On August 15, 2023 Cardinal Health (NYSE: CAH) reported fourth quarter fiscal year 2023 revenues of $53.5 billion, an increase of 13% from the fourth quarter of last year. GAAP operating earnings were $137 million, primarily due to a non-cash, pre-tax goodwill impairment charge of $368 million in the Medical segment, which reflects the financial update provided at Investor Day (Press release, Cardinal Health, AUG 15, 2023, View Source [SID1234634420]). GAAP diluted loss per share was $0.25, primarily due to this impairment, net of tax effects. Non-GAAP operating earnings increased 24% to $560 million, driven by increases in Medical and Pharmaceutical segment profit. Non-GAAP diluted earnings per share (EPS) increased 48% to $1.55 in the quarter, reflecting the increase in non-GAAP operating earnings, lower interest and other expense and a lower share count, partially offset by a higher non-GAAP effective tax rate.
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Fiscal year 2023 revenues were $205.0 billion, a 13% increase from fiscal year 2022. GAAP operating earnings were $727 million, due to cumulative non-cash, pre-tax goodwill impairment charges of $1.2 billion in the Medical segment. GAAP diluted EPS were $1.00, primarily due to these impairments, net of tax effects. Non-GAAP operating earnings increased 3% to $2.1 billion, driven by an increase in Pharmaceutical segment profit, partially offset by a decrease in Medical segment profit. Non-GAAP diluted EPS increased 14% to $5.79 for the year, an all-time high, reflecting the increase in non-GAAP operating earnings, lower interest and other expense and a lower share count.
"Fiscal 2023 was an inflection point for Cardinal Health, with improved performance, strong execution and notable progress against both our short and long-term plans," said Jason Hollar, CEO of Cardinal Health. "We are pleased with the strong finish to the year, including robust cash flow generation, continued strong growth in the Pharmaceutical segment and significant improvement in the Medical segment, driven by execution of our Medical Improvement Plan. We enter the new fiscal year with momentum and are raising our previously communicated fiscal year 2024 EPS guidance."
Q4 and full year FY23 summary
Q4 FY23
Q4 FY22
Y/Y
FY23
FY22
Y/Y
Revenue
$53.5 billion
$47.1 billion
13 %
$205.0 billion
$181.4 billion
13 %
Operating earnings/(loss)
$137 million
$36 million
N.M.
$727 million
$(596) million
N.M.
Non-GAAP operating earnings
$560 million
$450 million
24 %
$2.1 billion
$2.0 billion
3 %
Net earnings/(loss) attributable to Cardinal Health, Inc.
$(64) million
$138 million
N.M.
$261 million
$(933) million
N.M.
Non-GAAP net earnings attributable to Cardinal Health, Inc.
$397 million
$289 million
37 %
$1.5 billion
$1.4 billion
7 %
Effective Tax Rate3
154.3 %
575.3 %
58.9 %
(21.2) %
Non-GAAP Effective Tax Rate
27.4 %
25.4 %
22.8 %
22.1 %
Diluted EPS attributable to Cardinal Health, Inc.
$(0.25)
$0.50
N.M.
$1.00
$(3.35)
N.M.
Non-GAAP diluted EPS attributable to Cardinal Health, Inc.
$1.55
$1.05
48 %
$5.79
$5.06
14 %
Segment results
Pharmaceutical segment
Q4 FY23
Q4 FY22
Y/Y
FY23
FY22
Y/Y
Revenue
$49.7 billion
$43.3 billion
15 %
$190.0 billion
$165.5 billion
15 %
Segment profit
$504 million
$451 million
12 %
$2.0 billion
$1.8 billion
13 %
Fourth-quarter revenue for the Pharmaceutical segment increased 15% to $49.7 billion, driven by brand and specialty pharmaceutical sales growth from existing customers.
Pharmaceutical segment profit increased 12% to $504 million in the fourth quarter, primarily driven by positive generics program performance.
Medical segment
Q4 FY23
Q4 FY22
Y/Y
FY23
FY22
Y/Y
Revenue
$3.8 billion
$3.8 billion
— %
$15.0 billion
$15.9 billion
(5) %
Segment profit
$82 million
$(16) million
N.M.
$111 million
$216 million
(49) %
Fourth-quarter revenue for the Medical segment was flat at $3.8 billion. This reflects a decrease in Products and Distribution sales related to lower PPE volumes and pricing, partially offset by inflationary impacts, including mitigation initiatives. This decrease within Products and Distribution was offset by growth in at-Home Solutions.
Medical segment profit increased to $82 million in the fourth quarter, driven by an improvement in net inflationary impacts, including mitigation initiatives, and normalization of PPE margins.
Fiscal year 2024 outlook1,4
The company raised its fiscal year 2024 outlook for non-GAAP earnings per share by $0.05 to $6.50 to $6.75 from the preliminary outlook previously communicated at the company’s Investor Day5, which primarily reflects increased expectations for Pharmaceutical segment profit. The company reiterated its fiscal year 2024 Pharmaceutical segment profit outlook for 4% to 6% growth on higher ending fiscal year 2023 Pharmaceutical segment profit. The company also increased its fiscal year 2024 Pharmaceutical revenue outlook, driven by continued growth of GLP-1 medications, which do not meaningfully contribute to segment profit. Additionally, the company narrowed its range for diluted weighted average shares outstanding. The company reiterated its expectations for all other fiscal year 2024 outlook items:
Non-GAAP earnings per share
$6.50 – $6.75
Pharmaceutical segment:
Revenue
10% to 12% growth
Segment profit
4% to 6% growth
Medical segment:
Revenue
~3% growth
Segment profit
~$400M
Interest and other
$110M – $130M
Non-GAAP effective tax rate
23.0% – 25.0%
Diluted weighted average shares outstanding
250M – 253M
Share repurchases
~$500M
Capital Expenditures
~$500M
Non-GAAP adjusted free cash flow
~$2.0B
Recent highlights
Cardinal Health hosted an Investor Day on June 8th, 2023 where management detailed the company’s growth strategies, highlighted plans for value creation and provided compelling long-term targets.
Cardinal Health completed its business and portfolio review of the Pharmaceutical segment, which included the launch of the new Navista Network supporting community oncologists, the announcement to retain and invest in Nuclear & Precision Health Solutions and the merger of its Outcomes business into Transaction Data Systems.
Cardinal Health announced a new agreement with TrakCel to offer an integrated cell and gene therapy software solution to help biopharma companies track cell therapies through multiple stages of development and commercialization.
Cardinal Health hosted its 31st annual Retail Business Conference, bringing together nearly 4,500 attendees from across the country to celebrate the critical role its independent pharmacy customers play in caring for their communities and highlight the company’s innovations and commitment to its customers.
Cardinal Health announced plans to build a new distribution center in the Greenville, South Carolina, area, to support its at-Home Solutions business.
Cardinal Health was named one of the 2023 Best Companies for Multicultural Women by Seramount.
Cardinal Health Board of Directors approved a quarterly dividend of $0.5006 per share.
Upcoming webcasted investor events
Morgan Stanley 21st Annual Global Healthcare Conference at 9:30am ET, September 12, 2023
Baird 2023 Global Healthcare Conference at 8:30am ET, September 13, 2023
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss fourth quarter and full year 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 until August 14, 2024.