$9.60 Billion (107.6B total)
George S. Barrett, Chairman & CEO
Jeffrey W. Henderson, Chief Financial Officer
Donald M. Casey Jr., CEO, Medical Segment
Michael C. Kaufman, CEO, Pharmaceutical Segment
Mark R. Blake, Exec. VP, Strategy & Corporate Development
Stephen T. Falk, Exec. VP, General Counsel & Corporate Secretary
Craig S. Morford, Chief Legal & Compliance Officer
Mark E. Rosenbaum, Chief Customer Officer
NO. OF EMPLOYEES: 32,500
GLOBAL HEADQUARTERS: Dublin, Ohio
“An optimist is the human personification of spring.”
— Susan J. Bissonette
Two years ago, British researchers set out to uncover the secrets of the eternally optimistic. Specifically, they wanted to better understand the mental mechanism involved in positive thinking.
The researchers subjected 19 study subjects to various negative scenarios (stolen car, degenerative disease, etc.) and asked them to estimate the probability of such events occurring to them in the future. At the end of the experiment, the subjects completed a questionnaire regarding their optimism.
An analysis of the test subjects’ magnetic resonance imaging scans revealed a startling discovery—the brain does not always process unwanted information correctly. As University College London researcher Tali Sharot, Ph.D., explained: “Seeing the glass as half-full rather than half-empty can be a positive thing—it can lower stress and anxiety and be good for our health and well-being. But it can also mean that we are less likely to take precautionary action…So why don’t we learn from cautionary information? Our study suggests that we pick and choose the information we listen to. The more optimistic we are, the less likely we are to be influenced by negative information…”
George S. Barrett is among those who refuse to be influenced by negativity. The Cardinal Health Inc. chairman and CEO accentuated the positive in the company’s most recent annual report despite the numerous challenges that affected the global healthcare conglomerate in FY12, including increased commodity prices, an anemic economic recovery, shrinking reimbursement rates and legal troubles with its controlled drug policy.
“Fiscal 2012 was a year of considerable accomplishments. We achieved virtually all of our financial goals, including those for revenues, operating profit, earnings per share, margin rate growth and capital efficiencies. We made excellent progress on our strategic priorities,” Barrett said in his annual letter to shareholders.
“It was also a year which brought its challenges,” he continued, “some foreseen, like commodity costs, and some others unexpected, particularly our issues with the Drug Enforcement Administration around controlled drug policy. But through this, we continue to grow, learn and adjust—a necessary ingredient for any thriving organization with bold long-term aspirations.”
The higher commodity costs mainly affected Cardinal’s Medical business, which lost 11 percent in profit during the fiscal year ended June 30, 2012. The segment’s profit slipped to $332 million, down 13.7 percent from its recession-era low of $384.9 million in 2009 and 22.4 percent from the $428 million the unit posted in FY10. Bigwigs attributed the sharp drop in profit to higher prices of oil-based resins, cotton, latex and other product supplies.
Those price hikes also cut $66 million from the Medical segment’s gross margin, but a fourth-quarter surge in profit—fueled by stabilized commodity costs—enabled the unit to post an overall gross margin gain of $47 million for the fiscal year.
“We were pleased the Medical segment returned to profit growth in the fourth quarter of 2012…” Barrett said in the annual report. “The commodity headwinds appear to have subsided and we expect to reap some of the benefits from our 2012 systems installation through improved margins and lower inventories.”
In FY12, Cardinal’s Medical segment reaped the benefits of robust product sales ($335 million), driven in part by a bevy of new releases, including a surgical mask, sterilization wrap, diagnostic procedure trays and surgical gloves.
During the first half of the fiscal year, Cardinal introduced two new powder-free surgical gloves and renamed its entire portfolio—comprised of the Duraprene, Esteem, Protegrity and Ultrafree labels—to the Protexis brand umbrella.
The Protexis Latex Hydrogel and Protexis Latex Blue gloves both are made from natural rubber latex. The Hydrogel model features a hydrophilic coating that chemically bonds to the inside of the glove, enhancing donning lubricity and fit. The Latex Blue iteration, meanwhile, features 50 micrograms or less of total water extractable protein per square decimeter and a color designed to help alert clinicians to potentially dangerous breaches or perforations. The Latex Blue version also incorporates the company’s Neu-Thera emollient coating, which improves both damp and dry donning, and keeps skin moist and clean.
Several weeks after launching the Protexis Latex Blue gloves, Cardinal unveiled its DuraBlue sterilization wrap, a double-layer Spunbond/Meltdown/Spunbond (SMS) wrap cleared for use in the Sterrad 100S plasma sterilization system from Advanced Sterilization Products of Irvine, Calif., a division of Johnson & Johnson’s Ethicon Inc., as well as the lumen, non lumen and flexible cycles of Steris’ Amsco V-Pro1, Amsco V-Pro1 Plus and Amsco V-Pro maX low-temperature sterilization systems. The DuraBlue wrap is made with non-woven, polypropylene SMS technology for strength, durability and microbial protection, according to the company. Available in six color-coded basis weight models, the wrap provides durable protection for various products, from lightweight linen packs to heavy instrument trays weighing up to 25 pounds. The wrap also is available in 14 sizes ranging from 12 inches by 12 inches to 54 inches by 90 inches.
Cardinal’s Smart-Seal surgical mask and diagnostic procedure trays made their debut in the third quarter, shortly before the company hired Donald M. Casey Jr. to lead the Medical segment.
Casey joined Cardinal Health from the Gary and Mary West Wireless Health Institute, a 4-year-old non-profit research organization focused on lowering the cost of healthcare through novel technology solutions. He served as the entity’s first CEO and currently remains on its board of directors.
The Smart-Seal mask features a patent-pending “cinch-and-hug” single-tie design that creates a custom seal around the wearer’s nose and mouth, eliminating face gaps and helping to reduce contamination risks in the perioperative environment.
The trays contain essential clinical supplies needed for seven diagnostic procedures: lumbar puncture, myelogram, arthrogram, amniocentesis, paracentesis/thoracentesis, bone marrow aspiration and biopsy, and soft tissue biopsy (custom kits can be designed for other procedures upon customer request). Cardinal claims the new trays can help reduce the amount of time clinicians spend organizing supplies for procedures and the amount of waste remaining after them.
“Based on customer feedback, we designed our diagnostic procedure trays to include the supplies clinicians need for diagnostic procedures—nothing more, nothing less,” Lisa Ashby, president of Cardinal Health’s Category Management, said when the trays were released in February 2012. “We know how important it is to have the right product for the right procedure at the right time, and these trays are designed to increase efficiencies and minimize waste.”
The trays and other new releases had a similar effect on Cardinal’s Medical segment revenue, which rose 8 percent to $9.6 billion in FY12. That growth was double the rate set by the Pharmaceutical segment, which generated $97.9 billion in revenue and $1.6 billion in segment profit, according to the company’s annual report. Contributing factors to the 4 percent revenue growth were new product launches, branded drug agreements and the acquisition of wholesaler Dik Drug.
Revenue for the entire company climbed 5 percent to $107.6 billion. Non-GAAP diluted earnings per share from continuing operations were $3.21, a 15 percent increase.