Summary
Cardinal Health Inc.'s 2009 10-K filing highlights a significant strategic shift with the planned spin-off of its CareFusion Corporation business. This separation aims to streamline the company by divesting its clinical and medical products segment, allowing Cardinal Health to focus primarily on its core healthcare supply chain services, particularly pharmaceutical distribution. The company is also undergoing changes to its reportable segments to reflect this strategic realignment. Financially, the company operates within a competitive landscape across its segments, with the pharmaceutical supply chain business facing particular margin pressures due to customer discounts and manufacturer incentives. The filing also details various acquisitions and divestitures over the past five years, indicating a dynamic approach to portfolio management. Investors should pay close attention to the impact of the CareFusion spin-off and the ongoing competitive pressures on margins within the pharmaceutical distribution segment.
Financial Highlights
50 data points| Revenue | $95.99B |
| Cost of Revenue | $92.24B |
| Gross Profit | $3.75B |
| SG&A Expenses | $2.33B |
| Operating Income | $1.29B |
| Interest Expense | $114.40M |
| Net Income | $1.15B |
| EPS (Basic) | $3.22 |
| EPS (Diluted) | $3.18 |
| Shares Outstanding (Basic) | 357.60M |
| Shares Outstanding (Diluted) | 361.50M |
Key Highlights
- 1Planned spin-off of CareFusion Corporation, separating clinical and medical products businesses from healthcare supply chain services.
- 2Strategic focus shifting towards the core pharmaceutical distribution business.
- 3Significant customer concentration, with the top five customers (including CVS and Walgreen) accounting for 54% of fiscal 2009 revenue.
- 4Active acquisition and divestiture strategy, including the acquisition of VIASYS Healthcare Inc. and Enturia Inc., and divestitures of Tecomet, MedSystems, and plans to divest the UK-based Martindale injectable manufacturing business.
- 5Regulatory scrutiny and settlements, including a $34.0 million settlement with the DEA regarding controls against diversion of controlled substances.
- 6The pharmaceutical supply chain business operates on narrow profit margins heavily influenced by customer discounts, manufacturer cash discounts, distribution service agreement fees, and pharmaceutical price appreciation.
- 7Changes to reportable segments for fiscal 2010, with a post-spin-off structure of Pharmaceutical and Medical segments.