Cardinal Health Reports Second-Quarter Results

Published on Thursday, 02 February 2012 07:12 Written by TradersHuddle Staff

DUBLIN, Ohio, Feb. 2, 2012 /PRNewswire/ -- Cardinal Health today reported a 7 percent increase in fiscal 2012 second-quarter revenue to $27.1 billion and a 21 percent increase in non-GAAP operating earnings to $475 million. The company also reported an 11 percent increase in non-GAAP diluted earnings per share (EPS) from continuing operations to $0.81. On a GAAP basis, diluted EPS from continuing operations increased 25 percent to $0.76.

"We're pleased at the strong results of our second quarter and the first half of our fiscal 2012," said George Barrett, chairman and chief executive officer of Cardinal Health. "Both the Pharmaceutical and Medical segments delivered strong revenue growth in the second quarter, and key areas of strategic focus performed very well. Robust 30 percent profit growth in the Pharmaceutical segment versus the prior year more than offset the anticipated impact of residual commodity cost pressures on Medical segment profit.

"Based on our performance in the first half of fiscal 2012 and our perspective on trends for the second half of the year, we are revising our fiscal 2012 guidance for non-GAAP diluted EPS from continuing operations to a range of $3.10 to $3.20."

The company's previous range for full-year guidance was $3.04 to $3.19.

Q2 FY12 SUMMARY

Non-GAAP diluted EPS from continuing operations in the prior-year quarter benefited from a lower-than-usual tax rate.

SEGMENT RESULTS

Pharmaceutical segment

Revenue for the Pharmaceutical segment increased 6 percent to $24.7 billion, driven by acquisitions and increased volume from existing and new customers. Segment profit increased 30 percent to $394 million, driven by strong results from generic programs, including the impact of new item launches, as well as performance under manufacturer agreements and significant contributions from acquisitions completed in fiscal 2011.

Medical segment

Revenue for the Medical segment increased 9 percent to $2.4 billion, driven by solid volume growth from existing and net new customers and strong preferred products volume. As expected, segment profit declined 18 percent to $85 million, as commodity price pressure and increased investments in information systems were partially offset by the favorable profit impact from growth in the company's preferred products program.

ADDITIONAL SECOND-QUARTER AND RECENT HIGHLIGHTS

• Ranked #1 on Gartner Inc. third annual Healthcare Supply Chain Top 25 listing, which focuses on the health care value chain's pursuit of high-quality patient care at optimal economic cost.

• Launch of BarCode360™, a barcode administration solution that supports hospitals' medication safety initiatives by making it easier, more timely and cost efficient to order medications and ensure more unit-dose medications can be scanned at the patient bedside.

• Launch of first clinical pathways program for rheumatoid arthritis with CareFirst BlueCross BlueShield.

• Cash bid to acquire Futuremed Healthcare Products Corp. in Canada, a distributor of medical disposables and specialized equipment to the long-term care channel, continued, with expectation to close during Q3 fiscal 2012 subject to regulatory clearance and other customary conditions.

CONFERENCE CALL

Cardinal Health will host a webcast and conference call today at 8:30 a.m. Eastern to discuss second-quarter results and its future outlook. To access the call and corresponding slide presentation, go to the Investors page at cardinalhealth.com/investors. The call can also be accessed by dialing 617-597-5341 passcode 45509922.  Presentation slides and an audio replay will be archived on the website after the conclusion of the meeting. The audio replay will also be available until March 2 by dialing 617-801-6888, passcode 43183077.

UPCOMING EVENTS

• UBS 22nd Annual Global Healthcare Services Conference on Feb. 8 at 11 a.m. Eastern in New York
• Leerink Swann 2012 Global Healthcare Conference on Feb. 16 at 9 a.m. Eastern in New York
• Citigroup 2012 Global Healthcare Conference on Feb. 27 at 10:30 a.m. Eastern in New York
• Cowen & Co. 32nd Annual Healthcare Conference on March 5 at 1:30 p.m. Eastern in Boston
• Raymond James 33rd Institutional Investors Conference on March 6 at 8:05 a.m. Eastern in Orlando, Florida
• Barclays Capital Global Healthcare Conference on March 14 at 9 a.m. Eastern in Miami

At these events, Cardinal Health executives will discuss the company's diverse products and services, company performance and strategies for continued growth. To access more details and live webcasts of these events, including remarks, go to the Investors page at cardinalhealth.com.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $103 billion health 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 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 to more than 60,000 locations each day. The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company supports the growing diagnostic industry by supplying medical products to clinical laboratories and operating the nation's largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #19 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com.

(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. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue," 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 possible business interruptions, delays and other uncertainties relating to the Medical segment business transformation; uncertainties due to government health care reform including federal health care reform legislation; competitive pressures in Cardinal Health's various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; the timing of generic and branded pharmaceutical introductions and the frequency or rate of pharmaceutical price appreciation or deflation; changes in the distribution patterns or reimbursement rates for health care products and services; the effects of any investigation by any regulatory authority; and changes in 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 Feb. 2, 2012. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.  

Total consolidated revenue for the three months ended December 31, 2011 was $27,078 million, which included total segment revenue of $27,081 million and Corporate revenue of $(3) million. Total consolidated revenue for the three months ended December 31, 2010 was $25,372 million, which included total segment revenue of $25,377 million and Corporate revenue of $(5) million.  Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the three months ended December 31, 2011 were $449 million, which included total segment profit of $479 million and Corporate costs of $(30) million. Total consolidated operating earnings for the three months ended December 31, 2010 were $344 million, which included total segment profit of $407 million and Corporate costs of $(63) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs (including amortization of acquisition-related intangible assets), impairments and loss on sale of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.

Total consolidated revenue for the six months ended December 31, 2011 was $53,870 million, which included total segment revenue of $53,879 million and Corporate revenue of $(9) million. Total consolidated revenue for the six months ended December 31, 2010 was $49,809 million, which included total segment revenue of $49,819 million and Corporate revenue of $(10) million.  Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the six months ended December 31, 2011 were $862 million, which included total segment profit of $922 million and Corporate costs of $(60) million. Total consolidated operating earnings for the six months ended December 31, 2010 were $708 million, which included total segment profit of $797 million and Corporate costs of $(89) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs (including amortization of acquisition-related intangible assets), impairments and loss on sale of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.