Summary
Cardinal Health's Q1 Fiscal Year 2019 report for the period ending September 29, 2018, shows a significant increase in GAAP operating earnings driven by the divestiture of its naviHealth business, which contributed a $508 million gain. However, non-GAAP operating earnings saw a 11% decrease due to challenges in the Pharmaceutical segment, including generics program performance and customer contract renewals, alongside increased costs for Cardinal Health Brand products. Revenue grew 8% to $35.2 billion, primarily from pharmaceutical distribution, though partially impacted by the prior divestiture of its China distribution business. Despite the operational headwinds in certain segments, the company demonstrated solid cash flow generation, with cash and equivalents increasing to $2.0 billion. This was bolstered by the naviHealth sale proceeds and operating activities, partially offset by significant share repurchases and dividend payments. The company's liquidity position remains strong, supported by its credit facilities. Investors should note the impact of the U.S. Tax Cuts and Jobs Act, which positively affected earnings per share, and be aware of ongoing litigation, particularly concerning opioid distribution, and potential future goodwill impairments in the Medical segment.
Financial Highlights
47 data points| Revenue | $35.21B |
| Cost of Revenue | $33.55B |
| Gross Profit | $1.67B |
| SG&A Expenses | $1.16B |
| Operating Income | $816.00M |
| Interest Expense | $77.00M |
| Net Income | $593.00M |
| EPS (Basic) | $1.95 |
| EPS (Diluted) | $1.94 |
| Shares Outstanding (Basic) | 305.00M |
| Shares Outstanding (Diluted) | 306.00M |
Key Highlights
- 1Revenue increased 8% to $35.2 billion in Q1 FY2019, driven by pharmaceutical distribution and specialty pharmaceutical customers.
- 2GAAP operating earnings surged 211% to $816 million, primarily due to a $508 million gain from the naviHealth divestiture.
- 3Non-GAAP operating earnings decreased 11% to $542 million, impacted by pharmaceutical segment performance, customer contract renewals, and Cardinal Health Brand product costs.
- 4GAAP diluted EPS rose 439% to $1.94, while non-GAAP diluted EPS grew 18% to $1.29, benefiting from the U.S. Tax Cuts and Jobs Act and discrete tax items.
- 5Cash and equivalents increased to $2.0 billion, supported by $737 million in proceeds from the naviHealth sale and $365 million in net cash from operations.
- 6The company deployed $600 million for share repurchases and paid $150 million in dividends during the quarter.
- 7Cardinal Health has increased its maximum consolidated leverage ratio under its credit facilities to 4.25-to-1, with phased reductions planned through September 2020.