8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 29, 2006

Cardinal Health, Inc.

(Exact Name of Registrant as Specified in its Charter)

Ohio

(State or Other Jurisdiction of Incorporation)

1-11373	31-0958666
(Commission File Number)	(IRS Employer Identification Number)

7000 Cardinal Place, Dublin, Ohio 43017

(Address of Principal Executive Offices, Including Zip Code)

(614) 757-5000

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.05 Costs Associated with Exit or Disposal Activities

(a) On November 29, 2006, Cardinal Health, Inc. (the “Company”) determined to sell its Pharmaceutical Technologies and Services segment in order to focus its capabilities and resources on better serving healthcare provider customers and expanding its supply chain and medical and clinical products businesses domestically and internationally. The Company will retain its Martindale and Beckloff Associates businesses that support the generic pharmaceutical market that are currently part of this segment and they will become part of the Healthcare Supply Chain Services – Pharmaceutical segment. With the exception of the retained businesses, the financial results of the Pharmaceutical Technologies and Services segment will be classified as discontinued operations in the Company’s future financial statements. Although no definitive agreement has been entered into with third parties and there can be no assurance as to timing, the Company anticipates completing the sale of this segment in the fourth quarter of the current fiscal year or the first quarter of fiscal year 2008.

(b) The Company is currently unable to estimate the total amount or range of amounts of costs expected to be incurred in connection with the sale of this segment for each major type of cost associated with this course of action.

(c) The Company is currently unable to estimate the total amount or range of amounts of costs expected to be incurred in connection with the sale of this segment.

(d) The Company is currently unable to estimate the amount or range of amounts of charges that will result in future cash expenditures.

Item 7.01 Regulation FD Disclosure

On November 30, 2006, the Company issued a press release announcing its plans to sell its Pharmaceutical Technologies and Services segment. A copy of the press release is furnished under this report as Exhibit 99.01.

The Company also publicly disclosed information regarding its financial targets and goals. The Company is furnishing the information as Exhibit 99.02 to this report.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

99.01	Press release issued by the Company on November 30, 2006, and furnished under this report.
99.02	Information disclosed by the Company on November 30, 2006, and furnished under this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Cardinal Health, Inc.
	(Registrant)
Date: November 30, 2006	By:	/s/ Jeffrey W. Henderson
		Name:	Jeffrey W. Henderson
		Title:	Chief Financial Officer

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EXHIBIT INDEX

99.01	Press release issued by the Company on November 30, 2006, and furnished under this report.
99.02	Information disclosed by the Company on November 30, 2006, and furnished under this report.

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EX-99.01

Exhibit 99.01

7000 Cardinal Place

Dublin,OH 43017

www.cardinalhealth.com

FOR IMMEDIATE RELEASE

Contacts:

Media: Jim Mazzola (614) 757-3690 jim.mazzola@cardinal.com Investors: Jason Strohm (614) 757-7542 jason.strohm@cardinal.com

CARDINAL HEALTH ANNOUNCES PLANS TO SELL

$1.8 BILLION PHARMACEUTICAL TECHNOLOGIES AND SERVICES SEGMENT

Businesses comprise the leading provider of contract manufacturing, development and

packaging services for the pharmaceutical and biotechnology industries

Board approves additional $1 billion share repurchase, bringing

total authorization to $3 billion

DUBLIN, Ohio, Nov. 30, 2006 — Cardinal Health, the leading provider of products and services supporting the health-care industry, today announced plans to divest its Pharmaceutical Technologies and Services (PTS) segment, a business that manufactures or packages 100 billion doses of medication every year for pharmaceutical and biotech firms, employs approximately 10,000 at more than 30 facilities worldwide and generates $1.8 billion in revenue.

The company said the decision was made to focus Cardinal Health’s capabilities and resources to better serve health-care provider customers, such as hospitals and pharmacies.

“In the coming years, Cardinal Health will focus more on our products and services that help providers improve the safety and productivity of health care,” said R. Kerry Clark, president and chief executive officer of Cardinal Health. “While synergies clearly exist between PTS and our other businesses, we believe there is greater customer and shareholder value in the expansion of our supply-chain and medical and clinical products businesses domestically and internationally. These segments align with our core competencies and customers, and we see significant opportunities for future growth and improved return on capital.”

The company expects to use the proceeds to repurchase Cardinal Health shares. In anticipation, the board has initially authorized an additional $1 billion, bringing the company’s total repurchase authorization to $3 billion for fiscal 2007 and 2008. To date in fiscal 2007, the company has purchased approximately $500 million in shares and plans to complete a total of $1.5 billion by the end of fiscal 2007. Cardinal Health will also continue to invest in organic growth and tuck-in acquisitions to strengthen existing product and service offerings.

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Cardinal Health announces plans to sell $1.8 billion Pharmaceutical Technologies and Services segment

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Cardinal Health will retain Martindale and Beckloff Associates, two businesses that support the generic pharmaceutical market. Martindale develops generic, intravenous medicine that is complementary to Cardinal Health’s hospital business and generics strategy. Beckloff provides regulatory consulting services, including for Cardinal Health generic products. Combined, these businesses have approximately 400 employees at two primary locations in the United States and United Kingdom.

PTS is the leading contract manufacturing and service provider for the pharmaceutical industry. As a standalone company excluding Martindale and Beckloff, Cardinal Health estimates the business would generate in excess of $300 million in earnings before interest, taxes, depreciation and amortization¹. Among its core offerings, it develops and manufactures oral and sterile medication in nearly all dosage forms, and holds patents for softgel and Zydis^® fast-dissolve technologies used in many popular prescription and over-the-counter medicine. The segment is also the largest contract packager of pharmaceuticals.

Outlook

Cardinal Health said there would have been no change to its fiscal 2007 earnings per share (EPS) guidance had it not made the decision to sell PTS. However, based on the decision, results for PTS will be treated as discontinued operations in its financial statements, and the company issued new, consolidated EPS guidance for fiscal 2007. Non-GAAP diluted EPS from continuing operations² for fiscal 2007 is now expected to be in the range of $3.25 to $3.40. All growth goals for the four remaining segments are unchanged from previous communications.

Excluding the impact of any proceeds from the PTS divestiture, Cardinal Health reaffirmed its long-term financial goal of 12 percent to 15 percent growth in non-GAAP diluted EPS from continuing operations, and expects to be within that range for fiscal 2008. Depending on the timing of the divestiture, the company expects proceeds from the transaction should further add materially to fiscal 2008 EPS growth.

The company also expects each of its four remaining segments to perform within or above the previously announced long-term earnings goals in fiscal 2008.

(Cardinal Health’s updated financial goals are posted to the Investor page at www.cardinalhealth.com).

Conference Call

Cardinal Health will host a conference call and webcast at 11 a.m. Eastern Standard Time (EST) to discuss today’s announcement. To access the call, go to the Investor page at www.cardinalhealth.com. The conference call may also be accessed by calling 617-597-5380, conference passcode 38736701. An audio replay is expected to be available until 11 p.m. on Dec. 7 at 617-801-6888, passcode 38571891. A transcript and audio replay will also be available at www.cardinalhealth.com.

About Cardinal Health

Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is an $81 billion, global company serving the health-care industry with a broad portfolio of products and services. Through its diverse offerings, Cardinal Health delivers health-care solutions that help customers reduce their costs, improve safety and productivity, and deliver better care to patients. The company manufactures, packages and distributes pharmaceuticals and medical supplies, offers a range of clinical services and develops automation products that improve the management and delivery of supplies and medication for hospitals, physician offices and pharmacies. Ranked No. 19 on the

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Cardinal Health announces plans to sell $1.8 billion Pharmaceutical Technologies and Services segment

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Fortune 500, Cardinal Health employs more than 55,000 people on six continents. More information about the company may be found at www.cardinalhealth.com.

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¹Earnings before interest, taxes, depreciation and amortization for the PTS standalone business: Earnings before interest, taxes, depreciation and amortization for the PTS standalone business is a non-GAAP financial measure estimated as fiscal 2007 forecasted operating earnings for the PTS standalone business of approximately $195 million plus fiscal 2007 forecasted depreciation and amortization for the PTS standalone business of approximately $110 million.

²Non-GAAP diluted EPS from continuing operations: Earnings from continuing operations excluding special items and impairment charges and other, both net of tax, divided by diluted weighted average shares outstanding. The Company is unable to provide a quantitative reconciliation of this forward-looking non-GAAP measure to the most comparable forward-looking GAAP measure because the Company cannot reliably forecast special items and impairment charges and other, which are difficult to predict and estimate and are primarily dependent on future events. The unavailable reconciling items could significantly impact the Company’s future earnings.

Except for historical information, all other information in this news release 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 business; 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; uncertainties related to divesting the PTS segment, including uncertainties as to the amount of proceeds and timing; the costs, difficulties and uncertainties related to the integration of acquired businesses; 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.

EX-99.02

FY 2007 Financial Targets & Goals

1

As of November 30, 2006

Exhibit 99.02

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%

2

$3.25 -

$3.40 per share

(includes equity compensation expense)

Operating

FY07 OE

3

growth

Segment

Revenue

Earnings

3

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

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

4

:

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

2

-

Plan to repurchase $1.5 Billion in FY'07

Credit Rating:

Strong investment grade

Continued progress from BBB

1

Non-GAAP diluted EPS from continuing operations.

2

Excludes the impact of proceeds from the PTS divestiture.

3

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

4

Non-GAAP return on equity.

One Year Targets

Long-Term Financial Goals

CARDINAL HEALTH, INC. AND SUBSIDIARIES

GAAP / NON-GAAP RECONCILIATION

Forward-Looking

Non-GAAP

Financial

Measures

The Company presents non-GAAP diluted EPS from continuing operations and growth rate and non-GAAP return on equity

on a forward-looking basis.  The Company is unable to provide a quantitative reconciliation of these forward-looking non-

GAAP measures to the most comparable forward-looking GAAP measures because the Company cannot reliably forecast

special items and impairment charges and other, which are difficult to predict and estimate and are primarily dependent on

future events.  In addition, the long-term non-GAAP diluted EPS from continuing operations growth rate goal excludes the

impact of the proceeds from the PTS divestiture.  The Company expects to use the proceeds to repurchase shares, which,

depending on the timing of the divestiture, the Company expects should further add materially to fiscal 2008 EPS growth. 

The Company is unable to reliably forecast the proceeds from the

proposed divestiture at this time.  Please note that the

unavailable reconciling items could significantly impact the Company’s future earnings.

DEFINITIONS

GAAP

Operating Cash Flow:

net cash provided by operating activities from continuing operations

Non-GAAP

EP

Margin:

[net

operating

earnings,

after-tax

minus

(tangible

capital

multiplied

by

weighted

average

cost

of

capital)]

divided by revenue 

Non-GAAP Diluted EPS from Continuing Operations:

non-GAAP earnings from continuing operations divided by

diluted weighted average shares outstanding

Non-GAAP

Diluted

EPS

from

Continuing

Operations

Growth

Rate:

(current

period

non-GAAP

diluted

EPS

from

continuing operations minus prior period non-GAAP diluted EPS from continuing operations) divided by prior period

non-GAAP EPS from continuing operations

Non-GAAP

Return

on

Equity:

(annualized

current

period

earnings

from

continuing

operations

plus

special

items

minus

special items tax benefit) divided by average shareholders' equity