On May 6, 2021 Cardinal Health (NYSE: CAH) reported third-quarter fiscal year 2021 revenue of $39.3 billion, in-line with the third quarter of last year (Press release, Cardinal Health, MAY 6, 2021, View Source [SID1234579372]). Third-quarter GAAP operating earnings decreased 16% to $473 million, primarily due to the write-down of the net assets held for sale from the planned divestiture of the Cordis business. Third-quarter GAAP diluted earnings per share (EPS) decreased to $0.40, due to the previously-disclosed tax effect of the litigation charge in the first quarter.

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Non-GAAP operating earnings decreased 4% to $689 million in the quarter due to the negative impact from COVID-19, primarily concentrated in the Pharmaceutical segment. Non-GAAP diluted EPS decreased 6% to $1.53 in the quarter, reflecting a higher non-GAAP effective tax rate, partially offset by lower interest expense.

"We remain focused on serving our customers and their patients and continue to advance our strategic priorities," said Mike Kaufmann, CEO of Cardinal Health. "With our resilient business model and strong fundamentals, we are navigating the effects of the pandemic and finding opportunities to adapt, innovate and invest for future growth."

Third-quarter revenue for the Pharmaceutical segment was flat at $35.1 billion. This reflects sales growth from Pharmaceutical Distribution and Specialty Solutions customers in the current period compared against the unfavorable prior-year comparison of the COVID-19-related acceleration in overall pharmaceutical sales.

Pharmaceutical segment profit decreased 4% to $511 million in the third quarter, primarily due to COVID-19-related volume declines in the company’s generics program. This was partially offset by a higher contribution from brand sales mix.

Third-quarter revenue for the Medical segment increased 3% to $4.2 billion, driven by a net positive impact from COVID-19 on products and distribution. This increase was primarily due to the impact of personal protective equipment (PPE) sales and higher volumes in our Lab business, partially offset by the adverse effects of reduced elective procedures.

Medical segment profit decreased 2% to $174 million in the third quarter. Cost savings, including global manufacturing efficiencies, were offset by a decline in products and distribution. Additionally, the segment experienced a slight negative impact due to COVID-19.

Tax rate
During the third quarters of fiscal 2021 and 2020, GAAP effective tax rates were 72.8% and 26.8%, respectively. The increase was primarily due to the previously-disclosed tax effect of the litigation charge in the first quarter. Non-GAAP effective tax rates were 31.2% and 25.7%, respectively, for the third quarters of fiscal 2021 and 2020. Third-quarter fiscal 2021 effective tax rates reflect the resolution of all open issues with the IRS for fiscal years 2008 to 2010 as well as certain transfer pricing matters for fiscal years 2011 to 2014, which also impacted reserves for later years.

Fiscal year 2021 outlook1
Cardinal Health narrowed its fiscal year 2021 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $5.90 to $6.05, from the prior range of $5.85 to $6.10.

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 Board of Directors approved a 1% increase in the company’s quarterly dividend from $0.4859 per share to $0.4908 per share, or $1.96 on an annualized basis. The dividend will be payable on July 15, 2021 to shareholders of record at the close of business on July 1, 2021.
Cardinal Health announced that it signed a definitive agreement to sell its Cordis business to Hellman & Friedman (H&F) for approximately $1 billion. The company anticipates the transaction to close in the first quarter of fiscal 2022.
Cardinal Health recently launched Outcomes, a digital ecosystem that provides personalized medication therapy management, patient engagement and telepharmacy through its Connect platform, connecting pharmacists, payers and pharmaceutical companies to improve medication adherence, drive better outcomes and lower the cost of care.
Cardinal Health recently announced a partnership with FourKites, the largest predictive supply chain visibility platform, to create a cognitive supply chain network that combines real-time visibility, machine learning and artificial intelligence to facilitate the flow of inventory throughout the supply chain.
Cardinal Health Specialty Solutions launched Cardinal Health Navista Tech Solutions (TS), an advanced suite of technology solutions to help community oncologists improve outcomes and costs associated with patient treatment as they transition to value-based care.
Cardinal Health was awarded a $57.8 million contract, including options that if exercised by the U.S. Department of Health and Human Services (HHS) could reach $91.6 million, for the storage and distribution of 80,000 pallets of personal protective equipment (PPE) to support the Strategic National Stockpile (SNS).
Upcoming webcasted investor events

Bank of America Healthcare Conference at 8:45 a.m. Eastern, May 11
Webcast
Cardinal Health will host a webcast today at 8:30 a.m. Eastern to discuss third-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 until May 5, 2022.