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Press Release: Cardinal Health Reports Second-Quarter Results for Fiscal Year 2021

· 02/05/2021 06:55
-- Barclays Global Healthcare Conference at 8:35 a.m. Eastern, March 9-- 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(R) 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).Q2 FY21 Q2 FY20 Y/Y Revenue $4.3 billion $4.0 billion 7% Segment profit $236 million $195 million 21%Q2 FY21 Q2 FY20 Y/Y Revenue $37.2 billion $35.7 billion 4% Segment profit $413 million $462 million (11)%Q2 FY21 Q2 FY20 Y/Y Revenue $ 41.5 billion $39.7 billion 5% Operating earnings $ 461 million $334 million 38% Non-GAAP operating earnings $ 628 million $646 million (3)% Net earnings attributable to Cardinal Health, Inc. $ 629 million $220 million N.M. Non-GAAP net earnings attributable to Cardinal Health, Inc. $ 514 million $448 million 15% Effective Tax Rate (47.6) % 21.0 % Non-GAAP Effective Tax Rate 13.2 % 24.8 % Diluted EPS attributable to Cardinal Health, Inc. $ 2.13 $0.75 N.M. Non-GAAP diluted EPS attributable to Cardinal Health, Inc. $ 1.74 $1.52 14%

Cardinal Health Reports Second-Quarter Results for Fiscal Year 2021

- 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

PR Newswire

DUBLIN, Ohio, Feb. 5, 2021

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 outlook(1) 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

Upcoming webcasted investor events

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

(1) GAAP 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

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February 05, 2021 06:55 ET (11:55 GMT)