Cardinal Health Reports Fiscal 2013 Second-Quarter Results

- Operating earnings increase 13 percent to $506 million, or 11 percent to $525 million on a non-GAAP basis(1)

- Diluted earnings per share from continuing operations increase 16 percent to $0.88, or 15 percent to $0.93 on a non-GAAP basis

- Fiscal 2013 non-GAAP earnings per share guidance tightened to $3.42 to $3.50, representing top half of prior range

Feb 05, 2013, 07:00 ET from Cardinal Health

DUBLIN, Ohio, Feb. 5, 2013 /PRNewswire/ -- Cardinal Health today reported fiscal year 2013 second-quarter revenue of $25.2 billion and a 15 percent increase in non-GAAP diluted earnings per share (EPS) from continuing operations to $0.93.

In addition, the company tightened its fiscal 2013 outlook for non-GAAP diluted EPS from continuing operations to $3.42 to $3.50, which represents the top half of the prior guidance range.

"We've now completed a strong first half to our fiscal 2013 with a good second-quarter performance. While continued brand-to-generic conversions and the previously announced movement of the Express Scripts contract drove a revenue decline in the Pharmaceutical segment, excellent performance from our generic programs and new customer wins fueled profit gains," said George Barrett, chairman and chief executive officer of Cardinal Health. "And, despite continued procedural softness in the industry, our Medical segment reported double-digit growth this quarter. With our performance in the first six months of fiscal 2013, we are now guiding to the top half of our prior non-GAAP EPS range."

Q2 FY13 SUMMARY


Q2 FY13

Q2 FY12

Y/Y

Revenue

$25.2 billion

$27.1 billion

(7%)





 

Operating Earnings

 

$506 million

 

$449 million

 

13%

Non-GAAP Operating Earnings

 

$525 million

 

$475 million

 

11%





Earnings from Continuing Operations

 

$303 million

 

$264 million

 

15%

Non-GAAP Earnings from Continuing Operations

 

$317 million

 

$281 million

 

13%





Diluted EPS from Continuing Operations

 

$0.88

 

$0.76

 

16%

Non-GAAP Diluted EPS from Continuing Operations

 

$0.93

 

$0.81

 

15%

SEGMENT RESULTS

Pharmaceutical segment

Revenue for the Pharmaceutical segment decreased 8 percent to $22.7 billion due to the previously announced non-renewal of the Express Scripts contract as well as expected conversions from branded pharmaceuticals to lower-priced generics. The decline was partially offset by revenues from new pharmaceutical distribution customers. Segment profit increased 12 percent to $441 million, largely from overall strong performance from generics programs and benefits of customer and product mix within pharmaceutical distribution, partially offset by the impact of continued market softness in our nuclear business.


Q2 FY13

Q2 FY12

Y/Y

Revenue

$22.7 billion

$24.7 billion

(8%)

Segment Profit

$441 million

$394 million

12%

Medical segment

Revenue for the Medical segment increased 3 percent to $2.5 billion, reflecting the benefits of last year's acquisition of FutureMed and one additional sales day year-on-year. Excluding these drivers, year-on-year revenue growth was flat, reflecting continued softness in key U.S. markets, particularly as it relates to procedural volume. Segment profit increased 11 percent to $94 million driven by the favorable impact of commodities, acquisitions and preferred product mix. The increase was partially offset by customer mix and continued volume softness.

The overall profit impact of our Medical Business Transformation for the quarter was slightly negative, including year-over-year incremental depreciation and program expenses, realized benefits, and a $5 million favorable out-of-period adjustment as part of continued cleanup from the conversion to the new platform.


Q2 FY13

Q2 FY12

Y/Y

Revenue

$2.5 billion

$2.4 billion

3%

Segment Profit

$94 million

$85 million

11%

ADDITIONAL SECOND-QUARTER AND RECENT HIGHLIGHTS

  • Retained the No. 1 slot in the Gartner Fourth Annual Healthcare Supply Chain Top 25 ranking
  • Established Cardinal Health Specialty Solutions pathways program with Blue Cross Blue Shield of Louisiana and expanded Cardinal Health Specialty Solutions pathways program with Aetna to include oncologists in Michigan
  • Launched Cardinal Health Specialty Solutions VitalPath™ Integrated Dispensing Solution, VitalSource™ GPO Regimen Analyzer, and PathWare™ Decision Transaction Solutions to help improve physician practice efficiencies
  • Named one of 40 of the 2013 Best Companies for Leaders by Chief Executive magazine
  • Named one of the 2012 Working Mother 100 Best Companies by Working Mother magazine

CONFERENCE CALL

Cardinal Health will host a webcast and conference call today at 8:30 a.m. Eastern to discuss second-quarter results. To access the call and corresponding slide presentation, go to the Investors page at cardinalhealth.com. The call also can be accessed by dialing 224.357.2209, using conference ID 81032416.

There is no pre-registration for the call; however, participants are advised to dial into the call at least 10 minutes prior to the start time. Presentation slides and an audio replay will be archived on the website after the conclusion of the meeting. The audio replay will be available until March 5 by dialing 855.859.2056 or 404.537.3406, using conference ID 81032416.

UPCOMING EVENTS

  • Leerink Swann Global Healthcare Conference on Feb. 13 at 10:30 a.m. Eastern in New York
  • Cowen and Co. 33rd Annual Health Care Conference on March 5 at 8:40 a.m. Eastern in Boston
  • Barclays Global Healthcare Conference on March 13 at 9:30 a.m. Eastern in Miami

At these events, Cardinal Health will discuss the company's diverse products and services, company performance and strategies for continued growth. To access more details and live webcasts of these events, go to the Investors page at cardinalhealth.com. 

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $108 billion health care services company that improves the cost-effectiveness of health care. As the business behind health care, Cardinal Health helps pharmacies, hospitals, ambulatory surgery centers and physician offices focus on patient care while  reducing costs, enhancing efficiency and improving quality. Cardinal Health is an essential link in the health care supply chain, providing pharmaceuticals and medical products to more than 60,000 locations each day. The company is also a leading manufacturer of medical and surgical products, including gloves, surgical apparel and fluid management products. In addition, the company supports the growing diagnostic industry by supplying medical products to clinical laboratories and operating the nation's largest network of radiopharmacies that dispense products to aid in the early diagnosis and treatment of disease. Ranked #21 on the Fortune 500, Cardinal Health employs more than 30,000 people worldwide. More information about the company may be found at cardinalhealth.com and @CardinalHealth on Twitter.

1 See the attached tables for definitions of the non-GAAP financial measures presented in this news release and reconciliations of the differences between the non-GAAP financial measures and their most directly comparable GAAP financial measures.

Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, analyst presentations and financial information regarding Cardinal Health is routinely posted and accessible on the Investors page at cardinalhealth.com.

Cautions Concerning Forward-Looking Statements This news release contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue," "likely," and similar expressions, and include statements reflecting future results or guidance, statements of outlook and expense accruals. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include competitive pressures in Cardinal Health's various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships, including our relationships with CVS Caremark Corporation and Walgreen Co.; the timing of generic and branded pharmaceutical introductions and the frequency or rate of pharmaceutical price appreciation or deflation; uncertainties due to government health care reform including federal health care reform legislation; changes in the distribution patterns or reimbursement rates for health care products and services; the effects of any investigation or action by any regulatory authority; changes in the cost of commodities such as oil-based resins, cotton, latex and diesel fuel; and uncertainties concerning Cardinal Health's ability to achieve the expected benefits of its Medical segment's business transformation project. Cardinal Health is subject to additional risks and uncertainties described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports and exhibits to those reports. This news release reflects management's views as of Feb. 5, 2013. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.

 

Schedule 1

Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (Unaudited)

Second Quarter

(in millions, except per Common Share amounts)

2013

2012

% Change

Revenue

$

25,232

$

27,078

(7)

%

Cost of products sold

24,008

25,964

(8)

%

Gross margin

1,224

1,114

10

%

Operating expenses:

Distribution, selling, general and administrative expenses

699

640

9

%

Restructuring and employee severance

1

2

N.M.

Acquisition-related costs

25

22

N.M.

Impairments and loss on disposal of assets

5

1

N.M.

Litigation (recoveries)/charges, net

(12)

N.M.

Operating earnings

506

449

13

%

Other income, net

(4)

N.M.

Interest expense, net

27

23

18

%

Earnings before income taxes and discontinued operations

483

426

14

%

Provision for income taxes

180

162

11

%

Earnings from continuing operations

303

264

15

%

Loss from discontinued operations, net of tax

(2)

N.M.

Net earnings

$

303

$

262

16

%

Basic earnings/(loss) per Common Share:

Continuing operations

$

0.89

$

0.77

16

%

Discontinued operations

(0.01)

N.M.

Net basic earnings per Common Share

$

0.89

$

0.76

17

%

Diluted earnings/(loss) per Common Share:

Continuing operations

$

0.88

$

0.76

16

%

Discontinued operations

(0.01)

N.M.

Net diluted earnings per Common Share

$

0.88

$

0.75

17

%

Weighted-average number of Common Shares outstanding:

Basic

340

345

Diluted

343

349

 

Schedule 2

Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Statements of Earnings (Unaudited)

Year-to-Date

(in millions, except per Common Share amounts)

2013

2012

% Change

Revenue

$

51,121

$

53,870

(5)

%

Cost of products sold

48,739

51,672

(6)

%

Gross margin

2,382

2,198

8

%

Operating expenses:

Distribution, selling, general and administrative expenses

1,388

1,283

8

%

Restructuring and employee severance

6

5

N.M.

Acquisition-related costs

53

49

N.M.

Impairments and loss on disposal of assets

6

2

N.M.

Litigation (recoveries)/charges, net

(34)

(3)

N.M.

Operating earnings

963

862

12

%

Other (income)/expense, net

(12)

5

N.M.

Interest expense, net

53

46

14

%

Earnings before income taxes and discontinued operations

922

811

14

%

Provision for income taxes

347

310

12

%

Earnings from continuing operations

575

501

15

%

Loss from discontinued operations, net of tax

(2)

N.M.

Net earnings

$

575

$

499

15

%

Basic earnings/(loss) per Common Share:

Continuing operations

$

1.69

$

1.45

17

%

Discontinued operations

(0.01)

N.M.

Net basic earnings per Common Share

$

1.69

$

1.44

17

%

Diluted earnings/(loss) per Common Share:

Continuing operations

$

1.67

$

1.44

16

%

Discontinued operations

(0.01)

N.M.

Net diluted earnings per Common Share

$

1.67

$

1.43

17

%

Weighted-average number of Common Shares outstanding:

Basic

340

345

Diluted

344

349

 

Schedule 3

Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Balance Sheets

(in millions)

December 31, 2012

June 30, 2012

(Unaudited)

Assets

Current assets:

Cash and equivalents

$

2,255

$

2,274

Trade receivables, net

6,158

6,355

Inventories

8,452

7,864

Prepaid expenses and other

996

1,017

Total current assets

17,861

17,510

Property and equipment, net

1,475

1,551

Goodwill and other intangibles, net

4,428

4,392

Other assets

878

807

Total assets

$

24,642

$

24,260

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$

11,796

$

11,726

Current portion of long-term obligations and other short-term borrowings

474

476

Other accrued liabilities

1,932

1,972

Total current liabilities

14,202

14,174

Long-term obligations, less current portion

2,423

2,418

Deferred income taxes and other liabilities

1,475

1,424

Total shareholders' equity

6,542

6,244

Total liabilities and shareholders' equity

$

24,642

$

24,260

 

Schedule 4

Cardinal Health, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)

Second Quarter

Year-to-Date

(in millions)

2013

2012

2013

2012

Cash flows from operating activities:

Net earnings

$

303

$

262

$

575

$

499

Loss from discontinued operations, net of tax

2

2

Earnings from continuing operations

303

264

575

501

Adjustments to reconcile earnings from continuing operations to net cash provided by/(used in) operating activities:

Depreciation and amortization

88

78

176

156

Impairments and loss on disposal of assets

5

1

6

2

Share-based compensation

22

22

46

42

Provision for bad debts

8

1

9

2

Change in operating assets and liabilities, net of effects from acquisitions:

Decrease in trade receivables

299

236

228

167

Increase in inventories

(329)

(1,392)

(536)

(1,553)

Increase/(decrease) in accounts payable

(433)

708

31

1,118

Other accrued liabilities and operating items, net

(93)

(32)

(97)

(45)

Net cash provided by/(used in) operating activities

(130)

(114)

438

390

Cash flows from investing activities:

Acquisition of subsidiaries, net of cash acquired

(26)

(126)

(7)

Additions to property and equipment

(36)

(57)

(62)

(101)

Proceeds from maturities of held-to-maturity securities

48

25

71

35

Purchase of held-to-maturity securities and other investments

(11)

(11)

Net cash used in investing activities

(14)

(43)

(117)

(84)

Cash flows from financing activities:

Net change in short-term borrowings

27

9

17

4

Reduction of long-term obligations

(2)

(1)

(6)

(1)

Proceeds from issuance of Common Shares

25

14

26

11

Tax disbursements from share-based compensation

(10)

(4)

(12)

Dividends on Common Shares

(81)

(74)

(165)

(152)

Purchase of treasury shares

(200)

(300)

Net cash used in financing activities

(41)

(56)

(340)

(438)

Net decrease in cash and equivalents

(185)

(213)

(19)

(132)

Cash and equivalents at beginning of period

2,440

2,011

2,274

1,930

Cash and equivalents at end of period

$

2,255

$

1,798

$

2,255

$

1,798

 

Schedule 5

Cardinal Health, Inc. and Subsidiaries Total Company Business Analysis

Non-GAAP

Second Quarter

Second Quarter

(in millions)

2013

2012

2013

2012

Revenue

Amount

$

25,232

$

27,078

Growth rate

(7)

%

7

%

Operating earnings

Amount

$

506

$

449

$

525

$

475

Growth rate

13

%

31

%

11

%

21

%

Earnings from continuing operations

Amount

$

303

$

264

$

317

$

281

Growth rate

15

%

23

%

13

%

10

%

Non-GAAP

Year-to-Date

Year-to-Date

(in millions)

2013

2012

2013

2012

Revenue

Amount

$

51,121

$

53,870

Growth rate

(5)

%

8

%

Operating earnings

Amount

$

963

$

862

$

995

$

917

Growth rate

12

%

22

%

8

%

18

%

Earnings from continuing operations

Amount

$

575

$

501

$

598

$

537

Growth rate

15

%

(2)

%

11

%

10

%

Refer to the GAAP/Non-GAAP reconciliation for definitions and calculations supporting the Non-GAAP balances.

 

Schedule 6

Cardinal Health, Inc. and Subsidiaries Segment Business Analysis

Second Quarter

Second Quarter

(in millions)

2013

2012

(in millions)

2013

2012

Pharmaceutical

Medical

Revenue

Revenue

Amount

$

22,747

$

24,665

Amount

$

2,487

$

2,416

Growth rate

(8)

%

6

%

Growth rate

3

%

9

%

Mix

90

%

91

%

Mix

10

%

9

%

Segment profit

Segment profit

Amount

$

441

$

394

Amount

$

94

$

85

Growth rate

12

%

30

%

Growth rate

11

%

(18)

%

Mix

83

%

82

%

Mix

17

%

18

%

Segment profit margin

1.94

%

1.60

%

Segment profit margin

3.76

%

3.50

%

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the three months ended December 31, 2012 was $25,232 million, which included total segment revenue of $25,234 million and Corporate revenue of $(2) million. Total consolidated revenue for the three months ended December 31, 2011 was $27,078 million, which included total segment revenue of $27,081 million and Corporate revenue of $(3) million.  Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the three months ended December 31, 2012 were $506 million, which included total segment profit of $535 million and Corporate costs of $(29) million. Total consolidated operating earnings for the three months ended December 31, 2011 were $449 million, which included total segment profit of $479 million and Corporate costs of $(30) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs, impairments and loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments. Medical segment profit includes a $5 million favorable out-of-period adjustment to reflect certain vendor chargeback billings that were delayed when we implemented our medical business transformation.

 

Schedule 7

Cardinal Health, Inc. and Subsidiaries Segment Business Analysis

Year-to-Date

Year-to-Date

(in millions)

2013

2012

(in millions)

2013

2012

Pharmaceutical

Medical

Revenue

Revenue

Amount

$

46,244

$

49,083

Amount

$

4,879

$

4,796

Growth rate

(6)

%

8

%

Growth rate

2

%

10

%

Mix

90

%

91

%

Mix

10

%

9

%

Segment profit

Segment profit

Amount

$

841

$

757

Amount

$

168

$

164

Growth rate

11

%

24

%

Growth rate

3

%

(12)

%

Mix

83

%

82

%

Mix

17

%

18

%

Segment profit margin

1.82

%

1.54

%

Segment profit margin

3.44

%

3.41

%

Refer to definitions for an explanation of calculations.

Total consolidated revenue for the six months ended December 31, 2012 was $51,121 million, which included total segment revenue of $51,123 million and Corporate revenue of $(2) million. Total consolidated revenue for the six months ended December 31, 2011 was $53,870 million, which included total segment revenue of $53,879 million and Corporate revenue of $(9) million.  Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the six months ended December 31, 2012 were $963 million, which included total segment profit of $1,009 million and Corporate costs of $(46) million. Total consolidated operating earnings for the six months ended December 31, 2011 were $862 million, which included total segment profit of $921 million and Corporate costs of $(59) million. Corporate includes, among other things, restructuring and employee severance, acquisition-related costs, impairments and loss on disposal of assets, litigation (recoveries)/charges, net and certain investment spending that are not allocated to the segments. Medical segment profit includes an $8 million favorable out-of-period adjustment to reflect certain vendor chargeback billings that were delayed when we implemented our medical business transformation. The $5 million out-of-period adjustment recorded during the three months ended December 31, 2012 included $2 million related to the three months ended September 30, 2012.

 

Schedule 8

Cardinal Health, Inc. and Subsidiaries Schedule of Notable Items

Second Quarter

Year-to-Date

(in millions, except per Common Share amounts)

2013

2012

2013

2012

Restructuring and employee severance

$

(1)

$

(2)

$

(6)

$

(5)

Tax benefit

1

1

2

2

Restructuring and employee severance, net of tax

$

$

(1)

$

(4)

$

(3)

Decrease to diluted EPS from continuing operations

$

$

$

(0.01)

$

(0.01)

Acquisition-Related Costs

Amortization of acquisition-related intangible assets

$

(22)

$

(19)

$

(43)

$

(38)

Tax benefit

8

7

15

14

Amortization of acquisition-related intangible assets, net of tax

$

(14)

$

(12)

$

(28)

$

(24)

Decrease to diluted EPS from continuing operations

$

(0.04)

$

(0.03)

$

(0.08)

$

(0.07)

Other acquisition-related costs

$

(4)

$

(3)

$

(10)

$

(12)

Tax benefit

1

1

3

4

Other acquisition-related costs, net of tax

$

(3)

$

(2)

$

(7)

$

(8)

Decrease to diluted EPS from continuing operations

$

(0.01)

$

(0.01)

$

(0.02)

$

(0.02)

Total acquisition-related costs1

$

(25)

$

(22)

$

(53)

$

(49)

Tax benefit1

9

8

19

17

Total acquisition-related costs, net of tax1

$

(16)

$

(14)

$

(34)

$

(32)

Decrease to diluted EPS from continuing operations1

$

(0.05)

$

(0.04)

$

(0.10)

$

(0.09)

Impairments and loss on disposal of assets

$

(5)

$

(1)

$

(6)

$

(2)

Tax benefit

1

1

Impairments and loss on disposal of assets, net of tax

$

(5)

$

(1)

$

(5)

$

(1)

Decrease to diluted EPS from continuing operations

$

(0.01)

$

$

(0.01)

$

Litigation recoveries/(charges), net

$

12

$

$

34

$

3

Tax expense

(5)

(14)

(1)

Litigation recoveries/(charges), net, net of tax

$

7

$

$

20

$

2

Increase to diluted EPS from continuing operations

$

0.02

$

$

0.06

$

0.01

Other Spin-Off Costs

$

$

(1)

$

$

(2)

Tax benefit

Other Spin-Off Costs, net of tax

$

$

(1)

$

$

(2)

Decrease to diluted EPS from continuing operations

$

$

$

$

Weighted-average number of diluted shares outstanding

343

349

344

349

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

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

 

Schedule 9

Cardinal Health, Inc. and Subsidiaries Asset Management Analysis

Second Quarter

Year-to-Date

2013

2012

2013

2012

Days sales outstanding1

22.0

19.9

Days inventory on hand

27.0

27.0

Days payable outstanding

37.8

37.9

Net working capital days2

11.3

9.1

Debt to total capital

31

%

30

%

Net debt to capital

9

%

11

%

Return on equity

18.9

%

18.0

%

18.1

%

17.1

%

Non-GAAP return on equity

19.8

%

19.1

%

18.8

%

18.3

%

Effective tax rate from continuing operations

37.2

%

37.9

%

37.6

%

38.1

%

Non-GAAP effective tax rate from continuing operations

36.8

%

37.8

%

37.3

%

37.9

%

1           We changed our method of calculating days sales outstanding and have revised prior-year information to conform, refer to Schedule 14.

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

Refer to the GAAP/Non-GAAP reconciliation for definitions and calculations supporting the Non-GAAP balances. Refer to DSO, DIOH and DPO for definitions and calculations.

 

Schedule 10

Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation

Second Quarter 2013

Operating

Earnings Before

Provision

Earnings

Earnings from

Diluted EPS

Diluted EPS

Earnings

Income Taxes

for

from

Continuing

from

from Continuing

Operating

Growth

and Discontinued

Income

Continuing

Operations

Continuing

Operations

(in millions, except per Common Share amounts)

Earnings

Rate

Operations

Taxes

Operations

Growth Rate

Operations

Growth Rate

GAAP

$

506

13

%

$

483

$

180

$

303

15

%

$

0.88

16

%

Restructuring and employee severance

1

1

1

Acquisition-related costs

25

25

9

16

0.05

Impairments and loss on disposal of assets

5

5

5

0.01

Litigation (recoveries)/charges, net

(12)

(12)

(5)

(7)

(0.02)

Other Spin-Off Costs

Non-GAAP

$

525

11

%

$

502

$

185

$

317

13

%

$

0.93

15

%

Second Quarter 2012

GAAP

$

449

31

%

$

426

$

162

$

264

23

%

$

0.76

25

%

Restructuring and employee severance

2

2

1

1

Acquisition-related costs

22

22

8

14

0.04

Impairments and loss on disposal of assets

1

1

1

Litigation (recoveries)/charges, net

Other Spin-Off Costs

1

1

1

Non-GAAP

$

475

21

%

$

452

$

171

$

281

10

%

$

0.81

11

%

Year-to-Date 2013

Operating

Earnings Before

Provision

Earnings

Earnings from

Diluted EPS

Diluted EPS

Earnings

Income Taxes

for

from

Continuing

from

from Continuing

Operating

Growth

and Discontinued

Income

Continuing

Operations

Continuing

Operations

(in millions, except per Common Share amounts)

Earnings

Rate

Operations

Taxes

Operations

Growth Rate

Operations

Growth Rate

GAAP

$

963

12

%

$

922

$

347

$

575

15

%

$

1.67

16

%

Restructuring and employee severance

6

6

2

4

0.01

Acquisition-related costs

53

53

19

34

0.10

Impairments and loss on disposal of assets

6

6

1

5

0.01

Litigation (recoveries)/charges, net

(34)

(34)

(14)

(20)

(0.06)

Other Spin-Off Costs

Non-GAAP

$

995

8

%

$

953

$

355

$

598

11

%

$

1.74

13

%

Year-to-Date 2012

GAAP

$

862

22

%

$

811

$

310

$

501

(2)

%

$

1.44

(1)

%

Restructuring and employee severance

5

5

2

3

0.01

Acquisition-related costs

49

49

17

32

0.09

Impairments and loss on disposal of assets

2

2

1

1

Litigation (recoveries)/charges, net

(3)

(3)

(1)

(2)

(0.01)

Other Spin-Off Costs

2

2

2

Non-GAAP

$

917

18

%

$

866

$

329

$

537

10

%

$

1.54

11

%

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

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

 

Schedule 11

Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation

Second Quarter

(in millions)

2013

2012

GAAP return on equity

18.9

%

18.0

%

Non-GAAP return on equity

Net earnings

$

303

$

262

Restructuring and employee severance, net of tax, in continuing operations

1

Acquisition-related costs, net of tax, in continuing operations

16

14

Impairments and loss on disposal of assets, net of tax, in continuing operations

5

1

Litigation (recoveries)/charges, net, net of tax, in continuing operations

(7)

Other Spin-Off Costs, net of tax, in continuing operations

1

Adjusted net earnings

$

317

$

279

Annualized

$

1,268

$

1,116

Second

First

Second

First

Quarter

Quarter

Quarter

Quarter

2013

2013

2012

2012

Total shareholders' equity

$

6,542

$

6,281

$

5,928

$

5,714

Divided by average shareholders' equity

$

6,411

$

5,821

Non-GAAP return on equity

19.8

%

19.1

%

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

 

Schedule 12

Cardinal Health, Inc. and Subsidiaries GAAP / Non-GAAP Reconciliation

Year-to-Date

(in millions)

2013