Cardinal Health issued the following announcement on Nov. 4.
Today reported first quarter fiscal year 2021 revenues of $39.1 billion, an increase of 5% from the first quarter of last year. First quarter GAAP operating loss was $624 million due to a $1.0 billion pre-tax accrual related to opioid litigation. This quarter's accrual is incremental to the $5.6 billion accrual recorded in the first quarter of fiscal year 2020. Non-GAAP operating earnings increased 7% to $618 million in the quarter. GAAP diluted loss per share was $0.86, and non-GAAP diluted earnings per share (EPS) increased 19% to $1.51. These results include a moderate negative impact from COVID-19, primarily concentrated in the Pharmaceutical segment.
"Our first quarter results and improved outlook for the year demonstrate the resilience of our business model," said Mike Kaufmann, CEO of Cardinal Health. "We delivered strong performance in both segments due to progress against our growth initiatives and disciplined expense management. As we continue to navigate the pandemic, we remain focused on optimizing our core businesses and making strategic investments that create long-term value for our shareholders, customers, communities and employees."
Q1 FY21 summary
| Q1 FY21 | Q1 FY20 | Y/Y | |
| Revenue | $39.1 billion | $37.3 billion | 5% |
| Operating loss2 | $(624) million | $(5.3) billion | N.M. |
| Non-GAAP operating earnings | $618 million | $577 million | 7% |
| Net loss attributable to Cardinal Health, Inc. | $(253) million | $(4.9) billion | N.M. |
| Non-GAAP net earnings attributable to Cardinal Health, Inc. | $445 million | $378 million | 18% |
| Effective Tax Rate | 61.8% | 7.9% | - |
| Non-GAAP Effective Tax Rate | 23.1% | 23.7% | - |
| Diluted EPS attributable to Cardinal Health, Inc.3 | $(0.86) | $(16.65) | N.M. |
| Non-GAAP diluted EPS attributable to Cardinal Health, Inc. | $1.51 | $1.27 | 19% |
Pharmaceutical segment
| Q1 FY21 | Q1 FY20 | Y/Y | |
| Revenue | $35.1 billion | $33.4 billion | 5% |
| Segment profit | $402 million | $398 million | 1% |
Pharmaceutical segment profit increased 1% to $402 million in the first quarter, due to a higher contribution from brand sales mix. As expected, segment profit growth was adversely affected by COVID-19-related volume declines.
Medical segment
| Q1 FY21 | Q1 FY20 | Y/Y | |
| Revenue | $4.0 billion | $3.9 billion | 1% |
| Segment profit | $230 million | $170 million | 36% |
Medical segment profit increased 36% to $230 million in the first quarter due to cost savings, including global manufacturing efficiencies. The company estimates that COVID-19 had a minimal net impact on the segment's first quarter results, as the adverse effects of cancelled or deferred elective procedures were offset by the temporary reduction of certain costs and higher volumes in our lab business. Additionally, the impact of personal protective equipment (PPE) cost increases was mostly mitigated through price increases.
Fiscal year 2021 outlook1
Cardinal Health is updating its fiscal year 2021 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $5.65 to $5.95 from $5.25 to $5.65. This increased guidance range primarily reflects a combination of a lower-than-previously-expected net headwind related to COVID-19 and improved cost savings.
The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See "Use of Non-GAAP Measures" following the attached schedules for additional explanation.
Opioid lawsuits developments
In October 2019, the company agreed in principle to a global settlement framework with a leadership group of state attorneys general that is designed to resolve all pending and potential opioid lawsuits by states and political subdivisions. Negotiations under this settlement framework continue. In connection with the opioid lawsuits and these discussions, in the first quarter of fiscal year 2021, the company incurred a pre-tax charge of $1.02 billion. This is incremental to the $5.63 billion charge incurred in the first quarter of fiscal year 2020. The total pre-tax accrual for these matters at September 30, 2020 is $6.59 billion. These charges are excluded from the company's non-GAAP results.
GAAP tax effect of opioid litigation charges
For fiscal 2021, including the tax effects of opioid litigation charges in the calculation of the company's estimated annual effective tax rate increased the amount of tax benefit in the current quarter by approximately $450 million and is expected to significantly increase the company's provision for income taxes during the remainder of the fiscal year. The company currently estimates net tax benefits of $35 million and $488 million for fiscal 2021 and 2020 in connection with the opioid lawsuit developments.
Recent highlights
- Cardinal Health announced that Sheri Edison joined the board of directors effective September 1. Ms. Edison currently serves as Executive Vice President and General Counsel for Amcor plc.
- Cardinal Health board of directors approved a quarterly dividend of $0.4859 per share. The dividend will be payable on January 15, 2021 to shareholders of record at the close of business on January 4, 2021.
- Cardinal Health continues to be recognized for its Diversity and Inclusion efforts, recently in the Forbes 2020 America's Best Employers for Women list, the Diversity Best Practices (DBP) Inclusion Index, and the 2020 LATINA Style, Inc. 50 report.
- Credit Suisse 29th Annual Healthcare Conference at 1:15 p.m. EST, November 9
- 39th Annual J.P. Morgan Healthcare Conference on January 11-14, 2021
Cardinal Health will host a webcast today at 8:30 a.m. EST to discuss first quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required.
Presentation slides and a webcast replay will be available until November 4, 2021.
Original source can be found here.
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