10-KPeriod: FY2016

CARDINAL HEALTH INC Annual Report, Year Ended Jun 30, 2016

Filed August 12, 2016For Securities:CAH

Summary

Cardinal Health, Inc. reported a significant 19% increase in revenue for fiscal year 2016, reaching $121.5 billion, 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 $4.32 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.

Financial Highlights

50 data points
Beta

Revenue

$121.55B

5.4% Gross Margin

Net Income

$1.43B

1.2% Net Margin

EPS (Diluted)

$4.32

Total Assets

$34.12B

Cash & Equivalents

$2.36B

Free Cash Flow

$2.51B

Financial Statements
Beta
Revenue$121.55B
Cost of Revenue$115.00B
Gross Profit$6.54B
SG&A Expenses$3.65B
Operating Income$2.46B
Interest Expense$178.00M
Net Income$1.43B
EPS (Basic)$4.36
EPS (Diluted)$4.32
Shares Outstanding (Basic)327.00M
Shares Outstanding (Diluted)330.00M

Key Highlights

  • 1Revenue grew 19% year-over-year to $121.5 billion in fiscal year 2016, driven by pharmaceutical distribution customers and strategic acquisitions.
  • 2GAAP operating earnings increased 14% to $2.5 billion, while non-GAAP operating earnings rose 17% to $2.9 billion.
  • 3GAAP diluted EPS increased 20% to $4.32, and non-GAAP diluted EPS also grew 20% to $5.24.
  • 4The 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.
  • 5Cash and equivalents decreased from $4.6 billion to $2.4 billion, primarily due to $3.6 billion deployed for acquisitions.
  • 6The Pharmaceutical segment profit increased 19% to $2.5 billion, while the Medical segment profit grew 6% to $457 million.
  • 7Cardinal Health continued its shareholder return program, increasing its quarterly dividend by 13% and repurchasing $651 million of its common shares during fiscal year 2016.

Frequently Asked Questions

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.

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.

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.

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.