On November 9, 2021 Cardinal Health (NYSE: CAH) reported first quarter fiscal year 2022 revenues of $44.0 billion, an increase of 13% from the first quarter of last year (Press release, Cardinal Health, NOV 9, 2021, View Source [SID1234594997]). First quarter GAAP operating earnings were $415 million and GAAP diluted earnings per share (EPS) were $0.94. Prior year first quarter GAAP results included an operating loss of $624 million due to a $1.0 billion pretax accrual related to opioid litigation. Non-GAAP operating earnings decreased 15% to $527 million in the quarter, primarily due to a decline in Medical segment profit. Non-GAAP diluted earnings per share decreased 15% to $1.29.
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"Our first quarter results were in line with our expectations," said Mike Kaufmann, CEO of Cardinal Health. "We are reaffirming our full-year non-GAAP EPS guidance, despite our expectation that we will see greater inflationary pressures in the Medical segment for the remainder of the year, which we are taking action to mitigate. With an additional $3 billion share repurchase authorization and our commitment to our dividend, we are positioned to return capital to shareholders, while prioritizing investment in our growth businesses, technology and digital transformation, simplifying our operating model, and strengthening our core businesses," Kaufmann concluded.
First-quarter revenue for the Pharmaceutical segment increased 13% to $39.8 billion, driven primarily by branded pharmaceutical sales growth from large Pharmaceutical Distribution and Specialty customers.
Pharmaceutical segment profit increased 1% to $406 million in the first quarter. This reflects an improvement in volumes compared to the prior year, which was adversely impacted by COVID-19. This improvement was largely offset by investments in technology enhancements.
First-quarter revenue for the Medical segment increased 5% to $4.1 billion, driven primarily by PPE sales. This was partially offset by the divestiture of the Cordis business.
Medical segment profit decreased 46% to $123 million in the first quarter primarily due to elevated supply chain costs. To a lesser extent, this also reflects the divestiture of the Cordis business as well as net favorability in the prior year attributed to COVID-19.
Fiscal year 2022 outlook1
The company reaffirmed its fiscal year 2022 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. of $5.60 to $5.90.
This guidance includes an update to Medical segment profit outlook to mid-single to low-double digit percentage decline, from low-double digit percentage growth. This update reflects net incremental elevated supply chain costs of approximately $100 million to $125 million. Additionally, the company updated expectations for its fiscal 2022 non-GAAP effective tax rate to 23% to 25%, from 23.5% to 25.5%, and its diluted weighted average shares outstanding to 280 million to 282 million, from 287 million to 292 million.
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.
Long-term financial targets
The company announced long-term segment profit targets of low to mid-single digit growth in the Pharmaceutical segment and mid to high-single digit growth in the Medical segment. The company is also targeting to average a double-digit combined Non-GAAP EPS growth and dividend yield.
Recent highlights
Cardinal Health Board of Directors approved a 3-year authorization to repurchase up to an additional $3 billion of Cardinal Health common shares, which will expire on December 31, 2024.
Cardinal Health, along with pharmaceutical distribution peers, announced that enough states have agreed to participate in the previously announced proposed settlement agreement to proceed to the next phase, which is the subdivision sign-on period.
Cardinal Health announced a comprehensive talent strategy to increase representation of diverse employees at the manager level and above by 2030 and established a goal to reduce Scope 1 and Scope 2 greenhouse gas emissions 50% by 2030.
Cardinal Health announced that it has extended its agreements with CVS Health to distribute pharmaceuticals to retail pharmacies and distribution centers through June 30, 2027.
Cardinal Health announced an agreement with TerraPower that will help develop and produce Actinium-225, which will be utilized in drug trials involving targeted alpha therapy for diseases such as breast, prostate, colon and neuroendocrine cancers, melanoma and lymphoma.
Cardinal Health announced its efforts to commercialize and broaden access to over-the-counter rapid COVID-19 tests through partnerships with Abbott and Quidel Corporation.
Upcoming webcasted investor events
Credit Suisse 30th Annual Healthcare Conference at 10:30 a.m. EST, November 10, 2021
J.P. Morgan 40th Annual Healthcare Conference on January 10-13, 2022
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. EST to discuss first 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 until November 8, 2022.