SAN DIEGO, Nov. 7, 2011 /PRNewswire/ -- CareFusion today reported results for the quarter ended Sept. 30, 2011.
“Our revenue and adjusted earnings per share growth for the quarter was driven by increased sales in our Dispensing Technologies and Infusion Systems businesses and the benefit from a lower tax rate,” said Kieran Gallahue, chairman and CEO. “During the quarter, we transitioned from our stand-up phase to our foundation building stage, and made progress in our efforts to simplify how we do business and invest in areas to help expand margins and accelerate our top line growth.
Today, we are reaffirming our full-year adjusted diluted earnings per share guidance for fiscal 2012 of $1.80 to $1.90 and revenue growth of 3 to 5 percent over fiscal 2011 on a constant currency basis.”
CareFusion’s reported results compare to the quarter ended Sept. 30, 2010.
First Quarter Results
Revenue for the first quarter of fiscal 2012 increased 4 percent to $844 million on a reported basis and 3 percent on a constant currency basis, driven primarily by increased sales in the Dispensing Technologies and Infusion Systems businesses. Operating income was $108 million and income from continuing operations was $67 million, or $0.30 per diluted share. Excluding nonrecurring items, adjusted operating income increased $1 million to $119 million and adjusted income from continuing operations increased $12 million to $76 million, or $0.33 per diluted share. The adjusted tax rate for the quarter was 19.8 percent, primarily driven by a discrete onetime $5 millionUnited Kingdom tax refund related to pre-spinoff periods from Cardinal Health.
CareFusion’s financial results were negatively impacted during the quarter by an increase in recall reserves in the company’s Medical Systems segment. The company recorded a $12 million charge, or approximately $0.04 per share, the majority of which is related to expenses incurred and future expected costs associated with voluntary field corrections for a portion of its installed base of AVEA® ventilators. While the company is in the process of remediating the affected ventilators, it continues to manufacture and sell its AVEA ventilator products.
Operating expenses, including selling, general and administrative (SG&A), research and development (R&D) and restructuring and acquisition integration charges totaled $319 million, or 38 percent of total revenue. Excluding $11 million of nonrecurring items, adjusted operating expenses totaled $308 million, or 36 percent of total revenue. Adjusted SG&A expenses were $269 million and R&D investments totaled $39 million.
New Reporting Segments
In July 2011, the company realigned its businesses under two new global operating segments named Medical Systems and Procedural Solutions. Beginning with the first quarter of fiscal 2012, the company also made a determination to realign its reportable segments with the new operating segments. Accordingly, the company is reporting results under these two segments, which are replacing the Critical Care Technologies and Medical Technologies and Services segments under which the company had previously reported. The Medical Systems segment includes the company’s Dispensing Technologies, Infusion Systems and Respiratory Technologies business lines. The Procedural Solutions segment includes the company’s Infection Prevention, Medical Specialties and Specialty Disposables business lines. The company has separately provided summary historical financial data for the new reportable segments in a report on Form 8-K filed with the Securities and Exchange Commission on Nov. 2, 2011.
Medical Systems
Revenue for the Medical Systems segment increased 9 percent on a reported basis to $509 million, or 7 percent on a constant currency basis, driven by Dispensing Technologies and Infusion Systems sales. Sales in the company’s Dispensing Technologies business increased organically and due to the August 2011 acquisition of Rowa, a Germany-based company specializing in robotic medication storage and retrieval systems for retail and hospital pharmacies. Sales of Infusion Systems increased as a result of core business growth primarily in the dedicated disposable product volumes. These increases were partially offset by a decrease in Respiratory Technologies sales, primarily due to lower sales of ventilators in Western Europe. Segment profit increased 29 percent to $88 million, and adjusted segment profit increased 6 percent to $95 million, both of which were negatively impacted by the $12 million increase in the company’s recall reserves.
Procedural Solutions
Revenue for the Procedural Solutions segment decreased 2 percent on a reported basis to $335 million, or 4 percent on a constant currency basis, driven by the loss of sales from divesting the company’s OnSite Services business in March 2011. This decrease was partially offset by an increase in sales in the company’s Infection Prevention business. Net of the OnSite Services business divestiture, segment revenues grew 1 percent in the first quarter compared to the prior year period. Segment profit increased 82 percent to $20 million due to margin expansion and strong expense controls, and adjusted segment profit decreased 14 percent to $24 million, primarily driven by the divestiture of the OnSite Services business.
Fiscal 2012 Outlook
CareFusion is reiterating financial guidance for the fiscal year ending June 30, 2012. The company continues to expect fiscal 2012 revenues to grow 3 to 5 percent on a constant currency basis compared to fiscal 2011 revenue of $3.53 billion and for adjusted diluted earnings per share 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. PST (5 p.m. EST) to discuss earnings results for the first quarter ended Sept. 30, 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 (800) 901-5213 within the U.S. or (617) 786-2962 from outside the U.S., and use the access code 61573117. A replay of the conference call will be available from 5 p.m. PST (8 p.m. EST) on Nov. 7 through 8:59 p.m. PST (11:59 p.m. EST) on Nov. 14 and can be accessed by dialing (888) 286-8010 in the U.S. or (617) 801-6888 Internationally and using the access code 14995413.
About CareFusion
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® skin prep 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
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 and nonrecurring restructuring and acquisition integration charges; “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 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 quarters ended Sept. 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 Nov. 7, 2011.
