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Cardinal Health Inc CAH
Q2 2012 Earnings Call Transcript

Transcript Call Date 02/02/2012

Operator: Good morning, ladies and gentlemen, and welcome to the Second Quarter 2012 Cardinal Health, Incorporate Earnings Conference Call. My name is Chris and I will be your conference moderator for today. Presently, all participants are in a listen-only mode. Later, we will facilitate a question-and-answer session.

As a reminder, this conference is being recorded for replay purposes.

At this time, I would now like to turn the conference over to your presenter for today, Ms. Sally Curley, Senior Vice President of Investor Relations. Ma'am you may proceed.

Sally J. Curley - SVP, IR: Thank you, and welcome to Cardinal Health's second quarter fiscal 2012 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 the SEC filings and the forward-looking statements slide at the beginning of the presentation, found on the Investor page of our website for a description of risks and uncertainties.

In addition, we will reference non-GAAP financial measures. Information about these measures is included at the end of the slides.

I'd also like to remind you of a few upcoming investment conferences and events in which we will be webcasting; notably, the UBS Global Healthcare Services Conference on February 8th, the Leerink Swann 2012 Global Healthcare Conference on February 16th, Citigroup 2012 Global Healthcare Conference on February 27th, the Cowen and Company 32nd Annual Health Care Conference on March 5th, the Raymond James 33rd Institutional Investors Conference on March 6th, and the Barclays Capital Global Healthcare Conference on March 14th. The details of these events are or will be posted on IR section of our website at cardinal.com. So, please make sure to visit the site often for updated information. We look forward to seeing you at one of these upcoming events.

Now, I'd like to turn the call over to George Barrett.

George S. Barrett - Chairman and CEO: Thanks Sally. Good morning, everyone, and thanks to all of you for joining us on our second quarter call. We are now half way through our 2012 fiscal year, and I am pleased to report a solid second quarter performance. We continue to make excellent progress on activities that will benefit the near, mid and long term. Revenue for the second quarter was $27.1 billion, up 7% from the prior year. Non-GAAP operating earnings increased by 21% to $475 million. Our non-GAAP EPS grew 11% to $0.81 from last year's $0.73, which benefited from a lower than usual tax rate. The earnings improvement reflects continued margin expansion across our business. This continues to be a priority of ours and our margin improvement is a result of disciplined approach to product and customer mix as well as overall efficiency improvements.

Our Pharmaceutical segment continued its momentum and delivered a terrific performance, 30% profit growth on a revenue gain of 6%. The Medical segment achieved top line growth of 9% demonstrating good progress but as expected recorded a year-over-year profit decline of 18%, primarily due to residual commodity cost pressures. Overall, our growth initiatives continued to gain momentum and our recent acquisition are yielding results at or above target.

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