 trailing five quarters, GAAP to Non-GAAP reconciliation statements and supplemental financial information © Copyright 2017, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved
Slide 14: Q1 FY18 segment analysis
Q1 FY18 segment analysis Pharmaceutical segment Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Revenue 28,762 29,743 28,406 29,552 28,920 ($M) Segment Profit 534 537 611 505 467 ($M) Medical segment Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Revenue 3,279 3,410 3,418 3,416 3,724 ($M) Segment Profit 127 159 14
Slide 15: GAAP / Non-GAAP Reconciliation
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation 1 Operating Provision for Net Diluted Operating Earnings Earnings Before Incom e Net Earnings 2 Diluted EPS2 Earnings Grow th Rate Incom e Taxes Taxes Earnings 2 Grow th Rate EPS2 Grow th Rate (in millions, except per common share
Slide 16: 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 Grow th Rat
Slide 17: Total Company Information
Cardinal Health, Inc. and Subsidiaries Total Com pany Inform ation Non-GAAP First Quarter First Quarter (in millions) 2018 2017 2018 2017 Revenue Amount $ 32,641 $ 32,039 Grow th rate 2% 14 % Gross m argin Amount $ 1,672 $ 1,590 $ 1,672 $ 1,590 Grow th rate 5% 1% 5% 1% Operating earnings Amount $ 26
Slide 18: Segment Information
Cardinal Health, Inc. and Subsidiaries Segm ent Inform ation First Quarter First Quarter (in millions) 2018 2017 (in millions) 2018 2017 Pharm aceutical Medical Revenue Revenue Amount $ 28,920 $ 28,762 Amount $ 3,724 $ 3,279 Grow th rate 1% 14 % Grow th rate 14 % 12 % Segm ent profit Segm ent profit
Slide 19: GAAP / Non-GAAP Reconciliation First Quarter
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation First Quarter (in millions) 2018 2017 GAAP return on equity 6.8 % 19.0 % Non-GAAP return on equity Net earnings attributable to Cardinal Health, Inc. $ 115 $ 309 Restructuring and employee severance, net of tax 85 5 Amortization a
Slide 20: 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 21: GAAP / Non-GAAP Reconciliation First Quarter
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation First Quarter (in millions) 2018 2017 GAAP effective tax rate 34.2 % 37.3 % Non-GAAP effective tax rate Earnings/(loss) before income taxes $ 178 $ 494 Restructuring and employee severance 132 9 Amortization and other acquisition-
Slide 22: GAAP / Non-GAAP Reconciliation Fiscal Year
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Fiscal Year (in millions) 2017 GAAP effective tax rate 32.7 % Non-GAAP effective tax rate Earnings before income taxes $ 1,924 LIFO charges/(credits) - Restructuring and employee severance 56 Amortization and other acquisition-rel
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 2018 non-GAAP EPS and non-GAAP ETR. The Company does not provide EPS or ETR outlook, which are the most directly comparable GAAP measure to non-GAAP EPS and non-
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