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Home > News/Media > News releases
Cardinal Health Reports Record Second-Quarter Earnings and Revenues
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DUBLIN, Ohio, Jan. 30 /PRNewswire/ -- Cardinal Health, Inc. (NYSE: CAH), a leading provider of products and services supporting the health-care industry, today reported record revenues, earnings, and return on capital for its fiscal 2001 second quarter ended December 31, with strong gains in each of its four business segments. Unless noted otherwise, the following discussion excludes special items.
Second-Quarter Highlights
- Cardinal Health grew earnings per diluted share in the second quarter by 21 percent to a record $0.75 from $0.62 a year ago. Net earnings rose to a second-quarter record $215 million from $177 million in the year- earlier period.
- Reflecting growing demand for Cardinal Health's unique offering, the company reported very strong operating revenues, up 24 percent to a record $7.7 billion in the second quarter from $6.3 billion a year ago.
- Revenue growth and improved productivity fueled second-quarter operating earnings, which rose 19 percent over the prior year to $364 million. Reflecting the quality and diversity of its earnings growth, the company reported record second-quarter operating earnings as a percent of sales in each of its four business segments. The company continues to shift the mix of its business lines within each segment toward higher profitability categories.
- Return on committed capital rose 140 basis points to 30.3 percent and return on equity increased 130 basis points to 20.0 percent, both second-quarter records.
- The company's record operating earnings included significant investment spending - up 60 percent over the year-ago quarter to approximately $18 million - primarily for research and development activities and to support major manufacturing start-ups in its Pharmaceutical Technologies and Services as well as Automation and Information Services segments.
- The company reduced selling, general and administrative expenses as a percent of sales in each of its four business segments and by 89 basis points overall to 5.75 percent.
- Cardinal Health generated $142 million of operating cash flow, a record for the second quarter and an improvement of $247 million versus the prior year. This was driven primarily by effective management of owned inventories (versus higher Y2K-related safety inventories a year ago) and other working capital improvements.
"This was another outstanding quarter for Cardinal Health, with strong growth across the company, especially in our Pharmaceutical Distribution and Provider Services segment," said Robert D. Walter, chairman and chief executive officer. "In each of our segments, we are growing our strong positions, emphasizing a higher-return mix of products and services, and improving our productivity and profitability. Our consistent performance reflects the increasing value we bring to health-care manufacturers and providers - and the disciplined execution of our strategy. We serve vital, growing markets and we see continued consistent growth for Cardinal Health. We reaffirm our long-term objective of growing annual earnings per share by 20 percent or more, along with improving our returns on invested capital and increasing our commitment to invest in our businesses. To our customers we reaffirm our commitment to expand our capabilities and provide the highest quality products and services supporting healthcare."
Business-Segment Results
Among Cardinal Health's strengths are earnings that are diversified across four business segments with favorable long-term growth and financial profiles. In the second quarter, the Pharmaceutical Distribution and Provider Services segment accounted for 45 percent of the company's operating earnings, Medical- Surgical Products and Services made up 28 percent, Pharmaceutical Technologies and Services represented 15 percent, and Automation and Information Services contributed 12 percent. Operating margins reached second-quarter records in each segment, reflecting the impact of favorable sales mix trends and productivity gains. Combined selling among Cardinal Health companies continued to enjoy strong customer demand and have a favorable impact on revenue growth.
Pharmaceutical Distribution and Provider Services
Aided by growth from new contracts and strong vendor margins, the Pharmaceutical Distribution and Provider Services segment posted record second-quarter operating earnings of $175 million, up 29 percent. These exceptional earnings, which reflect a full allocation of corporate expenses, were fueled by a 28-percent increase in operating revenues to $5.9 billion - an all-time high. Operating margin expanded in the second quarter to 2.97 percent from 2.93 percent the prior quarter. Return on committed capital rose substantially to 28.2 percent from 24.6 percent a year ago.
Highlights
- In December, Cardinal Health announced it would acquire Bindley Western Industries, a fast-growing pharmaceutical distributor with revenues of about $6 billion. Bindley will bring to Cardinal Health a strong position in pharmaceutical distribution sales to the federal government as well as a substantial presence in the area of nuclear medicine -- a fast growing field of patient care that Cardinal does not serve today. In January, the waiting period for this transaction under the Hart- Scott-Rodino Antitrust Act expired. On February 14, Bindley Western shareholders will vote on the acquisition, and subject to this vote and other customary conditions, the transaction is expected to be completed by the end of March.
- This segment produced strong revenue growth in all customer categories, with especially robust growth from chain pharmacies, hospitals and alternate-site facilities. Strong vendor margins and prudent expense management (down 42 basis points to a record low of 2.34 percent of revenues, including the allocation of corporate costs) were the main drivers of improved productivity, lifting the segment's operating margin and return on committed capital.
- In the second quarter, Cardinal Health signed multiyear contracts with several customers, including a number of major hospitals served by Novation, the supply company of VHA, Inc. and the University HealthSystem Consortium.
Allegiance Corporation increased its second-quarter operating earnings by 19 percent to $106 million on revenues of $1.5 billion, a 15 percent increase over the prior-year period, even with additional Y2K related sales in 2000 and the current quarter having one fewer billing day. Growing demand for Allegiance's "Best Value Product" lines, continued improvement in productivity, and manufacturing and administrative cost controls drove significantly higher returns on sales and capital in the quarter.
In part due to the changing sales mix, the company reduced SG&A expenses by 159 basis points to 14.43 percent of revenues in the quarter, more than offsetting an expected decline in the gross margin and lifting the operating margin 22 basis points to 7.17 percent. Return on capital also improved significantly, rising to 30.2 percent from 28.6 percent a year ago. These are exceptional accomplishments, given the higher costs the company is incurring from rising fuel and plastic resin prices, and negative swings in foreign exchange rates.
Highlights
- During the second quarter, Allegiance completed two acquisitions: Ni-Med (Farmington, Missouri) and CurranCare LLC (North Riverside, Illinois). Ni-Med is a growing maker of small, sterile procedure kits used in hospitals, surgery centers and other sites of care. CurranCare is a health-care consulting firm that specializes in helping hospitals and health networks coordinate care as patients move from the hospital to the home or other care sites.
- The integration of Bergen Brunswig Medical Corporation (BBMC), which Allegiance acquired in August 2000, is on track financially and operationally. The acquisition is contributing significantly to Allegiance's revenue growth. While BBMC's distribution-only revenues dilute the gross margin in the short term, Allegiance expects to generate significant synergies from the transaction in the coming quarters. The company expects to improve the business' profitability and productivity as BBMC is further integrated and sells more of Allegiance's self-manufactured and Best Value Product lines. Strategically, the BBMC transaction gives Allegiance an important new platform for growth, especially in serving health care outside hospitals.
With strong performances from Zydis(R) fast-dissolving wafers and sterile- liquid pharmaceutical products, this segment improved operating earnings by 15 percent to $59 million on revenue gains of 9 percent to $287 million. In the year-ago quarter, this segment reported exceptionally strong earnings growth of 36 percent. Higher-margin pharmaceutical revenues continue to drive higher returns in this segment.
Return on sales again rose sharply in the second quarter, up 100 basis points to 20.6 percent, driven by a more profitable sales mix and productivity improvements. Return on committed capital was 30.1 percent for this segment.
Highlights
- Reflecting a continued emphasis on growing its higher-margin pharmaceutical products and services, this segment benefited from accelerating demand for the Zydis(R) version of Eli Lilly and Company's schizophrenia drug, Zyprexa(R) and WhiteHall Robins' Advil(R) Liqui-Gels(R), the softgel form of the popular over-the-counter product. In addition, increased demand for Pharmacia Corporation's Xalatan(R) and Sepracor's Xopenex(TM) respiratory drugs led to exceptional results in Cardinal Health's sterile-liquid offerings. The strong pharmaceutical results were offset in part by softening consumer demand for protease inhibitors and over-capacity in the market for lower-margin U.S. health and nutritional products.
- Cardinal Health continued to invest in this segment's future growth with the recently completed acquisition of International Processing Corporation (IPC) and the assumption of the Alcon group's manufacturing center in Puerto Rico. IPC's advanced technology produces controlled- release medications in solid-dose formulations. The former Alcon operation expands Cardinal Health's capabilities in Puerto Rico, allowing it to offer integrated contract manufacturing and packaging services for the many pharmaceutical companies with operations there.
- Reflecting the potential for further demand for the company's proprietary drug-delivery technologies, Schering-Plough Corporation in December filed a New Drug Application (NDA) with the U.S. Food and Drug Administration seeking clearance to market its nonsedating antihistamine desloratadine in a Zydis(R) formulation. Desloratadine, a newly developed chemical entity, is a major metabolite of Schering's Claritin(R) (loratadine) non-sedating antihistamine.
This segment posted higher sales and earnings over the prior year on strong sales of new and existing automation products. Operating earnings increased 17 percent to $45 million, with revenues gaining 15 percent to $120 million. Revenue growth in the quarter was somewhat impacted by more stringent capital decision-making processes at hospitals. While the selling cycle has lengthened for Pyxis, demand remains strong for the company's products. Pyxis' products are important clinical tools that enhance logistics, help reduce medication errors and improve patient care. The proven cost savings of Pyxis products and the increasing need to supplement a shrinking nursing and pharmacist labor pool will help drive continued demand.
Several recently signed customer contracts and the introduction of new products such as the next generation of SUPPLYSTATION(R), expected in the third quarter, will contribute to this segment's growth moving forward.
Fueled by productivity improvements, operating margin in the segment rose 59 basis points to 37.99 percent. Return on committed capital was 27.6 percent for this segment.
Highlights
- Reflecting the productivity of Pyxis' research and development work, about 16 percent of this segment's revenues came from products introduced just within the last 12 months. The main driver of new product sales was MEDSTATION(R) SN, Pyxis' flagship automated pharmaceutical-dispensing system that addresses medication safety concerns. Sales of Pyxis' SUPPLYSTATION(R), which automates the management and dispensing of medical supplies, also were strong.
- The company recently unveiled its PATIENTSTATION(R) system, a portable point-of-care information center for the patient's bedside. Designed to reduce medication errors, PATIENTSTATION(R) is a new category of automation that improves productivity and gives patients access to online information and entertainment services.
Cardinal Health's first-half results also were outstanding, setting records in revenues, earnings, returns on capital and equity. The company's performance reflects growing customer demand and the successful execution of the company's strategy. For the fiscal 2001 first half, operating revenues increased 22 percent over the prior year to $14.7 billion, operating earnings improved 18 percent to $674 million, net earnings rose 21 percent to $399 million and earnings per diluted share increased 22 percent to $1.40.
In the first half, the company increased investment spending over prior year by 69 percent to $38 million, return on committed capital increased 170 basis points to 29.7 percent, and return on equity rose 140 basis points to 19.1 percent.
Including merger-related charges of $16.4 million (after tax), net earnings for the 2001 first half rose 29 percent to $382 million and earnings per diluted share were $1.34, a 30 percent improvement.
Separately, in connection with the proposed merger with Bindley Western, Cardinal Health's board of directors has rescinded a previously authorized $750 million share repurchase program that was announced in March 2000. The company had repurchased 7 million shares under the program for $440 million of the amount authorized.
Webcast Today
Cardinal has scheduled an Internet "webcast" today to discuss its second- quarter financial performance and outlook. To access this discussion, please visit http://www.cardinal.com and follow directions to the company's Investor Center. The conference will begin at 11 a.m. Eastern Time today. If you have difficulty accessing the call via the Internet, the company has established a call-in number at 212-896-6011 for telephone access. A replay of the webcast will be available until 5:00 p.m. EDT February 1 on the Internet at cardinal.com's Investor Center or by dialing 800-633-8284, reservation number 17552253.
Cardinal Health, Inc. ( http://www.cardinal.com ) is a leading provider of products and services supporting the health-care industry. Cardinal Health companies develop, manufacture, package and market products for patient care; develop drug-delivery technologies; distribute pharmaceuticals, medical- surgical and laboratory supplies; and offer consulting and other services that improve quality and efficiency in health care. The company employs more than 42,000 people on five continents and produces annual revenues approaching $30 billion.
Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance of Cardinal Health, Inc., Bindley Western Industries, Inc. and the combined company after completion of the proposed merger transaction. The forward- looking information and statements in this news release are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Cardinal Health and Bindley Western, that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include those discussed or identified in the public filings with the U.S. Securities and Exchange Commission (SEC) made by Cardinal Health and Bindley Western; risks and uncertainties with respect to the parties' expectations regarding the timing, completion and accounting and tax treatment of the merger, the value of the merger consideration, growth opportunities, earnings accretion, cost savings, revenue enhancements, synergies and other benefits anticipated from the transaction; the costs and effects of government regulation and legal and administrative proceedings and difficulties related to integrating the businesses, and the effect of any changes in customer and supplier relationships and customer purchasing patterns, shifts in the growth rates among segments driven by various factors, general consumer perceptions of health-related concerns or the distribution outsourcing pattern for health-care products and/or services and of general economic condition such as changes in interest rates and the performance of the financial markets, changes in domestic and foreign laws, regulations and taxes, changes in competition and pricing environments, and general market and industry conditions.
Information regarding the identity of the persons who may, under SEC rules, be deemed to be participants in the solicitation of stockholders of Bindley Western in connection with the proposed merger, and their interests in the solicitation, are set forth in a schedule 14A filed on December 4, 2000 with the SEC. Cardinal Health and Bindley Western have filed a proxy statement/prospectus and other relevant documents concerning the proposed transaction with the SEC. Investors are urged to read the proxy statement/prospectus and any other relevant documents filed with the SEC, because they contain important information on the proposed transaction. Investors can obtain the documents free of charge at the SEC's Web site (www.sec.gov). In addition, documents filed with the SEC by Cardinal Health may be obtained free of charge by contacting Cardinal Health, Inc., 7000 Cardinal Place, Dublin, Ohio 43017, (614) 757-5000. Documents filed with the SEC by Bindley Western are available free of charge by contacting Bindley Western Industries, Inc., 8909 Purdue Road, Indianapolis, Indiana 46268, (317) 704-4000. Investors should read the proxy statement/prospectus carefully before making any voting or investment decision.
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(in millions, except per share amounts)
SECOND QUARTER
December December
2000 1999 % Change
Revenue:
Operating Revenue $7,745.1 $6,254.3 24 %
Bulk Deliveries to
Customer Warehouses 1,892.8 1,145.2 65 %
Total Revenue 9,637.9 7,399.5 30 %
Cost of Products Sold:
Operating Cost of Products
Sold 6,936.1 5,532.7 25 %
Cost of Products Sold -
Bulk Deliveries 1,892.8 1,144.9 65 %
Total Cost of Products Sold 8,828.9 6,677.6 32 %
Gross Margin 809.0 721.9 12 %
S, G & A Expenses 445.4 415.3 7 %
Merger-Related Costs 7.0 5.5 27 %
Operating Earnings 356.6 301.1 18 %
Interest Expense and Other (30.5) (26.8) 14 %
Earnings Before Income Taxes 326.1 274.3 19 %
Provision for Income Taxes 116.9 100.8 16 %
Net Earnings $209.2 $173.5 21 %
Earnings Per Common Share:
Basic $0.75 $0.62 21 %
Diluted $0.73 $0.61 20 %
Weighted Average Number of
Shares Outstanding:
Basic 279.3 280.4 --
Diluted 286.4 285.1 --
The following table summarizes the impact of merger-related costs on net earnings and diluted earnings per Common Share in the quarters in which they were recorded:
Current Year Prior Year
Net Diluted Net Diluted
Earnings EPS Earnings EPS
Merger-Related Costs $(5.4) $(0.02) $(3.4) $(0.01)
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(in millions, except per share amounts)
YEAR-TO-DATE
December December
2000 1999 % Change
Revenue:
Operating Revenue $14,728.3 $12,083.6 22 %
Bulk Deliveries to
Customer Warehouses 3,644.2 2,099.6 74 %
Total Revenue 18,372.5 14,183.2 30 %
Cost of Products Sold:
Operating Cost of
Products Sold 13,182.9 10,707.2 23 %
Cost of Products Sold -
Bulk Deliveries 3,644.2 2,099.3 74 %
Total Cost of Products
Sold 16,827.1 12,806.5 31 %
Gross Margin 1,545.4 1,376.7 12 %
S, G & A Expenses 871.5 806.6 8 %
Merger-Related Costs 24.3 42.3 (43)%
Operating Earnings 649.6 527.8 23 %
Interest Expense & Other (57.5) (51.7) 11 %
Earnings Before Income
Taxes 592.1 476.1 24 %
Provision for Income Taxes 209.7 180.6 16 %
Net Earnings $382.4 $295.5 29 %
Earnings Per Common Share:
Basic $1.37 $1.05 30 %
Diluted $1.34 $1.03 30 %
Weighted Average Number of
Shares Outstanding:
Basic 278.5 280.2 --
Diluted 285.5 285.8 --
The following table summarizes the impact of merger-related costs on net earnings and diluted earnings per Common Share in the periods in which they were recorded:
Current Year Prior Year
Net Diluted Net Diluted
Earnings EPS Earnings EPS
Merger-Related Costs $(16.4) $(0.06) $(33.1) $(0.12)
CARDINAL HEALTH, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
December 31, June 30, December 31,
2000 2000 1999
ASSETS
CURRENT ASSETS
Cash and Equivalents $416.2 $504.6 $290.5
Trade Receivables 2,225.3 1,677.0 1,887.8
Current Portion of Investment in
Sales-Type Leases 218.4 187.7 166.2
Inventories 5,206.8 3,865.3 4,041.2
Prepaid Expenses and Other 707.9 636.0 540.5
Total Current Assets 8,774.6 6,870.6 6,926.2
Property and Equipment - Net 1,688.1 1,626.9 1,604.4
Investment in Sales-Type Leases 600.8 578.6 506.4
Other Assets 1,262.9 1,188.8 1,243.0
TOTAL ASSETS $12,326.4 $10,264.9 $10,280.0
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes Payable - Banks and Current
Portion of Long-Term Obligations $28.2 $28.4 $163.6
Accounts Payable 4,350.0 3,030.9 3,027.3
Other Accrued Liabilities 976.9 1,202.2 961.6
Total Current Liabilities 5,355.1 4,261.5 4,152.5
Long-Term Obligations, Less
Current Portion 1,980.5 1,485.8 1,657.9
Deferred Taxes and Other
Liabilities 659.0 536.4 608.2
Total Shareholders' Equity 4,331.8 3,981.2 3,861.4
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $12,326.4 $10,264.9 $10,280.0
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Three months ended Six months ended
December 31, December 31,
2000 1999 2000 1999
Cash Flows From Operating
Activities:
Net earnings available for
Common Shares $209.2 $173.5 $382.4 $295.5
Adjustments to reconcile net
earnings to net cash
from operations:
Depreciation and
amortization 66.7 63.6 130.7 125.3
Change in operating assets
and liabilities, net of
effects from acquisitions:
Increase in trade
receivables (311.6) (139.2) (450.4) (287.4)
Increase in inventories (732.8) (474.4) (1,237.1) (1,102.3)
Increase in net investment
in sales-type leases (41.0) (50.3) (52.9) (65.8)
Increase in accounts
payable 910.4 232.9 1,252.3 675.5
Other operating items -
net 41.6 89.8 (147.5) 76.5
Net cash provided by/(used
in) operating activities 142.5 (104.1) (122.5) (282.7)
Cash Flows From Investing
Activities:
Net acquisition of
subsidiaries, net of cash
acquired (22.4) (14.3) (262.3) (62.6)
Proceeds from sale of property
and equipment 1.8 11.9 3.6 14.5
Additions to property and
equipment (81.2) (67.7) (129.0) (149.3)
Other -- (0.1) -- 48.3
Net cash used in investing
activities (101.8) (70.2) (387.7) (149.1)
Cash Flows From Financing
Activities:
Net short-term borrowing
activity (391.1) 337.8 96.9 693.8
Net change in long-term
obligations 405.5 (61.8) 397.1 (140.8)
Proceeds from issuance of
Common Shares 17.8 10.7 84.1 20.6
Purchase of Treasury Stock (137.9) (0.3) (138.1) (22.6)
Other (9.9) (7.0) (18.2) (14.1)
Net cash provided by/(used
in) financing activities (115.6) 279.4 421.8 536.9
Net Increase (Decrease) in Cash
and Equivalents (74.9) 105.1 (88.4) 105.1
Cash and Equivalents at
Beginning of Period 491.1 185.4 504.6 185.4
Cash and Equivalents at End of
Period 416.2 290.5 416.2 290.5
CARDINAL HEALTH, INC. - SECOND QUARTER FY 2001 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2001 2000 Comment
* REVENUE
- Amount $5,885 $4,608 RECORD
- Growth Rate 28% 23% Organic growth
- Mix 76% 74%
* RATIO TO REVENUE
- Gross Margin 5.31% 5.69% Customer mix
- Expenses 2.34% 2.76% RECORD LOW
- Operating Earnings 2.97% 2.93% Q2 RECORD
* OPERATING EARNINGS
- Growth Rate 29% 22%
- Mix 45% 43%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.27 $2.06 10% improvement
* ASSET MANAGEMENT
- Average Committed
Capital $2,475 $2,196 Inventory investment
- Return On Committed
Capital 28.2% 24.6% RECORD
- Operating Cash Flow $26 ($276) Working capital
management
- Capital Expenditures
Investment $14 $13
MEDICAL-SURGICAL PRODUCTS AND SERVICES
2001 2000 Comment
* REVENUE
- Amount $1,474 $1,279 RECORD
- Growth Rate 15% 6% BBMC acquisition
- Mix 19% 20%
* RATIO TO REVENUE
- Gross Margin 21.60% 22.97% BBMC impact
- Expenses 14.43% 16.02% Continued focus
- Operating Earnings 7.17% 6.95% Q2 RECORD
* OPERATING EARNINGS
- Growth Rate 19% 21%
- Mix 28% 28%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $1.50 $1.43 5% improvement
* ASSET MANAGEMENT
- Average Committed
Capital $1,398 $1,245 BBMC impact
- Return On Committed
Capital 30.2% 28.6% Q2 RECORD
- Operating Cash Flow $103 $125
- Capital Expenditures
Investment $18 $27
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2001 2000 Comment
* REVENUE
- Amount $287 $263 RECORD
- Growth Rate 9% 12%
- Mix 4% 4%
* RATIO TO REVENUE
- Gross Margin 35.77% 34.96% Product mix
- Expenses 15.22% 15.41% Operating efficiencies
- Operating Earnings 20.55% 19.55% RECORD
* OPERATING EARNINGS
- Growth Rate 15% 36%
- Mix 15% 16%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.35 $2.27 4% improvement
* ASSET MANAGEMENT
- Average Committed
Capital $782 $647 Strategic investments
- Return On Committed
Capital 30.1% 31.8%
- Operating Cash Flow $20 $66
- Capital Expenditures
Investment $48 $24
AUTOMATION AND INFORMATION SERVICES
2001 2000 Comment
* REVENUE
- Amount $120 $104 Q2 RECORD
- Growth Rate 15% 3%
- Mix 1% 2%
* RATIO TO REVENUE
- Gross Margin 68.30% 69.94% Product mix
- Expenses 30.31% 32.54% Growth leverage
- Operating Earnings 37.99% 37.40% Q2 RECORD
* OPERATING EARNINGS
- Growth Rate 17% 4%
- Mix 12% 13%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.25 $2.15 5% improvement
* ASSET MANAGEMENT
- Average Committed Capital $659 $554 Lease investment
- Return On Committed
Capital 27.6% 28.1%
- Operating Cash Flow ($7) ($19)
- Capital Expenditures
Investment $1 $3
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - SECOND QUARTER FY 2001 BUSINESS ANALYSIS
($ millions)
TOTAL
2001 2000 Comment
* REVENUE
- Amount $7,745 $6,254
- Growth Rate 24% 18%
* RATIO TO REVENUE >
Special Charges
- Gross Margin 10.44% 11.54%
- Expenses 5.75% 6.64%
2001 2000
- Special Charges 0.09% 0.09%
- Operating Earnings 4.60% 4.81% 4.69% 4.90%
OPERATING EARNINGS
- Growth Rate 18% 20% 19% 21%
NET EARNINGS
- Ratio to Revenue 2.70% 2.78% 2.77% 2.83%
- Growth Rate 21% 23% 21% 23%
PRODUCTIVITY
- Margin Per Expense Dollar* $1.82 $1.74
ASSET MANAGEMENT
Average Committed Capital $4,795 $4,246
Return On Committed
Capital 29.8% 28.4% 30.3% 28.9%
- Operating Cash Flow $142 ($104)
- Capital Expenditures
Investment $81 $67
Revenue and all ratios to revenue exclude bulk deliveries to
customer warehouses
Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. -- FIRST SIX MONTHS FY 2001 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2001 2000
* REVENUE
- Amount $11,137 $8,898
- Growth Rate 25% 22%
- Mix 76% 74%
* RATIO TO REVENUE
- Gross Margin 5.33% 5.71%
- Expenses 2.41% 2.80%
- Operating Earnings 2.92% 2.91%
* OPERATING EARNINGS
- Growth Rate 26% 27%
- Mix 46% 44%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.21 $2.04
* ASSET MANAGEMENT
- Average Committed Capital $2,316 $1,993
- Return On Committed
Capital 28.1% 26.0%
- Operating Cash Flow ($235) ($472)
- Capital Expenditures
Investment $26 $37
MEDICAL-SURGICAL PRODUCTS AND SERVICES
2001 2000
* REVENUE
- Amount $2,853 $2,492
- Growth Rate 14% 6%
- Mix 19% 20%
* RATIO TO REVENUE
- Gross Margin 22.03% 22.99%
- Expenses 14.74% 15.95%
- Operating Earnings 7.29% 7.04%
* OPERATING EARNINGS
- Growth Rate 19% 21%
- Mix 29% 30%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $1.50 $1.44
* ASSET MANAGEMENT
- Average Committed Capital $1,338 $1,235
- Return On Committed
Capital 31.1% 28.4%
- Operating Cash Flow $112 $173
- Capital Expenditures
Investment $29 $44
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2001 2000
* REVENUE
- Amount $559 $522
- Growth Rate 7% 18%
- Mix 4% 4%
* RATIO TO REVENUE
- Gross Margin 34.15% 33.39%
- Expenses 14.67% 14.91%
- Operating Earnings 19.48% 18.48%
* OPERATING EARNINGS
- Growth Rate 13% 44%
- Mix 15% 16%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.33 $2.24
* ASSET MANAGEMENT
- Average Committed Capital $768 $655
- Return On Committed
Capital 28.3% 29.4%
- Operating Cash Flow $29 $76
- Capital Expenditures
Investment $72 $59
AUTOMATION AND INFORMATION SERVICES
2001 2000
* REVENUE
- Amount $210 $174
- Growth Rate 21% (9)%
- Mix 1% 2%
* RATIO TO REVENUE
- Gross Margin 66.59% 69.48%
- Expenses 33.91% 37.25%
- Operating Earnings 32.68% 32.23%
* OPERATING EARNINGS
- Growth Rate 22% (14)%
- Mix 10% 10%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $1.96 $1.87
* ASSET MANAGEMENT
- Average Committed Capital $641 $528
- Return On Committed
Capital 21.4% 21.2%
- Operating Cash Flow ($29) ($60)
- Capital Expenditures
Investment $2 $9
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expense
CARDINAL HEALTH, INC. - FIRST SIX MONTHS FY 2001 BUSINESS ANALYSIS
($ millions)
TOTAL
2001 2000 Comment
* REVENUE
- Amount $14,728 $12,084
- Growth Rate 22% 17%
* RATIO TO REVENUE >
Special Charges
- Gross Margin 10.49% 11.39%
- Expenses 5.92% 6.67% 2001 2000
- Special Charges 0.16% 0.34%
- Operating Earnings 4.41% 4.38% 4.57% 4.72%
- OPERATING EARNINGS
- Growth Rate 23% 22% 18% 21%
- NET EARNINGS
- Ratio to Revenue 2.60% 2.45% 2.71% 2.72%
- Growth Rate 29% 25% 21% 24%
- PRODUCTIVITY
- Margin Per Expense Dollar* $1.77 $1.71
- ASSET MANAGEMENT
- Average Committed Capital $4,541 $4,066
- Return On Committed
Capital 28.6% 26.0% 29.7% 28.0%
- Operating Cash Flow ($123) ($283)
- Capital Expenditures
Investment $129 $149
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - QUARTERLY FY 2001 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $5,252 $5,885
- Growth Rate 22% 28%
- Mix 75% 76%
* RATIO TO REVENUE
- Gross Margin 5.37% 5.31%
- Expenses 2.49% 2.34%
- Operating Earnings 2.88% 2.97%
* OPERATING EARNINGS
- Growth Rate 22% 29%
- Mix 46% 45%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.15 $2.27
* ASSET MANAGEMENT
- Average Committed Capital $2,166 $2,475
- Return On Committed
Capital 27.9% 28.2%
- Operating Cash Flow ($261) $26
- Capital Expenditures
Investment $12 $14
MEDICAL-SURGICAL PRODUCTS AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $1,379 $1,474
- Growth Rate 14% 15%
- Mix 20% 19%
* RATIO TO REVENUE
- Gross Margin 22.50% 21.60%
- Expenses 15.06% 14.43%
- Operating Earnings 7.44% 7.17%
* OPERATING EARNINGS
- Growth Rate 19% 19%
- Mix 32% 28%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.49 $1.50
* ASSET MANAGEMENT
- Average Committed Capital $1,302 $1,398
- Return On Committed
Capital 31.5% 30.2%
- Operating Cash Flow $9 $103
- Capital Expenditures
Investment $11 $18
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $272 $287
- Growth Rate 5% 9%
- Mix 4% 4%
* RATIO TO REVENUE
- Gross Margin 32.44% 35.77%
- Expenses 14.08% 15.22%
- Operating Earnings 18.36% 20.55%
* OPERATING EARNINGS
- Growth Rate 11% 15%
- Mix 15% 15%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.30 $2.35
* ASSET MANAGEMENT
- Average Committed Capital $750 $782
- Return On Committed
Capital 26.6% 30.1%
- Operating Cash Flow $9 $20
- Capital Expenditures
Investment $24 $48
AUTOMATION AND INFORMATION SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $90 $120
- Growth Rate 29% 15%
- Mix 1% 1%
* RATIO TO REVENUE
- Gross Margin 64.32% 68.30%
- Expenses 38.68% 30.31%
- Operating Earnings 25.64% 37.99%
* OPERATING EARNINGS
- Growth Rate 35% 17%
- Mix 7% 12%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.66 $2.25
* ASSET MANAGEMENT
- Average Committed Capital $623 $659
- Return On Committed
Capital 14.8% 27.6%
- Operating Cash Flow ($22) ($7)
- Capital Expenditures
Investment $1 $1
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expense
CARDINAL HEALTH, INC. - QUARTERLY FY 2001 BUSINESS ANALYSIS
($ millions)
TOTAL (EXCLUDING SPECIAL CHARGES)
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $6,983 $7,745
- Growth Rate 20% 24%
- RATIO TO REVENUE
- Gross Margin 10.55% 10.44%
- Expenses 6.10% 5.75%
- Operating Earnings 4.45% 4.69%
- OPERATING EARNINGS
- Growth Rate 18% 19%
- NET EARNINGS
- Ratio to Revenue 2.64% 2.77%
- Growth Rate 21% 21%
- PRODUCTIVITY
- Margin Per Expense
Dollar * $1.73 $1.82
- ASSET MANAGEMENT
- Average Committed
Capital $4,360 $4,795
- Return On Committed
Capital 28.5% 30.3%
- Operating Cash Flow ($265) $142
- Capital Expenditures
Investment $48 $81
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - FIRST SIX MONTHS FISCAL 2001 AND 2000 ASSET
MANAGEMENT ANALYSIS
($ millions)
2001
Q1 Q2 YTD COMMENT
* RECEIVABLE DAYS 21 22
* INVENTORY TURNS 6.3 6.2 Seasonal
investment
* CASH $491 $416
* DEBT $1,994 $2,009
* EQUITY $4,230 $4,332
* NET DEBT/TOTAL CAPITAL 26% 27% Q2 RECORD
* TANGIBLE NET WORTH $3,185 $3,310
* RETURN ON EQUITY 16.9% 19.6% 18.3%
EXCLUDING SPECIAL ITEMS 17.9% 20.0% 19.1% Q2 RECORD
* TAX RATE 34.9% 35.8% 35.4%
EXCLUDING SPECIAL ITEMS 35.0% 35.5% 35.3% International
initiatives
2000
Q1 Q2 YTD
* RECEIVABLE DAYS 23 23
* INVENTORY TURNS 6.6 6.2
* CASH $185 $291
* DEBT $1,543 $1,822
* EQUITY $3,681 $3,861
* NET DEBT/TOTAL CAPITAL 27% 28%
* TANGIBLE NET WORTH $2,711 $2,892
* RETURN ON EQUITY 13.5% 18.4% 16.0%
EXCLUDING SPECIAL ITEMS 16.7% 18.7% 17.7%
* TAX RATE 39.5% 36.8% 37.9%
EXCLUDING SPECIAL ITEMS 36.5% 36.8% 36.6%
SOURCE Cardinal Health, Inc.
CONTACT: Investors, Stephen T. Fischbach, 614-757-7067, or Media, Geoffrey D. Fenton, 614-757-7871, both of Cardinal Health, Inc./
Feedback: Media relations
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