Summary
Cardinal Health Inc. (CAH) filed an 8-K on April 26, 2006, to report on its financial results for the quarter and nine months ended March 31, 2006, and to disclose significant impairment charges. The company announced its intention to divest two businesses: Healthcare Marketing Services (HMS) within its Pharmaceutical Technologies and Services segment and United Kingdom-based Intercare Pharmaceutical Distribution (IPD) within its Pharmaceutical Distribution and Provider Services segment. These divestitures are a key driver of the financial impact reported in this filing. As a result of these divestitures, Cardinal Health recorded substantial pre-tax impairment charges totaling approximately $238.2 million ($152.7 million for HMS and $85.5 million for IPD) in the quarter ended March 31, 2006. These charges relate to goodwill, long-lived assets, and current assets of the held-for-sale operations. Importantly, the company does not anticipate these impairment charges will result in future cash outflows. The company is classifying HMS and IPD as discontinued operations for financial reporting purposes as of March 31, 2006.
Key Highlights
- 1Cardinal Health announced results for the quarter and nine months ended March 31, 2006.
- 2The company is divesting its Healthcare Marketing Services (HMS) business and its UK-based Intercare Pharmaceutical Distribution (IPD) business.
- 3Significant impairment charges totaling approximately $238.2 million (pre-tax) were recorded for the HMS and IPD businesses in the quarter ended March 31, 2006.
- 4The impairment charges relate to goodwill, long-lived assets, and current assets of assets classified as held-for-sale.
- 5HMS and IPD are being reported as discontinued operations as of March 31, 2006.
- 6Cardinal Health does not expect the impairment charges to result in future cash expenditures.
- 7The company provided a discussion of non-GAAP financial measures, explaining their utility to investors.