Essential to care Lehman Brothers 11 Annual Global Healthcare Conference R. Kerry Clark, Chairman and CEO Sally J. Curley, SVP, IR Jon Lyons, Director, IR Exhibit 99.1 th |
2 Forward-looking statements and GAAP reconciliation This presentation contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: competitive pressures in Cardinal Health’s various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; uncertainties relating to timing of generic introductions and the frequency or rate of branded pharmaceutical price appreciation or generic pharmaceutical price deflation; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by any regulatory authority or any legal and administrative proceedings; future actions of regulatory bodies or government authorities relating to Cardinal Health’s manufacturing or sale of products and other costs or claims that could arise from its manufacturing, compounding or repackaging operations or from its other services; the costs, difficulties and uncertainties related to the integration of acquired businesses; and general economic and market conditions. This presentation reflects management’s views as of March 18, 2008. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement. In addition, this presentation includes non-GAAP financial measures. Cardinal Health provides definitions and reconciling information at the end of this presentation. |
3 Key themes: FY08 Focusing on the core and leveraging scale Rebuilding the pharmaceutical distribution business via superior execution Leveraging the growth potential of CMP Maintaining a shareholder-focused capital deployment strategy 1 2 3 4 |
4 Focusing on the core, leveraging scale Mission: To make healthcare safer and more productive Safety Productivity HSCS-Pharmaceutical HSCS-Medical HSCS Clinical Technologies & Services Medical Products & Technologies CMP |
5 Focusing on the core, leveraging scale HSCS-Pharmaceutical HSCS-Medical Pharmaceutical Distribution Nuclear Pharmacy Services Medical/Surgical Distribution Presource ® Kitting HSCS Clinical Technologies & Services Medical Products & Technologies* Infusion Dispensing Infection Prevention Respiratory *Formerly Medical Products Manufacturing CMP ~33% of Profit 1 ~67% of Profit 1 Industry leading distribution businesses with good growth and strong cash flow High growth, higher margin healthcare products and technologies businesses (1) Profit refers to combined H1 FY 08 segment profit for the respective segments of each sector before inter- segment eliminations. |
6 Focusing on the core, leveraging scale • We are executing on our stated capital deployment strategy • Sector organizations are in place • Executive leadership team is in place • Hospital salesforce integration is complete • Integration of HSCS in Dublin is on schedule • We are performing well in CMP, HSCS-M, but not in HSCS-P Corporate Update |
7 Rebuilding pharma distribution: Accomplishments • New leadership in place • Most major contracts recently renewed • Dedicated focus on all key sales channels • Improved customer profitability measures • New generic plan for regional chains and independents • Enhanced distribution center operational metrics • Strengthening anti-diversion controls |
8 Rebuilding pharma distribution: Near-term Expectations: • Calendar year 2008 (CY08) should be good for generics • Anticipate branded pharma pricing increasing mid-single digit percentages • CAH should grow revenue at, or slightly faster than, market due to customer mix • No significant additional contract renewals CY08 • Single-minded focus on superior execution |
9 Leveraging the growth potential of CMP • Business model remains very strong with revenue up 24% and profit up 44% (H1 FY’08) • Goal to be 35-40% of total segment profit by 2010 • CMP has significant opportunities internationally • New product pipeline is strong • Medication management and infection prevention platforms align well with core industry concerns • Viasys acquisition tracking ahead of expectations • Enturia acquisition is an excellent fit with our portfolio |
10 MPT: Enturia acquisition • Strong strategic fit with existing infection prevention business • Clinically preferred solution in proprietary application technology • 2007 revenues ~$140M • $490M cash transaction • Slightly dilutive to remainder of FY08, but remain within previous FY08 non-GAAP EPS guidance of $3.75 - $3.85 per share – Accretive FY09 and beyond – HSR filed, anticipate close early May, dilutive in Q4 FY08 • Expected to generate positive economic profit and returns above cost of capital within third fiscal year after purchase |
11 Viasys integration update • Developed three-year roadmap of global integration initiatives to achieve cost / revenue synergies • Integration into MPT going well; on-track to achieve one- and three-year commitments – Completed organizational and key process integration – Achieved first phase of operational offering efficiencies |
12 Value-focused financial strategy Value-focused financial strategy that is targeted at driving growth and returns Balance sheet management Capital Deployment Capital Structure Growth and returns Balance sheet management – Focus on working capital efficiency – Portfolio optimization – Q2 FY08 non-GAAP ROIC up 156 bps Y/Y Capital deployment – Shareholder value focused – $942M shares repurchased H1 FY08 Capital structure – Low cost of capital, BBB+ rating – Our structure provides sustainability in current credit crisis – Debt to total capital increased from 25% in Q2 FY07 to 36% in Q2 FY08 |
13 Guidance • Reaffirm FY08 non-GAAP EPS of $3.75 - $3.85 per share • FY09 guidance – FY09 guidance part of Q4 FY08 earnings release/conference call in early August |
14 Key themes: FY08 Focusing on the core and leveraging scale Rebuilding the pharmaceutical distribution business via superior execution Leveraging the growth potential of CMP Maintaining a shareholder-focused capital deployment strategy 1 2 3 4 |