01—Abstract
Summary
Summary of the 10-K filed August 26, 2011. Cited figures are marked; the original filing is the authoritative source.
Cardinal Health Inc.'s 2011 10-K filing reports robust revenue growth, reaching $102.6 billiona, driven primarily by its Pharmaceutical segment.
The company achieved significant growth through strategic acquisitions, including Kinray, Yong Yu, and P4 Healthcare, which expanded its reach in the U.S. retail independent pharmacy market, established a presence in China, and strengthened its specialty pharmaceutical services, respectively. These acquisitions contributed $2.9 billionb in revenue and $61 million in operating earnings in fiscal year 2011. The company experienced a 26% increase in Pharmaceutical segment profit, attributed to strong performance in generic drug programs, new product launches, and favorable branded manufacturer agreements.
Conversely, the Medical segment saw a 14% decrease in profit, impacted by rising commodity costs for manufactured products. Despite these segment-specific challenges, the overall consolidated operating earnings increased by 16% to $1.5 billionc, reflecting effective cost management and strategic execution. The company also continued its commitment to shareholder returns, increasing its quarterly dividend by 11% and repurchasing shares.
02—Key points
Key Highlights
- Record revenue of $102.6 billion achieved in fiscal year 2011, a 4% increase from the prior year.
- Pharmaceutical segment profit rose 26% due to strong generic drug performance and strategic acquisitions.
- Three key acquisitions in fiscal 2011 (Kinray, Yong Yu, P4 Healthcare) contributed $2.9 billion in revenue.
- Medical segment profit declined 14% due to increased commodity costs impacting manufactured products.
- Consolidated operating earnings grew 16% to $1.5 billion, demonstrating overall operational improvement.
- Quarterly dividend increased by 11% to $0.78 per share on an annualized basis.
- The company's largest customers, Walgreens and CVS, accounted for 45% of total revenue in fiscal 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Cardinal Health Inc kept $0.01.
- Revenue$102.64B100.0%
- Cost of revenue−$98.48B95.9%
- Gross profit$4.16B4.1%
- Operating costs−$2.65B2.6%
- Operating income$1.51B1.5%
- Interest, other & tax−$555.0M0.5%
- Net income$959.0M0.9%
Where FY2011 revenue went
$102.64B- Cost of revenue: $98.48B, 96% of revenue
- Net income: $959.0M, 0.9% of revenue
- SG&A: $2.53B, 2.5% of revenue
- Interest, other & tax: $555.0M, 0.5% of revenue
Kept 0.9% as net incomeNet income $959.0M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed August 26, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $102.64B$98.50B | +4.2% |
| Cost of Revenue | $98.48B$94.72B | +4.0% |
| Gross Profit | $4.16B$3.78B | +10.1% |
| SG&A Expenses | $2.53B$2.40B | +5.5% |
| Operating Income | $1.51B$1.31B | +15.8% |
| Interest Expense | $93.00M$113.00M | −17.7% |
| Net Income | $959.00M$642.00M | +49.4% |
| EPS (Basic) | $2.75$1.79 | +53.6% |
| EPS (Diluted) | $2.72$1.77 | +53.7% |
| Shares Outstanding (Basic) | 349.00M359.00M | −2.8% |
| Shares Outstanding (Diluted) | 353.00M361.00M | −2.2% |
05—Questions
Frequently Asked Questions
What were the key drivers of Cardinal Health's revenue growth in fiscal year 2011?
Cardinal Health's revenue in fiscal year 2011 reached a record $102.6 billion, primarily driven by a 4% increase in its Pharmaceutical segment. This growth was fueled by strategic acquisitions, including Kinray, Yong Yu, and P4 Healthcare, which contributed to increased sales volume, as well as strong performance in generic pharmaceutical programs and branded pharmaceutical sales.
How did the company's major acquisitions impact its financial performance?
The acquisitions of Kinray, Yong Yu, and P4 Healthcare in fiscal year 2011 significantly contributed to Cardinal Health's financial performance. These acquisitions collectively added $2.9 billion to revenue and $61 million to operating earnings. Kinray expanded its service to retail independent pharmacies, Yong Yu established a foothold in the Chinese market, and P4 Healthcare bolstered its specialty pharmaceutical services.
What were the primary factors affecting the profitability of the Pharmaceutical and Medical segments?
The Pharmaceutical segment saw a 26% increase in profit, largely due to strong performance in generic drug programs, new product launches, and favorable distribution service agreements. The Medical segment's profit decreased by 14% primarily due to higher commodity costs for manufactured products and somewhat sluggish healthcare utilization impacting higher-margin products.
How is Cardinal Health managing its capital and shareholder returns?
Cardinal Health demonstrated a balanced capital deployment strategy by investing in acquisitions and increasing its quarterly dividend by 11%. The company also repurchased shares during the fiscal year. As of June 30, 2011, the company had $1.9 billion in cash and equivalents, and it maintained adequate capital resources to fund working capital, capital expenditures, and debt service requirements.
06—Continue