Cardinal Health investor day slide presentations

EX-99.1 2 dex991.htm CARDINAL HEALTH INVESTOR DAY SLIDE PRESENTATIONS Cardinal Health investor day slide presentations

Cardinal Health, Inc.

Analyst / Investor Day Meetings

Sally J. Curley

Senior Vice President, Investor Relations

June 2, 2009

Exhibit 99.1

Forward-looking information

The following presentations contain forward-looking statements addressing expectations, prospects, estimates and other matters that are

dependent upon future events or developments. These matters 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 and CareFusion’s Form 10 registration statement (including all amendments to those reports and registration

statement) and exhibits to those reports and registration statement, and include (but are not limited to) the following: uncertainties related to the

deferral in hospital capital spending affecting Cardinal Health’s Clinical and Medical Products segment and difficulties in forecasting the exact

duration and potential long-term changes in hospital spending patterns; uncertainties regarding the planned spinoff of CareFusion as a new

standalone entity, including the timing and terms of any such spinoff and whether such spinoff will be completed as it is subject to a number of

conditions, and uncertainties regarding the impact of the planned spinoff on Cardinal Health, CareFusion and the potential market for their

respective securities; competitive pressures in Cardinal Health’s various lines of business; the loss of one or more key customer or supplier

relationships or changes to the terms of those relationships; uncertainties relating to timing of generic and branded pharmaceutical introductions

and the frequency or rate of branded pharmaceutical price appreciation or generic pharmaceutical price deflation; 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 any regulatory authority or any legal or administrative proceedings; future actions of regulatory bodies or government authorities

relating to Cardinal Health’s manufacturing or sale of products and other costs or claims that could arise from its manufacturing, compounding or

repackaging operations or from its other services, including uncertainties and costs relating to complying with the amended consent decree

entered into with the FDA and implementing the corrective action plan submitted to the FDA pursuant to the amended consent decree; the effects,

timing or success of restructuring programs or plans; the costs, difficulties and uncertainties related to the integration of acquired businesses;

uncertainties related to the recent disruptions in the financial markets, including uncertainties related to the availability and/or cost of credit and the

impact of the financial market disruptions on Cardinal Health’s customers and vendors; uncertainties regarding the ultimate features of government

health care reform initiatives and their enactment and implementation; with respect to future dividends, the decision by Cardinal Health’s 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; and conditions in the pharmaceutical market and general economic and market conditions.

These presentations reflect management’s views as of June 2, 2009. Except to the extent required by applicable law, Cardinal Health undertakes

no obligation to update or revise any forward-looking statement. In addition, these presentations include non-GAAP financial measures.

Definitions and reconciling information will accompany these presentations and will also be available on the investor relations page of Cardinal

Health’s website at www.cardinalhealth.com. A transcript of the webcast will be available on the investor relations page at

www.cardinalhealth.com.

Welcome

R. Kerry Clark

Chairman and CEO

June 2, 2009

Launching two exciting businesses

Timeline

target:

Summer

2009

Spinoff rationale

•

New Cardinal Health and CareFusion are very

different businesses

Products

Channels

Geographic footprint

•

Sharper strategic focus

•

CareFusion can stand on its own

•

Should deliver maximum value to our customers and

shareholders over time

Conditions and governance

•

Contingent upon

–

SEC declaring the Form 10 effective

–

IRS ruling on tax-free nature of transaction

–

Obtaining investment-grade credit ratings

–

Completion of necessary financing

•

Governance

–

New Boards of Directors in place at spinoff

Financial reporting

•

As of July 1, will begin functioning as separate entities in

anticipation of spinoff completion

•

Each entity’s reported results reflecting future company

structure down to operating earnings, rolled up for total

Cardinal Health picture

Sector reporting

–

New Cardinal Health

•

Pharmaceutical

•

Medical

–

CareFusion Corporation

•

Critical Care

•

Medical Technologies and Services

George Barrett

Current: CEO, HSCS, Cardinal Health, Inc.

Post-spinoff: Chairman and CEO, New Cardinal Health

Dave Schlotterbeck

Current: CEO, CMP, Cardinal Health, Inc.

Post-spinoff: Chairman and CEO, CareFusion Corporation

Jeff Henderson

Chief Financial Officer, Cardinal Health, Inc.

Post-spinoff: Chief Financial Officer, New Cardinal Health

Introductions

Full day agenda

All times are eastern

8:00 a.m.

Welcome and agenda

Sally Curley, Kerry Clark

8:15 a.m.

Spinoff financial details

Jeff Henderson

8:30 a.m.

New Cardinal Health

George Barrett, Jeff Henderson, Mike Kaufmann, Mike Lynch

12:00 p.m.

Lunch and healthcare reform update

Connie Woodburn

1:15 p.m.

CareFusion Corporation

Dave Schlotterbeck, Dwight Winstead, Ed Borkowski

4:30 p.m.

CareFusion product demonstrations with management

5:30 p.m.

Adjourn

Spinoff overview

Jeff Henderson

Chief Financial Officer

Cardinal Health

June 2, 2009

Spinoff

•

Capital structure

•

Transaction overview

•

CareFusion and New Cardinal Health financial crosswalks

•

Spinoff costs and negative synergies

•

Go-forward reporting

Cardinal Health

Cash: ~$1.7B

Debt: ~$3.7B

A/R Facility: $850M

Credit Revolver: $1.5B

Rating: BBB+/Baa2; A2/P2

Capital structure

CareFusion

Cash: ~$650M

Debt: ~$1.4B

Credit Revolver: $500M

Expected Rating: Investment grade

New Cardinal Health

Cash: ~$1B

Debt: ~$2.1B

A/R Facility: $950M

Credit Revolver: $1.5B

CFN Equity Stake: <20%

Expected Rating: Investment grade

Transaction

overview

Cardinal

Health

CareFusion

Bridge Loan

Banks

CareFusion

Bondholders

Cardinal

Health

Bondholders

CFN borrows $1.4B

against bridge loan to

pay distribution to CAH

CFN declares and pays

$1.4B distribution to CAH

CAH uses proceeds of

CFN $1.4B distribution to

tender for and retire debt

CFN issues public

debt post-spin to repay

bridge loan

CFN uses

proceeds from

public debt to repay

bridge loan

Equity

Markets

CAH disposes of its less than

20% stake in CFN within 5 years

Overview assumes that bridge is drawn down to fund distribution at spin-off

Crosswalk

CareFusion

Corporation (CFN)

FY09 YTD

Historical

Separation

Adjustments

Discontinued

Operations

Adjustments

Financing

Adjustments

Pro Forma

Revenue ($M)

3,410

(667)

2,812

Gross margin ($M)

1,507

(165)

1,350

SG&A ($M)

871

(71)

809

Operating earnings

($M)

460

(0.4)

(89)

370

Interest expense

and other, net ($M)

(15)

107

Royalty (income)

and other, net

received from

parent ($M)

(194)

194

Diluted EPS

$0.49

See

CareFusion

Appendix

for

CareFusion

historical

results

and

pro

forma

financial

information

for

the

nine months ended March 31, 2009.

Crosswalk

New Cardinal Health (nCAH)

FY09 YTD

reported

Discontinued

operations

Special

items

Impairments

and other

Pro

Forma

Revenue ($M)

74,385

(2,743)

71,642

Gross margin ($M)

4,183

(1,357)

2,826

SG&A ($M)

2,584

(867)

1,717

Operating

earnings ($M)

1,461

(434)

1,108

Diluted EPS from

continuing

operations

$2.44

$(0.83)

$0.14

$(0.05)

$1.70

Pro

forma

results

reflect

the

estimated

impact

the

CareFusion

Discontinued

Operations.

See

Cardinal Health Appendix for further explanation of the pro forma presentation of certain measures

included herein.

Non-GAAP measure.

Estimated one-time spinoff cost details

($M)

Through

spin date

Post-spin

Pre-Tax cash expenses

CAH

$109

$47

CFN

$60

$53

Pre-tax non-cash charges

CAH

$33

CFN

–

Tax charges

$152

–

Estimated negative synergies

Driven by:

•

Functional duplication

•

De-leveraging shared services

•

Additional depreciation

Incremental cost to FY09 pro forma

Operating

expense

($M)

FY10

FY11

FY12

CFN

nCAH

–

CFN

Go-forward reporting (FY10 pre-spin)

Consolidated

Sector

Segment

(Operating earnings)

(P&L, balance sheet, and cash flow)

(Segment profit)

nCAH

Pharma

Medical

Critical Care

Medical

Technologies

CAH

Summary

•

Spin transaction is on track

•

Target completion: Summer 2009

•

We expect to be ready to go once transaction

conditions are met

•

On July 1, will begin to function as separate

companies in anticipation of spinoff completion

Strategic foundations for

the New Cardinal Health

George Barrett

Post-spinoff: Chairman and CEO

June 2, 2009

8:30 a.m.

New Cardinal Health

George Barrett, Post-spinoff: Chairman and CEO

9:05 a.m.

Financial overview

Jeff Henderson, Chief Financial Officer

9:30 a.m.

Break

9:45 a.m.

Pharmaceutical Segment

Mike Kaufmann,

Chief Executive Officer, Pharmaceutical Segment

10:25 a.m.

Medical Segment

Mike Lynch, Chief Executive Officer, Medical Segment

11:00 a.m.

Q&A

George Barrett

Tom Kapfer, President, Medical Products & Services

Mike Kaufmann

John Rademacher, President, Nuclear & Pharmacy Services

Mike Lynch

Frank Segrave, President, Generics

Jeff Henderson

11:45 a.m.

Break

12:00 p.m.

Lunch and healthcare reform update

Connie Woodburn, SVP, Government Relations

New Cardinal Health agenda

Strategic foundations

•

New Cardinal Health

•

Critical role in healthcare

•

Three pillar strategy for the future

•

What to expect going forward

Why new Cardinal Health?

Well positioned to deliver healthcare solutions in most

cost-effective manner while maintaining product integrity

Balanced business model focused on delivering

healthcare products and services

Experienced team with diverse healthcare backgrounds

leading one of largest healthcare companies in N. America

Well positioned to play central role across entire

healthcare spectrum, especially with demographic trends

Strong balance sheet and cash flows, making necessary

investments to strengthen future position

Positioning

Balanced

model

Cost-effective

solutions

Financial

strength

Leadership

Profile of a leader

Revenue

Employees

Countries with direct operations

Customers

>$94B

~30K

>50K

Operating earnings

~$1.5B

*Pro forma Cardinal Health non-GAAP revenue and operating earnings, trailing 12 months ended March 31, 2009.

See Cardinal Health appendix for more information regarding Cardinal Health pro forma financial information.

What’s new about Cardinal Health?

•

Experienced management team with

renewed focus on the core

•

Reinvigorated culture

•

Capital deployment strategy

•

Streamlined portfolio management

New Cardinal Health –

Who we are

George Barrett

Chairman and CEO

Jeff Henderson

Chief Financial Officer

Mike Kaufmann

CEO, Pharmaceutical Segment

Mike Lynch

CEO, Medical Segment

Shelley Bird

EVP, Public Affairs

Craig Morford

Chief Legal and Compliance Officer

Mark Rosenbaum

Chief Customer Officer

Carole Watkins

Chief Human Resource Officer

Our mission

We make healthcare more cost-effective

so our customers can focus on their patients

Our Customers

Patients

•

Customers are facing enormous pressures to reduce costs and improve performance

•

We reduce the costs of care through our sourcing, supply chain efficiencies, reduction

of errors and safety events, and supplier and channel relationships

Strategic foundations

•

New Cardinal Health

•

Critical role in healthcare

•

Three pillar strategy for the future

•

What to expect going forward

•

Up to 66 million Americans could be

uninsured by 2019 unless healthcare

reform is enacted¹

•

Businesses could see their healthcare

costs double within 10 years¹

•

64.4 million, or 1 in 4 non-elderly

Americans, are in families that will spend

>10 percent of pre-tax income on

healthcare this year²

•

2007 figures for those without health

insurance were 45.7M or 15.3%²

Healthcare costs are rising

at an alarming rate

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Per Capita

Projected Per Capita

National health expenditures per capita, 1990-2016

Note: Figures from 1990 through 2005 represent historical data; data from 2006-2016 are projected.

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at

http://www.cms.hhs.gov/NationalHealthExpendData/ (Historical data from NHE summary including share of GDP, CY 1960-2005,

file nhegdp05.zip; Projected data from NHE Projections 2006-2016, Forecast summary and selected tables, file proj2006.pdf).

$12,782

(2016)

$7,498

(2007)

$2,813

(1990)

May 2009 report by researchers at the Urban Institute for The Robert Wood Johnson Foundation

April 2009 report from Families USA and U.S. Census Bureau

(Millions)

Positioned on the right side

of healthcare evolution

•

Slow growth rate of costs

•

Comparative effectiveness

research

Health Reform Priorities

Quality issues

Fragmented

system

Rising costs

Increasing number

of uninsured

and underinsured

Role of New Cardinal Health

•

Efficient, low cost partner

•

Solutions for increased

customer efficiency

•

Pay for performance and

aligned incentives

•

Continuum of care

infrastructure and health IT

•

Expand coverage through

public / private hybrid with

shared responsibility

•

Heightened focus on

safety and quality

•

Necessitates broad

footprint and capability to

work across channels

•

Continued/increased demand

for products and services

At the intersection of the

evolving healthcare system

Ambulatory

Care

•

Clinic

•

Physician office

•

Home care provider

•

Long-term care

•

Surgery center

Retail

•

Pharmacy

•

Mail service

•

In-store clinic

Acute Care

•

Hospital

•

Laboratory

Ambulatory Care

Retail

Acute Care

Critical role in a complex system

•

Distribution

•

Inventory management

•

Logistics support

•

Product selection

•

Financial transactions

•

Risk management

•

Patient safety

•

Pharmacy management

•

Quality and integrity

Delivering value to major stakeholders

Role of New Cardinal Health

Impact

•

Improve efficiency, eliminate

waste, enable scale and

manage risk

•

Most efficient link to end-

users, manage risk, smooth

volatility, drive share

•

Drive usage of cost

effective solutions, ensure

safety / integrity

•

Improved economics

•

Cost-effective solutions

that deliver economic

value and secure volume

•

Improved economics

and outcomes

Customers

Suppliers

Consumers

Payors

Two strong segments

•

Pharmaceutical distribution

•

Manufacturer and

specialty services

•

Nuclear and pharmacy services

Key Activities

•

Medical product distribution

•

Lab product distribution

•

Infection prevention products

Segment

Medical

Pharmaceutical

Balanced portfolio of products and services playing a critical role

in the healthcare system

Numbers are unaudited estimates of FY10 segment profit contribution.

~2/3 of

segment profit¹

~1/3

segment profit¹

Strategic foundations

•

New Cardinal Health

•

Critical role in healthcare

•

Three pillar strategy for the future

•

What to expect going forward

Strategic direction for

New Cardinal Health

•

Create a lean, disciplined and agile organization

•

Manage performance and measure progress

•

Improve systems and related processes

•

Deepen knowledge of stakeholder economics

•

Build talent and capability

•

Deliver exceptional

customer service

•

Strengthen our competitive

advantage in supply chain

and sourcing

•

Focus our business

portfolio and build scale

Strengthen

the core

Explore:

•

Related healthcare

segments

•

Strategic M&A and

partnerships

•

Opportunities outside

U.S. and Canada

Build

new

growth platforms

•

Offer new products

•

Expand service offerings

•

Broaden distribution

channels

Expand

into adjacencies

Strengthen the core

Progress in the past year

•

Delivering FY09 HSCS financial goals

•

Refocus on customer retention and loyalty

•

Stabilize pharmaceutical segment

–

Solidify management team

–

Controlled drug licenses restored

–

Strengthen relationship with retail independents

•

Elevate focus on and commitment to Medical

•

Nuclear well positioned following generic event

Strengthen the core

Continued emphasis on the core

•

Significant progress ongoing

–

Simplify how we do business

–

Invest in productivity (IT and OpEx)

–

Medical transformation

•

Major initiatives underway

–

Inventory management / new stocking strategies

–

Further enhance Medical sourcing model

–

Further enhance generic model

Strengthen the core

Portfolio management

•

Reposition Medicine Shoppe International

•

Divest Martindale (UK business)

•

Divest SpecialtyScripts pharmacy, but committed

to specialty distribution

Expand into adjacencies

Maximize our core competencies

•

Accelerate private label growth in Medical

•

Innovations in operating room

•

Expand Positron Emission Tomography (PET)

•

Scale specialty distribution

•

Expansion outside of acute care setting

Build new growth platforms

Future growth opportunities

Explore:

•

Clinically-oriented products and services

•

Information-enabled strategies

•

Targeted international expansion

Strategic foundations

•

New Cardinal Health

•

Critical role in healthcare

•

Three pillar strategy for the future

•

What to expect going forward

Near-term considerations

•

Completing the transition in FY10

•

Short-term market factors create headwinds

–

Generic launch cycles

–

Impact of economy on procedure-based channels

•

Important contract renewal

•

DSA timing

•

Continued investment to further strengthen the core

–

Medical transformation

–

Retail independents

–

Ambulatory Care

Three-year outlook

Regaining momentum in FY11

•

Pharmaceutical will regain positive growth trajectory

•

Medical will grow faster, creating an even more

balanced business model

•

Non-GAAP EPS past FY10, growing at high single digit rate

Close expense control with a focus on margins and balance sheet

Positive momentum

•

Attractive industry: sustained demand growth

•

Focused on critical issue for the industry: cost-effectiveness

•

Stabilized organization and investing in its future

•

Increasingly balanced business model

•

Attractive capital deployment

Solid cash-generating businesses with trends in our favor

Why new Cardinal Health?

Well positioned to deliver healthcare solutions in most

cost-effective manner while maintaining product integrity

Balanced business model focused on delivering

healthcare products and services

Experienced team with diverse healthcare backgrounds

leading one of largest healthcare companies in N. America

Well positioned to play central role across entire

healthcare spectrum, especially with demographic trends

Strong balance sheet and cash flows, making necessary

investments to strengthen future position

Positioning

Balanced

model

Cost-effective

solutions

Financial

strength

Leadership

New Cardinal Health:

Disciplined financial management

Jeff Henderson

Chief Financial Officer

Cardinal Health

June 2, 2009

Agenda

•

Driving financial discipline

•

Three-year financial outlook

•

Focus on shareholder return

Success at Cardinal Health requires

exceptional financial discipline

Key focus area

Financial management implications

Simplifying the portfolio

•

Ongoing, disciplined portfolio reviews

•

Resource focus

•

Account profitability management

•

Active compliance monitoring

•

Selective capital investment to drive differentiation

•

Focus on key performance metrics

•

Maximizing cash flow yield

•

Exercising capital deployment discipline

•

Increasing dividend pay-out

Strengthen core

Shareholder return

Reshaping and simplifying portfolio

FOCUS

Pre-Spin

(2005-2009)

•

Pharma

Distribution

•

Medical Supply

•

UK Pharma

Dist.

•

Pharmacy Services

•

Nuclear Pharmacy

•

Medicine Shoppe

•

Martindale

•

Kitting (Presource™)

•

Contract Sales and

Marketing

•

Pharmacy Staffing

•

Specialty Pharmacy

•

Gloves/Convertors/ Fluid

Management

•

Medical Specialties

•

Pharmaceutical Contract

Manufacturing

•

Industrial Apparel

•

Contract Printing and

Packaging

•

Tecomet

•

Medsystems

•

Dispensing

•

Infusion

•

Respiratory

•

Manufacturer and

Specialty Services

Post-Spin

(2010)

Pharmaceutical

Segment

•

Pharma

Distribution

•

Manufacturer and Specialty

Services

•

Pharmacy Services

•

Nuclear Pharmacy

•

Medicine Shoppe

Medical Segment

•

Medical Supply

•

Gloves/Convertors/

Fluid Management

•

Kitting (Presource™)

Simplified reporting

Pharmaceutical

Segment

Medical

Segment

FY10(E) Pro Forma Segment

Profit Contribution

FY05 Segment Profit Contribution

as Originally Reported

PDPS

MPS

CTS

PTS

CTS –

Clinical Technologies and Services; MPS

–

Medical Products and Services; PTS

–

Pharmaceutical Technologies and

Services; PDPS –

Pharmaceutical Distribution and Provider Services

Pro forma segment profit contribution reflects the estimated impact of CareFusion

Discontinued

Operations

in the period

presented.

See Cardinal Health Appendix for further explanation of the pro

forma

presentation of certain measures included herein.

Strengthen the core

Key financial metrics

Total

shareholder

return

Operating

cash

flow

Segment profit

margin

Net working

capital days

Return on

tangible capital

FY09E

FY10E

FY11E

FY12E

Strengthen the core

Driving efficient capital management

Net working capital days reflects the estimated impact of CareFusion

Discontinued Operations in

the period presented. See Cardinal Health Appendix for further explanation of the pro forma

presentation of certain measures included herein.

Net Working Capital Days

FY09E

FY10E

FY11E

FY12E

Strengthen the core

Strong operating cash flow generation

Operating cash flow from continuing operations reflects the estimated impact of CareFusion

Discontinued Operations in the period presented. See Cardinal Health Appendix for further explanation

of the pro forma presentation of certain measures included herein.

$1.3B

Operating Cash Flow

Agenda

•

Driving financial discipline

•

Three-year financial outlook

•

Focus on shareholder return

Entering FY10 with strong balance sheet

•

Total debt (after post-spin debt retirement): ~$2.1B

•

Cash position: ~$1.0B

•

Accounts receivable facility: $950M

•

Bank credit revolver: $1.5B (thru Jan FY12)

•

<20% CFN equity stake

•

Committed to maintaining investment grade ratings

FY10 headwinds expected to

subside in FY11

Market factors

Generic launches

Pricing/customer renewals

Medical cost of goods

Strategic positioning decisions

DSA transition timing

Portfolio repositioning

Sourcing models

Transformational investments

Medical Supply Chain

Ambulatory care

Customer ordering systems

Negative synergies

FY10

Est. FY11

and FY12

Cost control &

performance

improvement initiatives

Organic investment for the future

Estimated capital expenditures for Cardinal Health excluding CareFusion.

$300M

Capital Expenditures

FY09E

FY10E

FY11E

FY12E

I/T

Other

FY10 outlook

•

A year of transition and investment

•

Continued strong cash flow generation

•

Investing in capex

and increasing dividend

•

Growth in M segment despite increased investment

•

Dealing with headwinds in P while preparing for the future

FY09E

FY10E

FY11E

FY12E

Earnings per share

growth returns in FY11

Pro forma non-GAAP diluted earnings per share from continuing operations reflects the estimated impact of

CareFusion

as Discontinued Operations in the period presented. See Cardinal Health Appendix for further

explanation of the pro forma presentation of certain measures included herein.

$2.20-$2.25(E)

Agenda

•

Driving financial discipline

•

Three-year financial outlook

•

Focus on shareholder return

Margin

expansion

Focus on shareholder return

Return capital to shareholders

Strong OCF and investment grade credit

Working capital

management

60%

25%

11%

Capital

expenditures

Acqusitions

Dividends

Share repurchases

OCF

Divestitures

Increased Leverage

Strong track record of

disciplined capital deployment

$11.6B total

Source of cash

Deployment

$11.5B total

FY05-FY08

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

FY04

FY05

FY06

FY07

FY08

100

150

200

250

History of increasing dividend returns,

supplemented by share repurchases

Dividends

Share repurchases*

*Share repurchase program suspended in FY09 due to spinoff

Capital deployment will differentiate

New Cardinal Health

•

25-30% of OCF for organic growth and strengthening the

core through high-impact capital investments

•

Tuck-in M&A activity

•

Opportunistic share buybacks, primarily focused on

offsetting equity program issuances in near-term

Meaningful and increasing

dividend pay-out

31%

10%

13%

17%

FY04

FY05

FY06

FY07

FY08

FY09

YTD

FY09 pro

forma

Significantly increasing dividend payout

Historical 20% target

Pro forma payout ratio reflects the anticipated dividend per share post spinoff of $0.175 cents per share

per quarter divided by the mid-point of the FY09 pro forma non-GAAP earnings per share of $2.20-

$2.25.

In summary

We have a clear financial focus

•

Superior execution against stated goals and

delivering on key metrics

•

Relentless focus on cost and capital efficiency

•

Strengthening our core capabilities and building

stronger foundation for future growth

•

Strong external focus on maximizing shareholder

return through differentiated capital deployment

Pharmaceutical Segment

Mike Kaufmann

Chief Executive Officer

Pharmaceutical Segment

June 2, 2009

Agenda

•

Overall segment view

•

Business today and profit drivers

–

Nuclear and Pharmacy Services

–

Manufacturer and Specialty Services

–

Pharmaceutical Distribution

•

Outlook and summary

Pharmaceutical Segment today

>$85B

Revenue

Segment profit

SKUs

Distribution centers

Nuclear pharmacies

>$1B

>50k

~160

Pro forma revenue and segment profit, trailing 12 months ended March 31, 2009. See Cardinal

Health appendix for more information regarding Cardinal Health pro forma financial information.

Ambulatory

Care

•

Pharmaceutical

Distribution

•

Nuclear and

Pharmacy Services

•

Manufacturer and

Specialty Services

Retail

•

Pharmaceutical

Distribution

Acute Care

•

Pharmaceutical

Distribution

•

Nuclear and

Pharmacy Services

•

Manufacturer and

Specialty Services

At the intersection of the

evolving healthcare system

Pharmaceutical Segment

Nuclear and

Pharmacy Services

Manufacturer and

Specialty Services

Pharmaceutical

Distribution

Pharmaceutical Segment

Nuclear and

Pharmacy Services

Manufacturer and

Specialty Services

Pharmaceutical

Distribution

Nuclear and Pharmacy Services

Nuclear

Pharmacy

Services

–

Industry

leader

•

Successfully release lower-cost generic this summer

•

Optimize customer operations with new

management software

•

Capture increased use of diagnostic imaging studies

Profit drivers:

•

Leader in industry and growing: can reach >90% of U.S. hospitals in <3 hours

•

Only

national

network

with

both

low-energy

and

high-energy

dispensing

•

Only

national network with both branded cardiac imaging agents

(Cardiolite

and Myoview) and lower-cost alternative

•

High

customer

loyalty

scores

show

highly

differentiated

service

•

Leader in safety: patented delivery systems and education programs

Our position:

Nuclear and Pharmacy Services

Positron

Emission

Tomography

(PET)

–

Growing

•

Acquire tuck-in to build national footprint

•

Deepen collaboration with key universities

•

Become integral part of clinical trial design for biopharma

Profit drivers:

•

A leading U.S. player

in number of cyclotrons and doses, and growing

•

Focused

cGMP

Manufacturing

agents

used

diagnosis/treatment

•

Technical

and

chemistry

expertise

support

clinical

trials

of proprietary agents

•

Partner in

research

with universities and pharmaceutical companies

Our position:

Nuclear and Pharmacy Services

Pharmacy Solutions –

Re-positioning

•

Re-energize and re-position the business

•

Expand service footprint

•

Implement formulary management in pharmacies

Profit drivers:

•

Leader

pharmacy

management,

outsourcing

services

and

formulary management

•

Fast

growing

e-source

augments

staff

and

provides

after-hour

coverage

•

Expertise

data

analytics

improve

pharmacy

efficiencies

and

processes

Our position:

Pharmaceutical Segment

Nuclear and

Pharmacy Services

Manufacturer and

Specialty Services

Pharmaceutical

Distribution

Manufacturer and Specialty Services –

Bringing focus

•

Create a differentiated model

•

Drive synergy among the businesses

•

Build-out capabilities

Profit drivers:

•

Key player in third-party logistics, representing over 60 supplier partners

•

Significant

presence

plasma/specialty

distribution

•

Recognized

expertise

regulatory

consulting

new

drugs

•

Payor authorization/qualification

consulting

Our position:

Pharmaceutical Segment

Nuclear and

Pharmacy Services

Manufacturer and

Specialty Services

Pharmaceutical

Distribution

Pharmaceutical Distribution

Pharmaceutical distribution –

Our position

Leading

Distributor to national retail chains

Distributor to acute-care facilities

Footprint in Puerto Rico

Generic telesales

Logistics network

Leading

Increasing

Differentiated

Customers

Pharmaceutical Distribution

Critical role in the healthcare system

Alternate

Care

Hospital

Retail

Pharmacy

Mail

Service

Supply Partners

Generic

Pharma

Private

Label

Brand

Pharma

HBA/

OTC

Pharmaceutical Distribution

Critical role in the healthcare system

Pharmaceutical

Distribution

Generating value up and down the supply chain

Supply Partners

Generic

Pharma

Private

Label

Brand

Pharma

HBA/

OTC

Customers

Alternate

Care

Hospital

Retail

Pharmacy

Mail

Service

•

Reduced generic acquisition costs

–

Demand aggregation

–

Simple program with aligned incentives

•

Reduced inventories

–

Best-in-class software and process (Cardinal Inventory Manager)

–

Daily delivery with high service levels

•

Reduced back-office costs / administration

–

Best-in-class third party programs

–

Front-end merchandising

Pharmaceutical Distribution

Value delivered to Retail

Pharmaceutical Distribution

Partner with key Retail customers

Pharmaceutical Distribution

Two

Retail

Independent

brands

–

Deliver

value

•

Streamline operations for

improved performance

Value: ~$27K profit/average store

•

Improve payor

management for

better financial performance

Value: ~$95K profit/average store

•

Create alternative revenue

streams for better margins

Value: ~$20K profit/average store

•

Increase traffic and attract new

and loyal customers

Value: ~$6K profit/average store

3,200 stores

778 franchisees

Cardinal Health market research. Results are per year estimates.

Pharmaceutical Distribution

Value delivered to health systems

•

Reduced generic acquisition costs

–

Carve-out portfolios

–

Back-up portfolios

•

Reduced acquisition costs

–

Contract compliance reporting

–

Sentry 340B software

•

Reduced labor costs

–

Packaging options

–

Delivery

the

floor

CardinalASSIST

Customers

Pharmaceutical Distribution

Critical role in the healthcare system

Alternate

Care

Hospital

Retail

Pharmacy

Mail

Service

Supply partners

Generic

Pharma

Private

Label

Brand

Pharma

HBA/

OTC

Generating value up and down the supply chain

Pharmaceutical

Distribution

Pharmaceutical Distribution

Value delivered to supplier partners

•

Transparency

–

Provide sales and inventory data

•

Integrity –

Buy only from manufacturer

•

High fill rates

–

Scripts not delayed or unfilled

•

Volume

–

Generic formularies drive volume

•

Financial stability

–

Insulation from credit exposure

•

Simplicity

–

Manage charge backs/credit, logistics

Pharmaceutical Distribution

A strong business model

Breadth

Differentiation

Integration

Execution

Experience

Knowledge

Important player in all classes of trade

Equal or superior offers

Borschow, ParMed, Dohmen done well

Positive in all areas

>100 years combined industry experience

Strong customer and supplier relationships

•

Growth

–

Wholesaler growth has surpassed industry projections

–

Aligned with key customers

–

Healthcare reform, demographics and consumerism should

drive continued volume and generic utilization

•

Customer consolidation

–

Aligned with acquirers

•

Manufacturer consolidation

–

Little to no impact on our cost to serve

•

Regulations

–

Cold chain, anti-diversion and pedigree require

continued focus and investment

Pharmaceutical Distribution

Industry dynamics play to our strengths

Pharmaceutical Distribution

Key profit drivers

Improve the customer experience

Grow generics

Increase sales force effectiveness

Pharmaceutical Distribution

1. Improve the customer experience

•

Deliver a consistent experience

•

Develop technology that simplifies their lives

•

Create value-added programs

•

Know what each customer values, and deliver it

Q3FY08

Q4FY08

Q1FY09

Q2FY09

Q3FY09

Q4FY09

Pharmaceutical Distribution

Customer Loyalty

Result: Higher customer retention, above-market sales growth

Goals for FY10

•

Increase generic

margin rates by

>200 basis points

•

Increase retail

independent

generic penetration

by >10%

Result: Expanded margins and increased profitability

•

Improve our sourcing model

and costing

•

Offer clear value proposition

•

Deliver best-in-class

service levels

•

Require and enforce

contract compliance

Pharmaceutical Distribution

2. Grow generics

Pharmaceutical Distribution

3. Increase sales force effectiveness

•

Know the customer

•

Know the competitive

environment

•

Sell value

•

Reward the right behaviors

•

Measure performance

Result:

Expanded margins, increased direct-store-door

growth and increased profitability

Agenda

•

Overall segment view

•

Business today and profit drivers

–

Nuclear and Pharmacy Services

–

Manufacturer and Specialty Services

–

Pharmaceutical Distribution

•

Outlook and summary

Pharmaceutical Segment key metrics

Customer loyalty scores

Unadjusted service levels

Penetration (% generics)

Non-bulk revenue growth

Segment profit margin

Inventory days

In summary

We have value, focus and a plan to grow

•

Cost-effective

and

efficient:

Wholesalers

are

the

most

cost-

effective and efficient way for suppliers and customers to interact.

•

Focused

the

customer:

Offers

are

customized

each

customer’s unique needs. Programs and services are best-in-class,

easy to understand and execute, and valued by customers.

•

Stabilized

and

growing:

While

Pharmaceutical

Distribution

has

challenges and faces a tough FY10, it is executing well against

goals and investing in key initiatives to deliver long-term value.

Michael A. Lynch

CEO, Medical Segment

June 2, 2009

Medical Segment

Agenda

•

Business today

•

Industry dynamics

•

Profit drivers

•

Outlook and summary

Medical Segment today

>$8B

Revenue¹

Segment profit¹

SKUs

Distribution centers

Manufacturing sites

>$400M

~300k

Pro forma revenue and segment profit, trailing 12 months ended March 31, 2009. See Cardinal Health

appendix for more information regarding Cardinal Health pro forma financial information.

Clinical / Procedural

Canada

Channel and product-focused businesses

•

Hospital

•

Lab

•

Ambulatory

Medical Products

and Services

•

Kitting (Presource™)

•

Hospital

(Source Medical)

•

Ambulatory

Infection Prevention Products

Scale in each of our channels: hospital, lab, ambulatory, kitting

Depth and breadth of capabilities: distribution,

sourcing, manufacturing

Differentiated portfolio of self-manufactured products

Dedicated sales capabilities for different hospital callpoints:

C-suite, materials management, OR, nursing, pharmacy

Key strengths

Surg.

Ctr.

1. Unmatched channel breadth

Hospital

(U.S.)

Clinical

Lab

Ambulatory

Kitting

Canada

Phys.

Office

2. Unmatched depth of capabilities

Hospital (U.S.)

Clinical Lab

Ambulatory

Kitting

Canada

Distribution and Supply Chain Services

Self-Manufactured Products

Branded Products

Sourced Products

Esteem

#1 polyisoprene surgical glove

Medi-Vac Guardian canister

#1 OR suction canister

Tiburon

Industry-leading surgical drape

3. Differentiated product portfolio

4. Dedicated sales capabilities

C-Suite

Operating Room

Nursing

Pharmacy

Radiology

Lab

Central Sterile

Materials Management

•

Multiple customers/

departments within

each hospital

•

Served by one

dedicated account team

•

With specialist support

tailored to each

customer/department

Hospital Customers

Strategic Accounts

OR (Inf. Prev.) Products

Nursing Products

Pharma Distribution

Nuclear Pharmacy

Lab Products &

Distribution

Kitting (OR Products)

Med/Surg Distribution

Customer Account Team

Leadership positions we have today

present great opportunities for the future

•

Leading distributor of medical products in North America

•

Leading distributor of supplies to clinical laboratories

and surgery centers

•

Leader in medical procedure kits and surgical packs

•

Leading positions with self-manufactured products

(domestic and international)

Agenda

•

Business today

•

Industry dynamics

•

Profit drivers

•

Outlook and summary

Industry environment plays to our strengths

•

Volume will increase as coverage expands

•

Cost to serve must decrease as current growth rate is

not sustainable

•

Procedures are shifting to ambulatory care settings

•

Growing importance of diagnostics as a critical aspect

of providing quality, cost-effective care

•

Comparative effectiveness will require proof that

products drive outcomes superior to existing protocols

Well positioned to meet customer needs

•

Scale across channels that supports the development

of a low-cost product portfolio

•

Expertise that helps our customers make their supply

chain more efficient and effective

•

Shared, flexible operating platform that allows us to

serve our customers cost effectively across multiple

care settings

•

Customer insight and manufacturing expertise to

develop clinically differentiated products

Agenda

•

Business today

•

Industry dynamics

•

Profit drivers

•

Outlook and summary

Invest in a business transformation that will deliver a

best-in-class customer and supplier experience

Improve sourcing capabilities to utilize our scale

Grow in laboratory/ambulatory care channels

Execute new kitting business model

Expand our product portfolio

–

Innovation in OR products

–

Private label

Five key profit drivers

1. Customer and supplier experience

Q3FY08

Q4FY08

Q1FY09

Q2FY09

Q3FY09

Q4FY09

Medical Segment Customer Loyalty

2. Sourcing capabilities

•

Beginning to source across channels

–

Improved economics

–

Standardized terms and conditions

•

Drive more purchasing volume through sourcing

capabilities in Asia

•

We will more aggressively manage product categories

across segment

–

Reducing complexity and cost for our customers

–

Creating deeper, more meaningful supplier relationships

Industry

Growth

Focus

Lab

Clinical

6-7%

Continue to serve well

Independent

6-8%

Priority for expansion

Life Science

4-6%

Future opportunity

Ambulatory

Surgery Center

6-8%

Continue to serve well

Physician Office

5-6%

Priority for expansion

Home Care

6-7%

Future opportunity

Long Term Care

1-3%

Future opportunity

3. Growth in Ambulatory and Lab

4. Execute new kitting business model

•

Lean transformation to improve speed in meeting

changes in customer needs

•

Driving lower component costs through enhancement of

segment’s sourcing capabilities

•

New business models that better differentiate between

customer desire for low-cost, standardized kits and

customized kits

5. Expanding our product portfolio

ORwell

Differentiated fluid collection and

disposal solution

Private Label

Using our sourcing expertise to offer

customers a compelling alternative to

current offerings

Agenda

•

Business today

•

Industry dynamics

•

Profit drivers

•

Outlook and summary

Customer loyalty scores

Private label growth

Service levels

Return on tangible capital

Segment profit margin

Medical Segment key metrics

Why we will win

•

Unmatched channel breadth

•

Unmatched product depth

•

Deep capabilities in sourcing and operational excellence

•

Unrivaled, integrated sales capabilities