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Cardinal Health, Inc. (CAH)
F3Q09 Earnings Call
April 30, 2009 8:30 am ET
Kerry Clark - Chairman and Chief Executive Officer
Jeffrey W. Henderson - Chief Financial Officer
George S. Barrett - Chief Executive Officer, Healthcare Supply Chain Services
David L. Schlotterbeck - Chief Executive Officer, Clinical and Medical Products
Sally J. Curley - Senior Vice President, Investor Relations
Glen Santangelo - Credit Suisse
Lisa Gill - J.P. Morgan
John Kreger - William Blair & Co.
Randall Stanicky - Goldman Sachs
Ricky Goldwasser - UBS
Lawrence Marsh - Barclays Capital
Robert Willoughby - Bank of America-Merrill Lynch
John Ransom - Raymond James
Ross Muken - Deutsche Bank Securities
Previous Statements by CAH
» Cardinal Health, Inc. F1Q10 (Qtr End 09/30/09) Earnings Call Transcript
» Cardinal Health, Inc. F4Q09 (Qtr End 06/30/09) Earnings Call Transcript
» Cardinal Health, Inc. F2Q09 (Qtr End 12/31/08) Earnings Call Transcript
Sally J. Curley
Thank you, Michelle and welcome to Cardinal Health third quarter fiscal 2009 conference call. Today, we will be making forward-looking statements. The matters addressed in these statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Please refer to our SEC filings and the forward-looking statements filed at the beginning of our presentation which is found on the Investor page of our website for a description of those risks and uncertainties.
In addition, we will reference non-GAAP financial measures and the information about non-GAAP financial measures is included at the end of the slides. A transcript of today’s call is also posted on our Investor web page.
Before I turn the call over to Kerry, I would like to mention a few upcoming events. Representatives from Cardinal Health and/or CareFusion will be presenting and answering questions during several conferences during May and June. The Bank of America Conference on May 13th, the Robert Baird Growth Conference on May 14th, the Deutsche Bank Conference on May 18th, the Goldman Sachs Conference in mid June, and also on June 2nd, Cardinal Health and CareFusion will be hosting back-to-back events. For more information, please contact the IR Department.
That kept aside, also given tight time constraints, the large number of investor conferences in May, and our only analyst cum investor event on June 2nd, we will actually not be conducting any one-on-one meetings at the May conferences. Details of most of these events are or will be posted on the investor events section of our website at cardinalhealth.com; so please make sure to visit that site often for updated information.
Now, I would like to turn the call over to Kerry Clark, Cardinal’s Chairman and CEO.
Good morning everybody and welcome. I am going to keep my comments brief today. Jeff, George, and Dave will go into more detail. Overall, I am encouraged with our third quarter performance. We posted 9% overall revenue growth driven by strong top line performance from healthcare supply chain services. The strength of this segment during tough economic times gives us comfort that we are making progress. As previously forecasted, clinical and medical products continue to see the impact of the deferral in hospital capital spending and experienced headwinds from the Alaris related issues as well as foreign exchange, but we did experience a slight positive increase sequentially in customer orders in a couple of our capital equipment product areas. While this is still very preliminary, it may suggest that negative trends are moderate.
As in past quarters we continue to exercise discipline over total company operational expenses. In addition, we continue to monitor our separation costs related to the planned spin-off very carefully and believe they are reasonable and in line with benchmarks with comparable transactions.
We reached a major milestone in Q3 with the filing of CareFusion’s Form-10 in March. We are moving forward internally by organizing along the lines of the two separate companies. Our target remains for the planned spin-off to become effective this summer subject to the Form-10 being declared effective by the SEC, a favorable ruling from the IRS, investment grade credit ratings for both entities, and securing adequate financing. In the meantime, we’re still very focused on delivering our financial and operational goals this year. As I mentioned last quarter, excellence in execution is key.
Now, I’ll turn this over to Jeff to provide you with more details of our Q3 fiscal performance.
Jeffrey W. Henderson
Today I am going to take you through the consolidated and segment results for the quarter, update you on some key financial drivers, and spend some time going through our outlook for the remainder of the year. First, let me build on Kerry’s comments regarding the status of the spin. As you know, CareFusion files its Form-10 on March 31st thanks to the tremendous efforts from our team. Everyone continues to work hard to get ready to spin off CareFusion as targeted for this summer, from an organizational, business, legal, and systems perspective, and we’re great progress in those areas. Our treasury teams are working diligently to complete the necessary financing arrangements and complete our discussions with the rating agencies. I will touch more on that later in my talk. Finally, we’re also preparing the pro forma CareFusion financials and the pro forma recap financials for Cardinal Health, and I expect to have them available to you in the next month or so. I plan to walk many of you through them during our June 2nd investor day in Boston.
So in summary, we feel very good about our spin preparations and readiness plans. Now onto the third quarter results and a bit of other outlook.
Please note that my comments reflect the financial results from continuing operations on a non-GAAP basis. Consolidated revenues were up 9% to $24.9 billion. Operating earnings were down 10% to $553 million, reflecting stability in our HSCS segment, but dampened by the previously disclosed deferral in hospital capital spending, negative impact of foreign exchange, and costs associated with the remediation reserve and ship-hold on certain Alaris infusion products.