DUBLIN, Ohio, Oct. 31, 2016 /PRNewswire/ -- Cardinal Health (NYSE: CAH) today reported first-quarter fiscal year 2017 revenue of $32 billion, an increase of 14 percent from the comparable quarter last year. The company also reported a decline in GAAP operating earnings of 14 percent to $535 million and in non-GAAP operating earnings of 9 percent to $669 million. GAAP diluted earnings per share (EPS) decreased 17 percent to $0.96, while non-GAAP diluted EPS decreased 10 percent to $1.24.
“Our first-quarter results were largely as we suggested they would be, with a healthy increase in revenue and a decrease in our operating earnings largely driven by conditions in the pharmaceutical distribution market,” said George Barrett, chairman and CEO of Cardinal Health. “While short-term headwinds, particularly around pharmaceuticals, are quite challenging, our Medical segment had an excellent quarter building on the momentum coming out of fiscal year 2016. From an operating perspective, our metrics were strong in both of our reporting segments, and our strategic positioning is well-aligned with the changing needs of the market.”
Q1 FY17 summary
Q1 FY17 | Q1 FY16 | Y/Y | |
Revenue | $32.0 billion | $28.1 billion | 14% |
Operating earnings | $535 million | $620 million | (14)% |
Non-GAAP operating earnings | $669 million | $737 million | (9)% |
Net earnings | $309 million | $383 million | (19)% |
Non-GAAP net earnings | $399 million | $458 million | (13)% |
Diluted EPS | $0.96 | $1.15 | (17)% |
Non-GAAP diluted EPS | $1.24 | $1.38 | (10)% |
Segment results
Pharmaceutical segment
First-quarter revenue for the Pharmaceutical segment increased 14 percent to $28.8 billion due to growth from net new and existing Pharmaceutical Distribution customers and, to a lesser extent, performance from the Specialty business.
Segment profit for the quarter decreased 19 percent to $534 million. This decrease was driven by generic pharmaceutical pricing and, to a lesser extent, reduced levels of branded inflation and the previously announced loss of a large Pharmaceutical Distribution customer. This was partially offset by solid performance from Red Oak Sourcing.
Q1 FY17 | Q1 FY16 | Y/Y | |
Revenue | $28.8 billion | $25.1 billion | 14% |
Segment profit | $534 million | $657 million | (19)% |
Medical segment
First-quarter revenue for the Medical segment increased 12 percent to $3.3 billion driven by contributions from acquisitions and net new and existing customers.
Segment profit increased 26 percent to $127 million due to contributions from acquisitions and Cardinal Health Brand products.
Q1 FY17 | Q1 FY16 | Y/Y | |
Revenue | $3.3 billion | $2.9 billion | 12% |
Segment profit | $127 million | $101 million | 26% |
Fiscal 2017 outlook
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.
Full-year Pharmaceutical segment profit is now expected to be down as a percentage in the mid-to-high single digits compared to fiscal year 2016, with the changes coming primarily from generic pharmaceutical pricing and, to a lesser extent, reduced levels of branded inflation. Based on first-quarter results and second-quarter expectations, the company slightly lowered its fiscal year 2017 guidance range for non-GAAP diluted EPS from continuing operations to $5.40 to $5.60 from $5.48 to $5.73, representing growth of approximately 3 to 7 percent from the prior year.
More details about this outlook can be found on the company’s webcast and accompanying slides; see below for details.
Additional first-quarter and recent highlights
- Onboarded Medical segment customer Kaiser Permanente
- Expanded the existing distribution agreement between Cordis and Biosensors, enabling Cordis to be the exclusive distributor for Biosensors’ coronary interventional products in Japan
- Acquired TelePharm, a company that focuses on establishing telepharmacies in rural areas
- Granted Cardinal Health Foundation funds to 17 community-based non-profit organizations nationwide to combat prescription drug misuse
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss first-quarter results. To access the webcast and corresponding slide presentation, go to 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 Oct. 30, 2017.
Upcoming webcasted investor events
- 2016 Annual Meeting of Shareholders on Nov. 3 at 8 a.m. Eastern
- Credit Suisse 25th Annual Healthcare Conference on Nov. 8 at 8:30 a.m. Mountain
About Cardinal Health
Cardinal Health, Inc. (NYSE: CAH), is a global integrated healthcare services and products company, providing customized solutions for hospital 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. 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 37,000 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.
1 GAAP 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.
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