Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Investor Day (December 2013)
94 slides from Cardinal Health's investor day presentation, Dec 10, 2013
Slide 1: Cardinal Health: Essential to Care
Freedom Award 2013 Cardinal Health: Essential to Care Select awards in Fiscal 2013 Gartner Research #1 Healthcare Supply Chain Organization Three years in a row 2013, 2012, 2011 © Copyright 2013 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
Slide 2: Investor and Analyst Meeting
Cardinal Health: Investor and Analyst Meeting Sally J. Curley Senior Vice President, Investor Relations December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health
Slide 3: Cautions concerning forward-looking statements
Cautions concerning forward-looking statements The presentations at the Cardinal Health 2013 Investor Day contain forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by wo
Slide 4: Well-balanced. Well-prepared. Well-focused.
Cardinal Health: Well-balanced. Well-prepared. Well-focused. George Barrett Chairman and CEO December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 5: Proven track record of success
Proven track record of success Positioned for future growth in an evolving healthcare landscape Outstanding financial growth based on strong execution and focus on the right strategic priorities Thoughtful deployment of capital and substantial returns for shareholders The talent to make it all happe
Slide 6: Strong financial performance: Non-GAAP EPS historical trend
Non-GAAP EPS 1: Historical trend Strong financial performance Non-GAAP EPS, Operating Earnings, and Operating Earnings Margin Rates1 Non-GAAP $3.73 EPS CAGR2 $3.21 18.5% $2.80 Non-GAAP Non-GAAP Diluted EPS $2.24 $2.0B OE CAGR3 $1.9B 13.6% $1.6B Non-GAAP $1.4B 2.02% Op Earnings 1.73% 1.60% Non-GAAP 1
Slide 7: Taking the poll using texting on your cell
Taking the poll using texting on your cell What you will text… What will appear… Type “22333” into “To” field You’ve joined Employee Comm (CARDINAL) Type “Cardinal” into text message field © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 7 ESSENTI
Slide 8: Poll: drivers of sustaining growth
Question: Which of the following drivers will be most important to Cardinal Health sustaining growth over the next five years? a. Demographic trends b. Generics c. Specialty d. Preferred medical products e. Alternate site and home f. China TEXT YOUR SELECTION TO 22333 © Copyright 2013, Cardinal Heal
Slide 9: Poll: drivers of greatest concern
Question: Which of the following drivers are you most concerned about related to Cardinal Health sustaining growth over the next five years? a. Industry dynamics b. Sustaining generics c. Specialty positioning d. Medical segment overall position e. Execution on preferred products TEXT YOUR SELECTION
Slide 10: Healthcare trends
Healthcare trends Our priorities are driven by key trends in the healthcare marketplace . . . Demographics Care delivery Increased Transition from Increased and public in more cost- consumerism fee-for-service participation of health issues effective in healthcare to payment for government, driving
Slide 11: Serving the full continuum of care
Serving the full continuum of care Surgery Physician centers Clinics Hospitals offices Continuum of care Imaging Laboratories Retail Home 11 centers © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and pharmacies ESSENTIAL TO CARE are trademarks or re
Slide 12: Our strategic priorities: Solutions for a system in transition
Our strategic priorities: Solutions for a system in transition Generics Health system and • Continue to build scale and capabilities to deliver value in generics hospital solutions • Reduce IDN pain points with scaled, • Tailored programs to a segmented cost-saving solutions customer base – Physicia
Slide 13: Positioned to support evolving health system needs
Positioned to support evolving health system needs Don Casey CEO, Medical Segment December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 14: Why we are excited
Why we are excited Extraordinary changes in the healthcare system are creating unprecedented opportunities for Cardinal Health We are uniquely positioned to help health systems due to the breadth of our product and service solutions These solutions provide growth and margin expansion opportunities f
Slide 15: Acute care environment is changing
Acute care environment is changing Reimbursement changes Demographics © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 15 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 16: Hospitals are responding by consolidating
Hospitals are responding by consolidating Number of hospital M&A transactions 105 Hospitals also are 93 acquiring physician 76 practices (~50% hospital employed or owned) 50 2009 2010 2011 2012 Source: Irving Levin Associates © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, t
Slide 17: Hospitals are responding by expanding across the care continuum
Hospitals are responding by expanding across the care continuum Ambulatory Physician Urgent Surgery Clinic Pharmacy office care center Integrated Delivery Networks Acute Academic Community Specialty medical hospital hospital center Post Acute Skilled Long-term Home nursing Hospice Rehab acute care h
Slide 18: Hospitals are responding by bringing a new mindset
Hospitals are responding by bringing a new mindset Typical U.S. hospital spend Services (19%) Employed labor (60%) Medical supplies & devices (15%) Rx (6%) Source: Cardinal Health estimates © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 18 ESSEN
Slide 19: We are well positioned
We are well positioned Aligning our business in supporting hospital and health system needs: Increasing the breadth of our consumable product 1 portfolio, more launches in Q1 than all of last year Launching solutions focused on reducing the cost of 2 physician preference items 3 Expanding our servic
Slide 20: Preferred products
Preferred products Preferred products* Physician Consumables preference items * Manufactured and sourced products © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 20 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 21: Increasing the breadth of our consumables product portfolio
Increasing the breadth of our consumables product portfolio Product portfolio offering cost-effective alternatives Expanding the Cardinal Health brand across channels © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 21 ESSENTIAL TO CARE are tradem
Slide 22: Launching solutions to reduce cost of physician preference items
Launching solutions focused on reducing the cost of physician preference items Fracture fixation Product platforms in categories of higher physician preference and low clinical differentiation Focused on driving business model innovation Cardinal Health Orthopedic Solutions © Copyright 2013, Cardina
Slide 23: Expanding our service offerings
Expanding our service offerings Bulk distribution ValueLink® Core capabilities (Products moving via distribution) OptiFreight® RFID solutions Opportunities logistics (Products going directly to the providers) © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Healt
Slide 24: Serving patients in the Home
Serving patients in the Home Michael Petras President, AssuraMed December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 25: Why we like the HOME
Why we like the HOME Most cost-effective care setting Rapidly growing area We have a leading platform in a fragmented category Increasingly critical to our hospital customers care delivery plans Direct-to-patient capability © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the
Slide 26: Growing presence in alternate sites of care
Growing presence in alternate sites of care Ambulatory Home health Home Physician Clinics & Surgery Long-term Mail order Retail health office urgent care centers care DME DME agency Growth Cardinal Health presence Core Low unit of measure national distribution platform capabilities Comprehensive con
Slide 27: AssuraMed supports care in the home
AssuraMed supports care in the home • Direct patient orders received and fulfilled by • Patient orders placed with third-party Business Edgepark (direct to home) providers and fulfilled by Independence model • Broad diversified referral network Medical to the home • Durable medical equipment (“DME”)
Slide 28: Opportunities extend across the care continuum
Opportunities extend across the care continuum Cardinal Health Edgepark® referral sources Hospital Home Surgery Physician DME Pharmacies Hospitals healthcare Payors systems centers offices agency © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 28
Slide 29: Core competencies create many growth options
Core competencies create many growth options Cardinal Health core competencies: Alternate site Channel expansion Low unit of measure distribution Referral demand generation Product class expansion Payor access and billing expertise High-touch patient service model Service extension Regulatory and pa
Slide 30: AssuraMed integration and value realization
AssuraMed integration and value realization Increasing shareholder value Retail independent pharmacies Sales Health systems Pharmacy benefit managers Cardinal Health brand penetration Product Enterprise sourcing Freight and logistics savings Cost Distribution network Back-office Low unit of measure
Slide 31: Our aspiration
Our aspiration By the end of FY17: Deliver 45% of segment gross profit from preferred product sales Increase our income from the home platform by >50% Deliver >70% of segment gross profit from our preferred products, services, and alternate site solutions © Copyright 2013, Cardinal Health. All right
Slide 32: Why we are excited
Why we are excited Extraordinary changes in the healthcare system are creating unprecedented opportunities for Cardinal Health We are uniquely positioned to help health systems due to the breadth of our product and service solutions These solutions provide growth and margin expansion opportunities f
Slide 33: Q&A panel
Q&A panel Moderator: Jeff Henderson, CFO Lisa Ashby, President, Medical Devices and Diagnostics Don Casey, CEO, Medical Segment Mike Duffy, President, Medical Consumables Michael Petras, President, AssuraMed © Copyright 2013 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health
Slide 34: International and China
International and China Jeff Henderson Chief Financial Officer December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 35: Cardinal Health's international strategy
Cardinal Health’s international strategy 1 Near term, primary focus will be investing for growth in China, building off our existing strong base 2 Continue to leverage platforms in Puerto Rico and Canada 3 Evaluate opportunities in select new markets, considering risk / financial returns, growth pot
Slide 36: Cardinal Health: A select global presence
Cardinal Health: A select global presence Canada U.S. Malta China Mexico Puerto Rico Thailand Dominican Republic Malaysia Singapore Commercial operations Manufacturing / sourcing operations © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 36 ESSEN
Slide 37: Segment profit from international: Historical trend
Segment profit from international: Historical trend $175 $139 $136 $116 $ millions FY10 FY11 FY12 FY13 FY14E Note: Acquired Cardinal Health China (Yong Yu) in FY11. © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 37 ESSENTIAL TO CARE are trademar
Slide 38: What we said in December 2010
What we said in December 2010 China: Future opportunities • Initial focus will be on expanding pharmaceutical distribution presence, particularly Local Direct Distribution (LDD) business • Over time, we will explore: - Med/Surg expansion - Nuclear pharmacy - Hospital pharmacy management - Retail pha
Slide 39: China: The future is now
China: The future is now Eric Zwisler President, China December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 40: Current market dynamics
Current market dynamics Demographics – Aging population – Rapidly developing diseases Healthcare policy reform – National insurance penetration – Hospital reform – Separation of prescribing and dispensing Government policies – Anti-corruption – Price reductions – Distribution policy driving consolid
Slide 41: Tenets of our China strategy
Tenets of our China strategy Broaden our geographic reach by acquiring local direct distribution companies thus establishing a national platform Layer additional Cardinal Health businesses and services onto the pharmaceutical distribution network/platform - Tailor Cardinal Health existing services f
Slide 42: Rapid progress since acquisition
Rapid progress since acquisition At acquisition Now (FY11) Revenue ~$1B ~$2.5B (FY14E) Employees ~700 ~2,000 Local wholesaling 5 10 companies Number of 7 13 distribution centers Specialty retail -- 28 pharmacies (DTP1) 1 Direct-to-patient pharmacies as of December 3, 2013. © Copyright 2013, Cardinal
Slide 43: Rapid progress since acquisition
Rapid progress since acquisition Now At acquisition (FY11) • Third-party logistics • Distribution (national) Capabilities • Local wholesaling (10 cities) • Third-party logistics • Specialty retailing • Distribution (national) • Product promotion • Local wholesaling (5 cities) • E-commerce (B2B, B2C)
Slide 44: Geographic expansion
Geographic expansion Shenyang Beijing Dalian Wuxi Shanghai Wuhan Chengdu Chongqing Ningbo Sales network Local wholesaling company Specialty pharmacy ( planned) Shenzhen As of December 3, 2013 44 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESS
Slide 45: Specialty pharmacy (DTP) services
Specialty pharmacy (DTP) services Unique, integrated, scalable business – Non-reimbursed, high value prescription pharmaceuticals – Website and call center driving dispensing to retail platform – Accelerated by acquisition of profitable local industry leader Patient-centric services – Disease-state
Slide 46: Growing into the future
Growing into the future Broaden geographic reach – Expand from 10 to ~25 local wholesaling companies through tuck-in acquisitions – Expand from 28 to over 50 DTP specialty pharmacies Expand direct-to-patient for chronic care – Focus on disease-centric, patient support model Invest in innovative heal
Slide 47: Coffee break
Coffee break © Copyright 2013 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 48: Pharmaceutical: A proven track record of success
Pharmaceutical: A proven track record of success Mike Kaufmann CEO, Pharmaceutical Segment December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 49: We have delivered on our commitments: segment profit dollars
We have delivered on our commitments Segment profit dollars ($ millions) $ 1,734 $1,558 $1,329 $1,011 FY10 FY11 FY12 FY13 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 49 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Hea
Slide 50: We have delivered on our commitments: profit as percent of revenue
We have delivered on our commitments Segment profit as a percent of revenue 1.90% 1.59% 1.42% 1.13% FY10 FY11 FY12 FY13 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 50 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Healt
Slide 51: Through a focus on four key drivers
Through a focus on four key drivers 1. 1 Execute with relentless discipline and excellence 2. 2 Diversify customer base 3. 3 Grow generic volumes and margins 4. 4 Invest and grow Specialty © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 51 ESSENT
Slide 52: Specialty and biopharma: Strategic positioning in an evolving landscape
Specialty and biopharma: Strategic positioning in an evolving landscape Meghan FitzGerald President, Specialty Solutions December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks o
Slide 53: Strong annual sales growth
Strong annual sales growth Sales $ FY11 FY12 FY13 FY14E 2 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 53 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 54: The specialty landscape is evolving and demands greater value
The specialty landscape is evolving and demands greater value This image cannot currently be display ed. Financial forces Science evolving Access Connectivity • Demographics • Targeted therapy • Reimbursement • Collaborative payors • Medicine cost • Niche populations • Clinical patient and providers
Slide 55: Innovative medicine changes lives
Innovative medicine changes lives Treatment Financing Patient Insurance Support Maintenance © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 55 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 56: We add value by connecting stakeholders
We add value by connecting stakeholders to better serve specialty patients Payors Integrating clinical pathways with Specialty Pharmacy will enable payors and providers to improve patient care while reducing the cost of care Providers Biopharma Proven 20+ year track Investing in assets and record in
Slide 57: The right medicine, for the right patient, at the right time
The right medicine, for the right patient, at the right time Offerings today… …Growing offerings Specialty Healthcare Scientific & Patient Enhanced distribution, 3PL, analytics & Clinical Commercialization regulatory support data GPO, specialty marketing pathways services consulting services analyti
Slide 58: Specialty and biopharma: commitment, positioning, talent
Specialty and biopharma Commitment to win Positioning Talent © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 58 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 59: Q&A panel
Q&A panel Moderator: Jeff Henderson, CFO Meghan FitzGerald, President, Specialty Solutions Scott Howell, M.D., Senior Vice President, Clinical Solutions Eric Zwisler, President, Cardinal Health China © Copyright 2013 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and
Slide 60: Pharmaceutical: A proven track record of success
Pharmaceutical: A proven track record of success Mike Kaufmann CEO, Pharmaceutical Segment December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 61: Through a focus on four key drivers
Through a focus on four key drivers 1. 1 Execute with relentless discipline and excellence 2. 2 Diversify customer base 3. 3 Grow generic volumes and margins 4. 4 Invest and grow Specialty © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 61 ESSENT
Slide 62: Key highlights on execution since FY10
Key highlights on execution since FY10 Diversified customer base: nearly doubled the number of retail independents we serve Adjusted service levels exceed 99% Warehouse efficiencies have improved by over 13% SG&A as a percent of GM has decreased by 8 pp Return on tangible capital has more than doubl
Slide 63: Our retail offering is best-in-class
Our retail offering is best-in-class Leading generic program in breadth of line and overall customer value Best-in-class inventory management software Comprehensive and innovative offerings in DME, consumer health products and store marketing programs Experienced and highly qualified pharmacy transi
Slide 64: Product and service offering: Retail pharmacy
Product and service offering: Retail pharmacy Durable Home Local store Medical health marketing Equipment Reimbursement Generic consulting pharmaceuticals Operational Brand excellence pharmaceuticals Inventory Order Express manager Managed care OTC & Leader® Specialized Front-of- Pharmacy care store
Slide 65: Source generic sales dollars
Source generic sales dollars FY10 FY11 FY12 FY13 FY14 E(e) 2 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 65 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 66: Source generic margin dollar goal
Source generic margin dollar goal FY14 E(e) FY15 E(e) FY16E(e) FY17E(e) © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 66 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 67: Driving success in generics
Driving success in generics Lower Increase costs scale Customer focused Optimize with analytics © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 67 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 68: CVS Caremark and Cardinal Health create largest generic sourcing entity
CVS Caremark and Cardinal Health create largest generic sourcing entity in the U.S. – the world’s largest generic drug market ▪ Largest U.S. pharmacy health care provider with over $120 billion in revenue ▪ Leading health care services company with $101 billion in revenue ▪ Focused on enhancing acce
Slide 69: Generic sourcing joint venture: Key information
Generic sourcing joint venture: Key information Forming 50/50 JV with personnel from both companies – Initial 10-year term – Responsible for sourcing vast majority of generics for Cardinal Health and CVS Caremark – Cost center; expenses to be billed back to Cardinal Health and CVS Caremark Parties w
Slide 70: New generics sourcing JV: Key CAH reporting considerations
New generics sourcing JV: Key CAH reporting considerations Financial item Line Item/Area Where it will appear Cardinal Health sourcing Cost of Goods Sold Income Statement benefit Amortization of quarterly Cost of Goods Sold Income Statement payments to CVS Caremark* Present value of future Other Ass
Slide 71: Financial overview
Financial overview Jeff Henderson Chief Financial Officer December 10, 2013 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 72: Meeting our performance goals
Meeting our performance goals What we told you in Dec. 2010 What we delivered Long-term non-GAAP EPS1 growth at least double digit 18.5% CAGR2 Modified TSR ≥ 11% 21.1%3 (Non-GAAP EPS1 growth + dividend yield) Gross margin expansion (TTM) +113bps Non-GAAP operating margin expansion (TTM) +64bps Divid
Slide 73: Strong gross margin expansion
Strong gross margin expansion 5.15% Gross margin as a percent of revenue (TTM) 4.95% 4.75% 4.55% 4.35% 4.15% 3.95% 3.75% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011 2012 2013 2014 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 73 ESSENTIAL TO CA
Slide 74: With a relentless focus on efficiency
With a relentless focus on efficiency SG&A as % of gross margin (TTM) 63.0% SG&A as % of 62.0% gross margin (TTM) 61.0% 60.0% 59.0% 58.0% 57.0% 56.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY11 FY12 FY13 FY14 © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Healt
Slide 75: Aided by our operational excellence capabilities
Aided by our operational excellence capabilities Total type 1 and type 2 accumulated benefit* $1,200,000,000 Accumulated value $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 FY06 2006 FY07 2007 FY08 2008 FY09 2009 FY10 2010 FY11 2011 FY12 2012 Total Benefit Type 1 (P&L) Launch
Slide 76: Driving consistent operating margin expansion
Driving consistent operating margin expansion Non-GAAP operating earnings as a 2.2% percent of revenue (TTM) Non-GAAP operating earnings as a percent of revenue (TTM) 2.0% 1.8% 1.6% 1.4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY11 FY12 FY13 FY14 Please see appendix for GAAP/non-GAAP definitions and
Slide 77: Non-GAAP operating earnings: Historical trend
Non-GAAP operating earnings: Historical trend Non-GAAP operating earnings: Historical trend $2,046 $1,866 $1,644 $1,394 $ Millions FY10 FY11 FY12 FY13 Please see appendix for GAAP/non-GAAP definitions and reconciling information. © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALT
Slide 78: Non-GAAP EPS: Historical trend
Non-GAAP EPS1: Historical trend $3.73 $3.21 Includes $2.80 $0.18 favorable tax settlement $2.24 FY10 FY11 FY12 FY13 1 Non-GAAP diluted earnings per share from continuing operations. Please see appendix for definitions and reconciling information. © Copyright 2013, Cardinal Health. All rights reserve
Slide 79: Thoughtful capital deployment approach
Thoughtful capital deployment approach Capital deployment post CareFusion spin1 Dividends Capital expenditures Share repurchases Acquisitions, net of divestures 1 Capital deployment from Q2 FY10 to Q1 FY14. © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health
Slide 80: Acquisitions across all strategic priorities
Acquisitions across all strategic priorities Health system HLS Medical Emerge Concepts Wave- Freight Medical solutions Services Dev. mark (investment) Healthcare Solutions Specialty and Novis biopharma Holding, LLC ("P4 Pharma Healthcare") China Puerto International Zuellig Pharma Future- tuck- Rico
Slide 81: Returning cash to shareholders through dividends and share repurchases
Returning cash to shareholders through dividends and share repurchases $900 +66% $800 $700 $600 $500 $400 $300 $200 $ Millions $100 $0 FY10 FY11 FY12 FY13 Dividends paid Share repurchases © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 81 ESSENTI
Slide 82: Differentiated dividend policy
Differentiated dividend policy Dividendper Dividend pershare share $1.21 $1.03 $0.86 $0.78 $0.70 FY10 FY11 FY12 FY13 FY14E Continue to grow dividend at least in-line with longer-term earnings growth © Copyright 2013, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and
Slide 83: Future aspirations
Future aspirations Metric FY17 Consolidated non-GAAP >3.0% operating margin Pharmaceutical segment profit margin >2.5% Medical segment profit margin >5.75% Non-GAAP EPS CAGR 10% - 15% (from FY14) Dividend payout 30% - 35% (as percent of non-GAAP EPS) © Copyright 2013, Cardinal Health. All rights res
Slide 84: Strong portfolio driving growth and positioning for the future
Strong portfolio driving growth and positioning for the future Specialty Alternate sites of care Health system services Preferred products: physician preference Preferred products: medical consumables Targeted international Generics excellence Customer mix shift FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY
Slide 85: Financial flexibility
Financial flexibility Solid balance sheet • Q1 FY14 total debt: $3.9B • Q1 FY14 cash position: $2.8B • Accounts receivable facility: $700M • CP program / revolving credit facility: $1.5B Continued • Commitment to investment grade ratings capacity to fund strategic growth and Strong OCF generation re
Slide 86: Proven track record of success
Proven track record of success Outstanding financial growth based on strong execution and focus on the right strategic priorities Thoughtful deployment of capital and substantial return of cash to shareholders Positioned for strong future growth and shareholder returns and building on a proven track
Slide 87: Q&A
Q&A Moderator: Sally Curley, Sr. VP, Investor Relations George Barrett, Chairman and CEO Don Casey, CEO, Medical Segment Jeff Henderson, CFO Mike Kaufmann, CEO, Pharmaceutical Segment © Copyright 2013 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CA
Slide 88: Cardinal Health: Essential to Care
Freedom Award 2013 Cardinal Health: Essential to Care Select awards in Fiscal 2013 Gartner Research #1 Healthcare Supply Chain Organization Three years in a row 2013, 2012, 2011 © Copyright 2013 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are
Slide 89: Financial appendix
Financial appendix © Copyright 2013 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 90: GAAP / Non-GAAP Reconciliation Fiscal Year 2013
Cardinal Health, Inc. and Subs idiaries GAAP / Non-GAAP Reconciliation Fiscal Ye ar 2013 Ope rating Earnings Before Provision Earnings Earnings from Dilute d EPS Dilute d EPS Earnings Incom e Taxes for from Continuing from from Continuing Ope rating Grow th and Discontinue d Incom e Continuing Opera
Slide 91: GAAP / Non-GAAP Reconciliation First Quarter 2014
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation First Quarter 2014 Operating Earnings Before Provision Earnings Earnings from Diluted EPS Diluted EPS Earnings Incom e Taxes for from Continuing from from Continuing Operating Grow th and Discontinued Incom e Continuing Operations
Slide 92: GAAP / Non-GAAP Reconciliation Rolling Quarter
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Rolling Quarter 2014 2013 2012 2011 (in millions) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Revenue $ 99,727 $ 101,093 $ 102,437 $ 104,803 $ 106,648 $ 107,552 $ 107,551 $ 106,705 $ 104,999 $ 102,644 $ 100,340 $ 98,612 $ 98,160 GAAP o
Slide 93: GAAP / Non-GAAP Reconciliation Fiscal Year
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Fiscal Year (in millions) 2013 2012 2011 2010 Revenue $ 101,093 $ 107,552 $ 102,644 $ 98,503 GAAP operating earnings $ 996 $ 1,792 $ 1,514 $ 1,307 Restructuring and employee severance 71 21 15 91 Amortization and other acquisition
Slide 94: Definitions
Cardinal Health, Inc. and Subsidiaries Definitions Non-GAAP Diluted EPS from Continuing Operations and grow th rate calculation1: non-GAAP earnings from continuing operations divided by diluted w eighted-average shares outstanding. Non-GAAP Earnings from Continuing Operations: earnings from continui