Summary
Cardinal Health Inc. (CAH) reported its third-quarter fiscal year 2020 results, showing an 11% increase in revenue to $39.2 billion, driven by higher pharmaceutical distribution and specialty solutions sales, partly due to customer purchasing acceleration related to COVID-19. However, the company experienced below-average sales volume in March following this surge. The company also incurred a significant pre-tax charge of $5.63 billion related to the estimated liability for opioid lawsuits, which heavily impacted GAAP net earnings and EPS, resulting in a GAAP diluted loss per share of $(14.84) for the nine months ended March 31, 2020. Despite these challenges, non-GAAP operating earnings saw an 8% increase for the quarter and a 5% increase year-to-date, reflecting operational efficiencies and performance in key segments. Liquidity remains adequate, with $2.3 billion in cash and equivalents and strong operating cash flow generation. The company continues to manage its debt, with $888 million deployed for debt repayments during the nine-month period. While the COVID-19 pandemic introduces uncertainty, particularly regarding supply chain disruptions and potential impacts on sales volume, Cardinal Health believes it has sufficient resources to meet its obligations and fund future operations, including potential opioid settlement payments. Investors should closely monitor the ongoing opioid litigation developments and the company's ability to navigate the economic impacts of the pandemic.
Financial Highlights
46 data points| Revenue | $39.16B |
| Cost of Revenue | $37.27B |
| Gross Profit | $1.89B |
| SG&A Expenses | $1.17B |
| Operating Income | $562.00M |
| Interest Expense | $60.00M |
| Net Income | $350.00M |
| Shares Outstanding (Basic) | 292.00M |
| Shares Outstanding (Diluted) | 294.00M |
Key Highlights
- 1Revenue increased 11% to $39.2 billion in Q3 FY2020, driven by pharmaceutical distribution and specialty solutions, with a temporary COVID-19 related purchasing surge.
- 2Significant pre-tax charge of $5.63 billion recorded for opioid litigation settlement framework, heavily impacting GAAP net earnings and leading to a GAAP diluted loss per share of $(14.84) for the nine months ended March 31, 2020.
- 3Non-GAAP operating earnings increased by 8% in Q3 and 5% for the first nine months of FY2020, demonstrating underlying operational performance.
- 4Medical segment revenue grew 5% in Q3, with increased demand for personal protective equipment (PPE), although supply shortages are a concern.
- 5The company had $2.3 billion in cash and equivalents at the end of the quarter and generated $1.7 billion in net cash from operating activities for the nine-month period.
- 6Cardinal Health continues to be impacted by the COVID-19 pandemic, leading to increased demand for some products (like PPE) but also supply chain disruptions and uncertainty in future sales volumes.
- 7The company is in discussions to finalize terms for a global opioid litigation settlement framework, including a cash component of up to $5.56 billion over 18 years.