Cardinal Health(US:CAH)2024-08-14 12:47Revenue 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].