DUBLIN, Ohio, Nov. 6, 2017 /PRNewswire/ -- Cardinal Health
(NYSE: CAH) today reported first-quarter fiscal year 2018 revenues
of $32.6 billion, an increase of 2
percent. The company also reported a decline in GAAP operating
earnings of 51 percent to $262
million and in non-GAAP operating earnings of 9 percent to
$610 million. GAAP diluted earnings
per share (EPS) decreased 63 percent to $0.36, while non-GAAP diluted EPS decreased 12
percent to $1.09.
"Fiscal year 2018 started largely as we expected and included
strong performance from many of our business lines across the
segments. With one quarter behind us, we remain comfortable with
our full-year guidance. We're excited to have closed the Patient
Recovery transaction during Q1 and are pleased to report the
integration is going well," said George
Barrett, chairman and CEO of Cardinal Health.
"I'd also like to thank our extraordinary colleagues who showed
their commitment to serving both their communities and our
customers in the midst of multiple recent natural disasters."
Q1 FY18 summary
|
Q1
FY18
|
Q1
FY17
|
Y/Y
|
Revenue
|
$32.6
billion
|
$32.0
billion
|
2%
|
|
|
|
|
Operating
earnings
|
$262
million
|
$535
million
|
(51%)
|
Non-GAAP
operating
earnings
|
$610
million
|
$669
million
|
(9%)
|
|
|
|
|
Net earnings
attributable to
Cardinal Health, Inc.
|
$115
million
|
$309
million
|
(63%)
|
Non-GAAP net
earnings
attributable to Cardinal
Health, Inc.
|
$346
million
|
$399
million
|
(13%)
|
|
|
|
|
Diluted EPS
attributable to
Cardinal Health, Inc.
|
$0.36
|
$0.96
|
(63%)
|
Non-GAAP diluted
EPS
attributable to Cardinal
Health, Inc.
|
$1.09
|
$1.24
|
(12%)
|
During the quarter, the company entered into an agreement to
regain direct distribution of self-manufactured surgeon gloves in
certain international markets. Restructuring costs associated with
this agreement, as well as increased amortization of
acquisition-related intangible assets as a result of the Patient
Recovery business acquisition, reduced GAAP operating earnings in
the current period.
Segment results
Pharmaceutical segment
First-quarter revenue for the Pharmaceutical segment increased 1
percent to $28.9 billion due to sales
growth from specialty and pharmaceutical distribution customers,
which was partially offset by the previously announced May 2017 expiration of a large, mail-order
customer contract.
Segment profit for the quarter decreased 13 percent to
$467 million. This decrease was
driven by generics program performance, which includes the negative
impact of generic pharmaceutical pricing changes partially offset
by the benefits from Red Oak Sourcing. The costs related to the
company's ongoing investment in its Pharmaceutical IT platform also
contributed to the decrease.
|
Q1
FY18
|
Q1
FY17
|
Y/Y
|
Revenue
|
$28.9
billion
|
$28.8
billion
|
1%
|
Segment
profit
|
$467
million
|
$534
million
|
(13%)
|
Medical segment
First-quarter revenue for the Medical segment increased 14
percent to $3.7 billion primarily
driven by contributions from acquisitions and, to a lesser extent,
new and existing customers.
Segment profit for the quarter increased 1 percent to
$129 million. This was primarily
driven by contributions from acquisitions, which were mostly offset
by the previously disclosed reduced contribution from a Veterans
Affairs contract. Segment profit for the quarter includes the
impact of the Patient Recovery business inventory fair value
step-up. Excluding the $42 million
step-up in the quarter, year-over-year Medical segment profit
growth was 34 percent.
|
Q1
FY18
|
Q1
FY17
|
Y/Y
|
Revenue
|
$3.7
billion
|
$3.3
billion
|
14%
|
Segment
profit
|
$129
million
|
$127
million
|
1%
|
Fiscal year 2018 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.
The company reaffirms its fiscal year 2018 guidance range for
non-GAAP diluted EPS of $4.85 to
$5.10.
Additional first-quarter and recent highlights
- Closed acquisition of Medtronic's Patient Recovery business,
which expands the Medical segment product offerings and includes
well-established brands that fit naturally within the current
medical products portfolio
- Entered into an agreement that regains rights to distribute
self-manufactured surgeon gloves directly in certain international
markets
- Announced a distribution agreement to make Cordis the exclusive
distributor of Medinol coronary stents in the U.S.
- Launched ConnectSourceâ„¢, a new, cloud-based patient engagement
platform from Cardinal Health Specialty Solutions to provide the
biopharma industry with insights to make informed, data-driven
decisions
- Launched new grant opportunities from the Cardinal Health
Foundation's Generation Rx program to address the opioid epidemic,
which target four highly-affected states
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 at
ir.cardinalhealth.com until Nov. 5,
2018.
Upcoming webcasted investor events
- Cardinal Health 2017 Annual Meeting of Shareholders on
Nov. 8 at 8
a.m. Eastern
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. Because Cardinal Health helps ensure
pharmacists and the consumers they serve have access to medications
they need while working to help prevent prescription drug
diversion, the company and its education partners created
Generation Rx, a national program to help prevent the misuse of
prescription medications. Backed by nearly 100 years of experience,
with approximately 50,000 employees in nearly 60 countries,
Cardinal Health ranks #15 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; risks associated with the recently completed acquisition of
the Patient Recovery Business, including 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; 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
proposals to modify or repeal the Affordable Care Act;
uncertainties with respect to U.S. tax or trade laws; changes in
the distribution patterns or reimbursement rates for health care
products and services; the effects of any investigation or action
by any governmental or regulatory authority, including litigation
relating to opioid distribution; 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 November 6, 2017. 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)
|
|
|
First
Quarter
|
|
|
(in millions, except
per common share amounts)
|
2018
|
|
2017
|
|
%
Change
|
Revenue
|
$
|
32,641
|
|
|
$
|
32,039
|
|
|
2
|
%
|
Cost of products
sold
|
30,969
|
|
|
30,449
|
|
|
2
|
%
|
Gross
margin
|
1,672
|
|
|
1,590
|
|
|
5
|
%
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Distribution,
selling, general and administrative expenses
|
1,062
|
|
|
920
|
|
|
15
|
%
|
Restructuring and
employee severance
|
132
|
|
|
9
|
|
|
N.M.
|
Amortization and
other acquisition-related costs
|
183
|
|
|
122
|
|
|
N.M.
|
Impairments and
(gain)/loss on disposal of assets, net
|
1
|
|
|
3
|
|
|
N.M.
|
Litigation
(recoveries)/charges, net
|
32
|
|
|
1
|
|
|
N.M.
|
Operating
earnings
|
262
|
|
|
535
|
|
|
(51)
|
%
|
|
|
|
|
|
|
Other
(income)/expense, net
|
2
|
|
|
(3)
|
|
|
N.M.
|
Interest expense,
net
|
81
|
|
|
44
|
|
|
86
|
%
|
Loss on
extinguishment of debt
|
1
|
|
|
—
|
|
|
N.M.
|
Earnings before
income taxes
|
178
|
|
|
494
|
|
|
(64)
|
%
|
|
|
|
|
|
|
Provision for income
taxes
|
61
|
|
|
184
|
|
|
(67)
|
%
|
Net
earnings
|
117
|
|
|
310
|
|
|
(62)
|
%
|
|
|
|
|
|
|
Less: Net earnings
attributable to noncontrolling interests
|
(2)
|
|
|
(1)
|
|
|
N.M.
|
Net earnings
attributable to Cardinal Health, Inc.
|
$
|
115
|
|
|
$
|
309
|
|
|
(63)
|
%
|
|
|
|
|
|
|
Earnings per
common share attributable to Cardinal Health, Inc.:
|
|
|
|
|
|
Basic
|
$
|
0.36
|
|
|
$
|
0.97
|
|
|
(63)
|
%
|
Diluted
|
0.36
|
|
|
0.96
|
|
|
(63)
|
%
|
|
|
|
|
|
|
Weighted-average
number of common shares outstanding:
|
|
|
|
|
|
Basic
|
316
|
|
|
320
|
|
|
|
Diluted
|
318
|
|
|
322
|
|
|
|
Schedule
2
|
Cardinal Health,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
|
(in
millions)
|
September 30,
2017
|
|
June 30,
2017
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
|
1,181
|
|
|
$
|
6,879
|
|
Trade receivables,
net
|
8,382
|
|
|
8,048
|
|
Inventories,
net
|
12,121
|
|
|
11,301
|
|
Prepaid expenses and
other
|
2,041
|
|
|
2,117
|
|
Total current
assets
|
23,725
|
|
|
28,345
|
|
|
|
|
|
Property and
equipment, net
|
2,651
|
|
|
1,879
|
|
Goodwill and other
intangibles, net
|
14,926
|
|
|
9,207
|
|
Other
assets
|
638
|
|
|
681
|
|
Total
assets
|
$
|
41,940
|
|
|
$
|
40,112
|
|
|
|
|
|
Liabilities,
Redeemable Noncontrolling Interests and Shareholders'
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
19,202
|
|
|
$
|
17,906
|
|
Current portion of
long-term obligations and other short-term borrowings
|
935
|
|
|
1,327
|
|
Other accrued
liabilities
|
2,270
|
|
|
1,988
|
|
Total current
liabilities
|
22,407
|
|
|
21,221
|
|
|
|
|
|
Long-term
obligations, less current portion
|
9,068
|
|
|
9,068
|
|
Deferred income taxes
and other liabilities
|
3,758
|
|
|
2,877
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
12
|
|
|
118
|
|
|
|
|
|
Total Cardinal
Health, Inc. shareholders' equity
|
6,678
|
|
|
6,808
|
|
Noncontrolling
interests
|
17
|
|
|
20
|
|
Total shareholders'
equity
|
6,695
|
|
|
6,828
|
|
Total liabilities,
redeemable noncontrolling interests and shareholders'
equity
|
$
|
41,940
|
|
|
$
|
40,112
|
|
Schedule
3
|
Cardinal Health,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
First
Quarter
|
(in
millions)
|
2018
|
|
2017
|
Cash flows from
operating activities:
|
|
|
|
Net
earnings
|
$
|
117
|
|
|
$
|
310
|
|
|
|
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
229
|
|
|
173
|
|
Loss on
extinguishment of debt
|
1
|
|
|
—
|
|
Impairments and loss
on sale of other investments
|
6
|
|
|
—
|
|
Impairments and loss
on disposal of assets, net
|
1
|
|
|
3
|
|
Share-based
compensation
|
17
|
|
|
23
|
|
Provision for bad
debts
|
25
|
|
|
7
|
|
Change in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
Increase in trade
receivables
|
(359)
|
|
|
(306)
|
|
Increase in
inventories
|
(381)
|
|
|
(298)
|
|
Increase in accounts
payable
|
1,296
|
|
|
279
|
|
Other accrued
liabilities and operating items, net
|
229
|
|
|
(87)
|
|
Net cash provided by
operating activities
|
1,181
|
|
|
104
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Acquisition of
subsidiaries, net of cash acquired
|
(6,139)
|
|
|
(9)
|
|
Additions to property
and equipment
|
(67)
|
|
|
(100)
|
|
Purchase of
available-for-sale securities and other investments
|
(3)
|
|
|
(52)
|
|
Proceeds from sale of
available-for-sale securities and other investments
|
64
|
|
|
34
|
|
Proceeds from
disposal of property and equipment
|
1
|
|
|
—
|
|
Proceeds from
maturities of available-for-sale securities
|
—
|
|
|
17
|
|
Net cash used in
investing activities
|
(6,144)
|
|
|
(110)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Payment of contingent
consideration obligation
|
(15)
|
|
|
—
|
|
Net change in
short-term borrowings
|
(6)
|
|
|
25
|
|
Net purchase of
noncontrolling interests
|
(3)
|
|
|
(10)
|
|
Reduction of
long-term obligations
|
(402)
|
|
|
(1)
|
|
Proceeds from
interest rate swap terminations
|
—
|
|
|
14
|
|
Net tax withholdings
from share-based compensation
|
(18)
|
|
|
(9)
|
|
Excess tax benefits
from share-based compensation
|
—
|
|
|
30
|
|
Dividends on common
shares
|
(150)
|
|
|
(149)
|
|
Purchase of treasury
shares
|
(150)
|
|
|
(250)
|
|
Net cash used in
financing activities
|
(744)
|
|
|
(350)
|
|
|
|
|
|
Effect of exchange
rates changes on cash and equivalents
|
9
|
|
|
1
|
|
|
|
|
|
Net decrease in cash
and equivalents
|
(5,698)
|
|
|
(355)
|
|
Cash and equivalents
at beginning of period
|
6,879
|
|
|
2,356
|
|
Cash and
equivalents at end of period
|
$
|
1,181
|
|
|
$
|
2,001
|
|
Schedule
4
|
Cardinal Health,
Inc. and Subsidiaries
|
Segment
Information
|
|
|
First
Quarter
|
|
|
First
Quarter
|
(in
millions)
|
2018
|
|
2017
|
|
(in
millions)
|
2018
|
|
2017
|
Pharmaceutical
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
Revenue
|
|
|
|
Amount
|
$
|
28,920
|
|
|
$
|
28,762
|
|
|
Amount
|
$
|
3,724
|
|
|
$
|
3,279
|
|
Growth
rate
|
1
|
%
|
|
14
|
%
|
|
Growth
rate
|
14
|
%
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
|
|
|
Segment
profit
|
|
|
|
Amount
|
$
|
467
|
|
|
$
|
534
|
|
|
Amount
|
$
|
129
|
|
|
$
|
127
|
|
Growth
rate
|
(13)
|
%
|
|
(19)
|
%
|
|
Growth
rate1
|
1
|
%
|
|
26
|
%
|
Segment profit
margin
|
1.61
|
%
|
|
1.86
|
%
|
|
Segment profit
margin
|
3.45
|
%
|
|
3.87
|
%
|
1 Segment profit includes a $42 million impact from the roll-out of
the inventory fair value step up related to the Patient
Recovery acquisition for the three months ended September 30, 2017. Excluding the impact of the
inventory fair value step up, Medical segment profit would have
increased 34% for the three months ended September 30, 2017.
Supplemental Consolidated Information
Total consolidated revenue for the three months ended
September 30, 2017 was $32,641
million, which included total segment revenue of
$32,644 million and Corporate revenue
of $(3) million. Total consolidated
revenue for the three months ended September 30, 2016 was
$32,039 million, which included total
segment revenue of $32,041 million
and Corporate revenue of $(2)
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
September 30, 2017 were $262
million, which included total segment profit of $596 million and Corporate costs of $(334) million. Total consolidated operating
earnings for the three months ended September 30, 2016 were
$535 million, which included total
segment profit of $661 million and
Corporate costs of $(126) million.
Corporate includes, among other things, LIFO charges/(credits),
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
5
|
Cardinal Health,
Inc. and Subsidiaries
|
GAAP / Non-GAAP
Reconciliation1
|
|
|
|
Operating
|
Earnings
|
Provision
|
|
|
|
|
|
|
Earnings
|
Before
|
for
|
|
Net
|
|
Diluted
|
|
Operating
|
Growth
|
Income
|
Income
|
Net
|
Earnings2
|
Diluted
|
EPS2
|
(in millions, except
per common share amounts)
|
Earnings
|
Rate
|
Taxes
|
Taxes
|
Earnings2
|
Growth
Rate
|
EPS2
|
Growth
Rate
|
First Quarter
2018
|
GAAP
|
$
|
262
|
|
(51)
|
%
|
$
|
178
|
|
$
|
61
|
|
$
|
115
|
|
(63)
|
%
|
$
|
0.36
|
|
(63)
|
%
|
Restructuring and
employee severance
|
132
|
|
|
132
|
|
47
|
|
85
|
|
|
0.27
|
|
|
Amortization and
other acquisition-related costs
|
183
|
|
|
183
|
|
58
|
|
125
|
|
|
0.40
|
|
|
Impairments and
(gain)/loss on disposal of assets
|
1
|
|
|
1
|
|
—
|
|
1
|
|
|
—
|
|
|
Litigation
(recoveries)/charges, net
|
32
|
|
|
32
|
|
13
|
|
19
|
|
|
0.06
|
|
|
Loss on
extinguishment of debt
|
—
|
|
|
1
|
|
1
|
|
—
|
|
|
—
|
|
|
Non-GAAP
|
$
|
610
|
|
(9)
|
%
|
$
|
527
|
|
$
|
180
|
|
$
|
346
|
|
(13)
|
%
|
$
|
1.09
|
|
(12)
|
%
|
|
|
|
|
|
|
|
|
|
|
First Quarter
2017
|
GAAP
|
$
|
535
|
|
(14)
|
%
|
$
|
494
|
|
$
|
184
|
|
$
|
309
|
|
(19)
|
%
|
$
|
0.96
|
|
(17)
|
%
|
Restructuring and
employee severance
|
9
|
|
|
9
|
|
4
|
|
5
|
|
|
0.02
|
|
|
Amortization and
other acquisition-related costs
|
122
|
|
|
122
|
|
40
|
|
82
|
|
|
0.25
|
|
|
Impairments and
(gain)/loss on disposal of assets
|
3
|
|
|
3
|
|
1
|
|
2
|
|
|
0.01
|
|
|
Litigation
(recoveries)/charges, net
|
1
|
|
|
1
|
|
—
|
|
1
|
|
|
—
|
|
|
Non-GAAP
|
$
|
669
|
|
(9)
|
%
|
$
|
629
|
|
$
|
229
|
|
$
|
399
|
|
(13)
|
%
|
$
|
1.24
|
|
(10)
|
%
|
1For more information on these measures, refer to the
Use of Non-GAAP Financial Measures and Definitions schedules.
2attributable to Cardinal Health, Inc.
The sum of the components may not equal the total due to
rounding.
We generally apply varying tax rates depending on the item's
nature and tax jurisdiction where it is incurred.
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 addition to analyzing our business based on financial
information prepared in accordance with GAAP, we use these non-GAAP
financial measures internally to evaluate our performance, engage
in financial and operational planning and determine incentive
compensation because we believe that these measures provide
additional perspective on and, in some circumstances are more
closely correlated to, the performance of our underlying, ongoing
business. We provide these non-GAAP financial measures to investors
as supplemental metrics to assist readers in assessing the effects
of items and events on our financial and operating results on a
year-over-year basis and in comparing our performance to that of
our competitors. However, the non-GAAP financial measures that we
use 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 us 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 below should be carefully
evaluated.
Exclusions from Non-GAAP Financial Measures
Management believes it is useful to exclude the following items
from the non-GAAP measures presented in this earnings release for
its own and for investors' assessment of the business for the
reasons identified below:
- LIFO charges and credits are excluded because the factors that
drive last-in first-out ("LIFO") inventory charges or credits, such
as pharmaceutical manufacturer price appreciation or deflation and
year-end inventory levels (which can be meaningfully influenced by
customer buying behavior immediately preceding our fiscal
year-end), are largely out of our control and cannot be accurately
predicted. The exclusion of LIFO charges from non-GAAP metrics
allows for a better comparison of our current financial results to
our historical financial results and to our peer group companies'
financial results.
- Restructuring and employee severance costs are excluded because
they relate to programs in which we fundamentally change our
operations and because they are not part of the ongoing operations
of our underlying business.
- Amortization and other acquisition-related costs are excluded
primarily for consistency with the presentation of the financial
results of our peer group companies. Additionally, costs for
amortization of acquisition-related intangible assets are non-cash
amounts, which are variable in amount and frequency and are
significantly impacted by the timing and size of acquisitions, so
their exclusion allows for better comparison of historical, current
and forecasted financial results. We also exclude other
acquisition-related costs, which are directly related to an
acquisition but do not meet the criteria to be recognized on the
acquired entity's initial balance sheet as part of the purchase
price allocation. These costs are also significantly impacted by
the timing, complexity and size of acquisitions.
- Impairments and gain or loss on disposal of assets are excluded
because they do not occur in or reflect the ordinary course of our
ongoing business operations and are inherently unpredictable in
timing and amount, and in the case of impairments, are non-cash
amounts, so their exclusion allows for better comparison of
historical, current and forecasted financial results.
- Litigation recoveries or charges, net are excluded because they
often relate to events that may have occurred in prior or multiple
periods, do not occur in or reflect the ordinary course of our
business and are inherently unpredictable in timing and
amount.
- Loss on extinguishment of debt is excluded because it does not
typically occur in the normal course of business and may obscure
analysis of trends and financial performance. Additionally, the
amount and frequency of this type of charge is not consistent and
is significantly impacted by the timing and size of debt financing
transactions.
The tax effect for each of the items listed above is determined
using the tax rate and other tax attributes applicable to the item
and the jurisdiction(s) in which the item is recorded. The gross,
tax and net impact of each item are presented with our GAAP to
non-GAAP reconciliations.
Forward Looking Non-GAAP Measures
In this earnings release, the Company presents its outlook for
fiscal 2018 non-GAAP EPS. The Company does not provide
EPS outlook, which is the most directly comparable GAAP measure to
non-GAAP EPS, because changes in the items that the Company
excludes from EPS to calculate non-GAAP EPS, described above, can
be dependent on future events that are less capable of being
controlled or reliably predicted by management and are not part of
the Company's routine operating activities. Additionally, due to
their unpredictability, management does not forecast many of the
excluded items for internal use and therefore cannot create or rely
on an EPS outlook.
The timing and amount of any of the excluded items could
significantly impact the Company's fiscal 2018 EPS. Over the past
five fiscal years, the excluded items have lowered the Company's
EPS from $0.47 to $2.76, which
includes a goodwill impairment charge of $2.32 per share related to our Nuclear
Pharmacy Services division that we recognized in fiscal
2013.
Cardinal Health, Inc. and Subsidiaries
Definitions
Non-GAAP operating earnings: operating earnings excluding
(1) LIFO charges/(credits), (2) restructuring and employee
severance, (3) amortization and other acquisition-related costs,
(4) impairments and (gain)/loss on disposal of assets, and (5)
litigation (recoveries)/charges, net.
Non-GAAP earnings before income taxes: earnings before
income taxes excluding (1) LIFO charges/(credits), (2)
restructuring and employee severance, (3) amortization and other
acquisition-related costs, (4) impairments and (gain)/loss on
disposal of assets, (5) litigation (recoveries)/charges, net, and
(6) loss on extinguishment of debt.
Non-GAAP net earnings attributable to Cardinal Health,
Inc.: net earnings attributable to Cardinal Health, Inc.
excluding (1) LIFO charges/(credits), (2) restructuring and
employee severance, (3) amortization and other acquisition-related
costs, (4) impairments and (gain)/loss on disposal of assets, (5)
litigation (recoveries)/charges, net, and (6) loss on
extinguishment of debt, each net of tax.
Non-GAAP diluted EPS attributable to Cardinal Health,
Inc.: non-GAAP net earnings attributable to Cardinal Health,
Inc. divided by diluted weighted-average shares outstanding.
View original
content:http://www.prnewswire.com/news-releases/cardinal-health-reports-first-quarter-results-for-fiscal-year-2018-300549896.html
SOURCE Cardinal Health