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Cardinal Health First Quarter Revenue Up 16 Percent

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DUBLIN, Ohio, Oct. 23, 2003 — Cardinal Health, Inc. (NYSE: CAH), the leading provider of products and services supporting the health care industry, today announced record first quarter business results marked by a double-digit revenue increase, continued improvement in productivity and progress against its strategy to expand healthcare products and services along the chain of care.

For the period ending Sept. 30, 2003, as reported in accordance with generally accepted accounting principles (GAAP), revenue rose 16 percent to $13.3 billion from $11.4 billion a year ago and earnings per diluted share from continuing operations increased 16 percent to $0.74. GAAP operating earnings grew 12 percent to $522 million, with more than 60 percent contributed by businesses outside the company’s core pharmaceutical distribution activities.

"Performance for the quarter reflects Cardinal Health’s diversified leadership positions in a strong healthcare market," said Robert D. Walter, chairman and chief executive officer, Cardinal Health. "Our medical products, pharmaceutical technologies and automation businesses delivered solid earnings results, with excellent momentum going into the remainder of the year. Pharmaceutical distribution delivered exceptional revenue growth, while earnings growth was affected by a challenging vendor margin environment. With strong momentum from our other key lines of business and expected second half improvement in pharmaceutical distribution results, Cardinal Health continues to target earnings per share growth of mid teens or better for fiscal 2004."

Cardinal Health generated an increase of more than $300 million in operating cash flow during the quarter and expects to generate approximately $1.3 billion in operating cash flow for the year. In addition, the company completed a $1 billion stock buy back program that represented the repurchase of over 17 million shares.

"We continue to invest for the long term, with more than $26 million of investment spending charges against current earnings during the quarter," Walter added. "Strategic investments are a critical component of our growth strategy, and we see significant opportunity to continue to build scale, including through expansion in markets outside the United States that currently represent less than 10 percent of Cardinal Health’s business."

Financial Highlights

Cardinal Health incurred special items during the quarter consisting of merger-related costs and restructuring charges, partially offset by cash received from a litigation settlement. These items totaled $13.2 million ($8.7 million after tax) in the first quarter, compared to $18.7 million ($15.6 million after tax) in the same period last year, and decreased earnings per diluted share in the current quarter and comparable quarter by $0.02 and $0.03, respectively.

The following discussion adjusts certain amounts to exclude special items incurred during the quarter. Please see the attached financial table for a reconciliation of the reported amounts to the amounts excluding these items.

• Earnings per diluted share from continuing operations rose
13 percent to $0.76 versus $0.67 last year. Net earnings from continuing operations
rose 12 percent to $339 million from $304 million a year ago.



• Operating revenues rose 16 percent to a first quarter record
$13.3 billion, from $11.4 billion a year ago.

• Operating earnings rose 10 percent to $536 million from $486
million a year ago.

• Interest expense and other declined by 8 percent, driven by
strong cash flow and lower interest rates.

• Return on equity was 18.2 percent compared to 19.0 percent
last year and return on invested capital improved to 7.21 percent versus 7.08
percent a year ago.



• Operating cash flow of $294 million in the quarter was strong
as a result of effective working capital management and lower inventory investments
in the pharmaceutical distribution business. Owned inventories declined by more
than $200 million in the quarter. Accounts receivable days improved to 18 days
versus 19 days a year ago.

• The ratio of net debt-to-total capital was 20 percent, and
the company ended the quarter with $992 million cash on hand.


Significant Events for the Quarter and Business Results

During the quarter Cardinal Health made significant progress executing against
key strategies to build scale and drive competitive advantage; to expand product
and service offerings that deepen customer relationships; and to innovate and
invest in technology and services to provide integrated solutions and new levels
of customer value.

Highlights include:

• The acquisition of Gala Biotech as part of an ongoing strategy to
enhance Cardinal Health’s range of innovative drug development services
that help customers bring biopharmaceuticals to market at lower costs.

• Rapid customer acceptance of Pyxis PatientStation®, with signed
agreements representing more than 5,000 units. These systems deliver significant
value to hospitals by bringing medication and supply storage, entertainment
and clinical information to the patient’s bedside.

• The announcement of a contract to produce Roche’s Klonopin®,
a leading medication for panic disorder, in Cardinal Health’s patented
Zydis® quick dissolve form.

• Strong market acceptance of new self-manufactured medical products.
New product momentum continued with last week’s clearance by the Food
and Drug Administration (FDA) to market Esteem® surgical gloves with a proprietary
emollient designed to help protect surgeons’ hands.

• Healthcare provider demand for integrated solutions continues strong,
now representing more than $5 billion in annual sales and growing 19 percent
year-on-year, an indicator of the increased value Cardinal Health is bringing its customers through integrated offerings.

Specific segment results included:

First Quarter - Segment Results
($ in millions)	Revenue Increase	Operating Earnings	Increase	Contribution to Operating Earnings	Mix .
Pharmaceutical Distribution and Provider Services	$10,824	16%	$266	2%	46%
Medical Products and Services	$1,733	9%	$150	8%	26%
Pharmaceutical Technologies and Services	$606	57%	$107	47%	19%
Automation and Information Services	$143	7%	$53	15%	9%

Pharmaceutical Distribution and Provider Services delivered 16 percent revenue growth, increasing to $10.8 billion, compared to $9.3 billion during the first quarter of fiscal year 2003. Results from the company’s provider services businesses continued strong across the board. Robust sales from all pharmaceutical distribution customer segments were partially offset by a significant decline in wholesale-to-wholesale trading company revenues. The company experienced lower vendor margins because of limited product availability. These lower vendor margins as well as continued selling margin pressure were partially offset by expense control, driving operating earnings of $266 million. Return on sales was 2.45 percent, down 36 basis points, while return on invested capital continued strong primarily reflecting lower inventory levels.

For the full year, the company expects to see continued improvements in productivity and returns on capital for this segment. Near term pressure on vendor margins and selling margins for pharmaceutical distribution is expected to improve in the second half of the year.

Medical Products and Services revenue increased 9 percent to $1.7 billion with operating earnings of $150 million led by momentum in distribution activities. Earnings growth was driven by increased sales of self-manufactured offerings, such as Esteem® surgical gloves, and new respiratory and thermal products. Revenue generated from new products tripled during the quarter. Key customer growth segments included ambulatory care and surgery centers, which increased 20 percent in the quarter.

The company continues to expect revenue growth substantially above industry levels, with rising returns on sales reflecting new distribution contracts, increased sales of higher margin self-manufactured products and continued success of new products.

Pharmaceutical Technologies and Services showed continued strength with a year-over-year revenue increase of 57 percent to $606 million. Solid growth from drug delivery and manufacturing drove high-teens organic earnings growth, and the addition of Syncor nuclear pharmacy results contributed to segment earnings growth of 47 percent. Revenue gains were particularly strong in oral drug manufacturing, which experienced gains from Lilly’s Zyprexa® Zydis® for schizophrenia, and Mylan’s Amnesteem®, a dermatology product. Packaging services also experienced strong gains driven by the launch of Astra Zeneca’s Crestor®, a cholesterol medication. Increased capacity utilization, integration efficiencies from nuclear pharmacy operations and tight expense control contributed to the 47 percent improvement in operating earnings.


Cardinal Health continues to expect Pharmaceutical Technologies and Services to represent its fastest growing segment, with results substantially above industry growth rates. Expected approval of new products, coupled with the launch of sterile manufacturing capacity awaiting FDA approval is expected to drive momentum in revenue and operating earnings growth throughout the remainder of the fiscal year.

Automation and Information Services revenues increased 7 percent to $143 million. Manufacturing efficiencies and expense control yielded an increase in return on sales of 266 basis points and drove an operating earnings increase of 15 percent. Installations and associated revenues were dampened by business disruptions experienced by healthcare providers during the quarter. The backlog of committed contracts ended the quarter at $208 million.

Based on strong demand, the company expects significant revenue growth for the remainder of the year as delayed installations are booked and new contracts are signed and installed. Ongoing expense control and the benefit of just-in-time manufacturing are expected to continue to drive productivity improvement. The company expects this segment to grow at historically strong levels, led by growing customer demand for Pyxis PatientStation.

Conference Call
Cardinal Health has scheduled a conference call for today at 11 a.m. Eastern Daylight Time to discuss its first quarter financial performance. To access this discussion via the internet, go to the Investor Relations page at www.cardinal.com. The company has also established a telephone call-in line at 706-679-0766. An audio replay of the conference call will be available until Oct. 25, 2003 by dialing 706-645-9291, passcode 2633455. A replay of the Webcast will be available at the Investor Relations page on www.cardinal.com.

About Cardinal Health
Cardinal Health, Inc. (www.cardinal.com) is the leading provider of products and services supporting the health care industry. Cardinal Health develops, manufactures, packages and markets products for patient care; develops drug-delivery technologies; distributes pharmaceuticals, medical- surgical and laboratory supplies; and offers consulting and other services that improve quality and efficiency in health care. Headquartered in Dublin, Ohio, Cardinal Health employs more than 50,000 people on five continents and produces annual revenues of more than $50 billion. Cardinal Health is ranked #19 on the current Fortune 500 list and was named one of "The World’s Best" companies by Forbes magazine in 2002.

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 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 uncertainties are described in Cardinal Health's Form 10-K, Form 8-K and Form 10-Q reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the costs, difficulties, and uncertainties related to the integration of acquired businesses, the loss of one or more key customer or supplier relationships or changes to the terms of those relationships, changes in the distribution patterns or reimbursement rates for health-care products and/or services, the costs and other effects of governmental regulation and legal and administrative proceedings, and general economic and market conditions. Cardinal Health undertakes no obligation to update or revise any forward-looking statement.