CareFusion Reports First Quarter Fiscal 2014 Results - Revenue of $830 million consistent with company expectations - Diluted earnings per share (EPS) from continuing operations totaled $0.36 on a GAAP basis and remained even with prior year at $0.44 per adjusted share - Repurchased 3.3 million shares during the quarter, bringing the company's total investments in share repurchases to $621 million since February 2012 PR Newswire SAN DIEGO, Nov. 7, 2013 SAN DIEGO, Nov. 7, 2013 /PRNewswire/ --CareFusion Corp. (NYSE: CFN), a leading, global medical technology company, today reported financial results for its first quarter of fiscal 2014, ended Sept. 30. "Our team executed well and delivered solid first quarter results, putting us on the right track for the full fiscal year," said Kieran T. Gallahue, chairman and CEO. "I'm pleased with the way our Procedural Solutions team continues to perform across the board, and, with good visibility into our capital business, we continue to anticipate a strong second half of the year in Medical Systems. "During the quarter, we continued to make strategic progress, closing our Sendal acquisition in Spain as part of our strategy to globalize the company and ramping up our R&D investments in the Procedural Solutions segment as we prepare to launch several new products over the next 18 months." First Quarter Results CareFusion reported first quarter fiscal 2014 revenue of $830 million, compared to $837 million in the first quarter of fiscal year 2013, a 1 percent decrease on both a reported and constant currency basis. Operating income was $116 million compared to $143 million in the prior year period. Excluding nonrecurring items, adjusted operating income decreased 11 percent to $142 million, with revenue mix and the medical device excise tax negatively affecting the company's operating margins during the quarter. Operating expenses totaled $307 million. Excluding nonrecurring items, adjusted operating expenses were $281 million, an increase of 2 percent over the prior year period, primarily driven by the medical device excise tax. The company reported income from continuing operations of $78 million, or $0.36 per diluted share. Adjusted income from continuing operations decreased 3 percent from the prior year period to $96 million, or $0.44 per diluted share. During the quarter, CareFusion settled a previously disclosed tax matter with the IRS, which resulted in an adjusted effective tax rate of 21.4 percent and contributed approximately $0.04 per diluted share to the company's first quarter results. Medical Systems First quarter revenue for the Medical Systems segment was $524 million, a 5 percent decrease from the prior year period on a reported and constant currency basis. Strong performance in the Infusion Systems business line was offset by declines in the Respiratory Technologies and Dispensing Technologies business lines. Segment profit for the quarter fell to $74 million from $102 million in the prior year period, a 27 percent decrease driven by expected lower volumes in the Dispensing Technologies business line resulting from a product line transition. Adjusted segment profit declined 20 percent to $90 million. Procedural Solutions Strong performance across the Procedural Solutions segment led to first quarter revenue of $306 million, a 7 percent increase from the prior year period on a reported and constant currency basis. Segment growth was led by double-digit revenue increases in both the Medical Specialties and Specialty Disposables business lines. Segment profit totaled $42 million, driven by gross margin improvements that were partially offset by increased investments in R&D. On an adjusted basis, segment profit grew 8 percent to $52 million. Recent Highlights Additional first quarter and recent highlights included: oCompleting the acquisition of Sendal, an infusion specialty disposable manufacturer in Spain that primarily serves the western European market, further expanding the company's Infection Prevention business line globally. oInvesting $121 million to repurchase 3.3 million shares during the quarter under a two-year, $750 million share repurchase program. Since the company initiated its first share buyback program in February 2012, CareFusion has invested $621 million to repurchase 18.6 million shares. oReceiving 510(k) clearance from the Food and Drug Administration for a needleless IV connector that features neutral reflux at disconnect and only requires a three-second alcohol swab to disinfect. This product launch, expected in December 2013, will be the first of several new products anticipated across the Procedural Solutions segment during the next 18 months. oIntroducing a new "Rent-a-Rowa®" leasing and service program that makes it easier for European retail pharmacies to adopt the Rowa Smart® System for automated management of pharmaceutical inventory. oDeploying additional functionality for the Pyxis® ES platform, a combination of hardware and software that helps improve medication safety by simplifying and standardizing the medication management process. oLaunching a new online catalog that simplifies the ordering of surgical products either individually or as full, procedure-specific trays. oIntroducing the new Alaris VP pump, a large volume infusion pump with technology to accurately measure variable pressure in the infusion line, in several key markets outside of the United States. Fiscal 2014 Outlook For the fiscal year ending June 30, 2014, CareFusion continues to expect organic revenue to grow 1 to 4 percent on a constant currency basis compared to fiscal 2013 revenue of $3.55 billion.Adjusted diluted earnings per share from continuing operations are expected to be in the range of $2.30 to $2.40. The guidance is based on an assumed diluted weighted average outstanding share count of approximately 215 million, which includes the impact of expected share repurchases during fiscal 2014. Conference Call CareFusion will host a webcast and conference call today at 2 p.m. PST (5 p.m. EST) to discuss the financial and operational results for the first quarter. To access the call, visit the Investors page at www.carefusion.com. Log on at least 15 minutes before the call begins to register and download or install any necessary audio software. Investors and other interested parties may also access the call by dialing 866.318.8616 within the U.S. or 617.399.5135 from outside the U.S. and using the access code 68326717. A replay of the conference call will be available from 6 p.m. PST (9 p.m. EST) on Nov. 7 through 11:59 p.m. PST on Nov. 14 and can be accessed by dialing 888.286.8010 in the U.S. or 617.801.6888 from outside the U.S. and using the access code 72445345. About CareFusion Corporation CareFusion (NYSE: CFN) is a global corporation serving the health care industry with products and services that help hospitals measurably improve the safety and quality of care. The company develops industry-leading technologies including Alaris^® infusion pumps, Pyxis^® automated dispensing and patient identification systems, AVEA^®, AirLife^® and LTV^® series ventilation and respiratory products, ChloraPrep^® products, MedMined^® services for data mining surveillance, V. Mueller^® surgical instruments, and an extensive line of products that support interventional medicine. CareFusion employs approximately 15,000 people across its global operations. More information may be found at www.carefusion.com. Use of Non-GAAP Financial Measures by CareFusion Corporation This CareFusion news release and the information contained herein present non-GAAP financial measures that exclude certain amounts, as follows: "adjusted segment profit," "adjusted operating expenses," "adjusted operating income," and "adjusted operating margin," which exclude amortization of acquired intangibles, as well as nonrecurring restructuring and acquisition integration charges; and "adjusted income from continuing operations," "adjusted diluted earnings per share from continuing operations" and "adjusted effective tax rate," which exclude amortization of acquired intangibles, as well as nonrecurring restructuring and acquisition integration charges and nonrecurring tax items. The most directly comparable GAAP financial measures for these non-GAAP financial measures are segment profit, operating expenses, operating income, operating margin, income from continuing operations, diluted earnings per share from continuing operations and effective tax rate. The company has included below unaudited adjusted financial information for the quarters ended September 30, 2013 and 2012, which includes a reconciliation of GAAP to non-GAAP financial measures. The company's management uses these non-GAAP financial measures to evaluate the company's performance and provides them to investors as a supplement to the company's reported results, as they believe this information provides additional insight into the company's operating performance by disregarding certain nonrecurring items. These non-GAAP financial measures should not be considered in isolation, as a substitute for, or as superior to, financial measures calculated in accordance with GAAP, and the company's financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. While the types of items and charges excluded from the company's non-GAAP financial measures may occur in the future, the company's management believes that they are not reflective of the day-to-day offering of its products and services and relate more to strategic, multi-year corporate actions, without predictable trends, or discrete and unusual or infrequent transactions that are not indicative of future operations or business trends. Cautions Concerning Forward-looking Statements The CareFusion news release and the information contained herein present forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. CareFusion intends forward-looking terminology such as "believes," "expects," "may," "will," "should," "anticipates," "plans," or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause the company's actual results to differ materially from those projected, anticipated or implied by the forward-looking statements. The most significant of these uncertainties are described in CareFusion'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: we may be unable to effectively enhance our existing products or introduce and market new products or may fail to keep pace with advances in technology; we are subject to complex and costly regulation; cost containment efforts of our customers, purchasing groups, third-party payers and governmental organizations could adversely affect our sales and profitability; current economic conditions have and may continue to adversely affect our results of operations and financial condition; we may be unable to realize any benefit from our cost reduction and restructuring efforts and our profitability may be hurt or our business otherwise might be adversely affected; we may be unable to protect our intellectual property rights or may infringe on the intellectual property rights of others; defects or failures associated with our products and/or our quality system could lead to the filing of adverse event reports, recalls or safety alerts and negative publicity and could subject us to regulatory actions; and we are currently operating under an amended consent decree with the FDA and our failure to comply with the requirements of the amended consent decree may have an adverse effect on our business. The CareFusion news release and the information contained herein reflect management's views as of November 7, 2013. Except to the limited extent required by applicable law, CareFusion undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. CAREFUSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) QuartersEnded September30, (in millions, except per share amounts) 2013 2012 Revenue $ 830 $ 837 Cost of Products Sold 407 401 Gross Profit 423 436 Selling, General and Administrative Expenses 248 244 Research and Development Expenses 48 47 Restructuring and Acquisition Integration Charges 11 2 Operating Income 116 143 Interest Expense and Other, Net 20 19 Income Before Income Tax 96 124 Provision for Income Tax 18 37 Income from Continuing Operations 78 87 Loss from Discontinued Operations, Net of Tax — (3) Net Income $ 78 $ 84 Per Share Amounts:^1 Basic Earnings (Loss) per Common Share: Continuing Operations $ 0.36 $ 0.39 Discontinued Operations $ — $ (0.01) Basic Earnings per Common Share $ 0.36 $ 0.38 Diluted Earnings (Loss) per Common Share: Continuing Operations $ 0.36 $ 0.39 Discontinued Operations $ — $ (0.01) Diluted Earnings per Common Share $ 0.36 $ 0.37 Weighted-Average Number of Common Shares Outstanding: Basic 214.0 221.9 Diluted 217.4 224.4 Adjusted Financial Measures:^2 Operating Expenses $ 281 $ 276 Operating Income $ 142 $ 160 Operating Margin^3 17.1 % 19.1 % Income from Continuing Operations $ 96 $ 99 Diluted EPS from Continuing Operations $ 0.44 $ 0.44 Effective Tax Rate 21.4 % 30.2 % ____________ ^1 Earnings per share calculations are performed separately for each component presented. Therefore, the sum of the per share components from the table may not equal the per share amounts presented. ^2 Adjusted financial measures are non-GAAP measures that exclude amortization of acquired intangibles, as well as certain nonrecurring items, as discussed above under Use of Non-GAAP Financial Measures. These measures are reconciled to comparable GAAP measures in the Reconciliation of Non-GAAP Financial Measures included in the pages that follow. ^3 Operating margin reflects operating income divided by revenue. The Reconciliation of Non-GAAP Financial Measures included in the pages that follow present operating income on a GAAP and an adjusted basis, from which operating margin is derived. CAREFUSION CORPORATION SEGMENT AND SELECT BUSINESS LINE REVENUES (UNAUDITED) QuartersEnded Percent September30, (in millions) 2013 2012 Change Medical Systems Dispensing Technologies $ 211 $ 244 (14) % Infusion Systems 219 203 8 % Respiratory Technologies 88 97 (9) % Other 6 7 (14) % Total Medical Systems $ 524 $ 551 (5) % Procedural Solutions Infection Prevention $ 149 $ 144 3 % Medical Specialties 89 80 11 % Specialty Disposables 68 62 10 % Total Procedural Solutions $ 306 $ 286 7 % Total CareFusion $ 830 $ 837 (1) % CAREFUSION CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Adjusted Financial Data: Segment Profit (in millions, Operating Income from Diluted EPS except per Medical Procedural SG&A Operating Continuing from share Systems Solutions Expenses Expenses^3 Income Operations^4 Continuing amounts) Operations^5 Quarter Ended September 30, 2013 GAAP $ 74 $ 42 $ 248 $ 307 $ 116 $ 78 $ 0.36 Restructuring and 7 4 — (11) 11 8 0.04 Acquisition Integration^1 Amortization of acquired 9 6 (15) (15) 15 10 0.04 intangibles^2 Adjusted $ 90 $ 52 $ 233 $ 281 $ 142 $ 96 $ 0.44 Quarter Ended September 30, 2012 GAAP $ 102 $ 41 $ 244 $ 293 $ 143 $ 87 $ 0.39 Restructuring and 1 1 — (2) 2 2 0.01 Acquisition Integration^1 Amortization of acquired 9 6 (15) (15) 15 10 0.04 intangibles^2 Adjusted $ 112 $ 48 $ 229 $ 276 $ 160 $ 99 $ 0.44 ____________ ^1 Restructuring and acquisition integration charges primarily relate to nonrecurring expenses associated with rationalizing headcount and aligning operations. ^2 Amortization of acquired intangibles relate to the non-cash expenses associated with amortization of identifiable intangible assets of acquired businesses. ^3 Operating expenses consist of selling, general and administrative, research and development, and restructuring and acquisition integration expenses. ^4 Income from continuing operations is presented net of tax effect. Additional information about nonrecurring tax items related to nonrecurring expenses and the impact on the effective tax rate is included in the Reconciliation of the Adjusted Effective Tax Rate on the following page. ^5 Earnings per share calculations are performed separately for each component presented. Therefore, the sum of the per share components from the table may not equal the per share amounts presented. CAREFUSION CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) Adjusted Effective Tax Rate: Nonrecurring Amortization of Adjusted ^ (in millions) GAAP Items ^1 Acquired 2 Intangibles Quarter Ended September 30, 2013 Income Before $ 96 $ 11 $ 15 $ 122 Income Tax Provision for $ 18 $ 3 $ 5 $ 26 Income Tax Effective Tax 18.5 % 31.3 % 34.2 % 21.4 % Rate^3 Quarter Ended September 30, 2012 Income Before $ 124 $ 2 $ 15 $ 141 Income Tax Provision for $ 37 $ — $ 5 $ 42 Income Tax Effective Tax 29.8 % 70.2 % 32.7 % 30.2 % Rate^3 Adjusted EPS Outlook for Fiscal Year Ending June 30, 2014: GAAP Diluted Earnings per Common Share from Continuing Operations $2.04 - $2.14 Estimated charges for nonrecurring items related to restructuring and acquisition integration, net of tax (mid-point of an estimated $0.05 range of $0.04 to $0.06 per diluted share) Estimated acquisition-related intangible amortization, net of tax $0.21 Adjusted Diluted Earnings per Common Share from Continuing $2.30 - Operations $2.40 ____________ ^1 Reflects nonrecurring charges primarily related to nonrecurring restructuring and acquisition integration charges, and nonrecurring income tax items. ^2 Adjusted financial information reflects GAAP results adjusted on a non-GAAP basis to exclude nonrecurring items and amortization of acquired intangibles noted above. ^3 Effective tax rate calculations are performed based on whole dollar amounts, and therefore may not equal the calculations based on amounts rounded in millions presented in the table above. CAREFUSION CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions, except per share data) September 30, 2013 June30, 2013 ASSETS Current Assets: Cash and Cash Equivalents $ 1,773 $ 1,798 Trade Receivables, Net 402 429 Current Portion of Net Investment in Sales-Type 340 351 Leases Inventories, Net 404 384 Prepaid Expenses 34 30 Other Current Assets 215 141 3,168 3,133 Total Current Assets Property and Equipment, Net 406 409 Net Investment in Sales-Type Leases, Less 973 1,001 Current Portion Goodwill 3,083 3,081 Intangible Assets, Net 776 793 Other Assets 86 136 $ 8,492 $ 8,553 Total Assets LIABILITIES AND EQUITY Current Liabilities: Current Portion of Long-Term Obligations and $ 452 $ 2 Other Short-Term Borrowings Accounts Payable 123 147 Deferred Revenue 58 51 Accrued Compensation and Benefits 114 150 Other Accrued Liabilities 226 242 Total Current Liabilities 973 592 Long-Term Obligations, Less Current Portion 999 1,444 Deferred Income Taxes 645 638 Other Liabilities 473 493 3,090 3,167 Total Liabilities Commitments and Contingencies Stockholders' Equity: Preferred Stock (50.0 Authorized Shares; $.01 — — Par Value) Issued – None Common Stock (1,200.0 Authorized Shares; $.01 Par Value) Issued – 231.3 and 229.4 shares at 2 2 September30, 2013 and June30, 2013, respectively Treasury Stock, at cost, 18.8 and 15.5 shares at September 30, 2013 and June30, 2013, (626) (505) respectively Additional Paid-In Capital 4,924 4,886 Retained Earnings 1,126 1,048 Accumulated Other Comprehensive Loss (24) (45) Total Stockholders' Equity 5,402 5,386 $ 8,492 $ 8,553 Total Liabilities and Stockholders' Equity CAREFUSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Quarters Ended September 30, (in millions) 2013 2012 Cash and Cash Equivalents at July1, Attributable to $ 1,798 $ 1,648 Continuing Operations Cash and Cash Equivalents at July1, Attributable to $ — $ (1) Discontinued Operations Cash Flows from Operating Activities: Net Income 78 84 Loss from Discontinued Operations — (3) Income from Continuing Operations 78 87 Adjustments to Reconcile Income from Continuing Operations to Net Cash Provided by Operating Activities: Depreciation and Amortization 46 45 Other Non-Cash Items 36 34 Change in Operating Assets and Liabilities: Trade Receivables 25 32 Inventories (23) (22) Net Investment in Sales-Type Leases 39 (10) Accounts Payable (23) 7 Other Accrued Liabilities and Operating Items, Net (104) (95) Net Cash Provided by Operating Activities – Continuing 74 78 Operations Net Cash Provided by Operating Activities – Discontinued — 1 Operations Net Cash Provided by Operating Activities 74 79 Cash Flows from Investing Activities: Additions to Property and Equipment (18) (18) Other Investing Activities — (2) Net Cash Used in Investing Activities – Continuing (18) (20) Operations Net Cash Used in Investing Activities (18) (20) Cash Flows from Financing Activities: Repayment of Long-Term Obligations (1) (250) Share Repurchase Programs (114) — Proceeds from Stock Option Exercises 34 7 Other Financing Activities (10) (16) Net Cash Used in Financing Activities – Continuing (91) (259) Operations Net Cash Used in Financing Activities (91) (259) Effect of Exchange Rate Changes on Cash 10 14 Net Decrease in Cash and Cash Equivalents – Continuing (25) (187) Operations Net Increase in Cash and Cash Equivalents – Discontinued — 1 Operations Net Decrease in Cash and Cash Equivalents (25) (186) Cash and Cash Equivalents at September 30, Attributable to $ 1,773 $ 1,461 Continuing Operations Cash and Cash Equivalents at September 30, Attributable to $ — $ — Discontinued Operations Non-Cash Investing and Financing Activities: Asset Acquired by Entering into Capital Lease $ 4 $ — SOURCE CareFusion Corp. Website: http://www.carefusion.com Contact: Media: Kristen Cardillo, (858) 617-2317, firstname.lastname@example.org, Investors: Jim Mazzola, (858) 617-1203, email@example.com
CareFusion Reports First Quarter Fiscal 2014 Results
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