• Revenue elevated 13% to $51.5 billion
• GAAP¹ working loss was $119 million as a consequence of a non-cash, pre-tax goodwill impairment of $709 million associated to the Medical section; GAAP diluted loss per share was $0.50
• Non-GAAP working earnings of $467 million have been in-line with the second quarter of final 12 months; non-GAAP diluted EPS elevated 4% to $1.32
• Fiscal 12 months 2023 non-GAAP EPS steerage raised to $5.20 to $5.50, from $5.05 to $5.40

DUBLIN, Ohio, Feb. 2, 2023 /PRNewswire/ — Cardinal Health (NYSE: CAH) right now reported second quarter fiscal 12 months 2023 revenues of $51.5 billion, a rise of 13% from the second quarter of fiscal 12 months 2022. Second quarter GAAP working loss was $119 million as a consequence of a non-cash, pre-tax goodwill impairment of $709 million associated to the Medical section. GAAP diluted loss per share was $0.50, primarily as a consequence of this impairment, internet of tax results. Second quarter non-GAAP working earnings of $467 million have been in-line with the second quarter of final 12 months.  Non-GAAP diluted earnings per share (EPS) elevated 4% to $1.32, as a consequence of decrease curiosity expense and a decrease share rely, partially offset by the next non-GAAP efficient tax fee.

“Our second quarter results demonstrate continued momentum against our plans, led by better-than-expected performance in the Pharmaceutical segment and Medical results in-line with our prior commentary,” stated Jason Hollar, CEO of Cardinal Health. “With the first half of fiscal year 2023 behind us, we are pleased to raise our full year non-GAAP EPS guidance and outlook for the Pharmaceutical segment. In the Medical segment, we remain confident in our Medical Improvement Plan, including the actions we are taking to mitigate supply chain inflation and drive improved performance.”

Q2 FY23 abstract

Segment outcomes

Pharmaceutical section

Second-quarter income for the Pharmaceutical section elevated 15% to $47.7 billion, pushed by model and specialty pharmaceutical gross sales development from present and internet new prospects. 

Pharmaceutical section revenue elevated 9% to $464 million within the second quarter, pushed by the next contribution from model and specialty merchandise and generics program efficiency, partially offset by inflationary provide chain prices.

Medical section

Second-quarter income for the Medical section decreased 7% to $3.8 billion, pushed by decrease Products and Distribution gross sales, together with PPE pricing and volumes. Growth in at-Home Solutions partially offset this decline.

Medical section revenue decreased 66% to $17 million within the second quarter, primarily as a consequence of decrease Products and Distribution volumes and internet inflationary impacts, partially offset by an enchancment in PPE margins.

Fiscal 12 months 2023 outlook¹  
The firm up to date its fiscal 12 months 2023 steerage vary for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $5.20 to $5.50, from $5.05 to $5.40.

This steerage consists of an replace to fiscal 12 months 2023 Pharmaceutical section revenue outlook to 4% to six.5% development, from 2% to five% development. Additionally, the corporate up to date expectations for fiscal 12 months 2023 curiosity and different to $115 million to $130 million, from $140 million to $160 million.

The firm doesn’t present forward-looking steerage on a GAAP foundation as sure monetary data, the possible significance of which can’t be decided, is just not accessible and can’t be moderately estimated. See “Use of Non-GAAP Measures” following the connected schedules for extra clarification.

Investor Day
The firm plans to host an Investor Day on June 8 in New York City to debate its long-term monetary outlook, development methods, and conclusions from the Business Review Committee’s complete evaluate. The occasion might be live-webcast and archived on Cardinal Health’s Investor Relations web site.

Recent highlights

• Cardinal Health and its board of administrators introduced that Aaron Alt will change into the corporate’s new chief monetary officer (CFO) efficient February 10. Alt most not too long ago served as EVP and CFO for Sysco Corporation, the main international meals service distribution firm.
• Cardinal Health launched its fiscal 12 months 2022 Environmental, Social, and Governance (ESG) report which displays vital progress in ESG efforts and highlights the corporate’s dedication to serving to construct a extra sustainable, equitable world, and a more healthy future for workers, prospects and communities.
• Cardinal Health accomplished its $1 billion greenback accelerated share repurchase (ASR) program and initiated a brand new $250 million greenback ASR program within the second quarter, leading to a complete of $1.25 billion year-to-date share repurchases in fiscal 12 months 2023.
• Cardinal Health introduced the launch of Velocare™, a provide chain community and last-mile achievement answer able to reaching sufferers in a single to 2 hours with vital services and products required for hospital-level care at house. Through a strategic collaboration with Medically Home, Cardinal Health at-Home Solutions is now supporting a Medically Home well being system buyer with Velocare, collectively enabling scaled, high-acuity care within the house.
• Cardinal Health’s U.S. Medical Products and Distribution enterprise opened its expanded Sustainable Technologies™ facility in Riverview, Florida, doubling the manufacturing facility to roughly 100,000 sq. toes. Sustainable Technologies™ is a number one supplier of single-use system collections, reprocessing and recycling providers within the U.S., serving to to ship provide resiliency, sustainable options, and value financial savings for purchasers.

Webcast
Cardinal Health will host a webcast right now at 8:30 a.m. Eastern to debate second-quarter outcomes. To entry the webcast and corresponding slide presentation, go to the Investor Relations web page at ir.cardinalhealth.com. No entry code is required. 

Presentation slides and a webcast replay might be accessible on the Investor Relations web page for 12 months.

About Cardinal Health
Cardinal Health is a distributor of prescription drugs, a world producer and distributor of medical and laboratory merchandise, and a supplier of efficiency and knowledge options for well being care services. With greater than 50 years in enterprise, operations in additional than 30 nations and roughly 46,500 workers globally, Cardinal Health is crucial to care. Information about Cardinal Health is obtainable at cardinalhealth.com.

Contacts
Media: Erich Timmerman, [email protected] and 614.757.8231
Investors: Kevin Moran, [email protected] and 614.757.7942

¹GAAP refers to U.S. usually accepted accounting ideas. This information launch consists of GAAP monetary measures in addition to non-GAAP monetary measures, that are monetary measures not calculated in accordance with GAAP. See “Use of Non-GAAP Measures” following the connected schedules for definitions of the non-GAAP monetary measures introduced on this information launch and see the connected schedules for reconciliations of the variations between the non-GAAP monetary measures and their most immediately comparable GAAP monetary measures.
²The second quarter fiscal 12 months 2022 and 2023 GAAP efficient tax charges replicate the tax results of the goodwill impairment cost included within the firm’s estimated annual efficient tax fee for every year.

Cardinal Health makes use of its web site as a channel of distribution for materials firm data. Important data, together with information releases, monetary data, earnings and analyst shows, and details about upcoming shows and occasions is routinely posted and accessible on the Investor Relations web page at  ir.cardinalhealth.com. In addition, the web site permits traders and different individuals to enroll mechanically to obtain electronic mail alerts when the corporate posts information releases, SEC filings and sure different data on its web site.

Cautions Concerning Forward-Looking Statements
This launch comprises forward-looking statements addressing expectations, prospects, estimates and different issues which can be dependent upon future occasions or developments. These statements could also be recognized by phrases resembling “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue,” “likely,” and related expressions, and embrace statements reflecting future outcomes or steerage, statements of outlook and varied accruals and estimates. These issues are topic to dangers and uncertainties that might trigger precise outcomes to vary materially from these projected, anticipated or implied. These dangers and uncertainties embrace dangers arising from ongoing inflationary pressures and provide chain constraints, together with the danger that our plans to mitigate such results might not be as profitable as we anticipate and the likelihood that prices to supply sure private protecting or different gear, elevated prices for transportation, delivery, freight and commodities, decreased value or demand for sure merchandise might lead to extra stock reserves or disruptions and should negatively impression our capability to fulfill our long-term steerage; the likelihood that our Medical unit goodwill may very well be additional impaired because of the improve in international rates of interest, attainable unfavorable modifications within the U.S. statutory tax fee or extra modifications to our long-term monetary plan; aggressive pressures in Cardinal Health’s varied traces of enterprise; the efficiency of our generics program, together with the quantity or fee of generic deflation and our capability to offset generic deflation and preserve different monetary and strategic advantages via our generic sourcing enterprise or different parts of our generics packages; ongoing dangers related to the distribution of opioids, together with the monetary impression related to the settlements with governmental authorities, the danger that challenges to our plans to take tax deductions for opioid-related losses might adversely impression our monetary outcomes; dangers arising from the Department of Justice investigation which we consider issues our anti-diversion program and dangers related to the injunctive reduction necessities underneath the nationwide settlement, together with the danger that we might incur larger prices or operational challenges within the implementation and upkeep of the required modifications; dangers related to the manufacture and sourcing of sure merchandise, together with dangers associated to our capability and the flexibility of third-party producers to import or export sure merchandise or part components and to adjust to relevant rules; our capability to handle uncertainties related to the pricing of branded prescription drugs; and dangers related to our price financial savings initiatives or different enterprise initiatives, such because the Medical Improvement Plan, together with the likelihood that they may fail to attain the supposed outcomes. Cardinal Health is topic to extra dangers and uncertainties described in Cardinal Health’s Form 10-Okay, Form 10-Q and Form 8-Okay experiences and displays to these experiences. This launch displays administration’s views as of February 2, 2023. Except to the extent required by relevant legislation, Cardinal Health undertakes no obligation to replace or revise any forward-looking assertion. Forward-looking statements are aspirational and never ensures or guarantees that targets, targets or projections might be met, and no assurance could be on condition that any dedication, expectation, initiative or plan on this report can or might be achieved or accomplished. Cardinal Health supplies definitions and reconciliations of non-GAAP monetary measures and their most immediately comparable GAAP monetary measures at ir.cardinalhealth.com.

Cardinal Health, Inc. and Subsidiaries

Use of Non-GAAP Measures

This earnings launch comprises monetary measures that aren’t calculated in accordance with U.S. usually accepted accounting ideas (“GAAP”).

In addition to analyzing our enterprise primarily based on monetary data ready in accordance with GAAP, we use these non-GAAP monetary measures internally to judge our efficiency, have interaction in monetary and operational planning, and decide incentive compensation as a result of we consider that these measures present extra perspective on and, in some circumstances are extra intently correlated to, the efficiency of our underlying, ongoing enterprise. We present these non-GAAP monetary measures to traders as supplemental metrics to help readers in assessing the consequences of things and occasions on our monetary and working outcomes on a year-over-year foundation and in evaluating our efficiency to that of our opponents. However, the non-GAAP monetary measures that we use could also be calculated in another way from, and subsequently might not be corresponding to, equally titled measures utilized by different firms. The non-GAAP monetary measures disclosed by us shouldn’t be thought of an alternative choice to, or superior to, monetary measures calculated in accordance with GAAP, and the monetary outcomes calculated in accordance with GAAP and reconciliations to these monetary statements set forth under must be rigorously evaluated.  

Exclusions from Non-GAAP Financial Measures

Management believes it’s helpful to exclude the next objects from the non-GAAP measures introduced on this report for its personal and for traders’ evaluation of the enterprise for the explanations recognized under:

• LIFO prices and credit are excluded as a result of the elements that drive last-in first-out (“LIFO”) stock prices or credit, resembling pharmaceutical producer value appreciation or deflation and year-end stock ranges (which could be meaningfully influenced by buyer shopping for conduct instantly previous our fiscal year-end), are largely out of our management and can’t be precisely predicted. The exclusion of LIFO prices and credit from non-GAAP metrics facilitates comparability of our present monetary outcomes to our historic monetary outcomes and to our peer group firms’ monetary outcomes. We didn’t acknowledge any LIFO prices or credit in the course of the durations introduced.
• Surgical robe recall prices or revenue consists of stock write-offs and sure remediation and provide disruption prices, internet of associated insurance coverage recoveries, arising from the January 2020 recall of choose Association for the Advancement of Medical Instrumentation (“AAMI”) Level 3 surgical robes and voluntary discipline actions (a recall of some packs and a corrective motion permitting overlabeling of different packs) for Presource Procedure Packs containing affected robes. Income from surgical robe recall prices represents insurance coverage recoveries of those sure prices. We have excluded these prices from our non-GAAP metrics to permit traders to raised perceive the underlying working outcomes of the enterprise and to facilitate comparability of our present monetary outcomes to our historic monetary outcomes and to our peer group firms’ monetary outcomes.
• State opioid assessments associated to prior fiscal years is the portion of state assessments for prescription opioid drugs that have been offered or distributed in durations previous to the interval during which the expense is incurred. This portion is excluded from non-GAAP monetary measures as a result of it’s retrospectively utilized to gross sales in prior fiscal years and inclusion would obscure evaluation of the present fiscal 12 months outcomes of our underlying, ongoing enterprise. Additionally, whereas states’ legal guidelines might require us to make funds on an ongoing foundation, the portion of the evaluation associated to gross sales in prior durations are contemplated to be one-time, nonrecurring objects. Income from state opioid assessments associated to prior fiscal years represents reversals of accruals as a consequence of modifications in estimates or when the underlying assessments have been invalidated by a Court or reimbursed by producers.
• Shareholder cooperation settlement prices consists of prices resembling authorized, consulting and different bills incurred in relation to the settlement (the “Cooperation Agreement”) entered into amongst Elliott Associates, L.P., Elliott International, L.P. (collectively, “Elliott”) and Cardinal Health, together with prices incurred to barter and finalize the Cooperation Agreement and prices incurred by the brand new Business Review Committee of the Board of Directors, which was fashioned underneath this Cooperation Agreement. We have excluded these prices from our non-GAAP metrics as a result of they don’t happen in or replicate the atypical course of our ongoing enterprise operations and should obscure evaluation of tendencies and monetary efficiency.
• Restructuring and worker severance prices are excluded as a result of they aren’t a part of the continued operations of our underlying enterprise.
• Amortization and different acquisition-related prices, which embrace transaction prices, integration prices, and modifications within the honest worth of contingent consideration obligations, are excluded as a result of they aren’t a part of the continued operations of our underlying enterprise and to facilitate comparability of our present monetary outcomes to our historic monetary outcomes and to our peer group firms’ monetary outcomes. Additionally, prices for amortization of acquisition-related intangible belongings are non-cash quantities, that are variable in quantity and frequency and are considerably impacted by the timing and measurement of acquisitions, so their exclusion facilitates comparability of historic, present and forecasted monetary outcomes. We additionally exclude different acquisition-related prices, that are immediately associated to an acquisition however don’t meet the factors to be acknowledged on the acquired entity’s preliminary stability sheet as a part of the acquisition value allocation. These prices are additionally considerably impacted by the timing, complexity and measurement of acquisitions.
• Impairments and achieve or loss on disposal of belongings, internet are excluded as a result of they don’t happen in or replicate the atypical course of our ongoing enterprise operations and are inherently unpredictable in timing and quantity, and within the case of impairments, are non-cash quantities, so their exclusion facilitates comparability of historic, present and forecasted monetary outcomes.
• Litigation recoveries or prices, internet are excluded as a result of they typically relate to occasions which will have occurred in prior or a number of durations, don’t happen in or replicate the atypical course of our enterprise and are inherently unpredictable in timing and quantity. During fiscal 2022, we incurred a one-time contingent attorneys’ price of $18 million associated to the finalization of the settlement settlement (the “Settlement Agreement”) ensuing within the settlement of the overwhelming majority of opioid lawsuits filed by state and native governmental entities. Due to the distinctive nature and significance of the Settlement Agreement, and the one-time, contingent nature of the price, this price was included in litigation recoveries or prices, internet. Additionally, throughout fiscal 2022 our Pharmaceutical section revenue was positively impacted by a $16 million judgment for misplaced earnings. This judgment was the results of an atypical course mental property rights declare and, subsequently, is just not adjusted in calculating the litigation recoveries or prices, internet adjustment. During fiscal 2021, we incurred a tax profit associated to a carryback of a internet working loss. Some pre-tax quantities, which contributed to this loss, relate to litigation prices. As a consequence, we allotted considerably all the tax profit to litigation prices.
• Loss on early extinguishment of debt is excluded as a result of it doesn’t sometimes happen within the regular course of enterprise and should obscure evaluation of tendencies and monetary efficiency. Additionally, the quantity and frequency of the sort of cost is just not constant and is considerably impacted by the timing and measurement of debt extinguishment transactions.
• (Gain)/Loss on sale of fairness curiosity in naviHealth was incurred in reference to the sale of our remaining fairness curiosity in naviHealth in fiscal 2020. The fairness curiosity was retained in reference to the preliminary sale of our majority curiosity in naviHealth throughout fiscal 2019. We exclude this vital achieve as a result of good points or losses on investments of this magnitude don’t sometimes happen within the regular course of enterprise and are related in nature to a achieve or loss from a divestiture of a majority curiosity, which we exclude from non-GAAP outcomes. The achieve on the preliminary sale of our majority curiosity in naviHealth in fiscal 2019 was additionally excluded from our non-GAAP measures.

The tax impact for every of the objects listed above is set utilizing the tax fee and different tax attributes relevant to the merchandise and the jurisdiction(s) during which the merchandise is recorded. The gross, tax and internet impression of every merchandise are introduced with our GAAP to non-GAAP reconciliations.

Non-GAAP adjusted free money move: We present this non-GAAP monetary measure as a supplemental metric to help readers in assessing the consequences of things and occasions on our money move on a year-over-year foundation and in evaluating our efficiency to that of our peer group firms. In calculating this non-GAAP metric, sure objects are excluded from internet money offered by working actions as a result of they relate to vital and strange or non-recurring occasions and are inherently unpredictable in timing and quantity. We consider adjusted free money move is essential to administration and helpful to traders as a supplemental measure because it signifies the money move accessible for working capital wants, debt repayments, dividend funds, share repurchases, strategic acquisitions, or different strategic makes use of of money. A reconciliation of our GAAP monetary outcomes to Non-GAAP adjusted free money move is offered in Schedule 6 of the monetary assertion tables included with this launch.

Forward Looking Non-GAAP Measures

In this doc, the Company presents sure forward-looking non-GAAP metrics. The Company doesn’t present outlook on a GAAP foundation as a result of the objects that the Company excludes from GAAP to calculate the comparable non-GAAP measure could be depending on future occasions which can be much less able to being managed or reliably predicted by administration and will not be a part of the Company’s routine working actions. Additionally, administration doesn’t forecast most of the excluded objects for inner use and subsequently can’t create or depend on outlook accomplished on a GAAP foundation.

The prevalence, timing and quantity of any of the objects excluded from GAAP to calculate non-GAAP might considerably impression the Company’s fiscal 2023 GAAP outcomes. Over the previous 5 fiscal years, the excluded objects have impacted the Company’s EPS from $0.75 to $18.06, which features a $17.54 cost associated to the opioid litigation we acknowledged in fiscal 2020.

Definitions

Growth fee calculation: development charges on this report are decided by dividing the distinction between current-period outcomes and prior-period outcomes by prior-period outcomes.

Interest and Other, internet: different(revenue)/expense, internet plus curiosity expense, internet.

Segment Profit: section income minus (section price of merchandise offered and section distribution, promoting, basic and administrative bills).

Segment Profit margin: section revenue divided by section income. 

Non-GAAP gross margin: gross margin, excluding LIFO prices/(credit) and surgical robe recall prices/(revenue).

Non-GAAP distribution, promoting, basic and administrative bills or Non-GAAP SG&A: distribution, promoting, basic and administrative bills, excluding surgical robe recall prices/(revenue), state opioid evaluation associated to prior fiscal years and shareholder cooperation settlement prices.

Non-GAAP working earnings: working earnings excluding (1) LIFO prices/(credit), (2) surgical robe recall prices/(revenue), (3) state opioid evaluation associated to prior fiscal years, (4) shareholder cooperation settlement prices, (5) restructuring and worker severance, (6) amortization and different acquisition-related prices, (7) impairments and (achieve)/loss on disposal of belongings, internet, and (8) litigation (recoveries)/prices, internet. 

Non-GAAP earnings earlier than revenue taxes: earnings earlier than revenue taxes excluding (1) LIFO prices/(credit), (2) surgical robe recall prices/(revenue), (3) state opioid evaluation associated to prior fiscal years, (4) shareholder cooperation settlement prices, (5) restructuring and worker severance, (6) amortization and different acquisition-related prices, (7) impairments and (achieve)/loss on disposal of belongings, internet, (8) litigation (recoveries)/prices, internet, (9) loss on early extinguishment of debt and (10) (achieve)/loss on sale of fairness curiosity in naviHealth.  

Non-GAAP internet earnings attributable to Cardinal Health, Inc.: internet earnings attributable to Cardinal Health, Inc. excluding (1) LIFO prices/(credit), (2) surgical robe recall prices/(revenue), (3) state opioid evaluation associated to prior fiscal years, (4) shareholder cooperation settlement prices, (5) restructuring and worker severance, (6) amortization and different acquisition-related prices, (7) impairments and (achieve)/loss on disposal of belongings, internet, (8) litigation (recoveries)/prices, internet, (9) loss on early extinguishment of debt and (10) (achieve)/loss on sale of fairness curiosity in naviHealth, every internet of tax.

Non-GAAP efficient tax fee: provision for/(profit from) revenue taxes adjusted for the tax impacts of (1) LIFO prices/(credit), (2) surgical robe recall prices/(revenue), (3) state opioid evaluation associated to prior fiscal years, (4) shareholder cooperation settlement prices, (5) restructuring and worker severance, (6) amortization and different acquisition-related prices, (7) impairments and (achieve)/loss on disposal of belongings, internet, (8) litigation (recoveries)/prices, internet, (9) loss on early extinguishment of debt and (10) (achieve)/loss on sale of fairness curiosity in naviHealth divided by (earnings earlier than revenue taxes adjusted for the ten objects above).  

Non-GAAP diluted earnings per share attributable to Cardinal Health, Inc.: non-GAAP internet earnings attributable to Cardinal Health, Inc. divided by diluted weighted-average shares excellent. 

Non-GAAP adjusted free money move: internet money offered by working actions much less funds associated to additions to property and gear, excluding settlement funds and receipts associated to issues included in litigation (recoveries)/prices, internet, as outlined above, or different vital and strange or non-recurring money funds or receipts. For instance, the U.S. federal revenue tax refund of $966 million for the tax profit from the online working loss carryback associated to a self-insurance pre-tax loss was excluded from the Company’s fiscal 2022 non-GAAP adjusted free money move.

SOURCE Cardinal Health