Cardinal Health Latest News

- Revenue increased 5% to $41.5 billion
- GAAP(1) operating earnings were $461 million, GAAP diluted EPS were $2.13
- Non-GAAP operating earnings decreased 3% to $628 million, non-GAAP diluted EPS increased 14% to $1.74
- Company raised FY21 earnings guidance

DUBLIN, Ohio, Feb. 5, 2021 /PRNewswire/ -- Cardinal Health (NYSE: CAH) today reported second-quarter fiscal year 2021 revenue of $41.5 billion, an increase of 5% from the second quarter of last year. Second-quarter GAAP operating earnings increased 38% to $461 million, primarily due to the beneficial comparison to the prior-year charge related to voluntary surgical gown recalls. GAAP diluted earnings per share (EPS) increased to $2.13, primarily due to the tax effect of a self-insurance loss.

Non-GAAP operating earnings decreased 3% to $628 million in the quarter, and this decrease included a modest net negative impact from COVID-19. The Pharmaceutical segment was adversely affected by COVID-19, while the Medical segment experienced a net positive impact. Non-GAAP diluted EPS increased 14% to $1.74 in the quarter, benefiting from a lower non-GAAP effective tax rate.

"As we collectively navigate the pandemic, we remain committed to supporting customers, patients, and communities around the world," said Mike Kaufmann, CEO of Cardinal Health. "Our second-quarter results demonstrate our resilient business model, strong fundamentals, and the adaptability of our dedicated employees. We remain focused on optimizing our core businesses, investing in key areas, and efficiently deploying capital to drive long-term, sustainable growth."

Q2 FY21 summary

Segment results

Pharmaceutical segment

Second-quarter revenue for the Pharmaceutical segment increased 4% to $37.2 billion, driven by sales growth from Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical segment profit decreased 11% to $413 million in the second quarter, due to the adverse impact of COVID-19-related volume declines, primarily in the company's generics program and Nuclear and Precision Health Solutions business. This was partially offset by a higher contribution from brand sales mix.

Medical segment

Second-quarter revenue for the Medical segment increased 7% to $4.3 billion, driven by a net positive impact from COVID-19. This increase was primarily due to the impact of personal protective equipment (PPE) sales and higher volumes in our lab business, partially offset by the adverse effects of cancelled or deferred elective procedures.

Medical segment profit increased 21% to $236 million in the second quarter, due to the net positive impact from COVID-19 and cost savings, which included global manufacturing efficiencies. The net positive impact from COVID-19 was primarily due to higher volumes in our Lab business and an increased contribution from PPE, partially offset by the adverse effects of cancelled or deferred elective procedures.

Tax rate
During the second quarter of fiscal 2021, our wholly-owned insurance subsidiary recorded a self-insurance pre-tax loss in its fiscal 2020 statutory financial statements related to charges previously accrued in the company's consolidated financial statements. This self-insurance pre-tax loss, which did not impact the company's pre-tax consolidated results, is currently deductible on our fiscal 2020 consolidated federal income tax return, and contributed to a significant net operating loss for tax purposes. In addition, pursuant to the Coronavirus Aid, Relief and Economic Security Act enacted by the United States Congress in March 2020, this net operating loss will be carried back to fiscal years 2015-2018 to recover previously-paid Federal taxes at rates that were in effect at that time.

Accordingly, the second-quarter fiscal 2021 GAAP effective tax rate of (47.6)% reflects a benefit of $420 million associated with the net operating loss carryback. Additionally, we intend to file for a federal income tax refund of $974 million, primarily as a result of the net operating loss carryback, which we expect to receive within 12 months. The company has recorded a corresponding current asset on its second quarter fiscal 2021 consolidated balance sheet.

The second-quarter fiscal 2021 non-GAAP effective tax rate of 13.2% reflects the impact of certain discrete items.

Fiscal year 2021 outlook¹
Cardinal Health raised its fiscal year 2021 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $5.85 to $6.10, from the prior range of $5.65 to $5.95.

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 Board of Directors approved a quarterly dividend of $0.4859 per share. The dividend will be payable on April 15, 2021 to shareholders of record at the close of business on April 1, 2021.
• The company reached an agreement with the Centers for Disease Control and Prevention (CDC) to act as a network administrator in Phase 2 of the Federal Pharmacy Partnership Strategy for COVID-19. Additionally, the Cardinal Health OptiFreight® Logistics business was selected by the Ohio Department of Health to support efforts to distribute COVID-19 vaccines.
• For the 13th 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).

Upcoming webcasted investor events

• Barclays Global Healthcare Conference at 8:35 a.m. Eastern, March 9

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 4, 2022.

About Cardinal Health
Cardinal Health is a distributor of pharmaceuticals, a global manufacturer and distributor of medical and laboratory products, and a provider of performance and data solutions for healthcare facilities. With 50 years in business, operations in more than 40 countries and approximately 48,000 employees globally, Cardinal Health is essential to care. Information about Cardinal Health is available at cardinalhealth.com.

Contacts
Media: Sarah Shew, sarah.shew@cardinalhealth.com and 614.553.3401
Investors: Kevin Moran, kevin.moran@cardinalhealth.com and 614.757.7942

¹GAAP refers to U.S. generally accepted accounting principles. This news release includes GAAP financial measures as well as non-GAAP financial measures, which are financial measures not calculated in accordance with GAAP. See "Use of Non-GAAP Measures" following the attached schedules for definitions of the non-GAAP financial measures presented in this news release and see the attached schedules for 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 Investor Relations page at  ir.cardinalhealth.com. In addition, the website allows investors and other interested persons to sign up automatically to receive email alerts when the company posts news releases, SEC filings and certain other information on its website.

Cautions Concerning Forward-Looking Statements
This 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 various accruals and estimates. 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 risks arising from the ongoing COVID-19 pandemic and our critical role in the global healthcare supply chain including the impact of deferrals and cancellations of elective medical procedures, our ability to recoup or mitigate cost increases to source certain personal protective or other equipment, and the impact of  additional supply disruptions of distribution or manufacturing facilities; competitive pressures in Cardinal Health's various lines of business; the amount or rate of generic deflation and our ability to offset generic deflation and maintain other financial and strategic benefits through our generic sourcing venture with CVS Health and other components of our generics pharmaceutical program; risks associated with the distribution of opioids, including the financial impact associated with the outcome of the ongoing lawsuits and investigations by certain governmental and regulatory authorities and risks and uncertainties associated with the ongoing settlement framework discussions, including the risk that we may fail to reach a settlement agreement or that a final settlement could require us to pay more than we currently anticipate; risks associated with the manufacture and sourcing of certain products, including risks related to our ability and the ability of third-party manufacturers to comply with applicable regulations; risks associated with our interpretations and estimates used to calculate the tax benefit associated with our self-insurance loss position; our ability to manage uncertainties associated with the pricing of branded pharmaceuticals; and risks associated with our cost savings initiatives. 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 February 5, 2021. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.