DUBLIN, Ohio, June 5, 2015 /PRNewswire/ -- Cardinal Health
today announced plans to acquire The Harvard Drug Group (THDG),
a distributor of generic pharmaceuticals, over-the-counter
medications and related products to retail, institutional and
alternate care customers. THDG is currently owned by Court Square
Capital Partners. Cardinal Health will pay $1.115 billion using existing cash and new
debt. The transaction is expected to close in the beginning
of fiscal year 2016 subject to regulatory approvals and other
customary closing conditions.
Assuming this timing, Cardinal Health expects accretion in
non-GAAP diluted earnings per share (EPS) from continuing
operations of greater than $0.15 per
share in fiscal 2016, net of the $0.03 to
$0.04 per share of interest expense for the related debt
financing. Cardinal Health expects accretion in non-GAAP
diluted EPS of more than $0.20 in
fiscal 2017 and for accretion to be increasingly greater
thereafter.
In addition to enhancing the company's generic pharmaceutical
distribution business, the acquisition expands Cardinal Health's
existing telesales programs and capabilities; broadens the
company's portfolio of over-the counter pharmaceutical products;
and brings specialized packaging offerings to meet the needs of
hospital systems and other institutions.
Headquartered in Livonia,
Mich., The Harvard Drug Group had revenues of approximately
$450 million in 2014. There are 450
employees and two distribution facilities included in the
transaction.
"The Harvard Drug Group aligns perfectly with our commitment to
provide the most comprehensive line of pharmaceutical products for
the broadest range of customers," said George Barrett, chairman and chief executive
officer of Cardinal Health. "This acquisition enhances our ability
to support retail and institutional customers and further utilizes
Red Oak, our joint venture with CVS
Health to source generics."
FY16 Earnings Guidance
As a result of this planned
acquisition and the pending acquisition of Cordis, Cardinal
Health is providing its preliminary expectations for fiscal 2016
non-GAAP diluted EPS from continuing operations of $4.75 to $5.05. This range is based on the
assumptions that the THDG transaction closes in the first quarter
of fiscal 2016 and that the previously announced Cordis acquisition
closes in the United States and
key non-U.S. countries towards the end of calendar 2016. The
company expects to issue $1.5 billion
of new debt related to these two acquisitions. The company
expects to discuss its fiscal year 2016 financial outlook in detail
on its fourth quarter fiscal 2015 earnings call scheduled for
July 30, 2015.
Webcasted events
Cardinal Health will webcast its
Dublin Day Investor/Analyst meeting from 10:10 a.m. to 11:00 a.m. Eastern today, during
which its executives will discuss the matters referenced in this
release. To access the call, participants can dial 855-241-2663 and
use conference ID 7246584. To access the webcast and a
corresponding slide presentation and Frequently Asked Question
& Answer document, go to the Investors page at
ir.cardinalhealth.com. Presentation slides and an audio
replay will be archived on the website after the conclusion of the
meeting.
In addition, Cardinal Health will be presenting at the Goldman
Sachs 36th Annual Global Healthcare Conference on Wednesday, June 10 at 10:00 a.m. Pacific time in Rancho Palos Verdes,
Calif.
The company plans to release fourth-quarter and full year fiscal
2015 financial results and fiscal year 2016 guidance on
Thursday, July 30, 2015 prior to the
opening of trading on the New York Stock Exchange. A webcast
and conference call has been scheduled for July 30 at 8:30
a.m. Eastern to discuss the results and guidance. The
call and corresponding slide presentation can be accessed by going
to the Investors page at ir.cardinalhealth.com or by dialing
913-312-1448 and using passcode 5598613. There is no
pre-registration for the call. Participants are advised to dial
into the call at least 10 minutes prior to the start time.
Presentation slides and an audio replay will be archived on the
Cardinal Health website after the conclusion of the meeting. The
replay will be available until Thursday,
Aug. 6, 2015 and by dialing 719-457-0820 and using passcode
5598613.
NON-GAAP FINANCIAL MEASURES (INCLUDING
FOOTNOTE)
Footnote (1) Non-GAAP diluted earnings per share
from continuing operations: (A) earnings from continuing
operations, excluding (1) restructuring and employee
severance, (2) amortization and other acquisition-related costs,
(3) impairments and (gain)/loss on disposal of assets, (4)
litigation (recoveries)/charges, net, (5) LIFO charges/(credits),
and (6) loss on extinguishment of debt, each net of tax, (B)
divided by diluted weighted average shares outstanding.
Cardinal Health presents non-GAAP diluted earnings per share
from continuing operations on a forward-looking basis. The most
directly comparable forward-looking GAAP measure is diluted
earnings per share from continuing operations. Cardinal Health is
unable to provide a quantitative reconciliation of this
forward-looking non-GAAP measure to the most directly comparable
forward-looking GAAP measure, because Cardinal Health cannot
reliably forecast restructuring and employee severance,
amortization and acquisition-related costs (which Cardinal Health
expects to increase significantly as a result of pending
acquisitions), impairments and (gain)/loss on disposal of assets,
litigation (recoveries)/charges, net, and LIFO charges/(credits),
which are difficult to predict and estimate. Please note that the
unavailable reconciling items could significantly impact Cardinal
Health's future financial results.
About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE:
CAH) is a $91 billion health care
services company that improves the cost-effectiveness of health
care. Cardinal Health helps pharmacies, hospitals, ambulatory
surgery centers, clinical laboratories and physician offices focus
on patient care while reducing costs, enhancing efficiency and
improving quality. Cardinal Health is an essential link in the
health care supply chain, providing pharmaceuticals and medical
products and services to more than 100,000 locations each day and
is also the industry-leading direct-to-home medical supplies
distributor. The company is a leading manufacturer of medical and
surgical products, including gloves, surgical apparel and fluid
management products. In addition, the company operates the nation's
largest network of radiopharmacies that dispense products to aid in
the early diagnosis and treatment of disease. Ranked #26 on the
Fortune 500, Cardinal Health employs 34,000 people worldwide. More
information about the company may be found at
www.cardinalhealth.com and @CardinalHealth on Twitter.
Cautions Concerning Forward-Looking
Statements
This release contains forward-looking
statements addressing Cardinal Health's plans to acquire The
Harvard Drug Group (THDG) and other statements about future
expectations, prospects, estimates and other matters that are
dependent upon future events or developments. These statements may
be identified by words such as "expect," "anticipate," "intend,"
"plan," "believe," "will," "should," "could," "would," "project,"
"continue," "likely," and similar expressions, and include
statements reflecting future results or guidance, statements of
outlook and expense accruals. These matters are subject to risks
and uncertainties that could cause actual results to differ
materially from those projected, anticipated or implied. These
risks and uncertainties include: the ability to successfully
complete the acquisitions of The Harvard Drug Group and Cordis on a
timely basis, including receipt of required regulatory approvals
and satisfaction of other conditions; the ability to retain
customers and employees of the acquired businesses and to
successfully integrate the acquired businesses into Cardinal
Health's operations, if the acquisitions are completed; the ability
to achieve the expected synergies as well as accretion in earnings;
competitive pressures in Cardinal Health's various lines of
business; the ability to achieve the expected benefits from the
generic sourcing venture with CVS Health; the frequency or rate of
pharmaceutical price appreciation or deflation and the timing of
generic and branded pharmaceutical introductions; the non-renewal
or a default under one or more key customer or supplier
arrangements or changes to the terms of or level of purchases under
those arrangements; uncertainties due to government health care
reform including federal health care reform legislation; changes in
the distribution patterns or reimbursement rates for health care
products and services; the effects of any investigation or action
by any regulatory authority; and changes in the cost of commodities
such as oil-based resins, cotton, latex and diesel fuel. Cardinal
Health is subject to additional risks and uncertainties described
in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports and
exhibits to those reports. This release reflects management's views
as of June 5, 2015. Except to
the extent required by applicable law, Cardinal Health undertakes
no obligation to update or revise any forward-looking
statement.
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SOURCE Cardinal Health