On August 2, 2016 Cardinal Health reported fourth-quarter fiscal year 2016 revenues of $31.4 billion, an increase of 14 percent from the fourth quarter last year, and fiscal 2016 revenues of $121.5 billion, an increase of 19 percent from the same period last year (Filing, Q4/Annual, Cardinal Health, 2016, AUG 2, 2016, View Source [SID:1234514197]).
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For the quarter, the company reported growth in GAAP operating earnings of 11 percent to $620 million and in non-GAAP operating earnings of 5 percent to $643 million. GAAP operating earnings for fiscal year 2016 were $2.5 billion, an increase of 14 percent, and non-GAAP operating earnings for the fiscal year were $2.9 billion, an increase of 17 percent from the prior fiscal year.
For the quarter, GAAP diluted earnings per share from continuing operations2 (EPS) increased 16 percent to $1.02, while non-GAAP diluted EPS increased 14 percent to $1.14. GAAP diluted EPS for fiscal year 2016 increased 20 percent to $4.32, and non-GAAP diluted EPS increased 20 percent to $5.24.
"We finished fiscal 2016 having generated the highest revenues, the largest GAAP and non-GAAP operating earnings, and the greatest operating cash flow in our company’s history. Our teams worked incredibly hard this past year while never losing sight of the ultimate goal – serving patients and their families," said George Barrett, chairman and CEO of Cardinal Health, Inc. "The Cardinal Health team is well-positioned to adapt, innovate and lead during a time of great change in the healthcare industry."
Q4 and Fiscal Year Summary
Q4 FY16
Q4 FY15
Y/Y
FY16
FY15
Y/Y
Revenue
$
31.4
billion
$
27.5
billion
14%
$
121.5
billion
$
102.5
billion
19%
GAAP Operating Earnings
$
620
million
$
558
million
11%
$
2,459
million
$
2,161
million
14%
Non-GAAP Operating Earnings
$
643
million
$
611
million
5%
$
2,895
million
$
2,472
million
17%
GAAP Earnings from Continuing Operations2
$
333
million
$
293
million
14%
$
1,427
million
$
1,212
million
18%
Non-GAAP Earnings from Continuing Operations2
$
372
million
$
333
million
12%
$
1,732
million
$
1,469
million
18%
GAAP Diluted EPS from Continuing Operations2
$
1.02
$
0.88
16%
$
4.32
$
3.61
20%
Non-GAAP Diluted EPS from Continuing Operations2
$
1.14
$
1.00
14%
$
5.24
$
4.38
20%
SEGMENT RESULTS
Pharmaceutical Segment
Fourth-quarter revenue for the Pharmaceutical segment increased 14 percent to $28.2 billion due to growth from existing and net new Pharmaceutical Distribution customers and, to a lesser extent, performance from the Specialty business. Segment profit for the quarter increased 1 percent to $542 million due to contributions from acquisitions, largely offset by the loss of a large customer contract, which expired on March 31, 2016.
For the full year, revenue for the Pharmaceutical segment increased 20 percent to $109.1 billion, and segment profit increased 19 percent to $2.5 billion.
Q4 FY16
Q4 FY15
Y/Y
FY16
FY15
Y/Y
Revenue
$
28.2
billion
$
24.7
billion
14%
$
109.1
billion
$
91.1
billion
20%
Segment Profit
$
542
million
$
535
million
1%
$
2.5
billion
$
2.1
billion
19%
Cardinal Health
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Medical Segment
Fourth-quarter revenue for the Medical segment increased 12 percent to $3.2 billion primarily due to contributions from acquisitions, and, to a lesser extent, growth from Cardinal Health Brand products. Segment profit increased 19 percent to $122 million due to contributions from acquisitions and Cardinal Health Brand products.
Full-year revenue for the Medical segment increased 9 percent to $12.4 billion, and segment profit increased 6 percent to $457 million.
Q4 FY16
Q4 FY15
Y/Y
FY16
FY15
Y/Y
Revenue
$
3.2
billion
$
2.9
billion
12%
$
12.4
billion
$
11.4
billion
9%
Segment Profit
$
122
million
$
103
million
19%
$
457
million
$
433
million
6%
OUTLOOK
The company does not provide GAAP EPS outlook, because it is unable to reliably forecast most of the items that are excluded from GAAP EPS to calculate non-GAAP EPS. These items could cause EPS to differ materially from non-GAAP EPS. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.
The company’s fiscal year 2017 guidance range for non-GAAP diluted EPS from continuing operations is $5.48 to $5.73, representing growth of approximately 5 to 9 percent from the prior year.
Cardinal Health typically does not provide quarterly earnings guidance. However, the company expects a year-over-year decline in its non-GAAP earnings per share for the first-quarter of fiscal year 2017 in the high-single- to low-double-digit-percent range. This expectation is largely due to an anticipated first-quarter decline in Pharmaceutical segment profit in a percentage range from the high teens to low twenties with full-year Pharmaceutical segment profit expected to be essentially flat to fiscal year 2016.
The expected first-quarter fiscal 2017 Pharmaceutical segment decline is largely based upon two factors: 1) less year-over-year incremental contribution from its generics program; and 2) a previously mentioned Pharmaceutical Distribution large customer loss, the impacts of which will continue through the third-quarter of fiscal year 2017.
More details can be found on the accompanying earnings presentation slides as well as on the company’s conference call.
SELECTED YEAR-END AND RECENT HIGHLIGHTS
•
Increased quarterly dividend by 16 percent to $0.4489 per share, or $1.80 on an annualized basis, and authorized new share repurchase program
•
Appointed Pamela O. Kimmet Chief Human Resources Officer following the retirement of Carole Watkins
•
Committed nearly $2 million in multi-year patient safety grants to help improve the effectiveness, efficiency and excellence of patient care
•
Announced distribution agreement with Biosensors enabling Cordis to sell Biosensors’ coronary stent portfolio in select countries in Europe, the Middle East, Africa, Australia and New Zealand
•
Convened 26th annual Retail Business Conference, presenting a record-setting 9,300 attendees with the industry’s largest lineup of continuing education opportunities, buying opportunities, and access to a broad array of Cardinal Health solutions to help diversify and improve their businesses
•
Demonstrated Cardinal Health’s commitment to the community by:
◦
Recognizing the essential contributions of medical laboratory professionals to patient care with the Cardinal Health urEssential Award
◦
Donating 11 million yen to Save the Children Japan to assist with restoration efforts for those families affected by the earthquakes earlier this year
◦
Contributing more than $85,000 in cash and health care products to aid those affected by the wildfires in Fort McMurray, Alberta, Canada
AWARDS AND RECOGNITIONS
Over the past year, Cardinal Health was recognized for the company’s culture and its commitment to diversity and sustainability. These accolades include:
•
Named on the 2016 "World’s Most Admired Companies" list by Fortune
•
Designated a 2016 Top Green Company in the U.S. by Newsweek
•
Named to the Human Rights Campaign (HRC) "Best Places to Work for LGBT Equality" for fourth consecutive year based on ratings in HRC’s 2016 Corporate Equality Index
•
Included in Becker’s Healthcare 150 Great Places to Work in Healthcare 2016 listing
Cardinal Health
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•
Named among the 2016 Best Companies for Leaders by Chief Executive
•
Included in the Dow Jones Sustainability North American Company Index for the 10th year in a row