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Home > News/Media > News releases
Cardinal Health Reports Record Third-Quarter Earnings And Revenues
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DUBLIN, Ohio, April 26 /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 third quarter ended March 31. The company's strong performance was driven by exceptional sales gains in its two largest business segments - Pharmaceutical Distribution and Provider Services, and Medical- Surgical Products and Services. All per share data reflect the company's recent three-for-two stock split and unless noted otherwise, the following discussion excludes special items.
Third-Quarter Highlights
- Cardinal Health grew earnings per diluted share in the third quarter by 22 percent to a record $0.56 from $0.46 a year ago. Net earnings rose 23 percent to a third-quarter record $255 million from $208 million in the year- earlier period.
- Increasing demand for Cardinal's pharmaceutical distribution and medical-surgical products and services fueled a 35 percent increase in operating revenues to a record $10.3 billion in the third quarter from $7.7 billion a year ago.
- Revenue growth and improved productivity in the third quarter drove higher operating earnings, which rose 19 percent over the prior year to a record $436 million. This strong performance includes continued planned increases in investment spending for research and development and other activities that support future earnings growth. Investment spending is a long-term strategic priority for Cardinal Health. The company increased investment spending more than 90 percent over the prior year to $22 million in the third quarter.
- Reflecting the continued quality of the company's earnings growth and focus on disciplined asset management, return on committed capital rose an impressive 220 basis points to 30.6 percent, and return on equity increased 70 basis points to 20.5 percent, both all-time company records.
- Cardinal Health generated $251 million of operating cash flow, a record for the third quarter and an improvement of $149 million versus the prior year. The drivers of this growth were strong earnings gains combined with improved receivables performance, reduced working inventories and other improvements in working capital management.
- The company continued to demonstrate the effectiveness of its tax- and interest-rate management strategies in the quarter. Capital efficiency, strong cash flow and declining interest rates provided interest leverage as net interest cost rose only 12 percent. At the same time, the effective tax rate for the company declined 140 basis points to 35.1 percent, in line with expectations.
"This was another outstanding quarter for Cardinal Health, with exceptional growth in our two largest business segments - Pharmaceutical Distribution and Provider Services, and Medical-Surgical Products and Services which together represent 96 percent of our operating revenues and 80 percent of our operating earnings," said Robert D. Walter, chairman and chief executive officer. "Looking ahead over the next several quarters, we expect these segments to continue to fuel the earnings growth of the company, both through strong internal growth and the realization of efficiencies and other benefits from two significant mergers.
"Longer term," Walter added, "we intend to continue to grow our leadership positions across the company, expanding the breadth and proprietary nature of our product and service lines, and extending the reach of our distribution channels. Health care continues to be a vital and growing industry, driven by an aging population and product innovation. Though largely unaffected by economic swings, health care is in need of services that improve patient care and efficiency. This represents real opportunity for Cardinal Health's unique capabilities, integrated resources and problem-solving approach. These factors, combined with our financial strength, capital efficiency and operating discipline, give us confidence in our objective of growing annual earnings per share by 20 percent for the foreseeable future, just as we have done for more than 13 years."
Business-Segment Results
In the third quarter, the Pharmaceutical Distribution and Provider Services segment accounted for 56 percent of the company's operating earnings, Medical-Surgical Products and Services made up 24 percent, Pharmaceutical Technologies and Services represented 11 percent, and Automation and Information Services contributed 9 percent.
Pharmaceutical Distribution and Provider Services
This segment dramatically outpaced the growth of the pharmaceutical industry overall, posting record operating revenues in the third quarter of $8.4 billion, a 39 percent increase that is entirely internal growth. Operating earnings also rose sharply, up 38 percent over the prior year to $258 million, including a full allocation of corporate expenses. Strong earnings and management of working capital drove an outstanding 800 basis point improvement in return on committed capital to 31.2 percent versus the prior year. The segment's operating margin remained flat in the third quarter at 3.05 percent compared with 3.07 percent a year ago.
Highlights
- In February, Cardinal Health completed the merger with Bindley Western Industries. The transaction was accounted for using the pooling-of-interests method of accounting, so the sales and earnings growth reported in this segment are totally internal. The integration of Bindley Western has been progressing according to plan and is expected to produce annual synergies of at least $100 million by the end of fiscal 2004.
- Customer preference for Cardinal's pharmaceutical distribution services continues to grow. Operating revenues in this segment were up more than 25 percent in every customer category: independent and chain pharmacies, hospitals and health systems, and alternate-site facilities. Chain pharmacies continued to represent the highest growth in the segment, increasing by nearly 50 percent in the quarter over the prior year. Strong growth with existing customers and incremental volume from contracts won throughout the fiscal year drove the growth in the retail chain category. Cardinal also implemented contracts during the quarter with a number of major hospitals served by Novation, the supply company of VHA, Inc. and the University HealthSystem Consortium.
- Strong vendor margins, favorable customer mix and prudent expense management, down 30.0 basis points to a record low of 2.36 percent of revenues, were the main drivers of improved productivity in this segment.
Allegiance Corporation increased its third-quarter operating earnings by 20 percent to $112 million on strong revenues of $1.5 billion, a 24 percent increase over the prior-year period. These results include incremental revenues from the August 2000 acquisition of Bergen Brunswig Medical Corporation (BBMC), which was accounted for using purchase accounting. On a comparable basis with the prior year, excluding the BBMC revenues, Allegiance posted revenue growth of about 9 percent, with gains in most of its major product and service segments. Allegiance also continues to demonstrate excellent expense management. It reduced sales, general and administrative expenses by 120 basis points to 14.49 percent of revenues in the quarter, which helped offset an expected decline in the gross margin resulting from BBMC's distribution-only revenues.
Return on capital also improved significantly, rising 110 basis points to a record 31.1 percent from 30.0 percent a year ago. These improvements are notable, given the higher costs the company is incurring from rising fuel and resin prices, and negative swings in foreign exchange rates.
Highlights
- During the third quarter, Allegiance completed three acquisitions that expanded the company's product and service offerings. The company purchased the assets of a specialty distributor of respiratory-care products, a manufacturer of single-use surgical supplies and a service firm that repairs specialized surgical instruments.
- Allegiance was named as one of only two national authorized distribution agents for members of Novation, the group purchasing organization that represents more than 6,700 health-care facilities nationwide.
- The integration of BBMC is on track financially and operationally. The acquisition continues to contribute significantly to Allegiance's revenue growth and the company expects to generate significant synergies from the transaction in coming quarters. Strategically, the transaction has given Allegiance an important new platform for growth in serving health care outside hospitals.
Revenues gained 6 percent in the third quarter to $301 million on continued strong sales of drug-delivery technologies. The company's Zydis(R) rapid-dissolving drug-delivery technology and sterile-liquid pharmaceutical technology experienced the largest gains. As expected, a declining domestic market for softgel nutritional supplements and protease inhibitors dampened revenue growth in this segment.
Operating earnings declined 4 percent to $50 million, impacted primarily by lower sales and surplus manufacturing capacity for nutritional softgels. In March, the company reduced manufacturing capacity for these products and exited portions of its lower-return nutritional business in the United States. The move allows the company to allocate more resources toward higher-return pharmaceutical technologies and services, which are the strategic focus of this segment. Return on committed capital was 23.8 percent in the third quarter and return on sales was 16.6 percent, both below the company's short- and long-term expectations.
Highlights
- To help expand the company's leadership in pharmaceutical technologies and higher-margin health and nutritional products, Cardinal Health completed a number of acquisitions recently that bring new drug-delivery technology to the company and increase capacity for pharmaceutical packaging. In addition to the recent additions of unique topical and oral controlled-release formulations, Cardinal in the third quarter completed the purchase of Astra- Zeneca's packaging plant in Corby, U.K., which includes a long-term agreement to package the company's popular heartburn drug Prilosec(R) (Losec(R) in Europe). This acquisition provides needed capacity in Europe, and demonstrates the continued strong demand for outsourcing by pharmaceutical companies.
- This segment benefited from accelerating demand for the Zydis(R) formulation of Eli Lilly and Company's schizophrenia drug Zyprexa(R) and WhiteHall Robins' Advil(R) Liqui-Gels(R), the softgel form of the well-known over-the-counter product. In addition, increased demand for Xalatan(R), Pharmacia Corporation's glaucoma drug, led to exceptional results in Cardinal Health's sterile-liquid technologies.
- Construction of Cardinal Health's previously announced 265,000 square- foot pharmaceutical technology and services center in Franklin Township, New Jersey, is proceeding on plan. The advanced technology center will employ more than 250 scientists serving pharmaceutical and biotechnology companies when it opens early in 2002. The $80 million project will showcase Cardinal's comprehensive development, engineering, manufacturing, packaging, quality, testing and regulatory services for the drug industry.
This segment, which represents 9 percent of Cardinal Health's operating earnings, overcame a challenging environment for automation and information products to post a 17 percent increase in operating earnings to $41 million on revenues of $112 million, up 10 percent over the year-ago period. Pyxis' MEDSTATION(R) SN automated dispensing system for pharmaceuticals enjoyed especially strong sales growth as hospitals continue to channel scarce capital into technology that improves medication safety. This segment's performance in the third quarter, however, was below its historical growth rate. This was due primarily to delayed SUPPLYSTATION(R) purchases in the quarter as customers postponed purchase decisions in advance of the late-March introduction of a new model of this automated dispensing system for medical supplies. The sales pipeline remains strong in this segment and Cardinal continues to be confident about its long-term prospects for growth.
Fueled by strong gross margins and productivity improvements in the third quarter, operating margin in the segment rose 230 basis points to 36.6 percent and return on committed capital increased 40 basis points to 23.8 percent.
Highlights
- New products remain an important driver in this segment. About 22 percent of third-quarter revenues came from products introduced just within the last 12 months. With medication safety an increasing focus of hospital administrators, MEDSTATION(R) SN sales are expected to show continued solid growth.
- Pyxis was chosen as a major technology partner in a groundbreaking project announced by HealthSouth Corporation and Oracle Corp. during the quarter. The goal of the project is to build the world's first all-digital, automated hospital, "the hospital model for the world," according to HealthSouth. The project is expected to demonstrate how integrated technology can lower health-care costs, reduce human error and help provide exceptional patient care.
Cardinal Health's results for the first nine months of fiscal 2001 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 first nine months of fiscal 2001, operating revenues increased 28 percent over the prior year to $28.4 billion, operating earnings improved 20 percent to $1.2 billion, net earnings rose 22 percent to $678 million and earnings per diluted share increased 21 percent to $1.49.
Including special charges of $74 million (after tax), net earnings for the first nine months of 2001 rose 18 percent to $604 million and earnings per diluted share were $1.33, a 17 percent improvement.
Webcast Today
Cardinal has scheduled an Internet "webcast" today to discuss its third- 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 212-896-6046 for telephone access. A replay of the webcast will be available until 1:00 p.m. Eastern Time April 30 on the Internet at cardinal.com's Investor Center or by dialing 800-633-8284, reservation number 18304087.
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 45,000 people on five continents and produces annual revenues of more than $38 billion.
Except for historical information, all other information provided in this news release consists of "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These "forward-looking statements" are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, or implied. The most significant of these risks and uncertainties are discussed or identified in Cardinal Health's public filings made with the Securities and Exchange Commission, and include (but are not limited to) the costs and difficulties related to the integration of acquired businesses, effect of any changes in customer and supplier relationships and customer purchasing patterns, changes in the distribution outsourcing pattern for pharmaceutical products and/or services, costs and other effects of governmental regulation and legal and administrative proceedings and taxes, general consumer perception of health-related concerns and of general economic conditions such as changes in interest rates and the performance of the financial markets, changes in competition and pricing environments, and general market and industry conditions. Cardinal Health undertakes no obligation to publicly update or revise any forward-looking statements.
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(in millions, except per share amounts)
THIRD QUARTER
March March
2001 2000 % Change
Revenue:
Operating Revenue $10,334.2 $7,665.9 35 %
Bulk Deliveries to Customer
Warehouses 2,245.9 1,945.6 15 %
Total Revenue 12,580.1 9,611.5 31 %
Cost of Products Sold:
Operating Cost of Products Sold 9,388.1 6,874.9 37 %
Cost of Products Sold - Bulk
Deliveries 2,245.9 1,945.1 15 %
Total Cost of Products Sold 11,634.0 8,820.0 32 %
Gross Margin 946.1 791.5 20 %
S, G & A Expenses 509.9 425.9 20 %
Special Charges 86.3 10.7 N.M.
Operating Earnings 349.9 354.9 (1)%
Interest Expense and Other 43.7 38.9 12 %
Earnings Before Income Taxes 306.2 316.0 (3)%
Provision for Income Taxes 113.3 117.6 (4)%
Net Earnings $192.9 $198.4 (3)%
Earnings Per Common Share:
Basic $0.43 $0.45 (4)%
Diluted $0.42 $0.44 (5)%
Weighted Average Number of
Shares Outstanding:
Basic 444.3 440.5 -
Diluted 456.5 449.2 -
The following table summarizes the impact of special charges 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
Special Charges $(61.8) $(0.14) $(9.1) $(0.02)
CARDINAL HEALTH, INC. CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(in millions, except per share amounts)
YEAR-TO-DATE
March March
%
2001 2000 Change
Revenue:
Operating Revenue $28,405.8 $22,172.1 28 %
Bulk Deliveries to
Customer Warehouses 7,140.8 5,642.7 27 %
Total Revenue 35,546.6 27,814.8 28 %
Cost of Products Sold:
Operating Cost of
Products Sold 25,771.1 19,909.7 29 %
Cost of Products Sold
- Bulk Deliveries 7,139.8 5,641.0 27 %
Total Cost of Products
Sold 32,910.9 25,550.7 29 %
Gross Margin 2,635.7 2,264.1 16 %
S, G & A Expenses 1,469.0 1,289.0 14 %
Special Charges 106.6 53.0 101 %
Operating Earnings 1,060.1 922.1 15 %
Interest Expense & Other 116.9 100.3 17 %
Earnings Before Income Taxes 943.2 821.8 15 %
Provision for Income Taxes 339.1 310.0 9 %
Net Earnings $604.1 $511.8 18 %
Earnings Per Common Share:
Basic $1.37 $1.16 18 %
Diluted $1.33 $1.14 17 %
Weighted Average Number
of Shares Outstanding:
Basic 441.6 440.0 -
Diluted 453.9 449.6 -
The following table summarizes the impact of special charges 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
Special Charges $(73.8) $(0.16) $(42.2) $(0.09)
CARDINAL HEALTH, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in millions)
March 31, June 30, March 31,
2001 2000 2000
ASSETS
CURRENT ASSETS
Cash and Equivalents $396.2 $539.5 $369.0
Trade Receivables 2,862.3 2,398.8 2,482.1
Current Portion of Investment in
Sales-Type Leases 214.3 187.7 180.0
Inventories 6,127.7 4,657.0 4,990.2
Prepaid Expenses and Other 765.1 663.4 617.1
Total Current Assets 10,365.6 8,446.4 8,638.4
Property and Equipment - Net 1,859.0 1,728.3 1,705.9
Investment in Sales-Type Leases 631.8 578.6 535.5
Other Assets 1,374.1 1,270.8 1,292.1
TOTAL ASSETS $14,230.5 $12,024.1 $12,171.9
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable - Banks and Current
Portion of Long-Term Obligations $23.1 $423.4 $449.8
Accounts Payable 5,141.9 3,895.1 3,823.5
Other Accrued Liabilities 1,185.5 1,228.2 1,062.5
Total Current Liabilities 6,350.5 5,546.7 5,335.8
Long-Term Obligations, Less
Current Portion 2,169.8 1,524.5 2,031.8
Deferred Taxes and Other Liabilities 618.0 552.5 638.5
Total Shareholders' Equity 5,092.2 4,400.4 4,165.8
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $14,230.5 $12,024.1 $12,171.9
CARDINAL HEALTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Three months ended Nine months ended
March 31, March 31,
2001 2000 2001 2000
Cash Flows From Operating
Activities:
Net earnings available for
Common Shares $192.9 $198.4 $604.1 $511.8
Adjustments to reconcile net
earnings to net cash
from operations:
Depreciation and amortization 70.1 69.8 209.0 199.5
Change in operating assets
and liabilities, net of
effects from acquisitions:
Increase in trade
receivables (68.4) (91.2) (443.8) (423.7)
(Increase)/decrease in
inventories 95.0 (152.0) (1,359.6) (1,404.8)
Increase in net investment
in sales-type leases (26.9) (42.8) (79.8) (108.6)
Increase/(decrease) in
accounts payable (113.9) 58.3 1,135.7 827.6
Other operating items - net 101.9 61.4 (77.3) 135.1
Net cash provided by/(used
in) operating activities 250.7 101.9 (11.7) (263.1)
Cash Flows From Investing
Activities:
Net acquisition of
subsidiaries, net of cash
acquired (61.0) (4.9) (323.3) (67.5)
Proceeds from sale of property
and equipment 12.6 7.9 17.8 43.3
Additions to property and
equipment (93.6) (65.6) (234.8) (225.5)
Other - - - 48.4
Net cash used in investing
activities (142.0) (62.6) (540.3) (201.3)
Cash Flows From Financing
Activities:
Net short-term borrowing
activity (811.2) 348.1 (536.1) 1,072.0
Net change in long-term
obligations 480.2 (17.3) 877.0 (158.3)
Proceeds from issuance of
Common Shares 88.3 31.2 186.9 55.4
Purchase of Treasury Stock (1.8) (312.2) (138.8) (341.4)
Other (8.5) (21.8) (27.9) (22.7)
Net cash provided by/(used
in) financing activities (253.0) 28.0 361.1 605.0
Net Increase (Decrease) in Cash
and Equivalents (144.3) 67.3 (190.9) 140.6
Change in Bindley's fiscal year - - 47.6 -
Cash and Equivalents at
Beginning of Period 540.5 301.7 539.5 228.4
Cash and Equivalents at End of
Period 396.2 369.0 396.2 369.0
CARDINAL HEALTH, INC. - THIRD QUARTER FY 2001 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2001 2000 Comment
* REVENUE
- Amount $8,448 $6,098 RECORD
- Growth Rate 39% 18% Organic growth
- Mix 82% 79%
* RATIO TO REVENUE
- Gross Margin 5.41% 5.73% Customer mix
- Expenses 2.36% 2.66% RECORD LOW
- Operating Earnings 3.05% 3.07%
* OPERATING EARNINGS
- Growth Rate 38% 21%
- Mix 56% 51%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.29 $2.16 6% improvement
* ASSET MANAGEMENT
- Average Committed Capital $3,302 $3,235 Strong asset management
- Return On Committed Capital 31.2% 23.2% RECORD
- Operating Cash Flow $187 $58 Q3 RECORD
- Capital Expenditures
Investment $22 $27
MEDICAL-SURGICAL PRODUCTS AND SERVICES
2001 2000 Comment
* REVENUE
- Amount $1,498 $1,204 RECORD
- Growth Rate 24% 3% BBMC acquisition
- Mix 14% 16%
* RATIO TO REVENUE
- Gross Margin 21.97% 23.44% BBMC impact
- Expenses 14.49% 15.69% Expense control
- Operating Earnings 7.48% 7.75%
* OPERATING EARNINGS
- Growth Rate 20% 23%
- Mix 24% 25%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.52 $1.49
* ASSET MANAGEMENT
- Average Committed Capital $1,440 $1,242 BBMC impact
- Return On Committed Capital 31.1% 30.0% Q3 RECORD
- Operating Cash Flow $47 $38 Consistent performance
- Capital Expenditures
Investment $20 $24
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2001 2000 COMMENT
* REVENUE
- Amount $301 $284 RECORD
- Growth Rate 6% 12% H&N, protease inhibitors
- Mix 3% 4%
* RATIO TO REVENUE
- Gross Margin 31.98% 32.58% Product mix
- Expenses 15.39% 14.06% Higher fixed costs
- Operating Earnings 16.59% 18.52% Surplus capacity
* OPERATING EARNINGS
- Growth Rate (4)% 7%
- Mix 11% 14%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.08 $2.32
* ASSET MANAGEMENT
- Average Committed Capital $840 $678 Strategic investments
- Return On Committed Capital 23.8% 31.0% Earnings decline
- Operating Cash Flow $19 $32
- Capital Expenditures
Investment $49 $9
AUTOMATION AND INFORMATION SERVICES
2001 2000 COMMENT
* REVENUE
- Amount $112 $102 Q3 RECORD
- Growth Rate 10% 9%
- Mix 1% 1%
* RATIO TO REVENUE
- Gross Margin 68.81% 70.05% Product mix
- Expenses 32.20% 35.74% Growth leverage
- Operating Earnings 36.61% 34.31% Q3 RECORD
* OPERATING EARNINGS
- Growth Rate 17% 23%
- Mix 9% 10%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.14 $1.96 9% improvement
* ASSET MANAGEMENT
- Average Committed Capital $692 $601 Lease investment
- Return On Committed Capital 23.8% 23.4%
- Operating Cash Flow ($3) ($26)
- Capital Expenditures
Investment $3 $6
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expenses
($ millions)
TOTAL
2001 2000
* REVENUE
- Amount $10,334 $7,666
- Growth Rate 35% 14%
* RATIO TO REVENUE >
- Gross Margin 9.15% 10.33%
- Expenses 4.93% 5.56% 2001 2000
- Special Charges 0.84% 0.14%
- Operating Earnings 3.38% 4.63% 4.22% 4.77%
- OPERATING EARNINGS
- Growth Rate (1)% 64% 19% 20%
- NET EARNINGS
- Ratio to Revenue 1.86% 2.59% 2.46% 2.71%
- Growth Rate (3)% 104% 23% 21%
- PRODUCTIVITY
- Margin Per Expense
Dollar * $1.86 $1.86
- ASSET MANAGEMENT
- Average Committed
Capital $5,702 $5,149
- Return On Committed
Capital 24.5% 27.6% 30.6% 28.4%
- Operating Cash Flow $250 $102
- Capital Expenditures
Investment $94 $66
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - FIRST NINE MONTHS FY 2001 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
2001 2000
* REVENUE
- Amount $22,929 $17,418
- Growth Rate 32% 21%
- Mix 81% 78%
* RATIO TO REVENUE
- Gross Margin 5.21% 5.47%
- Expenses 2.42% 2.68%
- Operating Earnings 2.79% 2.79%
* OPERATING EARNINGS
- Growth Rate 32% 24%
- Mix 52% 49%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.15 $2.04
* ASSET MANAGEMENT
- Average Committed Capital $3,096 $2,818
- Return On Committed
Capital 27.6% 23.0%
- Operating Cash Flow ($187) ($496)
- Capital Expenditures Investment $60 $75
MEDICAL-SURGICAL PRODUCTS AND SERVICES
2001 2000
* REVENUE
- Amount $4,351 $3,696
- Growth Rate 18% 5%
- Mix 15% 17%
* RATIO TO REVENUE
- Gross Margin 22.01% 23.13%
- Expenses 14.65% 15.86%
- Operating Earnings 7.36% 7.27%
* OPERATING EARNINGS
- Growth Rate 19% 22%
- Mix 26% 27%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.50 $1.46
* ASSET MANAGEMENT
- Average Committed Capital $1,371 $1,239
- Return On Committed
Capital 31.1% 28.9%
- Operating Cash Flow $159 $211
- Capital Expenditures
Investment $49 $68
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
2001 2000
* REVENUE
- Amount $860 $806
- Growth Rate 7% 16%
- Mix 3% 4%
* RATIO TO REVENUE
- Gross Margin 33.39% 33.10%
- Expenses 14.92% 14.61%
- Operating Earnings 18.47% 18.49%
* OPERATING EARNINGS
- Growth Rate 7% 28%
- Mix 13% 15%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.24 $2.27
* ASSET MANAGEMENT
- Average Committed Capital $795 $661
- Return On Committed Capital 26.6% 30.0%
- Operating Cash Flow $48 $108
- Capital Expenditures Investment $121 $68
AUTOMATION AND INFORMATION SERVICES
2001 2000
* REVENUE
- Amount $322 $276
- Growth Rate 17% (3)%
- Mix 1% 1%
* RATIO TO REVENUE
- Gross Margin 67.36% 69.69%
- Expenses 33.31% 36.69%
- Operating Earnings 34.05% 33.00%
* OPERATING EARNINGS
- Growth Rate 20% (3)%
- Mix 9% 9%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.02 $1.90
* ASSET MANAGEMENT
- Average Committed Capital $658 $552
- Return On Committed Capital 22.2% 22.0%
- Operating Cash Flow ($32) ($86)
- Capital Expenditures Investment $5 $15
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - FIRST NINE MONTHS FY 2001 BUSINESS ANALYSIS
($ millions)
TOTAL
2001 2000
* REVENUE
- Amount $28,406 $22,172
- Growth Rate 28% 17%
* RATIO TO REVENUE >
- Gross Margin 9.28% 10.21%
- Expenses 5.17% 5.81% 2001 2000
- Special Charges 0.38% 0.24%
- Operating Earnings 3.73% 4.16% 4.11% 4.40%
- OPERATING EARNINGS
- Growth Rate 15% 35% 20% 20%
- NET EARNINGS
- Ratio to Revenue 2.13% 2.31% 2.39% 2.50%
- Growth Rate 18% 47% 22% 22%
- PRODUCTIVITY
- Margin Per Expense Dollar* $1.79 $1.76
- ASSET MANAGEMENT
- Average Committed Capital $5,392 $4,826
- Return On Committed
Capital 26.2% 25.5% 28.9% 26.9%
- Operating Cash Flow ($12) ($263)
- Capital Expenditures
Investment $235 $226
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. -- QUARTERLY FY 2001 BUSINESS ANALYSIS
($ millions)
PHARMACEUTICAL DISTRIBUTION AND PROVIDER SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $6,780 $7,701 $8,448
- Growth Rate 23% 32% 39%
- Mix 80% 80% 82%
* RATIO TO REVENUE
- Gross Margin 5.16% 5.05% 5.41%
- Expenses 2.54% 2.39% 2.36%
- Operating Earnings 2.62% 2.66% 3.05%
* OPERATING EARNINGS
- Growth Rate 23% 32% 38%
- Mix 50% 49% 56%
* PRODUCTIVITY
- Margin Per Expense Dollar* $2.03 $2.11 $2.29
* ASSET MANAGEMENT
- Average Committed Capital $2,890 $3,207 $3,302
- Return On Committed
Capital 24.6% 25.5% 31.2%
- Operating Cash Flow ($378) $4 $187
- Capital Expenditures
Investment $18 $20 $22
MEDICAL-SURGICAL PRODUCTS AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $1,379 $1,474 $1,498
- Growth Rate 14% 15% 24%
- Mix 16% 16% 14%
* RATIO TO REVENUE
- Gross Margin 22.50% 21.60% 21.97%
- Expenses 15.06% 14.43% 14.49%
- Operating Earnings 7.44% 7.17% 7.48%
* OPERATING EARNINGS
- Growth Rate 19% 19% 20%
- Mix 29% 26% 24%
* PRODUCTIVITY
- Margin Per Expense Dollar* $1.49 $1.50 $1.52
* ASSET MANAGEMENT
- Average Committed Capital $1,302 $1,398 $1,440
- Return On Committed
Capital 31.5% 30.2% 31.1%
- Operating Cash Flow $9 $103 $47
- Capital Expenditures
Investment $11 $18 $20
PHARMACEUTICAL TECHNOLOGIES AND SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $272 $287 $301
- Growth Rate 5% 9% 6%
- Mix 3% 3% 3%
* RATIO TO REVENUE
- Gross Margin 32.44% 35.77% 31.98%
- Expenses 14.08% 15.22% 15.39%
- Operating Earnings 18.36% 20.55% 16.59%
* OPERATING EARNINGS
- Growth Rate 11% 15% (4)%
- Mix 14% 14% 11%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $2.30 $2.35 $2.08
* ASSET MANAGEMENT
- Average Committed Capital $750 $782 $840
- Return On Committed
Capital 26.6% 30.1% 23.8%
- Operating Cash Flow $9 $20 $19
- Capital Expenditures
Investment $24 $48 $49
AUTOMATION AND INFORMATION SERVICES
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $90 $120 $112
- Growth Rate 29% 15% 10%
- Mix 1% 1% 1%
* RATIO TO REVENUE
- Gross Margin 64.32% 68.30% 68.81%
- Expenses 38.68% 30.31% 32.20%
- Operating Earnings 25.64% 37.99% 36.61%
* OPERATING EARNINGS
- Growth Rate 35% 17% 17%
- Mix 7% 11% 9%
* PRODUCTIVITY
- Margin Per Expense
Dollar* $1.66 $2.25 $2.14
* ASSET MANAGEMENT
- Average Committed Capital $623 $659 $692
- Return On Committed
Capital 14.8% 27.6% 23.8%
- Operating Cash Flow ($22) ($7) ($3)
- Capital Expenditures
Investment $1 $1 $3
- Revenue and all ratios to revenue exclude bulk deliveries to customer warehouses
- Corporate costs are fully allocated to businesses except for special charges and eliminations
- Margin Per Expense Dollar = Ratio of gross margin to expenses
CARDINAL HEALTH, INC. - QUARTERLY FY 2001 BUSINESS ANALYSIS
($ millions)
TOTAL (EXCLUDING SPECIAL CHARGES)
Q1 Q2 Q3 Q4 TOTAL
* REVENUE
- Amount $8,511 $9,561 $10,334
- Growth Rate 21% 28% 35%
- RATIO TO REVENUE
- Gross Margin 9.45% 9.26% 9.15%
- Expenses 5.49% 5.14% 4.93%
- Operating Earnings 3.96% 4.12% 4.22%
- OPERATING EARNINGS
- Growth Rate 19% 21% 19%
- NET EARNINGS
- Ratio to Revenue 2.30% 2.38% 2.46%
- Growth Rate 22% 22% 23%
- PRODUCTIVITY
- Margin Per Expense
Dollar* $1.72 $1.80 $1.86
- ASSET MANAGEMENT
- Average Committed
Capital $5,082 $5,528 $5,702
- Return On Committed
Capital 26.5% 28.5% 30.6%
- Operating Cash Flow ($382) $120 $250
- Capital Expenditures
Investment $54 $87 $94
- 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 NINE MONTHS FISCAL 2001 AND 2000
ASSET MANAGEMENT ANALYSIS
2001
Q1 Q2 Q3 YTD COMMENT
* RECEIVABLE DAYS 22 22 21 Q3 RECORD
* INVENTORY TURNS 6.1 6.3 6.6 Q3 RECORD
* CASH $573 $541 $396
* DEBT $2,433 $2,502 $2,193
* EQUITY $4,668 $4,798 $5,092
* NET DEBT/TOTAL CAPITAL 28% 29% 26% Q3 RECORD
* TANGIBLE NET WORTH $3,540 $3,694 $3,950
* RETURN ON EQUITY 16.8% 18.7% 15.6% 17.0%
EXCLUDING SPECIAL
ITEMS 17.3% 19.2% 20.5% 19.0% RECORD
* TAX RATE 34.7% 36.1% 37.0% 36.0%
EXCLUDING SPECIAL International
ITEMS 35.3% 35.8% 35.1% 35.4% initiatives
2000
Q1 Q2 Q3 YTD
* RECEIVABLE DAYS 23 23 22
* INVENTORY TURNS 6.7 6.1 5.9
* CASH $195 $302 $369
* DEBT $1,934 $2,156 $2,482
* EQUITY $4,010 $4,201 $4,166
* NET DEBT/TOTAL CAPITAL 30% 31% 34%
* TANGIBLE NET WORTH $3,023 $3,214 $3,117
* RETURN ON EQUITY 13.3% 17.8% 19.0% 16.8%
EXCLUDING SPECIAL ITEMS 16.2% 18.0% 19.8% 18.1%
* TAX RATE 39.5% 36.9% 37.2% 37.7%
EXCLUDING SPECIAL ITEMS 36.6% 36.9% 36.5% 36.7%
SOURCE Cardinal Health, Inc. CONTACT: Investor, Stephen T. Fischbach, or +1-614-757-7067, or Media, Geoffrey D. Fenton, +1-614-757-7871, both of Cardinal Health/
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