Summary
Cardinal Health Inc. (CAH) reported its first quarter fiscal year 2018 results, showcasing a 2% increase in total revenue to $32.6 billion, primarily driven by growth in specialty and pharmaceutical distribution customers, and contributions from Medical segment acquisitions. However, GAAP operating earnings saw a significant 51% decrease to $262 million, largely due to restructuring costs associated with the Medical segment's surgeon glove distribution, increased amortization from the recent Patient Recovery Business acquisition, and litigation charges. Non-GAAP operating earnings also declined by 9% to $610 million, reflecting some of these headwinds. The company completed a major acquisition of Medtronic's Patient Recovery Business for $6.1 billion in July 2017. This significantly impacted cash flow, with cash and equivalents dropping from $6.9 billion to $1.2 billion due to acquisition funding, debt redemption, and share repurchases, alongside operating cash flow generation. Despite the operational challenges impacting near-term profitability, management believes it has adequate capital resources for its ongoing needs, but may require additional financing for future acquisitions.
Financial Highlights
46 data points| Revenue | $32.64B |
| Cost of Revenue | $30.97B |
| Gross Profit | $1.67B |
| SG&A Expenses | $1.06B |
| Operating Income | $262.00M |
| Interest Expense | $81.00M |
| Net Income | $115.00M |
| Shares Outstanding (Basic) | 316.00M |
| Shares Outstanding (Diluted) | 318.00M |
Key Highlights
- 1Total revenue increased by 2% to $32.6 billion, driven by pharmaceutical distribution and Medical segment acquisitions, partially offset by a major contract expiration.
- 2GAAP operating earnings decreased significantly by 51% to $262 million, heavily impacted by $132 million in restructuring and employee severance costs and $183 million in amortization and acquisition-related costs.
- 3Non-GAAP operating earnings decreased by 9% to $610 million, indicating pressure on ongoing operations beyond one-time charges.
- 4The company completed the $6.1 billion acquisition of Medtronic's Patient Recovery Business in July 2017, which is expected to expand the Medical segment's product portfolio.
- 5Cash and equivalents decreased substantially from $6.9 billion to $1.2 billion, primarily due to the funding of the aforementioned acquisition.
- 6The Pharmaceutical segment profit declined by 13% due to generic program performance and pricing changes, while the Medical segment profit saw a modest 1% increase.
- 7The company is exploring strategic alternatives for its China products and services distribution business.