On November 4, 2022 Cardinal Health (NYSE: CAH) reported first quarter fiscal year 2023 revenues of $49.6 billion, an increase of 13% from the first quarter of last year (Press release, Cardinal Health, NOV 4, 2022, View Source [SID1234623111]). First quarter GAAP operating earnings were $137 million, including a non-cash, pre-tax goodwill impairment charge of $154 million in the Medical segment. GAAP diluted earnings per share (EPS) were $0.40. Non-GAAP operating earnings decreased 20% to $423 million in the quarter due to a decline in Medical segment profit, primarily resulting from net inflationary impacts, partially offset by an increase in Pharmaceutical segment profit. Non-GAAP diluted earnings per share decreased 7% to $1.20, reflecting the change in non-GAAP operating earnings, partially offset by lower interest expense and a lower non-GAAP effective tax rate and share count.

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"Our performance in the first quarter demonstrated stable fundamentals in the Pharmaceutical segment and tangible progress in the Medical segment," said Jason Hollar, CEO of Cardinal Health. "We are reaffirming our full year non-GAAP EPS guidance as we remain focused on our Medical Improvement Plan initiatives and building upon the growth of our Pharmaceutical business. Across the company, we are operating with urgency to drive our businesses forward and remain committed to creating shareholder value."

First-quarter revenue for the Pharmaceutical segment increased 15% to $45.8 billion, driven by branded pharmaceutical sales growth from existing and net new Pharmaceutical Distribution and Specialty customers.

Pharmaceutical segment profit increased 6% to $431 million in the first quarter, driven by generics program performance and a higher contribution from brand and specialty products, partially offset by inflationary supply chain costs.

First-quarter revenue for the Medical segment decreased 9% to $3.8 billion, driven by lower Products and Distribution sales, primarily due to PPE pricing and volumes. To a lesser extent, this also reflects the divestiture of the Cordis business, which was mostly offset by sales growth in at-Home Solutions.

Medical segment loss of $8 million in the first quarter was primarily due to net inflationary impacts in Products and Distribution and a lower contribution from PPE. The first quarter loss reflects $20 million in total inventory charges related to the previously-announced simplification actions, including the sale of certain disposable gloves primarily utilized in non-healthcare industries.

Fiscal year 2023 outlook1
The company reaffirmed its fiscal year 2023 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. of $5.05 to $5.40.

This guidance includes an update to Medical segment profit outlook to flat to 20% decline, from 10% growth to 10% decline, which reflects the impact of the previously announced simplification actions. Additionally, the company updated expectations for its fiscal 2023 interest and other to $140 million to $160 million, from $140 million to $170 million; its non-GAAP effective tax rate to 23% to 24%, from 23% to 25%; and its diluted weighted average shares outstanding to 262 million to 264 million, from 262 million to 266 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.

Recent highlights

Cardinal Health announced initiatives aimed at positioning the company for long-term success, building on Cardinal Health’s previously announced growth plans. These initiatives have benefited from input received from Elliott Investment Management L.P and include (1) the appointment of four new independent directors to the Board of Directors ("Board"); (2) the formation of the Business Review Committee of the Board, to support a comprehensive review of the company’s strategy, portfolio, capital-allocation framework and operations with the goal of maximizing Cardinal Health’s potential for the benefit of all stakeholders; and (3) the company’s plan to hold an Investor Day in the first half of calendar 2023 to share the conclusions of the Business Review Committee’s review and to provide additional guidance.
Cardinal Health announced Debbie Weitzman became CEO of the company’s Pharmaceutical Segment on September 19, 2022, after serving in her prior role of President of Pharmaceutical Distribution. As part of the company’s broader simplification efforts, Cardinal Health took actions to further streamline the Pharmaceutical Segment with efforts aimed to strengthen Pharmaceutical Distribution and Specialty, a key growth area, as well as bring together similar services under one team.
Cardinal Health announced the exit of its non-healthcare disposable gloves portfolio on September 13, 2022. The sale of this product portfolio is part of the company’s ongoing simplification actions, which resulted in approximately $20 million in total inventory charges in the first quarter of fiscal year 2023.
Cardinal Health was named to Seramount’s 2022 Inclusion Index, an honor recognizing companies committed to advancing diversity, equity and inclusion (DE&I) in the workplace.
Upcoming webcasted investor events

Evercore ISI Healthcare Conference at 8:50 a.m. EST, November 30, 2022
J.P. Morgan Healthcare Conference, January 9-12, 2023
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 on the Investor Relations page for 12 months.