Building a better CareFusion Annual Report 2014 Dear Shareholders, Customers and Employees: Five years ago, CareFusion was born out of a new Pyxis® ES dispensing platform, our Medical spinoff from Cardinal Health, with the vision Systems segment had a very strong fourth quarter, to improve the safety and cost of healthcare with 20 percent revenue growth and 16 percent for generations to come. adjusted segment profit† growth compared to What we have accomplished in less than the prior year. We also had record committed 2,000 days has required discipline and hard contracts for both our Dispensing Technologies work, and the results are now visible inside and Infusion Systems business lines and have a our company and becoming clearer to our record backlog to fuel top-line growth in the customers and our shareholders. The launch coming year. of the company started in three phases: The We have been active on the M&A front. In fiscal Stand-Up phase consisted of separating from 2014, we completed our largest acquisition to Cardinal Health and creating an independent, date: the $500 million tuck-in of GE Healthcare’s publicly traded company. Next came the Building Vital Signs business. In addition, we acquired a Foundation phase where we started to reshape Sendal in Spain to expand our infusion disposables the portfolio of businesses through both business and made a strategic investment in acquisitions and divestitures. And finally, the Caesarea Medical Electronics (CME) to broaden stage we are in now, which is Accelerating our understanding of a different segment of the for Long-Term Growth. infusion market. Along the way, we’ve acquired eight companies, We continued to generate healthy cash flows, expanded globally and built CareFusion into including $685 million of operating cash flow one of the top brands in the medical technology during the year. Our balance sheet remains strong, industry. We’ve introduced more than 60 new as does our ability to leverage it for additional products, awarded more than $1 million in strategic acquisitions. Clinical Excellence Grants and touched millions We have already deployed approximately of patients’ lives. $700 million for M&A as part of our three-year And today, we are in a strong position. Fiscal plan, which is in addition to the $1.1 billion 2014 ended as a solid year across CareFusion, we have used for share repurchases. Capital with above-market organic revenue growth deployment will remain an important part of across the majority of our businesses and our plans to create shareholder value. 11 percent growth in our adjusted earnings Fiscal 2014 also saw the fruits of our continued † per share from continuing operations. These investment in research and development. results were led by double-digit top- and We launched more than 20 new products, bottom-line growth from our Procedural Solutions including our Pyxis ES platform and complete segment, marking eight consecutive quarters of medication management solution; several line positive momentum. After an expected slow start extensions to our ChloraPrep® franchise; and to the year because of delays in ramping up our new infusion disposable products, including our Chemo Safety System. The R&D used to fuel digits, adjusted operating margins† to expand to these introductions was funded by savings from 23 percent or greater, and adjusted earnings our work to simplify the company and build a per share from continuing operations† to grow foundation for growth. 10 percent to 12 percent. We plan to deploy at We continued to position our team for success least 50 percent of our free cash flow for share as healthcare consolidates in the U.S. and adapts buybacks and tuck-in acquisitions. Larger-scale to cost pressures in other geographies. We are acquisitions are excluded from this outlook strengthening how we go to market in our selling because of their unpredictable nature, but we organizations, investing in our service organization remain steadfast in our commitment to gain and building scale in our core businesses. We also scale, grow outside the U.S. and improve our remain focused on the projects we have underway strategic portfolio of products through mergers across the company to simplify CareFusion, expand and acquisitions. We continue to actively manage our margins and improve the experience we a pipeline of opportunities ranging in all sizes, deliver for our customers. because we view this as an important lever for our growth. And we leveraged the strength of our CareFusion brand with new strategies that cut across business As we grow CareFusion, we will build on our past lines. From our new enterprise-wide medication accomplishments while we generate new ways to management solution to our CareFusion Focus on serve our global customers, simplify our business Quality Care initiative, we are seeing the benefits and enhance the experience we deliver. We have we can bring customers when we support them as built a culture focused on innovation, continuous CareFusion—working across business lines, rather improvement and not mistaking effort for results. than as standalone product lines. We will continue to work on being more flexible to evolve with our dynamic industry and continue To continue our success, we need to stay to lead in patient safety, quality and helping our nimble—change how we sell and who we sell to customers reduce their costs. We’ve come a long so our customers can meet their goals of doing way in five years and we have a long runway more with less, while still keeping patients safer ahead, but we’re just getting started. than ever before. This will drive us through fiscal 2015 and beyond. When we turn to next year, we expect revenue Sincerely, growth of 5 percent to 7 percent, adjusted operating margins† to be 20.5 percent to 21.5 percent for the full year, and adjusted earnings per share from continuing operations† to be in the range of $2.60 to $2.75, representing Kieran T. Gallahue 10 percent to 17 percent growth from fiscal 2014. Chairman and Chief Executive Officer Looking beyond and through fiscal 2017, we expect annual revenue growth in the mid-single GAAP Reconciliations (in millions, except per share amounts) Restructuring Amortization Step-up of Reserve for and Acquistion of Acquired Acquired Expected Gov’t GAAP Integration Intangibles Inventory Settlement Adjusted Fiscal 2015 Guidance A Diluted EPS from continuing operations $2.15-$2.30 $0.21 $0.23 $0.01 - $2.60-$2.75 Fiscal 2014 Revenue $3,842 - - - - $3,842 B Income from continuing operations $417 $30 $48 $8 - $503 A Diluted EPS from continuing operations $1.96 $0.14 $0.23 $0.04 - $2.36 Diluted shares outstanding 212.9 - - - - 212.9 Q4 Fiscal 2014 Segment profit—Medical Systems $146 $2 $10 - - $158 Segment profit—Procedural Solutions $48 $7 $11 $3 - $69 Fiscal 2013 Revenue $3,550 - - - - $3,550 B Income from continuing operations $389 $14 $39 - $33 $475 A Diluted EPS from continuing operations $1.74 $0.06 $0.17 - $0.15 $2.12 Diluted shares outstanding 224.0 - - - - 224.0 Q4 Fiscal 2013 Segment profit—Medical Systems $124 $3 $9 - - $136 Segment profit—Procedural Solutions $46 $1 $6 - - $53 A. Earnings per share calculations are performed separately for each component presented. Therefore, the sum of the per share components from the table may not equal the per share amounts presented. For fiscal 2015 guidance, restructuring and integration impact on diluted earnings per share is based on a mid-point of an estimated range of $0.19 to $0.23 per diluted share. B. Adjusted income from continuing operations is presented net of tax effect. References and endnotes † Denotes non-GAAP financial measure. These non-GAAP financial measures exclude amortization of acquired intangibles and nonrecurring items related to restructuring and acquisition integration charges. Commencing with the quarter ended December 31, 2013, the company began excluding from its adjusted results inventory valuation step-up charges from acquisitions. Financial information for historical periods has not been revised to reflect the exclusion of such inventory step-up charges, as the amounts were immaterial. For the fiscal year ended June 30, 2013, adjusted financial measures also exclude the reserve for the expected government settlement, which we paid in January 2014. See reconciliations above. Note: A full GAAP to non-GAAP reconciliation can be found in our earnings release that reported results for the quarter and fiscal year ended June 30, 2014, which was furnished to the United States Securities and Exchange Commission on our Current Report on Form 8-K on August 7, 2014, and is posted on our website at www.carefusion.com under the Investors tab. The Form 8-K also includes a discussion of the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding our financial condition and results of operations. Senior leadership Kieran T. Gallahue Gordon LaFortune Michael Paolucci Chairman and Executive Vice President Executive Vice President Chief Executive Officer EMEA/ANZ Commercial Operations Human Resources and and Global Infusion Disposables Chief Human Resources Officer Jim Hinrichs Chief Financial Officer Tom Leonard Joan Stafslien President Executive Vice President Don Abbey Medical Systems General Counsel and Executive Vice President Corporate Secretary Quality, Regulatory and Jim Mazzola Medical Affairs Senior Vice President Michael Zill Global Marketing and Communication Executive Vice President Scott Bostick Chief Information Officer Senior Vice President Michael Meyerhoff Americas Commercial Operations Vice President Asia Commercial Operations Ron Frisbie Executive Vice President Dr. Carlos M. Nunez Global Operations Chief Medical Officer Board of Directors Kieran T. Gallahue Jacqueline B. Kosecoff, PhD (A) Michael D. O’Halleran (H) Chairman and CEO Managing Partner Senior Executive Vice President CareFusion Corporation Moriah Partners, LLC Aon PLC Supratim Bose J.