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Cardinal Health Reports Third-Quarter Results
- Revenue increases 3 percent to $26.9 billion
- Operating earnings increase of 18 percent to $527 million, or 6 percent to $524 million on a non-GAAP basis(1)
- Diluted earnings per share from continuing operations increase 34 percent to $0.95, or 16 percent to $0.94 on a non-GAAP basis
- Raises lower end of full-year outlook for non-GAAP diluted EPS from continuing operations to a revised range of $3.15 to $3.20

DUBLIN, Ohio, May 3, 2012 /PRNewswire/ -- Cardinal Health today reported a 3 percent increase in fiscal 2012 third-quarter revenue to $26.9 billion and a 6 percent increase in non-GAAP operating earnings to $524 million. The company also reported a 16 percent increase in non-GAAP diluted earnings per share (EPS) from continuing operations to $0.94.

"We are pleased to report another solid quarter of revenue growth for both of our business segments, as well as continued strong growth in earnings per share," said George Barrett, chairman and chief executive officer of Cardinal Health. "Our Pharmaceutical segment continued its robust profit performance. Our Medical segment fundamentals showed continued momentum, but as anticipated, profit was negatively impacted by the cost of commodity inputs. However, we see the year-over-year impact of this dynamic subsiding in the fourth quarter of fiscal 2012 and into fiscal 2013."

The company raised the lower end of its guidance resulting in a revised range of $3.15 to $3.20 for fiscal 2012 non-GAAP diluted earnings per share from continuing operations.

Q3 FY12 SUMMARY


Q3 FY12

Q3 FY11

Y/Y

Revenue

$26.9 billion

$26.1 billion

3%





 

Operating Earnings

 

$527 million

 

$447 million

 

18%

Non-GAAP Operating Earnings

 

$524 million

 

$493 million

 

6%





Earnings from Continuing Operations

 

$332 million

 

$250 million

 

33%

Non-GAAP Earnings from Continuing Operations

 

$327 million

 

$286 million

 

14%





Diluted EPS from Continuing Operations

 

$0.95

 

$0.71

 

34%

Non-GAAP Diluted EPS from Continuing Operations

 

$0.94

 

$0.81

 

16%

A reduction in the fair value of the P4 Healthcare acquisition earn-out liability positively impacted third-quarter fiscal 2012 GAAP operating earnings by $55 million and GAAP diluted EPS from continuing operations by $0.10 per share. Third-quarter fiscal 2012 GAAP and Non-GAAP diluted EPS from continuing operations benefited from a lower tax rate than the prior year's higher-than-usual tax rate.

SEGMENT RESULTS

Pharmaceutical segment

Revenue for the Pharmaceutical segment increased 3 percent to $24.5 billion, driven by growth from existing customers. Segment profit increased 9 percent to $446 million, due to the strong performance of generic programs including the impact of new and recently launched items.


Q3 FY12

Q3 FY11

Y/Y

Revenue

$24.5 billion

$23.8 billion

3%

Segment Profit

$446 million

$411 million

9%

Medical segment

Revenue for the Medical segment increased 8 percent to $2.4 billion, driven by growth from existing customers, including strong sales of preferred products. Segment profit declined 17 percent to $89 million, due to the anticipated negative impact of commodity price increases and increased information system expenses, primarily related to the launch of the company's Medical Business Transformation. The decline was partially offset by the positive margin impact of higher preferred products volume.


Q3 FY12

Q3 FY11

Y/Y

Revenue

$2.4 billion

$2.2 billion

8%

Segment Profit

$89 million

$108 million

(17)%

ADDITIONAL THIRD-QUARTER AND RECENT HIGHLIGHTS

  • Appointment of Donald M. Casey, Jr. as CEO of company's Medical segment
  • Completion of acquisition of Futuremed Healthcare Products Corp., a distributor of medical disposables and specialized equipment to the long-term care channel in Canada
  • Introduction of the Smart-Seal™ surgical mask, a new line of standard diagnostic procedure trays, and the industry's only half-folded format surgical glove packaging
  • Recognized as one of 2012 top 10 best companies for leaders by "Chief Executive" magazine
  • Named one of the "Top 50 Companies for Executive Women" by the National Association for Female Executives

CONFERENCE CALL

The company has scheduled a webcast and conference call for May 3 at 8:30 a.m. Eastern to discuss third-quarter results. To access the call and corresponding slide presentation, go to the Investors page at cardinalhealth.com. Participants accessing the presentation through the website will be asked to register and can do so prior to the call on the Investors page. Participants can also dial 224-357-2209 directly; no passcode or registration will be required. 

Presentation slides and an audio replay will be archived on the website after the conclusion of the meeting. The audio replay will also be available until June 4 by dialing either 855-859-2056 or 404-537-3406.

UPCOMING WEBCASTED EVENTS

  • 2012 Deutsche Bank 37th Annual Health Care Conference on May 7 at 9:20 a.m. Eastern in Boston
  • Bank of America Merrill Lynch 2012 Health Care Conference on May 15 at 8:40 a.m. Pacific in Las Vegas
  • Goldman Sachs 33rd Annual Global Healthcare Conference on June 5 at 8:40 a.m. Pacific in Rancho Palos Verdes, Calif.
  • William Blair 32nd Annual Growth Stock Conference on June 14 at 8 a.m. Central in Chicago

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 cardinalhealth.com.

About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $103 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 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 to more than 60,000 locations each day. The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company supports the growing diagnostic industry by supplying medical products to clinical laboratories and operating the nation's largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #19 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com.

(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, analyst presentations and financial information regarding Cardinal Health is routinely posted and accessible on the Investors page at cardinalhealth.com.

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 uncertainties due to government health care reform including federal health care reform legislation; competitive pressures in Cardinal Health's various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; the timing of generic and branded pharmaceutical introductions and the frequency or rate of pharmaceutical price appreciation or deflation; 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, including the Drug Enforcement Administration's suspension of the company's Lakeland, Fla., distribution center's registration to distribute controlled substances; changes in the cost of commodities such as oil-based resins, cotton, latex and diesel fuel; and, with respect to future dividends, the decision by the Cardinal Health board of directors to declare such dividends, which decision will depend on Cardinal Health's surplus, earnings, cash flows, financial condition and prospects at the time any such action is considered. 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 May 3, 2012. 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)










Third Quarter



(in millions, except per Common Share amounts)


2012


2011


% Change








Revenue


$ 26,917.5


$ 26,071.4


3 %

Cost of products sold


25,710.8


24,909.2


3 %

Gross margin


1,206.7


1,162.2


4 %








Operating expenses:







Distribution, selling, general and administrative expenses


682.7


669.5


2 %

Restructuring and employee severance


7.1


6.2


N.M.

Acquisition-related costs


(26.6)


30.3


N.M.

Impairments and loss on disposal of assets


17.1


4.6


N.M.

Litigation (recoveries)/charges, net


(0.2)


4.3


N.M.

Operating earnings


526.6


447.3


18 %








Other income, net


(7.7)


(6.2)


24 %

Interest expense, net


23.9


25.1


(5)%

Loss on sale of investment in CareFusion


-


3.3


N.M.

Earnings before income taxes and discontinued operations


510.4


425.1


20 %








Provision for income taxes


177.9


175.6


1 %

Earnings from continuing operations


332.5


249.5


33 %








Earnings/(loss) from discontinued operations, net of tax


0.9


(3.5)


N.M.

Net earnings


$      333.4


$      246.0


36 %








Basic earnings/(loss) per Common Share:







Continuing operations


$        0.96


$        0.72


33 %

Discontinued operations


-


(0.01)


N.M.

Net basic earnings per Common Share


$        0.96


$        0.71


35 %








Diluted earnings/(loss) per Common Share:







Continuing operations


$        0.95


$        0.71


34 %

Discontinued operations


-


(0.01)


N.M.

Net diluted earnings per Common Share


$        0.95


$        0.70


36 %








Weighted average number of Common Shares outstanding:







Basic


345.3


348.5



Diluted


349.5


352.9



  














Schedule 2








CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)










Year-to-Date



(in millions, except per Common Share amounts)


2012


2011


% Change








Revenue


$ 80,787.5


$ 75,880.7


6 %

Cost of products sold


77,382.5


72,762.0


6 %

Gross margin


3,405.0


3,118.7


9 %








Operating expenses:







Distribution, selling, general and administrative expenses


1,965.6


1,857.7


6 %

Restructuring and employee severance


12.2


10.6


N.M.

Acquisition-related costs


22.8


75.2


N.M.

Impairments and loss on disposal of assets


19.4


8.2


N.M.

Litigation (recoveries)/charges, net


(3.2)


11.9


N.M.

Operating earnings


1,388.2


1,155.1


20 %








Other income, net


(3.0)


(19.4)


N.M.

Interest expense, net


70.2


69.0


2 %

Gain on sale of investment in CareFusion


-


(71.5)


N.M.

Earnings before income taxes and discontinued operations


1,321.0


1,177.0


12 %








Provision for income taxes


487.1


418.2


16 %

Earnings from continuing operations


833.9


758.8


10 %








Loss from discontinued operations, net of tax


(1.7)


(2.5)


N.M.

Net earnings


$      832.2


$      756.3


10 %








Basic earnings/(loss) per Common Share:







Continuing operations


$        2.42


$        2.18


11 %

Discontinued operations


(0.01)


(0.01)


N.M.

Net basic earnings per Common Share


$        2.41


$        2.17


11 %








Diluted earnings/(loss) per Common Share:







Continuing operations


$        2.39


$        2.16


11 %

Discontinued operations


(0.01)


(0.01)


N.M.

Net diluted earnings per Common Share


$        2.38


$        2.15


11 %








Weighted average number of Common Shares outstanding:







Basic


345.0


348.3



Diluted


349.2


351.8



  










Schedule 3






CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS








March 31,


June 30,

(in millions)


2012


2011



(UNAUDITED)








Assets





Cash and equivalents


$       2,410.4


$    1,929.3

Trade receivables, net


6,495.4


6,155.7

Inventories


8,220.1


7,334.2

Prepaid expenses and other


944.3


896.7

Total current assets


18,070.2


16,315.9






Property and equipment, net


1,517.4


1,512.2

Goodwill and other intangibles, net


4,370.8


4,259.0

Other assets


683.7


758.8

Total assets


$     24,642.1


$  22,845.9






Liabilities and Shareholders' Equity





Accounts payable


$     12,572.5


$  11,331.5

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


345.5


326.7

Other accrued liabilities


1,928.1


1,711.3

Total current liabilities


14,846.1


13,369.5






Long-term obligations, less current portion


2,207.9


2,175.3

Deferred income taxes and other liabilities


1,348.0


1,452.5

Total shareholders' equity


6,240.1


5,848.6

Total liabilities and shareholders' equity


$     24,642.1


$  22,845.9











  


















Schedule 4










CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)












Third Quarter


Year-to-Date

(in millions)


2012


2011


2012


2011










CASH FLOWS FROM OPERATING ACTIVITIES:









Net earnings


$    333.4


$    246.0


$    832.2


$       756.3

(Earnings)/loss from discontinued operations


(0.9)


3.5


1.7


2.5

Earnings from continuing operations


332.5


249.5


833.9


758.8

Adjustments to reconcile earnings from continuing operations to net cash from operations:









Depreciation and amortization


83.5


97.5


239.3


239.2

(Gain)/loss on sale of investment in CareFusion


-


3.3


-


(71.5)

Impairments and loss on disposal of assets


17.1


4.6


19.4


8.2

Share-based compensation


21.6


18.0


63.1


60.4

Provision for bad debts


5.0


14.4


6.7


22.2

Change in fair value of contingent consideration obligation


(53.2)


(3.6)


(53.2)


(0.4)

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









Increase in trade receivables


(477.6)


(470.3)


(310.5)


(578.9)

Decrease/(increase) in inventories


682.7


552.2


(869.9)


(1,048.1)

Increase in accounts payable


94.6


223.5


1,212.2


1,986.4

Other accrued liabilities and operating items, net


187.0


225.0


141.9


(101.0)

Net cash provided by operating activities-continuing operations


893.2


914.1


1,282.9


1,275.3

Net cash used in operating activities-discontinued operations


-


(0.2)


-


(0.5)

Net cash provided by operating activities


893.2


913.9


1,282.9


1,274.8










CASH FLOWS FROM INVESTING ACTIVITIES:









Acquisition of subsidiaries, net of cash acquired


(135.3)


-


(142.6)


(2,295.0)

Purchase of held-to-maturity securities and other investments


-


(14.6)


(10.5)


(155.6)

Additions to property and equipment


(57.7)


(59.8)


(159.0)


(183.1)

Proceeds from sale of CareFusion


-


-


-


705.9

Proceeds from maturities of held-to-maturity securities


11.0


-


46.0


-

Net cash used in investing activities


(182.0)


(74.4)


(266.1)


(1,927.8)










CASH FLOWS FROM FINANCING ACTIVITIES:









Net change in short-term borrowings


4.1


43.0


8.2


41.5

Reduction of long-term obligations


(43.5)


(220.1)


(44.5)


(228.1)

Proceeds from long-term obligations, net of issuance costs


-


-


-


494.5

Proceeds from issuance of Common Shares


11.9


25.1


22.9


36.0

Tax proceeds/(disbursements) from exercises of stock options


3.3


(5.8)


3.6


(8.7)

Dividends on Common Shares


(74.3)


(67.9)


(225.9)


(205.9)

Purchase of treasury shares


-


-


(300.0)


(269.8)

Net cash used in financing activities


(98.5)


(225.7)


(535.7)


(140.5)










Net increase/(decrease) in cash and equivalents


612.7


613.8


481.1


(793.5)

Cash and equivalents at beginning of period


1,797.7


1,348.0


1,929.3


2,755.3

Cash and equivalents at end of period


$ 2,410.4


$ 1,961.8


$ 2,410.4


$    1,961.8



















  


















Schedule 5










CARDINAL HEALTH, INC. AND SUBSIDIARIES

TOTAL COMPANY BUSINESS ANALYSIS
















Non-GAAP



Third Quarter


Third Quarter

(in millions)


2012


2011


2012


2011










Revenue









Amount


$ 26,918


$ 26,071





Growth Rate


3 %


7 %














Operating Earnings









Amount


$      527


$      447


$    524


$          493

Growth Rate


18 %


22 %


6 %


27 %










Earnings from Continuing Operations









Amount


$      332


$      250


$    327


$          286

Growth Rate


33 %


11 %


14 %


28 %
















Non-GAAP



Year-to-Date


Year-to-Date

(in millions)


2012


2011


2012


2011










Revenue









Amount


$ 80,788


$ 75,881





Growth Rate


6 %


2 %














Operating Earnings









Amount


$   1,388


$   1,155


$ 1,441


$       1,268

Growth Rate


20 %


19 %


14 %


18 %










Earnings from Continuing Operations









Amount


$      834


$      759


$    864


$          774

Growth Rate


10 %


93 %


12 %


23 %










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














Third Quarter




Third Quarter

(in millions)


2012


2011


(in millions)


2012


2011

PHARMACEUTICAL






MEDICAL
















Revenue






Revenue





Amount


$         24,508


$         23,845


Amount


$           2,414


$           2,231

Growth Rate


3 %


7 %


Growth Rate


8 %


5 %

Mix


91 %


91 %


Mix


9 %


9 %












Segment Profit






Segment Profit





Amount


$              446


$              411


Amount


$                89


$              108

Growth Rate


9 %


33 %


Growth Rate


(17)%


0 %

Mix


83 %


79 %


Mix


17 %


21 %

Segment Profit Margin


1.82 %


1.73 %


Segment Profit Margin


3.70 %


4.84 %












Refer to definitions for an explanation of calculations.












Total consolidated revenue for the three months ended March 31, 2012 was $26,918 million, which included total segment revenue of $26,922 million and Corporate revenue of $(4) million. Total consolidated revenue for the three months ended March 31, 2011 was $26,071 million, which included total segment revenue of $26,076 million and Corporate revenue of $(5) million.  Corporate revenue consists primarily of elimination of inter-segment revenue.












Total consolidated operating earnings for the three months ended March 31, 2012 were $527 million, which included total segment profit of $535 million and Corporate costs of $(8) million. Total consolidated operating earnings for the three months ended March 31, 2011 were $447 million, which included total segment profit of $519 million and Corporate costs of $(72) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs (including amortization of acquisition-related intangible assets and changes in the fair value of contingent consideration obligations), impairments and 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)


2012


2011


(in millions)


2012


2011

PHARMACEUTICAL






MEDICAL
















Revenue






Revenue





Amount


$ 73,591


$ 69,286


Amount


$ 7,210


$       6,610

Growth Rate


6 %


3 %


Growth Rate


9 %


0 %

Mix


91 %


91 %


Mix


9 %


9 %












Segment Profit






Segment Profit





Amount


$   1,204


$   1,021


Amount


$    253


$          294

Growth Rate


18 %


31 %


Growth Rate


(14)%


(10)%

Mix


83 %


78 %


Mix


17 %


22 %

Segment Profit Margin


1.64 %


1.47 %


Segment Profit Margin


3.51 %


4.46 %












Refer to definitions for an explanation of calculations.












Total consolidated revenue for the nine months ended March 31, 2012 was $80,788 million, which included total segment revenue of $80,801 million and Corporate revenue of $(13) million. Total consolidated revenue for the nine months ended March 31, 2011 was $75,881 million, which included total segment revenue of $75,896 million and Corporate revenue of $(15) million. Corporate revenue consists primarily of elimination of inter-segment revenue.


Total consolidated operating earnings for the nine months ended March 31, 2012 were $1,388 million, which included total segment profit of $1,457 million and Corporate costs of $(69) million. Total consolidated operating earnings for the nine months ended March 31, 2011 were $1,155 million, which included total segment profit of $1,315 million and Corporate costs of $(160) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs (including amortization of acquisition-related intangible assets and changes in the fair value of contingent consideration obligations), impairments and 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

SCHEDULE OF NOTABLE ITEMS












Third Quarter


Year-to-Date

(in millions, except per Common Share amounts)


2012


2011


2012


2011










Restructuring and Employee Severance









Restructuring and employee severance


$   (7.1)


$   (6.2)


$ (12.2)


$        (10.6)

Tax benefit


2.7


2.4


4.6


4.1

Restructuring and employee severance, net of tax


$   (4.4)


$   (3.8)


$   (7.6)


$          (6.5)










Decrease to diluted EPS from continuing operations


$ (0.01)


$ (0.01)


$ (0.02)


$        (0.02)










Acquisition-Related Costs









Amortization of acquisition-related intangible assets


$ (20.4)


$ (27.9)


$ (57.9)


$        (53.4)

Tax benefit


7.2


7.4


20.7


13.2

Amortization of acquisition-related intangible assets, net of tax


$ (13.2)


$ (20.5)


$ (37.2)


$        (40.2)










Decrease to diluted EPS from continuing operations


$ (0.04)


$ (0.06)


$ (0.11)


$        (0.11)










Other acquisition-related costs (1)


$  47.0


$   (2.5)


$  35.2


$        (21.8)

Tax benefit/(expense) (1)


(13.5)


0.4


(9.9)


2.4

Other acquisition-related costs, net of tax


$  33.5


$   (2.1)


$  25.3


$        (19.4)










Increase/(decrease) to diluted EPS from continuing operations (1)


$  0.10


$ (0.01)


$  0.07


$        (0.06)










Total acquisition-related costs (2)


$  26.6


$ (30.3)


$ (22.8)


$        (75.2)

Tax benefit/(expense) (2)


(6.4)


7.8


10.8


15.6

Total acquisition-related costs, net of tax (2)


$  20.2


$ (22.5)


$ (12.0)


$        (59.6)










Increase/(decrease) to diluted EPS from continuing operations (2)


$  0.06


$ (0.06)


$ (0.03)


$        (0.17)










Impairments and Loss on Disposal of Assets









Impairments and loss on disposal of assets


$ (17.1)


$   (4.6)


$ (19.4)


$          (8.2)

Tax benefit


6.7


1.8


7.6


3.1

Impairments and loss on disposal of assets, net of tax


$ (10.4)


$   (2.8)


$ (11.8)


$          (5.1)










Decrease to diluted EPS from continuing operations


$ (0.03)


$ (0.01)


$ (0.03)


$        (0.01)










Litigation Recoveries/(Charges), Net









Litigation recoveries/(charges), net


$    0.2


$   (4.3)


$    3.2


$        (11.9)

Tax benefit/(expense)


(0.1)


0.4


(1.2)


1.4

Litigation recoveries/(charges), net, net of tax


$    0.1


$   (3.9)


$    2.0


$        (10.5)










Increase/(decrease) to diluted EPS from continuing operations


$      -


$ (0.01)


$  0.01


$        (0.03)










Other Spin-Off Costs









Other spin-off costs


$   (0.2)


$   (0.7)


$   (1.5)


$          (7.4)

Tax benefit


0.1


0.3


0.6


2.8

Other spin-off costs, net of tax


$   (0.1)


$   (0.4)


$   (0.9)


$          (4.6)










Decrease to diluted EPS from continuing operations


$      -


$      -


$      -


$        (0.01)










(Gain)/Loss on Sale of CareFusion Stock









(Gain)/loss on sale of CareFusion stock


$       -


$   (3.3)


$       -


$         71.5

Tax benefit


-


-


-


-

(Gain)/loss on sale of CareFusion stock, net of tax


$       -


$   (3.3)


$       -


$         71.5










Increase/(decrease) to diluted EPS from continuing operations


$      -


$ (0.01)


$      -


$         0.20










Weighted Average Number of Diluted Shares Outstanding


349.5


352.9


349.2


351.8










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











(1) Includes a $54.7 million decrease in the fair value of the total contingent consideration obligation related to the P4 Healthcare acquisition for the three months ended March 31, 2012. The related tax expense was $20.1 million and diluted EPS from continuing operations increased $0.10.











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

  


















Schedule 9










CARDINAL HEALTH, INC. AND SUBSIDIARIES

ASSET MANAGEMENT ANALYSIS












Third Quarter


Year-to-Date



2012


2011


2012


2011










Days Sales Outstanding


21.2


19.7





Days Inventory on Hand


25.0


24.5





Days Payable Outstanding


38.3


38.0





Net Working Capital Days


7.9


6.2














Debt to Total Capital


29 %


30 %





Net Debt to Capital


2 %


8 %














Return on Equity


21.9 %


17.8 %


18.7 %


18.7 %

Non-GAAP Return on Equity


21.6 %


20.7 %


19.4 %


19.1 %










Effective Tax Rate from Continuing Operations


34.9 %


41.3 %


36.9 %


35.5 %

Non-GAAP Effective Tax Rate from Continuing Operations


35.6 %


39.7 %


37.1 %


36.5 %










Refer to the GAAP/Non-GAAP reconciliation for Non-GAAP calculations. Refer to DSO, DIOH and DPO for definitions and calculations.

  






















Schedule 10


















CARDINAL HEALTH, INC. AND SUBSIDIARIES
GAAP / NON-GAAP RECONCILIATIONS
















(in millions, except per Common Share amounts)
























Third Quarter 2012






Earnings











Before



Earnings


Diluted






Income

Provision

Earnings

from

Diluted

EPS from





Operating

Taxes and

for

from

Continuing

EPS from

Continuing




Operating

Earnings

Discontinued

Income

Continuing

Operations

Continuing

Operations




Earnings

Growth Rate

Operations

Taxes(1)

Operations

Growth Rate

Operations

Growth Rate


GAAP


$        527

18 %

$               510

$        178

$           332

33 %

$          0.95

34 %


Restructuring and Employee Severance


7


7

3

4


0.01



Acquisition-Related Costs


(27)


(27)

(6)

(20)


(0.06)



Impairments and Loss on Disposal of Assets


17


17

7

10


0.03



Litigation (Recoveries)/Charges, net


-


-

-

-


-



Other Spin-Off Costs


-


-

-

-


-



Loss on Sale of CareFusion Stock


-


-

-

-


-



Non-GAAP


$        524

6 %

$               508

$        181

$           327

14 %

$          0.94

16 %















Third Quarter 2011






Earnings











Before



Earnings


Diluted






Income

Provision

Earnings

from

Diluted

EPS from





Operating

Taxes and

for

from

Continuing

EPS from

Continuing




Operating

Earnings

Discontinued

Income

Continuing

Operations

Continuing

Operations




Earnings

Growth Rate

Operations

Taxes(1)

Operations

Growth Rate

Operations

Growth Rate


GAAP


$        447

22 %

$               425

$        176

$           250

11 %

$          0.71

15 %


Restructuring and Employee Severance


6


6

2

4


0.01



Acquisition-Related Costs


30


30

8

23


0.06



Impairments and Loss on Disposal of Assets


5


5

2

3


0.01



Litigation (Recoveries)/Charges, net


4


4

-

4


0.01



Other Spin-Off Costs


1


1

-

-


-



Loss on Sale of CareFusion Stock


-


3

-

3


0.01



Non-GAAP


$        493

27 %

$               475

$        188

$           286

28 %

$          0.81

31 %















Year-to-Date 2012






Earnings











Before



Earnings


Diluted






Income

Provision

Earnings

from

Diluted

EPS from





Operating

Taxes and

for

from

Continuing

EPS from

Continuing




Operating

Earnings

Discontinued

Income

Continuing

Operations

Continuing

Operations




Earnings

Growth Rate

Operations

Taxes(1)

Operations

Growth Rate

Operations

Growth Rate


GAAP


$     1,388

20 %

$            1,321

$        487

$           834

10 %

$          2.39

11 %


Restructuring and Employee Severance


12


12

5

8


0.02



Acquisition-Related Costs


23


23

11

12


0.03



Impairments and Loss on Disposal of Assets


19


19

8

12


0.03



Litigation (Recoveries)/Charges, net


(3)


(3)

(1)

(2)


(0.01)



Other Spin-Off Costs


2


2

1

1


-



Gain on Sale of CareFusion Stock


-


-

-

-


-



Non-GAAP


$     1,441

14 %

$            1,374

$        509

$           864

12 %

$          2.47

12 %















Year-to-Date 2011






Earnings











Before



Earnings


Diluted






Income

Provision

Earnings

from

Diluted

EPS from





Operating

Taxes and

for

from

Continuing

EPS from

Continuing




Operating

Earnings

Discontinued

Income

Continuing

Operations

Continuing

Operations




Earnings

Growth Rate

Operations

Taxes(1)

Operations

Growth Rate

Operations

Growth Rate


GAAP


$     1,155

19 %

$            1,177

$        418

$           759

93 %

$          2.16

98 %


Restructuring and Employee Severance


11


11

4

7


0.02



Acquisition-Related Costs


75


75

16

60


0.17



Impairments and Loss on Disposal of Assets


8


8

3

5


0.01



Litigation (Recoveries)/Charges, net


12


12

1

11


0.03



Other Spin-Off Costs


7


7

3

5


0.01



Gain on Sale of CareFusion Stock


-


(72)

-

(72)


(0.20)



Non-GAAP


$     1,268

18 %

$            1,219

$        445

$           774

23 %

$          2.20

26 %













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












(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


























Third Quarter




(in millions)


2012




2011




GAAP Return on Equity


21.9 %




17.8 %














Non-GAAP Return on Equity










Net earnings


$    333.4




$    246.0




Restructuring and employee severance, net of tax, in continuing operations(1)


4.4




3.8




Acquisition-related costs, net of tax, in continuing operations(1)


(20.2)




22.5




Impairments and loss on disposal of assets, net of tax, in continuing operations(1)


10.4




2.8




Litigation (recoveries)/charges, net, net of tax, in continuing operations(1)


(0.1)




3.9




Other spin-off costs, net of tax, in continuing operations(1)


0.1




0.4




Loss on sale of CareFusion stock, net of tax(1)


-




3.3




CareFusion net loss in discontinued operations(1,2)


-




3.3




Adjusted net earnings


$    328.0




$    286.0




Annualized


$ 1,312.0




$ 1,144.0
















Third


Second


Third


Second




Quarter


Quarter


Quarter


Quarter




2012


2012


2011


2011


Total shareholders' equity


$ 6,240.1


$ 5,927.7


$ 5,656.8


$      5,421.4


Divided by average shareholders' equity


$ 6,083.9




$ 5,539.1




Non-GAAP Return on Equity


21.6 %




20.7 %



















(1)

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

















(2)

To properly reflect the impact of the spin-off, on a non-GAAP basis, CareFusion net earnings included in discontinued operations are excluded from adjusted net earnings for all periods presented.  


  




































Schedule 12



















CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION






















Year-to-Date








Year-to-Date








(in millions)


2012








2011








GAAP Return on Equity


18.7 %








18.7 %


























Non-GAAP Return on Equity


















Net earnings


$          832.2








$          756.3








Restructuring and employee severance, net of tax, in continuing operations (1)


7.6








6.5








Acquisition-related costs, net of tax, in continuing operations (1)


12.0








59.6








Impairments and loss on disposal of assets, net of tax, in continuing operations (1)


11.8








5.1








Litigation (recoveries)/charges, net, net of tax, in continuing operations (1)


(2.0)








10.5








Other spin-off costs, net of tax, in continuing operations (1)


0.9








4.6








Gain on sale of CareFusion stock, net of tax (1)


-








(71.5)








CareFusion net loss in discontinued operations (1,2)


-








3.3








Adjusted net earnings


$          862.5








$          774.4








Annualized


$       1,150.0








$       1,032.5




























Third


Second


First


Fourth


Third


Second


First


Fourth




Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter




2012


2012


2012


2011


2011


2011


2011


2010


Total shareholders' equity


$       6,240.1


$ 5,927.7


$ 5,713.9


$ 5,848.6


$       5,656.8


$ 5,421.4


$ 5,239.0


$      5,276.1


Divided by average shareholders' equity


$       5,932.6








$       5,398.3








Non-GAAP Return on Equity


19.4 %








19.1 %

























(1)

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



















(2)

To properly reflect the impact of the spin-off, on a non-GAAP basis, CareFusion net earnings included in discontinued operations are excluded from adjusted net earnings for all periods presented.  

  




















Schedule 13











CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION














Third Quarter


Year-to-Date


(in millions)


2012


2011


2012


2011


GAAP Effective Tax Rate from Continuing Operations


34.9 %


41.3 %


36.9 %


35.5 %












Non-GAAP Effective Tax Rate from Continuing Operations










Earnings before income taxes and discontinued operations


$    510.4


$    425.1


$ 1,321.0


$      1,177.0


Restructuring and employee severance


7.1


6.2


12.2


10.6


Acquisition-related costs


(26.6)


30.3


22.8


75.2


Impairments and loss on disposal of assets


17.1


4.6


19.4


8.2


Litigation (recoveries)/charges, net


(0.2)


4.3


(3.2)


11.9


Other spin-off costs


0.2


0.7


1.5


7.4


(Gain)/loss on sale of CareFusion stock


-


3.3


-


(71.5)


Adjusted earnings before income taxes and discontinued operations


$    508.0


$    474.5


$ 1,373.7


$      1,218.8












Provision for income taxes (1)


$    177.9


$    175.6


$    487.1


$         418.2


Restructuring and employee severance tax benefit (1)


2.7


2.4


4.6


4.1


Acquisition-related costs tax benefit/(expense) (1)


(6.4)


7.8


10.8


15.6


Impairments and loss on disposal of assets tax benefit (1)


6.7


1.8


7.6


3.1


Litigation (recoveries)/charges, net tax benefit/(expense) (1)


(0.1)


0.4


(1.2)


1.4


Other spin-off costs tax benefit (1)


0.1


0.3


0.6


2.8


(Gain)/loss on sale of CareFusion stock tax benefit (1)


-


-


-


-


Adjusted provision for income taxes


$    180.9


$    188.3


$    509.5


$         445.2












Non-GAAP Effective Tax Rate from Continuing Operations


35.6 %


39.7 %


37.1 %


36.5 %














Third Quarter








2012


2011






Debt to Total Capital


29 %


30 %
















Net Debt to Capital










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


$    345.5


$    113.7






Long-term obligations, less current portion


2,207.9


2,362.1






Debt


$ 2,553.4


$ 2,475.8






Cash and equivalents


(2,410.4)


(1,961.8)






Net Debt


$    143.0


$    514.0






Total shareholders' equity


6,240.1


5,656.8






Capital


$ 6,383.1


$ 6,170.8






Net Debt to Capital


2 %


8 %















(1)

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, acquisition-related costs (including amortization of acquisition-related intangible assets and changes in the fair value of contingent consideration obligations), impairments and loss on disposal of assets, litigation (recoveries)/charges, net, and other spin-off costs, 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.  







  










Schedule 14






CARDINAL HEALTH, INC. AND SUBSIDIARIES













Third Quarter

(in millions)


2012


2011

Days Sales Outstanding


21.2


19.7






Days Inventory on Hand





Inventories


$   8,220.1


$      7,717.7






Cost of products sold


$ 25,710.8