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Cardinal Health Reports First Quarter Results
Date:11/5/2007

- Revenue increases 5 percent to $22 billion

- Operating earnings up 9 percent to $490 million - Diluted earnings per share from continuing operations rise 15 percent to

$0.82 per share - Non-GAAP diluted EPS from continuing operations increases 15 percent to

$0.86 per share - Full year EPS guidance reaffirmed, outlook revised for Healthcare Supply

Chain Services-Pharmaceutical segment

DUBLIN, Ohio, Nov. 5 /PRNewswire-FirstCall/ -- Cardinal Health, a global provider of products and services that improve the safety and productivity of health care, today reported a 15 percent increase in earnings per share during its first quarter, led by strong profit growth in its clinical and medical products businesses and ongoing programs to repurchase shares and streamline operations.

For the quarter ended Sept. 30, revenue increased 5 percent to $22 billion, operating earnings increased 9 percent to $490 million and earnings per share from continuing operations rose 15 percent to $0.82, or $0.86(1) on a non-GAAP basis.

"Our first quarter results were solid and led by very strong performance in our Clinical and Medical Products sector, which now accounts for 30 percent of segment profits," said R. Kerry Clark, chief executive officer of Cardinal Health.

Cardinal Health also reaffirmed its annual earnings-per-share guidance, while lowering the profit outlook for its Healthcare Supply Chain Services- Pharmaceutical segment. The company continues to expect a strong second half of the fiscal year, led by continued growth in clinical and medical products and a significant increase in generic product introductions.

"We are disappointed with the performance in our Healthcare Supply Chain Services-Pharmaceutical segment, but have a positive outlook for the second half of the fiscal year for the company," Clark said. "Our Clinical and Me

receivables (191.9) 107.0

Decrease in inventories 232.4 119.8

Increase in net investment in

sales-type leases (24.1) (20.9)

Decrease in accounts payable (63.2) (131.5)

Other accrued liabilities and

operating items, net 57.0 181.8

Net cash provided by operating

activities - continuing operations $439.2 $670.5

Net cash (used in) / provided by

operating activities - discontinued

operations (30.4) 16.1

Net cash provided by operating activities $408.8 $686.6

Cash Flows From Investing Activities:

Acquisition of subsidiaries, net of

divestitures and cash acquired $(88.1) $(64.5)

Proceeds from sale of property and

equipment 2.5 3.6

Additions to property and equipment (91.5) (68.7)

Sale of investment securities

available for sale, net 131.9 41.9

Net cash used investing activities

- continuing operations $(45.2) $(87.7)

Net cash provided by investing activities

- discontinued operations - 3.6

Net cash used in investing activities $(45.2) $(84.1)

Cash Flows From Financing Activities:

Net change in commercial paper and

short-term borrowings $232.0 $105.4

Reduction of long-term obligations (13.0) (27.8)

Proceeds from long-term obligations,

net of issuance costs 0.1 1.7

Proceeds from issuance of Common Shares 105.5 57.3

Tax benefits from exercises of

stock options 11.6 12.5

Dividends on Common Shares (44.3) (37.0)

Purchase of treasury shares (674.7) (445.3)

Net cash used in financing activities

- continuing operations $(382.8) $(333.2)

Net cash used in financing activities

- discontinued operations - (12.5)

Net cash used in financing activities $(382.8) $(345.7)

Net (decrease) / increase in cash

and equivalents (19.2) 256.8

Cash and equivalents at beginning of

period $1,308.8 $1,187.3

Cash and equivalents at end of period $1,289.6 $1,444.1

CARDINAL HEALTH, INC. AND SUBSIDIARIES

BUSINESS ANALYSIS

TOTAL COMPANY

Non-GAAP

First Quarter First Quarter

(in millions) 2008 2007 2008 2007

Revenue

Amount $21,973 $20,938

Growth Rate 5% 11%

Operating Earnings

Amount $490 $451 $512 $475

Growth Rate 9% 23% 8% 23%

Earnings from Continuing Operations

Amount $303 $291 $318 $309

Growth Rate 4% 24% 3% 24%

Refer to the GAAP / Non-GAAP Reconciliation for Non-GAAP calculations.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

SEGMENT BUSINESS ANALYSIS

HEALTHCARE SUPPLY CHAIN SERVICES CLINICAL AND MEDICAL PRODUCTS

First Quarter First Quarter

(in millions) 2008 2007 (in millions) 2008 2007

PHARMACEUTICAL CLINICAL TECHNOLOGIES AND SERVICES

Revenue Revenue

Amount $19,221 $18,533 Amount $649 $594

Growth Rate 4% 12% Growth Rate 9% 3%

Mix 86% 87% Mix 3% 3%

Segment Profit (1) Segment Profit (1)

Amount $305 $289 Amount $98 $51

Growth Rate 6% 28% Growth Rate 91% (10)%

Mix 59% 64% Mix 19% 12%

Segment Profit Segment Profit

Margin 1.59% 1.56% Margin 15.14% 8.66%

MEDICAL MEDICAL PRODUCTS AND TECHNOLOGIES

Revenue Revenue

Amount $1,921 $1,806 Amount $623 $424

Growth Rate 6% 2% Growth Rate 47% 11%

Mix 8% 8% Mix 3% 2%

Segment Profit (1) Segment Profit (1)

Amount $58 $64 Amount $57 $46

Growth Rate (10)% (1)% Growth Rate 24% 36%

Mix 11% 14% Mix 11% 10%

Segment Profit Segment Profit

Margin 2.99% 3.55% Margin 9.13% 10.86%

(1) Refer to definitions for an explanation of segment profit.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

ASSET MANAGEMENT ANALYSIS

First Quarter

2008 2007

Receivable Days 22.2 16.9

Days Inventory on Hand 28 30

Debt to Total Capital 35% 26%

Net Debt to Capital 26% 11%

Return on Equity 16.7% 12.8%

Non-GAAP Return on Equity 17.5% 13.6%

Return on Invested Capital 6.57% 5.14%

Non-GAAP Return on Invested Capital 7.50% 5.93%

Effective Tax Rate from Continuing

Operations 32.2% 29.5%

Non-GAAP Effective Tax Rate from

Continuing Operations 32.3% 29.4%

Refer to the GAAP / Non-GAAP Reconciliation for Non-GAAP calculations.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

SCHEDULE OF NOTABLE ITEMS

(in millions, except per Common First Quarter

Share amounts) 2008 2007

Special Items

Restructuring charges $(14.8) $(11.8)

Acquisition integration charges (5.4) (1.9)

Litigation and other (2.3) (8.4)

Total special items $(22.5) $(22.1)

Tax benefit 7.7 5.8

Special items, net of tax $(14.8) $(16.3)

Decrease to diluted EPS from

continuing operations $(0.04) $(0.04)

Impairment Charges and Other

Impairment charges and other $0.2 $(1.7)

Tax (expense) / benefit (0.1) 0.6

Net impairment charges and other,

net of tax $0.1 $(1.1)

Decrease to diluted EPS from

continuing operations $- $-

Weighted Average Number of Diluted

Shares Outstanding 370.2 413.0

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

First Quarter 2008

Impairment

(in millions, except per Common Special Charges and

Share amounts) GAAP Items Other Non-GAAP

Operating Earnings

Amount $490 $23 - $512

Growth Rate 9% 8%

Provision for Income Taxes $144 $8 - $151

Earnings from Continuing Operations

Amount $303 $15 - $318

Growth Rate 4% 3%

Diluted EPS from Continuing

Operations

Amount $0.82 $0.04 - $0.86

Growth Rate 15% 15%

First Quarter 2007

Impairment

Special Charges and

GAAP Items Other Non-GAAP

Operating Earnings

Amount $451 $22 $2 $475

Growth Rate 23% 23%

Provision for Income Taxes $122 $6 $1 $128

Earnings from Continuing Operations

Amount $291 $16 $1 $309

Growth Rate 24% 24%

Diluted EPS from Continuing

Operations

Amount $0.71 $0.04 - $0.75

The sum of the components may not equal the total due to rounding

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

First Quarter

(in millions) 2008 2007

GAAP Return on Equity 16.7% 12.8%

Non-GAAP Return on Equity

Net earnings $301.8 $270.7

Special items, net of tax, in

continuing operations 14.8 16.3

Special items, net of tax, in

discontinued operations - 1.4

Adjusted net earnings $316.6 $288.4

Annualized $1,266.4 $1,153.6

Divided by average shareholders'

equity (1) $7,222.6 $8,455.9

Non-GAAP return on equity 17.5% 13.6%

First Quarter

(in millions) 2008 2007

GAAP Return on Invested Capital 6.57% 5.14%

Non-GAAP Return on Invested Capital

Net earnings $301.8 $270.7

Special items, net of tax, in

continuing operations 14.8 16.3

Special items, net of tax, in

discontinued operations - 1.4

Interest expense and other, net of tax 27.5 23.6

Adjusted net earnings $344.1 $312.0

Annualized $1,376.4 $1,248.0

Divided by average total invested

capital (2) $18,365.9 $21,050.9

Non-GAAP return on invested capital 7.50% 5.93%

(1) The average shareholders' equity shown above is calculated using the

average of the prior years' fourth quarter and the current quarter.

(2) The average total invested capital shown above is calculated using the

average of the prior years' quarter and the current quarter. Total

invested capital is calculated as the sum of the current portion of

long-term obligations and other short-term borrowings, long-term

obligations, current portion of long-term obligations and other

short-term borrowings in discontinued operations, long-term

obligations in discontinued operations, total shareholders' equity and

unrecorded goodwill. Unrecorded goodwill is $7.5 billion and

$9.7 billion, respectively, for the September 30, 2007 and 2006

calculations. Current portion of long-term obligations and other

short-term borrowings in discontinued operations, and long-term

obligations in discontinued operations were $59.2 million and $46.6

million at June 30, 2006 and September 30, 2006, respectively.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

First Quarter

(in millions) 2008 2007

GAAP Effective Tax Rate from Continuing

Operations 32.2% 29.5%

Non-GAAP Effective Tax Rate from

Continuing Operations

Earnings before income taxes and

discontinued operations $446.9 $413.4

Special items 22.5 22.1

Adjusted earnings before income

taxes and discontinued operations $469.4 $435.5

Provision for income taxes $143.7 $122.0

Special items tax benefit 7.7 5.8

Adjusted provision for income taxes $151.4 $127.8

Non-GAAP effective tax rate from

continuing operations 32.3% 29.4%

First Quarter

2008 2007

Debt to Total Capital 35% 26%

Net Debt to Capital

Current portion of long-term

obligations and other short-term

borrowings $386.8 $280.1

Long-term obligations, less current

portion and other short-term

borrowings 3,347.5 2,616.0

Debt $3,734.3 $2,896.1

Cash and equivalents (1,289.6) (1,444.1)

Short-term investments available for sale - (456.5)

Net debt $2,444.7 $995.5

Total shareholders' equity $7,068.2 $8,421.1

Capital $9,512.9 $9,416.6

Net debt to capital 26% 11%

Forward-Looking Non-GAAP Financial Measures

The Company presents non-GAAP operating earnings, non-GAAP earnings from

continuing operations, non-GAAP return on equity and non-GAAP effective

tax rate from continuing operations (and presentations derived from these

financial measures) on a forward-looking basis. The most directly

comparable forward-looking GAAP measures are operating earnings, earnings

from continuing operations, return on equity and effective tax rate from

continuing operations. The Company is unable to provide a quantitative

reconciliation of these forward-looking non-GAAP measures to the most

comparable forward-looking GAAP measures because the Company cannot

reliably forecast special items and impairment charges and other, which

are difficult to predict and estimate and are primarily dependent on

future events. Please note that the unavailable reconciling items could

significantly impact the Company's future financial results.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

DEFINITIONS

GAAP

Debt: long-term obligations plus short-term borrowings

Debt to Total Capital: debt divided by (debt plus total shareholders'

equity)

Diluted EPS from Continuing Operations: earnings from continuing

operations divided by diluted weighted average shares outstanding

Effective Tax Rate from Continuing Operations: provision for income

taxes divided by earnings before income taxes and discontinued operations

Operating Cash Flow: net cash provided by / (used in) operating

activities from continuing operations

Segment Profit: segment revenue minus (segment cost of products sold and

segment selling, general and administrative expenses)

Segment Profit Margin: segment profit divided by revenue

Segment Profit Mix: segment profit divided by total segment profit for

all operating segments

Return on Equity: annualized net earnings divided by average

shareholders' equity

Return on Invested Capital: annualized net earnings divided by (average

total shareholders' equity plus debt plus unrecorded goodwill)

Revenue Mix: segment revenue divided by total revenue for all segments

NON-GAAP

Economic Profit: segment net operating earnings, after-tax minus

(tangible capital multiplied by weighted average cost of capital);

Tangible Capital is the quarterly average calculated as total assets

allocated to the segment less (total liabilities allocated to the segment,

goodwill and intangibles, cash and equivalents and short term investments

available for sale)

Economic Profit Margin: economic profit divided by revenue

Net Debt to Capital: net debt divided by (net debt plus total

shareholders' equity)

Net Debt: debt minus (cash and equivalents and short-term investments

available for sale)

Non-GAAP Diluted EPS from Continuing Operations: non-GAAP earnings from

continuing operations divided by diluted weighted average shares

outstanding

Non-GAAP Diluted EPS from Continuing Operations Growth Rate: (current

period non-GAAP diluted EPS from continuing operations minus prior period

non-GAAP diluted EPS from continuing operations) divided by prior period

non-GAAP diluted EPS from continuing operationsdical Products sector will be a key growth driver, and we also expect to benefit from new generic pharmaceutical launches and improvements in operational performance."

Cardinal Health separately announced that Mark W. Parrish, who led the Healthcare Supply Chain Services sector, is leaving the company. Chief Financial Officer Jeffrey W. Henderson will assume the additional role of interim CEO of Healthcare Supply Chain Services until a permanent successor is named.

Q1 FY08 Summary

Q1 FY08 Q1 FY07 Y/Y

Revenue $22 billion $21 billion 5%

Operating Earnings $490 million $451 million 9%

Non-GAAP Operating

Earnings(2) $512 million $475 million 8%

Earnings from

Continuing

Operations $303 million $291 million 4%

Non-GAAP Earnings

from Continuing

Operations(3) $318 million $309 million 3%

Diluted EPS from

Continuing Operations $0.82 $0.71 15%

Non-GAAP Diluted EPS

from Continuing

Operations $0.86 $0.75 15%

First quarter segment results:

Healthcare Supply Chain Services Sector

-- Revenue for the Healthcare Supply Chain Services-Pharmaceutical segment

grew 4 percent during the quarter to $19.2 billion, with sales to non-

bulk customers declining 2 percent to $10.3 billion and sales to bulk

customers increasing 11 percent to $8.9 billion. Segment profit

increased 6 percent to $305 million, benefiting from the $14 million

adjustment of a vendor related reserve, and partially dampened by sales

mix, generic market conditions, nuclear pharmacy pricing pressure and a

moderation in the sale of prescription drugs.

Non-GAAP Earnings from Continuing Operations: earnings from continuing

operations excluding special items and impairment charges and other, both

net of tax

Non-GAAP Earnings from Continuing Operations Growth Rate: (current

period non-GAAP earnings from continuing operations minus prior period

non-GAAP earnings from continuing operations) divided by prior period

non-GAAP earnings from continuing operations

Non-GAAP Effective Tax Rate from Continuing Operations: (provision for

income taxes adjusted for special items) divided by earnings before income

taxes and discontinued operations adjusted for special items)

Non-GAAP Operating Earnings: operating earnings excluding special items

and impairment charges and other

Non-GAAP Operating Earnings Growth Rate: (current period non-GAAP

operating earnings minus prior period non-GAAP operating earnings) divided

by prior period non-GAAP operating earnings

Non-GAAP Return on Equity: (annualized current period net earnings plus

special items minus special items tax benefit) divided by average

shareholders' equity

Non-GAAP Return on Invested Capital: (annualized net earnings plus

special items minus special items tax benefit plus interest expense and

other, net of tax) divided by (average total shareholders' equity plus

debt plus unrecorded goodwill)

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

(in millions)

HEALTHCARE SUPPLY CHAIN SERVICES First Quarter Fiscal 2008

Pharmaceutical July August September Total

Economic Profit Margin

Segment profit $305.4

Effective tax rate from

continuing operations 35.9%

Net operating earnings, after-tax

(NOPAT) $195.6

Total assets $11,591.6 $11,719.5 $11,574.7

Less: assets from

discontinued operations - - -

Less: accounts payable 7,350.3 7,948.1 8,344.0

Less: other accrued

liabilities 1,211.8 1,173.2 1,130.7

Less: liabilities from

businesses held for sale - - -

Less: deferred income taxes

and other liabilities 88.8 86.7 35.0

Less: goodwill and other

intangibles, net 1,351.2 1,344.9 1,345.2

Less: cash and equivalents 65.4 51.4 38.3

Less: short-term investments

available for sale - - -

Tangible capital $1,524.1 $1,115.2 $681.5 $1,106.9

Multiplied by weighted average

cost of capital 2.3%

Capital charge $25.5

Economic profit $170.1

Revenue $19,220.8

Economic profit margin 0.88%

(in millions)

HEALTHCARE SUPPLY CHAIN SERVICES First Quarter Fiscal 2007

Pharmaceutical July August September Total

Economic Profit Margin

Segment profit $288.7

Effective tax rate from

continuing operations 35.1%

Net operating earnings, after-tax

(NOPAT) $187.5

Total assets $11,549.8 $12,206.9 $11,620.0

Less: assets from

discontinued operations 107.5 109.4 -

Less: accounts payable 7,488.3 8,027.1 8,101.0

Less: other accrued

liabilities 1,069.5 1,088.6 1,016.3

Less: liabilities from

businesses held for sale - - -

Less: deferred income taxes

and other liabilities 82.1 82.1 71.0

Less: goodwill and other

intangibles, net 1,354.5 1,361.8 1,332.4

Less: cash and equivalents 42.2 57.4 75.0

Less: short-term investments

available for sale - - -

Tangible capital $1,405.7 $1,480.5 $1,024.3 $1,303.5

Multiplied by weighted average

cost of capital 2.3%

Capital charge $30.0

Economic profit $157.5

Revenue $18,532.8

Economic profit margin 0.85%

(1) Tangible Capital is a quarterly average calculated as total assets

allocated to the segment less (total liabilities allocated to the

segment, goodwill and intangibles, cash and equivalents and short term

investments available for sale)

(2) The sum of the components may not equal the total due to rounding

(3) Healthcare Supply Chain Services - Pharmaceutical Tangible Capital

calculated for both current and prior fiscal year includes an

allocation of payables previously held at Corporate to more accurately

reflect the payable balance of the segment.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

(in millions)

HEALTHCARE SUPPLY CHAIN SERVICES First Quarter Fiscal 2008

Medical July August September Total

Economic Profit Margin

Segment profit $57.5

Effective tax rate from continuing

operations 29.3%

Net operating earnings, after-tax

(NOPAT) $40.6

Total assets $2,481.8 $2,515.4 $2,552.6

Less: assets from discontinued

operations - - -

Less: accounts payable 539.0 581.0 615.0

Less: other accrued liabilities 67.0 71.7 53.5

Less: liabilities from businesses

held for sale - - -

Less: deferred income taxes and

other liabilities 54.6 55.4 61.3

Less: goodwill and other

intangibles, net 386.0 385.9 388.2

Less: cash and equivalents 24.4 25.7 21.6

Less: short-term investments

available for sale - - -

Tangible capital $1,410.8 $1,395.7 $1,413.0 $1,406.5

Multiplied by weighted average

cost of capital 2.3%

Capital charge $32.3

Economic profit $8.3

Revenue $1,920.7

Economic profit margin 0.43%

HEALTHCARE SUPPLY CHAIN SERVICES First Quarter Fiscal 2007

Medical July August September Total

Economic Profit Margin

Segment profit $64.1

Effective tax rate from continuing

operations 29.8%

Net operating earnings, after-tax

(NOPAT) $45.0

Total assets $2,442.1 $2,437.6 $2,456.6

Less: assets from discontinued

operations - - -

Less: accounts payable 534.8 478.7 510.4

Less: other accrued liabilities 71.1 78.1 49.4

Less: liabilities from businesses

held for sale - - -

Less: deferred income taxes and

other liabilities 58.2 58.1 53.0

Less: goodwill and other

intangibles, net 378.8 377.8 377.7

Less: cash and equivalents 2.9 3.0 4.1

Less: short-term investments

available for sale - - -

Tangible capital $1,396.3 $1,441.9 $1,462.0 $1,433.4

Multiplied by weighted average

cost of capital 2.3%

Capital charge $33.0

Economic profit $12.0

Revenue $1,806.1

Economic profit margin 0.66%

(1) Tangible Capital is a quarterly average calculated as total assets

allocated to the segment less (total liabilities allocated to the

segment, goodwill and intangibles, cash and equivalents and short term

investments available for sale)

(2) The sum of the components may not equal the total due to rounding

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

(in millions)

CLINICAL AND MEDICAL PRODUCTS First Quarter Fiscal 2008

Clinical Technologies and Services July August September Total

Economic Profit Margin

Segment profit $98.3

Effective tax rate from continuing

operations 24.2%

Net operating earnings, after-tax

(NOPAT) $74.5

Total assets $4,375.8 $4,301.6 $4,262.2

Less: assets from discontinued

operations - - -

Less: accounts payable 82.0 63.3 62.3

Less: other accrued liabilities 575.9 592.2 250.3

Less: liabilities from businesses

held for sale - - -

Less: deferred income taxes and

other liabilities 238.4 238.9 474.5

Less: goodwill and other

intangibles, net 2,171.8 2,206.2 2,180.4

Less: cash and equivalents 217.3 195.5 175.4

Less: short-term investments

available for sale - - -

Tangible capital $1,090.4 $1,005.5 $1,119.3 $1,071.7

Multiplied by weighted average

cost of capital 2.3%

Capital charge $24.6

Economic profit $49.9

Revenue $648.9

Economic profit margin 7.69%

CLINICAL AND MEDICAL PRODUCTS First Quarter Fiscal 2007

Clinical Technologies and Services July August September Total

Economic Profit Margin

Segment profit $51.5

Effective tax rate from continuing

operations 29.2%

Net operating earnings, after-tax

(NOPAT) $36.5

Total assets $3,916.6 $4,012.1 $3,880.1

Less: assets from discontinued

operations - - -

Less: accounts payable 91.2 84.7 79.4

Less: other accrued liabilities 277.2 287.9 223.4

Less: liabilities from businesses

held for sale - - -

Less: deferred income taxes and

other liabilities 577.6 577.0 475.1

Less: goodwill and other

intangibles, net 2,085.9 2,083.4 2,174.3

Less: cash and equivalents 66.2 60.1 82.6

Less: short-term investments

available for sale - - 0.3

Tangible capital $818.5 $919.0 $845.0 $860.8

Multiplied by weighted average cost

of capital 2.3%

Capital charge $19.8

Economic profit $16.7

Revenue $594.5

Economic profit margin 2.81%

(1) Tangible Capital is a quarterly average calculated as total assets

allocated to the segment less (total liabilities allocated to the

segment, goodwill and intangibles, cash and equivalents and short term

investments available for sale)

(2) The sum of the components may not equal the total due to rounding

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

(in millions)

CLINICAL AND MEDICAL PRODUCTS First Quarter Fiscal 2008

Medical Products and Technologies July August September Total

Economic Profit Margin

Segment profit $56.9

Effective tax rate from continuing

operations 13.1%

Net operating earnings, after-tax

(NOPAT) $49.4

Total assets $3,645.8 $3,661.3 $3,601.6

Less: assets from discontinued

operations - - -

Less: accounts payable 123.8 127.9 123.1

Less: other accrued liabilities 270.7 266.5 207.0

Less: liabilities from businesses

held for sale - - -

Less: deferred income taxes and

other liabilities 203.5 203.9 180.0

Less: goodwill and other

intangibles, net 1,945.4 1,952.2 1,910.5

Less: cash and equivalents 445.7 469.5 503.0

Less: short-term investments

available for sale - - -

Tangible capital $656.7 $641.3 $678.0 $658.7

Multiplied by weighted average cost

of capital 2.3%

Capital charge $15.2

Economic profit $34.2

Revenue $623.2

Economic profit margin 5.49%

CLINICAL AND MEDICAL PRODUCTS First Quarter Fiscal 2007

Medical Products and Technologies July August September Total

Economic Profit Margin

Segment profit $46.0

Effective tax rate from continuing

operations 7.0%

Net operating earnings, after-tax

(NOPAT) $42.8

Total assets $1,455.5 $1,453.1 $1,506.0

Less: assets from discontinued

operations - - -

Less: accounts payable 107.3 88.5 118.3

Less: other accrued liabilities 119.3 124.7 89.1

Less: liabilities from businesses

held for sale - - -

Less: deferred income taxes and

other liabilities 46.2 46.6 44.4

Less: goodwill and other

intangibles, net 454.8 453.7 453.4

Less: cash and equivalents 136.9 144.9 197.8

Less: short-term investments

available for sale - - -

Tangible capital $591.0 $594.7 $603.0 $596.2

Multiplied by weighted average cost

of capital 2.3%

Capital charge $13.7

Economic profit $29.1

Revenue $423.6

Economic profit margin 6.87%

(1) Tangible Capital is a quarterly average calculated as total assets

allocated to the segment less (total liabilities allocated to the

segment, goodwill and intangibles, cash and equivalents and short term

investments available for sale)

(2) The sum of the components may not equal the total due to rounding

>-- Revenue for the Healthcare Supply Chain Services-Medical segment

increased 6 percent to $1.9 billion, with improving demand in new and

existing hospital, laboratory and ambulatory customers. Segment profit

declined 10 percent to $58 million due primarily to a previously

disclosed change in corporate cost allocation that reduced profit by 9

percentage points. The company continues to expect a return to

profitable growth in the segment later this fiscal year and made

progress against that goal during the quarter with continued

improvements in customer service operations and strength in its

hospital supply business.

Clinical and Medical Products Sector

-- Revenue for the Clinical Technologies and Services segment increased 9

percent to $649 million from continued strong demand for Alaris(R) and

Pyxis(R) products. Segment profit increased 91 percent to $98 million

with good sales momentum from the fourth quarter in dispensing products

and a favorable mix of product revenue. The segment also benefited

from a favorable comparison to the prior-year period where a $13.5

million charge was taken for the recall of Alaris SE products.

-- Revenue for the Medical Products and Technologies segment increased 47

percent to $623 million, led by strong sales of new products and the

addition of VIASYS Healthcare, acquired by Cardinal Health in June.

Segment profit grew 24 percent to $57 million and benefited from the

integration of VIASYS, which remains ahead of the company's schedule.

Additional first quarter and recent highlights include:

-- Repurchasing approximately $600 million of Cardinal Health shares

during the quarter and announcing an additional two-year, $2 billion

repurchase authorization in August.

-- Introducing several new products, including Esteem Micro surgical

gloves made from a proprietary, latex-free material; new Presource(R)

surgical kits for cosmetic procedures and to help prevent central line

infections; the LTV 1150 ventilator for home use; and CareFusion(TM)

Transfusion Verification with Rapid Infusion for use in hospital

emergency rooms.

-- Signing an exclusive marketing agreement with Sentry Data Systems to

offer eligible hospitals and health care facilities technology services

that help cost-efficiently extend care to the uninsured and

underinsured under the federal 340B Drug Pricing program.

-- Launching the $1 million, Cardinal Health Patient Safety Challenge

Grant program to support initiatives to improve safety in U.S.

hospitals. More than 700 hospitals responded to the challenge and are

competing for 30 to 40 grants.

-- Breaking ground on a $50 million expansion of the company's

headquarters in Ohio to consolidate its Healthcare Supply Chain

Services businesses.

Outlook

Cardinal Health reiterated its fiscal 2008 guidance range of $3.95 to $4.15 for non-GAAP diluted EPS from continuing operations. In addition, the company revised the outlook for its Healthcare Supply Chain Services- Pharmaceutical segment, which is now expected to grow profit during the year below its long term goal of 7 to 10 percent growth. Cardinal Health previously said profit growth for this segment was expected to be in line with the long term range.

Conference Call

Cardinal Health will host a conference call and webcast at 8:30 a.m. EST to discuss the results. To access the call and corresponding slide presentation, go to the Investor page at http://www.cardinalhealth.com. The conference call may also be accessed by calling 617-213-4857, passcode 21392080. An audio replay will be available until 11:30 p.m. EST on Nov. 7 at 617-801-6888, passcode 50524989. A transcript and audio replay will also be available at http://www.cardinalhealth.com.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is an $87 billion, global company serving the health care industry with products and services that help hospitals, physician offices and pharmacies reduce costs, improve safety, productivity and profitability, and deliver better care to patients. With a focus on making supply chains more efficient, reducing hospital-acquired infections and breaking the cycle of harmful medication errors, Cardinal Health develops market leading technologies, including Alaris(R) IV pumps, Pyxis(R) automated dispensing systems, MedMined(TM) infection surveillance services and the CareFusion(TM) patient identification system. The company also manufactures medical and surgical products and is one of the largest distributors of pharmaceuticals and medical supplies worldwide. Ranked No. 19 on the Fortune 500 and No. 1 in its sector on Fortune's ranking of Most Admired firms, Cardinal Health employs more than 40,000 people on five continents. More information about the company may be found at http://www.cardinalhealth.com.

(1) Non-GAAP diluted EPS from continuing operations: Non-GAAP earnings

from continuing operations divided by diluted weighted average shares

outstanding.

(2) Non-GAAP operating earnings: Operating earnings excluding special

items and impairment charges and other.

(3) Non-GAAP earnings from continuing operations: Earnings from

continuing operations excluding special items and impairment charges

and other, both net of tax.

A reconciliation of the differences between these non-GAAP financial measures and their most directly comparable GAAP financial measures is provided in the attached tables and at http://www.cardinalhealth.com.

This news release contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: competitive pressures in its various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; uncertainties relating to timing of generic introductions and the frequency or rate of branded pharmaceutical price appreciation or generic pharmaceutical price deflation; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by any regulatory authority or any legal and administrative proceedings; successful integration of Cardinal Health and VIASYS Healthcare and the ability to achieve synergies from the acquisition; and general economic and market conditions. This news release reflects management's views as of Nov. 5, 2007. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)

(in millions, except per Common Share First Quarter

amounts) 2008 2007 % Change

Revenue $21,973.4 $20,937.5 5%

Cost of products sold 20,631.2 19,737.0 5%

Gross margin $1,342.2 $1,200.5 12%

Selling, general and administrative

expenses 830.1 725.5 14%

Impairment charges and other (0.2) 1.7 N.M.

Special items:

Restructuring charges 14.8 11.8 N.M.

Acquisition integration charges 5.4 1.9 N.M.

Litigation and Other 2.3 8.4 N.M.

Operating earnings $489.8 $451.2 9%

Interest expense and other 42.9 37.8 13%

Earnings before income taxes and

discontinued operations $446.9 $413.4 8%

Provision for income taxes 143.7 122.0 18%

Earnings from continuing operations $303.2 $291.4 4%

Loss from discontinued operations

(net of tax (expense) / benefit of

$(2.0) and $19.8 for the first quarter

of fiscal 2008 and 2007, respectively) (1.4) (20.7) N.M.

Net earnings $301.8 $270.7 11%

Basic Earnings (Loss) per Common

Share:

Continuing operations $0.83 $0.72 15%

Discontinued operations - (0.05) N.M.

Net basic earnings per Common Share $0.83 $0.67 24%

Diluted Earnings (Loss) per Common

Share:

Continuing operations $0.82 $0.71 15%

Discontinued operations - (0.05) N.M.

Net diluted earnings per Common Share $0.82 $0.66 24%

Weighted Average Number of Shares

Outstanding:

Basic 363.0 404.5

Diluted 370.2 413.0

CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

September 30, June 30,

(in millions) 2007 2007

Assets

Cash and equivalents $1,289.6 $1,308.8

Short-term investments available for

sale - 132.0

Trade receivables, net 4,904.7 4,714.4

Current portion of net investment in

sales-type leases 369.1 354.8

Inventories 7,150.8 7,383.2

Prepaid expenses and other 619.0 651.3

Total current assets $14,333.2 $14,544.5

Property and equipment, net 1,683.1 1,647.0

Net investment in sales-type leases,

less current portion 830.5 820.7

Goodwill and other intangibles, net 5,822.8 5,860.9

Other assets 328.5 280.7

Total assets $22,998.1 $23,153.8

Liabilities and Shareholders' Equity

Current portion of long-term

obligations and other short-term

borrowings $386.8 $16.0

Accounts payable 9,099.0 9,162.2

Other accrued liabilities 1,623.0 2,247.3

Liabilities from businesses held for

sale and discontinued operations 5.2 34.2

Total current liabilities $11,114.0 $11,459.7

Long-term obligations, less current

portion and other short-term borrowings 3,347.5 3,457.3

Deferred income taxes and other

liabilities 1,468.4 859.9

Total shareholders' equity 7,068.2 7,376.9

Total liabilities and shareholders'

equity $22,998.1 $23,153.8

CARDINAL HEALTH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

First Quarter

(in millions) 2008 2007

Cash Flows From Operating Activities:

Net earnings $301.8 $270.7

Loss from discontinued operations 1.4 20.7

Earnings from continuing operations $303.2 $291.4

Adjustments to reconcile earnings

from continuing operations to net cash

provided by operating activities:

Depreciation and amortization 94.9 78.4

Asset impairments (0.2) 1.7

Equity compensation 26.1 37.4

Provision for bad debts 5.0 5.4

Change in operating assets and

liabilities, net of effects from

acquisitions:

(Increase) / decrease in trade
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SOURCE Cardinal Health, Inc.
Copyright©2007 PR Newswire.
All rights reserved

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