07.01.06
$9.8 Billion ($74B Total)
Key Executives:
Robert D. Walter, Chairman
R. Kelly Clark, President and CEO
John Parker, President, Cardinal Health, Europe
Jody Davids, Executive Vice President and CIO
Jeffrey Henderson, Executive Vice President and CFO
No. of Employees: 55,000
World Headquarters: Dublin, OH
For fiscal year ended June 30, 2005, Cardinal Health was able to achieve a 15% gain in sales. However, the full picture shows troubled times as Cardinal actually experienced its first earnings decline in the company’s 35-year history, sliding from $2.2 billion in 2004 to $1.6 billion in 2005.
Cardinal’s Medical Products and Service business had mixed news, garnering a 7% increase to $9.8 billion while earnings declined 3% to $672 million. The earnings slide was attributed to competitive pricing pressures and significant increases in raw material and fuel costs.
During 2005, the company did make some moves to strengthen business. Cardinal opened a new plant in Las Piedras, Puerto Rico, where it will manufacture components for the Pyxis Products business. With this addition, Cardinal now operates six facilities employing nearly 1,000 people in Puerto Rico.
Cardinal also signed preferred provider agreements with MedAssets Supply Chain Systems, a major group purchasing organization representing 22,000 healthcare providers, for its Alaris infusion safety systems and Pyxis medication and supply automation solutions.
Overall, though, the company’s top executives were disappointed with the final results of FY 2005, noting in their annual report, “Our financial performance was disappointing. We could have done better.” As a result, Cardinal’s primary strategy is to sell some of its assets and become a leaner, more focused company.
Changes are certainly in motion, as 2006 has seen major shifting within the company. Earlier this year, Cardinal Health appointed R. Kerry Clark, former vice chairman of the board of The Procter & Gamble Company, to president, chief executive officer and a member of the board of directors. Clark succeeded Robert D. Walter, the company’s founder and long-time CEO. Since he is remaining with the company as the Cardinal’s chairman, Walter will work closely with Clark to shape the company’s future. Cardinal also announced that George L. Fotiades, president and chief operating officer, would leave the company following a transition period.
As the company adjusts to all the changes in motion, Cardinal is beginning to show a bit of rebound, but things are still somewhat unsteady. Third-quarter FY 2006 results for Cardinal Health continue to strengthen as revenues reached record levels. For the quarter ended March 31, revenue had increased 9% to $21 billion. Earnings before discontinued operations continued a downward trend, however, losing 5% over last year. In the Medical Products and Services business, revenue was slightly ahead of the prior year, including a 6% increase in revenue within the medical products manufacturing and distribution businesses. Sales growth in medical products manufacturing was helped by demand for Cardinal health’s glove and respiratory products.
The third quarter also has been particularly active for Cardinal with announcements of divestitures and acquisitions. As part of a strategy to focus on core, market-leading products, Cardinal plans to divest certain businesses as part of Cardinal Health’s specialty distribution business to OTN, a wholly owned subsidiary of Oncology Holdings, Inc.
Cardinal also has entered into discussions concerning the sale of its healthcare marketing services and UK-based Intercare pharmaceutical distribution businesses. Both businesses have been listed as discontinued operations.
During the quarter, Cardinal sold its pharmacy staffing business to Soliant Health, the healthcare staffing unit of MPS Group.
Furthermore, Cardinal Health signed a five-year agreement with Novation to distribute medical and surgical products, essentially extending a long-term relationship between Novation and Cardinal Health. Under the agreement, Cardinal Health will provide medical and surgical products and logistics services to Novation members. The contract will go into effect September 1, 2006 and run through August 2011.
“This is a vote of confidence in our company and the value of our products and services for healthcare facilities nationwide,” said Jim Neubauer, Cardinal Health’s vice president of Health Systems. “We are pleased to continue building on our long-term relationship with such a valuable customer.”
Finally, in an effort to augment its line of medical product offerings, Cardinal also completed the acquisition of Golden, CO-based Denver Biomedical, Inc., a designer and manufacturer of the Pleurx Pleural Catheter System.
With operations becoming more focused on core technologies, Cardinal expects to grow revenues by 8% to 10% annually.
“After completing a thorough review of our businesses and global operations, we remain convinced of the tremendous potential Cardinal Health has to help improve productivity and the safety of health care worldwide,” said president and CEO Clark. “We have made progress during fiscal 2006 in transforming Cardinal Health and see continued momentum as we transition to fiscal 2007. In 2007, we will continue to focus on organic growth and using our scale to reduce costs across the enterprise, which we expect will result in strong revenue and earnings-per-share growth for the year.”
Key Executives:
Robert D. Walter, Chairman
R. Kelly Clark, President and CEO
John Parker, President, Cardinal Health, Europe
Jody Davids, Executive Vice President and CIO
Jeffrey Henderson, Executive Vice President and CFO
No. of Employees: 55,000
World Headquarters: Dublin, OH
For fiscal year ended June 30, 2005, Cardinal Health was able to achieve a 15% gain in sales. However, the full picture shows troubled times as Cardinal actually experienced its first earnings decline in the company’s 35-year history, sliding from $2.2 billion in 2004 to $1.6 billion in 2005.
Cardinal’s Medical Products and Service business had mixed news, garnering a 7% increase to $9.8 billion while earnings declined 3% to $672 million. The earnings slide was attributed to competitive pricing pressures and significant increases in raw material and fuel costs.
During 2005, the company did make some moves to strengthen business. Cardinal opened a new plant in Las Piedras, Puerto Rico, where it will manufacture components for the Pyxis Products business. With this addition, Cardinal now operates six facilities employing nearly 1,000 people in Puerto Rico.
Cardinal also signed preferred provider agreements with MedAssets Supply Chain Systems, a major group purchasing organization representing 22,000 healthcare providers, for its Alaris infusion safety systems and Pyxis medication and supply automation solutions.
Overall, though, the company’s top executives were disappointed with the final results of FY 2005, noting in their annual report, “Our financial performance was disappointing. We could have done better.” As a result, Cardinal’s primary strategy is to sell some of its assets and become a leaner, more focused company.
Changes are certainly in motion, as 2006 has seen major shifting within the company. Earlier this year, Cardinal Health appointed R. Kerry Clark, former vice chairman of the board of The Procter & Gamble Company, to president, chief executive officer and a member of the board of directors. Clark succeeded Robert D. Walter, the company’s founder and long-time CEO. Since he is remaining with the company as the Cardinal’s chairman, Walter will work closely with Clark to shape the company’s future. Cardinal also announced that George L. Fotiades, president and chief operating officer, would leave the company following a transition period.
As the company adjusts to all the changes in motion, Cardinal is beginning to show a bit of rebound, but things are still somewhat unsteady. Third-quarter FY 2006 results for Cardinal Health continue to strengthen as revenues reached record levels. For the quarter ended March 31, revenue had increased 9% to $21 billion. Earnings before discontinued operations continued a downward trend, however, losing 5% over last year. In the Medical Products and Services business, revenue was slightly ahead of the prior year, including a 6% increase in revenue within the medical products manufacturing and distribution businesses. Sales growth in medical products manufacturing was helped by demand for Cardinal health’s glove and respiratory products.
The third quarter also has been particularly active for Cardinal with announcements of divestitures and acquisitions. As part of a strategy to focus on core, market-leading products, Cardinal plans to divest certain businesses as part of Cardinal Health’s specialty distribution business to OTN, a wholly owned subsidiary of Oncology Holdings, Inc.
Cardinal also has entered into discussions concerning the sale of its healthcare marketing services and UK-based Intercare pharmaceutical distribution businesses. Both businesses have been listed as discontinued operations.
During the quarter, Cardinal sold its pharmacy staffing business to Soliant Health, the healthcare staffing unit of MPS Group.
Furthermore, Cardinal Health signed a five-year agreement with Novation to distribute medical and surgical products, essentially extending a long-term relationship between Novation and Cardinal Health. Under the agreement, Cardinal Health will provide medical and surgical products and logistics services to Novation members. The contract will go into effect September 1, 2006 and run through August 2011.
“This is a vote of confidence in our company and the value of our products and services for healthcare facilities nationwide,” said Jim Neubauer, Cardinal Health’s vice president of Health Systems. “We are pleased to continue building on our long-term relationship with such a valuable customer.”
Finally, in an effort to augment its line of medical product offerings, Cardinal also completed the acquisition of Golden, CO-based Denver Biomedical, Inc., a designer and manufacturer of the Pleurx Pleural Catheter System.
With operations becoming more focused on core technologies, Cardinal expects to grow revenues by 8% to 10% annually.
“After completing a thorough review of our businesses and global operations, we remain convinced of the tremendous potential Cardinal Health has to help improve productivity and the safety of health care worldwide,” said president and CEO Clark. “We have made progress during fiscal 2006 in transforming Cardinal Health and see continued momentum as we transition to fiscal 2007. In 2007, we will continue to focus on organic growth and using our scale to reduce costs across the enterprise, which we expect will result in strong revenue and earnings-per-share growth for the year.”