Cardinal Health Reports Third-quarter Results For Fiscal Year 2017
DUBLIN, Ohio, May 1, 2017 /PRNewswire/ -- Cardinal Health (NYSE: CAH) today reported third-quarter fiscal year 2017 revenues of $31.8 billion, an increase of 4 percent. The company also reported a decline in GAAP operating earnings of 8 percent to $605 million and in non-GAAP operating earnings of 4 percent to $759 million. GAAP diluted earnings per share (EPS) increased 3 percent to $1.20, while non-GAAP diluted EPS increased 7 percent to $1.53.
"The third quarter came in largely as we expected, in a dynamic market environment, as we noted a few weeks ago," said George S. Barrett, chairman and chief executive officer of Cardinal Health. "Many of our lines of business continue to perform well, particularly naviHealth, our medical/surgical consumables lines, and our Specialty Solutions group. We are also extremely excited about our recent announcement to acquire Medtronic's Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses. These product lines are natural extensions to the work that we're doing across the continuum of care from acute care, to surgery centers, to long-term care, into the retail setting and even to the consumer."
Q3 FY17 summary
Q3 FY17 | Q3 FY16 | Y/Y | |
Revenue | $ 31.8 billion | $ 30.7 billion | 4% |
Operating earnings | $ 605 million | $ 656 million | (8)% |
Non-GAAP operating earnings | $ 759 million | $ 788 million | (4)% |
Net earnings attributable to Cardinal Health, Inc. | $ 381 million | $ 386 million | (1)% |
Non-GAAP net earnings attributable to Cardinal Health, Inc. | $ 485 million | $ 472 million | 3% |
Diluted EPS attributable to Cardinal Health, Inc. | $ 1.20 | $ 1.17 | 3% |
Non-GAAP diluted EPS attributable to Cardinal Health, Inc. | $ 1.53 | $ 1.43 | 7% |
Diluted EPS for the quarter benefitted from a lower effective tax rate and fewer weighted average shares outstanding than the same quarter in the prior fiscal year.
Segment results
Pharmaceutical segment
Third-quarter revenue for the Pharmaceutical segment increased 3 percent to $28.4 billion due to performance from the Specialty business and growth from Pharmaceutical Distribution customers.
Segment profit for the quarter decreased 7 percent to $611 million. This decrease was driven by generic pharmaceutical pricing, the final quarterly impact of the loss of Safeway, and the company's ongoing investment in its pharmaceutical IT platform. These were partially offset by solid performance from Red Oak Sourcing.
Q3 FY17 | Q3 FY16 | Y/Y | |
Revenue | $ 28.4 billion | $ 27.5 billion | 3% |
Segment profit | $ 611 million | $ 660 million | (7)% |
Medical segment
Third-quarter revenue for the Medical segment increased 9 percent to $3.4 billion driven by contributions from new and existing customers
Segment profit increased 16 percent to $148 million, reflecting solid performance from naviHealth, Cardinal Health Branded products (excluding Cordis) and distribution services. A decline in Cordis performance reflected increased SG&A expenses and the net favorable impact of two larger inventory adjustments in the year-over-year comparison.
Q3 FY17 | Q3 FY16 | Y/Y | |
Revenue | $ 3.4 billion | $ 3.1 billion | 9% |
Segment profit | $ 148 million | $ 128 million | 16% |
Fiscal year 2017 outlook
As previously disclosed, the company does not provide GAAP EPS outlook, because it is unable to reliably forecast most of the items that are excluded from GAAP EPS to calculate non-GAAP EPS. These items could cause EPS to differ materially from non-GAAP EPS. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.
The company reaffirms its expectation that its fiscal 2017 non-GAAP EPS from continuing operations will be at the bottom of its previous guidance range of $5.35 to $5.50. Additional details about this outlook can be found in the company's press release issued April 18.
Additional third-quarter and recent highlights
- Announced intent to acquire Medtronic's Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency businesses for $6.1 billion, enabling Cardinal Health to add an industry-leading portfolio of products, deepen its presence in the post-acute channel and increase its geographic scale
- Acquired rights to Navidea's Lymphoseek, a radiopharmaceutical diagnostic imaging agent
- Named on Fortune's 2017 "World's Most Admired Companies" list
- Recognized among the nation's best workplaces for female advancement as a Top Company for Executive Women by the National Association for Female Executives
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss third-quarter results. The webcast and corresponding slide presentation will be available on the Investor Relations page at ir.cardinalhealth.com. No access code is required.
Presentation slides and a webcast replay will be available on the Cardinal Health website at ir.cardinalhealth.com until April 30, 2018.
Upcoming webcasted investor events
- Goldman Sachs 38th Annual Global Healthcare Conference on June 14 at 10:40 a.m. Pacific in Rancho Palos Verdes, Calif.
About Cardinal Health
Cardinal Health, Inc. is a global, integrated healthcare services and products company, providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories and physician offices worldwide. The company provides clinically proven medical products and pharmaceuticals and cost-effective solutions that enhance supply chain efficiency from hospital to home. Cardinal Health connects patients, providers, payers, pharmacists and manufacturers for integrated care coordination and better patient management. Backed by nearly 100 years of experience, with more than 40,000 employees in nearly 60 countries, Cardinal Health ranks among the top 25 on the Fortune 500. For more information, visit cardinalhealth.com, follow @CardinalHealth on Twitter and connect on LinkedIn at linkedin.com/ company/cardinal-health.
1GAAP refers to U.S. generally accepted accounting principles. This news release includes GAAP financial measures as well as non-GAAP financial measures, which are financial measures not calculated in accordance with GAAP. See "Use of Non-GAAP Measures" following the attached schedules for definitions of the non-GAAP financial measures presented in this news release, and see the attached schedules for 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, financial information, earnings and analyst presentations, and information about upcoming presentations and events is routinely posted and accessible on the Investor Relations page at ir.cardinalhealth.com. In addition, the website allows investors and other interested persons to sign up automatically to receive e-mail alerts when the company posts news releases, SEC filings and certain other information on its website.
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 competitive pressures in Cardinal Health's various lines of business; the amount or rate of pharmaceutical price appreciation or deflation and the timing of and benefit from generic pharmaceutical introductions; the ability to maintain the benefits from the generic sourcing venture with CVS Health; the ability to successfully complete the acquisition of the Patient Recovery businesses from Medtronic on a timely basis, including obtaining required regulatory approvals and the satisfaction of other conditions; the conditions of the credit markets and our ability to issue debt to fund the acquisition on acceptable terms; if the acquisition of the Patient Recovery businesses is completed, the ability to retain the acquired businesses' customers and employees, the ability to successfully integrate the acquired businesses into our operations and the ability to achieve the expected synergies as well as accretion in earnings; risks associated with the anticipated increase of indebtedness and potential limitations on our ability to use our cash for other purposes; our ability to successfully integrate and realize the benefits from our acquisition of Cordis; the risk of non-renewal or a default under one or more key customer or supplier arrangements or changes to the terms of or level of purchases under those arrangements; uncertainties due to government health care reform including federal health care reform legislation; 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; and changes in foreign currency rates and the cost of commodities such as oil-based resins, cotton, latex and diesel fuel. 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 1, 2017.
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