CareFusion Corporation Reports Fourth Quarter and Fiscal 2011 Results

SAN DIEGO, Aug. 8, 2011 /PRNewswire/ -- CareFusion Corp. (NYSE: CFN), a leading, global medical technology company, today reported results for the quarter and fiscal year ended June 30, 2011.

"Growth in our Infusion, Dispensing and Infection Prevention businesses, gross margin expansion and the benefit of strong spending controls drove double digit improvements in our adjusted operating earnings for the quarter and for the year," said Kieran Gallahue, chairman and CEO. "We continue to make progress in optimizing our product portfolio and expanding our geographical footprint. We recently acquired pharmacy automation innovator Rowa, enabling us to expand our Pyxis platform outside the U.S."

"Looking ahead to fiscal 2012, we will continue to leverage operational efficiencies and reduce complexity across our businesses to drive bottom line growth that outpaces our top line growth. We are expecting revenue growth in a range of 3 to 5 percent over fiscal 2011 results, representing an improvement over the 2 percent growth we had this year and acceleration over the low single digit growth rates we are seeing in the markets where we participate. For adjusted EPS we are guiding to a range of $1.80 to $1.90."

CareFusion's reported results compare to the quarter and fiscal year periods ended June 30, 2010.

Results from the company's International Surgical Products (ISP) business, which had been included in the Medical Technologies and Services segment and was divested in April 2011, have been classified as discontinued operations in the accompanying financial tables. Reported results for continuing operations and comparisons to prior periods exclude the historical results of the ISP business.

Fourth Quarter Results

Revenue for the fourth quarter of fiscal 2011 increased 4 percent to $964 million on a reported basis and 2 percent on a constant currency basis, driven primarily by increased sales in the Infusion, Dispensing and Infection Prevention businesses. Operating income was $149 million and income from continuing operations was $96 million, or $0.42 per diluted share. Excluding nonrecurring items, adjusted operating income increased $40 million to $179 million and adjusted income from continuing operations increased $38 million to $118 million, or $0.52 per diluted share. The adjusted tax rate for the quarter was 26.2 percent.

Operating expenses, including selling, general and administrative (SG&A), research and development (R&D), restructuring and acquisition integration charges and loss on the sale of assets totaled $351 million, or 36 percent of total revenue. Excluding $30 million of nonrecurring items, adjusted operating expenses totaled $321 million, or 33 percent of total revenue. Adjusted SG&A expenses were $281 million and R&D investments totaled $40 million.

Critical Care Technologies

Revenue for the Critical Care Technologies segment increased 7 percent to $767 million driven by Infusion product sales, including core growth and a contribution from the May 2010 acquisition of Medegen and an increase in Dispensing sales. These increases were offset by an expected decrease in Respiratory sales due to a weak post-H1N1 environment. Segment profit increased 29 percent to $137 million, and adjusted segment profit increased 24 percent to $153 million.

Medical Technologies and Services

Revenue for the Medical Technologies and Services segment decreased 8 percent to $197 million, driven by the loss of revenue from the company's April 2011 divestiture of the OnSite Services business, as well as the May 2010 divestiture of the Research Services business, which offset increased sales from the Infection Prevention and Medical Specialties businesses. Net of these divestitures, period-over-period revenue growth would have been 5 percent. Segment profit increased 75 percent to $14 million due to margin expansion and strong expense controls, and adjusted segment profit increased 63 percent to $26 million.

Fiscal 2011 Results

Revenue for fiscal 2011 increased 2 percent to $3.53 billion. Operating income increased to $496 million and income from continuing operations increased to $291 million, or $1.29 per diluted share. Excluding nonrecurring items, adjusted operating income increased $87 million to $602 million and adjusted income from continuing operations increased $70 million to $371 million, or $1.65 per diluted share.

Operating expenses totaled $1.31 billion or 37 percent of total revenue. Excluding $106 million of nonrecurring items, adjusted operating expenses totaled $1.2 billion, or 34 percent of total revenue. Adjusted SG&A expenses were $1.05 billion, and R&D investments totaled $155 million.

Critical Care Technologies

Revenue for the Critical Care Technologies segment increased 3 percent to $2.73 billion. Segment profit increased 10 percent to $434 million, and adjusted segment profit increased 14 percent to $511 million.

Medical Technologies and Services

Revenue for the Medical Technologies and Services segment decreased 4 percent to $799 million. Net of the OnSite Services and Research Services divestitures, year-over-year revenue growth would have been 7 percent. Segment profit increased 17 percent to $49 million, and adjusted segment profit increased 40 percent to $91 million.

Fiscal 2012 Outlook

For the fiscal year ending June 30, 2012, CareFusion expects revenues to grow 3 to 5 percent on a constant currency basis compared to fiscal 2011 revenue of $3.53 billion. Adjusted diluted earnings per share for fiscal 2012 are expected to be in the range of $1.80 to $1.90. The guidance is based on an assumed diluted weighted average outstanding share count of approximately 226 million.

Conference Call

CareFusion will host a conference call today at 2 p.m. PDT (5 p.m. EDT) to discuss earnings results for the fourth quarter and fiscal 2011.

To access the call and corresponding slide presentation, visit the Investors page at www.carefusion.com. Log on at least 15 minutes before the call begins to register and download or install any necessary audio software.

Investors and other interested parties may also access the call by dialing (866) 783-2139 within the U.S. or (857) 350-1598 from outside the U.S., and use the access code 69553494. A replay of the conference call will be available from 5 p.m. PDT (8 p.m. EDT) on Aug. 8 through 8:59 p.m. PDT (11:59 p.m. EDT) on Aug. 15 and can be accessed by dialing (888) 286-8010 in the U.S. or (617) 801-6888 Internationally and using the access code 40211522.

About CareFusion

CareFusion (NYSE: CFN) is a global corporation serving the health care industry with products and services that help hospitals measurably improve patient care. The company develops market-leading technologies including Alaris® infusion pumps, Pyxis® automated dispensing and patient identification systems, AirLife, AVEA® and LTV® series of ventilators and respiratory products, ChloraPrep® skin prep products, MedMined services for data mining surveillance, V. Mueller® and Snowden-Pencer® surgical instruments and Nicolet® diagnostic products. CareFusion employs more than 14,000 people across its global operations. More information may be found at www.carefusion.com.

Use of Non-GAAP Financial Measures by CareFusion Corporation

This CareFusion news release presents non-GAAP financial measures that exclude certain amounts, as follows: "adjusted operating expenses", "adjusted SG&A expenses" and "adjusted operating income", whichexclude nonrecurring items primarily related to the spinoff, nonrecurring restructuring and acquisition integration charges, and nonrecurring (gain)/loss on the sale of assets; "adjusted income from continuing operations", "adjusted diluted earnings per share from continuing operations" and "adjusted tax rate", whichexclude nonrecurring items primarily related to the spinoff, nonrecurring restructuring and acquisition integration charges, nonrecurring (gain)/loss on the sale of assets, and nonrecurring tax items; and "adjusted segment profit", whichexcludes nonrecurring items primarily related to the spinoff and nonrecurring restructuring and acquisition integration charges.

The most directly comparable measure for these non-GAAP financial measures are operating expenses, SG&A expenses, operating income, income from continuing operations, diluted earnings per share from continuing operations, tax rate, and segment profit (the most comparable GAAP measures). The company has included below unaudited adjusted financial information for the quarter and fiscal year periods ended June 30, 2011 and 2010, which includes a reconciliation of GAAP to non-GAAP financial measures.

In addition, CareFusion presents the non-GAAP financial measure "adjusted diluted earnings per share" on a forward-looking basis. The most directly comparable forward-looking GAAP measure for the company is diluted earnings per share. CareFusion is unable to provide a quantitative reconciliation of this forward-looking non-GAAP financial measure to the most directly comparable forward-looking GAAP measure, because the company cannot reliably forecast restructuring and acquisition integration costs, and other nonrecurring costs. Please note that the unavailable reconciling items could significantly impact CareFusion's future financial results. A discussion of the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding CareFusion's financial condition and results of operations is included as Exhibit 99.3 to CareFusion's report on Form 8-K filed with the Securities and Exchange Commission on Aug. 8, 2011.

Cautions Concerning Forward-looking Statements

The CareFusion news release and the information contained herein contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. The matters discussed in these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in CareFusion's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: we may be unable to effectively enhance our existing products or introduce and market new products or may fail to keep pace with advances in technology; we are subject to complex and costly regulation; cost containment efforts of our customers, purchasing groups, third-party payers and governmental organizations could adversely affect our sales and profitability; current economic conditions have and may continue to adversely affect our results of operations and financial condition; we may be unable to realize any benefit from our cost reduction and restructuring efforts and our profitability may be hurt or our business otherwise might be adversely affected; we may be unable to protect our intellectual property rights or may infringe on the intellectual property rights of others; defects or failures associated with our products and/or our quality system could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could subject us to regulatory actions; we are currently operating under an amended consent decree with the FDA and our failure to comply with the requirements of the amended consent decree may have an adverse effect on our business; and our success depends on our key personnel, and the loss of key personnel or the transition of key personnel, including our chief executive officer, could disrupt our business. The CareFusion news release and the information contained herein reflect management's views as of Aug. 8, 2011. Except to the limited extent required by applicable law, CareFusion undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.