Global Research and Evidence Lab 14 August 2024 Cardinal Health Inc. Caliendo's Conference Call Commentary ● General Takeaways: Management provided additional color underlying the improved FY25 Pharma EBIT outlook and steady FY25 GMPD EBIT guidance. Within Pharma, guidance calls for y/y EBIT improvement of +1-3% with consistent generic market dynamics, a greater contribution from brand/specialty products, a modest y/y headwind from COVID vaccine, and cost optimization. On GMPD, CAH did not seem overly conce ...

First Read Cardinal Health Inc First Take: Improved FY25 Guidance and LT Commitment to GMPD Conveyed Loaded Print: Improved FY25 Guide, Steady GMPD Outlook and More Aggressive Repos Should Buoy Sentiment Along with F4Q results, CAH tweaked preliminary FY25 financial expectations offered last quarter. Key guidance highlights include: (1) FY25 EPS range of $7.55-7.70 (prior: at least $7.50) on better Pharma EBIT growth of +1-3% ( prior: at least 1% - at midpoint adds ~$0.06); (2) lower interest and other (at ...

Financial Data and Key Metrics Changes - Cardinal Health reported a 29% growth in EPS for both Q4 and fiscal year 2024, with full-year EPS reaching $7.53, exceeding guidance by $0.96 [7][25] - The company generated nearly $4 billion in adjusted free cash flow for the year, ending with approximately $5 billion in cash after returning $1.25 billion to shareholders [7][25] - Revenue for fiscal year 2024 increased by 11% to $227 billion, with gross margin growing by 8% to $7.4 billion [24][25] Business Line Data and Key Metrics Changes - The pharmaceutical and specialty solutions segment saw a 13% revenue increase in Q4 to $55.6 billion, driven by brand and specialty pharmaceutical sales [20] - The GMPD segment's Q4 revenue grew by 2% to $3.1 billion, with segment profit of $47 million, reflecting ongoing improvement efforts [22] - Revenue from other businesses, including at-home solutions and OptiFreight, increased by 15% to $1.2 billion, with segment profit growing by 11% to $111 million [23] Market Data and Key Metrics Changes - The specialty business revenue grew by 14% for the year, now exceeding $36 billion, with expectations for continued growth despite a large contract expiration [9][10] - The generics program within the pharmaceutical segment showed strong performance, contributing to overall revenue growth [21] Company Strategy and Development Direction - Cardinal Health is focused on enhancing its pharmaceutical and specialty solutions, executing a GMPD improvement plan, and optimizing its portfolio for shareholder value creation [8][12] - The company is investing in key growth areas, including specialty networks and at-home solutions, while simplifying its business structure for better performance [9][12][45] - The strategic partnership with CVS Health for sourcing biosimilars aims to increase access to therapy options at lower costs [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and growth potential, supported by positive industry trends and strategic initiatives [11][34] - The company anticipates a decline in pharma revenue for fiscal year 2025 due to a large customer contract expiration but expects underlying growth from new customers and existing customer expansions [28][29] - Management highlighted the successful execution of cost control measures and inflation mitigation strategies, which are expected to provide a tailwind in the upcoming fiscal year [22][44] Other Important Information - Cardinal Health raised its share repurchase expectations for fiscal year 2025 to $750 million, reflecting a commitment to returning capital to shareholders [15][34] - The company identified a longstanding accounting error that resulted in slight net increases to non-GAAP EPS for prior periods [17] Q&A Session Summary Question: Insights on margin improvement for fiscal year 2025 - Management raised guidance for pharma business profitability, reflecting confidence in new customer contributions and cost mitigation efforts [51][52] Question: Impact of macro freight trends and input costs - Management noted that while there have been increases in freight costs, they are manageable and not at levels that require widespread price adjustments [56][57] Question: Underlying pharma growth and profit streams - Specialty is expected to continue growing, driven by investments and new customer acquisitions, despite the impact of a contract non-renewal [62][63] Question: Changes in guidance regarding Optum unwind - Management confirmed that the non-renewal will impact Q1, but cost optimization and new customer onboarding are already in play to mitigate effects [70][71] Question: Gross profit performance and insulin pricing changes - Management indicated that gross margin progression met expectations, with ongoing benefits from GLP-1 growth and some offsets from insulin pricing changes [74][75]

Key TakeawaysCardinal Health exceeded fourth-quarter earnings and revenue estimates on strong sales of pharmaceuticals.The healthcare firm raised its full-year profit guidance and revenue for its Pharmaceutical and Specialty Solutions unit.Cardinal Health also boosted its share buyback plan. Shares of Cardinal Health (CAH) gained in intraday trading Wednesday as the provider of healthcare services and products posted better-than-anticipated results and raised its outlook on strong drug sales. The company re ...

Core Viewpoint - Cardinal Health, Inc. reported strong fourth-quarter fiscal 2024 results, with adjusted earnings per share (EPS) of $1.84, exceeding estimates and showing a 29% year-over-year improvement [1]. Revenue Details - The company achieved sales of $59.9 billion, reflecting a 12% year-over-year increase and surpassing consensus estimates by 2% [2]. Segmental Analysis - **Pharmaceutical and Specialty Solutions Segment**: Revenues increased by 13% to $55.6 billion, driven by branded pharmaceutical sales growth. Profit in this segment rose 8% to $482 million [3]. - **Global Medical Products and Distribution Segment**: Revenues totaled $3.1 billion, up 2% year over year, with profits increasing to $47 million from $7 million in the prior year [3]. - **Other Segment**: This segment reported sales of $1.2 billion, a 15% increase year over year, with profits rising 11% to $111 million, primarily due to strong performance in OptiFreight Logistics [4]. Margin Analysis - Gross profit increased by 5% year over year to $1.88 billion, with a gross margin of 3.1%, down 20 basis points from the previous year. Operating income rose significantly to $401 million from $111 million in the prior year [5]. Financial Update - The company ended the quarter with cash and cash equivalents of $5.13 billion, up from $3.72 billion in the previous quarter. Cumulative net cash from operating activities was $2.08 billion, compared to $871 million in the year-ago period [6]. 2025 Guidance Update - Cardinal Health raised its fiscal 2025 adjusted EPS guidance to between $7.55 and $7.70, up from at least $7.50. The company anticipates a 4-6% decline in Pharmaceutical segment revenues due to the OptumRx contract expiration, while Medical segment revenues are expected to grow 3-5% [7]. Conclusion - The company exited the fiscal fourth quarter positively, with earnings and revenues exceeding estimates, and experienced year-over-year growth across all sectors. Shares rose 6.2% in pre-market trading following the results [8].

Cardinal Health Inc (NYSE:CAH) stock is gapping higher on the charts today, after the company announced strong fiscal fourth-quarter results and raised its full-year guidance. Plus, the Ohio-based healthcare name raised its share repurchase expectations for fiscal 2025 to a total of $750 million. At last glance, CAH was up 3.6% at $106.31, earlier as high as $109. This positive price action has the stock flipping above the $105 level, which has provided pressure since April, as well as its 200-day moving av ...

For the quarter ended June 2024, Cardinal Health (CAH) reported revenue of $59.87 billion, up 12% over the same period last year. EPS came in at $1.84, compared to $1.55 in the year-ago quarter.The reported revenue represents a surprise of +1.95% over the Zacks Consensus Estimate of $58.72 billion. With the consensus EPS estimate being $1.72, the EPS surprise was +6.98%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine thei ...

Revenue and Earnings - Revenue increased 11 percent to $226.8 billion for fiscal 2024, compared to $205.0 billion for fiscal 2023, primarily driven by growth in branded and specialty pharmaceutical sales[24]. - GAAP operating earnings for fiscal 2024 were $1.2 billion, a 65 percent increase from $752 million in fiscal 2023, influenced by segment profit increases[25][26]. - Non-GAAP operating earnings rose 16 percent to $2.4 billion in fiscal 2024, compared to $2.1 billion in fiscal 2023[25][28]. - GAAP diluted EPS increased to $3.45 in fiscal 2024 from $1.26 in fiscal 2023, while non-GAAP diluted EPS rose 29 percent to $7.53[30][34]. - The total consolidated operating earnings increased by 65% to $1.243 billion in fiscal 2024 compared to the previous year[70]. - Non-GAAP net earnings attributable to Cardinal Health, Inc. for fiscal year 2024 were $1,856 million, an increase of 21% from the prior year[177]. Cash and Investments - Cash and equivalents balance was $5.1 billion at June 30, 2024, up from $4.1 billion at June 30, 2023, with net cash provided by operating activities at $3.8 billion[35]. - The company deployed $1.2 billion for the Specialty Networks acquisition and $750 million for share repurchases during fiscal 2024[35]. - Share repurchases amounted to $750 million in fiscal 2024, down from $2.0 billion in fiscal 2023[113]. - Capital expenditures for fiscal 2024 were $511 million, with expectations for fiscal 2025 to be between $500 million and $550 million[111]. Segment Performance - Pharmaceutical and Specialty Solutions segment revenue increased by 11% in fiscal 2024, reaching $210.0 billion, driven by branded and specialty pharmaceutical sales growth[51]. - Global Medical Products and Distribution (GMPD) segment revenue grew by 1% to $12.4 billion in fiscal 2024, primarily due to higher volumes from existing customers[51]. - Segment profit for Pharmaceutical and Specialty Solutions increased by 7% to $2.015 billion in fiscal 2024, while GMPD segment profit improved to $92 million from a loss of $147 million in the previous year[70]. - Fiscal 2024 profit for the Pharmaceutical and Specialty Solutions segment increased primarily due to the positive performance of the generics program[71]. - Fiscal 2024 profit for the Global Medical Products and Distribution (GMPD) segment increased due to beneficial comparisons to prior-year inflationary impacts[72]. Organizational Changes - The updated organizational structure includes two reportable segments: Pharmaceutical and Specialty Solutions, and Global Medical Products and Distribution[19]. - Effective January 1, 2024, the company implemented a new enterprise operating and segment reporting structure, comprising two reportable segments: Pharmaceutical and Specialty Solutions, and Global Medical Products and Distribution[136]. Goodwill and Impairments - The company reported a pre-tax non-cash goodwill impairment charge of $675 million related to the GMPD segment for fiscal 2024[26][32]. - The company allocated $90 million of goodwill to the GMPD reporting unit, resulting in a full impairment of GMPD's remaining goodwill balance[48]. - Cumulative pre-tax goodwill impairment charges for the GMPD segment were $675 million, $1.2 billion, and $2.1 billion for fiscal years 2024, 2023, and 2022, respectively[159]. Litigation and Settlements - As of June 30, 2024, the company has accrued $5.4 billion related to opioid litigation, with expected payments continuing through 2038[109]. - The company accrued $363 million for opioid litigation as of June 30, 2024, reflecting the current estimate of probable loss[149]. - A settlement agreement for IVC filter product liability claims was executed for $275 million, resolving approximately 4,375 claims[150]. - The company continues to engage in resolution discussions regarding opioid litigation, with agreements in principle reached with various parties[149]. Future Outlook - Future outlook includes continued focus on enhancing supply chain efficiency and integrated care coordination across healthcare providers[18]. - The expiration of OptumRx contracts, which contributed 17% of consolidated revenue in fiscal 2024, is anticipated to negatively impact operating cash flow in fiscal 2025[39]. - The company expects inflationary impacts to continue affecting GMPD segment profit in fiscal 2025, although mitigation actions are anticipated to offset these costs[46]. Tax and Other Financial Metrics - The effective tax rate for non-GAAP earnings before income taxes was 21.7% for fiscal year 2024[177]. - The company recognized tax benefits related to goodwill impairment charges amounting to $58 million, $92 million, and $140 million for fiscal years 2024, 2023, and 2022, respectively[159]. - The allowance for doubtful accounts at the end of fiscal 2024 was $233 million, representing 1.9% of customer receivables[125]. Acquisitions and Divestitures - The company completed the acquisition of Specialty Networks for a purchase price of $1.2 billion in cash on March 18, 2024[96]. - The divestiture of the Cordis business in August 2021 generated net proceeds of $923 million in cash[210]. - Cardinal Health expects to continue exploring acquisitions in the future to support its brand medical products and specialty pharmaceutical products[204].

Cardinal Health (CAH) came out with quarterly earnings of $1.84 per share, beating the Zacks Consensus Estimate of $1.72 per share. This compares to earnings of $1.55 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 6.98%. A quarter ago, it was expected that this prescription drug distributor would post earnings of $1.95 per share when it actually produced earnings of $2.08, delivering a surprise of 6.67%.Over the last four qua ...

Q4 FY24 Earnings Cardinal Health, Inc. August 14, 2024 © 2024 Cardinal Health. All Rights Reserved. 1 © 2024 Cardinal Health. All Rights Reserved. INTERNAL USE ONLY • Q4 FY24 Earnings Cautions Concerning Forward-Looking Statements This presentation 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," "wi ...