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Cardinal Health, Inc. (CAH) Reports Fourth-Quarter And Fiscal Year Results, Provides Fiscal 2015 Outlook


8/4/2014 7:42:45 AM

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DUBLIN, Ohio, Aug. 4, 2014 /PRNewswire/ -- Cardinal Health today reported earnings for its fiscal 2014 fourth quarter and year-end.

Fourth-quarter fiscal year 2014 revenue was $22.9 billion, down 10 percent from the prior fiscal year. Fourth-quarter revenue was up 12 percent excluding the impact of the Walgreens contract expiration. Non-GAAP operating earnings for the fourth quarter were $461 million. Non-GAAP diluted earnings per share (EPS) from continuing operations were $0.83, an increase of 5 percent. On a GAAP basis, operating earnings and diluted EPS from continuing operations for the fourth quarter were $387 million and $0.68, respectively, compared with a loss of $442 million and $1.72, respectively, in the prior-year quarter. GAAP results in the fourth quarter of fiscal 2013 reflected a goodwill impairment charge associated with the company's nuclear division.  

Fiscal year 2014 revenue was $91.1 billion. Non-GAAP operating earnings increased 4 percent to $2.1 billion, and non-GAAP diluted EPS from continuing operations increased 3 percent to $3.84. On a GAAP basis, operating earnings and diluted EPS from continuing operations for fiscal year 2014 were $1.9 billion and $3.37, respectively, an increase of 89 percent and 247 percent, respectively, from the prior fiscal year.

"I am extremely proud of the progress we made in a year of transition for both Cardinal Health and the health care system. The organization more than met the challenge, reporting strong performance in non-GAAP operating earnings, EPS, operating cash flow and cash returned to shareholders," said George Barrett, chairman and chief executive officer of Cardinal Health. 

"We made significant progress on our strategic priorities: launching the largest generic purchasing entity in the U.S. through our joint venture with CVS Caremark, expanding our position and capabilities in specialty, substantially increasing our line of consumable medical products, taking significant steps to enhance our program on physician preference items in both cardiovascular and orthopedics, enlarging our footprint in the home, and showing continued strong growth in China."

In fiscal year 2014, the company generated $2.5 billion in operating cash flow and returned $1.1 billion to shareholders through dividends and share buybacks.

Barrett continued, "We enter fiscal year 2015 well-positioned to address the needs of a rapidly changing health care system. Our fiscal year 2015 outlook for non-GAAP diluted EPS from continuing operations is $4.10 to $4.30."

Q4 and Fiscal Year Summary


Q4 FY14

Q4 FY13

Y/Y

FY14

FY13

Y/Y

Revenue

$22.9 billion

$25.4 billion

(10%)

$91.1 billion

$101.1 billion

(10%)








 

Operating
Earnings/(Loss)

 

$387 million

 

($442) million

 

N.M.

 

$1,885 million

 

$996 million

 

89%

Non-GAAP
Operating Earnings

 

$461 million

 

$472 million

 

(2)%

 

$2,133 million

 

$2,046 million

 

4%








Earnings/(Loss) from
Continuing
Operations

 

$234 million

 

($586) million

 

N.M.

 

$1,163 million

 

$335 million

 

247%

Non-GAAP Earnings
from Continuing
Operations

 

$284 million

 

$274 million

 

4%

 

$1,324 million

 

$1, 284 million

 

3%








Diluted EPS from
Continuing
Operations

 

$0.68

 

($1.72)

 

N.M

 

$3.37

 

$0.97

 

247%

Non-GAAP Diluted
EPS from Continuing
Operations

 

$0.83

 

$0.79

 

5%

 

$3.84

 

$3.73

 

3%

Fiscal year 2014 non-GAAP EPS included a net $0.02 per share benefit from two large off-setting tax items. As a reminder, fiscal year 2013 non-GAAP EPS included a discrete positive $0.18 per share benefit from a tax settlement.

SEGMENT RESULTS

Pharmaceutical Segment

Fourth-quarter revenue for the Pharmaceutical segment decreased 12 percent to $20.1 billion, and segment profit decreased 5 percent to $377 million. The decrease in both segment revenue and profit was due to the continuing impact of the expiration of the Walgreens contract.   

Excluding the impact of Walgreens, fourth-quarter revenue for the Pharmaceutical segment grew 13 percent, driven by organic sales growth, growth in the company's Specialty Solutions division, and China. The impact of the Walgreens contract expiration on segment profit was partially offset by strong performance under generic programs.  

For the full year, revenue for the Pharmaceutical segment decreased 12 percent to $80.1 billion, and segment profit increased 1 percent to $1.7 billion.


Q4 FY14

Q4 FY13

Y/Y

FY14

FY13

Y/Y

Revenue

$20.1 billion

$22.8 billion

(12)%

$80.1 billion

$91.1 billion

(12)%

Segment Profit

$377 million

$395 million

(5)%

$1.7 billion

$1.7 billion

1%

Medical Segment

Fourth-quarter revenue for the Medical segment increased 4 percent to $2.8 billion, driven by growth in existing customers, including solid growth in strategic hospital network accounts, and acquisitions. Segment profit decreased 8 percent to $96 million, primarily due to a year-over-year increase in enterprise incentive compensation and market pressures in Canada.

For the full year, Medical segment revenue increased 9 percent to $11.0 billion, and segment profit increased 19 percent to $444 million.


Q4 FY14

Q4 FY13

Y/Y

FY14

FY13

Y/Y

Revenue

$2.8 billion

$2.7 billion

4%

$11.0 billion

$10.1 billion

9%

Segment Profit

$96 million

$104 million

(8)%

$444 million

$372 million

19%

ADDITIONAL YEAR-END AND RECENT HIGHLIGHTS

  • Increased the regular quarterly dividend 13 percent to $0.3425 per share. Dividend was paid July 15 to shareholders of record at the close of business on July 1.
  • Formally launched Red Oak Sourcing, LLC, a joint venture with CVS Caremark forming the largest generic sourcing entity in the U.S.
  • Completed the acquisition of AccessClosure, a leading manufacturer and distributor of extravascular closure devices in the United States, expanding the company's portfolio of physician preference items.
  • Convened 24th annual Retail Business Conference, presenting nearly 8,000 attendees with the industry's largest and most complete lineup of continuing education opportunities, buying opportunities with more than 340 exhibitors, and access to a broad array of Cardinal Health solutions to help diversify and improve their businesses.

CONFERENCE CALL

Cardinal Health will host a webcast and conference call today at 8:30 a.m. Eastern to discuss fourth-quarter and full-year results and its future outlook. To access the call and corresponding slide presentation, go to the Investors page at cardinalhealth.com. Alternatively, participants can dial 913.312.0640, using conference ID# 6121128. 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 conference call. The audio replay will also be available for seven days by dialing 719.457.0820, passcode 6121128.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $91 billionhealth 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, 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.

To read full press release, please click here.

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