Summary
Cardinal Health Inc. (CAH) reported solid revenue growth driven by acquisitions and existing pharmaceutical distribution customers for the second quarter of fiscal year 2016. The company completed three significant acquisitions: Cordis, naviHealth, and Harvard Drug, totaling over $3.2 billion, which are expected to expand its Medical and Pharmaceutical segments. While revenue increased by 23% year-over-year, the company saw growth in both GAAP and non-GAAP operating earnings, with non-GAAP operating earnings increasing by 14% for the quarter. Diluted EPS also saw an increase, with GAAP diluted EPS up 14% and non-GAAP diluted EPS up 8% compared to the prior year. Despite the positive revenue and earnings growth, the company experienced a decrease in its cash and equivalents balance due to significant deployment for acquisitions and dividend payments. However, Cardinal Health maintains adequate capital resources and is in compliance with its financial covenants. Investors should note the impact of acquisition-related costs, particularly amortization, on GAAP earnings and the company's continued strategy of growth through strategic acquisitions.
Financial Highlights
49 data points| Revenue | $31.45B |
| Cost of Revenue | $29.84B |
| Gross Profit | $1.61B |
| SG&A Expenses | $922.00M |
| Operating Income | $563.00M |
| Interest Expense | $45.00M |
| Net Income | $326.00M |
| EPS (Basic) | $0.99 |
| EPS (Diluted) | $0.98 |
| Shares Outstanding (Basic) | 329.00M |
| Shares Outstanding (Diluted) | 332.00M |
Key Highlights
- 1Total revenue increased by 23% to $31.4 billion for the three months ended December 31, 2015, driven by pharmaceutical distribution customer growth and recent acquisitions.
- 2Completed three significant acquisitions (Cordis, naviHealth, Harvard Drug) for a total of over $3.2 billion, strengthening its Medical and Pharmaceutical segments.
- 3GAAP operating earnings increased by 3% to $563 million and Non-GAAP operating earnings increased by 14% to $726 million for the quarter.
- 4GAAP diluted EPS rose 14% to $0.98, and Non-GAAP diluted EPS increased 8% to $1.30.
- 5Cash and equivalents decreased from $4.6 billion to $2.3 billion, primarily due to $3.3 billion deployed for acquisitions and $259 million in dividends.
- 6The Pharmaceutical segment reported a 16% increase in segment profit, while the Medical segment profit decreased by 8%, largely due to acquisition-related inventory step-ups.
- 7The company remains compliant with its financial covenants related to its revolving credit facility and receivables sales facility program.