On November 3, 2023 Cardinal Health (NYSE: CAH) reported first quarter fiscal 2024 revenue of $54.8 billion, an increase of 10% from the first quarter of last year (Press release, Cardinal Health, NOV 3, 2023, View Source [SID1234636879]). First quarter GAAP operating loss was $14 million due to a non-cash, pre-tax goodwill impairment of $581 million related to the Medical segment, due to an increase in the discount rate.² GAAP diluted earnings per share (EPS) were $0.02, primarily due to this impairment, net of tax effects. Non-GAAP operating earnings increased 35% to $571 million in the quarter, driven by significant increases in both Pharmaceutical segment profit and Medical segment profit. Non-GAAP diluted EPS increased 44% to $1.73, reflecting the increase in non-GAAP operating earnings, a lower share count and lower interest and other expense, partially offset by a higher non-GAAP effective tax rate.
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"With strong first quarter results and an improved outlook for the year, we are continuing our operating momentum into fiscal 2024," said Jason Hollar, CEO of Cardinal Health. "In Q1, we delivered significant profit growth in both the Pharmaceutical and Medical segments, which along with our favorable capital structure and opportunistic capital deployment, gives us confidence to raise fiscal 2024 non-GAAP EPS guidance. Across the enterprise, we continue to prioritize focused execution to best serve our customers and create value for our shareholders."
Q1 FY24 summary
Q1 FY24
Q1 FY23
Y/Y
Revenue
$54.8 billion
$49.6 billion
10 %
Operating earnings/(loss)
$(14) million
$137 million
N.M.
Non-GAAP operating earnings
$571 million
$423 million
35 %
Net earnings attributable to Cardinal Health, Inc.
$5 million
$110 million
N.M.
Non-GAAP net earnings attributable to Cardinal Health, Inc.
$433 million
$328 million
32 %
Effective Tax Rate3
122.5 %
(0.7) %
Non-GAAP Effective Tax Rate
22.5 %
16.9 %
Diluted EPS attributable to Cardinal Health, Inc.
$0.02
$0.40
N.M.
Non-GAAP diluted EPS attributable to Cardinal Health, Inc.
$1.73
$1.20
44 %
Segment results
Pharmaceutical segment
Q1 FY24
Q1 FY23
Y/Y
Revenue
$51.0 billion
$45.8 billion
11 %
Segment profit
$507 million
$431 million
18 %
First quarter revenue for the Pharmaceutical segment increased 11% to $51.0 billion, driven by brand and specialty pharmaceutical sales growth from existing customers.
Pharmaceutical segment profit increased 18% to $507 million in the first quarter, driven by a higher contribution from brand and specialty products, including distribution of COVID-19 vaccines, and positive generics program performance.
Medical segment
Q1 FY24
Q1 FY23
Y/Y
Revenue
$3.8 billion
$3.8 billion
— %
Segment profit
$71 million
$(8) million
N.M.
First quarter revenue for the Medical segment was flat at $3.8 billion. This reflects lower PPE volumes and pricing, offset by growth in at-Home Solutions and inflationary impacts, including mitigation initiatives. PPE volumes and pricing includes the impact from the prior year exit of our non-healthcare gloves portfolio in connection with our simplification strategy.
Medical segment profit increased to $71 million in the first quarter, driven by an improvement in net inflationary impacts, including mitigation initiatives.
Fiscal year 2024 outlook1
The company raised its fiscal 2024 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $6.75 to $7.00, from $6.50 to $6.75.
This guidance includes an update to the company’s Pharmaceutical segment profit outlook for fiscal 2024 to 7% to 9% growth, from 4% to 6% growth. Additionally, the company updated expectations for interest and other to $100 million to $120 million, from $110 million to $130 million, and for diluted weighted average shares outstanding of approximately 249 million, from 250 million to 253 million.
The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.
Recent highlights
Cardinal Health initiated a $500M accelerated share repurchase program in the first quarter, which was completed in October.
Cardinal Health began distributing the recently commercialized COVID-19 vaccines to customers following FDA approval in September.
Cardinal Health launched its Kangaroo OMNI Enteral Feeding Pump in the U.S., designed to help provide enteral feeding patients with more options to meet their personalized needs throughout their enteral feeding journey.
Cardinal Health was named to the 100 Best Corporate Citizens ranking by 3BL Media based on an assessment of environmental, social and governance (ESG) transparency and performance of the 1,000 largest public companies in the U.S.
Cardinal Health was named to Seramount’s 2023 lists of 100 Best Companies, Top Companies for Executive Women, and Best Companies for Multicultural Women.
Upcoming webcasted investor events
Evercore ISI Healthcare Conference at 10:00 a.m. EST, November 29, 2023
J.P. Morgan Healthcare Conference, January 8-11, 2024
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. EST to discuss first quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required.
Presentation slides and a webcast replay will be available on the Investor Relations page for 12 months.