10-QPeriod: Q1 FY2024

CARDINAL HEALTH INC Quarterly Report for Q1 Ended Sep 30, 2023

Filed November 3, 2023For Securities:CAH

Summary

Cardinal Health Inc. reported robust revenue growth in its first quarter of fiscal year 2024, with total revenue increasing by 10% to $54.8 billion, primarily driven by strong performance in its Pharmaceutical segment. This growth was fueled by increased branded and specialty pharmaceutical sales, as well as the early distribution of COVID-19 vaccines. The company also saw a significant improvement in Non-GAAP operating earnings, which rose 35% to $571 million, and Non-GAAP diluted EPS increased by 44% to $1.73, reflecting improved segment profitability and a lower share count due to repurchases. Despite overall positive operational trends, GAAP operating earnings showed a loss of $14 million due to a substantial $581 million goodwill impairment charge related to the Medical segment. While this impairment impacts GAAP figures, the company's Non-GAAP performance highlights underlying operational strength. Cardinal Health continues to manage its liquidity effectively, with $3.9 billion in cash and equivalents and a strong credit facility. The company is also actively returning capital to shareholders through dividends and share repurchases, with $3.8 billion remaining on its share repurchase authorization.

Financial Highlights

47 data points
Beta

Revenue

$54.65B

3.2% Gross Margin

Net Income

-$12.00M

-0.0% Net Margin

EPS (Diluted)

$-0.05

Total Assets

$43.71B

Cash & Equivalents

$3.87B

Free Cash Flow

$436.00M

Financial Statements
Beta
Revenue$54.65B
Cost of Revenue$52.91B
Gross Profit$1.74B
SG&A Expenses$1.19B
Operating Income-$32.00M
Interest Expense$11.00M
Net Income-$12.00M
EPS (Basic)$-0.05
EPS (Diluted)$-0.05
Shares Outstanding (Basic)249.00M
Shares Outstanding (Diluted)249.00M

Key Highlights

  • 1Total revenue increased 10% year-over-year to $54.8 billion, driven by pharmaceutical and specialty pharmaceutical sales growth.
  • 2Non-GAAP operating earnings surged 35% to $571 million, indicating improved underlying operational performance.
  • 3Non-GAAP diluted EPS grew 44% to $1.73, benefiting from operational improvements and share repurchases.
  • 4A significant $581 million pre-tax goodwill impairment charge was recorded for the Medical segment, impacting GAAP operating earnings and EPS negatively.
  • 5Pharmaceutical segment profit increased 18% due to strong sales, including contributions from COVID-19 vaccine distribution and a robust generics program.
  • 6Medical segment profit improved substantially year-over-year, benefiting from eased inflationary pressures and mitigation efforts.
  • 7The company generated $545 million in net cash from operating activities, despite a $378 million opioid settlement payment.

Frequently Asked Questions

The GAAP operating loss of $14 million was primarily due to a significant $581 million pre-tax goodwill impairment charge related to the Medical segment. This non-cash charge, driven by an increase in the risk-free interest rate, negatively impacted the GAAP results.

The Pharmaceutical segment showed strong growth with an 11% increase in revenue and an 18% increase in profit, driven by branded/specialty sales, COVID-19 vaccine distribution, and its generics program. The Medical segment revenue was flat, but segment profit improved significantly year-over-year due to easing inflationary pressures and successful mitigation actions.

Cardinal Health maintains a solid liquidity position with $3.9 billion in cash and equivalents as of September 30, 2023. The company also has access to a $2.0 billion revolving credit facility and a $1.0 billion receivables sales facility, with no outstanding balances on these credit lines at the end of the quarter.

Cardinal Health is actively deploying capital through share repurchases, having spent $500 million on an accelerated share repurchase program in the quarter. The company also continues to pay quarterly dividends and has approximately $3.8 billion remaining on its share repurchase authorization.