On February 1, 2024 Cardinal Health (NYSE: CAH) reported second quarter fiscal 2024 revenue of $57.4 billion, an increase of 12% from the second quarter of last year (Press release, Cardinal Health, FEB 1, 2024, View Source [SID1234639769]). Second quarter GAAP operating earnings were $482 million and GAAP diluted earnings per share (EPS) were $1.43. Second quarter non-GAAP operating earnings increased 20% to $562 million, driven by strong growth in both Pharmaceutical segment profit and Medical segment profit. Non-GAAP diluted earnings per share (EPS) increased 38% to $1.82, driven by four factors: the increase in non-GAAP operating earnings, a lower share count following incremental share repurchase activity, lower interest and other expense and a lower non-GAAP effective tax rate.
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
"We delivered strong second quarter results across the enterprise, demonstrating continued momentum against our strategic priorities," said Jason Hollar, CEO of Cardinal Health. "With strong growth in Pharmaceutical segment profit and continued progress against our Medical Improvement Plan, we are continuing to drive operational execution in our core business. Along with our recent announcements of a tech-enabled specialty acquisition and growth portfolio prioritization, we remain focused on best serving our customers and creating value for our shareholders."
"With our first half performance including positive operating leverage, incremental return of capital to shareholders beyond our baseline plans, and confidence in our efforts as we look ahead, we are pleased to again raise our FY24 non-GAAP EPS guidance, which reflects 26% growth at the mid-point compared to our FY23 results," said Aaron Alt, CFO of Cardinal Health.
Q2 FY24 summary
Q2 FY24
Q2 FY23
Y/Y
Revenue
$57.4 billion
$51.5 billion
12 %
Operating earnings/(loss)
$482 million
$(119) million
N.M.
Non-GAAP operating earnings
$562 million
$467 million
20 %
Net earnings/(loss) attributable to Cardinal Health, Inc.
$353 million
$(130) million
N.M.
Non-GAAP net earnings attributable to Cardinal Health, Inc.
$447 million
$346 million
29 %
Effective Tax Rate
27.7 %
5.4 %4
Non-GAAP Effective Tax Rate
21.3 %
23.0 %
Diluted EPS attributable to Cardinal Health, Inc.
$1.43
$(0.50)
N.M.
Non-GAAP diluted EPS attributable to Cardinal Health, Inc.
$1.82
$1.32
38 %
Segment results
Pharmaceutical segment
Q2 FY24
Q2 FY23
Y/Y
Revenue
$53.5 billion
$47.7 billion
12 %
Segment profit
$518 million
$464 million
12 %
Second quarter revenue for the Pharmaceutical segment increased 12% to $53.5 billion, driven by brand and specialty pharmaceutical sales growth from existing customers.
Pharmaceutical segment profit increased 12% to $518 million in the second quarter, driven by positive generics program performance and a higher contribution from brand and specialty products, including distribution of COVID-19 vaccines. This increase was partially offset by higher costs to support sales growth.
Medical segment
Q2 FY24
Q2 FY23
Y/Y
Revenue
$3.9 billion
$3.8 billion
3 %
Segment profit
$71 million
$17 million
N.M.
Second quarter revenue for the Medical segment increased 3% to $3.9 billion, driven by growth in at-Home Solutions and Global Medical Products and Distribution, which primarily reflects higher Cardinal Health Brand volumes.
Medical segment profit increased by $54 million to $71 million in the second quarter, driven by an improvement in net inflationary impacts, including mitigation initiatives.
Fiscal 2024 outlook2
The company raised its fiscal 2024 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $7.20 to $7.35, from $6.75 to $7.003.
The company reiterated its expectations for segment profit growth for the former Pharmaceutical Segment of 7% to 9% and updated its fiscal 2024 segment profit outlook for the former Medical Segment to approximately $380 million, from approximately $400 million.
Additionally, the company now expects interest and other in the range of $50 million to $65 million, diluted weighted average shares outstanding of approximately 247 million, a non-GAAP effective tax rate of 23% to 24% and non-GAAP adjusted free cash of approximately $2.5 billion.
Pro-forma fiscal 2024 outlook, updated segment structure
As announced on January 9, 2024, the company updated its enterprise operating and segment reporting structure, effective January 1, 2024, to be reflected in the company’s financial reporting beginning third quarter fiscal 2024. Therefore, the company provided preliminary guidance for fiscal 2024 according to its updated segment reporting structure.
View News Release Full Screen
FY23 Actuals5
FY24 Outlook
Long-term Target
Businesses
Pharmaceutical and
Specialty Solutions
Revenue:
~$188.8B
Segment Profit:
~1.87B
Revenue:
10% to 12% growth
Segment Profit:
7% to 9% growth
4-6%
Segment Profit CAGR6
Former Pharmaceutical Segment,
excluding Nuclear and Precision
Health Solutions
GMPD
Revenue:
~$12.1B
Segment Profit:
~$(165)M
Revenue:
~2% growth
Segment Profit:
~$65M
~$300 million
in Segment Profit by FY267
Former Medical Segment,
excluding at-Home Solutions and OptiFreight
Logistics
Other
Revenue:
~$4.1B
Segment Profit:
~$410M
Revenue:
~10% growth
Segment Profit:
6% to 8% growth
8-10%
Segment Profit CAGR6
at-Home Solutions, Nuclear and
Precision Health Solutions and
OptiFreight Logistics
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 announced progress on the company’s business and portfolio review on January 9, 2024. The company completed its review of the growth businesses within the former Medical Segment, determining to invest in and further develop at-Home Solutions and OptiFreight Logistics as part of the company’s portfolio for long-term growth and value creation. The company’s review of the Global Medical Products and Distribution business continues, with a focus on driving operational performance through the Medical Improvement Plan.
Cardinal Health completed a $250 million accelerated share repurchase program in the second quarter, resulting in a total of $750 million year-to-date share repurchases in fiscal 2024.
Cardinal Health announced plans to build a new at-Home Solutions distribution center in Texas, with increased capacity, advanced automation and robotics within the facility.
Upcoming webcasted investor events
Barclays 26th Annual Global Healthcare Conference at 8:30 a.m. EST, March 13, 2024.
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss second-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.