Cardinal Health issued the following announcement.
Cardinal Health (NYSE: CAH) today reported fourth quarter fiscal year 2020 revenues of $36.7 billion, a decrease of 2 percent from the fourth quarter last year. GAAP operating earnings were $270 million and non-GAAP operating earnings were $442 million in the quarter, both of which include an estimated net negative impact of approximately $130 million due to the COVID-19 pandemic. GAAP diluted earnings per share (EPS) were $2.23, which included a pre-tax gain of $579 million related to the divestiture of a minority equity interest. Fourth quarter non-GAAP diluted EPS were $1.04.
Fiscal 2020 revenues were $152.9 billion, an increase of 5 percent from fiscal 2019. GAAP operating loss of $4.1 billion includes a $5.6 billion accrual in the first quarter related to opioid litigation. Non-GAAP operating earnings were $2.4 billion for the year. GAAP diluted loss per share for fiscal year 2020 was $12.61, while non-GAAP diluted EPS were $5.45.
"In fiscal 2020, we delivered on our commitments, grew operating earnings and exceeded our EPS guidance, despite the unprecedented global environment," said Mike Kaufmann, CEO of Cardinal Health. "We play an essential role in healthcare, and I'd like to thank our employees, especially our frontline teams, for their dedication under the challenging circumstances of the past several months. Our strong performance in fiscal 20 and the unwavering commitment of our employees will enable us to manage the complexities ahead, serve our customers and their patients, and continue our growth."
Q4 and full year FY20 summary
| Q4 FY20 | Q4 FY19 | Y/Y | FY20 | FY19 | Y/Y | |
| Revenue | $36.7 billion | $37.4 billion | (2)% | $152.9 billion | $145.5 billion | 5% |
| Operating earnings/(loss) | $270 million | $307 million | (12)% | $(4.1) billion | $2.1 billion | N.M. |
| Non-GAAP operating earnings | $442 million | $507 million | (13)% | $2.4 billion | $2.4 billion | 1% |
| Net earnings/(loss) attributable to
Cardinal Health, Inc. | $656 million | $194 million | N.M. | $(3.7) billion | $1.4 billion | N.M. |
| Non-GAAP net earnings attributable
to Cardinal Health, Inc. | $305 million | $334 million | (9)% | $1.6 billion | $1.6 billion | 1% |
| Effective Tax Rate | 19.4% | 18.4% | - | 2.1%2 | 22.1% | - |
| Non-GAAP Effective Tax Rate | 26.4% | 23.7% | - | 25.1% | 22.1% | - |
| Diluted EPS attributable to
Cardinal Health, Inc. | $2.23 | $0.65 | N.M. | $(12.61) | $4.53 | N.M. |
| Non-GAAP diluted EPS attributable
to Cardinal Health, Inc. | $1.04 | $1.11 | (6)% | $5.45 | $5.28 | 3% |
The COVID-19 pandemic adversely affected fourth quarter and fiscal year 2020 results. The negative impact was primarily due to the decline in volumes in both segments related to the cancellation or deferral of elective procedures and physician office visits. The company estimates that the COVID-19 pandemic had a net negative impact to both GAAP and non-GAAP operating earnings of approximately $130 million in the fourth quarter and approximately $100 million in fiscal year 2020.
Segment results
Pharmaceutical segment
| Q4 FY20 | Q4 FY19 | Y/Y | FY20 | FY19 | Y/Y | |
| Revenue | $33.2 billion | $33.4 billion | 0% | $137.5 billion | $129.9 billion | 6% |
| Segment profit | $359 million | $447 million | (20)% | $1.8 billion | $1.8 billion | (4)% |
Pharmaceutical segment profit decreased 20 percent to $359 million in the fourth quarter. This reflects expected COVID-19-related volume declines, which primarily affected Nuclear and Precision Health Solutions, as well as the company's generics program. Pharmaceutical Distribution customer contract renewals also adversely affected segment profit.
Medical segment
| Q4 FY20 | Q4 FY19 | Y/Y | FY20 | FY19 | Y/Y | |
| Revenue | $3.5 billion | $4.0 billion | (13)% | $15.4 billion | $15.6 billion | (1)% |
| Segment profit | $120 million | $97 million | 24% | $663 million | $576 million | 15% |
Medical segment profit increased 24 percent to $120 million in the fourth quarter due to benefits from cost savings initiatives and the beneficial comparison to a supplier-related charge in the prior year. This was partially offset by the adverse effects of COVID-19, primarily on products and distribution.
Fiscal year 2021 outlook1
- Non-GAAP earnings per share $5.25 - $5.65
- Interest and other $190M - $215M
- Non-GAAP effective tax rate 24.0% - 26.0%
- Diluted weighted average shares outstanding 292M - 296M
- Capital expenditures $400M - $450M
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
- Cardinal Health completed the divestiture of its remaining equity interest in naviHealth.
- Cardinal Health announced that David Evans, former interim Chief Financial Officer of Cardinal Health, joined the board of directors effective July 1. Mr. Evans previously served as executive vice president and CFO of Battelle Memorial Institute, and as executive vice president and CFO of Scotts Miracle-Gro.
- Cardinal Health board of directors approved a quarterly dividend of $0.4859 per share. The dividend will be payable on October 15, 2020 to shareholders of record at the close of business on October 1, 2020.
- Cardinal Health was named to the Human Rights Campaign (HRC) Best Places to Work for LGBTQ Equality for the twelfth consecutive year based on ratings in HRC's 2020 Corporate Equality Index.
- Morgan Stanley 18th Annual Global Healthcare Conference at 11:15 a.m. Eastern, Monday, September 14
Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss fourth quarter and fiscal year 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 August 5, 2021.
About Cardinal Health
Cardinal Health, Inc. is a global, integrated healthcare services and products company, providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories and physician offices worldwide. The company enhances supply chain efficiency for clinically proven medical products, pharmaceuticals and cost-effective solutions. To combat prescription drug misuse, the Cardinal Health Foundation and its education partners created Generation Rx, a national drug prevention education and awareness program. The Foundation actively supports an array of other solutions, including efforts to reduce opioid prescribing, promote drug take back and safe disposal and expand collaborative community work.
Cardinal Health is backed by nearly 100 years of experience with operations in nearly 46 countries. For more information, visit cardinalhealth.com. Follow us on Twitter, Facebook and LinkedIn.
Contacts
Media: Sarah Shew, sarah.shew@cardinalhealth.com and 614.553.3401; Erich Timmerman, erich.timmerman@cardinalhealth.com and 845.239.6690
Investors: Kevin Moran, kevin.moran@cardinalhealth.com and 614.757.7942
1GAAP 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.
2The fiscal year 2020 GAAP effective tax rate was impacted by the assessment of the future deductibility of the $5.6 billion opioid litigation accrual and the sale of our remaining equity interest in naviHealth.
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
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 possibility that continued deferrals and cancellations of elective medical procedures will result in a sustained reduction in demand for our products and the possibility that we will not be successful in recouping or offsetting the cost increases to source certain personal protective equipment, or that such cost increases will be larger or more sustained than we currently anticipate, the possibility that we will experience supply disruptions either from new regulations or forced shut downs 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 potential financial impact associated with the outcome of the ongoing lawsuits and investigations by certain governmental and regulatory authorities and the risks associated with the ongoing global 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; our ability to manage uncertainties associated with the pricing of branded pharmaceuticals; and risks associated with our cost savings initiatives, including the possibility that they could result in greater charges or expenses than we anticipate, could fail to achieve the desired efficiencies or strategic outcomes and could have unintended consequences, such as business disruption. 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 August 6, 2020. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.here.
Original source can be found here.
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