UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2015
Cardinal Health, Inc.
(Exact name of registrant as specified in its charter)
|
| | |
| | |
Ohio | 1-11373 | 31-0958666 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| | |
7000 Cardinal Place, Dublin, Ohio 43017 |
(Address of principal executive offices) (Zip Code) |
| | |
(614) 757-5000 |
(Registrant's telephone number, including area code) |
| | |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
p Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
p Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
p Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d2(b))
p Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02: Results of Operations and Financial Condition
On July 30, 2015, Cardinal Health, Inc. (the "Company") issued a news release announcing its results for the quarter and fiscal year ended June 30, 2015. A copy of the news release is included as Exhibit 99.1 to this report.
Item 7.01: Regulation FD Disclosure
During a conference call scheduled to be held at 8:30 a.m. Eastern time on July 30, 2015, the Company's Chairman and Chief Executive Officer and Chief Financial Officer will discuss the Company's results for the quarter and fiscal year ended June 30, 2015 and outlook for the fiscal year ending June 30, 2016. The slide presentation for the conference call will be available on the Investors page at ir.cardinalhealth.com. An audio replay of the conference call also will be available on the Investors page at ir.cardinalhealth.com.
Item 9.01: Financial Statements and Exhibits
(d) Exhibits
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| |
Exhibit Number | Exhibit Description |
99.1 | News release issued by the Company on July 30, 2015 announcing fourth quarter and fiscal year results. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | |
| | Cardinal Health, Inc. |
| | (Registrant) |
| | | |
Date: | July 30, 2015 | By: | /s/ Stuart G. Laws |
| | | Stuart G. Laws |
| | | Senior Vice President and Chief Accounting Officer |
Exhibit Index
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| |
Exhibit Number | Exhibit Description |
99.1 | News release issued by the Company on July 30, 2015 announcing fourth quarter and fiscal year results. |
FOR IMMEDIATE RELEASE
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| | | | |
Media: | Debbie Mitchell | | Investors: | Sally Curley |
| (614) 757-6225 | | | (614) 757-7115 |
| debbie.mitchell@cardinalhealth.com | | | sally.curley@cardinalhealth.com |
CARDINAL HEALTH REPORTS STRONG Q4 AND RECORD FISCAL YEAR-END NON-GAAP OPERATING EARNINGS RESULTS
Company Points to Progress on Strategic Priorities as it Provides Fiscal 2016 Outlook
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• | 33 percent increase in non-GAAP1 operating earnings to $611 million for the fourth quarter |
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• | 16 percent growth to record $2.5 billion in non-GAAP operating earnings for fiscal 2015 |
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• | 20 percent increase in non-GAAP diluted earnings per share from continuing operations to $1.00 for the fourth quarter |
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• | 14 percent increase in non-GAAP diluted earnings per share from continuing operations to $4.38 for fiscal 2015 |
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• | Fiscal 2016 outlook for non-GAAP diluted earnings per share raised to $4.85 to $5.05, or 11 to 15 percent growth in FY2016 |
DUBLIN, Ohio, July 30, 2015 - Cardinal Health today reported fourth-quarter fiscal year 2015 revenues of $27.5 billion, an increase of 20 percent, and non-GAAP diluted earnings per share (EPS) from continuing operations of $1.00, an increase of 20 percent. Non-GAAP operating earnings increased 33 percent to $611 million. On a GAAP basis, operating earnings increased 44 percent to $558 million, and diluted EPS from continuing operations increased 29 percent to $0.88.
Fiscal year 2015 revenues increased 13 percent to $102.5 billion, and non-GAAP diluted EPS from continuing operations increased 14 percent to $4.38. Non-GAAP operating earnings increased 16 percent to $2.5 billion. On a GAAP basis, operating earnings and diluted EPS from continuing operations for fiscal year 2015 were $2.2 billion and $3.61, respectively, an increase of 15 percent and 7 percent, respectively, from the prior fiscal year.
"We finished our fiscal year 2015 with a very strong fourth quarter, capping off an outstanding year. During fiscal 2015, we had record non-GAAP operating earnings, achieved excellent growth in revenues and non-GAAP EPS, and generated $2.5 billion in cash flow," said George Barrett, chairman and chief executive officer of Cardinal Health.
"It was also a year of meaningful strategic initiatives, including: operationalizing Red Oak Sourcing, our generic sourcing venture with CVS Health; agreeing to acquire The Harvard Drug Group, which reinforces our position in generic drugs and telemarketing; and acquiring Metro Medical, which enhances the position of our fast-growing Specialty Solutions group," Barrett added. "We also combined forces with Henry Schein to serve office-based medical practices; enhanced our 'at Home' platform to expand the product portfolio; and, took a major step forward in our physician preference item portfolio with the planned acquisition of Cordis. At the same time, we were able to return $1.5 billion to shareholders through dividends and share repurchases.
"We look forward to fiscal year 2016 and the opportunities, enhanced by these growth drivers, to serve a health care system going through significant change," Barrett concluded.
The company raised the midpoint of its fiscal year 2016 outlook for non-GAAP diluted EPS from continuing operations, tightening the range to $4.85 to $5.05 due to its strong fiscal year 2015 performance and the momentum the company has carried into fiscal year 2016. While the company does not provide quarterly guidance, it expects financial performance to be weighted toward the second half of fiscal 2016.
In fiscal 2015, Cardinal Health generated $2.5 billion in operating cash flow and returned $1.5 billion to shareholders through dividends and share buybacks.
Q4 and Fiscal Year Summary
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| | | | | | | | | | | | | | | | | | | |
| Q4 FY15 | | Q4 FY14 | | Y/Y | | FY15 | | FY14 | | Y/Y |
Revenue | $ | 27.5 | billion | | $ | 22.9 | billion | | 20% | | $ | 102.5 | billion | | $ | 91.1 | billion | | 13% |
Operating earnings | $ | 558 | million | | $ | 387 | million | | 44% | | $ | 2,161 | million | | $ | 1,885 | million | | 15% |
Non-GAAP operating earnings | $ | 611 | million | | $ | 461 | million | | 33% | | $ | 2,472 | million | | $ | 2,133 | million | | 16% |
Earnings from continuing operations | $ | 293 | million | | $ | 234 | million | | 25% | | $ | 1,212 | million | | $ | 1,163 | million | | 4% |
Non-GAAP earnings from continuing operations | $ | 333 | million | | $ | 284 | million | | 17% | | $ | 1,469 | million | | $ | 1,324 | million | | 11% |
Diluted EPS from continuing operations | $ | 0.88 |
| | $ | 0.68 |
| | 29% | | $ | 3.61 |
| | $ | 3.37 |
| | 7% |
Non-GAAP diluted EPS from continuing operations | $ | 1.00 |
| | $ | 0.83 |
| | 20% | | $ | 4.38 |
| | $ | 3.84 |
| | 14% |
SEGMENT RESULTS
Pharmaceutical Segment
Fourth-quarter revenue for the Pharmaceutical segment increased 23 percent to $24.7 billion, due to growth from existing and new customers. Segment profit for the quarter increased 42 percent to $535 million, due to strong performance under the company's generics program, which includes the net benefit of Red Oak Sourcing, as well as growth from existing and new customers.
For the full year, revenue for the Pharmaceutical segment increased 14 percent to $91.1 billion, and segment profit increased 20 percent to $2.1 billion.
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| | | | | | | | | | | | | | | | | | | |
| Q4 FY15 | | Q4 FY14 | | Y/Y | | FY15 | | FY14 | | Y/Y |
Revenue | $ | 24.7 | billion | | $ | 20.1 | billion | | 23% | | $ | 91.1 | billion | | $ | 80.1 | billion | | 14% |
Segment profit | $ | 535 | million | | $ | 377 | million | | 42% | | $ | 2.1 | billion | | $ | 1.7 | billion | | 20% |
Medical Segment
Fourth-quarter revenue for the Medical segment increased 2 percent to $2.9 billion, due to contributions from acquisitions and growth in the Cardinal Health at Home platform, partially offset by a decline in Canada. Segment profit for the quarter increased 7 percent to $103 million, due to contributions from the strategic expansion of the company's portfolio of Cardinal Health brand products and services, which was driven by a combination of acquisitions and organic efforts, coupled with targeted cost reductions, during the past year.
For the full year, Medical segment revenue increased 4 percent to $11.4 billion, and segment profit decreased 3 percent to $433 million.
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| | | | | | | | | | | | | | | | | | | |
| Q4 FY15 | | Q4 FY14 | | Y/Y | | FY15 | | FY14 | | Y/Y |
Revenue | $ | 2.9 | billion | | $ | 2.8 | billion | | 2% | | $ | 11.4 | billion | | $ | 11.0 | billion | | 4% |
Segment profit | $ | 103 | million | | $ | 96 | million | | 7% | | $ | 433 | million | | $ | 444 | million | | (3)% |
FY2015 SELECTED HIGHLIGHTS
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• | Entered into an agreement to acquire The Harvard Drug Group, a distributor of generic pharmaceuticals, over-the-counter medications and related products to retail, institutional and alternate care customers, increasing Cardinal Health's generics scale and reach; acquisition completed July 2015 |
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• | Entered into an agreement to acquire Cordis, a worldwide leader in cardiovascular medical products |
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• | Acquired the specialty distribution business of Metro Medical Supply Inc., expanding scale and deepening reach into rheumatology, oncology and nephrology segments |
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• | Entered into a long-term strategic agreement with Henry Schein, the world's largest provider of health care products and services to office-based dental, animal health and medical practitioners, to provide one of the most comprehensive service and product offerings to office-based medical practices |
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• | Unveiled the Cardinal HealthTM negative pressure wound therapy PRO family of devices for use in the acute care setting, at discharge and in the home |
Awards and Recognitions
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• | Ranked #1 on the Gartner Healthcare Supply Chain Top 25 for the fourth consecutive year |
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• | Selected as one of Institutional Investor magazine's Most Honored Companies |
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• | Named one of 15 recipients of the Department of Defense 2015 Secretary of Defense Employer Support Freedom Award, the highest honor the department gives to employers for support of National Guard and Reserve employees |
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• | Named among the 2015 Best Companies for Leaders by Chief Executive magazine |
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• | Named one of the "Top 50 Companies for Executive Women" by the National Association for Female Executives and one of the Working Mother 100 Best Companies, marking repeat designation since 2012 |
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• | Named to the Human Rights Campaign (HRC) "Best Places to Work for LGBT Equality" for third consecutive year based on ratings in HRC's 2015 Corporate Equality Index |
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• | Named among the National Business Group on Health Best Employers for Healthy Lifestyles Platinum Award recipients |
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• | Included in Becker's Healthcare 150 Great Places to Work in Healthcare 2015 listing |
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• | Named to the Dow Jones Sustainability Index for the ninth consecutive year |
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• | Designated a 2015 Top Green Company in the U.S. by Newsweek magazine |
CONFERENCE CALL
Cardinal Health will host a webcast and conference call today at 8:30 a.m. Eastern to discuss fourth-quarter and full-year fiscal 2015 financial results and its future outlook. To access the call and corresponding slide presentation, go to the Investors page at ir.cardinalhealth.com. Alternatively, participants can call 913.312.1448 and use 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 also will be available until Thursday, Aug. 6, by dialing 719.457.0820 and using passcode 5598613.
UPCOMING WEBCASTED INVESTOR EVENTS
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• | FBR Second Annual Healthcare Conference on Sept. 9 at 12 p.m. Eastern in Boston |
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• | Baird's 2015 Healthcare Conference on Sept. 10 at 7:50 a.m. Eastern in New York |
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• | Morgan Stanley Global Healthcare Conference on Sept. 16 at 8:45 a.m. Eastern in New York |
About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $103 billion health care services company that improves the cost-effectiveness of health care. As the business behind 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 nearly 35,000 people worldwide. More information about the company may be found at www.cardinalhealth.com and @CardinalHealth on Twitter.
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1 | See the attached tables for definitions of the non-GAAP financial measures presented in this news release and reconciliations of the differences between the non-GAAP financial measures and their most directly comparable GAAP financial measures. |
Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, financial information, earnings and analyst presentations, and information about upcoming presentations and events is routinely posted and accessible on the Investors page at ir.cardinalhealth.com. In addition, our website allows investors and other interested persons to sign up automatically to receive e-mail alerts when we post news releases, SEC filings and certain other information on our website.
Cautions Concerning Forward-Looking Statements
This news release contains forward-looking statements addressing 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 competitive pressures in Cardinal Health's various lines of business; the ability to achieve and maintain the benefits from the generic sourcing venture with CVS Health and from our acquisition of The Harvard Drug Group; the frequency or rate of pharmaceutical price appreciation or deflation and the timing of generic and branded pharmaceutical introductions; the ability to successfully complete the acquisition of Cordis and if completed to achieve the anticipated results from the Cordis acquisition; the risk of 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 news release reflects management's views as of July 30, 2015. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.
Schedule 1
Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
|
| | | | | | | | | | |
| Fourth Quarter | | |
(in millions, except per common share amounts) | 2015 | | 2014 | | % Change |
Revenue | $ | 27,547 |
| | $ | 22,894 |
| | 20 | % |
Cost of products sold | 26,089 |
| | 21,638 |
| | 21 | % |
Gross margin | 1,458 |
| | 1,256 |
| | 16 | % |
| | | | | |
Operating expenses: | | | | | |
Distribution, selling, general and administrative expenses | 847 |
| | 795 |
| | 7 | % |
Restructuring and employee severance | 11 |
| | 6 |
| | N.M. |
|
Amortization and other acquisition-related costs | 91 |
| | 63 |
| | N.M. |
|
Impairments and (gain)/loss on disposal of assets | — |
| | 4 |
| | N.M. |
|
Litigation (recoveries)/charges, net | (49 | ) | | 1 |
| | N.M. |
|
Operating earnings | 558 |
| | 387 |
| | 44 | % |
| | | | | |
Other income, net | (1 | ) | | (3 | ) | | N.M. |
|
Interest expense, net | 36 |
| | 33 |
| | 9 | % |
Earnings before income taxes and discontinued operations | 523 |
| | 357 |
| | 46 | % |
| | | | | |
Provision for income taxes | 230 |
| | 123 |
| | 87 | % |
Earnings from continuing operations | 293 |
| | 234 |
| | 25 | % |
| | | | | |
Earnings from discontinued operations, net of tax | 2 |
| | — |
| | N.M. |
|
Net earnings | $ | 295 |
| | $ | 234 |
| | 26 | % |
| | | | | |
Basic earnings per common share: | | | | | |
Continuing operations | $ | 0.89 |
| | $ | 0.69 |
| | 29 | % |
Discontinued operations | — |
| | — |
| | N.M. |
|
Net basic earnings per common share | $ | 0.89 |
| | $ | 0.69 |
| | 29 | % |
| | | | | |
Diluted earnings per common share: | | | | | |
Continuing operations | $ | 0.88 |
| | $ | 0.68 |
| | 29 | % |
Discontinued operations | — |
| | — |
| | N.M. |
|
Net diluted earnings per common share | $ | 0.88 |
| | $ | 0.68 |
| | 29 | % |
| | | | | |
Weighted-average number of common shares outstanding: | | | | | |
Basic | 330 |
| | 339 |
| | |
Diluted | 333 |
| | 343 |
| | |
Schedule 2
Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
|
| | | | | | | | | | |
| Fiscal Year | | |
(in millions, except per common share amounts) | 2015 | | 2014 | | % Change |
| (Unaudited) | | | | |
Revenue | $ | 102,531 |
| | $ | 91,084 |
| | 13 | % |
Cost of products sold | 96,819 |
| | 85,923 |
| | 13 | % |
Gross margin | 5,712 |
| | 5,161 |
| | 11 | % |
| | | | | |
Operating expenses: | | | | | |
Distribution, selling, general and administrative expenses | 3,240 |
| | 3,028 |
| | 7 | % |
Restructuring and employee severance | 44 |
| | 31 |
| | N.M. |
|
Amortization and other acquisition-related costs | 281 |
| | 223 |
| | N.M. |
|
Impairments and (gain)/loss on disposal of assets | (19 | ) | | 15 |
| | N.M. |
|
Litigation (recoveries)/charges, net | 5 |
| | (21 | ) | | N.M. |
|
Operating earnings | 2,161 |
| | 1,885 |
| | 15 | % |
| | | | | |
Other income, net | (7 | ) | | (46 | ) | | N.M. |
|
Interest expense, net | 141 |
| | 133 |
| | 6 | % |
Loss on extinguishment of debt | 60 |
| | — |
| | N.M. |
|
Earnings before income taxes and discontinued operations | 1,967 |
| | 1,798 |
| | 9 | % |
| | | | | |
Provision for income taxes | 755 |
| | 635 |
| | 19 | % |
Earnings from continuing operations | 1,212 |
| | 1,163 |
| | 4 | % |
| | | | | |
Earnings from discontinued operations, net of tax | 3 |
| | 3 |
| | N.M. |
|
Net earnings | $ | 1,215 |
| | $ | 1,166 |
| | 4 | % |
| | | | | |
Basic earnings per common share: | | | | | |
Continuing operations | $ | 3.65 |
| | $ | 3.41 |
| | 7 | % |
Discontinued operations | 0.01 |
| | 0.01 |
| | N.M. |
|
Net basic earnings per common share | $ | 3.66 |
| | $ | 3.42 |
| | 7 | % |
| | | | | |
Diluted earnings per common share: | | | | | |
Continuing operations | $ | 3.61 |
| | $ | 3.37 |
| | 7 | % |
Discontinued operations | 0.01 |
| | 0.01 |
| | N.M. |
|
Net diluted earnings per common share | $ | 3.62 |
| | $ | 3.38 |
| | 7 | % |
| | | | | |
Weighted-average number of common shares outstanding: | | | | | |
Basic | 332 |
| | 341 |
| | |
Diluted | 335 |
| | 345 |
| | |
Schedule 3
Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
|
| | | | | | | |
(in millions) | June 30,
2015 | | June 30,
2014 |
| (Unaudited) | | |
Assets | | | |
Current assets: | | | |
Cash and equivalents | $ | 4,616 |
| | $ | 2,865 |
|
Trade receivables, net | 6,523 |
| | 5,380 |
|
Inventories, net | 9,211 |
| | 8,266 |
|
Prepaid expenses and other | 1,402 |
| | 1,428 |
|
Total current assets | 21,752 |
| | 17,939 |
|
| | | |
Property and equipment, net | 1,506 |
| | 1,459 |
|
Goodwill and other intangibles, net | 6,018 |
| | 5,870 |
|
Other assets | 866 |
| | 765 |
|
Total assets | $ | 30,142 |
| | $ | 26,033 |
|
| | | |
Liabilities and Shareholders’ Equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 14,368 |
| | $ | 12,149 |
|
Current portion of long-term obligations and other short-term borrowings | 281 |
| | 801 |
|
Other accrued liabilities | 2,594 |
| | 2,165 |
|
Total current liabilities | 17,243 |
| | 15,115 |
|
| | | |
Long-term obligations, less current portion | 5,211 |
| | 3,171 |
|
Deferred income taxes and other liabilities | 1,432 |
| | 1,346 |
|
Total shareholders’ equity | 6,256 |
| | 6,401 |
|
Total liabilities and shareholders’ equity | $ | 30,142 |
| | $ | 26,033 |
|
Schedule 4
Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
|
| | | | | | | | | | | | | | | |
| Fourth Quarter | | Fiscal Year |
(in millions) | 2015 | | 2014 | | 2015 | | 2014 |
| (Unaudited) | | (Unaudited) | | (Unaudited) | | |
Cash flows from operating activities: | | | | | | | |
Net earnings | $ | 295 |
| | $ | 234 |
| | $ | 1,215 |
| | $ | 1,166 |
|
Earnings from discontinued operations, net of tax | (2 | ) | | — |
| | (3 | ) | | (3 | ) |
Earnings from continuing operations | 293 |
| | 234 |
| | 1,212 |
| | 1,163 |
|
| | | | | | | |
Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities: | | | | | | | |
Depreciation and amortization | 115 |
| | 115 |
| | 451 |
| | 459 |
|
Loss on extinguishment of debt | — |
| | — |
| | 60 |
| | — |
|
Gain on sale of other investments | — |
| | — |
| | (5 | ) | | (32 | ) |
Impairments and (gain)/loss on disposal of assets, net | — |
| | 4 |
| | (19 | ) | | 15 |
|
Share-based compensation | 30 |
| | 24 |
| | 110 |
| | 96 |
|
Provision for deferred income taxes | 219 |
| | 26 |
| | 219 |
| | 26 |
|
Provision for bad debts | 10 |
| | 11 |
| | 52 |
| | 42 |
|
Change in fair value of contingent consideration obligation | 8 |
| | — |
| | 8 |
| | — |
|
Change in operating assets and liabilities, net of effects from acquisitions: | | | | | | | |
Decrease/(increase) in trade receivables | (152 | ) | | (548 | ) | | (870 | ) | | 925 |
|
Decrease/(increase) in inventories | 71 |
| | (208 | ) | | (779 | ) | | 142 |
|
Increase/(decrease) in accounts payable | 291 |
| | 1,196 |
| | 1,948 |
| | (196 | ) |
Other accrued liabilities and operating items, net | (17 | ) | | (138 | ) | | 153 |
| | (116 | ) |
Net cash provided by operating activities | 868 |
| | 716 |
| | 2,540 |
| | 2,524 |
|
| | | | | | | |
Cash flows from investing activities: | | | | | | | |
Acquisition of subsidiaries, net of cash acquired | (184 | ) | | (351 | ) | | (503 | ) | | (519 | ) |
Additions to property and equipment | (161 | ) | | (111 | ) | | (300 | ) | | (249 | ) |
Purchase of available-for-sale securities and other investments | (208 | ) | | (102 | ) | | (342 | ) | | (129 | ) |
Proceeds from sale of available-for-sale securities and other investments | 77 |
| | — |
| | 206 |
| | 47 |
|
Proceeds from maturities of available-for-sale securities | 13 |
| | — |
| | 37 |
| | — |
|
Proceeds from divestitures and disposal of held for sale assets | — |
| | — |
| | 53 |
| | — |
|
Net cash used in investing activities | (463 | ) | | (564 | ) | | (849 | ) | | (850 | ) |
| | | | | | | |
Cash flows from financing activities: | | | | | | | |
Payment of contingent consideration obligation | (4 | ) | | — |
| | (7 | ) | | — |
|
Net change in short-term borrowings | (3 | ) | | 49 |
| | (12 | ) | | 114 |
|
Reduction of long-term obligations | — |
| | (1 | ) | | (1,221 | ) | | (2 | ) |
Proceeds from long-term obligations, net of issuance costs | 1,490 |
| | — |
| | 2,672 |
| | — |
|
Net proceeds from issuance of common shares | 13 |
| | 8 |
| | 72 |
| | 227 |
|
Tax proceeds/(disbursements) from share-based compensation | (4 | ) | | 3 |
| | 52 |
| | 39 |
|
Dividends on common shares | (114 | ) | | (103 | ) | | (460 | ) | | (415 | ) |
Purchase of treasury shares | (350 | ) | | (284 | ) | | (1,036 | ) | | (673 | ) |
Net cash provided by/(used in) financing activities | 1,028 |
| | (328 | ) | | 60 |
| | (710 | ) |
| | | | | | | |
Net increase/(decrease) in cash and equivalents | 1,433 |
| | (176 | ) | | 1,751 |
| | 964 |
|
Cash and equivalents at beginning of period | 3,183 |
| | 3,041 |
| | 2,865 |
| | 1,901 |
|
Cash and equivalents at end of period | $ | 4,616 |
| | $ | 2,865 |
| | $ | 4,616 |
| | $ | 2,865 |
|
Schedule 5
Cardinal Health, Inc. and Subsidiaries
Total Company Business Analysis
|
| | | | | | | | | | | | | | | |
| | | Non-GAAP |
| Fourth Quarter | | Fourth Quarter |
(in millions) | 2015 | | 2014 | | 2015 | | 2014 |
Revenue | | | | | | | |
Amount | $ | 27,547 |
| | $ | 22,894 |
| | | | |
Growth rate | 20 | % | | (10 | )% | | | | |
| | | | | | | |
Operating earnings | | | | | | | |
Amount | $ | 558 |
| | $ | 387 |
| | $ | 611 |
| | $ | 461 |
|
Growth rate | 44 | % | | N.M. |
| | 33 | % | | (2 | )% |
| | | | | | | |
Earnings from continuing operations | | | | | | | |
Amount | $ | 293 |
| | $ | 234 |
| | $ | 333 |
| | $ | 284 |
|
Growth rate | 25 | % | | N.M. |
| | 17 | % | | 4 | % |
| | | | | | | |
Return on equity | 18.7 | % | | 14.5 | % | | 21.3 | % | | 17.6 | % |
| | | | | | | |
Effective tax rate from continuing operations | 44.1 | % | | 34.4 | % | | 42.2 | % | | 34.2 | % |
| | | | | | | |
Debt to total capital | 47 | % | | 38 | % | | | | |
Net debt to total capital | | | | | 12 | % | | 15 | % |
|
| | | | | | | | | | | | | | | |
| | | Non-GAAP |
| Fiscal Year | | Fiscal Year |
(in millions) | 2015 | | 2014 | | 2015 | | 2014 |
Revenue | | | | | | | |
Amount | $ | 102,531 |
| | $ | 91,084 |
| | | | |
Growth rate1 | 13 | % | | (10 | )% | | | | |
| | | | | | | |
Operating earnings | | | | | | | |
Amount | $ | 2,161 |
| | $ | 1,885 |
| | $ | 2,472 |
| | $ | 2,133 |
|
Growth rate | 15 | % | | 89 | % | | 16 | % | | 4 | % |
| | | | | | | |
Earnings from continuing operations | | | | | | | |
Amount | $ | 1,212 |
| | $ | 1,163 |
| | $ | 1,469 |
| | $ | 1,324 |
|
Growth rate | 4 | % | | 247 | % | | 11 | % | | 3 | % |
| | | | | | | |
Return on equity | 19.4 | % | | 18.3 | % | | 23.4 | % | | 20.9 | % |
| | | | | | | |
Effective tax rate from continuing operations | 38.4 | % | | 35.3 | % | | 37.2 | % | | 35.3 | % |
| |
1 | Revenue from Walgreens was $3.3 billion for the fiscal year ended June 30, 2014. Excluding the impact of the Walgreens contract expiration, the fiscal 2015 revenue growth rate would have been 17 percent. |
Refer to the GAAP/Non-GAAP reconciliation for definitions and calculations supporting the Non-GAAP balances.
Schedule 6
Cardinal Health, Inc. and Subsidiaries
Segment Business Analysis
|
| | | | | | | | | | | | | | | | |
| Fourth Quarter | | | Fourth Quarter |
(in millions) | 2015 | | 2014 | | (in millions) | 2015 | | 2014 |
Pharmaceutical | | | | | Medical | | | |
| | | | | | | | |
Revenue | | | | | Revenue | | | |
Amount | $ | 24,676 |
| | $ | 20,092 |
| | Amount | $ | 2,855 |
| | $ | 2,794 |
|
Growth rate | 23 | % | | (12 | )% | | Growth rate | 2 | % | | 4 | % |
| | | | | | | | |
Segment profit | | | | | Segment profit | | | |
Amount | $ | 535 |
| | $ | 377 |
| | Amount | $ | 103 |
| | $ | 96 |
|
Growth rate | 42 | % | | (5 | )% | | Growth rate | 7 | % | | (8 | )% |
Segment profit margin | 2.17 | % | | 1.88 | % | | Segment profit margin | 3.59 | % | | 3.43 | % |
Refer to definitions for an explanation of calculations.
Total consolidated revenue for the three months ended June 30, 2015 was $27,547 million, which included total segment revenue of $27,531 million and Corporate revenue of $16 million. Total consolidated revenue for the three months ended June 30, 2014 was $22,894 million, which included total segment revenue of $22,886 million and Corporate revenue of $8 million. Corporate revenue consists primarily of elimination of inter-segment revenue and other revenue not allocated to the segments.
Total consolidated operating earnings for the three months ended June 30, 2015 were $558 million, which included total segment profit of $638 million and Corporate costs of $(80) million. Total consolidated operating earnings for the three months ended June 30, 2014 were $387 million, which included total segment profit of $473 million and Corporate costs of $(86) million. Corporate includes, among other things, restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.
Schedule 7
Cardinal Health, Inc. and Subsidiaries
Segment Business Analysis
|
| | | | | | | | | | | | | | | | |
| Fiscal Year | | | Fiscal Year |
(in millions) | 2015 | | 2014 | | (in millions) | 2015 | | 2014 |
Pharmaceutical | | | | | Medical | | | |
| | | | | | | | |
Revenue | | | | | Revenue | | | |
Amount | $ | 91,116 |
| | $ | 80,110 |
| | Amount | $ | 11,395 |
| | $ | 10,962 |
|
Growth rate1 | 14 | % | | (12 | )% | | Growth rate | 4 | % | | 9 | % |
| | | | | | | | |
Segment profit | | | | | Segment profit | | | |
Amount | $ | 2,094 |
| | $ | 1,745 |
| | Amount | $ | 433 |
| | $ | 444 |
|
Growth rate | 20 | % | | 1 | % | | Growth rate | (3 | )% | | 19 | % |
Segment profit margin | 2.30 | % | | 2.18 | % | | Segment profit margin | 3.80 | % | | 4.05 | % |
| |
1 | Revenue from Walgreens was $3.3 billion for the fiscal year ended June 30, 2014. Excluding the impact of the Walgreens contract expiration, the fiscal 2015 Pharmaceutical segment revenue growth rate would have been 19 percent. |
Refer to definitions for an explanation of calculations.
Total consolidated revenue for the fiscal year ended June 30, 2015 was $102,531 million, which included total segment revenue of $102,511 million and Corporate revenue of $20 million. Total consolidated revenue for the fiscal year ended June 30, 2014 was $91,084 million, which included total segment revenue of $91,072 million and Corporate revenue of $12 million. Corporate revenue consists primarily of elimination of inter-segment revenue and other revenue not allocated to the segments.
Total consolidated operating earnings for the fiscal year ended June 30, 2015 were $2,161 million, which included total segment profit of $2,527 million and Corporate costs of $(366) million. Total consolidated operating earnings for the fiscal year ended June 30, 2014 were $1,885 million, which included total segment profit of $2,189 million and Corporate costs of $(304) million. Corporate includes, among other things, restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments.
Schedule 8
Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation
|
| | | | | | | | | | | | | | | | | | | | | |
| Fourth Quarter 2015 |
| | Operating | Earnings Before | Provision | Earnings | Earnings from | Diluted EPS | Diluted EPS |
| | Earnings | Income Taxes | for | from | Continuing | from | from Continuing |
(in millions, except per common share amounts) | Operating | Growth | and Discontinued | Income | Continuing | Operations | Continuing | Operations |
Earnings | Rate | Operations | Taxes | Operations | Growth Rate | Operations | Growth Rate |
GAAP | $ | 558 |
| 44 | % | $ | 523 |
| $ | 230 |
| $ | 293 |
| 25 | % | $ | 0.88 |
| 29 | % |
Restructuring and employee severance | 11 |
| | 11 |
| 4 |
| 7 |
| | 0.02 |
| |
Amortization and other acquisition-related costs | 91 |
| | 91 |
| 31 |
| 60 |
| | 0.18 |
| |
Impairments and (gain)/loss on disposal of assets | — |
| | — |
| — |
| — |
| | — |
| |
Litigation (recoveries)/charges, net | (49 | ) | | (49 | ) | (22 | ) | (27 | ) | | (0.08 | ) | |
Loss on extinguishment of debt | — |
| | — |
| — |
| — |
| | — |
| |
Non-GAAP | $ | 611 |
| 33 | % | $ | 577 |
| $ | 243 |
| $ | 333 |
| 17 | % | $ | 1.00 |
| 20 | % |
| | | | | | | | |
| Fourth Quarter 2014 |
GAAP | $ | 387 |
| N.M. |
| $ | 357 |
| $ | 123 |
| $ | 234 |
| N.M. |
| $ | 0.68 |
| N.M. |
|
Restructuring and employee severance | 6 |
| | 6 |
| 2 |
| 4 |
| | 0.01 |
| |
Amortization and other acquisition-related costs | 63 |
| | 63 |
| 22 |
| 41 |
| | 0.12 |
| |
Impairments and loss on disposal of assets | 4 |
| | 4 |
| 1 |
| 3 |
| | 0.01 |
| |
Litigation (recoveries)/charges, net | 1 |
| | 1 |
| — |
| 1 |
| | — |
| |
Loss on extinguishment of debt | — |
| | — |
| — |
| — |
| | — |
| |
Non-GAAP | $ | 461 |
| (2 | )% | $ | 432 |
| $ | 148 |
| $ | 284 |
| 4 | % | $ | 0.83 |
| 5 | % |
|
| | | | | | | | | | | | | | | | | | | | | |
| Fiscal Year 2015 |
| | Operating | Earnings Before | Provision | Earnings | Earnings from | Diluted EPS | Diluted EPS |
| | Earnings | Income Taxes | for | from | Continuing | from | from Continuing |
(in millions, except per common share amounts) | Operating | Growth | and Discontinued | Income | Continuing | Operations | Continuing | Operations |
Earnings | Rate | Operations | Taxes | Operations | Growth Rate | Operations | Growth Rate |
GAAP | $ | 2,161 |
| 15 | % | $ | 1,967 |
| $ | 755 |
| $ | 1,212 |
| 4 | % | $ | 3.61 |
| 7 | % |
Restructuring and employee severance | 44 |
| | 44 |
| 15 |
| 29 |
| | 0.09 |
| |
Amortization and other acquisition-related costs | 281 |
| | 281 |
| 100 |
| 181 |
| | 0.54 |
| |
Impairments and (gain)/loss on disposal of assets | (19 | ) | | (19 | ) | (10 | ) | (9 | ) | | (0.03 | ) | |
Litigation (recoveries)/charges, net | 5 |
| | 5 |
| (14 | ) | 19 |
| | 0.06 |
| |
Loss on extinguishment of debt | — |
| | 60 |
| 23 |
| 37 |
| | 0.11 |
| |
Non-GAAP | $ | 2,472 |
| 16 | % | $ | 2,339 |
| $ | 870 |
| $ | 1,469 |
| 11 | % | $ | 4.38 |
| 14 | % |
| | | | | | | | |
| Fiscal Year 2014 |
GAAP | $ | 1,885 |
| 89 | % | $ | 1,798 |
| $ | 635 |
| $ | 1,163 |
| 247 | % | $ | 3.37 |
| 247 | % |
Restructuring and employee severance | 31 |
| | 31 |
| 11 |
| 20 |
| | 0.06 |
| |
Amortization and other acquisition-related costs | 223 |
| | 223 |
| 79 |
| 144 |
| | 0.42 |
| |
Impairments and loss on disposal of assets | 15 |
| | 15 |
| 5 |
| 10 |
| | 0.03 |
| |
Litigation (recoveries)/charges, net | (21 | ) | | (21 | ) | (8 | ) | (13 | ) | | (0.04 | ) | |
Loss on extinguishment of debt | — |
| | — |
| — |
| — |
| | — |
| |
Non-GAAP | $ | 2,133 |
| 4 | % | $ | 2,047 |
| $ | 722 |
| $ | 1,324 |
| 3 | % | $ | 3.84 |
| 3 | % |
The sum of the components may not equal the total due to rounding.
We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.
Schedule 9
Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation
|
| | | | | | | | | | | | | | | |
| Fourth Quarter | | |
(in millions) | 2015 | | | | 2014 | | |
GAAP return on equity | 18.7 | % | | | | 14.5 | % | | |
| | | | | | | |
Non-GAAP return on equity | | | | | | | |
Net earnings | $ | 295 |
| | | | $ | 234 |
| | |
Restructuring and employee severance, net of tax, in continuing operations | 7 |
| | | | 4 |
| | |
Amortization and other acquisition-related costs, net of tax, in continuing operations | 60 |
| | | | 41 |
| | |
Impairments and (gain)/loss on disposal of assets, net of tax, in continuing operations | — |
| | | | 3 |
| | |
Litigation (recoveries)/charges, net, net of tax, in continuing operations | (27 | ) | | | | 1 |
| | |
Adjusted net earnings | $ | 335 |
| | | | $ | 283 |
| | |
Annualized | $ | 1,340 |
| | | | $ | 1,132 |
| | |
| | | | | | | |
| Fourth | | Third | | Fourth | | Third |
| Quarter | | Quarter | | Quarter | | Quarter |
| 2015 | | 2015 | | 2014 | | 2014 |
Total shareholders' equity | $ | 6,256 |
| | $ | 6,369 |
| | $ | 6,401 |
| | $ | 6,532 |
|
Divided by average shareholders' equity | $ | 6,312 |
| | | | $ | 6,466 |
| | |
Non-GAAP return on equity | 21.3 | % | | | | 17.6 | % | | |
We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.
Schedule 10
Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Year | | | | | | | | |
(in millions) | 2015 | | | | | | | | | | 2014 | | | | | | | | |
GAAP return on equity | 19.4 | % | | | | | | | | | | 18.3 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Non-GAAP return on equity | | | | | | | | | | | | | | | | | | | |
Net earnings | $ | 1,215 |
| | | | | | | | | | $ | 1,166 |
| | | | | | | | |
Restructuring and employee severance, net of tax, in continuing operations | 29 |
| | | | | | | | | | 20 |
| | | | | | | | |
Amortization and other acquisition-related costs, net of tax, in continuing operations | 181 |
| | | | | | | | | | 144 |
| | | | | | | | |
Impairments and (gain)/loss on disposal of assets, net of tax, in continuing operations | (9 | ) | | | | | | | | | | 10 |
| | | | | | | | |
Litigation (recoveries)/charges, net, net of tax, in continuing operations | 19 |
| | | | | | | | | | (13 | ) | | | | | | | | |
Loss on extinguishment of debt, net of tax, in continuing operations | 37 |
| | | | | | | | | | — |
| | | | | | | | |
Adjusted net earnings | $ | 1,472 |
| | | | | | | | | | $ | 1,327 |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Fourth | | Third | | Second | | First | | Fourth | | Fourth | | Third | | Second | | First | | Fourth |
| Quarter | | Quarter | | Quarter | | Quarter | | Quarter | | Quarter | | Quarter | | Quarter | | Quarter | | Quarter |
| 2015 | | 2015 | | 2015 | | 2015 | | 2014 | | 2014 | | 2014 | | 2014 | | 2014 | | 2013 |
Total shareholders' equity | $ | 6,256 |
| | $ | 6,369 |
| | $ | 6,100 |
| | $ | 6,256 |
| | $ | 6,401 |
| | $ | 6,401 |
| | $ | 6,532 |
| | $ | 6,589 |
| | $ | 6,297 |
| | $ | 5,975 |
|
Divided by average shareholders' equity | $ | 6,276 |
| | | | | | | | | | $ | 6,359 |
| | | | | | | | |
Non-GAAP return on equity | 23.4 | % | | | | | | | | | | 20.9 | % | | | | | | | | |
We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.
Schedule 11
Cardinal Health, Inc. and Subsidiaries
GAAP / Non-GAAP Reconciliation
|
| | | | | | | | | | | | | | | |
| Fourth Quarter | | Fiscal Year |
(in millions) | 2015 | | 2014 | | 2015 | | 2014 |
GAAP effective tax rate from continuing operations | 44.1 | % | | 34.4 | % | | 38.4 | % | | 35.3 | % |
| | | | | | | |
Non-GAAP effective tax rate from continuing operations | | | | | | | |
Earnings before income taxes and discontinued operations | $ | 523 |
| | $ | 357 |
| | $ | 1,967 |
| | $ | 1,798 |
|
Restructuring and employee severance | 11 |
| | 6 |
| | 44 |
| | 31 |
|
Amortization and other acquisition-related costs | 91 |
| | 63 |
| | 281 |
| | 223 |
|
Impairments and (gain)/loss on disposal of assets | — |
| | 4 |
| | (19 | ) | | 15 |
|
Litigation (recoveries)/charges, net | (49 | ) | | 1 |
| | 5 |
| | (21 | ) |
Loss on extinguishment of debt | — |
| | — |
| | 60 |
| | — |
|
Adjusted earnings before income taxes and discontinued operations | $ | 577 |
| | $ | 432 |
| | $ | 2,339 |
| | $ | 2,047 |
|
| | | | | | | |
Provision for income taxes | $ | 230 |
| | $ | 123 |
| | $ | 755 |
| | $ | 635 |
|
Restructuring and employee severance tax benefit | 4 |
| | 2 |
| | 15 |
| | 11 |
|
Amortization and other acquisition-related costs tax benefit | 31 |
| | 22 |
| | 100 |
| | 79 |
|
Impairments and (gain)/loss on disposal of assets tax benefit/(expense) | — |
| | 1 |
| | (10 | ) | | 5 |
|
Litigation (recoveries)/charges, net tax expense | (22 | ) | | — |
| | (14 | ) | | (8 | ) |
Loss on extinguishment of debt tax benefit | — |
| | — |
| | 23 |
| | — |
|
Adjusted provision for income taxes | $ | 243 |
| | $ | 148 |
| | $ | 870 |
| | $ | 722 |
|
| | | | | | | |
Non-GAAP effective tax rate from continuing operations | 42.2 | % | | 34.2 | % | | 37.2 | % | | 35.3 | % |
| | | | | | | |
| Fourth Quarter | | | | |
| 2015 | | 2014 | | | | |
Debt to total capital | 47 | % | | 38 | % | | | | |
| | | | | | | |
Net debt to capital | | | | | | | |
Current portion of long-term obligations and other short-term borrowings | $ | 281 |
| | $ | 801 |
| | | | |
Long-term obligations, less current portion | 5,211 |
| | 3,171 |
| | | | |
Debt | $ | 5,492 |
| | $ | 3,972 |
| | | | |
Cash and equivalents | (4,616 | ) | | (2,865 | ) | | | | |
Net debt | $ | 876 |
| | $ | 1,107 |
| | | | |
Total shareholders' equity | 6,256 |
| | 6,401 |
| | | | |
Capital | $ | 7,132 |
| | $ | 7,508 |
| | | | |
Net debt to capital | 12 | % | | 15 | % | | | | |
The sum of the components may not equal the total due to rounding.
We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.
Forward-Looking Non-GAAP Financial Measures
We present non-GAAP earnings from continuing operations and non-GAAP effective tax rate from continuing operations (and presentations derived from these financial measures, including per share calculations) on a forward-looking basis. The most directly comparable forward-looking GAAP measures are earnings from continuing operations and effective tax rate from continuing operations. We are unable to provide a quantitative reconciliation of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures because we cannot reliably forecast restructuring and employee severance, amortization and other acquisition-related costs, impairments and (gain)/loss on disposal of assets, litigation (recoveries)/charges, net, LIFO charges/(credits) and loss on extinguishment of debt, which are difficult to predict and estimate and are primarily dependent on future events. Please note that the unavailable reconciling items could significantly impact our future financial results.
Cardinal Health, Inc. and Subsidiaries
Use of Non-GAAP Measures
This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). In general, the measures exclude items and charges that (i) management does not believe reflect Cardinal Health, Inc.'s (the "Company") core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company’s performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.
In fiscal 2015, the Company began excluding last-in, first-out ("LIFO") inventory charges/(credits)5 from its non-GAAP earnings, for consistency with the presentation by some of its peers. The Company did not record any LIFO charges or credits in fiscal 2015 or 2014, respectively. In the second quarter of fiscal 2015, the Company excluded the loss on extinguishment of debt6 related to the early redemption of debt that occurred in December 2014 from its non-GAAP earnings.
Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company’s performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.
Definitions
Debt: long-term obligations plus short-term borrowings.
Debt to Total Capital: debt divided by (debt plus total shareholders’ equity).
Net Debt: a Non-GAAP measure defined as debt minus (cash and equivalents).
Net Debt to Capital: a Non-GAAP measure defined as net debt divided by (net debt plus total shareholders’ equity).
Non-GAAP Diluted EPS from Continuing Operations: non-GAAP earnings from continuing operations divided by diluted weighted-average shares outstanding.
Non-GAAP Earnings from Continuing Operations: earnings from continuing operations excluding (1) restructuring and employee severance1, (2) amortization and other acquisition-related costs2, (3) impairments and (gain)/loss on disposal of assets3, (4) litigation (recoveries)/charges, net4, (5) LIFO charges/(credits) and (6) loss on extinguishment of debt, each net of tax.
Non-GAAP Effective Tax Rate from Continuing Operations: (provision for income taxes adjusted for (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) divided by (earnings before income taxes and discontinued operations adjusted for the same six items).
Non-GAAP Operating Earnings: operating earnings 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 and (5) LIFO charges/(credits).
Non-GAAP Return on Equity: (annualized current period net earnings 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) divided by average shareholders’ equity.
Return on Equity: annualized current period net earnings divided by average shareholders’ equity.
Segment Profit: segment revenue minus (segment cost of products sold and segment distribution, selling, general and administrative expenses).
Segment Profit Margin: segment profit divided by segment revenue.
| |
1 | Programs by which the Company fundamentally changes its operations such as closing and consolidating facilities, moving manufacturing of a product to another location, production or business process sourcing, employee severance (including rationalizing headcount or other significant changes in personnel) and realigning operations (including realignment of the management structure of a business unit in response to changing market conditions). |
| |
2 | Costs that consist primarily of amortization of acquisition-related intangibles assets, transaction costs, integration costs and changes in the fair value of contingent consideration obligations. |
| |
3 | Asset impairments and (gains)/losses from the disposal of assets not eligible to be classified as discontinued operations are classified within impairments and (gain)/loss on disposal of assets within the consolidated statements of earnings. |
| |
4 | Loss contingencies related to litigation and regulatory matters and income from favorable resolution of legal matters. |
| |
5 | The inventories of the Company's core pharmaceutical distribution facilities in the Pharmaceutical segment are valued at the lower of cost, using the LIFO method, or market. These charges or credits are included in cost of products sold, and represent changes in the Company's LIFO inventory reserve. |
| |
6 | Charges related to the make-whole premium on the redemption of notes. |
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