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CareFusion (CFN)

Q2 2011 Earnings Call

February 03, 2011 5:00 pm ET


Carol Cox - SVP, IR

Dwight Winstead - Chief Operating Officer

David Schlotterbeck -

James Hinrichs - Chief Financial Officer

Kieran Gallahue -


David Turkaly - Susquehanna Financial Group, LLLP

Michael Weinstein - JP Morgan Chase & Co

David Roman - Goldman Sachs Group Inc.

Kristen Stewart - Deutsche Bank AG

David Lewis - Morgan Stanley

Paul Choi - Caris & Company

Richard Newitter - Leerink Swann LLC

Valerie Dixon

Margaret Kaczor

Matthew Taylor



Good day, ladies and gentlemen, and welcome to the Second Quarter 2011 CareFusion Earnings Conference Call. My name is Derek, and I'll be your operator for today. [Operator Instructions] I would now like to turn the conference over to Ms. Carol Cox, Vice President, Investor Relations. You may proceed.

Carol Cox

Thank you, Derek. Good afternoon, everyone, and thank you for joining us on today's call as we provide an overview of CareFusion's results for the three and six months ended December 31, 2010, and provide an update to our guidance for our fiscal 2011.

Our press release was issued today, 1 p.m. Pacific Time, and posted on our website at, as well as filed on Form 8-K with the Securities and Exchange Commission. We also filed and posted several slides to accompany today's webcast, which may be found on the Investor Relations homepage with our earnings materials.

While we will not review each slide on today's call, these slides should be used as a reference guide by investors. The slides include comparisons of the results for the three and six months ended December 31, 2010, to the prior year period, as well the financial outlook for fiscal 2011 and definitions of our non-GAAP items and reconciliations to GAAP. The slides also include information regarding the financial impact of the international surgical products and OnSite divestitures.

Joining me on today's call are our new Chairman and CEO, Kieran Gallahue; Dave Schlotterbeck, our outgoing CEO; and Jim Hinrichs, our Chief Financial Officer.

Before I turn the call over, I'll just make a few quick remarks. In today's call, we will be presenting our results on a GAAP and an adjusted basis. Our adjusted results exclude restructuring and acquisition, integration charges, nonrecurring-related costs, nonrecurring tax items and discontinued operations. We believe that these adjusted financial measures can facilitate a more complete analysis and greater transparency into CareFusion's ongoing results of operations, particularly in comparing underlying results from period to period.

Our management team utilizes adjusted financial measures internally and financial planning to monitor business unit performance and in evaluating management performance. We have included reconciliations of these non-GAAP measures with today's release.

I would like to remind investors that during today's call, we will be making statements that are forward-looking and consequently are subject to risks and uncertainties. Examples of these statements include statements regarding the timing of the anticipated sale and post-sale plans and intentions related to our ISP products and OnSite Services businesses; our fiscal '11 guidance; expectations regarding hospital capital spending; expectations related to our restructuring program, including anticipated timing, costs and expected savings; our expectations regarding acquisitions and divestitures and statements regarding business and revenue growth as well as foreign currency fluctuations.

You should be aware that certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Such factors include the risks set forth in this afternoon's press release, as well as those in our Form 10-K and in our other filings with the SEC.

We urge you to consider these factors, and remind you that we undertake no obligation to update the information contained on this call to reflect subsequent events or circumstances.

And with that, I'll turn the call over to Dave.

David Schlotterbeck

Thanks, Carol. As you've read in the releases we issued this week, there's a lot to cover today. And I intend to leave plenty of time for your questions.

Let me start by saying a very pleased to welcome Kieran Gallahue to CareFusion. We announced on Tuesday that Kieran had joined us from ResMed to succeed me as CEO. He brings to CareFusion 20 years of experience in med tech and most recently an impressive track record during his eight years at ResMed.

He significantly increased revenue and earnings and expanded operating margins and drove substantial international growth. We had an enviable slate of candidates that the search committee of our board and I interviewed for my replacement. Speaking as a large shareholder, I believe we found the best leader to take the company to the next level. As I announced in November, my plan remains the same; to retire in February 28, providing plenty of time for an orderly transition.

Now let me give Kieran the opportunity to say a few words. Kieran?

Kieran Gallahue

Thanks, Dave. I'll certainly have a lot more to say in coming weeks and months, but for now let me just say how energized I am to be here. As I have met with the board and through my initial discussions with members of the management team, I see a company performing well, with abundant opportunities ahead and that is executing against a sound strategy.

It's a rare opportunity to join an organization with an end-to-end portfolio of category-leading products yet with such growth potential of the top and bottom lines. The opportunities for margin expansion are clear and will remain a top priority for me.

As Dave said, I've spent a fair amount of time in the industry and I look forward to both applying my experience in CareFusion, but also learning from and working with a very talented management team. However, at this point I've been on the job for a grand total of about two days, so Dave and Jim will be answering the questions on today's call.

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