CARDINAL HEALTH INC Quarterly Report for Q2 Ended Dec 31, 2009

Summary

Cardinal Health, Inc. reported its financial results for the quarter ended December 31, 2009. The company saw a modest increase in revenue, up 3% year-over-year to $24.9 billion for the quarter. Operating earnings showed a more significant improvement, rising 17% to $366.8 million, driven by increased gross margins and a favorable litigation credit. A key event impacting the period was the spin-off of CareFusion Corporation on August 31, 2009. While this significantly reduced earnings from discontinued operations, the company is strategically managing its retained stake in CareFusion, having sold some shares and realizing a gain. Management is focused on core operations, with both the Pharmaceutical and Medical segments contributing to revenue growth, though segment profit dynamics varied. The company also actively managed its debt, including a significant debt tender, and continued its share repurchase program.

Key Highlights

• 1Revenue increased by 3% to $24.9 billion for the three months ended December 31, 2009, compared to the prior year period.
• 2Operating earnings grew by 17% to $366.8 million for the three months ended December 31, 2009, demonstrating improved operational performance.
• 3The company successfully completed the spin-off of CareFusion Corporation on August 31, 2009, and is managing its retained investment.
• 4Gross margin improved by 5% to $957.7 million for the quarter, benefiting from distribution service agreement fees, pharmaceutical price appreciation, and manufacturer discounts.
• 5The Pharmaceutical segment's revenue increased by 3% and the Medical segment's revenue increased by 9% year-over-year.
• 6The company actively managed its debt, including a debt tender resulting in a $39.9 million loss on extinguishment of debt.
• 7The company continued its share repurchase program, buying back $50 million of its common shares during the quarter.

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