Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

Media: Debbie Mitchell             (614) 757-6225              debbie.mitchell@cardinalhealth.com		Investors: Sally Curley                 (614) 757-7115                 sally.curley@cardinalhealth.com

CARDINAL HEALTH REPORTS STRONG Q4 AND FISCAL YEAR 2012;

PROVIDES FISCAL 2013 OUTLOOK

 

•

Fourth-quarter diluted earnings per share from continuing operations increase by 17 percent to $0.68, or 22 percent to $0.73 on a non-GAAP basis1

 

•

Fiscal 2012 diluted earnings per share from continuing operations increase by 12 percent to $3.06, or 15 percent to $3.21 on a non-GAAP basis

 

•

Fiscal 2013 outlook for non-GAAP diluted earnings per share of $3.35 to $3.50

DUBLIN, Ohio, Aug. 2, 2012 — Cardinal Health today reported fourth-quarter fiscal year 2012 revenues of $26.8 billion and non-GAAP diluted earnings per share (EPS) from continuing operations of $0.73, up 22 percent. The company reported fiscal year 2012 revenues increased 5 percent to $108 billion, and non-GAAP diluted EPS from continuing operations increased 15 percent to $3.21.

“We finished our fiscal year with a strong fourth quarter, growing our non-GAAP EPS by 22 percent,” said George Barrett, chairman and chief executive officer of Cardinal Health. “Our Pharmaceutical segment continued its strong momentum, and, as expected, our Medical segment finished the year with profit growth in the fourth quarter and is well-positioned as we begin FY 2013.

“Overall, fiscal 2012 was another strong year, meeting virtually all of our financial goals, including revenues, margin growth, operating earnings, EPS and cash flow. It was also a year in which we made great strides on our strategic priorities — including expansion of our retail independent customer base, improved generic contribution, build out of our Positron Emission Tomography capabilities, accelerating penetration of our specialty solutions, growth in preferred medical products, expansion of our ambulatory franchise and excellent growth in China.”

The outlook for non-GAAP diluted EPS from continuing operations in fiscal 2013 is $3.35 to $3.50 and incorporates the previously announced non-renewal of the Express Scripts contract.

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Cardinal Health

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Q4 and Fiscal Year Summary

 

		Q4 FY12				Q4 FY11				Y/Y				FY12				FY11				Y/Y
Revenue		$	26.8 billion			$	26.8 billion				0	%		$	107.6 billion			$	102.6 billion				5	%
Operating Earnings		$	403 million			$	359 million				12	%		$	1.8 billion			$	1.5 billion				18	%
Non-GAAP Operating Earnings		$	425 million			$	375 million				13	%		$	1.9 billion			$	1.6 billion				13	%
Earnings from Continuing Operations		$	236 million			$	207 million				14	%		$	1.1 billion			$	966 million				11	%
Non-GAAP Earnings from Continuing Operations		$	255 million			$	214 million				19	%		$	1.1 billion			$	988 million				13	%
Diluted EPS from Continuing Operations		$	0.68			$	0.58				17	%		$	3.06			$	2.74				12	%
Non-GAAP Diluted EPS from Continuing Operations		$	0.73			$	0.60				22	%		$	3.21			$	2.80				15	%

SEGMENT RESULTS

Pharmaceutical Segment

Fourth-quarter revenue for the Pharmaceutical segment decreased 1 percent to $24.3 billion. The decrease, primarily due to brand-to-generic conversions, was mostly offset by revenue from new customers. Segment profit for the quarter increased 15 percent to $354 million, driven by the overall strong performance of generic programs and the benefits of expanded business with new and existing customers, including strong contributions from retail independents. Segment profit also benefited from performance under branded agreements.

For the full year, revenue for the Pharmaceutical segment increased 4 percent to $97.9 billion, and segment profit increased 17 percent to $1.6 billion.

 

		Q4 FY12				Q4 FY11				Y/Y				FY12				FY11				Y/Y
Revenue		$	24.3 billion			$	24.5 billion				(1	%)		$	97.9 billion			$	93.7 billion				4	%
Segment Profit		$	354 million			$	308 million				15	%		$	1.6 billion			$	1.3 billion				17	%

 

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Cardinal Health

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Medical Segment

Fourth-quarter revenue for the Medical segment increased 5 percent to $2.4 billion. Segment profit increased 2 percent to $79 million, primarily driven by increased sales of preferred products, offset by expenses related to the new systems implementation. In addition, the negative impact of commodities and foreign exchange moderated to $8 million in the quarter versus prior year.

For the full year, Medical segment revenue increased 8 percent to $9.6 billion, and segment profit decreased 11 percent to $332 million.

 

		Q4 FY12				Q4 FY11				Y/Y				FY12				FY11				Y/Y
Revenue		$	2.4 billion			$	2.3 billion				5	%		$	9.6 billion			$	8.9 billion				8	%
Segment Profit		$	79 million			$	78 million				2	%		$	332 million			$	373 million				(11	%)

ADDITIONAL YEAR-END AND RECENT HIGHLIGHTS

 

•

Increased the regular quarterly dividend by 10.5 percent to $0.2375 per share, effective July 15

 

•

Closed several acquisitions in China, notably Da Sheng Group, significantly expanding the Cardinal Health footprint in Ningbo, a city of 7.6 million people

 

•

Selected as the primary healthcare solutions partner by the Medical Oncology Association of Southern California Purchasing Network, Inc.

 

•

Completed the acquisition of Dik Drug, an Illinois-based pharmaceutical distributor with more than 500 retail independent pharmacy customers

CONFERENCE CALL

Cardinal Health will host a webcast and conference call today at 8:00 a.m. Eastern Daylight Time to discuss fourth-quarter and full-year results and its future outlook. To access the call and corresponding slide presentation, go to the Investors page at cardinalhealth.com. The call also can be accessed by dialing 224.357.2209. 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 Sept. 2 by dialing 855.859.2056 or 404.537.3406, access code 98065830.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $108 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 #21 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com and @CardinalHealth on Twitter.

 

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Cardinal Health

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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,” “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 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; 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; changes in the cost of commodities such as oil-based resins, cotton, latex and diesel fuel; and uncertainties concerning Cardinal Health’s ability to achieve the expected benefits of its Medical segment’s business transformation project. 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 Aug. 2, 2012. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

 

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Schedule 1

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

 

		Fourth Quarter
(in millions, except per Common Share amounts)		2012				2011				% Change
Revenue		$	26,764			$	26,764				0 %
Cost of products sold			25,628				25,720				(0)%
Gross margin			1,136				1,044				9 %
Operating expenses:
Distribution, selling, general and administrative expenses			712				671				6 %
Restructuring and employee severance			9				5				N.M.
Acquisition-related costs			11				15				N.M.
Impairments and loss on disposal of assets			1				—				N.M.
Litigation (recoveries)/charges, net			—				(6	)			N.M.
Operating earnings			403				359				12 %
Other (income)/expenses, net			1				(2	)			N.M.
Interest expense, net			25				24				4 %
Gain on sale of investment in CareFusion			—				(4	)			N.M.
Earnings before income taxes and discontinued operations			377				341				11 %
Provision for income taxes			141				134				5 %
Earnings from continuing operations			236				207				14 %
Loss from discontinued operations, net of tax			—				(4	)			N.M.
Net earnings		$	236			$	203				17 %
Basic earnings/(loss) per Common Share:
Continuing operations		$	0.68			$	0.59				15 %
Discontinued operations			—				(0.01	)			N.M.
Net basic earnings per Common Share		$	0.68			$	0.58				17%
Diluted earnings/(loss) per Common Share:
Continuing operations		$	0.68			$	0.58				17 %
Discontinued operations			—				(0.01	)			N.M.
Net diluted earnings per Common Share		$	0.68			$	0.57				19 %
Weighted average number of Common Shares outstanding:
Basic			345				349
Diluted			349				355

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Schedule 2

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings

 

		Fiscal Year
(in millions, except per Common Share amounts)		2012				2011				% Change
		(Unaudited)
Revenue		$	107,552			$	102,644				5 %
Cost of products sold			103,011				98,482				5 %
Gross margin			4,541				4,162				9 %
Operating expenses:
Distribution, selling, general and administrative expenses			2,677				2,528				6 %
Restructuring and employee severance			21				15				N.M.
Acquisition-related costs			33				90				N.M.
Impairments and loss on disposal of assets			21				9				N.M.
Litigation (recoveries)/charges, net			(3	)			6				N.M.
Operating earnings			1,792				1,514				18 %
Other income, net			(1	)			(22	)			N.M.
Interest expense, net			95				93				2 %
Gain on sale of investment in CareFusion			—				(75	)			N.M.
Earnings before income taxes and discontinued operations			1,698				1,518				12 %
Provision for income taxes			628				552				14 %
Earnings from continuing operations			1,070				966				11 %
Loss from discontinued operations, net of tax			(1	)			(7	)			N.M.
Net earnings		$	1,069			$	959				11 %
Basic earnings/(loss) per Common Share:
Continuing operations		$	3.10			$	2.77				12 %
Discontinued operations			—				(0.02	)			N.M.
Net basic earnings per Common Share		$	3.10			$	2.75				13 %
Diluted earnings/(loss) per Common Share:
Continuing operations		$	3.06			$	2.74				12 %
Discontinued operations			—				(0.02	)			N.M.
Net diluted earnings per Common Share		$	3.06			$	2.72				13 %
Weighted average number of Common Shares outstanding:
Basic			345				349
Diluted			349				353

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Schedule 3

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

		June 30,				June 30,
(in millions)		2012				2011
		(Unaudited)
Assets
Cash and equivalents		$	2,274			$	1,929
Trade receivables, net			6,355				6,156
Inventories			7,864				7,334
Prepaid expenses and other			1,017				897
Total current assets			17,510				16,316
Property and equipment, net			1,551				1,512
Goodwill and other intangibles, net			4,392				4,259
Other assets			807				759
Total assets		$	24,260			$	22,846
Liabilities and Shareholders’ Equity
Accounts payable		$	11,726			$	11,332
Current portion of long-term obligations and other short-term borrowings			476				327
Other accrued liabilities			1,972				1,711
Total current liabilities			14,174				13,370
Long-term obligations, less current portion			2,418				2,175
Deferred income taxes and other liabilities			1,424				1,452
Total shareholders’ equity			6,244				5,849
Total liabilities and shareholders’ equity		$	24,260			$	22,846

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Schedule 4

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

 

		Fourth Quarter								Fiscal Year
(in millions)		2012				2011				2012				2011
		(Unaudited)				(Unaudited)				(Unaudited)
Cash Flows from Operating Activities:
Net earnings		$	236			$	203			$	1,069			$	959
Loss from discontinued operations			—				4				1				7
Earnings from continuing operations			236				207				1,070				966
Adjustments to reconcile earnings from continuing operations to net cash from operations:
Depreciation and amortization			86				74				325				313
Gain on sale of investment in CareFusion			—				(4	)			—				(75)
Impairments and loss on disposal of assets			1				—				21				9
Share-based compensation			22				19				85				80
Provision for deferred income taxes			158				128				158				128
Provision for bad debts			7				5				22				27
Change in fair value of contingent consideration obligation			(18	)			(6	)			(71	)			(7)
Change in operating assets and liabilities, net of effects from acquisitions:
Decrease/(increase) in trade receivables			190				122				(129	)			(457)
Decrease/(increase) in inventories			375				384				(495	)			(665)
Increase/(decrease) in accounts payable			(893	)			(630	)			319				1,356
Other accrued liabilities and operating items, net			(271	)			(179	)			(129	)			(280)
Net cash provided by/(used in) operating activities			(107	)			120				1,176				1,395
Cash Flows from Investing Activities:
Acquisition of subsidiaries, net of cash acquired			(31	)			(5	)			(174	)			(2,300)
Purchase of held-to-maturity securities and other investments			(25	)			—				(35	)			(156)
Additions to property and equipment			(100	)			(105	)			(263	)			(291)
Proceeds from divestitures and sale of property and equipment			(1	)			—				3				3
Proceeds from sale of CareFusion			—				—				—				706
Proceeds from maturities of held-to-maturity securities			46				10				92				10
Net cash used in investing activities			(111	)			(100	)			(377	)			(2,028)
Cash Flows from Financing Activities:
Payment of contingent consideration			—				(10	)			—				(10)
Net change in short-term borrowings			5				5				13				46
Reduction of long-term obligations			(206	)			(1	)			(251	)			(229)
Proceeds from long-term obligations, net of issuance costs			496				—				496				495
Proceeds from issuance of Common Shares			19				27				42				63
Tax disbursements from exercises of stock options			(8	)			(5	)			(4	)			(14)
Dividends on Common Shares			(74	)			(68	)			(300	)			(274)
Purchase of treasury shares			(150	)			—				(450	)			(270)
Net cash provided by/(used in) financing activities			82				(52	)			(454	)			(193)
Net increase/(decrease) in cash and equivalents			(136	)			(32	)			345				(826)
Cash and equivalents at beginning of period			2,410				1,961				1,929				2,755
Cash and equivalents at end of period		$	2,274			$	1,929			$	2,274			$	1,929

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Schedule 5

Cardinal Health, Inc. and Subsidiaries

Total Company Business Analysis

 

										Non-GAAP
		Fourth Quarter								Fourth Quarter
(in millions)		2012				2011				2012				2011
Revenue
Amount		$	26,764			$	26,764
Growth rate			0 %				9 %
Operating earnings
Amount		$	403			$	359			$	425			$	375
Growth rate			12 %				7 %				13 %				17 %
Earnings from continuing operations
Amount		$	236			$	207			$	255			$	214
Growth rate			14 %				7 %				19 %				17 %
										Non-GAAP
		Fiscal Year								Fiscal Year
(in millions)		2012				2011				2012				2011
Revenue
Amount		$	107,552			$	102,644
Growth rate			5 %				4 %
Operating earnings
Amount		$	1,792			$	1,514			$	1,866			$	1,644
Growth rate			18 %				16 %				13 %				18 %
Earnings from continuing operations
Amount		$	1,070			$	966			$	1,119			$	988
Growth rate			11 %				65 %				13 %				22 %

Refer to the GAAP/Non-GAAP reconciliation for definitions and calculations supporting the Non-GAAP balances.

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Schedule 6

Cardinal Health, Inc. and Subsidiaries

Segment Business Analysis

 

		Fourth Quarter										Fourth Quarter
(in millions)		2012				2011				(in millions)		2012				2011
Pharmaceutical										Medical
Revenue										Revenue
Amount		$	24,335			$	24,458			Amount		$	2,432			$	2,312
Growth rate			(1)%				10 %			Growth rate			5 %				7 %
Mix			91 %				91 %			Mix			9 %				9 %
Segment profit										Segment profit
Amount		$	354			$	308			Amount		$	79			$	78
Growth rate			15 %				34 %			Growth rate			2 %				(24)%
Mix			82 %				80 %			Mix			18 %				20 %
Segment profit margin			1.46 %				1.26 %			Segment profit margin			3.27 %				3.38 %

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the three months ended June 30, 2012 was $26,764 million, which included total segment revenue of $26,767 million and Corporate revenue of $(3) million. Total consolidated revenue for the three months ended June 30, 2011 was $26,764 million, which included total segment revenue of $26,770 million and Corporate revenue of $(6) million. Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the three months ended June 30, 2012 were $403 million, which included total segment profit of $433 million and Corporate costs of $(30) million. Total consolidated operating earnings for the three months ended June 30, 2011 were $359 million, which included total segment profit of $386 million and Corporate costs of $(27) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs (including amortization of acquisition-related intangible assets and changes in the fair value of contingent consideration obligations), impairments and loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.

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Schedule 7

Cardinal Health, Inc. and Subsidiaries

Segment Business Analysis

 

		Fiscal Year										Fiscal Year
(in millions)		2012				2011				(in millions)		2012				2011
Pharmaceutical										Medical
Revenue										Revenue
Amount		$	97,925			$	93,744			Amount		$	9,642			$	8,922
Growth rate			4 %				4 %			Growth rate			8 %				2 %
Mix			91 %				91 %			Mix			9 %				9 %
Segment profit										Segment profit
Amount		$	1,558			$	1,329			Amount		$	332			$	373
Growth rate			17 %				31 %			Growth rate			(11)%				(13)%
Mix			82 %				78 %			Mix			18 %				22 %
Segment profit margin			1.59 %				1.42 %			Segment profit margin			3.45 %				4.18 %

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the fiscal year ended June 30, 2012 was $107,552 million, which included total segment revenue of $107,567 million and Corporate revenue of $(15) million. Total consolidated revenue for the fiscal year ended June 30, 2011 was $102,644 million, which included total segment revenue of $102,666 million and Corporate revenue of $(22) million. Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the fiscal year ended June 30, 2012 were $1,792 million, which included total segment profit of $1,890 million and Corporate costs of $(98) million. Total consolidated operating earnings for the fiscal year ended June 30, 2011 were $1,514 million, which included total segment profit of $1,702 million and Corporate costs of $(188) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs (including amortization of acquisition-related intangible assets and changes in the fair value of contingent consideration obligations), impairments and loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.

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Schedule 8

Cardinal Health, Inc. and Subsidiaries

Schedule of Notable Items

 

		Fourth Quarter								Fiscal Year
(in millions, except per Common Share amounts)		2012				2011				2012				2011
Restructuring and employee severance
Restructuring and employee severance		$	(9	)		$	(5	)		$	(21	)		$	(15)
Tax benefit			3				2				8				5
Restructuring and employee severance, net of tax		$	(6	)		$	(3	)		$	(13	)		$	(10)
Decrease to diluted EPS from continuing operations		$	(0.02	)		$	(0.01	)		$	(0.04	)		$	(0.03)
Acquisition-related costs
Amortization of acquisition-related intangible assets		$	(20	)		$	(14	)		$	(78	)		$	(67)
Tax benefit			8				8				29				21
Amortization of acquisition-related intangible assets, net of tax		$	(12	)		$	(6	)		$	(49	)		$	(46)
Decrease to diluted EPS from continuing operations		$	(0.03	)		$	(0.02	)		$	(0.14	)		$	(0.13)
Other acquisition-related costs 1		$	9			$	(1	)		$	45			$	(23)
Tax benefit/(expense) 1			(10	)			(2	)			(20	)			1
Other acquisition-related costs, net of tax		$	(1	)		$	(3	)		$	25			$	(22)
Increase/(decrease) to diluted EPS from continuing operations 1		$	—			$	(0.01	)		$	0.07			$	(0.06)
Total acquisition-related costs		$	(11	)		$	(15	)		$	(33	)		$	(90)
Tax benefit/(expense)			(2	)			6				9				22
Total acquisition-related costs, net of tax		$	(13	)		$	(9	)		$	(24	)		$	(68)
Decrease to diluted EPS from continuing operations 2		$	(0.04	)		$	(0.03	)		$	(0.07	)		$	(0.19)
Impairments and loss on disposal of assets
Impairments and loss on disposal of assets		$	(1	)		$	—			$	(21	)		$	(9)
Tax benefit			1				—				8				3
Impairments and loss on disposal of assets, net of tax		$	—			$	—			$	(13	)		$	(6)
Decrease to diluted EPS from continuing operations		$	—			$	—			$	(0.04	)		$	(0.02)
Litigation recoveries/(charges), net
Litigation recoveries/(charges), net		$	—			$	6			$	3			$	(6)
Tax expense			—				(3	)			(1	)			(1)
Litigation recoveries/(charges), net, net of tax		$	—			$	3			$	2			$	(7)
Increase/(decrease) to diluted EPS from continuing operations		$	—			$	0.01			$	0.01			$	(0.02)
Other Spin-Off costs
Other spin-off costs		$	—			$	(3	)		$	(2	)		$	(10)
Tax benefit			—				1				1				4
Other spin-off costs, net of tax		$	—			$	(2	)		$	(1	)		$	(6)
Decrease to diluted EPS from continuing operations		$	—			$	—			$	—			$	(0.02)
Gain on sale of CareFusion stock
Gain on sale of CareFusion stock		$	—			$	4			$	—			$	75
Tax benefit			—				—				—				—
Gain on sale of CareFusion stock, net of tax		$	—			$	4			$	—			$	75
Increase to diluted EPS from continuing operations		$	—			$	0.01			$	—			$	0.21
Weighted average number of diluted shares outstanding			349				355				349				353

We apply varying tax rates depending on the item’s nature and tax jurisdiction where it is incurred.

 

1	Includes a $71 million decrease in the fair value of the total contingent consideration obligation related to the P4 Healthcare acquisition for the fiscal year. The related tax expense was $29 million and diluted EPS from continuing operations increased $0.13.

2	The sum of the components may not equal the total due to rounding.

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Schedule 9

Cardinal Health, Inc. and Subsidiaries

Asset Management Analysis

 

		Fourth Quarter								Fiscal Year
		2012				2011				2012				2011
Days sales outstanding			22.3				20.3
Days inventory on hand			23.9				22.5
Days payable outstanding			35.6				34.8
Net working capital days1			10.5				8.0
Debt to total capital			32 %				30 %
Net debt to capital			9 %				9 %
Return on equity			15.1 %				14.1 %				17.8 %				17.5 %
Non-GAAP return on equity			16.3 %				14.9 %				18.6 %				18.0 %
Effective tax rate from continuing operations			37.4 %				39.3 %				37.0 %				36.4 %
Non-GAAP effective tax rate from continuing operations			36.0 %				39.6 %				36.8 %				37.2 %

 

1	The sum of the components may not equal the total due to rounding.

Refer to the GAAP/Non-GAAP reconciliation for Non-GAAP calculations. Refer to DSO, DIOH and DPO for definitions and calculations.

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Schedule 10

Cardinal Health, Inc. and Subsidiaries

GAAP / Non-GAAP Reconciliation

 

		Fourth Quarter 2012
(in millions, except per Common Share amounts)		Operating Earnings				Operating Earnings Growth Rate				Earnings Before Income Taxes and Discontinued Operations				Provision for Income Taxes				Earnings from Continuing Operations				Earnings from Continuing Operations Growth Rate				Diluted EPS from Continuing Operations				Diluted EPS from Continuing Operations Growth Rate
GAAP		$	403				12 %			$	377			$	141			$	236				14 %			$	0.68				17 %
Restructuring and employee severance			9								9				3				6								0.02
Acquisition-related costs			11								11				(2	)			13								0.04
Impairments and loss on disposal of assets			1								1				1				—								—
Litigation (recoveries)/charges, net			—								—				—				—								—
Other Spin-Off costs			—								—				—				—								—
Gain on sale of CareFusion stock			—								—				—				—								—
Non-GAAP		$	425				13 %			$	398			$	143			$	255				19 %			$	0.73				22 %
		Fourth Quarter 2011
GAAP		$	359				7 %			$	341			$	134			$	207				7 %			$	0.58				7 %
Restructuring and employee severance			5								5				2				3								0.01
Acquisition-related costs			15								15				6				9								0.03
Impairments and loss on disposal of assets			—								—				—				—								—
Litigation (recoveries)/charges, net			(6	)							(6	)			(3	)			(3	)							(0.01	)
Other Spin-Off costs			3								3				1				2								—
Gain on sale of CareFusion stock			—								(4	)			—				(4	)							(0.01	)
Non-GAAP		$	375				17 %			$	354			$	140			$	214				17 %			$	0.60				20 %
		Fiscal Year 2012
(in millions, except per Common Share amounts)		Operating Earnings				Operating Earnings Growth Rate				Earnings Before Income Taxes and Discontinued Operations				Provision for Income Taxes				Earnings from Continuing Operations				Earnings from Continuing Operations Growth Rate				Diluted EPS from Continuing Operations				Diluted EPS from Continuing Operations Growth Rate
GAAP		$	1,792				18 %			$	1,698			$	628			$	1,070				11 %			$	3.06				12 %
Restructuring and employee severance			21								21				8				13								0.04
Acquisition-related costs			33								33				9				24								0.07
Impairments and loss on disposal of assets			21								21				8				13								0.04
Litigation (recoveries)/charges, net			(3	)							(3	)			(1	)			(2	)							(0.01	)
Other Spin-Off costs			2								2				1				1								—
Gain on sale of CareFusion stock			—								—				—				—								—
Non-GAAP		$	1,866				13 %			$	1,772			$	653			$	1,119				13 %			$	3.21				15 %
		Fiscal Year 2011
GAAP		$	1,514				16 %			$	1,518			$	552			$	966				65 %			$	2.74				69 %
Restructuring and employee severance			15								15				5				10								0.03
Acquisition-related costs			90								90				22				68								0.19
Impairments and loss on disposal of assets			9								9				3				6								0.02
Litigation (recoveries)/charges, net			6								6				(1	)			7								0.02
Other Spin-Off costs			10								10				4				6								0.02
Gain on sale of CareFusion stock			—								(75	)			—				(75	)							(0.21	)
Non-GAAP		$	1,644				18 %			$	1,573			$	585			$	988				22 %			$	2.80				25 %

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.

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Schedule 11

Cardinal Health, Inc. and Subsidiaries

GAAP / Non-GAAP Reconciliation

 

		Fourth Quarter
(in millions)		2012								2011
GAAP return on equity			15.1%								14.1 %
Non-GAAP return on equity
Net earnings		$	236							$	203
Restructuring and employee severance, net of tax, in continuing operations			6								3
Acquisition-related costs, net of tax, in continuing operations			13								9
Impairments and loss on disposal of assets, net of tax, in continuing operations			—								—
Litigation (recoveries)/charges, net, net of tax, in continuing operations			—								(3)
Other spin-off costs, net of tax, in continuing operations			—								2
Gain on sale of CareFusion stock, net of tax			—								(4)
CareFusion net loss in discontinued operations 1			—								4
Adjusted net earnings		$	255							$	214
Annualized		$	1,020							$	856
		Fourth				Third				Fourth				Third
		Quarter				Quarter				Quarter				Quarter
		2012				2012				2011				2011
Total shareholders’ equity		$	6,244			$	6,240			$	5,849			$	5,657
Divided by average shareholders’ equity		$	6,242							$	5,753
Non-GAAP return on equity			16.3 %								14.9 %

We apply varying tax rates depending on the item’s nature and tax jurisdiction where it is incurred.

 

1	To properly reflect the impact of the spin-off, on a non-GAAP basis, CareFusion net earnings included in discontinued operations are excluded from adjusted net earnings for all periods presented.

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Schedule 12

Cardinal Health, Inc. and Subsidiaries

GAAP / Non-GAAP Reconciliation

 

		Fiscal Year																				Fiscal Year
(in millions)		2012																				2011
GAAP return on equity			17.8 %																				17.5 %
Non-GAAP return on equity
Net earnings		$	1,069																			$	959
Restructuring and employee severance, net of tax, in continuing operations			13																				10
Acquisition-related costs, net of tax, in continuing operations			24																				68
Impairments and loss on disposal of assets, net of tax, in continuing operations			13																				6
Litigation (recoveries)/charges, net, net of tax, in continuing operations			(2	)																			7
Other spin-off costs, net of tax, in continuing operations			1																				6
Gain on sale of CareFusion stock, net of tax			—																				(75)
CareFusion net loss in discontinued operations 1			—																				7
Adjusted net earnings		$	1,118																			$	988
		Fourth				Third				Second				First				Fourth				Fourth				Third				Second				First				Fourth
		Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter				Quarter
		2012				2012				2012				2012				2011				2011				2011				2011				2011				2010
Total shareholders’ equity		$	6,244			$	6,240			$	5,928			$	5,714			$	5,849			$	5,849			$	5,657			$	5,421			$	5,239			$	5,276
Divided by average shareholders’ equity		$	5,995																			$	5,488
Non-GAAP return on equity			18.6 %																				18.0 %

We apply varying tax rates depending on the item’s nature and tax jurisdiction where it is incurred.

 

1	To properly reflect the impact of the spin-off, on a non-GAAP basis, CareFusion net earnings included in discontinued operations are excluded from adjusted net earnings for all periods presented.

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Schedule 13

Cardinal Health, Inc. and Subsidiaries

GAAP / Non-GAAP Reconciliation

 

		Fourth Quarter								Fiscal Year
(in millions)		2012				2011				2012				2011
GAAP effective tax rate from continuing operations			37.4 %				39.3 %				37.0 %				36.4 %
Non-GAAP effective tax rate from continuing operations
Earnings before income taxes and discontinued operations		$	377			$	341			$	1,698			$	1,518
Restructuring and employee severance			9				5				21				15
Acquisition-related costs			11				15				33				90
Impairments and loss on disposal of assets			1				—				21				9
Litigation (recoveries)/charges, net			—				(6	)			(3	)			6
Other Spin-Off costs			—				3				2				10
Gain on sale of CareFusion stock			—				(4	)			—				(75)
Adjusted earnings before income taxes and discontinued operations		$	398			$	354			$	1,772			$	1,573
Provision for income taxes		$	141			$	134			$	628			$	552
Restructuring and employee severance tax benefit			3				2				8				5
Acquisition-related costs tax benefit/(expense)			(2	)			6				9				22
Impairments and loss on disposal of assets tax benefit			1				—				8				3
Litigation (recoveries)/charges, net tax expense			—				(3	)			(1	)			(1)
Other spin-off costs tax benefit			—				1				1				4
Gain on sale of CareFusion stock tax benefit			—				—				—				—
Adjusted provision for income taxes		$	143			$	140			$	653			$	585
Non-GAAP effective tax rate from continuing operations			36.0 %				39.6 %				36.8 %				37.2 %

		Fourth Quarter
		2012				2011
Debt to total capital			32 %				30 %
Net debt to capital
Current portion of long-term obligations and other short-term borrowings		$	476			$	327
Long-term obligations, less current portion			2,418				2,175
Debt		$	2,894			$	2,502
Cash and equivalents			(2,274	)			(1,929	)
Net Debt		$	620			$	573
Total shareholders’ equity			6,244				5,849
Capital		$	6,864			$	6,422
Net debt to capital			9 %				9 %

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 the most directly comparable forward-looking GAAP measures because we cannot reliably forecast restructuring and employee severance, acquisition-related costs, impairments and loss on disposal of assets, litigation (recoveries)/charges, net, and other spin-off costs, which are difficult to predict and estimate and are primarily dependent on future events. Please note that the unavailable reconciling items could significantly impact our future financial results.

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Schedule 14

Cardinal Health, Inc. and Subsidiaries

 

		Fourth Quarter
(in millions)		2012				2011
Days Sales Outstanding			22.3				20.3
Days Inventory on Hand
Inventories		$	7,864			$	7,334
Cost of products sold		$	25,628			$	25,720
Chargeback billings			3,984				3,556
Adjusted cost of products sold		$	29,612			$	29,276
Adjusted cost of products sold divided by 90 days		$	329			$	325
Days Inventory on Hand			23.9				22.5
Days Payable Outstanding
Accounts payable		$	11,726			$	11,332
Cost of products sold		$	25,628			$	25,720
Chargeback billings			3,984				3,556
Adjusted cost of products sold		$	29,612			$	29,276
Adjusted cost of products sold divided by 90 days		$	329			$	325
Days Payable Outstanding			35.6				34.8
Net Working Capital Days1			10.5				8.0

 

1	The sum of the components may not equal the total due to rounding.

Days Sales Outstanding: trade receivables, net divided by (monthly revenue divided by 30 days).

Days Inventory on Hand: inventory divided by ((quarterly cost of products sold plus chargeback billings) divided by 90 days). Chargeback billings are the difference between a product’s wholesale acquisition cost and the contract price established between pharmaceutical manufacturers and the end customer.

Days Payable Outstanding: accounts payable divided by ((quarterly cost of products sold plus chargeback billings) divided by 90 days).

Net Working Capital Days: days sales outstanding plus days inventory on hand less days payable outstanding.

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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. Management uses these non-GAAP financial measures internally to evaluate the Company’s performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

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 and growth rate calculation ¹: non-GAAP earnings from continuing operations divided by diluted weighted average shares outstanding.

Non-GAAP Earnings from Continuing Operations and growth rate calculation: earnings from continuing operations excluding (1) restructuring and employee severance ², (2) acquisition-related costs ³, (3) impairments and loss on disposal of assets ⁴, (4) litigation (recoveries)/charges, net ⁵, (5) Other Spin-Off Costs and (6) gain on sale of CareFusion stock, each net of tax.

Non-GAAP Effective Tax Rate from Continuing Operations: (provision for income taxes adjusted for (1) restructuring and employee severance, (2) acquisition-related costs, (3) impairments and loss on disposal of assets, (4) litigation (recoveries)/charges, net, (5) Other Spin-Off Costs and (6) gain on sale of CareFusion stock) divided by (earnings before income taxes and discontinued operations adjusted for the same six items).

Non-GAAP Operating Earnings and growth rate calculation: operating earnings excluding (1) restructuring and employee severance, (2) acquisition-related costs, (3) impairments and loss on disposal of assets, (4) litigation (recoveries)/charges, net and (5) Other Spin-Off Costs.

Non-GAAP Return on Equity: (annualized current period net earnings excluding (1) restructuring and employee severance, (2) acquisition-related costs, (3) impairments and loss on disposal of assets, (4) litigation (recoveries)/charges, net, (5) Other Spin-Off Costs, (6) gain on sale of CareFusion stock and (7) CareFusion net loss in discontinued operations, each net of tax) and divided by average shareholders’ equity.

Other Spin-Off Costs: costs incurred in connection with our Spin-Off of CareFusion which are included in distribution, selling, general and administrative expenses.

Return on Equity: annualized current period net earnings divided by average shareholders’ equity.

Revenue Mix: segment revenue divided by total segment revenue for all segments.

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.

Segment Profit Mix: segment profit divided by total segment profit for all segments.

 

1	In this earnings release growth rates are determined by dividing the difference between current period results and prior period results by prior period results.

2

Programs whereby the Company fundamentally changes its operations such as closing and consolidating certain manufacturing and distribution facilities, moving manufacturing of a product to another location, outsourcing the production of a product, employee severance (including rationalizing headcount or other significant changes in personnel) and realigning operations (including substantial realignment of the management structure of a business unit in response to changing market conditions).

3	Costs that consist primarily of transaction costs, integration costs, changes in the fair value of contingent consideration obligations and amortization of acquisition-related intangible assets.

4	Asset impairments and losses from the disposal of assets not eligible to be classified as discontinued operations are classified within impairments and loss on disposal of assets within the consolidated statements of earnings.

5	Loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal matters.