01—Abstract
Summary
Summary of the 10-Q filed November 3, 2023. Cited figures are marked; the original filing is the authoritative source.
Cardinal Health Inc. reported robust revenue growth in its first quarter of fiscal year 2024, with total revenue increasing by 10% to $54.8 billiona, 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 millionb, 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 billionc 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.
02—Key points
Key Highlights
- Total revenue increased 10% year-over-year to $54.8 billion, driven by pharmaceutical and specialty pharmaceutical sales growth.
- Non-GAAP operating earnings surged 35% to $571 million, indicating improved underlying operational performance.
- Non-GAAP diluted EPS grew 44% to $1.73, benefiting from operational improvements and share repurchases.
- A significant $581 million pre-tax goodwill impairment charge was recorded for the Medical segment, impacting GAAP operating earnings and EPS negatively.
- Pharmaceutical segment profit increased 18% due to strong sales, including contributions from COVID-19 vaccine distribution and a robust generics program.
- Medical segment profit improved substantially year-over-year, benefiting from eased inflationary pressures and mitigation efforts.
- The company generated $545 million in net cash from operating activities, despite a $378 million opioid settlement payment.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2024, Cardinal Health Inc lost $0.00.
- Revenue$54.65B100.0%
- Cost of revenue−$52.91B96.8%
- Gross profit$1.74B3.2%
- Operating costs−$1.77B3.2%
- Operating income−$32.0M0.1%
- Interest, other & tax$20.0M0.0%
- Net income−$12.0M0.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed November 3, 2023Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $54.65B$49.59B | +10.2% |
| Cost of Revenue | $52.91B$48.00B | +10.2% |
| Gross Profit | $1.74B$1.60B | +9.2% |
| SG&A Expenses | $1.19B$1.20B | −0.8% |
| Operating Income | -$32.00M$123.00M | −126.0% |
| Interest Expense | $11.00M$24.00M | −54.2% |
| Net Income | -$12.00M$98.00M | −112.2% |
| EPS (Basic) | $-0.05$0.36 | −113.9% |
| EPS (Diluted) | $-0.05$0.36 | −113.9% |
| Shares Outstanding (Basic) | 249.00M271.00M | −8.1% |
| Shares Outstanding (Diluted) | 249.00M273.00M | −8.8% |
05—Questions
Frequently Asked Questions
What caused the GAAP operating loss in the current quarter?
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.
How did the Pharmaceutical and Medical segments perform?
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.
What is the company's liquidity position?
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.
What is the company doing with its capital?
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.
06—Continue