CareFusion Corp. (NYSE:CFN) posted second-quarter sales of $1.02 billion for the three months ended Dec. 31, 2009, up 5.2 percent compared with $969 million during the same period in fiscal 2009. Net income fell 62.8 percent to $70 million, compared with $188 million during Q2 2009:
CareFusion Reports Second Quarter Results
— Revenue increased 5 percent to $1 billion, or 2 percent on a constant currency basis
— GAAP diluted earnings per share (EPS) from continuing operations of $0.33, or $0.39 on an adjusted basis
— Company raises 2010 adjusted EPS guidance to upper end of range, now $1.40 to $1.45
SAN DIEGO, Feb. 9 /PRNewswire-FirstCall/ — CareFusion Corp. (NYSE: CFN), a leading, global medical device company, today reported results from continuing operations for the three and six months ended Dec. 31, 2009.
“We continued to execute well during our second quarter and performed ahead of our expectations,” said David Schlotterbeck, chairman and CEO of CareFusion. “Hospital capital spending made modest improvements during the quarter and we continued to win key customer contracts. We also benefited in our respiratory business from government and hospital flu preparedness planning.
“As I look ahead to the second half of the fiscal year, we will make progress on our long-term plans for growth, stepping up our investments in R&D and sales and marketing to grow our key franchises and extend into important market adjacencies.”
CareFusion’s reported results compare to the three and six month periods ended Dec. 31, 2008.
Revenue in the second quarter increased 5 percent to $1 billion, or 2 percent on a constant currency basis, driven primarily by increased sales in the company’s Respiratory business and in its Medical Technologies and Services segment. Sequentially from the first quarter ended Sept. 30, 2009, revenue increased $96 million or 11 percent. Compared to a strong prior year period when the slowdown in hospital capital spending had not yet had an impact on the company’s financial results, operating income declined to $127 million from $172 million. Income from continuing operations was $73 million, or $0.33 per diluted share.
Excluding nonrecurring items, adjusted operating income for the second quarter declined to $149 million from $177 million and adjusted net income decreased $22 million to $88 million, or $0.39 on an adjusted basis per diluted share.
Operating expenses, including selling, general and administrative (SG&A), research and development (R&D), and restructuring and acquisition integration charges in the second quarter totaled $351 million or 34 percent of total revenue. Excluding $22 million of nonrecurring items, adjusted operating expenses in the second quarter totaled $329 million, or 32 percent of total revenue. Adjusted SG&A expenses were $292 million, and R&D investments totaled $37 million.
Critical Care Technologies
Second quarter revenue for the Critical Care Technologies segment, which includes the company’s Dispensing, Infusion and Respiratory businesses, increased 1 percent to $682 million, driven by a strong performance in the company’s Respiratory business. On a constant currency basis, revenue decreased by 1 percent. Segment profit decreased to $111 million from $146 million. Adjusted segment profit decreased to $126 million from $148 million driven by the impact of the slowdown in hospital capital spending and higher allocated costs from standing up as a public company, which were only partially offset by strong results in the company’s Respiratory business.
Medical Technologies and Services
Second quarter revenue for the Medical Technologies and Services segment, which includes the company’s Infection Prevention and Medical Specialties businesses, increased 15 percent to $337 million, or 8 percent on a constant currency basis, driven by increased sales from the International Surgical Products and Interventional Specialties businesses. Segment profit decreased to $16 million from $26 million. Adjusted segment profit decreased to $23 million from $29 million, primarily driven by higher allocated costs from standing up as a public company.
For the first six months of fiscal 2010, revenue increased 3 percent to $1.9 billion. Operating income declined to $244 million from $262 million. Income from continuing operations was $128 million, or $0.58 per diluted share.
Excluding nonrecurring items, adjusted operating income for the first six months of fiscal 2010 decreased to $283 million from $297 million and adjusted net income increased $13 million to $174 million, or $0.79 on an adjusted basis per diluted share.
Operating expenses, including SG&A, R&D, and restructuring and acquisition integration charges in the first six months of fiscal 2010 totaled $685 million or 35 percent of total revenue. Excluding $39 million of nonrecurring items, adjusted operating expenses in the first six months of fiscal 2010 totaled $646 million, or 33 percent of total revenue. Adjusted SG&A expenses were $573 million, and R&D investments totaled $73 million.
Segment results for the six months ended Dec. 31, 2009 and 2008 are as follows:
Critical Care Technologies 1H FY10 1H FY09 Y/Y -------------------------- ------- ------- --- Revenue $1,299 million $1,293 million 0% ------- -------------- -------------- --- Segment Profit $212 million $221 million (4)% -------------- ------------ ------------ ---
Medical Technologies & Services 1H FY10 1H FY09 Y/Y ---------------------- ------- ------- --- Revenue $643 million $591 million 9% ------- ------------ ------------ --- Segment Profit $32 million $41 million (22)% -------------- ----------- ----------- ----
Adjusted operating expenses, adjusted SG&A expenses, adjusted operating income, adjusted net income, adjusted diluted earnings per share and adjusted segment profit are non-GAAP financial measures and exclude restructuring and acquisition integration charges, nonrecurring spinoff related costs, nonrecurring tax items, and discontinued operations. Adjusted net income also excludes nonrecurring costs related to the bridge loan entered into in connection with the spinoff. A reconciliation of GAAP to non-GAAP financial measures is included later in this news release.
Additional Second Quarter and Recent Highlights
Additional second quarter and recent company highlights include:
- Introducing under limited release new minimally invasive interventional products to treat spinal compression fractures. With planned general availability in April, CareFusion will offer a complete line of products for both kyphoplasty and vertebroplasty procedures;
- Signing a 10-year, sole-source agreement to upgrade Tenet Healthcare’s entire network of 50 member hospitals with the Alaris® system infusion pumps;
- FDA lifting an injunction on manufacture and sale of the CareFusion Alaris® SE pump;
- The New England Journal of Medicine publishing a study showing the superiority of CareFusion ChloraPrep® compared to povidone-iodine for surgical skin preparation;
- Announcing six new Pyxis® medication management products at the 44th American Society of Health-System Pharmacists (ASHP) Midyear Clinical Meeting and Exhibition; and
- Launching the CareFusion Knowledge Portal, a Web-based application providing hospitals with on-demand information to improve efficiency and medication safety, while reducing costs.
Fiscal 2010 Outlook
CareFusion increased its revenue guidance range to a range of $3.95 billion to $4.05 billion, up from the previous guidance range of $3.85 billion to $4.0 billion. In addition, the company narrowed its previously provided adjusted diluted EPS outlook for fiscal 2010 to a range of $1.40 to $1.45, the upper end of its previously provided guidance range of $1.35 to $1.45. The guidance for fiscal 2010 is based on an assumed diluted weighted average outstanding share count of approximately 223 million.