01—Abstract
Summary
Summary of the 10-K filed August 22, 2012. Cited figures are marked; the original filing is the authoritative source.
Cardinal Health Inc. (CAH) reported robust revenue growth in fiscal year 2012, reaching $107.6 billiona, driven by strong performance in its Pharmaceutical segment and contributions from acquisitions.
The company's operating earnings increased by 18% to $1.8 billionb. Key drivers included effective generic pharmaceutical programs and strategic acquisitions that bolstered both revenue and profit. Despite overall growth, the company faces significant customer concentration, with its top two customers, CVS and Walgreens, accounting for a substantial portion of its revenue.
The upcoming expiration of major contracts, particularly with Express Scripts, Inc., which provided $9.0 billionc in revenue in fiscal 2012, poses a notable risk. The company is also navigating regulatory scrutiny, including a settlement with the DEA regarding controlled substance distribution at its Lakeland, Florida facility, which resulted in a suspension of its registration for these substances until May 2014. The company's financial health remains solid, with increased cash and equivalents and ongoing capital deployment through dividends and share repurchases.
02—Key points
Key Highlights
- Total revenue for fiscal year 2012 reached $107.6 billion, a 5% increase from the previous year, demonstrating continued top-line growth.
- Operating earnings saw a significant improvement, increasing by 18% to $1.8 billion, indicating enhanced profitability.
- The Pharmaceutical segment was a key driver of growth, with strong performance in generic programs and the positive impact of acquisitions contributing to a 17% increase in segment profit.
- Significant customer concentration exists, with CVS and Walgreens accounting for 43% of total revenue in fiscal 2012, highlighting reliance on a few key clients.
- The company faces a material risk due to the non-renewal of its pharmaceutical distribution contract with Express Scripts, Inc., which generated $9.0 billion in revenue in fiscal 2012.
- Cardinal Health entered into a settlement with the DEA regarding its Lakeland, Florida distribution center, resulting in a suspension of its controlled substance distribution registration until May 2014.
- The company continued to return value to shareholders through dividends and share repurchases, with a 10% increase in quarterly dividends and $450 million in share repurchases during fiscal 2012.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Cardinal Health Inc kept $0.01.
- Revenue$107.55B100.0%
- Cost of revenue−$103.01B95.8%
- Gross profit$4.54B4.2%
- Operating costs−$2.75B2.6%
- Operating income$1.79B1.7%
- Interest, other & tax−$723.0M0.7%
- Net income$1.07B1.0%
Where FY2012 revenue went
$107.55B- Cost of revenue: $103.01B, 96% of revenue
- Net income: $1.07B, 1.0% of revenue
- SG&A: $2.68B, 2.5% of revenue
- Interest, other & tax: $723.0M, 0.7% of revenue
Kept 1.0% as net incomeNet income $1.07B · 1.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed August 22, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $107.55B$102.64B | +4.8% |
| Cost of Revenue | $103.01B$98.48B | +4.6% |
| Gross Profit | $4.54B$4.16B | +9.1% |
| SG&A Expenses | $2.68B$2.53B | +5.9% |
| Operating Income | $1.79B$1.51B | +18.4% |
| Interest Expense | $95.00M$93.00M | +2.2% |
| Net Income | $1.07B$959.00M | +11.5% |
| EPS (Basic) | $3.10$2.75 | +12.7% |
| EPS (Diluted) | $3.06$2.72 | +12.5% |
| Shares Outstanding (Basic) | 345.00M349.00M | −1.1% |
| Shares Outstanding (Diluted) | 349.00M353.00M | −1.1% |
05—Questions
Frequently Asked Questions
What was Cardinal Health's overall financial performance in fiscal year 2012?
Cardinal Health reported strong revenue growth, reaching $107.6 billion, an increase of 5% year-over-year. Operating earnings also saw a significant increase of 18% to $1.8 billion, driven by the Pharmaceutical segment's performance and strategic acquisitions.
What are the main risks highlighted in the report for Cardinal Health?
Key risks include significant customer concentration, with CVS and Walgreens making up a large portion of revenue. The non-renewal of the Express Scripts contract is a material concern, potentially impacting future revenue. Additionally, the company is subject to regulatory risks, as evidenced by the DEA settlement impacting its Lakeland, Florida facility's controlled substance distribution.
How is the company returning value to shareholders?
Cardinal Health demonstrated its commitment to shareholder returns by increasing its quarterly cash dividend by 10% and repurchasing $450 million of its common stock during fiscal year 2012. A new $750 million share repurchase program was also approved.
Can you elaborate on the DEA settlement and its implications?
Cardinal Health settled with the DEA regarding its Lakeland, Florida distribution center's controlled substance distribution registration. The settlement suspends the facility's registration for controlled substances until May 15, 2014. During this period, the facility will continue to distribute other pharmaceutical products, while controlled substances will be handled by other distribution centers. The company is also responding to related civil subpoenas.
06—Continue