Cardinal Health, Inc. · NYSE:CAH
Cardinal Health — Q2 2014 Earnings Presentation
23 slides from Cardinal Health's earnings presentation, Jan 30, 2014
Slide 1: Q2 FY2014 earnings investor/analyst call
Q2 FY2014 earnings investor/analyst call January 30, 2014 © Copyright 2014, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 2: Forward-looking statements and GAAP reconciliation
Forward-looking statements and GAAP reconciliation Cautions Concerning Forward-Looking Statements This presentation contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be ident
Slide 3: Financial summary
Q2 FY2014 Financial summary GAAP Basis ($M) Non-GAAP Basis ($M) Q2 FY14 Q2 FY13 Q2 FY14 Q2 FY13 Revenue $22,240 $25,232 % change (12)% (7)% Operating earnings $519 $506 $579 $525 % change 2% 13% 10% 11% Ratio to revenue 2.33% 2.01% 2.60% 2.08% Earnings from continuing ops $275 $303 $313 $317 % chang
Slide 4: Pharmaceutical segment business analysis
Q2 FY2014 Pharmaceutical segment business analysis Q2 FY14 Q2 FY13 % Change ($M) ($M) Revenue $19,443 $22,747 (15)% Segment profit $482 $441 9% Segment profit margin 2.48% 1.94% Highlights: • Revenue decreased 15% vs. last year due to the continuing impact of the expiration of the Walgreens contract
Slide 5: Medical segment business analysis
Q2 FY2014 Medical segment business analysis Q2 FY14 Q2 FY13 % Change ($M) ($M) Revenue $2,799 $2,487 13% Segment profit $131 $94 40% Segment profit margin 4.69% 3.76% Highlights: • Revenue increase was driven by the home health platform, reflecting the acquisition of AssuraMed, and growth from strat
Slide 6: GAAP to non-GAAP reconciliation
Q2 FY2014 GAAP to non-GAAP reconciliation Q2 FY 2014 Q2 FY 2013 Earnings from Diluted EPS Earnings from Diluted EPS Operating Operating Continuing from Continuing Continuing from Continuing Earnings ($M) Earnings ($M) Operations ($M) Operations Operations ($M) Operations GAAP $519 $275 $0.79 $506 $3
Slide 7: FY2014 outlook
FY2014 outlook © Copyright 2014 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 7 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 8: Updated FY2014 financial expectations
January 30, 2014 Updated FY2014 financial expectations FY2014 non-GAAP EPS from continuing operations: $3.75 - $3.85 © Copyright 2014, Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and 8 ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 9: Updated FY2014 corporate assumptions
January 30, 2014 Updated FY2014 corporate assumptions FY14 outlook FY13 actual Diluted weighted-average 345M - 347M 344.5M shares outstanding Interest and other, net $105M - $130M $108M Capital expenditures $245M - $265M $195M Amortization of acquisition- ~$184M or ~$0.341 $118M or $0.22 related int
Slide 10: © Copyright 2014 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO
© Copyright 2014 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health.
Slide 11: Q2 FY2014 trailing five quarters and GAAP to Non-GAAP reconciliation statements
Q2 FY2014 trailing five quarters and GAAP to Non-GAAP reconciliation statements © Copyright 2014 Cardinal Health. All rights reserved. CARDINAL HEALTH, the Cardinal Health LOGO and ESSENTIAL TO CARE are trademarks or registered trademarks of Cardinal Health. 11
Slide 12: Segment analysis
Q2 FY2014 Segment analysis Pharmaceutical segment Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Revenue 22,747 22,070 22,783 21,813 19,443 ($M) Segment Profit 441 498 395 433 482 ($M) Medical segment Q2 FY13 Q3 FY13 Q4 FY13 Q1 FY14 Q2 FY14 Revenue 2,487 2,484 2,697 2,711 2,799 ($M) Segment Profit 94 100 1
Slide 13: GAAP / Non-GAAP Reconciliation Second Quarter 2014
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Second Quarter 2014 Operating Earnings Before Provision Earnings Earnings from Diluted EPS Diluted EPS Earnings Income Taxes for from Continuing from from Continuing Operating Growth and Discontinued Income Continuing Operations C
Slide 14: GAAP / Non-GAAP Reconciliation: return on equity, second quarter
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Second Quarter (in millions) 2014 2013 GAAP return on equity 17.2 % 18.9 % Non-GAAP return on equity Net earnings $ 278 $ 303 Restructuring and employee severance, net of tax, in continuing operations 6 - Amortization and other ac
Slide 15: GAAP / Non-GAAP Reconciliation: return on equity, year-to-date
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Year-to-Date (in millions) 2014 2013 GAAP return on equity 19.6 % 18.1 % Non-GAAP return on equity Net earnings $ 617 $ 575 Restructuring and employee severance, net of tax, in continuing operations 13 4 Amortization and other acq
Slide 16: GAAP / Non-GAAP Reconciliation: effective tax rate
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Second Quarter Year-to-Date (in millions) 2014 2013 2014 2013 GAAP effective tax rate from continuing operations1 44.1 % 37.2 % 34.2 % 37.6 % Non-GAAP effective tax rate from continuing operations Earnings before income taxes and
Slide 17: GAAP / Non-GAAP Reconciliation: fiscal year tax rate
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Fiscal Year (in millions) 2013 GAAP effective tax rate from continuing operations1 62.3 % Non-GAAP effective tax rate from continuing operations Earnings/(loss) before income taxes and discontinued operations $ 888 Restructuring a
Slide 18: GAAP / Non-GAAP Reconciliation: operating expenses
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Second Quarter Year-to-Date (in millions) 2014 2013 2014 2013 Distribution, selling, general and administrative expenses $ 766 $ 699 $ 1,497 $ 1,388 Restructuring and employee severance 10 1 20 6 Amortization and other acquisition
Slide 19: GAAP / Non-GAAP Reconciliation: operating earnings margin
Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation Second Quarter Year-to-Date (in millions) 2014 2013 2014 2013 Revenue $ 22,240 $ 25,232 $ 46,763 $ 51,121 GAAP operating earnings $ 519 $ 506 $ 990 $ 963 Restructuring and employee severance 10 1 20 6 Amortization and other acquis
Slide 20: Schedule of Notable Items
Cardinal Health, Inc. and Subsidiaries Schedule of Notable Items Second Quarter Year-to-Date (in millions, except per common share amounts) 2014 2013 2014 2013 Restructuring and employee severance $ (10) $ (1) $ (20) $ (6) Tax benefit 4 1 7 2 Restructuring and employee severance, net of tax $ (6) $
Slide 21: Asset Management Analysis
Cardinal Health, Inc. and Subsidiaries Asset Management Analysis Second Quarter Year-to-Date 2014 2013 2014 2013 Days sales outstanding 19.7 22.0 Days inventory on hand 29.7 27.0 Days payable outstanding 39.3 37.8 Net working capital days1 10.1 11.3 Debt to total capital 37 % 31 % Net debt to capita
Slide 22: Working capital days calculation
Cardinal Health, Inc. and Subsidiaries Second Quarter (in millions) 2014 2013 Days sales outstanding 19.7 22.0 Days inventory on hand Inventories, net $ 8,478 $ 8,452 Cost of products sold $ 20,895 $ 24,008 Chargeback billings 4,803 4,113 Adjusted cost of products sold $ 25,698 $ 28,121 Adjusted cos
Slide 23: Definitions
Cardinal Health, Inc. and Subsidiaries Definitions Debt: long-term obligations plus short-term borrowings. Debt to Total Capital: debt divided by (debt plus total shareholders’ equity). Interest and Other, net: other (income)/expense, net plus interest expense, net. Net Debt: a Non-GAAP measure defi