CareFusion Reports Fourth Quarter and Fiscal 2012 Results
-- Fourth quarter revenue increased 3 percent to $968 million on strong Medical Systems results; fiscal 2012 revenue grew 5 percent to $3.6 billion.
-- Fourth quarter GAAP diluted earnings per share (EPS) from continuing operations reached $0.48, or $0.51 on an adjusted basis.
-- Fiscal 2012 GAAP diluted EPS from continuing operations increased to $1.65, or $1.78 on an adjusted basis.
-- Company expects fiscal 2013 adjusted diluted EPS guidance range to be $1.92 to $2.02, or $2.11 to $2.21 excluding acquisition-related amortization.
SAN DIEGO, Aug. 9, 2012 /PRNewswire/ -- CareFusion Corp. (NYSE: CFN), a leading, global medical technology company, today reported results for the quarter and fiscal year ended June 30, 2012.
"Fiscal 2012 was an important year in the company's transformation, as we worked to build our foundation for long-term growth," said Kieran Gallahue, chairman and CEO. "I am proud of our team for the progress we made this year to optimize our portfolio, simplify the complexity of our infrastructure, and reduce administrative expenses to fund R&D and other growth initiatives.
"Our fourth quarter results once again highlighted the strength of our Medical Systems segment, which delivered strong performance throughout the year. The Procedural Solutions segment performed in line with our expectations and continued to make the necessary changes to enable future segment growth. Overall, we finished the year well-positioned to execute on our fiscal 2013 objectives, as we deploy capital to invest in long-term growth."
Fourth Quarter Results
The company reported revenue for the fourth quarter of fiscal 2012 of $968 million, compared to $940 million in the fourth quarter of fiscal 2011, an increase of 3 percent on a reported basis and 4 percent on a constant currency basis.
Operating income was $176 million, an increase of 18 percent compared to $149 million in the prior year period. Excluding nonrecurring items, adjusted operating income rose 2 percent to $183 million. For the quarter, adjusted operating income was 18.9 percent of revenue.
Operating expenses totaled $313 million, a decrease of 7 percent over the prior year period. Excluding nonrecurring items, adjusted operating expenses decreased 1 percent to $306 million. During the quarter, the company increased investments in research and development by 21 percent to $46 million, funded in part by ongoing cost-savings initiatives in administrative support functions.
Income from continuing operations increased 11 percent to $107 million, or $0.48 per diluted share. Adjusted income from continuing operations decreased 3 percent from the prior year period to $114 million, or $0.51 per diluted share, primarily driven by a higher adjusted effective tax rate during the quarter of 28.7 percent.
Fourth quarter revenue for the Medical Systems segment was $646 million, an increase over the prior year period of 9 percent on a reported basis and 10 percent on a constant currency basis. The increase was driven by record installations in Infusion Systems and double-digit sales increases in both Respiratory Technologies and Dispensing Technologies, which continued to benefit from the August 2011 acquisition of Rowa.
Segment profit for the quarter increased 29 percent from the prior year period to $148 million, and adjusted segment profit increased 16 percent to $151 million.
In line with the company's expectations, fourth quarter revenue for the Procedural Solutions segment was $322 million, a decrease from the prior year period of 7 percent on a reported basis and 6 percent on a constant currency basis. The decrease was primarily driven by year-over-year declines in the Specialty Disposables business, which experienced strong sales growth in the prior year period as distributors purchased additional inventory in advance of a business model transition.
Segment profit decreased 22 percent from the prior year period to $28 million, and adjusted segment profit decreased 35 percent to $32 million.
Fiscal Year 2012 Results
Revenue for fiscal 2012 increased 5 percent from the prior year to $3.6 billion. Operating income increased 19 percent to $590 million, from $497 million in fiscal 2011. Excluding nonrecurring items, adjusted operating income rose 4 percent to $627 million. Throughout the fiscal year, operating income as a percent of revenue improved sequentially over four consecutive quarters to finish fiscal 2012 at 16.4 percent, or 17.4 percent on an adjusted basis.
Income from continuing operations was $373 million, or $1.65 per diluted share, for fiscal 2012. Adjusted income from continuing operations increased 7 percent from the prior year to $402 million, or $1.78 per diluted share.
Operating expenses for fiscal 2012 totaled $1.2 billion on both a reported and adjusted basis. During the year, the company increased R&D expenses by 12 percent from the prior year to $164 million, reflecting the company's continued investments in product development and innovation. The company also benefited from planned, double-digit expense reductions in corporate overhead.
Within the Medical Systems segment, revenue for fiscal 2012 increased 11 percent to $2.32 billion, driven by strong performance across the segment. Dispensing Technologies and Infusion Systems delivered record sales years, and Respiratory Technologies contributed its strongest performance in a post-H1N1 environment. Segment profit increased 28 percent from the prior year to $481 million, an increase of 14 percent to $502 million on an adjusted basis.
Revenue for the Procedural Solutions segment decreased 5 percent from the prior year to $1.28 billion. The decrease was driven by declines in the Specialty Disposables business and the loss of sales from divesting the company's OnSite Services business in March 2011. Segment profit was even with the prior year at $109 million and decreased 23 percent to $125 million on an adjusted basis.
Additional fourth quarter and recent highlights included:
- Advancing the company's strategy to expand globally by investing to build scale, infrastructure and local capabilities through the acquisition of U.K. Medical Limited, a leading distributor of clinically differentiated interventional and implantable medical products in the United Kingdom.
- Acquiring two early-stage technologies to support the company's medication management and infection prevention strategies.
- Simplifying and focusing CareFusion's operations by completing the divestiture of the company's Nicolet neurodiagnostic business to Natus Medical Incorporated for $58 million.
- Purchasing 1.9 million shares for $50 million during the fourth quarter under the company's previously announced two-year, $500 million share repurchase program. CareFusion purchased a total of 3.9 million shares for $100 million during fiscal 2012.
- Announcing an agreement to make bi-directional connectivity available between CareFusion's Alaris® System and Epic's electronic medical record platform, further extending CareFusion's leadership in health care information technology (HIT) integration.
- Strengthening CareFusion's operating room (OR) offering through reseller agreements with Codonics, which enhances CareFusion's Pyxis® Anesthesia System 3500 for the storage and documentation of OR medications, and with Surgical Innovations, to serve as the exclusive reseller of its new advanced PretzelFlex® laparoscopic retractor in the U.S.
Fiscal Year 2013 Outlook
For the fiscal year ending June 30, 2013, CareFusion expects revenue to grow 1 to 3 percent on a constant currency basis compared to fiscal 2012 revenue of $3.6 billion. Adjusted diluted earnings per share from continuing operations are expected to be in the range of $1.92 to $2.02. Excluding acquisition-related amortization, adjusted diluted earnings per share from continuing operations are expected to be in the range of $2.11 to $2.21, compared to fiscal 2012 results of $2.00.
The guidance is based on an assumed diluted weighted average outstanding share count of approximately 221 million, which includes the impact of expected share repurchases during fiscal 2013.
CareFusion will host a webcast and conference call today at 2 p.m. PDT (5 p.m. EDT) to discuss the results for the fourth quarter and fiscal 2012.
To access the call and corresponding slide presentation, visit the Investors page at www.carefusion.com. Log on at least 15 minutes before the call begins to register and download or install any necessary audio software.
Investors and other interested parties may also access the call by dialing (800) 901-5248 within the U.S. or (617) 786-4512 from outside the U.S., and use the access code 54529592. A replay of the conference call will be available from 4 p.m. PDT (7 p.m. EDT) on Aug. 9 through 8:59 p.m. PDT (11:59 p.m. EDT) on Aug. 16 and can be accessed by dialing (888) 286-8010 in the U.S. or (617) 801-6888 internationally and using the access code 21592468.
About CareFusion Corporation
CareFusion (NYSE: CFN) is a global corporation serving the health care industry with products and services that help hospitals measurably improve the safety and quality of care. The company develops market-leading technologies including Alaris® infusion pumps, Pyxis® automated dispensing and patient identification systems, AVEA®, AirLife™ and LTV® series ventilation and respiratory products, ChloraPrep® products, MedMined® services for data mining surveillance, V. Mueller® surgical instruments, and an extensive line of products that support interventional medicine. CareFusion employs more than 15,000 people across its global operations. More information may be found at www.carefusion.com.
Use of Non-GAAP Financial Measures by CareFusion Corporation
This CareFusion news release and the information contained herein present non-GAAP financial measures that exclude certain amounts, as follows: "adjusted operating expenses," "adjusted operating income" and "adjusted segment profit," which exclude nonrecurring items primarily related to the spinoff and nonrecurring restructuring and acquisition integration charges; and "adjusted income from continuing operations," "adjusted diluted earnings per share from continuing operations" and "adjusted effective tax rate," which exclude nonrecurring items primarily related to the spinoff, nonrecurring restructuring and acquisition integration charges and nonrecurring tax items. The most directly comparable GAAP financial measures for these non-GAAP financial measures are operating expenses, operating income, segment profit, income from continuing operations, diluted earnings per share from continuing operations and effective tax rate. The company has included below unaudited adjusted financial information for the quarters and fiscal years ended June 30, 2012 and 2011, which includes a reconciliation of GAAP to non-GAAP financial measures.
The company's management uses these non-GAAP financial measures to evaluate the company's performance and provides them to investors as a supplement to the company's reported results, as they believe this information provides additional insight into the company's operating performance by disregarding certain non-recurring items. These non-GAAP financial measures should not be considered in isolation, as a substitute for, or as superior to, financial measures calculated in accordance with GAAP, and the company's financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. While the types of items and charges excluded from the company's non-GAAP financial measures may occur in the future, the company's management believes that they are not reflective of the day-to-day offering of its products and services and relate more to strategic, multi-year corporate actions, without predictable trends, or discrete and unusual or infrequent transactions that are not indicative of future operations or business trends.
Cautions Concerning Forward-looking Statements