2007

October 27, 2006

First Quarter Earnings

Exhibit 99.03

2

Forward-Looking Statements and GAAP Reconciliation

Except

for

historical

information,

all

other

information

in

this

presentation

consists

of

forward-looking

statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. 

These forward-looking statements are subject to risks and uncertainties that could cause actual

results to differ materially from those projected, anticipated or implied.  The most significant of these

uncertainties are described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports

(including all amendments to those reports) and exhibits to those reports, and include (but are not

limited to) the following: competitive pressures in its various lines of businesses; the loss of one or

more key customer or supplier relationships or changes to the terms of those relationships; changes

in the distribution patterns or reimbursement rates for health-care products and/or services; the

results, consequences, effects or timing of any inquiry or investigation by or settlement discussions

with any regulatory authority or any legal and administrative proceedings, including shareholder

litigation; difficulties in opening new facilities or fully utilizing existing capacity; the costs, difficulties

and uncertainties related the integration of acquired businesses; with respect to future dividends, the

decision by the board of directors to declare such dividends, which is expected to consider Cardinal

Health’s surplus, earnings, cash flows, financial condition and prospects at the time any such action

is considered; with respect to future share repurchases, the approval of the board of directors, which

is expected to consider Cardinal Health’s then-current stock price, earnings, cash flows, financial

condition and prospects as well as alternatives available to Cardinal Health at the time any such

action is considered; and general economic and market conditions.  Except to the extent required by

applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking

statement.  In addition, this presentation includes non-GAAP financial measures.  Cardinal Health

provides definitions and a reconciliation between GAAP and non-GAAP financial information at the

end of this presentation and on its investor relations page at www.cardinalhealth.com.

3

Today’s Agenda

Opening remarks

Kerry Clark

President & Chief

Executive Officer

Financial overview

Jeff Henderson

Chief Financial

Officer

PTS update

David Schlotterbeck

CEO, Pharmaceutical

and Medical Products

Q&A

4

Financial Overview

•

FY 2007 Q1 Results –

Consolidated

•

FY 2007 Q1 Results –

Segments

•

Key Value Drivers

•

FY 2007 Financial Targets and Goals

•

Other Items

5

Revenue

Operating earnings

Earnings from continuing

operations

Diluted EPS

Operating cash flow

Return on equity

Q1 FY 2007 Recap

$ M

% Change

1

$21,357

11%

$     464

23%

$     300

26%

$    0.73

33%

$    722

14.5%

$ M

% Change

1

$     492

23%

$     320

27%

$    0.78

32%

15.3%

GAAP Basis

Note: 

% change over prior year quarter

Non-GAAP Basis

1

6

Q1 Operating Earnings and EPS

6

Operating Earnings

($MM)

Diluted EPS from

Continuing

Operations

Operating Earnings

($MM)

Diluted EPS from

Continuing

Operations

GAAP Consolidated

$464

$0.73

$377

$0.55

Special Items

$24

$0.04

$21

$0.03

Impairment Charges

& Other

$4

$0.01

$3

$0.01

Non-GAAP

Consolidated

$492

$0.78

$400

$0.59

Non-Recurring &

Other Items

$32

$0.05

Q1 FY 2007

Q1 FY 2006

7

Cardinal Health Business Analysis

Healthcare Supply Chain Services -

Pharmaceutical

Q1 FY ‘07        Q1 FY ‘06

$ M                  $ M

% change        

Revenue                      

$  18,505

$ 16,509            12%

Operating earnings                        

$       301          $      243            24%

Non-recurring and other items                                      $

32

Highlights:

•

Economic Profit margin   increased 15 basis points to 0.76% vs. prior year

•

Strong

growth

in

generics

driven

by

recent

new

item

launches

and

strategic

sourcing

•

Integration

of

F.

Dohmen

Co.

and

Parmed

progressing

well

•

Efficient inventory management, as days inventory on hand declined 2 days vs. prior year

•

Strong earnings growth from nuclear pharmacy services

•

$32 million non-recurring and other items charge related to vendor credits from prior periods

recorded in Q1 FY’06

Note: 

Non-GAAP financial measure

1

1

8

Cardinal Health Business Analysis

Healthcare

Supply

Chain

Services

-

Medical

Q1 FY ‘07        Q1 FY ‘06

$ M                  $ M

% change        

Revenue                      

$   1,806

$   1,763            2%

Operating earnings                        

$        74          $        82         (10%)

Highlights:

•

Economic Profit margin declined 64 basis points to 1.17% due to earnings decline and increased

capital deployed

•

Customer service consolidation and new sales organization (IPS) impacting revenue growth during

transition period

•

Competitive

pricing

pressure

within

Presource

surgical

kitting

business

•

Strong growth from Canadian medical distribution and lab distribution businesses

9

Cardinal Health Business Analysis

Clinical Technologies and Services

Q1 FY ‘07        Q1 FY ‘06

$ M                  $ M

% change        

Revenue                      

$       594         $     

576

3%

Operating earnings                           

$        68          $        78

(14%)

Highlights:

•

New product launch delays in medication technologies (Pyxis and Alaris) impacted revenue and

earnings during the quarter

•

Earnings negatively impacted by Alaris SE recall, including a $13.5 million charge in Q1 related

to the current estimate of the cost to resolve the key bounce issue

•

Good earnings growth in Pyxis supply technologies

•

Earnings dampened by continued investment in R&D

•

Continued investments in product quality and customer service resulting in improved customer

service ratings

10

Cardinal Health Business Analysis

Pharmaceutical Technologies and Services

Q1 FY ‘07        Q1 FY ‘06

$ M                  $ M

% change        

Revenue                      

$      451

$      411           10%

Operating earnings                        

$        22          $        20           13%

Highlights:

•

Good earnings growth from oral technologies and packaging services

•

Strong demand for proprietary technologies, led by Zydis

•

Continued progress made N. Raleigh manufacturing site

–

expect to be profitable by end of fiscal year

•

Continued operational and equipment issues at Albuquerque sterile manufacturing facility

•

Major customer volume reduction in Woodstock sterile manufacturing facility

11

Cardinal Health Business Analysis

Medical Products Manufacturing

Q1 FY ‘07        Q1 FY ‘06

$ M                  $ M

% change        

Revenue                      

$      424

$      383           11%

Operating earnings                        

$        61          $        53           15%

Highlights:

•

Revenue

growth

driven

by

strong

demand

for

respiratory

products,

convertors

and

gloves

•

Integration of Denver Biomedical ahead of plan

•

Operating margin improvements driven by manufacturing improvements and previous

facility restructurings

•

Product

innovation

–

new

latex

free,

coated

surgeons

gloves

•

Earnings growth dampened by increased investment in R&D spending

12

FY 2007 –

Key Value Drivers

Operating Growth

–

Strong demand for products and services drive revenue growth

–

Within Healthcare Supply Chain Services, leverage of scale, capital

efficiency and operational excellence should drive Economic Profit

margin expansion

–

Within Pharmaceutical and Medical Products, operational excellence,

product innovation and international expansion should drive operating

margin expansion

–

SG&A moderation

–

Declining equity compensation expense

Balance sheet management

–

Focus on return on capital, economic profit margin and economic profit

–

Continued portfolio optimization

Disciplined capital deployment

FY 2007 Financial Targets & Goals

13

Over FY'07 - FY'09 3 Year Period:

Fiscal Year 2007

Revenue:

+ 8 - 10%

At or above the high end of long-term goal

EPS ¹:

+ 12 - 15%

$3.50 - $3.70 per share (includes equity compensation expense)

Operating

FY07 OE ²

growth

Segment

Revenue

Earnings ²

vs. long-term target

Drivers

HSCS - Pharma

+ 7 - 10%

+ 7 - 10%

In range

*

Strong bulk growth; generic launches; cost control; stable to increasing

EP margins driven by efficient capital usage; impact of Dohmen acquisition

*

Sell margin pressure; stable to declining operating margins due to sales

mix (driven by lower-margin bulk revenue growth)

HSCS - Medical

+ 4 - 7%

+ 6 - 9%

In range

*

Strong corporate brand sales growth; cost control; stable to increasing

operating margins; stable EP margins

*

Launch of IPS and customer service consolidations

MPM

+ 6 - 8%

+ 10 - 12%

Above range

*

New contracts; product innovation; international growth; impact of

restructuring and sourcing initiatives; impact of DBI acquisition

PTS

+ 6 - 9%

+ 8 - 15%

Low end of range

*

Packaging growth; value pricing; increasing operating margins due to

operational improvements

*

Opening of N. Raleigh and Brussels facilities; stable Oral

CTS

+ 10 - 15%

+ 15 - 20%

Below range

*

Strong product demand for Alaris and Pyxis products; new product

launches; continued impact of operational improvements; international

expansion; impact of MedMined acquisition

*

Increased investment in innovation, quality and service

*

Current estimate of SE pump fix; impact of Care Fusion acquisition

Return on Equity ³

:

15% - 20%

In line with long-term goal

Operating Cash Flow:

> 100% of net earnings

In line with long-term goal

Cash Returned

up to 50% of OCF, via share

- Quarterly dividend increased 50% to $0.09 per share

to Shareholders:

     repurchase and dividends

- Announced $2 billion multi-year repurchase in August 2006

Credit Rating:

Strong investment grade

Continued progress from BBB

1 

Non-GAAP diluted EPS from continuing operations.

2

  Segment operating earnings growth rates represent organic growth only (except as noted).

3

  Non-GAAP return on equity.

One Year Targets

Long-Term Financial Goals

14

Other Items

Generics

–

Global focus / leveraging scale across all of Cardinal

–

Strategic initiatives

•

Worldwide sourcing capabilities

•

Strategic product ownership

–

Growth

•

Proprietary Source program

•

Customer contract compliance

•

New customers

One Cardinal Health update

15

Q&A