01—Abstract
Summary
Summary of the 10-K filed August 12, 2016. Cited figures are marked; the original filing is the authoritative source.
Cardinal Health, Inc. reported a significant 19% increase in revenue for fiscal year 2016, reaching $121.5 billiona, primarily driven by strong performance in its Pharmaceutical segment, bolstered by new and existing distribution customers, and complemented by strategic acquisitions.
The company also saw a healthy increase in both GAAP and non-GAAP operating earnings, growing by 14% and 17% respectively. Diluted earnings per share also experienced robust growth, with GAAP EPS up 20% to $4.32b and non-GAAP EPS up 20% to $5.24. Key to this growth were significant acquisitions, including Cordis, Harvard Drug Group, and naviHealth, which expanded the company's Medical segment capabilities and its pharmaceutical distribution reach.
Despite these investments, which led to a decrease in cash and equivalents, the company maintained a strong liquidity position through its credit facilities. Management anticipates continued growth, though with moderating profit growth in the Pharmaceutical segment for fiscal year 2017 due to customer pricing changes and the loss of a large customer.
02—Key points
Key Highlights
- Revenue grew 19% year-over-year to $121.5 billion in fiscal year 2016, driven by pharmaceutical distribution customers and strategic acquisitions.
- GAAP operating earnings increased 14% to $2.5 billion, while non-GAAP operating earnings rose 17% to $2.9 billion.
- GAAP diluted EPS increased 20% to $4.32, and non-GAAP diluted EPS also grew 20% to $5.24.
- The company completed significant acquisitions in fiscal year 2016, including Cordis ($1.9 billion), Harvard Drug Group ($1.1 billion), and naviHealth (71% stake for $238 million), expanding its Medical and Pharmaceutical segments.
- Cash and equivalents decreased from $4.6 billion to $2.4 billion, primarily due to $3.6 billion deployed for acquisitions.
- The Pharmaceutical segment profit increased 19% to $2.5 billion, while the Medical segment profit grew 6% to $457 million.
- Cardinal Health continued its shareholder return program, increasing its quarterly dividend by 13% and repurchasing $651 million of its common shares during fiscal year 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Cardinal Health Inc kept $0.01.
- Revenue$121.55B100.0%
- Cost of revenue−$115.00B94.6%
- Gross profit$6.54B5.4%
- Operating costs−$4.08B3.4%
- Operating income$2.46B2.0%
- Interest, other & tax−$1.03B0.8%
- Net income$1.43B1.2%
Where FY2016 revenue went
$121.55B- Cost of revenue: $115.00B, 95% of revenue
- Net income: $1.43B, 1.2% of revenue
- SG&A: $3.65B, 3.0% of revenue
- Interest, other & tax: $1.03B, 0.8% of revenue
Kept 1.2% as net incomeNet income $1.43B · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed August 12, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $121.55B$102.53B | +18.5% |
| Cost of Revenue | $115.00B$96.82B | +18.8% |
| Gross Profit | $6.54B$5.71B | +14.5% |
| SG&A Expenses | $3.65B$3.24B | +12.6% |
| Operating Income | $2.46B$2.16B | +13.8% |
| Interest Expense | $178.00M$141.00M | +26.2% |
| Net Income | $1.43B$1.22B | +17.4% |
| EPS (Basic) | $4.36$3.66 | +19.1% |
| EPS (Diluted) | $4.32$3.62 | +19.3% |
| Shares Outstanding (Basic) | 327.00M332.00M | −1.5% |
| Shares Outstanding (Diluted) | 330.00M335.00M | −1.5% |
05—Questions
Frequently Asked Questions
What were the main drivers of Cardinal Health's revenue growth in fiscal year 2016?
Cardinal Health's revenue grew by 19% to $121.5 billion in fiscal year 2016. This growth was primarily driven by increased sales from existing and new pharmaceutical distribution customers, as well as the impact of strategic acquisitions, most notably Cordis, Harvard Drug Group, and naviHealth.
How did Cardinal Health's profitability change in fiscal year 2016?
Cardinal Health saw improved profitability in fiscal year 2016. GAAP operating earnings increased by 14% to $2.5 billion, and non-GAAP operating earnings grew by 17% to $2.9 billion. This translated to strong growth in earnings per share, with GAAP diluted EPS rising 20% to $4.32 and non-GAAP diluted EPS also increasing 20% to $5.24.
What was the impact of acquisitions on Cardinal Health's financial position in fiscal year 2016?
Cardinal Health made significant strategic acquisitions in fiscal year 2016, including Cordis for $1.9 billion, Harvard Drug Group for $1.1 billion, and a majority stake in naviHealth for $238 million. These acquisitions expanded the company's Medical segment and its pharmaceutical distribution capabilities. The substantial investment in acquisitions led to a decrease in cash and equivalents from $4.6 billion to $2.4 billion.
What is the company's outlook for the Pharmaceutical segment in fiscal year 2017?
For fiscal year 2017, Cardinal Health expects Pharmaceutical segment profit to be relatively flat compared to fiscal year 2016. This is attributed to factors such as reduced profit growth from its generics program, the loss of a major pharmaceutical distribution customer starting in April 2016, and the ongoing impact of customer pricing changes.
06—Continue