2014

Cardinal Health Reports Fiscal 2013 Third-Quarter Results and Raises Quarterly Dividend by 10 Percent -- Non-GAAP diluted earnings per share (EPS) from continuing operations increases 28 percent to $1.201

-- Non-GAAP operating earnings increase 11% to $579 million

-- Fiscal 2013 non-GAAP earnings per share guidance raised to $3.67 - $3.71, which reflects an $0.18 EPS tax benefit from a third-quarter tax settlement

DUBLIN, Ohio, May 2, 2013 /PRNewswire/ -- Cardinal Health today reported fiscal year 2013 third-quarter revenue of $24.6 billion and a 28 percent increase in non-GAAP diluted earnings per share from continuing operations to $1.20. The earnings increase was driven by strong non-GAAP operating earnings growth and a tax settlement, which contributed $0.18 per share. On a GAAP basis, diluted EPS from continuing operations increased 5 percent to $1.00. Non-GAAP operating earnings of $579 million increased 11 percent, while operating earnings on a GAAP basis were down 10 percent to $475 million.

The company raised its fiscal 2013 outlook for non-GAAP diluted EPS from continuing operations to $3.67 to $3.71. The revised range includes the $0.18 tax settlement previously mentioned.

Cardinal Health also announced that its board of directors approved a 10 percent increase in the company's quarterly dividend to $0.3025 per share, or $1.21 per share on an annualized basis. The quarterly dividend is payable on July 15, 2013 to shareholders of record at close of business on July 1, 2013.

"We delivered another solid performance in our fiscal third quarter," said George Barrett, chairman and chief executive officer of Cardinal Health. "Both our Pharmaceutical and Medical segments reported double-digit profit growth. Our organization is successfully innovating and adapting our business lines and portfolio to an evolving market, with a focus on establishing a strategic edge in areas of higher growth. This was highlighted during the quarter with the acquisition of AssuraMed which will enable us to follow the care of patients to the home."  

Q3 FY13 SUMMARY


Q3 FY13

Q3 FY12

Y/Y

Revenue

$24.6 billion

$26.9 billion

(9%)





 

Operating Earnings

 

$475 million

 

$527 million

 

(10%)

Non-GAAP Operating Earnings

 

$579 million

 

$524 million

 

11%





Earnings from Continuing Operations

 

$346 million

 

$332 million

 

4%

Non-GAAP Earnings from Continuing Operations

 

$412 million

 

$327 million

 

26%





Diluted EPS from Continuing Operations

 

$1.00

 

$0.95

 

5%

Non-GAAP Diluted EPS from Continuing Operations

 

$1.20

 

$0.94

 

28%

Revaluation of the deferred tax liability as a result of an agreement with tax authorities positively impacted third-quarter fiscal 2013 GAAP and non-GAAP earnings from continuing operations by $64 million and GAAP and non-GAAP diluted EPS by $0.18 per share.

In the third quarter of fiscal 2012, a reduction in the fair value of the P4 Healthcare acquisition earn-out liability had positively impacted GAAP operating earnings by $55 million and GAAP diluted EPS by $0.10 per share.

SEGMENT RESULTS

Pharmaceutical segment

Revenue for the Pharmaceutical segment decreased 10 percent to $22.1 billion driven by the non-renewal of the Express Scripts contract and brand-to-generic conversions, partially offset by revenues from new customers. Segment profit increased 12 percent to $498 million as the company continued to benefit from a focus on product and customer mix and reflected strong performance from generics programs.


Q3 FY13

Q3 FY12

Y/Y

Revenue

$22.1 billion

$24.5 billion

(10%)

Segment Profit

$498 million

$446 million

12%

Medical segment

Revenue for the Medical segment increased 3 percent to $2.5 billion, driven by acquisitions, partially offset by one fewer sales day. Segment profit increased 12 percent to $100 million driven by the favorable impact of commodities and the performance of the preferred product portfolio. The increase was partially offset by rate compression, driven in part by customer mix.  Results were also moderated by softness in procedural-based utilization.


Q3 FY13

Q3 FY12

Y/Y

Revenue

$2.5 billion

$2.4 billion

3%

Segment Profit

$100 million

$89 million

12%

ADDITIONAL THIRD-QUARTER AND RECENT HIGHLIGHTS

  • Completed acquisition of AssuraMed, a leading direct-to-home medical supplies distributor
  • Named one of the National Association of Female Executives Top 50 companies for 2013
  • Launched the fourth in a series of Cardinal Health Foundation interactive Generation Rx toolkits, which are designed to help reduce the abuse of prescription drugs

CONFERENCE CALL

Cardinal Health will host a webcast and conference call today at 8:30 a.m. Eastern to discuss third-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 877.870.9220 or 631.291.4512.

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 June 1 by dialing 855.859.2056 or 404.537.3406, using passcode 35177390.

UPCOMING WEBCAST EVENTS

  • Bank of America Merrill Lynch 2013 Health Care Conference at 8:40 a.m. local time on May 14 in Las Vegas
  • Goldman Sachs 34th Annual Global Healthcare Conference at 8:40 a.m. local time on June 11 in Rancho Palos Verdes, Calif.

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; uncertainties relating to the ability of Cardinal Health to successfully mitigate the impact of the expiration of the pharmaceutical distribution contract with Walgreen Co. at the end of August 2013; the ability to achieve the expected benefits from the AssuraMed acquisition, including the expected accretion in non-GAAP earnings; the timing of generic and branded pharmaceutical introductions and the frequency or rate of pharmaceutical price appreciation or deflation; the non-renewal, early termination or a default under one or more key customer or supplier arrangements or changes to the terms of or level of purchases under those arrangements; 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; and 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. 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 May 2, 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)






Third Quarter



(in millions, except per Common Share amounts)

2013


2012


% Change

Revenue

$

24,552



$

26,918



(9)

%

Cost of products sold

23,261



25,711



(10)

%

Gross margin

1,291



1,207



7

%







Operating expenses:






Distribution, selling, general and administrative expenses

712



683



4

%

Restructuring and employee severance

33



7



N.M.

Acquisition-related costs

53



(27)



N.M.

Impairments and loss on disposal of assets

21



17



N.M.

Litigation (recoveries)/charges, net

(3)





N.M.

Operating earnings

475



527



(10)

%







Other income, net

(6)



(7)



N.M.

Interest expense, net

34



24



42

%

Earnings before income taxes and discontinued operations

447



510



(12)

%







Provision for income taxes

101



178



(43)

%

Earnings from continuing operations

346



332



4

%







Earnings/(loss) from discontinued operations, net of tax

(1)



1



N.M.

Net earnings

$

345



$

333



4

%







Basic earnings per Common Share:






Continuing operations

$

1.01



$

0.96



5

%

Discontinued operations





N.M.

Net basic earnings per Common Share

$

1.01



$

0.96



5

%







Diluted earnings per Common Share:






Continuing operations

$

1.00



$

0.95



5

%

Discontinued operations





N.M.

Net diluted earnings per Common Share

$

1.00



$

0.95



5

%







Weighted-average number of Common Shares outstanding:






Basic

341



345




Diluted

345



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

$

75,673



$

80,788



(6)

%

Cost of products sold

72,000



77,383



(7)

%

Gross margin

3,673



3,405



8

%







Operating expenses:






Distribution, selling, general and administrative expenses

2,099



1,966



7

%

Restructuring and employee severance

39



12



N.M.

Acquisition-related costs

106



23



N.M.

Impairments and loss on disposal of assets

27



19



N.M.

Litigation (recoveries)/charges, net

(37)



(3)



N.M.

Operating earnings

1,439



1,388



4

%







Other income, net

(17)



(3)



N.M.

Interest expense, net

87



70



24

%

Earnings before income taxes and discontinued operations

1,369



1,321



4

%







Provision for income taxes

448



487



(8)

%

Earnings from continuing operations

921



834



10

%







Loss from discontinued operations, net of tax

(1)



(2)



N.M.

Net earnings

$

920



$

832



11

%







Basic earnings/(loss) per Common Share:






Continuing operations

$

2.70



$

2.42



12

%

Discontinued operations



(0.01)



N.M.

Net basic earnings per Common Share

$

2.70



$

2.41



12

%







Diluted earnings/(loss) per Common Share:






Continuing operations

$

2.68



$

2.39



12

%

Discontinued operations

(0.01)



(0.01)



N.M.

Net diluted earnings per Common Share

$

2.67



$

2.38



12

%







Weighted-average number of Common Shares outstanding:






Basic

341



345




Diluted

344



349




 

Schedule 3

Cardinal Health, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets





(in millions)

March 31,
2013


June 30,
2012


(Unaudited)



Assets




Current assets:




Cash and equivalents

$

2,305



$

2,274


Trade receivables, net

6,416



6,355


Inventories

8,328



7,864


Prepaid expenses and other

878



1,017


Total current assets

17,927



17,510






Property and equipment, net

1,470



1,551


Goodwill and other intangibles, net

6,413



4,392


Other assets

913



807


Total assets

$

26,723



$

24,260






Liabilities and Shareholders' Equity




Current liabilities:




Accounts payable

$

12,049



$

11,726


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

446



476


Other accrued liabilities

1,979



1,972


Total current liabilities

14,474



14,174






Long-term obligations, less current portion

3,714



2,418


Deferred income taxes and other liabilities

1,705



1,424


Total shareholders' equity

6,830



6,244


Total liabilities and shareholders' equity

$

26,723



$

24,260


 

Schedule 4

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






Third Quarter


Year-to-Date

(in millions)

2013


2012


2013


2012

Cash flows from operating activities:








Net earnings

$

345



$

333



$

920



$

832


(Earnings)/loss from discontinued operations, net of tax

1



(1)



1



2


Earnings from continuing operations

346



332



921



834










Adjustments to reconcile earnings from continuing operations to net cash provided by operating activities:








Depreciation and amortization

99



83



275



239


Impairments and loss on disposal of assets

21



17



27



19


Share-based compensation

22



22



68



63


Provision for bad debts

9



5



18



7


Change in fair value of contingent consideration obligation



(53)





(53)


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








Decrease/(increase) in trade receivables

(147)



(478)



81



(310)


Decrease/(increase) in inventories

193



683



(343)



(870)


Increase in accounts payable

183



95



214



1,212


Other accrued liabilities and operating items, net

263



187



166



142


Net cash provided by operating activities

989



893



1,427



1,283










Cash flows from investing activities:








Acquisition of subsidiaries, net of cash acquired

(2,093)



(135)



(2,219)



(143)


Additions to property and equipment

(41)



(58)



(103)



(158)


Proceeds from maturities of held-to-maturity securities



11



71



46


Purchase of other investments

(6)





(6)



(11)


Net cash used in investing activities

(2,140)



(182)



(2,257)



(266)










Cash flows from financing activities:








Net change in short-term borrowings

(28)



4



(11)



8


Reduction of long-term obligations



(44)



(6)



(45)


Proceeds from long-term obligations, net of issuance costs

1,286





1,286




Net proceeds from issuance of Common Shares

37



12



63



23


Tax proceeds/(disbursements) from share-based compensation

(1)



3



(13)



3


Dividends on Common Shares

(93)



(74)



(258)



(226)


Purchase of treasury shares





(200)



(300)


Net cash provided by/(used in) financing activities

1,201



(99)



861



(537)










Net increase in cash and equivalents

50



612



31



480


Cash and equivalents at beginning of period

2,255



1,798



2,274



1,930


Cash and equivalents at end of period

$

2,305



$

2,410



$

2,305



$

2,410


 

Schedule 5

Cardinal Health, Inc. and Subsidiaries
Total Company Business Analysis








Non-GAAP


Third Quarter


Third Quarter

(in millions)

2013


2012


2013


2012

Revenue








Amount

$

24,552



$

26,918






Growth rate

(9)%



3%














Operating earnings








Amount

$

475



$

527



$

579



$

524


Growth rate

(10)%



18%



11%



6%










Earnings from continuing operations








Amount

$

346



$

332



$

412



$

327


Growth rate

4%



33%



26%



14%













Non-GAAP


Year-to-Date


Year-to-Date

(in millions)

2013


2012


2013


2012

Revenue








Amount

$

75,673



$

80,788






Growth rate

(6)%



6%














Operating earnings








Amount

$

1,439



$

1,388



$

1,574



$

1,441


Growth rate

4%



20%



9%



14%










Earnings from continuing operations








Amount

$

921



$

834



$

1,010



$

864


Growth rate

10%



10%



17%



12%


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







Third Quarter



Third Quarter

(in millions)

2013


2012


(in millions)

2013


2012

Pharmaceutical





Medical













Revenue





Revenue




Amount

$

22,070



$

24,508



Amount

$

2,484



$

2,414


Growth rate

(10)%



3%



Growth rate

3%



8%


Mix

90%



91%



Mix

10%



9%











Segment profit





Segment profit




Amount

$

498



$

446



Amount

$

100



$

89


Growth rate

12%



9%



Growth rate

12%



(17)%


Mix

83%



83%



Mix

17%



17%


Segment profit margin

2.26%



1.82%



Segment profit margin

4.01%



3.70%


Refer to definitions for an explanation of calculations.

Total consolidated revenue for the three months ended March 31, 2013 was $24,552 million, which included total segment revenue of $24,554 million and Corporate revenue of $(2) million. Total consolidated revenue for the three months ended March 31, 2012 was $26,918 million, which included total segment revenue of $26,922 million and Corporate revenue of $(4) million.  Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the three months ended March 31, 2013 were $475 million, which included total segment profit of $598 million and Corporate costs of $(123) million. Total consolidated operating earnings for the three months ended March 31, 2012 were $527 million, which included total segment profit of $535 million and Corporate costs of $(8) 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. As noted on Schedule 7, of the $8 million adjustment recorded in the Medical segment during fiscal 2013 related to certain vendor chargeback billings, $4 million related to the third quarter of fiscal 2012.

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

$

68,314



$

73,591



Amount

$

7,363



$

7,210


Growth rate

(7)%



6%



Growth rate

2%



9%


Mix

90%



91%



Mix

10%



9%











Segment profit





Segment profit




Amount

$

1,339



$

1,204



Amount

$

268



$

253


Growth rate

11%



18%



Growth rate

6%



(14)%


Mix

83%



83%



Mix

17%



17%


Segment profit margin

1.96%



1.64%



Segment profit margin

3.63%



3.51%


Refer to definitions for an explanation of calculations.

Total consolidated revenue for the nine months ended March 31, 2013 was $75,673 million, which included total segment revenue of $75,677 million and Corporate revenue of $(4) million. Total consolidated revenue for the nine months ended March 31, 2012 was $80,788 million, which included total segment revenue of $80,801 million and Corporate revenue of $(13) million.  Corporate revenue consists primarily of elimination of inter-segment revenue.

Total consolidated operating earnings for the nine months ended March 31, 2013 were $1,439 million, which included total segment profit of $1,607 million and Corporate costs of $(168) million. Total consolidated operating earnings for the nine months ended March 31, 2012 were $1,388 million, which included total segment profit of $1,457 million and Corporate costs of $(69) 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 for fiscal 2013 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. Of the $8 million adjustment recorded during fiscal 2013, $4 million related to the third quarter of fiscal 2012.

Schedule 8

Cardinal Health, Inc. and Subsidiaries
Schedule of Notable Items






Third Quarter


Year-to-Date

(in millions, except per Common Share amounts)

2013


2012


2013


2012

Restructuring and employee severance

$

(33)



$

(7)



$

(39)



$

(12)


Tax benefit

12



3



15



4


Restructuring and employee severance, net of tax

$

(21)



$

(4)



$

(24)



$

(8)










Decrease to diluted EPS from continuing operations

$

(0.06)



$

(0.01)



$

(0.07)



$

(0.02)










Acquisition-Related Costs








Amortization of acquisition-related intangible assets

$

(26)



$

(20)



$

(69)



$

(58)


Tax benefit

10



7



25



21


Amortization of acquisition-related intangible assets, net of tax

$

(16)



$

(13)



$

(44)



$

(37)










Decrease to diluted EPS from continuing operations

$

(0.05)



$

(0.04)



$

(0.13)



$

(0.11)










Other acquisition-related costs1

$

(26)



$

47



$

(37)



$

35


Tax benefit/(expense)1

10



(14)



13



(10)


Other acquisition-related costs, net of tax

$

(16)



$

33



$

(24)



$

25










Increase/(decrease) to diluted EPS from continuing operations1

$

(0.05)



$

0.10



$

(0.07)



$

0.07










Total acquisition-related costs2

$

(53)



$

27



$

(106)



$

(23)


Tax benefit/(expense)

20



(7)



38



11


Total acquisition-related costs, net of tax2

$

(33)



$

20



$

(68)



$

(12)










Increase/(decrease) to diluted EPS from continuing operations2

$

(0.10)



$

0.06



$

(0.20)



$

(0.03)










Impairments and loss on disposal of assets

$

(21)



$

(17)



$

(27)



$

(19)


Tax benefit

6



7



7



7


Impairments and loss on disposal of assets, net of tax

$

(15)



$

(10)



$

(20)



$

(12)










Decrease to diluted EPS from continuing operations

$

(0.04)



$

(0.03)



$

(0.06)



$

(0.03)










Litigation recoveries/(charges), net

$

3



$



$

37



$

3


Tax expense

(1)





(14)



(1)


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

$

2



$



$

23



$

2










Increase to diluted EPS from continuing operations

$



$



$

0.06



$

0.01










Other Spin-Off Costs

$



$

(1)



$



$

(2)


Tax benefit







1


Other Spin-Off Costs, net of tax

$



$

(1)



$



$

(1)










Decrease to diluted EPS from continuing operations

$



$



$



$










Weighted-average number of diluted shares outstanding

345



349



344



349


1           Includes a $55 million decrease in the fair value of the total contingent consideration obligation related to the P4 Healthcare acquisition for the three months ended March 31, 2012. The related tax expense was $20 million and diluted EPS from continuing operations increased $0.10.

2           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






Third Quarter


Year-to-Date


2013


2012


2013


2012

Days sales outstanding1

23.5



21.7






Days inventory on hand

27.5



25.0






Days payable outstanding

39.8



38.3






Net working capital days2

11.2



8.5














Debt to total capital

38

%


29

%





Net debt to capital

21

%


2

%













Return on equity

20.7

%


21.9

%


18.9

%


18.7

%

Non-GAAP return on equity

24.7

%


21.6

%


20.8

%


19.4

%









Effective tax rate from continuing operations3

22.7

%


34.9

%


32.7

%


36.9

%

Non-GAAP effective tax rate from continuing operations3

25.1

%


35.6

%


32.8

%


37.1

%

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.

3       The revaluation of the deferred tax liability and related interest on unrepatriated foreign earnings as a result of an agreement with tax authorities reduced, for fiscal 2013 third quarter, both the effective tax rate from continuing operations and non-GAAP effective tax rate from continuing operations by 14.2 and 11.6 percentage points, respectively. The fiscal 2013 third quarter non-GAAP effective tax rate from continuing operations, excluding the impact of the tax settlement, would have been 36.7%.

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




Third 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

$

475


(10)

%

$

447


$

101


$

346


4

%

$

1.00


5

%

Restructuring and employee severance

33



33


12


21



0.06



Acquisition-related costs

53



53


20


33



0.10



Impairments and loss on disposal of assets

21



21


6


15



0.04



Litigation (recoveries)/charges, net

(3)



(3)


(1)


(2)





Other Spin-Off Costs









Non-GAAP

$

579


11

%

$

551


$

138


$

412


26

%

$

1.20


28

%











Third Quarter 2012

GAAP

$

527


18

%

$

510


$

178


$

332


33

%

$

0.95


34

%

Restructuring and employee severance

7



7


3


4



0.01



Acquisition-related costs

(27)



(27)


(7)


(20)



(0.06)



Impairments and loss on disposal of assets

17



17


7


10



0.03



Litigation (recoveries)/charges, net









Other Spin-Off Costs

1



1



1





Non-GAAP

$

524


6

%

$

508


$

181


$

327


14

%

$

0.94


16

%











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

$

1,439


4

%

$

1,369


$

448


$

921


10

%

$

2.68


12

%

Restructuring and employee severance

39



39


15


24



0.07



Acquisition-related costs

106



106


38


68



0.20



Impairments and loss on disposal of assets

27



27


7


20



0.06



Litigation (recoveries)/charges, net

(37)



(37)


(14)


(23)



(0.06)



Other Spin-Off Costs









Non-GAAP

$

1,574


9

%

$

1,504


$

494


$

1,010


17

%

$

2.94


19

%











Year-to-Date 2012

GAAP

$

1,388


20

%

$

1,321


$

487


$

834


10

%

$

2.39


11

%

Restructuring and employee severance

12



12


4


8



0.02



Acquisition-related costs

23



23


11


12



0.03



Impairments and loss on disposal of assets

19



19


7


12



0.03



Litigation (recoveries)/charges, net

(3)



(3)


(1)


(2)



(0.01)



Other Spin-Off Costs

2



2


1


1





Non-GAAP

$

1,441


14

%

$

1,374


$

509


$

864


12

%

$

2.47


12

%

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






Third Quarter



(in millions)

2013




2012



GAAP return on equity

20.7

%




21.9

%











Non-GAAP return on equity








Net earnings

$

345





$

333




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

21





4




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

33





(20)




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

15





10




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

(2)








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





1




Adjusted net earnings

$

412





$

328




Annualized

$

1,648





$

1,312













Third


Second


Third


Second


Quarter


Quarter


Quarter


Quarter


2013


2013


2012


2012

Total shareholders' equity

$

6,830



$

6,542



$

6,240



$

5,928


Divided by average shareholders' equity

$

6,686





$

6,084




Non-GAAP return on equity

24.7

%




21.6

%



















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








2012







GAAP return on equity

18.9

%








18.7

%























Non-GAAP return on equity
















Net earnings

$

920









$

832








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

24









8








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

68









12








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

20









12








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

(23)









(2)








Other Spin-Off Costs, net of tax,