10-KPeriod: FY2015

CARDINAL HEALTH INC Annual Report, Year Ended Jun 30, 2015

Filed August 13, 2015For Securities:CAH

Summary

Cardinal Health Inc. reported robust growth in fiscal year 2015, with total revenue increasing by 13% to $102.5 billion. This expansion was primarily driven by strong performance in its Pharmaceutical segment, fueled by sales growth from existing and new customers, alongside increased sales of branded pharmaceuticals and newly launched hepatitis C treatments. The Medical segment also contributed positively, with revenue growth attributed to acquisitions. The company highlighted significant strategic moves, including the acquisition of Harvard Drug Group for $1.1 billion and the pending acquisition of Johnson & Johnson's Cordis business for $1.9 billion, aimed at strengthening its core offerings and expanding its market reach. Financially, Cardinal Health demonstrated improved profitability, with GAAP operating earnings up 15% to $2.2 billion and GAAP diluted EPS rising 7% to $3.61. The company also returned value to shareholders through share repurchases and increased dividends. Despite the positive trajectory, the company noted the ongoing impact of the Walgreens contract expiration, which negatively affected revenue growth, and highlighted the increasing impact of acquisition-related costs on future earnings.

Financial Highlights

50 data points
Beta

Revenue

$102.53B

5.6% Gross Margin

Net Income

$1.22B

1.2% Net Margin

EPS (Diluted)

$3.62

Total Assets

$30.14B

Cash & Equivalents

$4.62B

Free Cash Flow

$2.24B

Financial Statements
Beta
Revenue$102.53B
Cost of Revenue$96.82B
Gross Profit$5.71B
SG&A Expenses$3.24B
Operating Income$2.16B
Interest Expense$141.00M
Net Income$1.22B
EPS (Basic)$3.66
EPS (Diluted)$3.62
Shares Outstanding (Basic)332.00M
Shares Outstanding (Diluted)335.00M

Key Highlights

  • 1Revenue increased by 13% to $102.5 billion in fiscal year 2015, driven by strong performance in the Pharmaceutical segment.
  • 2GAAP operating earnings grew 15% to $2.2 billion, and GAAP diluted EPS increased by 7% to $3.61.
  • 3Completed the acquisition of Harvard Drug Group for $1.1 billion and announced the pending acquisition of Cordis business for $1.9 billion to expand strategic areas.
  • 4Pharmaceutical segment profit increased by 20% due to strong generics program performance and sales growth, partially offset by customer pricing changes.
  • 5Medical segment profit saw a decrease of 3%, primarily due to a decline in national brand product distribution, though offset by strategic product expansion.
  • 6The company returned $1.0 billion to shareholders through share repurchases and increased its quarterly dividend by 13%.
  • 7Cash and equivalents increased significantly to $4.6 billion from $2.9 billion year-over-year, supported by operating cash flow and debt issuance.

Frequently Asked Questions

Cardinal Health's revenue increased by 13% to $102.5 billion in fiscal year 2015. The primary driver was the Pharmaceutical segment, which benefited from sales growth from existing and new pharmaceutical distribution customers, increased sales of branded pharmaceuticals, and the launch of new hepatitis C pharmaceutical products. The Medical segment also contributed to revenue growth, largely due to acquisitions.

Cardinal Health completed the acquisition of Harvard Drug Group for $1.1 billion in July 2015. Additionally, the company entered into an agreement to acquire the Cordis business from Johnson & Johnson for $1.9 billion, which was expected to close in the second quarter of fiscal year 2016. These acquisitions are intended to enhance the company's strategic focus areas.

Cardinal Health reported improved profitability in fiscal year 2015. GAAP operating earnings increased by 15% to $2.2 billion, and GAAP diluted earnings per share (EPS) rose by 7% to $3.61, compared to the prior year. Non-GAAP operating earnings increased by 16% and non-GAAP diluted EPS by 14%, reflecting strong operational performance offset by acquisition-related costs.

Cardinal Health significantly increased its cash and equivalents balance to $4.6 billion from $2.9 billion, supported by $2.5 billion in net cash provided by operating activities and $1.5 billion in new debt issuance. The company deployed capital by repurchasing $1.0 billion of its common shares and increasing its quarterly dividend by 13%.