J.P. Morgan 34th Annual Healthcare Conference Presentation

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  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved

    Healthcare is changing

    Were changing healthcare.George S. Barrett

    Chairman and Chief Executive Officer

    J.P. Morgan Healthcare Conference

    January 12, 2016

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.1

    Forward-looking statements and GAAP reconciliation

    Cautions Concerning Forward-Looking Statements

    This presentation contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent

    upon future events or developments. These statements may be identified by words such as "expect," "anticipate," "intend," "plan," "believe,"

    "will," "should," "could," "would," "project," "continue," "likely," and similar expressions, and include statements reflecting future results or

    guidance, statements of outlook and expense accruals. These matters are subject to risks and uncertainties that could cause actual results

    to differ materially from those projected, anticipated or implied. These risks and uncertainties include competitive pressures in Cardinal

    Health's various lines of business; the ability to continue to achieve and maintain the benefits from the generic sourcing joint venture with

    CVS Health; the ability to achieve and maintain the benefits from our acquisitions of Cordis and The Harvard Drug Group; the frequency or

    rate of pharmaceutical price appreciation or deflation and the timing of generic and branded pharmaceutical introductions; the risk of non-

    renewal or a default under one or more key customer or supplier arrangements or changes to the terms of or level of purchases under

    those arrangements; uncertainties due to government health care reform including federal health care reform legislation; changes in the

    distribution patterns or reimbursement rates for health care products and services; the effects of any investigation or action by any

    regulatory authority; and changes in the cost of commodities such as oil-based resins, cotton, latex and diesel fuel. Cardinal Health is

    subject to additional risks and uncertainties described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports and exhibits to

    those reports. This presentation reflects management's views as of January 12, 2016. 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 contains Non-

    GAAP financial measures. Cardinal Health provides definitions and reconciliations of the differences between the Non-GAAP financial

    measures and their most directly comparable GAAP financial measures in the Financial Appendix at the end of these presentations and at

    ir.cardinalhealth.com. An audio replay of the conference call will be available at ir.cardinalhealth.com.

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.

    For those tasked with navigating the complexities of healthcare

    Cardinal Health brings

    scaled solutions that

    help our customers thrive

    in a changing world.

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.3

    Essential facts about Cardinal Health

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.4

    Non-GAAP EPSRolling 3-year CAGRs

    11%FY11 FY14

    11%FY12 FY15

    12%1FY13 FY16(E)

    Generated

    >$9BIn cash from operations

    FY11 FY15

    Financial highlights and goals

    Total Shareholder Return2 of

    176%From FY11 FY15

    Long-term goals

    1CAGR for FY13 FY16(E) uses midpoint of FY16 guidance range of $5.15 - $5.35 provided on November 2, 2015.2TSR assumes the reinvestment of dividends.3Based on full year dividends paid in FY15 versus non-GAAP EPS for FY15.

    Please see appendix for comparable GAAP numbers and GAAP to Non-GAAP reconciliations.

    Non-GAAP EPS CAGR

    10-15%

    Annual Dividend Payout

    30-35%(FY15 Dividend Payout Ratio3 31%)

    Highlights

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.5

    Key trends in healthcare

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.6

    GenericsSpecialty &

    BiopharmaInternational

    Health

    System & Hospital

    Solutions

    Alternate Sites

    of Care

    Expand generics

    customer base

    Red Oak

    Largest U.S. generic

    sourcing entity

    Harvard Drug GroupIncreased telesales

    presence

    Upstream solutions for

    BiopharmaRegulatory sciences, 3PL

    services, Patient HUB (Sonexus)

    Metro MedicalIncrease scale and

    expanded therapeutic reach

    Grow post-acute

    leveraging IDN experience

    and scale

    Cardinal Health at Home Leader in medical products to the

    home

    Henry Schein alliance

    Discharge managementnaviHealth

    Scaled and standardized

    solutions

    360 Program Comprehensive suite of solutions

    Cardinal Health brand

    consumables

    Physician preference itemsCardiovascular (Cordis), Negative

    Pressure Wound Therapy and

    Ortho Trauma

    ChinaTop 10 distributor

    Global product

    expansion(Cordis)

    Our priorities are focused on the right initiatives to help the system

    deliver the right care, at the right time, in the right setting

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.7

    Two financial reporting segments

    Pharmaceutical segment Medical segment

    One enterprise market strategy

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.

    Serving the full continuum of care

    Hospitals

    Retail

    pharmacies

    Surgery

    centers

    Home

    health

    Physician

    offices

    Laboratories

    Imaging

    centers

    Clinics

    8

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.9

    Pharmaceutical Segment long-term sustainable growth driversFY15 revenues of $91B, segment profit of $2.1B

    Enable our customers growth

    World-class generics offering

    Drive growth in Specialty Solutions

    1Excludes non-Source sales

    Deliver on organic initiatives and recent

    acquisitions

    China

    FY11 FY16(E)

    $8B

    $1B Revenue

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.10

    Expand on integrated services

    Medical Segment long-term sustainable growth driversFY15 revenues of $11B, segment profit of $433M

    Deep customer knowledge

    Grow Cardinal Health Brand

    Maximize the post-acute setting

    72%Growth in segment profit

    contribution FY12 to FY15

    1.8 million patients served in the home

    We provide resources to

    >75%of U.S. Hospitals

    88%Growth in segment profit

    contribution FY12 to FY15

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.11

    FY10 FY11 FY12 FY13 FY14 FY15 FY16Guidance

    Strong and consistent earnings growth

    Non-GAAP EPS

    See appendix for GAAP/non-GAAP definitions and reconciling information.16-year CAGR is based off of non-GAAP EPS from FY10 to the midpoint of the FY16 guidance range provided on Nov. 2, 2015.

    $5.15 $5.35

    Generics

    Specialty

    CAH Brand Products

    Cost Efficiency

    $2.80

    $2.24

    $3.21

    $3.73$3.84

    $4.38

    Customer Focus

    Post-Acute

    China

    At Home

    PPI

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.12

    A balanced approach with capital

    1Acquisitions are net of divestitures. Cordis closed on October 2, 2015 at the start of Q2 and thus is not included in this figure.

    FY11 Q1 FY16 Capital Deployment

    $1.4BCapital Expenditure

    $7.1BAcquisitions1

    $1.9BDividends

    $2.9BShare Repurchases

    Returning

    $4.8B long-term value to our

    shareholders

    Investing

    $8.5B for sustainable growth

  • Copyright 2016, Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.13

    Our business is positioned to grow WELL into the future

    Our strategic priorities are on the right side of healthcare trends

    We are excellent, disciplined stewards of capital

    We have strong and valuable strategic partnerships

    We have a relentless focus on serving our customers, and the patientsthey care for

    We will execute to deliver meaningful and measurable results

    Driven by a team with a proven track record

    in the business of healthcare

    Healthcare is changingWere changing healthcare.

  • Operating Earnings Before Provision Earnings Earnings from Diluted EPS Diluted EPS

    Earnings Income Taxes for from Continuing from from Continuing

    Operating Growth and Discontinued Income Continuing Operations Continuing Operations

    (in millions, except per common share amounts) Earnings Rate Operations Taxes Operations Growth Rate Operations Growth Rate1

    GAAP 2,161$ 15 % 1,967$ 755$ 1,212$ 4 % 3.61$ 7 %

    Restructuring and employee severance 44 44 15 29 0.09

    Amortiza

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