On February 3, 2022 Cardinal Health (NYSE: CAH) reported second quarter fiscal year 2022 revenues of $45.5 billion, an increase of 9% from the second quarter of last year. Second quarter GAAP operating loss was $950 million due to a non-cash, pre-tax goodwill impairment of $1.3 billion related to the Medical segment (Press release, Cardinal Health, FEB 3, 2022, View Source [SID1234607698]). GAAP diluted earnings per share (EPS) were $0.17, primarily due to this impairment, net of tax effects. Second quarter non-GAAP operating earnings decreased 26% to $467 million and non-GAAP diluted earnings per share (EPS) decreased 27% to $1.27, primarily due to inflationary impacts and global supply chain constraints in the Medical segment.

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Cardinal Health, Inc. is a global, integrated healthcare services and products company, providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories and physician offices worldwide. (PRNewsfoto/Cardinal Health)

"Consistent with our January update, we continue to experience significant inflationary impacts and global supply chain constraints in our US Medical Products and Distribution business. We’re taking action to drive performance in the Medical segment, including evolving our commercial contracting strategies and driving mix, simplifying our operating model, and investing in our growth businesses," said Mike Kaufmann, chief executive officer of Cardinal Health. "Our second quarter results demonstrate continued performance in other areas, including: growth in the Pharma segment, progress towards our $750 million enterprise cost savings target, strong cash flow generation, and efficient capital deployment."

Second-quarter revenue for the Pharmaceutical segment increased 11% to $41.4 billion, driven primarily by branded pharmaceutical sales growth from large Pharmaceutical Distribution and Specialty customers.

Pharmaceutical segment profit increased 3% to $426 million in the second quarter driven by generics program performance. This was partially offset by investments in technology enhancements and higher operations expenses.

Second-quarter revenue for the Medical segment decreased 5% to $4.1 billion, primarily due to the divestiture of the Cordis business.

Medical segment profit decreased 79% to $50 million in the second quarter, primarily due to inflationary impacts and global supply chain constraints in products and distribution. This also reflects the timing of selling higher cost PPE, including the net positive impact in the prior year, and to a lesser extent, the divestiture of the Cordis business.

Fiscal year 2022 outlook1
The company updated its fiscal year 2022 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $5.15 to $5.50, from $5.60 to $5.90.

This guidance reflects the previously announced additional $150 million to $175 million impact from increased inflation and global supply chain constraints, and a lower-than-expected offset from pricing actions. Accordingly, the company announced updated Medical segment profit outlook of thirty to forty-five percent decline, from mid-single to low-double digit percentage decline.

Additionally, the company updated expectations for its fiscal year 2022 non-GAAP effective tax rate to 23% to 24.5%, from 23% to 25%, and its Interest and Other to $140 million to $160 million, from $150 million to $180 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 recently announced a partnership with Ember Technologies to deliver a cold chain solution that ensures product integrity and security throughout the supply chain, while significantly reducing shipping waste in the transport of temperature-sensitive medicines.
Cardinal Health participated as a strategic investor in a new round of funding for Medically Home, a technology company that enables health systems to safely care for their patients at home, across the care continuum, including hospital-level care.
For the 14th consecutive year, Cardinal Health was honored as one of the "Best Places to Work for LGBTQ Equality" by the Human Rights Campaign (HRC) Foundation, achieving 100% on the HRC’s 2021 Corporate Equality Index (CEI).
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss second 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 February 3, 2023.