Cardinal Health 2015 Annual Report Download - page 14

Download and view the complete annual report

Please find page 14 of the 2015 Cardinal Health annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 91

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91

MD&A Results of Operations
13 Cardinal Health | Fiscal 2015 Form 10-K
Segment Profit
We evaluate segment performance based upon segment profit, among other measures. See Note 15 of the "Notes to Consolidated Financial
Statements" for additional information on segment profit.
Segment Profit and Operating Earnings Change
(in millions) 2015 2014 2013 2015 2014
Pharmaceutical $ 2,094 $ 1,745 $ 1,734 20 % 1%
Medical 433 444 372 (3)% 19%
Total segment profit 2,527 2,189 2,106 15 % 4%
Corporate (366) (304) (1,110) N.M. N.M.
Total consolidated operating earnings $ 2,161 $ 1,885 $ 996 15 % 89%
Fiscal 2015 Compared to Fiscal 2014
Pharmaceutical Segment Profit
The increase in Pharmaceutical segment profit in fiscal 2015 over
2014 reflected sales growth from existing and new pharmaceutical
distribution customers and strong performance from our generics
program, including benefits from Red Oak Sourcing, partially offset
by the adverse impact of customer pricing changes and the Walgreens
contract expiration in the prior-year period.
Medical Segment Profit
The decrease in Medical segment profit in fiscal 2015 compared to
fiscal 2014 was primarily due to a decline in contribution from
distribution of national brand products. This was partially offset by
contributions from the strategic expansion of our portfolio of Cardinal
Health brand products and services, driven by acquisitions and
targeted cost reductions.
Corporate
As discussed further in sections that follow, the principal driver for the
change in Corporate in fiscal 2015 compared to fiscal 2014 was
amortization and other acquisition-related costs primarily due to costs
incurred in connection with the pending acquisition of Cordis.
Fiscal 2014 Compared to Fiscal 2013
Pharmaceutical Segment Profit
The increase in fiscal 2014 over fiscal 2013 reflected the positive
impact of sales growth, which primarily reflects growth from existing
customers, and was largely offset by the impact of the Walgreens
contract expiration. The impact of gross margin rate, apart from the
impact of the Walgreens contract expiration, was flat for fiscal 2014.
Gross margin rate was positively impacted by strong performance
from our generics program, including the impact of generic
pharmaceutical price appreciation, and was adversely impacted by
customer pricing changes.
Medical Segment Profit
The principal driver for the increase in fiscal 2014 over fiscal 2013
was the positive impact of acquisitions.
Corporate
As discussed further in sections that follow, the principal driver for the
change in Corporate in fiscal 2014 compared to fiscal 2013 was
an $829 million non-cash goodwill impairment charge recognized in
fiscal 2013 related to our Nuclear Pharmacy Services division.