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Press Release: Cardinal Health Reports -2-

· 02/05/2021 06:55
Schedule 1 ---------------------------------------------------------------------------------------- Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (Unaudited) Second Quarter Year-to-Date (in millions, except per common share amounts) 2021 2020 % Change 2021 2020 % Change ---------------------- Revenue $41,541 $39,735 5 % $80,606 $77,076 5 % Cost of products sold 39,765 38,021 5 % 77,115 73,683 5 % Gross margin 1,776 1,714 4 % 3,491 3,393 3 % Operating expenses: Distribution, selling, general and administrative expenses 1,147 1,163 (1) % 2,284 2,270 1 % Restructuring and employee severance 20 56 57 86 Amortization and other acquisition-related costs 116 133 234 265 Impairments and (gain)/loss on disposal of assets, net -- 7 9 8 Litigation (recoveries)/charges, net (1) 32 21 1,070 5,694 Operating earnings/(loss) 461 334 38 % (163) (4,930) N.M Other (income)/expense, net (12) (12) (19) 2 Interest expense, net 46 63 (27) % 91 129 (29) % Loss on extinguishment of debt -- 4 1 4 Earnings/(loss) before income taxes 427 279 53 % (236) (5,065) N.M. Provision for/(benefit from) income taxes (2) (203) 59 N.M (613) (364) N.M. Net earnings/(loss) 630 220 N.M 377 (4,701) N.M. Less: Net earnings attributable to noncontrolling interests (1) -- (1) (1) Net earnings/(loss) attributable to Cardinal Health, Inc. $629 $220 N.M. $376 $(4,702) N.M. Earnings/(loss) per common share attributable to Cardinal Health, Inc.: Basic $2.14 $0.75 N.M. $1.28 $(15.99) N.M. Diluted 2.13 0.75 N.M. 1.27 (15.99) (3) N.M. Weighted-average number of common shares outstanding: Basic 294 292 293 294 Diluted 295 294 295 294 (3) (1) Litigation (recoveries)/charges, net includes pre-tax charges of $1.02 billion and $5.63 billion recorded in the first quarter of fiscal 2021 and 2020, respectively, related to the opioid litigation. (2) Provision for/(benefit from) income taxes includes a tax benefit recorded during the three months ended December 31, 2020 related to a net operating loss carryback. Our wholly-owned insurance subsidiary recorded a self-insurance pre-tax loss in its fiscal 2020 statutory financial statements primarily related to the opioid litigation charges previously accrued in our consolidated financial statements. This self-insurance pre-tax loss, which did not impact our 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. The net operating loss is being carried back and applied to adjust our taxable income for fiscal 2015, 2016, 2017 and 2018 as permitted under the Coronavirus Aid, Relief and Economic Security ("CARES") Act. The total net benefit was $420 million. In addition, the amount of tax expense increased by approximately $150 million during the three months ended December 31, 2020 while the amount of tax benefit increased by approximately $300 million during the six months ended December 31, 2020 compared to the tax impacts that would have been recognized without the opioid litigation charge. The treatment of the tax impacts of opioid litigation charges is expected to significantly increase the provision for income taxes during the remainder of the fiscal year. The net tax benefits associated with the opioid litigation charges are $35 million and $488 million for fiscal 2021 and 2020, respectively. (3) Due to the net loss for the six months ended December 31, 2019, potentially dilutive common shares have not been included in the denominator of the dilutive per share computation due to their anti-dilutive effect. Schedule 2 -------------------------------------------------------------------------- Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Balance Sheets June 30, (in millions) December 31, 2020 2020 --------------------------------------- Assets (Unaudited) Current assets: Cash and equivalents $ 3,737 $ 2,771 Trade receivables, net 8,728 8,264 Inventories, net 14,443 13,198 Prepaid expenses and other 3,205 1,707 Total current assets 30,113 25,940 Property and equipment, net 2,386 2,366 Goodwill and other intangibles, net 11,102 11,275 Other assets 1,118 1,185 Total assets $ 44,719 $ 40,766 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 23,235 $ 21,374 Current portion of long-term obligations and other short-term borrowings 13 10 Other accrued liabilities 2,502 2,231 Total current liabilities 25,750 23,615 Long-term obligations, less current portion 6,720 6,765 Deferred income taxes and other liabilities 10,274 8,594 Total shareholders' equity 1,975 1,792 Total liabilities and shareholders' equity $ 44,719 $ 40,766 Schedule 3 --------------------------------------------------------------------- Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Second Quarter Year-to-Date (in millions) 2021 2020 2021 2020 ------------------------ Cash flows from operating activities: Net earnings/(loss) $ 630 $ 220 $ 377 $(4,701) Adjustments to reconcile net earnings/(loss) to net cash provided by operating activities: Depreciation and amortization 199 230 404 464 Impairments and (gain)/loss on disposal of assets, net -- 7 9 8 Loss on extinguishment of debt 1 4 1 4 Share-based compensation 23 21 51 41 Provision for bad debts 19 18 35 47

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.

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