CARDINAL HEALTH, INC. DUBLIN, Ohio, July 30, 2015 /PRNewswire/ -- Cardinal Health today reported fourth-quarter fiscal year 2015 revenues of $27.5 billion, an increase of 20 percent, and non-GAAP diluted earnings per share (EPS) from continuing operations of $1.00, an increase of 20 percent. Non-GAAP operating earnings increased 33 percent to $611 million. On a GAAP basis, operating earnings increased 44 percent to $558 million, and diluted EPS from continuing operations increased 29 percent to $0.88.
Fiscal year 2015 revenues increased 13 percent to $102.5 billion, and non-GAAP diluted EPS from continuing operations increased 14 percent to $4.38. Non-GAAP operating earnings increased 16 percent to $2.5 billion. On a GAAP basis, operating earnings and diluted EPS from continuing operations for fiscal year 2015 were $2.2 billion and $3.61, respectively, an increase of 15 percent and 7 percent, respectively, from the prior fiscal year.
"We finished our fiscal year 2015 with a very strong fourth quarter, capping off an outstanding year. During fiscal 2015, we had record non-GAAP operating earnings, achieved excellent growth in revenues and non-GAAP EPS, and generated $2.5 billion in cash flow," said George Barrett, chairman and chief executive officer of Cardinal Health.
"It was also a year of meaningful strategic initiatives, including: operationalizing Red Oak Sourcing, our generic sourcing venture with CVS Health; agreeing to acquire The Harvard Drug Group, which reinforces our position in generic drugs and telemarketing; and acquiring Metro Medical, which enhances the position of our fast-growing Specialty Solutions group," Barrett added. "We also combined forces with Henry Schein to serve office-based medical practices; enhanced our 'at Home' platform to expand the product portfolio; and, took a major step forward in our physician preference item portfolio with the planned acquisition of Cordis. At the same time, we were able to return $1.5 billion to shareholders through dividends and share repurchases.
"We look forward to fiscal year 2016 and the opportunities, enhanced by these growth drivers, to serve a health care system going through significant change," Barrett concluded.
The company raised the midpoint of its fiscal year 2016 outlook for non-GAAP diluted EPS from continuing operations, tightening the range to $4.85 to $5.05 due to its strong fiscal year 2015 performance and the momentum the company has carried into fiscal year 2016. While the company does not provide quarterly guidance, it expects financial performance to be weighted toward the second half of fiscal 2016.
In fiscal 2015, Cardinal Health generated $2.5 billion in operating cash flow and returned $1.5 billion to shareholders through dividends and share buybacks.
Q4 and Fiscal Year Summary
Q4 FY15 Q4 FY14 Y/Y FY15 FY14 Y/Y
------- ------- --- ---- ---- ---
Revenue $27.5 billion $22.9 billion 20% $102.5 billion $91.1 billion 13%
------- ------------- ------------- --- -------------- ------------- ---
$558 million $387 million $2,161 million $1,885 million
Operating
Earnings 44% 15%
--------- --- ---
Non-GAAP
Operating
Earnings $611 million $461 million $2,472 million $2,133 million
33% 16%
--- --- ---
Earnings from
Continuing
Operations $293 million $234 million $1,212 million $1,163 million
25% 4%
--- --- ---
Non-GAAP
Earnings from
Continuing
Operations $333 million $284 million $1,469 million $1,324 million
17% 11%
--- --- ---
Diluted EPS
from
Continuing
Operations $0.88 $0.68 29% $3.61 $3.37 7%
----------- ----- ----- --- ----- ----- ---
Non-GAAP
Diluted EPS
from
Continuing
Operations $1.00 $0.83 20% $4.38 $3.84 14%
------------ ----- ----- --- ----- ----- ---
SEGMENT RESULTS
Pharmaceutical Segment
Fourth-quarter revenue for the Pharmaceutical segment increased 23 percent to $24.7 billion, due to growth from existing and new customers. Segment profit for the quarter increased 42 percent to $535 million, due to strong performance under the company's generics program, which includes the net benefit of Red Oak Sourcing, as well as growth from existing and new customers.
For the full year, revenue for the Pharmaceutical segment increased 14 percent to $91.1 billion, and segment profit increased 20 percent to $2.1 billion.
Q4 FY15 Q4 FY14 Y/Y FY15 FY14 Y/Y
------- ------- --- ---- ---- ---
Revenue $24.7 billion $20.1 billion 23% $91.1 billion $80.1 billion 14%
------- ------------- ------------- --- ------------- ------------- ---
Segment
Profit $535 million $377 million 42% $2.1 billion $1.7 billion 20%
------- ------------ ------------ --- ------------ ------------ ---
Medical Segment
Fourth-quarter revenue for the Medical segment increased 2 percent to $2.9 billion, due to contributions from acquisitions and growth in the Cardinal Health at Home platform, partially offset by a decline in Canada. Segment profit for the quarter increased 7 percent to $103 million, due to contributions from the strategic expansion of the company's portfolio of Cardinal Health brand products and services, which was driven by a combination of acquisitions and organic efforts, coupled with targeted cost reductions, during the past year.
For the full year, Medical segment revenue increased 4 percent to $11.4 billion, and segment profit decreased 3 percent to $433 million.
Q4 FY15 Q4 FY14 Y/Y FY15 FY14 Y/Y
------- ------- --- ---- ---- ---
Revenue $2.9 billion $2.8 billion 2% $11.4.billion $11.0 billion 4%
------- ------------ ------------ --- ------------- ------------- ---
Segment
Profit $103 million $96 million 7% $433 million $444 million (3%)
------- ------------ ----------- --- ------------ ------------ ---
FY2015 SELECTED HIGHLIGHTS
-- Entered into an agreement to acquire The Harvard Drug Group, a
distributor of generic pharmaceuticals, over-the-counter medications and
related products to retail, institutional and alternate care customers,
increasing Cardinal Health's generics scale and reach; acquisition
completed July 2015
-- Entered into an agreement to acquire Cordis, a worldwide leader in
cardiovascular medical products
-- Acquired the specialty distribution business of Metro Medical Supply
Inc., expanding scale and deepening reach into rheumatology, oncology
and nephrology segments
-- Entered into a long-term strategic agreement with Henry Schein, the
world's largest provider of health care products and services to
office-based dental, animal health and medical practitioners, to provide
one of the most comprehensive service and product offerings to
office-based medical practices
-- Unveiled the Cardinal Health(TM) negative pressure wound therapy PRO
family of devices for use in the acute care setting, at discharge and in
the home
Awards and Recognitions
-- Ranked #1 on the Gartner Healthcare Supply Chain Top 25 for the fourth
consecutive year
-- Selected as one of Institutional Investor magazine's Most Honored
Companies
-- Named one of 15 recipients of the Department of Defense 2015 Secretary
of Defense Employer Support Freedom Award, the highest honor the
department gives to employers for support of National Guard and Reserve
employees.
-- Named among the 2015 Best Companies for Leaders by Chief Executive
magazine
-- Named one of the "Top 50 Companies for Executive Women" by the National
Association for Female Executives and one of the Working Mother 100 Best
Companies, marking repeat designation since 2012
-- Named to the Human Rights Campaign (HRC) "Best Places to Work for LGBT
Equality" for third consecutive year based on ratings in HRC's 2015
Corporate Equality Index.
-- Named among the National Business Group on Health Best Employers for
Healthy Lifestyles Platinum Award recipients
-- Included in Becker's Healthcare 150 Great Places to Work in Healthcare
2015 listing
-- Named to the Dow Jones Sustainability Index for the ninth consecutive
year
-- Designated a 2015 Top Green Company in the U.S. by Newsweek magazine
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 fiscal 2015 financial results and its future outlook. To access the call and corresponding slide presentation, go to the Investors page at ir.cardinalhealth.com. Alternatively, participants can call 913.312.1448 and use passcode 5598613.
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 meeting. The replay also will be available until Thursday, Aug. 6, by dialing 719.457.0820 and using passcode 5598613.
UPCOMING WEBCASTED INVESTOR EVENTS
-- FBR Second Annual Healthcare Conference on Sept. 9 at 12 p.m. Eastern in
Boston
-- Baird's 2015 Healthcare Conference on Sept. 10 at 7:50 a.m. Eastern in
New York
-- Morgan Stanley Global Healthcare Conference on Sept. 16 at 8:45 a.m.
Eastern in New York
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, 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 #26 on the Fortune 500, Cardinal Health employs nearly 35,000 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, financial information, earnings and analyst presentations, and information about upcoming presentations and events is routinely posted and accessible on the Investors page at ir.cardinalhealth.com. In addition, our website allows investors and other interested persons to sign up automatically to receive e-mail alerts when we post news releases, SEC filings and certain other information on our 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 ability to achieve and maintain the benefits from the generic sourcing venture with CVS Health and from our acquisition of The Harvard Drug Group; the frequency or rate of pharmaceutical price appreciation or deflation and the timing of generic and branded pharmaceutical introductions; the ability to successfully complete the acquisition of Cordis and if completed to achieve the anticipated results from the Cordis acquisition; 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 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 July 30, 2015. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.
Schedule 1
----------
Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
Fourth Quarter
--------------
(in millions, except per common
share amounts) 2015 2014 % Change
------------------------------- ---- ---- --------
Revenue $27,547 $22,894 20%
Cost of products sold 26,089 21,638 21%
--------------------- ------ ------ ---
Gross margin 1,458 1,256 16%
Operating expenses:
Distribution, selling, general
and administrative expenses 847 795 7%
Restructuring and employee
severance 11 6 N.M.
Amortization and other
acquisition-related costs 91 63 N.M.
Impairments and (gain)/loss on
disposal of assets - 4 N.M.
Litigation (recoveries)/charges,
net (49) 1 N.M.
-------------------------------- --- --- ----
Operating earnings 558 387 44%
Other income, net (1) (3) N.M.
Interest expense, net 36 33 9%
--------------------- --- --- ---
Earnings before income taxes and
discontinued operations 523 357 46%
Provision for income taxes 230 123 87%
Earnings from continuing
operations 293 234 25%
Earnings from discontinued
operations, net of tax 2 - N.M.
-------------------------- --- --- ----
Net earnings $295 $234 26%
------------ ---- ---- ---
Basic earnings per common share:
Continuing operations $0.89 $0.69 29%
Discontinued operations - - N.M.
--- --- ----
Net basic earnings per common
share $0.89 $0.69 29%
----------------------------- ----- ----- ---
Diluted earnings per common share:
Continuing operations $0.88 $0.68 29%
Discontinued operations - - N.M.
--- --- ----
Net diluted earnings per common
share $0.88 $0.68 29%
------------------------------- ----- ----- ---
Weighted-average number of common shares
outstanding:
Basic 330 339
Diluted 333 343
------- --- ---
Schedule 2
----------
Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
Fiscal Year
-----------
(in millions, except per common
share amounts) 2015 2014 % Change
------------------------------- ---- ---- --------
(Unaudited)
Revenue $102,531 $91,084 13%
Cost of products sold 96,819 85,923 13%
--------------------- ------ ------ ---
Gross margin 5,712 5,161 11%
Operating expenses:
Distribution, selling, general
and administrative expenses 3,240 3,028 7%
Restructuring and employee
severance 44 31 N.M.
Amortization and other
acquisition-related costs 281 223 N.M.
Impairments and (gain)/loss on
disposal of assets (19) 15 N.M.
Litigation (recoveries)/charges,
net 5 (21) N.M.
-------------------------------- --- --- ----
Operating earnings 2,161 1,885 15%
Other income, net (7) (46) N.M.
Interest expense, net 141 133 6%
Loss on extinguishment of debt 60 - N.M.
------------------------------ --- --- ----
Earnings before income taxes and
discontinued operations 1,967 1,798 9%
Provision for income taxes 755 635 19%
Earnings from continuing
operations 1,212 1,163 4%
Earnings from discontinued
operations, net of tax 3 3 N.M.
-------------------------- --- --- ----
Net earnings $1,215 $1,166 4%
------------ ------ ------ ---
Basic earnings per common share:
Continuing operations $3.65 $3.41 7%
Discontinued operations 0.01 0.01 N.M.
---- ---- ----
Net basic earnings per common
share $3.66 $3.42 7%
----------------------------- ----- ----- ---
Diluted earnings per common share:
Continuing operations $3.61 $3.37 7%
Discontinued operations 0.01 0.01 N.M.
---- ---- ----
Net diluted earnings per common
share $3.62 $3.38 7%
------------------------------- ----- ----- ---
Weighted-average number of common shares
outstanding:
Basic 332 341
Diluted 335 345
------- --- ---
Schedule 3
----------
Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions) June 30, June 30,
2015 2014
--- ---- ----
(Unaudited)
Assets
Current assets:
Cash and
equivalents $4,616 $2,865
Trade
receivables,
net 6,523 5,380
Inventories,
net 9,211 8,266
Prepaid
expenses and
other 1,402 1,428
------------- ----- -----
Total current
assets 21,752 17,939
Property and
equipment,
net 1,506 1,459
Goodwill and
other
intangibles,
net 6,018 5,870
Other assets 866 765
Total assets $30,142 $26,033
------------ ------- -------
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts
payable $14,368 $12,149
Current
portion of
long-term
obligations
and other
short-term
borrowings 281 801
Other accrued
liabilities 2,594 2,165
------------- ----- -----
Total current
liabilities 17,243 15,115
Long-term
obligations,
less current
portion 5,211 3,171
Deferred
income taxes
and other
liabilities 1,432 1,346
Total
shareholders'
equity 6,256 6,401
Total
liabilities
and
shareholders'
equity $30,142 $26,033
-------------- ------- -------
Schedule 4
----------
Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Fourth Quarter Fiscal Year
-------------- -----------
(in millions) 2015 2014 2015 2014
------------ ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net earnings $295 $234 $1,215 $1,166
Earnings from
discontinued operations,
net of tax (2) - (3) (3)
Earnings from continuing
operations 293 234 1,212 1,163
Adjustments to reconcile earnings from
continuing operations to net cash
provided by operating activities:
Depreciation and
amortization 115 115 451 459
Loss on extinguishment of
debt - - 60 -
Gain on sale of other
investments - - (5) (32)
Impairments and
(gain)/loss on disposal
of assets, net - 4 (19) 15
Share-based compensation 30 24 110 96
Provision for deferred
income taxes 219 26 219 26
Provision for bad debts 10 11 52 42
Change in fair value of
contingent consideration
obligation 8 - 8 -
Change in operating assets and
liabilities, net of effects from
acquisitions:
Decrease/(increase) in
trade receivables (152) (548) (870) 925
Decrease/(increase) in
inventories 71 (208) (779) 142
Increase/(decrease) in
accounts payable 291 1,196 1,948 (196)
Other accrued liabilities
and operating items, net (17) (138) 153 (116)
-------------------------
Net cash provided by
operating activities 868 716 2,540 2,524
Cash flows from investing activities:
Acquisition of
subsidiaries, net of
cash acquired (184) (351) (503) (519)
Additions to property and
equipment (161) (111) (300) (249)
Purchase of available-
for-sale securities and
other investments (208) (102) (342) (129)
Proceeds from sale of
available-for-sale
securities and other
investments 77 - 206 47
Proceeds from maturities
of available-for-sale
securities 13 - 37 -
Proceeds from
divestitures and
disposal of held for
sale assets - - 53 -
---------------------
Net cash used in
investing activities (463) (564) (849) (850)
Cash flows from financing activities:
Payment of contingent
consideration obligation (4) - (7) -
Net change in short-term
borrowings (3) 49 (12) 114
Reduction of long-term
obligations - (1) (1,221) (2)
Proceeds from long-term
obligations, net of
issuance costs 1,490 - 2,672 -
Net proceeds from
issuance of common
shares 13 8 72 227
Tax proceeds/
(disbursements) from
share-based
compensation (4) 3 52 39
Dividends on common
shares (114) (103) (460) (415)
Purchase of treasury
shares (350) (284) (1,036) (673)
Net cash provided by/
(used in) financing
activities 1,028 (328) 60 (710)
Net increase/(decrease)
in cash and equivalents 1,433 (176) 1,751 964
Cash and equivalents at
beginning of period 3,183 3,041 2,865 1,901
Cash and equivalents at
end of period $4,616 $2,865 $4,616 $2,865
----------------------- ------ ------ ------ ------
Schedule 5
----------
Cardinal Health, Inc. and Subsidiaries
Total Company Business Analysis
Non-GAAP
Fourth Quarter Fourth Quarter
-------------- --------------
(in millions) 2015 2014 2015 2014
------------ ---- ---- ---- ----
Revenue
Amount $27,547 $22,894
Growth rate 20% (10)%
Operating earnings
Amount $558 $387 $611 $461
Growth rate 44% N.M. 33% (2)%
Earnings from continuing
operations
Amount $293 $234 $333 $284
Growth rate 25% N.M. 17% 4%
Return on
equity 18.7% 14.5% 21.3% 17.6%
Effective tax
rate from
continuing
operations 44.1% 34.4% 42.2% 34.2%
Debt to total
capital 47% 38%
Net debt to total capital 12% 15%
------------------------- --- ---
Non-GAAP
Fiscal Year Fiscal Year
----------- -----------
(in millions) 2015 2014 2015 2014
------------ ---- ---- ---- ----
Revenue
Amount $102,531 $91,084
Growth rate(1) 13% (10)%
Operating earnings
Amount $2,161 $1,885 $2,472 $2,133
Growth rate 15% 89% 16% 4%
Earnings from continuing
operations
Amount $1,212 $1,163 $1,469 $1,324
Growth rate 4% 247% 11% 3%
Return on
equity 19.4% 18.3% 23.4% 20.9%
Effective tax
rate from
continuing
operations 38.4% 35.3% 37.2% 35.3%
------------- ---- ---- ---- ----
(1) Revenue from Walgreens was $3.3 billion for the fiscal year ended June 30, 2014. Excluding the impact of the Walgreens contract expiration, the fiscal 2015 revenue growth rate would have been 17 percent.
Refer to the GAAP/Non-GAAP reconciliation for definitions and calculations supporting the Non-GAAP balances.
Schedule 6
----------
Cardinal Health, Inc. and Subsidiaries
Segment Business Analysis
Fourth Quarter Fourth Quarter
-------------- --------------
(in millions) 2015 2014 (in millions) 2015 2014
------------ ---- ---- ------------ ---- ----
Pharmaceutical Medical
Revenue Revenue
Amount $24,676 $20,092 Amount $2,855 $2,794
Growth rate 23% (12)% Growth rate 2% 4%
Segment profit Segment profit
Amount $535 $377 Amount $103 $96
Growth rate 42% (5)% Growth rate 7% (8)%
Segment profit margin 2.17% 1.88% Segment profit margin 3.59% 3.43%
--------------------- ---- ---- --------------------- ---- ----
Refer to definitions for an explanation of calculations.
Total consolidated revenue for the three months ended June 30, 2015 was $27,547 million, which included total segment revenue of $27,531 million and Corporate revenue of $16 million. Total consolidated revenue for the three months ended June 30, 2014 was $22,894 million, which
included total segment revenue of $22,886 million and Corporate revenue of $8 million. Corporate revenue consists primarily of elimination of inter-segment revenue and other revenue not allocated to the segments.
Total consolidated operating earnings for the three months ended June 30, 2015 were $558 million, which included total segment profit of $638 million and Corporate costs of $(80) million. Total consolidated operating earnings for the three months ended June 30, 2014 were $387
million, which included total segment profit of $473 million and Corporate costs of $(86) million. Corporate includes, among other things, restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets,
litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.
Schedule 7
----------
Cardinal Health, Inc. and Subsidiaries
Segment Business Analysis
Fiscal Year Fiscal Year
----------- -----------
(in millions) 2015 2014 (in millions) 2015 2014
------------ ---- ---- ------------ ---- ----
Pharmaceutical Medical
Revenue Revenue
Amount $91,116 $80,110 Amount $11,395 $10,962
Growth rate(1) 14% (12)% Growth rate 4% 9%
Segment profit Segment profit
Amount $2,094 $1,745 Amount $433 $444
Growth rate 20% 1% Growth rate (3)% 19%
Segment profit margin 2.30% 2.18% Segment profit margin 3.80% 4.05%
--------------------- ---- ---- --------------------- ---- ----
(1) Revenue from Walgreens was $3.3 billion for the fiscal year ended June 30, 2014. Excluding the impact of the Walgreens contract expiration,
the fiscal 2015 Pharmaceutical segment revenue growth rate would have been 19 percent.
Refer to definitions for an explanation of calculations.
Total consolidated revenue for the fiscal year ended June 30, 2015 was $102,531 million, which included total segment revenue of $102,511 million and Corporate revenue of $20 million. Total consolidated revenue for the fiscal year ended June 30, 2014 was $91,084 million, which included total
segment revenue of $91,072 million and Corporate revenue of $12 million. Corporate revenue consists primarily of elimination of inter-segment revenue and other revenue not allocated to the segments.
Total consolidated operating earnings for the fiscal year ended June 30, 2015 were $2,161 million, which included total segment profit of $2,527 million and Corporate costs of $(366) million. Total consolidated operating earnings for the fiscal year ended June 30, 2014 were $1,885 million, which
included total segment profit of $2,189 million and Corporate costs of $(304) million. Corporate includes, among other things, restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, litigation
(recoveries)/charges, net and certain investment spending that are not allocated to the segments.
Schedule 8
----------
Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation
Fourth Quarter 2015
-------------------
Operating Earnings Before Provision Earnings Earnings from Diluted EPS Diluted EPS
Earnings Income Taxes for from Continuing from from Continuing
(in millions, except per common share amounts) Operating Growth and Discontinued Income Continuing Operations Continuing Operations
---------------------------------------------
Earnings Rate Operations Taxes Operations Growth Rate Operations Growth Rate
-------- ---- ---------- ----- ---------- ----------- ---------- -----------
GAAP $558 44% $523 $230 $293 25% $0.88 29%
---- ---- --- ---- ---- ---- --- ----- ---
Restructuring and employee severance 11 11 4 7 0.02
Amortization and other acquisition-related costs 91 91 31 60 0.18
Impairments and (gain)/loss on disposal of assets - - - - -
Litigation (recoveries)/charges, net (49) (49) (22) (27) (0.08)
Loss on extinguishment of debt - - - - -
------------------------------ --- --- --- --- ---
Non-GAAP $611 33% $577 $243 $333 17% $1.00 20%
-------- ---- --- ---- ---- ---- --- ----- ---
Fourth Quarter 2014
GAAP $387 N.M. $357 $123 $234 N.M. $0.68 N.M.
---- ---- ---- ---- ---- ---- ---- ----- ----
Restructuring and employee severance 6 6 2 4 0.01
Amortization and other acquisition-related costs 63 63 22 41 0.12
Impairments and loss on disposal of assets 4 4 1 3 0.01
Litigation (recoveries)/charges, net 1 1 - 1 -
Loss on extinguishment of debt - - - - -
------------------------------ --- --- --- --- ---
Non-GAAP $461 (2)% $432 $148 $284 4% $0.83 5%
-------- ---- --- ---- ---- ---- --- ----- ---
Fiscal Year 2015
----------------
Operating Earnings Before Provision Earnings Earnings from Diluted EPS Diluted EPS
Earnings Income Taxes for from Continuing from from Continuing
(in millions, except per common share amounts) Operating Growth and Discontinued Income Continuing Operations Continuing Operations
---------------------------------------------
Earnings Rate Operations Taxes Operations Growth Rate Operations Growth Rate
-------- ---- ---------- ----- ---------- ----------- ---------- -----------
GAAP $2,161 15% $1,967 $755 $1,212 4% $3.61 7%
---- ------ --- ------ ---- ------ --- ----- ---
Restructuring and employee severance 44 44 15 29 0.09
Amortization and other acquisition-related costs 281 281 100 181 0.54
Impairments and (gain)/loss on disposal of assets (19) (19) (10) (9) (0.03)
Litigation (recoveries)/charges, net 5 5 (14) 19 0.06
Loss on extinguishment of debt - 60 23 37 0.11
Non-GAAP $2,472 16% $2,339 $870 $1,469 11% $4.38 14%
-------- ------ --- ------ ---- ------ --- ----- ---
Fiscal Year 2014
GAAP $1,885 89% $1,798 $635 $1,163 247% $3.37 247%
---- ------ --- ------ ---- ------ --- ----- ---
Restructuring and employee severance 31 31 11 20 0.06
Amortization and other acquisition-related costs 223 223 79 144 0.42
Impairments and loss on disposal of assets 15 15 5 10 0.03
Litigation (recoveries)/charges, net (21) (21) (8) (13) (0.04)
Loss on extinguishment of debt - - - - -
Non-GAAP $2,133 4% $2,047 $722 $1,324 3% $3.84 3%
-------- ------ --- ------ ---- ------ --- ----- ---
The sum of the components may not equal the total due to rounding.
We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.
Schedule 9
----------
Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation
Fourth Quarter
--------------
(in millions) 2015 2014
------------
GAAP return on equity 18.7% 14.5%
--------------------- ---- ----
Non-GAAP return on equity
Net earnings $295 $234
Restructuring and employee
severance, net of tax, in
continuing operations 7 4
Amortization and other
acquisition-related costs, net
of tax, in continuing operations 60 41
Impairments and (gain)/loss on
disposal of assets, net of tax,
in continuing operations - 3
Litigation (recoveries)/charges,
net, net of tax, in continuing
operations (27) 1
Adjusted net earnings $335 $283
Annualized $1,340 $1,132
---------- ------ ------
Fourth Third Fourth Third
Quarter Quarter Quarter Quarter
------- ------- ------- -------
2015 2015 2014 2014
---- ---- ---- ----
Total shareholders' equity $6,256 $6,369 $6,401 $6,532
Divided by average shareholders'
equity $6,312 $6,466
-------------------------------- ------ ------
Non-GAAP return on equity 21.3% 17.6%
------------------------- ---- ----
We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.
Schedule 10
-----------
Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation
Fiscal Year
-----------
(in millions) 2015 2014
------------
GAAP return on equity 19.4% 18.3%
--------------------- ---- ----
Non-GAAP return on equity
Net earnings $1,215 $1,166
Restructuring and employee
severance, net of tax, in
continuing operations 29 20
Amortization and other
acquisition-related costs, net
of tax, in continuing operations 181 144
Impairments and (gain)/loss on
disposal of assets, net of tax,
in continuing operations (9) 10
Litigation (recoveries)/charges,
net, net of tax, in continuing
operations 19 (13)
Loss on extinguishment of debt,
net of tax, in continuing
operations 37 -
--- ---
Adjusted net earnings $1,472 $1,327
--------------------- ------ ------
Fourth Third Second First Fourth Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
2015 2015 2015 2015 2014 2014 2014 2014 2014 2013
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total shareholders' equity $6,256 $6,369 $6,100 $6,256 $6,401 $6,401 $6,532 $6,589 $6,297 $5,975
Divided by average shareholders'
equity $6,276 $6,359
-------------------------------- ------ ------
Non-GAAP return on equity 23.4% 20.9%
------------------------- ---- ----
We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.
Schedule 11
-----------
Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation
Fourth Quarter Fiscal Year
-------------- -----------
(in millions) 2015 2014 2015 2014
------------
GAAP effective tax rate from
continuing operations 44.1% 34.4% 38.4% 35.3%
---------------------------- ---- ---- ---- ----
Non-GAAP effective tax rate from continuing
operations
Earnings before income taxes and
discontinued operations $523 $357 $1,967 $1,798
Restructuring and employee
severance 11 6 44 31
Amortization and other
acquisition-related costs 91 63 281 223
Impairments and (gain)/loss on
disposal of assets - 4 (19) 15
Litigation (recoveries)/charges,
net (49) 1 5 (21)
Loss on extinguishment of debt - - 60 -
Adjusted earnings before income
taxes and discontinued
operations $577 $432 $2,339 $2,047
Provision for income taxes $230 $123 $755 $635
Restructuring and employee
severance tax benefit 4 2 15 11
Amortization and other
acquisition-related costs tax
benefit 31 22 100 79
Impairments and (gain)/loss on
disposal of assets tax benefit/
(expense) - 1 (10) 5
Litigation (recoveries)/charges,
net tax expense (22) - (14) (8)
Loss on extinguishment of debt
tax benefit - - 23 -
--- --- --- ---
Adjusted provision for income
taxes $243 $148 $870 $722
Non-GAAP effective tax rate from
continuing operations 42.2% 34.2% 37.2% 35.3%
-------------------------------- ---- ---- ---- ----
Fourth Quarter
--------------
2015 2014
Debt to total capital 47% 38%
--------------------- --- ---
Net debt to capital
Current portion of long-term
obligations and other short-
term borrowings $281 $801
Long-term obligations, less
current portion 5,211 3,171
Debt $5,492 $3,972
Cash and equivalents (4,616) (2,865)
Net debt $876 $1,107
Total shareholders' equity 6,256 6,401
Capital $7,132 $7,508
Net debt to capital 12% 15%
------------------- --- ---
The sum of the components may not equal the
total due to rounding.
We apply varying tax rates depending on the
item's nature and tax jurisdiction where it is
incurred.
Forward-Looking Non-GAAP Financial Measures
-------------------------------------------
We present non-GAAP earnings from continuing
operations and non-GAAP effective tax rate
from continuing operations (and presentations
derived from these financial measures,
including per share calculations) on a forward-
looking basis. The most directly comparable
forward-looking GAAP measures are earnings
from continuing operations and effective tax
rate from continuing operations. We are unable
to provide a quantitative reconciliation of
these forward-looking non-GAAP measures to
Cardinal Health, Inc. and Subsidiaries
Use of Non-GAAP Measures
------------------------
This earnings release contains financial
measures that are not calculated in accordance
with U.S. generally accepted accounting
principles ("GAAP"). In general, the measures
exclude items and charges that (i) management
does not believe reflect Cardinal Health,
Inc.'s (the "Company") core business and relate
more to strategic, multi-year corporate
activities; or (ii) relate to activities or
actions that may have occurred over multiple or
in prior periods without predictable trends.
In fiscal 2015, the Company began excluding
last-in, first-out ("LIFO") inventory
charges/(credits)5 from its non-GAAP
earnings, for consistency with the presentation
by some of its peers. The Company did not
record any LIFO charges or credits in fiscal
2015 or 2014, respectively. In the second
quarter of fiscal 2015, the Company excluded
the loss on extinguishment of debt6 related to
the early redemption of debt that occurred in
December 2014 from its non-GAAP earnings.
Management provides these non-GAAP financial
measures to investors as supplemental metrics
to assist readers in assessing the effects of
items and events on its financial and operating
results and in comparing the Company's
performance to that of its competitors.
However, the non-GAAP financial measures used
by the Company may be calculated differently
from, and therefore may not be comparable to,
similarly titled measures used by other
companies.
The non-GAAP financial measures disclosed by
the Company should not be considered a
substitute for, or superior to, financial
measures calculated in accordance with GAAP,
and the financial results calculated in
accordance with GAAP and reconciliations to
those financial statements set forth above
should be carefully evaluated.
Definitions
-----------
Debt: long-term obligations plus short-term
borrowings.
Debt to Total Capital: debt divided by (debt
plus total shareholders' equity).
Net Debt: a Non-GAAP measure defined as debt
minus (cash and equivalents).
Net Debt to Capital: a Non-GAAP measure defined
as net debt divided by (net debt plus total
shareholders' equity).
Non-GAAP Diluted EPS from Continuing
Operations: non-GAAP earnings from continuing
operations divided by diluted weighted-average
shares outstanding.
Non-GAAP Earnings from Continuing Operations:
earnings from continuing operations excluding
(1) restructuring and employee severance(1),
(2) amortization and other acquisition-related
costs(2), (3) impairments and (gain)/loss on
disposal of assets(3), (4) litigation
(recoveries)/charges, net4, (5) LIFO charges/
(credits) and (6) loss on extinguishment of
debt, each net of tax.
Non-GAAP Effective Tax Rate from Continuing
Operations: (provision for income taxes
adjusted for (1) restructuring and employee
severance, (2) amortization and other
acquisition-related costs, (3) impairments and
(gain)/loss on disposal of assets, (4)
litigation (recoveries)/charges, net, (5) LIFO
charges/(credits) and (6) loss on
extinguishment of debt) divided by (earnings
before income taxes and discontinued operations
adjusted for the same six items).
Non-GAAP Operating Earnings: operating earnings
excluding (1) restructuring and employee
severance, (2) amortization and other
acquisition-related costs, (3) impairments and
(gain)/loss on disposal of assets, (4)
litigation (recoveries)/charges, net and (5)
LIFO charges/(credits).
Non-GAAP Return on Equity: (annualized current
period net earnings excluding (1) restructuring
and employee severance, (2) amortization and
other acquisition-related costs, (3)
impairments and (gain)/loss on disposal of
assets, (4) litigation (recoveries)/charges,
net, (5) LIFO charges/(credits) and (6) loss
on extinguishment of debt, each net of tax)
divided by average shareholders' equity.
Return on Equity: annualized current period net
earnings divided by average shareholders'
equity.
Segment Profit: segment revenue minus (segment
cost of products sold and segment distribution,
selling, general and administrative expenses).
Segment Profit Margin: segment profit divided by
segment revenue.
(1) Programs by which the Company
fundamentally changes its operations
such as closing and consolidating
facilities, moving manufacturing of a
product to another location, production
or business process sourcing, employee
severance (including rationalizing
headcount or other significant changes
in personnel) and realigning operations
(including realignment of the
management structure of a business unit
in response to changing market
conditions).
(2) Costs that consist primarily of
amortization of acquisition-related
intangibles assets, transaction costs,
integration costs and changes in the
fair value of contingent consideration
obligations.
(3) Asset impairments and (gains)/losses
from the disposal of assets not
eligible to be classified as
discontinued operations are classified
within impairments and (gain)/loss on
disposal of assets within the
consolidated statements of earnings.
4 Loss contingencies related to litigation
and regulatory matters and income from
favorable resolution of legal matters.
5 The inventories of the Company's core
pharmaceutical distribution facilities
in the Pharmaceutical segment are
valued at the lower of cost, using the
LIFO method, or market. These charges
or credits are included in cost of
products sold, and represent changes in
the Company's LIFO inventory reserve.
6 Charges related to the make-whole
premium on the redemption of notes.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cardinal-health-reports-strong-q4-and-record-fiscal-year-end-non-gaap-operating-earnings-results-300121165.html
SOURCE Cardinal Health
