01—Abstract
Summary
Summary of the 10-K filed August 15, 2023. Cited figures are marked; the original filing is the authoritative source.
Cardinal Health, Inc. reported a significant increase in revenue for fiscal year 2023, reaching $205.0 billiona, driven primarily by its Pharmaceutical segment.
The company's consolidated GAAP operating earnings improved to $727 millionb from a loss of $596 million in the prior year, largely benefiting from litigation recoveries. On a non-GAAP basis, operating earnings increased by 3% to $2.1 billion, reflecting growth in the Pharmaceutical segment's profit, partially offset by a decline in the Medical segment's profit. The company faced challenges in its Medical segment, which saw a 5% decrease in revenue due to lower volumes and unfavorable product mix, compounded by ongoing inflationary impacts.
Significant goodwill impairment charges totaling $1.2 billionc were recognized in the Medical segment during fiscal 2023, following a $2.1 billion charge in fiscal 2022, reflecting revised long-term financial plan assumptions. The company continues to manage substantial long-term liabilities, including a significant accrual for opioid litigation, with payments expected through 2038. Financially, Cardinal Health returned $2.0 billion to shareholders through share repurchases and paid $525 million in dividends in fiscal 2023.
The company maintained a strong liquidity position, with cash and equivalents of $4.0 billiond at year-end. Looking ahead, the company expects continued inflationary impacts in the Medical segment, albeit at a reduced level, and anticipates sales growth in its branded medical products.
02—Key points
Key Highlights
- Total revenue increased by 13% year-over-year to $205.0 billion, driven by a 15% increase in Pharmaceutical segment revenue, while Medical segment revenue decreased by 5%.
- GAAP operating earnings turned positive at $727 million in fiscal 2023, a significant improvement from a GAAP operating loss of $596 million in fiscal 2022, mainly due to litigation recoveries.
- Non-GAAP operating earnings increased by 3% to $2.1 billion, with Pharmaceutical segment profit growth being the primary driver.
- The Medical segment recorded $1.2 billion in goodwill impairment charges in fiscal 2023, following $2.1 billion in fiscal 2022, due to changes in financial plan assumptions.
- The company accrued $5.87 billion for opioid litigation settlement agreements, with payments expected through 2038.
- Cardinal Health returned $2.0 billion to shareholders through share repurchases and paid $525 million in dividends during fiscal 2023.
- Cash and equivalents stood at $4.0 billion as of June 30, 2023, while operating activities generated $2.8 billion in cash.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Cardinal Health Inc kept $0.00.
- Revenue$204.98B100.0%
- Cost of revenue−$198.10B96.6%
- Gross profit$6.87B3.4%
- Operating costs−$6.12B3.0%
- Operating income$752.0M0.4%
- Interest, other & tax−$422.0M0.2%
- Net income$330.0M0.2%
Where FY2023 revenue went
$204.98B- Cost of revenue: $198.10B, 97% of revenue
- Net income: $330.0M, 0.2% of revenue
- SG&A: $4.80B, 2.3% of revenue
- Other operating costs: $1.32B, 0.6% of revenue
Kept 0.2% as net incomeNet income $330.0M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed August 15, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $204.98B$181.33B | +13.0% |
| Cost of Revenue | $198.10B$174.84B | +13.3% |
| Gross Profit | $6.87B$6.48B | +6.0% |
| SG&A Expenses | $4.80B$4.51B | +6.4% |
| Operating Income | $752.00M-$607.00M | +223.9% |
| Interest Expense | $84.00M$147.00M | −42.9% |
| Net Income | $330.00M-$938.00M | +135.2% |
| EPS (Basic) | $1.27$-3.37 | +137.7% |
| EPS (Diluted) | $1.26$-3.37 | +137.4% |
| Shares Outstanding (Basic) | 261.00M279.00M | −6.5% |
| Shares Outstanding (Diluted) | 262.00M279.00M | −6.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Cardinal Health's revenue growth in fiscal year 2023?
The primary driver of Cardinal Health's revenue growth in fiscal year 2023 was the Pharmaceutical segment, which saw a 15% increase in revenue. Overall revenue grew by 13% to $205.0 billion.
What led to the significant goodwill impairment charges in the Medical segment?
The goodwill impairment charges in the Medical segment, totaling $1.2 billion in fiscal 2023, were primarily due to changes in the company's long-term financial plan assumptions, particularly those related to Cardinal Health branded medical products sales growth and net inflationary impacts. These charges reflect the carrying amount of the Medical Unit exceeding its fair value.
How is Cardinal Health addressing the ongoing inflationary impacts on its Medical segment?
Cardinal Health has implemented actions to partially mitigate inflationary impacts in its Medical segment, including certain price increases and evolving pricing and commercial contracting processes. While the company expects these impacts to continue in fiscal 2024, they are anticipated to be less severe than in previous periods due to these mitigation efforts and decreasing product-related costs.
What is the company's financial position regarding opioid litigation?
Cardinal Health has accrued $5.87 billion for opioid litigation settlement agreements, with the majority of payments expected to occur through 2038. The company made its second annual payment of $372 million in fiscal 2023 and a third payment of $378 million in July 2023. The company continues to dispute the allegations and defend itself in remaining lawsuits.
06—Continue