Cardinal Health's non-GAAP operating earnings increase 13% to $532M in Q1 FY 2014

Cardinal Health today reported fiscal year 2014 first-quarter revenue of $24.5 billion and a 36 percent increase in non-GAAP diluted earnings per share (EPS) from continuing operations to $1.10. Non-GAAP operating earnings increased 13 percent to $532 million. On a GAAP basis, operating earnings increased 3 percent to $471 million, and diluted EPS from continuing operations increased 25 percent to $0.99. The reported EPS figures include contribution of approximately $0.18 related to settlements with tax authorities for certain outstanding audit periods.

"We are off to an outstanding start to fiscal 2014, with both segments achieving strong margin expansion and earnings growth in the first quarter. Our Pharmaceutical segment performance demonstrated balance across the businesses, with robust results in both our generic and branded programs. Our Medical segment made excellent  progress on its key priorities – building the portfolio of preferred products, achieving results from efficiency initiatives, growing strategic hospital network accounts and integrating the 2013 acquisition of AssuraMed," said George Barrett, chairman and chief executive officer of Cardinal Health. 

Barrett said, "Based on our first-quarter results and the strength of our operating earnings performance, we are increasing our fiscal 2014 outlook for non-GAAP diluted EPS from continuing operations to a range of $3.62 to $3.72."

This guidance range reflects the company's unchanged assumption of 34.5 to 36 percent non-GAAP effective tax rate range given expectations of further volatility in the quarterly tax rate for the remainder of the year.

"Recognizing our strong operating cash flow and the strength of our balance sheet, the board has approved a new, three-year authorization to repurchase up to $1 billion of Cardinal Health common shares," said Barrett. "This approval allows us to continue our flexible and balanced approach to capital deployment."

The share repurchase program is in addition to the existing share repurchase program approved in August 2012, of which $350 million remains available.

Q1 FY14 SUMMARY

Settlements of federal and state tax matters favorably impacted first-quarter fiscal 2014 GAAP and non-GAAP diluted EPS by $0.18 per share.

SEGMENT RESULTS

Pharmaceutical segment

As expected, revenue for the Pharmaceutical segment declined 7 percent to $21.8 billion, driven by the previously announced expiration of the Express Scripts contract on Sept. 30, 2012, and the Walgreens contract on Aug. 31, 2013. The decline was partially offset by volume growth from new and existing customers. Segment profit increased 8 percent to $433 million, with both generic and branded programs showing strong performance.

Medical segment

Revenue for the Medical segment was up 13 percent to $2.7 billion, driven by the early 2013 acquisition of AssuraMed, the leading distributor of medical products to the home. The segment also realized strong growth in its strategic hospital network accounts. Segment profit increased 43 percent to $106 million, primarily driven by the AssuraMed acquisition, planned efficiency initiatives and growth in preferred products, an offering that includes Cardinal Health-branded products.

ADDITIONAL FIRST-QUARTER AND RECENT HIGHLIGHTS 

• Patricia A. Hemingway Hall, president and CEO of Health Care Service Corp., elected to board of directors
• Launched the Specialty Pharmacy Alliance, a new suite of services that makes it easier for community pharmacies to improve their patients' access to, and compliance with, specialty medications
• Launched service for retail pharmacies to give their customers convenient access to more than 40,000 home medical products through AssuraMed's Independence Medical
• Announced strategic alignment with FedEx to offer health care third-party logistics solutions

CONFERENCE CALL
Cardinal Health will host a webcast and conference call today at 8:30 a.m. Eastern to discuss first-quarter results. To access the call and corresponding slide presentation, go to the Investors page at cardinalhealth.com or dial 224.357.2209. There is no access code required for the call.  

There is no pre-registration for the call. Participants are advised to dial into the call at least 10 minutes prior to the start time.

Presentation slides and an audio replay will be archived on the Cardinal Health website after the conclusion of the meeting. The audio replay will also be available until Nov. 6 by dialing 855.859.2056 or 404.537.3406, passcode 76902753.

UPCOMING WEBCASTED INVESTOR EVENTS

• Annual Meeting of Shareholders at 8 a.m. Eastern on Nov. 6 at the company headquarters in Dublin, Ohio
• Investor and Analyst Day at 8 a.m. Eastern on Dec. 10 in New York

At these events, Cardinal Health executives will discuss the company's diverse products and services, company performance and strategies for continued growth. To access more details and a live webcast of the events, go to the Investors page at cardinalhealth.com.

SOURCE Cardinal Health