News and Media

Latest News Release
04/13/2021

Cardinal Health (NYSE: CAH) was awarded a $57.8 million contract, including options that if exercised by the U.S. Department of Health and Human Services (HHS) could reach $91.6 million, for the...

Top feature box IMAGE ONLY - COMPANY NEWS

Company News

Cardinal Health Reports Fiscal 2015 Second-Quarter Results
01/29/2015
-- Revenue increased 15 percent to $25.5 billion
-- Non-GAAP 1 operating earnings increased 10 percent to $639 million
-- Non-GAAP diluted earnings per share from continuing operations increased 33 percent to $1.20; excluding a tax charge in prior-year period, growth was 13 percent
-- Fiscal 2015 outlook for non-GAAP diluted earnings per share from continuing operations raised to $4.28 to $4.38 from prior guidance range of $4.10 to $4.30

DUBLIN, Ohio, Jan. 29, 2015 /PRNewswire/ -- Cardinal Health today reported fiscal year 2015 second-quarter revenue of $25.5 billion and non-GAAP diluted earnings per share (EPS) from continuing operations of $1.20. Non-GAAP operating earnings increased 10 percent to $639 million. Non-GAAP diluted EPS from continuing operations for the second quarter of fiscal year 2015 grew 33 percent; however, excluding a $0.16 tax charge in the second quarter of the prior fiscal year, the growth rate was 13 percent. On a GAAP basis, operating earnings increased 5 percent to $546 million, and diluted EPS from continuing operations increased 9 percent to $0.86.

"We're pleased to report an excellent second quarter capping off a strong first half to our fiscal year," said George Barrett, chairman and chief executive officer of Cardinal Health. "Overall, we posted strong revenue growth for the second quarter. Although we experienced some continued challenges in the Canadian market, we saw real progress in most of our business lines and customer channels. Most important, our organization continues to drive our key strategic priorities with focus on positioning us to create new value for our customers and patients in a time of great change."

He continued, "Based on our performance in the first half of our fiscal year and our expectations for the second half, we are raising our guidance for full-year non-GAAP diluted EPS from continuing operations to a range of $4.28 to $4.38."

 

Q2 FY15 SUMMARY









Q2 FY15

Q2 FY14

Y/Y

Revenue

$25.5 billion

$22.2 billion

15%





Operating Earnings

$546 million

$519 million

5%

Non-GAAP Operating Earnings

$639 million

$579 million

10%





Earnings from Continuing Operations

$289 million

$275 million

5%

Non-GAAP Earnings from Continuing Operations

$400 million

$313 million

28%





Diluted EPS from Continuing Operations

$0.86

$0.79

9%

Non-GAAP Diluted EPS from Continuing Operations

$1.20

$0.90

33%

 

As previously disclosed, both GAAP and non-GAAP earnings from continuing operations and diluted EPS from continuing operations for second quarter of prior fiscal year reflected a tax charge of $56 million, or $0.16 per share, based on proposed assessments of additional tax.

SEGMENT RESULTS

Pharmaceutical segment

Revenue for the Pharmaceutical segment increased 16 percent to $22.6 billion due to growth in the base of existing customers as well as the impact of new customers. Segment profit increased 12 percent to $542 million, driven by strong performance under generic programs, which includes the net benefit of Red Oak Sourcing, as well as continued growth from existing customers and growth from new customers.

 


Q2 FY15

Q2 FY14

Y/Y

Revenue

$22.6 billion

$19.4 billion

16%

Segment Profit

$542 million

$482 million

12%

 

Medical segment

Revenue for the Medical segment was up 4 percent to $2.9 billion, driven by acquisitions and growth from existing customers. Segment profit decreased 12 percent to $115 million due to the year-over-year increase in enterprise-wide incentive compensation as well as the continued impact of market pressures in Canada and the related repositioning of that business.

 


Q2 FY15

Q2 FY14

Y/Y

Revenue

$2.9 billion

$2.8 billion

4%

Segment Profit

$115 million

$131 million

(12)%

 

ADDITIONAL SECOND-QUARTER AND RECENT HIGHLIGHTS 

  • Returned $438 million to shareholders through stock repurchases and dividends in the second quarter of fiscal year 2015
  • Redeemed approximately $1.2 billion of outstanding debt and issued senior notes for a comparable amount at lower interest rates and longer maturities
  • Entered into a long-term strategic agreement with Henry Schein, the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners, to provide one of the most comprehensive service and product offerings to office-based medical practices
  • Announced 15-year agreement with Bayer HealthCare for the contract manufacturing of Xofigo® (radium Ra 223 dichloride), an alpha-particle-emitting radioactive therapeutic agent for the treatment of patients with castration-resistant prostate cancer, symptomatic bone metastases and no known visceral metastatic disease

CONFERENCE CALL 
Cardinal Health will host a webcast and conference call today at 8:30 a.m. Eastern to discuss the results. To access the call and corresponding slide presentation, visit ir.cardinalhealth.com, or dial 719.234.0008, using conference ID# 7777110. There is no access code required for the call.  

There is no pre-registration for the call. Participants are advised to dial into the call at least 10 minutes prior to the start time.

Presentation slides and an audio replay will be archived on the Cardinal Health website after the conclusion of the meeting. The audio replay will also be available for seven days by dialing 719.457.0820, passcode 7777110.

UPCOMING WEBCASTED INVESTOR EVENTS

  • Leerink Partners Global Healthcare Conference on Feb. 12 at 8:30 a.m. local time in New York
  • RBC Capital Markets' 2015 Global Healthcare Conference on Feb. 24 at 8 a.m. local time in New York
  • Cowen and Company 35th Annual Health Care Conference on March 3 at 8 a.m. local time in Boston
  • Barclays Global Healthcare Conference on March 10 at 8:30 a.m. local time in Miami

At these events, Cardinal Health executives will discuss the company's diverse products and services, company performance and strategies for continued growth. To access more details and live webcasts of these events, go to the Investors page at ir.cardinalhealth.com.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $91 billion health care services company that improves the cost-effectiveness of health care. As the business behind health care, Cardinal Health helps pharmacies, hospitals, ambulatory surgery centers, clinical laboratories and physician offices focus on patient care while reducing costs, enhancing efficiency and improving quality. Cardinal Health is an essential link in the health care supply chain, providing pharmaceuticals and medical products and services to more than 100,000 locations each day and is also the industry-leading direct-to-home medical supplies distributor. The company is a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company operates the nation's largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #22 on the Fortune 500, Cardinal Health employs 34,000 people worldwide. More information about the company may be found at www.cardinalhealth.com and @CardinalHealth on Twitter.

1 See the attached tables for definitions of the non-GAAP financial measures presented in this news release and reconciliations of the differences between the non-GAAP financial measures and their most directly comparable GAAP financial measures.

Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, financial information, earnings and analyst presentations, and information about upcoming presentations and events is routinely posted and accessible on the Investors page at ir.cardinalhealth.com. In addition, our website allows investors and other interested persons to sign up automatically to receive e-mail alerts when we post news releases, SEC filings and certain other information on our website.

Cautions Concerning Forward-Looking Statements
This news release contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue," "likely," and similar expressions, and include statements reflecting future results or guidance, statements of outlook and expense accruals. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include competitive pressures in Cardinal Health's various lines of business; the ability to achieve the expected benefits from the generic sourcing venture with CVS Health; the frequency or rate of pharmaceutical price appreciation or deflation and the timing of generic and branded pharmaceutical introductions; the non-renewal or a default under one or more key customer or supplier arrangements or changes to the terms of or level of purchases under those arrangements; the ability to achieve anticipated results from the AccessClosure acquisition; uncertainties due to government health care reform including federal health care reform legislation; changes in the distribution patterns or reimbursement rates for health care products and services; the effects of any investigation or action by any regulatory authority; and changes in the cost of commodities such as oil-based resins, cotton, latex and diesel fuel. Cardinal Health is subject to additional risks and uncertainties described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports and exhibits to those reports. This news release reflects management's views as of Jan. 29, 2015. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

 

 



Schedule 1

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)



Second Quarter




(in millions, except per common share amounts)

2015



2014



% Change


Revenue

$

25,537



$

22,240



15%


Cost of products sold

24,083



20,895



15%


Gross margin

1,454



1,345



8%











Operating expenses:









Distribution, selling, general and administrative expenses

815



766



6%


Restructuring and employee severance

7



10



N.M.


Amortization and other acquisition-related costs

60



56



N.M.


Impairments and (gain)/loss on disposal of assets

(18)



9



N.M.


Litigation (recoveries)/charges, net

44



(15)



N.M.


Operating earnings

546



519



5%











Other income, net

(1)



(6)



N.M. 


Interest expense, net

36



33



10%


Loss on extinguishment of debt

60





N.M. 


Earnings before income taxes and discontinued operations

451



492



(8)%











Provision for income taxes

162



217



(25)%


Earnings from continuing operations

289



275



5%











Earnings from discontinued operations, net of tax



3



N.M.


Net earnings

$

289



$

278



4%











Basic earnings per common share:









Continuing operations

$

0.87



$

0.80



9%


Discontinued operations



0.01



N.M.


Net basic earnings per common share

$

0.87



$

0.81



7%











Diluted earnings per common share:









Continuing operations

$

0.86



$

0.79



9%


Discontinued operations



0.01



N.M.


Net diluted earnings per common share

$

0.86



$

0.80



8%











Weighted-average number of common shares outstanding:









Basic

331



342





Diluted

334



346





 

 

Schedule 2

Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)







Year-to-Date




(in millions, except per common share amounts)

2015



2014



% Change


Revenue

$

49,607



$

46,763



6%


Cost of products sold

46,813



44,155



6%


Gross margin

2,794



2,608



7%











Operating expenses:









Distribution, selling, general and administrative expenses

1,590



1,497



6%


Restructuring and employee severance

26



20



N.M.


Amortization and other acquisition-related costs

112



105



N.M.


Impairments and (gain)/loss on disposal of assets

(18)



9



N.M.


Litigation (recoveries)/charges, net

72



(13)



N.M.


Operating earnings

1,012



990



2%











Other income, net

(4)



(10)



N.M.


Interest expense, net

70



66



6%


Loss on extinguishment of debt

60





N.M.


Earnings before income taxes and discontinued operations

886



934



(5)%











Provision for income taxes

331



320



4%


Earnings from continuing operations

555



614



(10)%











Earnings from discontinued operations, net of tax



3



N.M. 


Net earnings

$

555



$

617



(10)%











Basic earnings per common share:









Continuing operations

$

1.66



$

1.80



(8)%


Discontinued operations



0.01



N.M. 


Net basic earnings per common share

$

1.66



$

1.81



(8)%











Diluted earnings per common share:









Continuing operations

$

1.65



$

1.78



(7)%


Discontinued operations



0.01



N.M. 


Net diluted earnings per common share

$

1.65



$

1.79



(8)%











Weighted-average number of common shares outstanding:









Basic

333



341





Diluted

337



345





 

 




Schedule 3

Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets





(in millions)

December 31,
 2014


June 30,
 2014


(Unaudited)




Assets






Current assets:






Cash and equivalents

$

2,881



$

2,865


Trade receivables, net

5,653



5,380


Inventories, net

9,408



8,266


Prepaid expenses and other

1,213



1,428


Total current assets

19,155



17,939








Property and equipment, net

1,415



1,459


Goodwill and other intangibles, net

5,876



5,870


Other assets

802



765


Total assets

$

27,248



$

26,033








Liabilities and Shareholders' Equity






Current liabilities:






Accounts payable

$

13,602



$

12,149


Current portion of long-term obligations and other short-term borrowings

270



801


Other accrued liabilities

2,158



2,165


Total current liabilities

16,030



15,115








Long-term obligations, less current portion

3,706



3,171


Deferred income taxes and other liabilities

1,412



1,346


Total shareholders' equity

6,100



6,401


Total liabilities and shareholders' equity

$

27,248



$

26,033


 

 




Schedule 4

Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)






Second Quarter


Year-to-Date

(in millions)

2015



2014



2015



2014


Cash flows from operating activities:












Net earnings

$

289



$

278



$

555



$

617


Earnings from discontinued operations, net of tax



(3)





(3)


Earnings from continuing operations

289



275



555



614














Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:












Depreciation and amortization

112



117



220



234


Loss on extinguishment of debt

60





60




Gain on sale of other investments





(5)




Impairments and (gain)/loss on disposal of assets

(18)



9



(18)



9


Share-based compensation

28



24



53



48


Provision for bad debts

14



17



26



29


Change in operating assets and liabilities, net of effects from acquisitions:












       Decrease/(increase) in trade receivables



25



(291)



1,420


       Increase in inventories

(1,336)



(1,198)



(1,137)



(100)


       Increase/(decrease) in accounts payable

1,595



764



1,438



(1,088)


       Other accrued liabilities and operating items, net

209



4



113



(178)


Net cash provided by operating activities

953



37



1,014



988














Cash flows from investing activities:












Acquisition of subsidiaries, net of cash acquired

(25)



(25)



(86)



(50)


Additions to property and equipment

(47)



(64)



(83)



(90)


Purchase of available-for-sale securities and other investments

(32)





(107)




Proceeds from sale of available-for-sale securities and other investments

16





107




Proceeds from maturities of available-for-sale securities

16





16




Proceeds from divestitures and disposal of held for sale assets

53





53




Net cash used in investing activities

(19)



(89)



(100)



(140)














Cash flows from financing activities:












Net change in short-term borrowings

(58)



53



(18)



73


Reduction of long-term obligations

(1,220)



(1)



(1,220)



(1)


Proceeds from long-term obligations, net of issuance costs

1,182





1,182




Net proceeds from issuance of common shares

10



37



35



139


Tax proceeds from share-based compensation

4



54



42



39


Dividends on common shares

(114)



(103)



(233)



(208)


Purchase of treasury shares

(326)





(686)



(50)


Net cash provided by/(used in) financing activities

(522)



40



(898)



(8)














Net increase/(decrease) in cash and equivalents

412



(12)



16



840


Cash and equivalents at beginning of period

2,469



2,753



2,865



1,901


Cash and equivalents at end of period

$

2,881



$

2,741



$

2,881



$

2,741


 

 




Schedule 5

Cardinal Health, Inc. and Subsidiaries
Total Company Business Analysis








Non-GAAP


Second Quarter


Second Quarter

(in millions)

2015



2014



2015



2014


Revenue












Amount

$

25,537



$

22,240








Growth rate

15%



(12)%




















Operating earnings












Amount

$

546



$

519



$

639



$

579


Growth rate

5%



2%



10%



10%














Earnings from continuing operations












Amount

$

289



$

275



$

400



$

313


Growth rate

5%



(9)%



28%



(1)%














Return on equity

18.7%



17.2%



25.9%



19.6%














Effective tax rate from continuing operations1

36.0%



44.1%



33.8%



43.3%














Debt to total capital

39%



37%








Net debt to total capital







15%



15%


 

 




Non-GAAP


Year-to-Date


Year-to-Date

(in millions)

2015



2014



2015



2014


Revenue












Amount

$

49,607



$

46,763








Growth rate2

6%



(9)%




















Operating earnings












Amount

$

1,012



$

990



$

1,204



$

1,111


Growth rate

2%



3%



8%



12%














Earnings from continuing operations












Amount

$

555



$

614



$

740



$

691


Growth rate

(10)%



7%



7%



16%














Return on equity

17.8%



19.6%



23.7%



22.1%














Effective tax rate from continuing operations

37.4%



34.2%



35.0%



34.4%


 

1 The $56 million remeasurement of unrecognized tax benefits unfavorably impacted, for fiscal 2014 second quarter, both the effective tax rate from continuing operations and non-GAAP effective tax rate from continuing operations by 11.3 and 10.1 percentage points, respectively.  The fiscal 2014 second quarter non-GAAP effective tax rate from continuing operations, excluding the impact of the tax remeasurement, would have been 33.2 percent.

2 Revenue from Walgreens was $3.3 billion for the six months ended December 31, 2013.  Excluding the impact of the Walgreens contract expiration, the fiscal 2015 year-to-date revenue growth rate would have been 14 percent.

Refer to the GAAP/Non-GAAP reconciliation for definitions and calculations supporting the Non-GAAP balances.

 





Schedule 6

Cardinal Health, Inc. and Subsidiaries
Segment Business Analysis







Second Quarter



Second Quarter

(in millions)

2015



2014



(in millions)

2015



2014


Pharmaceutical







Medical



















Revenue







Revenue






Amount

$

22,627



$

19,443



Amount

$

2,914



$

2,799


Growth rate

16%



(15)%



Growth rate

4%



13%















Segment profit







Segment profit






Amount

$

542



$

482



Amount

$

115



$

131


Growth rate

12%



9%



Growth rate

(12)%



40%


Segment profit margin

2.39%



2.48%



Segment profit margin

3.96%



4.69%


 

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the three months ended December 31, 2014 was $25,537 million, which included total segment revenue of $25,541 million and Corporate revenue of $(4) million. Total consolidated revenue for the three months ended December 31, 2013 was $22,240 million, which included total segment revenue of $22,242 million and Corporate revenue of $(2) million.  Corporate revenue consists primarily of elimination of inter-segment revenue and other revenue not allocated to the segments.

Total consolidated operating earnings for the three months ended December 31, 2014 were $546 million, which included total segment profit of $657 million and Corporate costs of $(111) million. Total consolidated operating earnings for the three months ended December 31, 2013 were $519 million, which included total segment profit of $613 million and Corporate costs of $(94) million. Corporate includes, among other things, restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.

 





Schedule 7

Cardinal Health, Inc. and Subsidiaries
Segment Business Analysis







Year-to-Date



Year-to-Date

(in millions)

2015



2014



(in millions)

2015



2014


Pharmaceutical







Medical



















Revenue







Revenue






Amount

$

43,836



$

41,256



Amount

$

5,766



$

5,511


Growth rate1

6%



(11)%



Growth rate

5%



13%















Segment profit







Segment profit






Amount

$

992



$

916



Amount

$

229



$

238


Growth rate

8%



9%



Growth rate

(4)%



41%


Segment profit margin

2.26%



2.22%



Segment profit margin

3.96%



4.31%


 

1 Revenue from Walgreens was $3.3 billion for the six months ended December 31, 2013.  Excluding the impact of the Walgreens contract expiration, the fiscal 2015 year-to-date Pharmaceutical segment revenue growth rate would have been 16 percent.

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the six months ended December 31, 2014 was $49,607 million, which included total segment revenue of $49,602 million and Corporate revenue of $5 million. Total consolidated revenue for the six months ended December 31, 2013 was $46,763 million, which included total segment revenue of $46,767 million and Corporate revenue of $(4) million.  Corporate revenue consists primarily of elimination of inter-segment revenue and other revenue not allocated to the segments.

Total consolidated operating earnings for the six months ended December 31, 2014 were $1,012 million, which included total segment profit of $1,221 million and Corporate costs of $(209) million. Total consolidated operating earnings for the six months ended December 31, 2013 were $990 million, which included total segment profit of $1,154 million and Corporate costs of $(164) million. Corporate includes, among other things, restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.

 

 

Schedule 8

Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation




Second Quarter 2015


 

Operating

Earnings

Operating

Earnings

Growth

Rate

Earnings Before

Income Taxes

and Discontinued

Operations

Provision

for

Income

Taxes

Earnings

from

Continuing

Operations

Earnings from

Continuing

Operations

Growth Rate

Diluted EPS

from

Continuing

Operations

Diluted EPS

from Continuing

Operations

Growth Rate1


(in millions, except per common share amounts)

GAAP

$

546


5

%

$

451


$

162


$

289


5

%

$

0.86


9

%

Restructuring and employee severance

7




7


3


4




0.01




Amortization and other acquisition-related costs

60




60


22


38




0.11




Impairments and (gain)/loss on disposal of assets

(18)




(18)


(10)


(8)




(0.03)




Litigation (recoveries)/charges, net

44




44


4


40




0.12




Loss on extinguishment of debt




60


23


37




0.11




Non-GAAP

$

639


10

%

$

604


$

204


$

400


28

%

$

1.20


33

%



















Second Quarter 2014

GAAP

$

519


2

%

$

492


$

217


$

275


(9)

%

$

0.79


(10)

%

Restructuring and employee severance

10




10


4


6




0.02




Amortization and other acquisition-related costs

56




56


20


36




0.10




Impairments and (gain)/loss on disposal of assets

9




9


3


6




0.02




Litigation (recoveries)/charges, net

(15)




(15)


(5)


(10)




(0.03)




Loss on extinguishment of debt












Non-GAAP

$

579


10

%

$

552


$

239


$

313


(1)

%

$

0.90


(3)

%

 


Year-to-Date 2015


 

Operating

Earnings

Operating

Earnings

Growth

Rate

Earnings Before

Income Taxes

and Discontinued

Operations

Provision

for

Income

Taxes

Earnings

from

Continuing

Operations

Earnings from

Continuing

Operations

Growth Rate

Diluted EPS

from

Continuing

Operations

Diluted EPS

from Continuing

Operations

Growth Rate


(in millions, except per common share amounts)

GAAP

$

1,012


2

%

$

886


$

331


$

555


(10)

%

$

1.65


(7)

%

Restructuring and employee severance

26




26


9


17




0.05




Amortization and other acquisition-related costs

112




112


41


71




0.21




Impairments and (gain)/loss on disposal of assets

(18)




(18)


(10)


(8)




(0.02)




Litigation (recoveries)/charges, net

72




72


4


68




0.20




Loss on extinguishment of debt




60


23


37




0.11




Non-GAAP

$

1,204


8

%

$

1,138


$

399


$

740


7

%

$

2.19


10

%



















Year-to-Date 2014

GAAP

$

990


3

%

$

934


$

320


$

614


7

%

$

1.78


7

%

Restructuring and employee severance

20




20


7


13




0.04




Amortization and other acquisition-related costs

105




105


38


67




0.19




Impairments and (gain)/loss on disposal of assets

9




9


3


6




0.02




Litigation (recoveries)/charges, net

(13)




(13)


(5)


(8)




(0.02)




Loss on extinguishment of debt












Non-GAAP

$

1,111


12

%

$

1,055


$

363


$

691


16

%

$

2.00


15

%

 

1 The $56 million remeasurement of unrecognized tax benefits reduced, for fiscal 2014 second quarter, both diluted EPS from continuing operations and non-GAAP diluted EPS from continuing operations by $0.16.  The fiscal 2014 second quarter growth rates for diluted EPS from continuing operations and non-GAAP diluted EPS from continuing operations, excluding the impact of the tax remeasurement, would have been 8 percent and 14 percent, respectively.  The fiscal 2015 second quarter growth rates for diluted EPS from continuing operations and non-GAAP diluted EPS from continuing operations, excluding the impact of the tax remeasurement, would have been (10) percent and 13 percent, respectively.

The sum of the components may not equal the total due to rounding.

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

 

 




Schedule 9

Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation







Second Quarter




(in millions)

2015






2014





GAAP return on equity

18.7

%





17.2

%
















Non-GAAP return on equity












Net earnings

$

289






$

278





Restructuring and employee severance, net of tax, in continuing operations

4






6





Amortization and other acquisition-related costs, net of tax, in continuing operations

38






36





Impairments and (gain)/loss on disposal of assets, net of tax, in continuing operations

(8)






6





Litigation (recoveries)/charges, net, net of tax, in continuing operations

40






(10)





Loss on extinguishment of debt, net of tax, in continuing operations

37










Adjusted net earnings

$

400






$

316





Annualized

$

1,600






$

1,264


















Second


First


Second


First


Quarter


Quarter


Quarter


Quarter


2015



2015



2014



2014


Total shareholders' equity

$

6,100



$

6,256



$

6,589



$

6,297


Divided by average shareholders' equity

$

6,178






$

6,443





Non-GAAP return on equity

25.9

%





19.6

%




















 

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.


 


 

 

 

Schedule 10

Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation





Year-to-Date







(in millions)

2015









2014








GAAP return on equity

17.8

%








19.6

%

























Non-GAAP return on equity


















Net earnings

$

555









$

617








Restructuring and employee severance, net of tax, in continuing operations

17









13








Amortization and other acquisition-related costs, net of tax, in continuing operations

71









67








Impairments and (gain)/loss on disposal of assets, net of tax, in continuing operations

(8)









6








Litigation (recoveries)/charges, net, net of tax, in continuing operations

68









(8)








Loss on extinguishment of debt, net of tax, in continuing operations

37
















Adjusted net earnings

$

740









$

695








Annualized

$

1,480









$

1,390



























Second


First


Fourth


Second


First


Fourth


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


2015



2015



2014



2014



2014



2013


Total shareholders' equity

$

6,100



$

6,256



$

6,401



$

6,589



$

6,297



$

5,975


Divided by average shareholders' equity

$

6,252









$

6,287








Non-GAAP return on equity

23.7

%








22.1

%































 

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

 

 




Schedule 11

Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation






Second Quarter


Year-to-Date

(in millions)

2015



2014



2015



2014


GAAP effective tax rate from continuing operations1

36.0

%


44.1

%


37.4

%


34.2

%













Non-GAAP effective tax rate from continuing operations












Earnings before income taxes and discontinued operations

$

451



$

492



$

886



$

934


Restructuring and employee severance

7



10



26



20


Amortization and other acquisition-related costs

60



56



112



105


Impairments and (gain)/loss on disposal of assets

(18)



9



(18)



9


Litigation (recoveries)/charges, net

44



(15)



72



(13)


Loss on extinguishment of debt

60





60




Adjusted earnings before income taxes and discontinued operations

$

604



$

552



$

1,138



$

1,055














Provision for income taxes

$

162



$

217



$

331



$

320


Restructuring and employee severance tax benefit

3



4



9



7


Amortization and other acquisition-related costs tax benefit

22



20



41



38


Impairments and (gain)/loss on disposal of assets tax benefit/(expense)

(10)



3



(10)



3


Litigation (recoveries)/charges, net tax benefit/(expense)

4



(5)



4



(5)


Loss on extinguishment of debt tax benefit

23





23




Adjusted provision for income taxes

$

204



$

239



$

399



$

363














Non-GAAP effective tax rate from continuing operations1

33.8

%


43.3

%


35.0

%


34.4

%














Second Quarter








2015



2014








Debt to total capital

39

%


37

%



















Net debt to capital












Current portion of long-term obligations and other short-term borrowings

$

270



$

255








Long-term obligations, less current portion

3,706



3,679








Debt

$

3,976



$

3,934








Cash and equivalents

(2,881)



(2,741)








Net debt

$

1,095



$

1,193








Total shareholders' equity

6,100



6,589








Capital

$

7,195



$

7,782








Net debt to capital

15

%


15

%







 

1 The $56 million remeasurement of unrecognized tax benefits unfavorably impacted, for fiscal 2014 second quarter, both the effective tax rate from continuing operations and non-GAAP effective tax rate from continuing operations by 11.3 and 10.1 percentage points, respectively.  The fiscal 2014 second quarter non-GAAP effective tax rate from continuing operations, excluding the impact of the tax remeasurement, would have been 33.2 percent.

The sum of the components may not equal the total due to rounding.

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

Forward-Looking Non-GAAP Financial Measures

We present non-GAAP earnings from continuing operations and non-GAAP effective tax rate from continuing operations (and presentations derived from these financial measures, including per share calculations) on a forward-looking basis. The most directly comparable forward-looking GAAP measures are earnings from continuing operations and effective tax rate from continuing operations. We are unable to provide a quantitative reconciliation of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures because we cannot reliably forecast restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, litigation (recoveries)/charges, net, LIFO charges/(credits) and loss on extinguishment of debt, which are difficult to predict and estimate and are primarily dependent on future events. Please note that the unavailable reconciling items could significantly impact our future financial results.


Cardinal Health, Inc. and Subsidiaries

 

Use of Non-GAAP Measures

This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  In general, the measures exclude items and charges that (i) management does not believe reflect Cardinal Health, Inc.'s (the "Company") core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company's performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

In fiscal 2015, the Company began excluding last-in, first-out ("LIFO") inventory charges/(credits)5 from its non-GAAP earnings, for consistency with the presentation by some of its peers. The Company did not record any LIFO charges or credits in the first or second quarters of fiscal 2015 or 2014, respectively.  In the second quarter of fiscal 2015, the Company has excluded the loss on extinguishment of debt6 related to the early redemption of debt that occurred in December 2014 from its non-GAAP earnings.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company's performance to that of its competitors.  However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.

Definitions

Debt: long-term obligations plus short-term borrowings.

Debt to Total Capital: debt divided by (debt plus total shareholders' equity).

Net Debt: a Non-GAAP measure defined as debt minus (cash and equivalents).

Net Debt to Capital: a Non-GAAP measure defined as net debt divided by (net debt plus total shareholders' equity).

Non-GAAP Diluted EPS from Continuing Operations: non-GAAP earnings from continuing operations divided by diluted weighted-average shares outstanding.

Non-GAAP Earnings from Continuing Operations: earnings from continuing operations excluding (1) restructuring and employee severance1, (2) amortization and other acquisition-related costs2, (3) impairments and (gain)/loss on disposal of assets3, (4) litigation (recoveries)/charges, net4, (5) LIFO charges/(credits) and (6) loss on extinguishment of debt, each net of tax.

Non-GAAP Effective Tax Rate from Continuing Operations: (provision for income taxes adjusted for (1) restructuring and employee severance, (2) amortization and other acquisition-related costs, (3) impairments and (gain)/loss on disposal of assets, (4) litigation (recoveries)/charges, net, (5) LIFO charges/(credits) and (6) loss on extinguishment of debt) divided by (earnings before income taxes and discontinued operations adjusted for the same six items).

Non-GAAP Operating Earnings: operating earnings excluding (1) restructuring and employee severance, (2) amortization and other acquisition-related costs, (3) impairments and (gain)/loss on disposal of assets, (4) litigation (recoveries)/charges, net and (5) LIFO charges/(credits).

Non-GAAP Return on Equity: (annualized current period net earnings excluding (1) restructuring and employee severance, (2) amortization and other acquisition-related costs, (3) impairments and (gain)/loss on disposal of assets, (4) litigation (recoveries)/charges, net, (5) LIFO charges/(credits) and (6) loss on extinguishment of debt, each net of tax) divided by average shareholders' equity.

Return on Equity: annualized current period net earnings divided by average shareholders' equity.

Segment Profit: segment revenue minus (segment cost of products sold and segment distribution, selling, general and administrative expenses).

Segment Profit Margin: segment profit divided by segment revenue.

1  Programs by which the Company fundamentally changes its operations such as closing and consolidating facilities, moving manufacturing of a product to another location, production or business process sourcing, employee severance (including rationalizing headcount or other significant changes in personnel) and realigning operations (including realignment of the management structure of a business unit in response to changing market conditions).

2  Costs that consist primarily of amortization of acquisition-related intangible assets, transaction costs, integration costs and changes in the fair value of contingent consideration obligations.

3  Asset impairments and (gains)/losses from the disposal of assets not eligible to be classified as discontinued operations are classified within impairments and (gain)/loss on disposal of assets within the condensed consolidated statements of earnings.

4  Loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal matters.

5  The inventories of the Company's core pharmaceutical distribution facilities in the Pharmaceutical segment are valued at the lower of cost, using the LIFO method, or market.  These charges or credits are included in cost of products sold, and represent changes in the Company's LIFO inventory reserve.

6  Charges related to the make-whole premium on the redemption of notes.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cardinal-health-reports-fiscal-2015-second-quarter-results-300027705.html

SOURCE Cardinal Health

For further information: Media: Debbie Mitchell, (614) 757-6225, debbie.mitchell@cardinalhealth.com, or Investors: Sally Curley, (614) 757-7115, sally.curley@cardinalhealth.com
More Company News
04/13/2021

Cardinal Health (NYSE: CAH) was awarded a $57.8 million contract, including options that if exercised by the U.S. Department of Health and Human Services (HHS) could reach $91.6 million, for the...

04/07/2021

By Victor Crawford, Chief Executive Officer of the Pharmaceutical segment at Cardinal Health

04/07/2021

Cardinal Health (NYSE: CAH) Specialty Solutions today launched Cardinal Health™ Navista™ Tech Solutions (TS), an advanced suite of technology solutions to help community oncologists improve...

03/30/2021

Cardinal Health (NYSE: CAH) plans to release third-quarter financial results for its fiscal year 2021 on May 6 prior to the opening of trading on the New York Stock Exchange. The company will...

View all company news »

* Required Fields