Cardinal Health 2015 Annual Report Download - page 13

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MD&A Results of Operations
Cardinal Health | Fiscal 2015 Form 10-K 12
Gross Margin
Consolidated Gross Margin Change
(in millions) 2015 2014 2013 2015 2014
Gross margin $5,712 $5,161 $4,921 11% 5%
Fiscal 2015 Compared to Fiscal 2014
Consolidated gross margin increased during fiscal 2015 compared to
fiscal 2014 by $551 million.
Consolidated gross margin growth during fiscal 2015 was positively
impacted by sales growth from existing and new pharmaceutical
distribution customers and was negatively impacted by the Walgreens
contract expiration in the prior-year period. The net impact of these
factors increased consolidated gross margin for fiscal 2015 by $516
million. In addition, acquisitions positively impacted gross margin by
$101 million.
Consolidated gross margin rate contracted slightly during fiscal 2015,
reflecting the adverse impact of customer pricing changes, the lower
margin rate impact of newly launched hepatitis C pharmaceutical
products, and new customer mix, largely offset by strong performance
from our generics program, including benefits from Red Oak Sourcing.
Fiscal 2014 Compared to Fiscal 2013
Consolidated gross margin increased during fiscal 2014 compared to
fiscal 2013 by $240 million.
Gross margin for fiscal 2014 was positively impacted by $32 million
due to sales growth, which primarily reflects growth from existing
customers, and was largely offset by the impact of the Walgreens
contract expiration. In addition, acquisitions positively impacted gross
margin by $221 million.
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.
Distribution, Selling, General and Administrative ("SG&A") Expenses
SG&A Expenses Change
(in millions) 2015 2014 2013 2015 2014
SG&A expenses $ 3,240 $ 3,028 $ 2,875 7% 5%
Fiscal 2015 Compared to Fiscal 2014
The increase in SG&A expenses during fiscal 2015 over 2014 was
primarily due to acquisitions ($97 million) and an overall increase in
volume of sales to existing and new customers.
Fiscal 2014 Compared to Fiscal 2013
SG&A expenses increased during fiscal 2014 over 2013 primarily due
to acquisitions ($129 million).