Cardinal Health Plans to Spin Off Clinical and Medical Products Businesses, Creating Global Leader in Medical Technology

David L. Schlotterbeck to be named chairman and CEO of new company George S. Barrett to be named Cardinal Health chairman and CEO, succeeding R. Kerry Clark who will retire following spin-off


DUBLIN, Ohio, Sept. 29 /PRNewswire-FirstCall/ -- Cardinal Health, a global
provider of products and services that improve the safety and productivity of
health care, today announced plans for a tax-free spin-off of its clinical and
medical products businesses as a separate public company that will be led by
current vice chairman and med-tech industry veteran David L. Schlotterbeck.


As a result of the spin-off, which is anticipated to be completed by the
middle of calendar 2009, both companies are expected to benefit from enhanced
management focus and sharper strategic vision, as well as better alignment of
management and employee incentives with performance and growth objectives. In
addition, both companies expect improved opportunities to access and allocate
capital, and the ability to make investments in their respective growth areas.


The company also announced that Chairman and CEO R. Kerry Clark, 56, will
continue to lead Cardinal Health through the spin-off and then will retire
from the company. Clark will be succeeded by George S. Barrett, 53, who has
served as vice chairman and CEO of Healthcare Supply Chain Services since
joining Cardinal Health in January.  Barrett has more than 25 years of
experience in the health care industry, most recently serving as president and
CEO of North America for Teva Pharmaceuticals and as a member of Teva's Office
of the CEO.  In addition to his responsibility for North American operations,
he led Teva's global pharmaceutical strategy.


"Since 1996, Cardinal Health has built an industry-leading med-tech
business that, as an independent company, would have the size and scale to
stand on its own," said Clark.  "This business will be well positioned to
deliver maximum value to customers and shareholders over the long term.


"We undertook a very disciplined exploratory process that involved our
board, management and outside advisers.  The result was a unanimous decision
to move forward with the spin-off.  This strategic decision will benefit
Cardinal Health and the new med-tech company by allowing each business to
focus on its unique growth strategies, capital needs and customer
requirements.


"The substantial strategic and operational steps we have taken put us in
the very competitive and enviable market positions we have today. I believe
our customers, employees and shareholders will benefit from our ability to be
even more focused, and I look forward to leading the effort to complete the
spin-off."


In addition, the company announced that founder Robert D. Walter will
retire from its board of directors by not standing for re-election when his
term expires on Nov. 5, following the company's 2008 annual meeting of
shareholders. He will continue to serve as an adviser to the company.


"I am fully supportive of our plans to spin off the clinical and medical
products businesses and am confident that the two businesses will be well
positioned as separate companies," Walter said.  "With strong teams in place
to lead these two organizations, my retirement from the board is the next
logical step in my leadership transition at Cardinal Health."



A new, global medical-technology company


The spin-off of the clinical and medical products businesses will create a
new, global company headquartered in San Diego, with industry-leading
offerings for infusion, medication and supply dispensing, respiratory care,
infection prevention, medical diagnostics and surgical procedures. Products
will include the Alaris(R) IV infusion and Pyxis(R) dispensing systems, AVEA
and LTV(R) series ventilators, V. Mueller(R) surgical instruments, and
clinically differentiated offerings to reduce hospital-acquired infections
through MedMined(TM) services and ChloraPrep(R) preoperative skin preparation.
Fiscal 2009 pro forma revenue for these businesses as a stand-alone entity is
expected to be more than $4 billion(1), which would place the independent
company among the largest medical-technology firms globally.


Schlotterbeck, 61, joined Cardinal Health in 2004 through the $2 billion
acquisition of Alaris Medical Systems where he was president and CEO.  Prior
to Alaris, he was president and chief operating officer of Pacific Scientific
Company; president and CEO of Vitalcom, Inc. and executive vice president and
chief operating officer of Nellcor, Inc.  He currently serves as vice chairman
and CEO of Clinical and Medical Products for Cardinal Health.


Dwight Winstead, 59, currently group president of Clinical and Medical
Products, will be named chief operating officer, reporting to Schlotterbeck.
An external search has been launched to select a chief financial officer for
the new medical-technology company.



A more focused Cardinal Health


With fiscal 2009 revenue adjusted for the spin-off at more than $90
billion(1), Cardinal Health is an industry leader in pharmaceutical and
medical product distribution.  It is also one of the largest providers of
products and services to acute care hospitals in the U.S. and the leading
nuclear pharmacy provider, preparing more than 13 million doses of highly
specialized radiopharmaceuticals each year. Cardinal Health will retain its
industry leading surgical gloves, drapes and apparel, and fluid management
businesses that are currently part of the Clinical and Medical Products
segment. Cardinal Health also will retain a group of other businesses
including Pharmacy Services (outsourced hospital pharmacy management services)
and Medicine Shoppe International, while the company conducts a previously
announced in-depth review to evaluate their strategic fit. Cardinal Health
will continue to be headquartered in Dublin, Ohio.


Jeffrey W. Henderson, 43, will remain chief financial officer of Cardinal
Health, a position he has held since 2005, and will report to Barrett after
the spin-off. In addition, Michael A. Lynch and Michael C. Kaufmann will be
named to senior business leader positions within Cardinal Health.



Clark to retire


Clark joined as president and CEO in April 2006 following a 32-year career
at Procter & Gamble.  During his tenure with Cardinal Health, he focused the
company - through organic growth, acquisition and divestiture - on the global
opportunity to help hospitals, physicians and pharmacies make the practice and
delivery of health care safer and more productive.  Under his leadership, the
company acquired medical-technology leaders, MedMined, Care Fusion, VIASYS
Healthcare and Enturia to bolster its patient-safety offerings, and divested a
$2 billion business that developed, manufactured and packaged medicine for the
pharmaceutical industry. Clark also took important steps to strengthen the
management team and provide a focus on people for succession planning and
development of future company leaders. He was named chairman and CEO in
September 2007.


"Kerry has led the company through the important, strategic decisions to
position Cardinal Health and our medical technologies spin-off company very
strongly in their respective markets," said Richard C. Notebaert, presiding
director of the Cardinal Health board. "His tenure has been, and will continue
to be as he leads the company through the spin-off, critical to long-term
value creation for customers and shareholders."



Completing the spin-off


The proposed tax-free spin-off will be accomplished through a pro rata
distribution to Cardinal Health shareholders. Completion of the spin-off is
subject to final approval by Cardinal Health's board of directors,
confirmation of the tax-free nature of the transaction, as well as
effectiveness of a Form 10 registration statement to be filed with the U.S.
Securities and Exchange Commission (SEC). The Form 10 is expected to be filed
during the company's fiscal third quarter (January to March 2009) and will
include detailed information about the new medical-technology company, the
spin-off and related matters. The company will distribute an information
statement to shareholders following completion of the SEC's review of the Form
10.  Approval by the company's shareholders is not required for completion of
the spin-off.


Both companies are expected to be well capitalized to provide financial
flexibility to take advantage of future growth opportunities. They are
expected to have financial policies, balance sheets and credit metrics that
are commensurate with investment-grade credit ratings.


Cardinal Health will reassess its capital deployment targets as it refines
the capital structure of both companies. Share repurchases for this year are
expected to total no more than the amount required to offset dilution from
issuances for equity compensation. Cardinal Health also expects to continue
its regular $0.14 quarterly dividend until the spin-off is completed and
anticipates that it will continue to pay a dividend after the spin-off. It is
not currently anticipated that the new medical-technology company will pay
regular dividends.


The company expects that Cardinal Health historical financial statements,
adjusted for the spin-off, will be available toward the middle of calendar
2009.



Outlook


For the current fiscal 2009, the company reiterated guidance it provided
on Aug. 7 for revenue growth of 6 percent to 7 percent and non-GAAP diluted
EPS from continuing operations(2) to be in a range of $3.80 to $3.95. Non-GAAP
EPS in the first quarter is still expected to be around $0.70, with EPS
returning to more normal levels in the second quarter and overall results
stronger in the second half of the year.  The company's guidance does not
reflect any incremental costs it will incur associated with the spin-off and
separation of the two companies. The company expects a significant portion of
these costs will be classified as special items in accordance with company
practices.



Conference call and Q1 earnings


Cardinal Health will host a conference call and webcast at 8:30 a.m. EDT
to discuss today's news.  To access the call and corresponding slide
presentation, go to the Investor page at www.cardinalhealth.com.  The
conference call may also be accessed by calling 617-213-8052, conference
passcode 47080658.  An audio replay will be available until 11:30 p.m. EDT on
Oct. 1 at 617-801-6888, passcode 60300274.  A transcript and audio replay will
also be available at www.cardinalhealth.com.


Cardinal Health plans to release first-quarter results for fiscal 2009 on
Wednesday, Oct. 29, prior to the opening of trading on the New York Stock
Exchange. The company has scheduled a webcast and conference call for Oct. 29
at 8:30 a.m. EDT to discuss results of the quarter. To access the call and
corresponding slide presentation, visit the Investor page at
www.cardinalhealth.com or dial 617-213-4845, passcode 12574826.


Participants are advised to pre-register at the Investor page at
www.cardinalhealth.com or to dial into the call at least 10 minutes prior to
the start time. Pre-registrants are issued a pin number that provides faster
access to the live call. Presentation slides, an audio replay and a transcript
will be archived on the Web site after the conclusion of the meeting. The
audio replay will also be available until 11 p.m. EDT on Oct. 31 by dialing
617-801-6888, passcode 49513300.



About Cardinal Health


Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $91
billion, global company serving the health care industry with products and
services that help hospitals, physician offices and pharmacies reduce costs,
improve safety, productivity and profitability, and deliver better care to
patients.  With a focus on making supply chains more efficient, reducing
hospital-acquired infections and breaking the cycle of harmful medication
errors, Cardinal Health develops market leading technologies, including
Alaris(R) IV pumps, Pyxis(R) automated dispensing systems, MedMined(TM)
infection surveillance services and the CareFusion(TM) patient identification
system.  The company also manufactures medical and surgical products and is
one of the largest distributors of pharmaceuticals and medical supplies
worldwide.  Ranked No. 19 on the Fortune 500, Cardinal Health employs more
than 40,000 people on five continents.  More information about the company may
be found at www.cardinalhealth.com.



(1) The estimates of the pro forma revenue for the clinical and medical
products company that is expected to be spun-off and for Cardinal Health are
estimates of the revenue for each company for the twelve months ending June
30, 2009 in accordance with generally accepted accounting principles and
include adjustments expected to reflect each company as a stand-alone entity.
These estimates are based on Cardinal Health's previously announced revenue
expectations for fiscal 2009 and on assumptions that management currently
believes are reasonable, but actual revenues for each company may vary
materially from these estimates.



(2) Non-GAAP diluted EPS from continuing operations: earnings from
continuing operations, excluding special items and impairments, (gain)/loss on
sale of assets and other, net, both net of tax, divided by diluted weighted
average shares outstanding.



Non-GAAP Financial Measures


Cardinal Health presents non-GAAP earnings from continuing operations (and
presentations derived from this financial measure, including per share
calculations) on a forward-looking basis.  The most directly comparable
forward-looking GAAP measure is earnings from continuing operations.  The
company is unable to provide a quantitative reconciliation of this forward-
looking non-GAAP measure to the most directly comparable forward-looking GAAP
measure, because the company cannot reliably forecast special items and
impairments, (gain)/loss on sale of assets and other, net, which are difficult
to predict and estimate. Please note that the unavailable reconciling items
could significantly impact the company's future financial results.



Cautions Concerning Forward-Looking Statements


This news release contains forward-looking statements addressing expected
financial results of Cardinal Health, the planned spin-off of Cardinal
Health's clinical and medical products businesses as a separate company, the
expected financial results of the new company and of Cardinal Health after
giving effect to the spin-off of the new company,  the operation, business and
prospects of Cardinal Health and the new company following the planned spin-
off and other 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.  These risks and uncertainties
include uncertainties regarding the planned spin-off of the clinical and
medical products businesses as a new stand-alone entity, including the timing
and terms of any such spin-off and whether such spin-off will be completed,
and uncertainties regarding the impacts on Cardinal Health, the new clinical
and medical products company and the market for their respective securities if
the spin-off is accomplished.  In addition, Cardinal Health and the proposed
new clinical and medical products company are subject to additional risks and
uncertainties 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, including (but not limited to) the following: 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; difficulties and
uncertainties related to the integration of acquired businesses; and
conditions in the pharmaceutical market and general economic and market
conditions.  This news release reflects management's views as of September 29,
2008.  Except to the extent required by applicable law, Cardinal Health
undertakes no obligation to update or revise any forward-looking statement.



SOURCE  Cardinal Health, Inc.