Press Releases

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."

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.

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.

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 35^th 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.

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.

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.

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.