Cardinal Health, Inc. (CAH)

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Cardinal Health, Inc. (CAH)

F4Q09 Earnings Call

August 18, 2009 8:30 am ET


Sally Curley – Senior Vice President Investor Relations

Jeff Henderson – Chief Financial Officer

George Barrett – Chairman and CEO


Lisa Gill – JP Morgan

Glen Santangelo – Credit Suisse

Larry Marsh – Barclays Capital

Tom Gallucci – Lazard Capital

John Kreger – William Blair

Robert Willoughby – Bank of America

Randall Stanicky – Goldman Sachs



(Operator Instructions) Welcome to the Fourth Quarter 2009 Cardinal Health Earnings Conference Call. Now I’ll turn the call over to your host for today’s presentation, Ms. Sally Curley, Senior Vice President of Investor Relations.

Sally Curley

Welcome to Cardinal Health fourth quarter and year end 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 statement slide 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; information about these is included at the end of the slides. A transcript of today’s call is also posted on our website on the investor page.

Since we are approaching the spinoff effective date of September 1, today’s call format will be a little different in order to accommodate questions from those investors who are solely focused on CareFusion Corporation. First, Jeff Henderson will provide a brief overview of the fourth quarter and year end FY09 results for total Cardinal Health. Jeff will then pass the call to George Barrett, Chairman and CEO of New Cardinal Health Post-spin and George, followed again by Jeff, will provide color on trends we are seeing in the New Cardinal Health businesses as well as provide FY10 guidance using our pro-forma New Cardinal Health numbers released today and SEC filing as a basis.

We will then conduct a Q&A session and we ask that you focus your questions on either the consolidated results for total Cardinal or for New Cardinal Health. At 45 minutes into the call, approximately 9:15am Eastern we will hand the call over to Carol Cox, Dave Schlotterbeck, and Ed Borkowski who will provide an overview of CareFusion performance and their expectations for FY10 and who will take questions regarding CareFusion results and expectations.

Because we have a lot to cover today, if we don’t get to your questions we will all be available afterward to address them. I’d like to remind you of a few upcoming dates and events. First, and related to the upcoming spinoff of CareFusion, the record date for purposes of determining shareholders who will receive the CareFusion stock dividend, is August 25th at 5:00pm Eastern.

We anticipate that one issue trading for CareFusion and Cardinal Health will begin on the New York Stock Exchange later this week and run through August 31st. One issue trading as a reminder will be under CAHWI and CFNWI symbols on the New York Stock Exchange. Cardinal, CAH will also continue to trade in the regular way throughout this time. As of September 1, the effective date of the spinoff, neither Cardinal nor CareFusion will trade as one issued and CareFusion, CFN will begin trading in the regular way on the New York Stock Exchange. Again, Cardinal will trade CAH; will trade in the regular way uninterrupted throughout these time periods.

New Cardinal Health will be participating in a number of investor conferences during the upcoming months, notably the Thomas Weisel Partners Conference on Thursday, September 10th, Morgan Stanley’s Global Healthcare Conference on September 15th, the Invest Ohio Conference on September 15th, and the UBS Global Life Sciences Conference on September 23rd. As always, the details of these conferences are or will be posted on the IR section of our website so please make sure to visit that often.

Now I’d like to turn the call over Jeff Henderson for the review of the consolidated Cardinal Health Fourth Quarter and Year End.

Jeff Henderson

As Sally mentioned we have a lot to cover today. I’ll be brief in my comments on our fiscal ’09 results under our current reporting structure which included the businesses that we intend to spinoff as CareFusion. I should point out that we very much remain on track for the spinoff of CareFusion to be effective after the close of trading on August 31st. You can see the detail of what I’m about to cover in both the news release as well as in the slide presentation which are both available on our website.

First, a quick recap on FY09. I won’t comment specifically on slides four through nine but will just give some overall comments. As we mentioned in our earnings release, our FY09 results reflect solid progress in healthcare supply chain services and the impact of a challenging environment for clinical and medical products. Consolidated revenues were up 10% to $25.2 billion for the quarter and up 9% to $99.5 billion for the year. We posted non-GAAP operating earnings from continuing operations of $509 million for Q4 and $2.1 billion for the year.

Net interest expense and other was $35 million for Q4 and $219 million for FY09. The year was slightly lower then we had previously anticipated due to favorable valuation adjustments on certain derivative instruments at the end of Q4. Our non-GAAP tax rate for the year was about 33.2% and we averaged 361.5 million fully diluted shares outstanding. Our GAAP tax rate was 31.4%.

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