SAN DIEGO, May 3, 2012 /PRNewswire/ -- CareFusion Corp. (NYSE: CFN), a leading, global medical technology company, today reported results for the three and nine months ended March 31, 2012.
"Our team executed well in the third quarter, particularly in the Medical Systems segment where Dispensing, Infusion and Respiratory Technologies all reported double-digit revenue growth," said Kieran Gallahue, chairman and CEO. "Our Procedural Solutions segment performed as we expected, with strength in the Infection Prevention business and sales of ChloraPrep growing in line with our expectations.
"We continued to make good progress during the quarter on strategies to optimize our portfolio, simplify the complexity of our infrastructure and reduce expenses to fund growth initiatives. This work showed multiple benefits during the quarter as we closed on the Phacts acquisition, announced plans to divest the Nicolet business and increased R&D investments that we funded by lowering our organic SG&A expenses."
Last month, the company announced it had reached an agreement to divest its Nicolet neurodiagnostic and monitoring products business to Natus Medical Incorporated for $58 million. The Nicolet business, which had been included in the Procedural Solutions segment, has been classified as discontinued operations in the accompanying financial tables. Reported results from continuing operations and comparisons to prior periods exclude the historical results of the Nicolet business.
Third Quarter Results
The company reported revenue for the third quarter of fiscal 2012 of $919 million, compared to $842 million in the third quarter of fiscal 2012, an increase of 9 percent on a reported and constant currency basis.
Operating income was $161 million, an increase of 10 percent compared to $146 million in the prior year period. Excluding nonrecurring items, adjusted operating income rose 12 percent to $173 million, compared to $155 million in the prior year.
Operating expenses totaled $298 million. Excluding nonrecurring items, adjusted operating expenses were $286 million, an increase of 1 percent over the prior year period, primarily driven by operating expenses from Rowa Technologies, which the company acquired in August 2011. In addition, the company increased investments in research and development by 25 percent during the quarter and benefited from ongoing cost-savings initiatives in administrative support functions.
The company reported income from continuing operations of $103 million, or $0.45 per diluted share. Adjusted income from continuing operations increased 19 percent from the prior year period to $112 million, or $0.49 per diluted share. The adjusted effective tax rate was 26.0 percent.
Third quarter revenue for the Medical Systems segment increased 19 percent from the prior year period on a reported and constant currency basis to $591 million, driven by double-digit sales increases in each business. The segment growth was led by continued strong installations in the Dispensing Technologies and Infusion Systems businesses, as well as growth in Respiratory Technologies resulting from increased sales to acute care hospitals and a significant government contract that will continue through March of 2013.
Segment profit for the quarter increased 29 percent from the prior year period to $125 million, and adjusted segment profit increased 21 percent to $132 million.
Third quarter revenue for the Procedural Solutions segment decreased 5 percent from the prior year period on a reported and constant currency basis to $328 million. The decrease was driven, in part, by the loss of sales from divesting the company's OnSite Services business in March 2011. Net of the OnSite Services business divestiture, segment revenues decreased 2 percent from the prior year period.
Segment profit increased 6 percent from the prior year period to $36 million, and adjusted segment profit decreased 11 percent to $41 million.
Nine Month Results
For the first nine months of fiscal 2012, revenue increased 6 percent from the prior year period to $2.63 billion. Operating income increased 19 percent to $414 million from $348 million in the prior year period. Income from continuing operations was $266 million, or $1.17 per diluted share. Adjusted income from continuing operations increased 13 percent from the prior year period to $288 million, or $1.27 per diluted share.
Operating expenses in the first nine months totaled $910 million, or $880 million on an adjusted basis. R&D expenses increased 9 percent from the prior year period, reflecting the company's continued investments in product development and innovation.
Within the Medical Systems segment, revenue increased 12 percent from the prior year period to $1.67 billion. Segment profit increased 28 percent to $334 million, an increase of 14 percent to $352 million on an adjusted basis.
Revenue for the Procedural Solutions segment decreased 4 percent from the prior year period to $961 million. Segment profit increased 10 percent to $80 million, a decrease of 19 percent to $92 million on an adjusted basis.
Additional third quarter and recent highlights included:
- Initiating a two-year, $500 millionshare repurchase program and investing $50 million to repurchase 2 million shares during the quarter.The company purchased an additional 1.9 million shares for $50 million in April.
- Receiving a three-year, single-source award for ChloraPrep® applicators from Novation, a health care supply contracting company, in its chlorhexidine gluconate preoperative skin prep category.
- Strengthening the company's end-to-end medication management offering by completing the acquisition of Phacts, a technology and consulting company that helps hospital pharmacies better manage inventory, reduce pharmaceutical costs and streamline operations.
- Launching the Alaris® Connectivity Services Infusion Parameter Pre-Population application, helping hospitals improve infusion safety and clinician workflow through wireless interoperability.
- Announcing the Snowden-Pencer® laparoscopic take-apart instrument line, a portfolio of surgical instruments that can be easily disassembled to aid in cleaning and sterilization.
Fiscal 2012 Outlook
CareFusion raised full-year consolidated revenue growth guidance from a 3 to 5 percent range to a new range of 4 to 5 percent growth on a constant currency basis. This growth rate is compared to fiscal 2011 revenue of $3.43 billion, which reflects fiscal 2011 revenue net of the Nicolet divestiture. The company also narrowed its full-year guidance range for adjusted diluted EPS from continuing operations of $1.75 to $1.85 to a new range of $1.75 to $1.80. The change reflects a $0.02 reduction for the planned divestiture of CareFusion's Nicolet business and narrowing based on the company's expectations entering the fourth quarter.
The guidance is based on an assumed diluted weighted average outstanding share count of approximately 226 million, which includes the impact of expected share repurchases during fiscal 2012.
CareFusion will host a webcast and conference call today at 2 p.m. PDT (5 p.m. EDT) to discuss the results for the third quarter fiscal 2012.
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 (888) 396-2369 within the U.S. or (617) 847-8710 from outside the U.S., and use the access code 88204211. A replay of the conference call will be available from 5 p.m. PDT (8 p.m. EDT) on May 3 through 8:59 p.m. PDT (11:59 p.m. EDT) on May 10 and can be accessed by dialing (888) 286-8010 in the U.S. or (617) 801-6888 internationally and using the access code 14284150.
About CareFusion Corporation
CareFusion (NYSE: CFN) is a global corporation serving the health care industry with products and services that help hospitals measurably improve the safety and quality of care. The company develops market-leading technologies including Alaris® infusion pumps, Pyxis® automated dispensing and patient identification systems, AVEA®, AirLife and LTV® series ventilation and respiratory products, ChloraPrep® products, MedMined® services for data mining surveillance, Nicolet neurological monitoring and diagnostic products, V. Mueller® surgical instruments, and an extensive line of products that support interventional medicine. 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