- Revenue increased 13% to $50.5
billion
- GAAP1 operating earnings were $572 million; GAAP diluted EPS was $1.34
- Non-GAAP operating earnings increased 11% to $606 million; non-GAAP diluted EPS increased 20%
to $1.74
- Fiscal year 2023 non-GAAP EPS guidance raised and narrowed
to $5.60 to $5.80, from $5.20
to $5.50
- Fiscal year 2023 adjusted free cash flow guidance raised and
narrowed to $2.0 to $2.3 billion, from $1.5 to $2.0
billion
DUBLIN,
Ohio, May 4, 2023 /PRNewswire/ -- Cardinal
Health (NYSE: CAH) today reported third quarter fiscal year 2023
revenues of $50.5 billion, an
increase of 13% from the third quarter of fiscal year 2022. Third
quarter GAAP operating earnings were $572
million and GAAP diluted earnings per share (EPS) were
$1.34. Third quarter non-GAAP
operating earnings increased 11% to $606
million due to a significant increase in Pharmaceutical
segment profit, partially offset by a decline in Medical segment
profit. Non-GAAP diluted EPS increased 20% to $1.74, reflecting the improvement in non-GAAP
operating earnings, a lower share count and lower interest expense,
partially offset by a higher non-GAAP effective tax rate.
"Our third quarter results were led by continued momentum and
growth in the Pharmaceutical segment," said Jason Hollar, CEO of Cardinal Health. "With the
strong overall performance in the quarter, we are pleased to raise
our full year non-GAAP EPS guidance by $0.35 at the midpoint. In Medical, we continue to
see improvement in underlying performance and remain confident in
our Medical Improvement Plan initiatives. Across the enterprise, we
continue to operate with urgency to drive our businesses forward
and create value for our shareholders."
Q3 FY23 summary
|
Q3
FY23
|
|
Q3 FY22
|
|
Y/Y
|
Revenue
|
$50.5
billion
|
|
$44.8
billion
|
|
13 %
|
Operating
earnings/(loss)
|
$572
million
|
|
$(97)
million
|
|
N.M.
|
Non-GAAP operating
earnings
|
$606
million
|
|
$545 million
|
|
11 %
|
Net earnings/(loss)
attributable to Cardinal Health, Inc.
|
$345
million
|
|
$(1,391)
million
|
|
N.M.
|
Non-GAAP net earnings
attributable to Cardinal Health, Inc.
|
$447
million
|
|
$402 million
|
|
11 %
|
Effective Tax
Rate2
|
36.3 %
|
|
(916.5) %
|
|
|
Non-GAAP Effective Tax
Rate
|
22.4 %
|
|
20.1 %
|
|
|
Diluted EPS
attributable to Cardinal Health, Inc.
|
$1.34
|
|
$(5.05)
|
|
N.M.
|
Non-GAAP diluted EPS
attributable to Cardinal Health, Inc.
|
$1.74
|
|
$1.45
|
|
20 %
|
Segment results
Pharmaceutical segment
|
Q3
FY23
|
|
Q3 FY22
|
|
Y/Y
|
Revenue
|
$
46.8 billion
|
|
$
41.0 billion
|
|
14 %
|
Segment
profit
|
$
600 million
|
|
$
487 million
|
|
23 %
|
Third-quarter revenue for the Pharmaceutical segment increased
14% to $46.8 billion, driven by brand
and specialty pharmaceutical sales growth from existing
customers.
Pharmaceutical segment profit increased 23% to $600 million in the third quarter, driven by
positive generics program performance and a higher contribution
from brand and specialty products.
Medical segment
|
Q3
FY23
|
|
Q3 FY22
|
|
Y/Y
|
Revenue
|
$
3.7 billion
|
|
$
3.9 billion
|
|
(5) %
|
Segment
profit
|
$
20 million
|
|
$
59 million
|
|
(66) %
|
Third-quarter revenue for the Medical segment decreased 5% to
$3.7 billion, driven by lower
Products and Distribution sales, primarily due to PPE volumes and
pricing.
Medical segment profit decreased 66% to $20 million in the third quarter, primarily
due to lower Products and Distribution volumes and unfavorable
sales mix. Additionally, these results reflect both net unfavorable
non-recurring adjustments, including simplification actions, and an
improvement in PPE margins.
Fiscal year 2023 outlook1
The company raised and narrowed its fiscal year 2023 guidance
range for non-GAAP diluted earnings per share attributable to
Cardinal Health, Inc. to $5.60 to
$5.80, from $5.20 to $5.50.
This guidance includes an update to fiscal year 2023
Pharmaceutical segment profit outlook to 10.5% to 12% growth, from
4% to 6.5% growth and Medical segment profit outlook to a decline
of approximately 50%, from flat to a decline of 20%.
Additionally, the company now expects interest and other in the
range of $95 to $105 million, a non-GAAP effective tax rate of
22% to 23%, diluted weighted average shares outstanding of 262 to
263 million, capital expenditures of ~$450
million and adjusted free cash flow of $2.0 to $2.3
billion.
The company does not provide forward-looking guidance on a GAAP
basis as certain financial information, the probable significance
of which cannot be determined, is not available and cannot be
reasonably estimated. See "Use of Non-GAAP Measures" following the
attached schedules for additional explanation.
Investor Day
The company plans to host an Investor Day at 9:00 a.m. Eastern Standard Time on June 8 in New York
City to detail its growth strategies and provide updates on
its long-term outlook, capital allocation framework and the ongoing
business and portfolio review. The event will be live-webcast and
archived on Cardinal Health's Investor Relations website.
Business Review Committee and Cooperation Agreement
update
Business Review Committee and Cooperation Agreement update
Cardinal Health's management and Board of Directors, with support
from the Business Review Committee, continue to work through the
comprehensive review of the company's strategy, portfolio, capital
allocation framework, and operations. Given the importance of the
work in maximizing Cardinal Health's potential for the benefit of
all stakeholders, the Board has extended the term of the Business
Review Committee for an additional year through July 15, 2024. In connection with this extension,
Cardinal Health has also extended the term of the company's
Cooperation Agreement with Elliott Investment Management L.P.
("Elliott") until the later of July 15,
2024 or until Elliott's representative ceases to serve on,
or resigns from, the company's Board of Directors.
Recent highlights
- Cardinal Health initiated and completed a $250 million dollar accelerated share repurchase
program in the third quarter, resulting in a total of $1.5 billion year-to-date share repurchases in
fiscal year 2023.
- Cardinal Health announced the opening of two new distribution
centers in Central Ohio. Both
facilities support the company's Medical segment, focusing on its
U.S. Medical Products and Distribution and at-Home Solutions
businesses.
- Cardinal Health announced its collaboration with Signify Health
to offer in-home clinical and medication management services
through its Outcomes™ business.
- Cardinal Health was selected by Autolus to provide core
distribution capabilities required for U.S. commercialization of
CAR T-cell therapies.
- Cardinal Health recently introduced the Kangaroo OMNI™ Enteral
Feeding platform, which is designed to accurately deliver thick
formula and meet enteral feeding needs, from the hospital to home
and infancy to end of life. OMNI™ is expected to launch in
the United States and Canada in early fiscal year 2024.
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. Eastern Standard Time to discuss
third-quarter results. To access the webcast and corresponding
slide presentation, go to the Investor Relations page at
ir.cardinalhealth.com. No access code is required.
Presentation slides and a webcast replay will be available on
the Investor Relations page for 12 months.
About Cardinal Health
Cardinal Health is a distributor of pharmaceuticals, a global
manufacturer and distributor of medical and laboratory products,
and a provider of performance and data solutions for health care
facilities. With more than 50 years in business, operations in more
than 30 countries and approximately 46,500 employees globally,
Cardinal Health is essential to care. Information about Cardinal
Health is available at cardinalhealth.com.
Contacts
Media: Erich Timmerman,
erich.timmerman@cardinalhealth.com and 614.757.8231
Investors: Kevin Moran,
kevin.moran@cardinalhealth.com and 614.757.7942
1GAAP refers to U.S. generally accepted accounting
principles. This news release includes GAAP financial measures as
well as non-GAAP financial measures, which are financial measures
not calculated in accordance with GAAP. See "Use of Non-GAAP
Measures" following the attached schedules for definitions of the
non-GAAP financial measures presented in this news release and see
the attached schedules for reconciliations of the differences
between the non-GAAP financial measures and their most directly
comparable GAAP financial measures.
2During the third quarters of fiscal 2023 and 2022,
GAAP effective tax rates were 36.3% and (916.5%), respectively, and
included the impact of year-to-date non-cash, pre-tax goodwill
impairments of $863 million and
$1.8 billion, respectively, in the
Medical segment. These impairments increased the estimated annual
effective tax rate in fiscal 2023 and significantly decreased the
annual effective tax in fiscal 2022. Applying the tax rate to the
year-to-date income/loss resulted in recognizing an interim tax
expense in the third quarter of fiscal year 2023 and 2022 of
approximately $74 million and
$1.2 billion, respectively.
Cardinal Health uses its website as a channel of distribution
for material company information. Important information, including
news releases, financial information, earnings and analyst
presentations, and information about upcoming presentations and
events is routinely posted and accessible on the Investor Relations
page at ir.cardinalhealth.com. In addition, the website allows
investors and other interested persons to sign up automatically to
receive email alerts when the company posts news releases, SEC
filings and certain other information on its website.
Cautions Concerning Forward-Looking Statements
This 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 various accruals and estimates. 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 risks arising from ongoing
inflationary pressures and supply chain constraints, including the
risk that our plans to mitigate such effects may not be as
successful as we anticipate; the possibility that our Medical unit
goodwill could be further impaired due to increases in global
interest rates, possible unfavorable changes in the U.S. statutory
tax rate or additional changes to our long-term financial plan;
competitive pressures in Cardinal Health's various lines of
business; the performance of our generics program, including the
amount or rate of generic deflation and our ability to offset
generic deflation and maintain other financial and strategic
benefits through our generic sourcing venture or other components
of our generics programs; ongoing risks associated with the
distribution of opioids, including the financial impact associated
with the settlements with governmental authorities, the risk that
challenges to our plans to take tax deductions for opioid-related
losses could adversely impact our financial results; risks arising
from the Department of Justice investigation which we believe
concerns our anti-diversion program and risks associated with the
injunctive relief requirements under the national settlement,
including the risk that we may incur higher costs or operational
challenges in the implementation and maintenance of the required
changes; risks associated with the manufacture and sourcing of
certain products, including risks related to our ability and the
ability of third-party manufacturers to import or export certain
products or component parts and to comply with applicable
regulations; our ability to manage uncertainties associated with
the pricing of branded pharmaceuticals; and risks associated with
our cost savings initiatives or other business process initiatives,
such as the Medical Improvement Plan, including the possibility
that they could fail to achieve the intended results. 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 release reflects management's views
as of May 4, 2023. Except to the
extent required by applicable law, Cardinal Health undertakes no
obligation to update or revise any forward-looking statement.
Forward-looking statements are aspirational and not guarantees or
promises that goals, targets or projections will be met, and no
assurance can be given that any commitment, expectation, initiative
or plan in this report can or will be achieved or completed.
Cardinal Health provides definitions and reconciliations of
non-GAAP financial measures and their most directly comparable GAAP
financial measures at ir.cardinalhealth.com.
Schedule
1
|
|
Cardinal Health,
Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings/(Loss)
(Unaudited)
|
|
|
Third
Quarter
|
|
Year-to-Date
|
(in millions, except
per common share amounts)
|
2023
|
|
2022
|
|
%
Change
|
|
2023
|
|
2022
|
|
%
Change
|
Revenue
|
$
50,487
|
|
$
44,836
|
|
13 %
|
|
$
151,559
|
|
$
134,261
|
|
13 %
|
Cost of products
sold
|
48,702
|
|
43,154
|
|
13 %
|
|
146,497
|
|
129,321
|
|
13 %
|
Gross
margin
|
1,785
|
|
1,682
|
|
6 %
|
|
5,062
|
|
4,940
|
|
2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Distribution, selling,
general and administrative expenses
|
1,179
|
|
1,137
|
|
4 %
|
|
3,567
|
|
3,402
|
|
5 %
|
Restructuring and
employee severance
|
16
|
|
31
|
|
|
|
62
|
|
56
|
|
|
Amortization and other
acquisition-related costs
|
74
|
|
79
|
|
|
|
216
|
|
237
|
|
|
Impairments and
(gain)/loss on disposal of assets, net 1
|
20
|
|
471
|
|
|
|
883
|
|
1,764
|
|
|
Litigation
(recoveries)/charges, net
|
(76)
|
|
61
|
|
|
|
(256)
|
|
113
|
|
|
Operating
earnings/(loss)
|
572
|
|
(97)
|
|
N.M.
|
|
590
|
|
(632)
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)/expense,
net
|
—
|
|
3
|
|
|
|
(5)
|
|
(14)
|
|
|
Interest expense,
net
|
28
|
|
38
|
|
(26) %
|
|
78
|
|
115
|
|
(32) %
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
|
|
—
|
|
10
|
|
|
Gain on sale of equity
interest in naviHealth
|
—
|
|
(1)
|
|
|
|
—
|
|
(2)
|
|
|
Earnings/(loss) before
income taxes
|
544
|
|
(137)
|
|
N.M.
|
|
517
|
|
(741)
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes 2
|
197
|
|
1,253
|
|
N.M.
|
|
189
|
|
328
|
|
N.M.
|
Net
earnings/(loss)
|
347
|
|
(1,390)
|
|
N.M.
|
|
328
|
|
(1,069)
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net earnings
attributable to noncontrolling interests
|
(2)
|
|
(1)
|
|
|
|
(3)
|
|
(2)
|
|
|
Net earnings/(loss)
attributable to Cardinal Health, Inc.
|
$
345
|
|
$
(1,391)
|
|
N.M.
|
|
$
325
|
|
$
(1,071)
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(Loss) per
common share attributable to Cardinal Health, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
1.35
|
|
$
(5.05)
|
|
N.M.
|
|
$
1.24
|
|
$
(3.82)
|
|
N.M.
|
Diluted
|
1.34
|
|
(5.05)
|
|
N.M.
|
|
1.23
|
|
(3.82)
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
256
|
|
275
|
|
|
|
263
|
|
281
|
|
|
Diluted
|
258
|
|
275
|
|
|
|
264
|
|
281
|
|
|
|
1
Impairments and (gain)/loss on disposal of assets, net included
pre-tax goodwill impairment charges related to the Medical segment
of $863 million recorded during the nine months ended March 31,
2023. During the three and nine months ended March 31, 2022,
impairments and (gain)/loss on disposal of assets, net included
pre-tax impairment charges of $474 million and $1.8 billion related
to the Medical segment, respectively.
|
|
2 For fiscal
2023, the estimated net tax benefit related to the impairments is
$68 million and is included in the annual effective tax rate. As a
result, the amount of tax expense recognized increased
approximately by an incremental $74 million during the three months
ended March 31, 2023. The incremental interim tax benefit
recognized during the nine months ended March 31, 2023 was $66
million and will reverse in the fourth quarter of the fiscal year.
For fiscal 2022, the estimated net tax benefit related to the
impairment was $126 million and was included in the annual
effective tax rate. As a result, the amount of tax expense
recognized during the three and nine months ended March 31, 2022
increased approximately by an incremental $1.2 billion and $180
million, respectively, and lowered the provision for income taxes
during the fourth quarter of fiscal 2022 by approximately $180
million.
|
Schedule
2
|
|
Cardinal Health,
Inc. and Subsidiaries Condensed Consolidated
Balance Sheets
|
|
(in
millions)
|
March 31,
2023
|
|
June 30,
2022
|
Assets
|
(Unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and
equivalents
|
$
3,990
|
|
$
4,717
|
Trade receivables,
net
|
10,992
|
|
10,561
|
Inventories,
net
|
16,620
|
|
15,636
|
Prepaid expenses and
other
|
1,895
|
|
2,021
|
Total current
assets
|
33,497
|
|
32,935
|
|
|
|
|
Property and equipment,
net
|
2,362
|
|
2,361
|
Goodwill and other
intangibles, net
|
6,567
|
|
7,629
|
Other assets
|
951
|
|
953
|
Total
assets
|
$
43,377
|
|
$
43,878
|
|
|
|
|
Liabilities and
Shareholders' Deficit
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
29,601
|
|
$
27,128
|
Current portion of
long-term obligations and other short-term borrowings
|
26
|
|
580
|
Other accrued
liabilities
|
2,876
|
|
2,842
|
Total current
liabilities
|
32,503
|
|
30,550
|
|
|
|
|
Long-term obligations,
less current portion
|
4,708
|
|
4,735
|
Deferred income taxes
and other liabilities
|
8,384
|
|
9,299
|
|
|
|
|
Total shareholders'
deficit
|
(2,218)
|
|
(706)
|
Total liabilities
and shareholders' deficit
|
$
43,377
|
|
$
43,878
|
Schedule
3
|
|
Cardinal Health,
Inc. and Subsidiaries Condensed Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
Third
Quarter
|
|
Year-to-Date
|
(in
millions)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net
earnings/(loss)
|
$
347
|
|
$
(1,390)
|
|
$
328
|
|
$
(1,069)
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
175
|
|
181
|
|
516
|
|
513
|
Impairments and
(gain)/loss on disposal of assets, net
|
20
|
|
471
|
|
883
|
|
1,764
|
Impairments and loss
on sale of other investments
|
—
|
|
3
|
|
—
|
|
3
|
(Gain)/loss on sale of
equity interest in naviHealth
|
—
|
|
(1)
|
|
—
|
|
(2)
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
—
|
|
10
|
Share-based
compensation
|
21
|
|
23
|
|
69
|
|
65
|
Provision for bad
debts
|
20
|
|
21
|
|
79
|
|
46
|
Change in operating
assets and liabilities, net of effects from acquisitions and
divestitures:
|
|
|
|
|
|
|
|
(Increase)/decrease in
trade receivables
|
409
|
|
(864)
|
|
(510)
|
|
(1,193)
|
(Increase)/decrease in
inventories
|
631
|
|
(561)
|
|
(1,012)
|
|
(922)
|
Increase/(decrease) in
accounts payable
|
(481)
|
|
62
|
|
2,473
|
|
1,121
|
Other accrued
liabilities and operating items, net
|
219
|
|
1,636
|
|
(845)
|
|
(206)
|
Net cash provided
by/(used in) operating activities
|
1,361
|
|
(419)
|
|
1,981
|
|
130
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Proceeds from
divestitures, net of cash sold
|
—
|
|
(4)
|
|
—
|
|
923
|
Acquisition of
subsidiaries, net of cash acquired
|
(10)
|
|
—
|
|
(10)
|
|
—
|
Additions to property
and equipment
|
(109)
|
|
(82)
|
|
(264)
|
|
(223)
|
Proceeds from disposal
of property and equipment
|
—
|
|
—
|
|
2
|
|
11
|
Purchases of
investments
|
(1)
|
|
(34)
|
|
(6)
|
|
(38)
|
Proceeds from sale of
investments
|
—
|
|
5
|
|
1
|
|
27
|
Proceeds from net
investment hedge terminations
|
29
|
|
71
|
|
29
|
|
71
|
Net cash provided
by/(used in) investing activities
|
(91)
|
|
(44)
|
|
(248)
|
|
771
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Reduction of long-term
obligations
|
(558)
|
|
(5)
|
|
(571)
|
|
(597)
|
Net tax
proceeds/(withholdings) from share-based compensation
|
2
|
|
1
|
|
11
|
|
(26)
|
Dividends on common
shares
|
(128)
|
|
(136)
|
|
(399)
|
|
(425)
|
Purchase of treasury
shares
|
(250)
|
|
(200)
|
|
(1,500)
|
|
(1,000)
|
Net cash used in
financing activities
|
(934)
|
|
(340)
|
|
(2,459)
|
|
(2,048)
|
|
|
|
|
|
|
|
|
Effect of exchange
rates changes on cash and equivalents
|
—
|
|
(2)
|
|
(1)
|
|
(13)
|
Cash reclassified from
assets held for sale
|
—
|
|
—
|
|
—
|
|
109
|
|
|
|
|
|
|
|
|
Net increase/(decrease)
in cash and equivalents
|
336
|
|
(805)
|
|
(727)
|
|
(1,051)
|
Cash and equivalents at
beginning of period
|
3,654
|
|
3,161
|
|
4,717
|
|
3,407
|
Cash and
equivalents at end of period
|
$
3,990
|
|
$
2,356
|
|
$
3,990
|
|
$
2,356
|
Schedule
4
|
|
Cardinal Health,
Inc.
and Subsidiaries Segment Information
|
|
|
Third
Quarter
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
2023
|
|
2022
|
|
(in
millions)
|
2023
|
|
2022
|
Pharmaceutical
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
Revenue
|
|
|
|
Amount
|
$
46,809
|
|
$
40,957
|
|
Amount
|
$
3,684
|
|
$
3,884
|
Growth rate
|
14 %
|
|
17 %
|
|
Growth rate
|
(5) %
|
|
(7) %
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
|
|
|
Segment
profit
|
|
|
|
Amount
|
$
600
|
|
$
487
|
|
Amount
|
$
20
|
|
$
59
|
Growth rate
|
23 %
|
|
(5) %
|
|
Growth rate
|
(66) %
|
|
(66) %
|
Segment profit
margin
|
1.28 %
|
|
1.19 %
|
|
Segment profit
margin
|
0.54 %
|
|
1.52 %
|
Year-to-Date
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
2023
|
|
2022
|
|
(in
millions)
|
2023
|
|
2022
|
Pharmaceutical
|
|
|
|
|
Medical
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
Revenue
|
|
|
|
Amount
|
$ 140,310
|
|
$ 122,154
|
|
Amount
|
$
11,259
|
|
$
12,118
|
Growth rate
|
15 %
|
|
14 %
|
|
Growth rate
|
(7) %
|
|
(3) %
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
|
|
|
Segment
profit
|
|
|
|
Amount
|
$
1,495
|
|
$
1,319
|
|
Amount
|
$
29
|
|
$
232
|
Growth rate
|
13 %
|
|
(1) %
|
|
Growth rate
|
(88) %
|
|
(64) %
|
Segment profit
margin
|
1.07 %
|
|
1.08 %
|
|
Segment profit
margin
|
0.26 %
|
|
1.91 %
|
|
The sum of the
components and certain computations may reflect rounding
adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardinal Health,
Inc. and Subsidiaries GAAP / Non-GAAP
Reconciliation1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
Operating
|
(Loss)
|
|
|
Net
|
|
|
Diluted
|
|
|
Margin
|
|
SG&A2
|
Operating
|
Earnings
|
Before
|
Provision
for
|
Net
|
Earnings3
|
Effective
|
|
EPS
3
|
(in millions, except
per common share amounts)
|
Gross
|
Growth
|
|
Growth
|
Earnings/
|
Growth
|
Income
|
Income
|
Earnings/
|
Growth
|
Tax
|
Diluted
|
Growth
|
Margin
|
Rate
|
SG&A
2
|
Rate
|
(Loss)
|
Rate
|
Taxes
|
Taxes
|
(Loss)
3
|
Rate
|
Rate
|
EPS
3,4
|
Rate
|
Third Quarter
2023
|
GAAP
|
$
1,785
|
6 %
|
$
1,179
|
4 %
|
$
572
|
N.M.
|
$
544
|
$
197
|
$
345
|
N.M.
|
36.3 %
|
$
1.34
|
N.M.
|
Restructuring and
employee severance
|
—
|
|
—
|
|
16
|
|
16
|
4
|
12
|
|
|
0.05
|
|
Amortization and other
acquisition-related costs
|
—
|
|
—
|
|
74
|
|
74
|
19
|
55
|
|
|
0.21
|
|
Impairments and
(gain)/loss on disposal of assets, net 5
|
—
|
|
—
|
|
20
|
|
20
|
(69)
|
89
|
|
|
0.35
|
|
Litigation
(recoveries)/charges, net
|
—
|
|
—
|
|
(76)
|
|
(76)
|
(22)
|
(54)
|
|
|
(0.21)
|
|
Non-GAAP
|
$
1,785
|
6 %
|
$
1,179
|
4 %
|
$
606
|
11 %
|
$
578
|
$
129
|
$
447
|
11 %
|
22.4 %
|
$
1.74
|
20 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
2022
|
GAAP
|
$
1,682
|
(7) %
|
$
1,137
|
2 %
|
$
(97)
|
N.M.
|
$ (137)
|
$
1,253
|
$
(1,391)
|
N.M.
|
(916.5) %
|
$
(5.05)
|
N.M.
|
Restructuring and
employee severance
|
—
|
|
—
|
|
31
|
|
31
|
8
|
23
|
|
|
0.08
|
|
Amortization and other
acquisition-related costs
|
—
|
|
—
|
|
79
|
|
79
|
20
|
59
|
|
|
0.21
|
|
Impairments and
(gain)/loss on disposal of assets, net 5
|
—
|
|
—
|
|
471
|
|
471
|
(1,189)
|
1,660
|
|
|
6.03
|
|
Litigation
(recoveries)/charges, net 6
|
—
|
|
—
|
|
61
|
|
61
|
10
|
51
|
|
|
0.18
|
|
(Gain)/Loss on sale of
equity interest in naviHealth
|
—
|
|
—
|
|
—
|
|
(1)
|
—
|
(1)
|
|
|
—
|
|
Non-GAAP
|
$
1,683
|
(7) %
|
$
1,138
|
2 %
|
$ 545
|
(21) %
|
$ 504
|
$
101
|
$
402
|
(11) %
|
20.1 %
|
$
1.45
|
(5) %
|
1For more
information on these measures, refer to the Use of Non-GAAP
Measures and Definitions schedules.
|
2Distribution, selling, general and
administrative expenses.
|
3Attributable to Cardinal Health, Inc.
|
4 For the
three months ended March 31, 2022, GAAP diluted EPS and the EPS
impact from the GAAP to non-GAAP per share reconciling items are
calculated using a weighted average of 275 million common shares,
which excludes potentially dilutive securities from the denominator
due to their anti-dilutive effects resulting from our GAAP net loss
for the periods. For the three months ended March 31, 2022,
non-GAAP diluted EPS is calculated using a weighted average of 277
million common shares, which includes potentially dilutive
shares.
|
5
Impairments and (gain)/loss on disposal of assets, net included
pre-tax goodwill impairment charges related to the Medical segment
of $863 million recorded during the nine months ended March 31,
2023. For fiscal 2023, the estimated net tax benefit related to the
impairments is $68 million and is included in the annual effective
tax rate. As a result, the amount of tax expense recognized
increased approximately by an incremental $74 million during the
three months ended March 31, 2023.
|
During the three months
ended March 31, 2022, impairments and (gain)/loss on disposal of
assets, net included pre-tax impairment charges of $474 million.
For fiscal 2022, the estimated net tax benefit related to the
impairment was $126 million and was included in the annual
effective tax rate. As a result, the amount of tax expense
recognized during the three months ended March 31, 2022 increased
approximately by an incremental $1.2 billion, and lowered the
provision for income taxes during the fourth quarter of fiscal 2022
by approximately $180 million.
|
6 Litigation
(recoveries)charges, net includes a one-time contingent attorney
fee of $18 million recorded during the three months ended March 31,
2022 related to the finalization of the settlement agreement (the
"Settlement Agreement") resulting in the settlement of the vast
majority of opioid lawsuits filed by state and local governmental
entities. Due to the unique nature and significance of the
Settlement Agreement, and the one-time, contingent nature of the
fee, this related fee was included in litigation
(recoveries)/charges, net.
|
The sum of the
components and certain computations may reflect rounding
adjustments.
|
We generally apply
varying tax rates depending on the item's nature and tax
jurisdiction where it is incurred.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardinal Health,
Inc. and Subsidiaries GAAP / Non-GAAP
Reconciliation1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
Operating
|
(Loss)
|
|
|
Net
|
|
|
Diluted
|
|
|
Margin
|
|
SG&A
2
|
Operating
|
Earnings
|
Before
|
Provision
for
|
Net
|
Earnings3
|
Effective
|
|
EPS
3
|
|
Gross
|
Growth
|
|
Growth
|
Earnings/
|
Growth
|
Income
|
Income
|
Earnings/
|
Growth
|
Tax
|
Diluted
|
Growth
|
(in millions, except
per common share amounts)
|
Margin
|
Rate
|
SG&A
2
|
Rate
|
(Loss)
|
Rate
|
Taxes
|
Taxes
|
(Loss)
3
|
Rate
|
Rate
|
EPS
3,4
|
Rate
|
Year-to-Date
2023
|
GAAP
|
$
5,062
|
2 %
|
$
3,567
|
5 %
|
$
590
|
N.M.
|
$
517
|
$
189
|
$
325
|
N.M.
|
36.7 %
|
$
1.23
|
N.M.
|
State opioid assessment
related to prior fiscal years
|
—
|
|
6
|
|
(6)
|
|
(6)
|
(2)
|
(4)
|
|
|
0.02
|
|
Shareholder cooperation
agreement costs
|
—
|
|
(8)
|
|
8
|
|
8
|
2
|
6
|
|
|
(0.02)
|
|
Restructuring and
employee severance
|
—
|
|
—
|
|
62
|
|
62
|
14
|
48
|
|
|
0.18
|
|
Amortization and other
acquisition-related costs
|
—
|
|
—
|
|
216
|
|
216
|
56
|
160
|
|
|
0.61
|
|
Impairments and
(gain)/loss on disposal of assets, net 5
|
—
|
|
—
|
|
883
|
|
883
|
138
|
745
|
|
|
2.82
|
|
Litigation
(recoveries)/charges, net
|
—
|
|
—
|
|
(256)
|
|
(256)
|
(98)
|
(158)
|
|
|
(0.60)
|
|
Non-GAAP
|
$
5,062
|
2 %
|
$
3,565
|
5 %
|
$
1,497
|
(3) %
|
$ 1,424
|
$
299
|
$
1,122
|
(1) %
|
21.0 %
|
$
4.24
|
6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date
2022
|
GAAP
|
$
4,940
|
(7) %
|
$
3,402
|
— %
|
$
(632)
|
N.M.
|
$ (741)
|
$
328
|
$ (1,071)
|
N.M.
|
(44.4) %
|
$
(3.82)
|
N.M.
|
Surgical gown recall
costs/(income)
|
1
|
|
—
|
|
1
|
|
1
|
—
|
1
|
|
|
—
|
|
Restructuring and
employee severance
|
—
|
|
—
|
|
56
|
|
56
|
14
|
42
|
|
|
0.15
|
|
Amortization and other
acquisition-related costs
|
—
|
|
—
|
|
237
|
|
237
|
61
|
176
|
|
|
0.63
|
|
Impairments and
(gain)/loss on disposal of assets, net 5
|
—
|
|
—
|
|
1,764
|
|
1,764
|
(119)
|
1,883
|
|
|
6.71
|
|
Litigation
(recoveries)/charges, net 6,7
|
—
|
|
—
|
|
113
|
|
113
|
19
|
94
|
|
|
0.33
|
|
Loss on early
extinguishment of debt
|
—
|
|
—
|
|
—
|
|
10
|
3
|
7
|
|
|
0.03
|
|
(Gain)/Loss on sale of
equity interest in naviHealth
|
—
|
|
—
|
|
—
|
|
(2)
|
—
|
(2)
|
|
|
—
|
|
Non-GAAP
|
$
4,942
|
(7) %
|
$
3,402
|
1 %
|
$ 1,540
|
(20) %
|
$ 1,438
|
$
306
|
$ 1,131
|
(20) %
|
21.3 %
|
$
4.01
|
(16) %
|
1For more
information on these measures, refer to the Use of Non-GAAP
Measures and Definitions schedules.
|
2Distribution, selling, general and
administrative expenses.
|
3Attributable to Cardinal Health,
Inc.
|
4 For the
nine months ended March 31, 2022, GAAP diluted EPS and the EPS
impact from the GAAP to non-GAAP per share reconciling items are
calculated using a weighted average of 281 million common shares,
which excludes potentially dilutive securities from the denominator
due to their anti-dilutive effects resulting from our GAAP net loss
for the periods. For the nine months ended March 31, 2022, non-GAAP
diluted EPS is calculated using a weighted average of 282 million
common shares, which includes potentially dilutive
shares.
|
5
Impairments and (gain)/loss on disposal of assets, net included
pre-tax goodwill impairment charges related to the Medical segment
of $863 million recorded during the nine months ended March 31,
2023. For fiscal 2023, the estimated net tax benefit related to the
impairments is $68 million and is included in the annual effective
tax rate. As a result, the incremental interim tax benefit
recognized during the nine months ended March 31, 2023 was $66
million and will reverse in the fourth quarter of the fiscal
year.
|
During the nine months
ended March 31, 2022, impairments and (gain)/loss on disposal
of assets, net included a pre-tax impairment charge of $1.8 billion
related to the Medical segment. For fiscal 2022, the estimated net
tax benefit related to the impairment was $126 million and was
included in the annual effective tax rate. As a result, the amount
of tax expense recognized during the nine months ended March 31,
2022 increased approximately by an incremental $180 million, and
lowered the provision for income taxes during the fourth quarter of
fiscal 2022 by approximately $180 million.
|
6 Litigation
(recoveries)charges, net includes a one-time contingent attorney
fee of $18 million recorded during the nine months ended March 31,
2022 related to the finalization of the Settlement Agreement
resulting in the settlement of the vast majority of opioid lawsuits
filed by state and local governmental entities. Due to the unique
nature and significance of the Settlement Agreement, and the
one-time, contingent nature of the fee, this related fee was
included in litigation (recoveries)/charges, net.
|
7 Litigation
(recoveries)/charges, net for the nine months ended March 31, 2022
does not include a $16 million judgement for lost profits related
to an ordinary course intellectual property claim, which positively
impacted Pharmaceutical segment profit.
|
The sum of the
components and certain computations may reflect rounding
adjustments.
|
We generally apply
varying tax rates depending on the item's nature and tax
jurisdiction where it is incurred.
|
|
|
|
Schedule
6
|
|
|
|
|
|
|
|
|
Cardinal Health,
Inc. and Subsidiaries GAAP / Non-GAAP
Reconciliation - GAAP Cash Flow to Non-GAAP Adjusted Free Cash
Flow
|
|
|
|
|
|
|
|
|
|
Third
Quarter
|
Year-to-Date
|
|
|
|
(in
millions)
|
2023
|
2023
|
|
|
|
GAAP - Cash Flow
Categories
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
1,361
|
$
1,981
|
|
|
|
Net cash used in
investing activities
|
(91)
|
(248)
|
|
|
|
Net cash used in
financing activities
|
(934)
|
(2,459)
|
|
|
|
Effect of exchange
rates changes on cash and equivalents
|
—
|
(1)
|
|
|
|
Net increase/(decrease)
in cash and equivalents
|
$
336
|
$
(727)
|
|
|
|
|
|
|
|
|
|
Non-GAAP Adjusted
Free Cash Flow
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
1,361
|
$
1,981
|
|
|
|
Additions to property
and equipment
|
(109)
|
(264)
|
|
|
|
Payments related to
matters included in litigation (recoveries)/charges, net
|
57
|
373
|
|
|
|
Non-GAAP Adjusted Free
Cash Flow
|
$
1,309
|
$
2,090
|
|
|
|
|
|
|
|
|
|
For more information on
these measures, refer to the Use of Non-GAAP Measures and
Definitions schedules.
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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 addition to analyzing our business based on financial
information prepared in accordance with GAAP, we use these non-GAAP
financial measures internally to evaluate our performance, engage
in financial and operational planning, and determine incentive
compensation because we believe that these measures provide
additional perspective on and, in some circumstances are more
closely correlated to, the performance of our underlying, ongoing
business. We provide these non-GAAP financial measures to investors
as supplemental metrics to assist readers in assessing the effects
of items and events on our financial and operating results on a
year-over-year basis and in comparing our performance to that of
our competitors. However, the non-GAAP financial measures that we
use 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 us 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 below should be carefully
evaluated.
Exclusions from Non-GAAP Financial Measures
Management believes it is useful to exclude the following items
from the non-GAAP measures presented in this report for its own and
for investors' assessment of the business for the reasons
identified below:
- LIFO charges and credits are excluded because the factors that
drive last-in first-out ("LIFO") inventory charges or credits, such
as pharmaceutical manufacturer price appreciation or deflation and
year-end inventory levels (which can be meaningfully influenced by
customer buying behavior immediately preceding our fiscal
year-end), are largely out of our control and cannot be accurately
predicted. The exclusion of LIFO charges and credits from non-GAAP
metrics facilitates comparison of our current financial results to
our historical financial results and to our peer group companies'
financial results. We did not recognize any LIFO charges or credits
during the periods presented.
- Surgical gown recall costs or income includes inventory
write-offs and certain remediation and supply disruption costs, net
of related insurance recoveries, arising from the January 2020 recall of select Association for the
Advancement of Medical Instrumentation ("AAMI") Level 3 surgical
gowns and voluntary field actions (a recall of some packs and a
corrective action allowing overlabeling of other packs) for
Presource Procedure Packs containing affected gowns. Income from
surgical gown recall costs represents insurance recoveries of these
certain costs. We have excluded these costs from our non-GAAP
metrics to allow investors to better understand the underlying
operating results of the business and to facilitate comparison of
our current financial results to our historical financial results
and to our peer group companies' financial results.
- State opioid assessments related to prior fiscal years is the
portion of state assessments for prescription opioid medications
that were sold or distributed in periods prior to the period in
which the expense is incurred. This portion is excluded from
non-GAAP financial measures because it is retrospectively applied
to sales in prior fiscal years and inclusion would obscure analysis
of the current fiscal year results of our underlying, ongoing
business. Additionally, while states' laws may require us to make
payments on an ongoing basis, the portion of the assessment related
to sales in prior periods are contemplated to be one-time,
nonrecurring items. Income from state opioid assessments related to
prior fiscal years represents reversals of accruals due to changes
in estimates or when the underlying assessments were invalidated by
a Court or reimbursed by manufacturers.
- Shareholder cooperation agreement costs includes costs such as
legal, consulting and other expenses incurred in relation to the
agreement (the "Cooperation Agreement") entered into among Elliott
Associates, L.P., Elliott International, L.P. (together, "Elliott")
and Cardinal Health, including costs incurred to negotiate and
finalize the Cooperation Agreement and costs incurred by the new
Business Review Committee of the Board of Directors, which was
formed under this Cooperation Agreement. We have excluded these
costs from our non-GAAP metrics because they do not occur in or
reflect the ordinary course of our ongoing business operations and
may obscure analysis of trends and financial performance.
- Restructuring and employee severance costs are excluded because
they are not part of the ongoing operations of our underlying
business.
- Amortization and other acquisition-related costs, which include
transaction costs, integration costs, and changes in the fair value
of contingent consideration obligations, are excluded because they
are not part of the ongoing operations of our underlying business
and to facilitate comparison of our current financial results to
our historical financial results and to our peer group companies'
financial results. Additionally, costs for amortization of
acquisition-related intangible assets are non-cash amounts, which
are variable in amount and frequency and are significantly impacted
by the timing and size of acquisitions, so their exclusion
facilitates comparison of historical, current and forecasted
financial results. We also exclude other acquisition-related costs,
which are directly related to an acquisition but do not meet the
criteria to be recognized on the acquired entity's initial balance
sheet as part of the purchase price allocation. These costs are
also significantly impacted by the timing, complexity and size of
acquisitions.
- Impairments and gain or loss on disposal of assets, net are
excluded because they do not occur in or reflect the ordinary
course of our ongoing business operations and are inherently
unpredictable in timing and amount, and in the case of impairments,
are non-cash amounts, so their exclusion facilitates comparison of
historical, current and forecasted financial results.
- Litigation recoveries or charges, net are excluded because they
often relate to events that may have occurred in prior or multiple
periods, do not occur in or reflect the ordinary course of our
business and are inherently unpredictable in timing and amount.
During fiscal 2022, we incurred a one-time contingent attorneys'
fee of $18 million related to the
finalization of the settlement agreement (the "Settlement
Agreement") resulting in the settlement of the vast majority of
opioid lawsuits filed by state and local governmental entities. Due
to the unique nature and significance of the Settlement Agreement,
and the one-time, contingent nature of the fee, this fee was
included in litigation recoveries or charges, net. Additionally,
during fiscal 2022 our Pharmaceutical segment profit was positively
impacted by a $16 million judgment
for lost profits. This judgment was the result of an ordinary
course intellectual property rights claim and, therefore, is not
adjusted in calculating the litigation recoveries or charges, net
adjustment. During fiscal 2021, we incurred a tax benefit related
to a carryback of a net operating loss. Some pre-tax amounts, which
contributed to this loss, relate to litigation charges. As a
result, we allocated substantially all of the tax benefit to
litigation charges.
- Loss on early extinguishment of debt is excluded because it
does not typically occur in the normal course of business and may
obscure analysis of trends and financial performance. Additionally,
the amount and frequency of this type of charge is not consistent
and is significantly impacted by the timing and size of debt
extinguishment transactions.
- (Gain)/Loss on sale of equity interest in naviHealth was
incurred in connection with the sale of our remaining equity
interest in naviHealth in fiscal 2020. The equity interest was
retained in connection with the initial sale of our majority
interest in naviHealth during fiscal 2019. We exclude this
significant gain because gains or losses on investments of this
magnitude do not typically occur in the normal course of business
and are similar in nature to a gain or loss from a divestiture of a
majority interest, which we exclude from non-GAAP results. The gain
on the initial sale of our majority interest in naviHealth in
fiscal 2019 was also excluded from our non-GAAP measures.
The tax effect for each of the items listed above is determined
using the tax rate and other tax attributes applicable to the item
and the jurisdiction(s) in which the item is recorded. The gross,
tax and net impact of each item are presented with our GAAP to
non-GAAP reconciliations.
Non-GAAP adjusted free cash flow: We provide this non-GAAP
financial measure as a supplemental metric to assist readers in
assessing the effects of items and events on our cash flow on a
year-over-year basis and in comparing our performance to that of
our peer group companies. In calculating this non-GAAP metric,
certain items are excluded from net cash provided by operating
activities because they relate to significant and unusual or
non-recurring events and are inherently unpredictable in timing and
amount. We believe adjusted free cash flow is important to
management and useful to investors as a supplemental measure as it
indicates the cash flow available for working capital needs, debt
repayments, dividend payments, share repurchases, strategic
acquisitions, or other strategic uses of cash. A reconciliation of
our GAAP financial results to Non-GAAP adjusted free cash flow is
provided in Schedule 6 of the financial statement tables included
with this release.
Forward Looking Non-GAAP Measures
In this document, the Company presents certain forward-looking
non-GAAP metrics. The Company does not provide outlook on a GAAP
basis because the items that the Company excludes from GAAP to
calculate the comparable non-GAAP measure can be dependent on
future events that are less capable of being controlled or reliably
predicted by management and are not part of the Company's routine
operating activities. Additionally, management does not forecast
many of the excluded items for internal use and therefore cannot
create or rely on outlook done on a GAAP basis.
The occurrence, timing and amount of any of the items excluded
from GAAP to calculate non-GAAP could significantly impact the
Company's fiscal 2023 GAAP results. Over the past five fiscal
years, the excluded items have impacted the Company's EPS from
$0.75 to $18.06, which includes a $17.54 charge related to the opioid litigation we
recognized in fiscal 2020.
Definitions
Growth rate calculation: growth rates in this report
are determined by dividing the difference between current-period
results and prior-period results by prior-period results.
Interest and Other, net: other(income)/expense, net plus
interest expense, net.
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.
Non-GAAP gross margin: gross margin, excluding LIFO
charges/(credits) and surgical gown recall costs/(income).
Non-GAAP distribution, selling, general and administrative
expenses or Non-GAAP SG&A: distribution, selling, general
and administrative expenses, excluding surgical gown recall
costs/(income), state opioid assessment related to prior fiscal
years and shareholder cooperation agreement costs.
Non-GAAP operating earnings: operating earnings/(loss)
excluding (1) LIFO charges/(credits), (2) surgical gown recall
costs/(income), (3) state opioid assessment related to prior fiscal
years, (4) shareholder cooperation agreement costs, (5)
restructuring and employee severance, (6) amortization and other
acquisition-related costs, (7) impairments and (gain)/loss on
disposal of assets, net and (8) litigation (recoveries)/charges,
net.
Non-GAAP earnings before income taxes: earnings/(loss)
before income taxes excluding (1) LIFO charges/(credits), (2)
surgical gown recall costs/(income), (3) state opioid assessment
related to prior fiscal years, (4) shareholder cooperation
agreement costs, (5) restructuring and employee severance, (6)
amortization and other acquisition-related costs, (7) impairments
and (gain)/loss on disposal of assets, net, (8) litigation
(recoveries)/charges, net, (9) loss on early extinguishment of debt
and (10) (gain)/loss on sale of equity interest in naviHealth.
Non-GAAP net earnings attributable to Cardinal Health,
Inc.: net earnings/(loss) attributable to Cardinal Health, Inc.
excluding (1) LIFO charges/(credits), (2) surgical gown recall
costs/(income), (3) state opioid assessment related to prior fiscal
years, (4) shareholder cooperation agreement costs, (5)
restructuring and employee severance, (6) amortization and other
acquisition-related costs, (7) impairments and (gain)/loss on
disposal of assets, net, (8) litigation (recoveries)/charges, net,
(9) loss on early extinguishment of debt and (10) (gain)/loss on
sale of equity interest in naviHealth, each net of tax.
Non-GAAP effective tax rate: provision for income taxes
adjusted for the tax impacts of (1) LIFO charges/(credits), (2)
surgical gown recall costs/(income), (3) state opioid assessment
related to prior fiscal years, (4) shareholder cooperation
agreement costs, (5) restructuring and employee severance, (6)
amortization and other acquisition-related costs, (7) impairments
and (gain)/loss on disposal of assets, net, (8) litigation
(recoveries)/charges, net, (9) loss on early extinguishment of debt
and (10) (gain)/loss on sale of equity interest in naviHealth
divided by (earnings before income taxes adjusted for the ten items
above).
Non-GAAP diluted earnings per share attributable to Cardinal
Health, Inc.: non-GAAP net earnings attributable to Cardinal
Health, Inc. divided by diluted weighted-average shares
outstanding.
Non-GAAP adjusted free cash flow: net cash provided by
operating activities less payments related to additions to property
and equipment, excluding settlement payments and receipts related
to matters included in litigation (recoveries)/charges, net, as
defined above, or other significant and unusual or non-recurring
cash payments or receipts. For example, the U.S. federal income tax
refund of $966 million for the tax benefit from the net
operating loss carryback related to a self-insurance pre-tax loss
was excluded from the Company's fiscal 2022 non-GAAP adjusted free
cash flow.
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SOURCE Cardinal Health