# CARDINAL HEALTH INC (CAH)

Informational only - not investment advice.

CIK: 0000721371
SIC: 5122 Wholesale-Drugs, Proprietaries & Druggists' Sundries
SIC breadcrumb: [Wholesale Trade](/division/F/) > [Wholesale Trade - Nondurable Goods](/major-group/51/) > [SIC 5122 Wholesale-Drugs, Proprietaries & Druggists' Sundries](/industry/5122/)
Latest 10-K filed: 2025-08-12
SEC page: https://www.sec.gov/edgar/browse/?CIK=721371
Filing source: https://www.sec.gov/Archives/edgar/data/721371/000072137125000079/cah-20250630.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 222578000000 | USD | 2025 | 2025-08-12 |
| Net income | 1561000000 | USD | 2025 | 2025-08-12 |
| Assets | 53122000000 | USD | 2025 | 2025-08-12 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-08-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000721371.json. Derived margins are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 121,546,000,000 | 129,976,000,000 | 136,809,000,000 | 145,534,000,000 | 152,922,000,000 | 162,467,000,000 | 181,326,000,000 | 204,979,000,000 | 226,827,000,000 | 222,578,000,000 |
| Net income | 1,427,000,000 | 1,288,000,000 | 256,000,000 | 1,363,000,000 | -3,696,000,000 | 611,000,000 | -938,000,000 | 330,000,000 | 852,000,000 | 1,561,000,000 |
| Operating income | 2,459,000,000 | 2,120,000,000 | 126,000,000 | 2,060,000,000 | -4,098,000,000 | 472,000,000 | -607,000,000 | 752,000,000 | 1,243,000,000 | 2,275,000,000 |
| Gross profit | 6,543,000,000 | 6,544,000,000 | 7,181,000,000 | 6,834,000,000 | 6,868,000,000 | 6,778,000,000 | 6,484,000,000 | 6,874,000,000 | 7,414,000,000 | 8,168,000,000 |
| Diluted EPS | 4.32 | 4.03 | 0.81 | 4.53 | -12.61 | 2.08 | -3.37 | 1.26 | 3.45 | 6.45 |
| Assets | 34,122,000,000 | 40,112,000,000 | 39,951,000,000 | 40,963,000,000 | 40,766,000,000 | 44,453,000,000 | 43,878,000,000 | 43,349,000,000 | 45,121,000,000 | 53,122,000,000 |
| Stockholders' equity | 6,554,000,000 | 6,808,000,000 | 6,059,000,000 | 6,328,000,000 | 1,789,000,000 | 1,791,000,000 | -709,000,000 | -2,958,000,000 | -3,213,000,000 | -2,781,000,000 |
| Cash and cash equivalents | 2,356,000,000 | 6,879,000,000 | 1,763,000,000 | 2,531,000,000 | 2,771,000,000 | 3,407,000,000 | 4,717,000,000 | 4,076,000,000 | 5,133,000,000 | 3,874,000,000 |
| Net margin | 1.17% | 0.99% | 0.19% | 0.94% | -2.42% | 0.38% | -0.52% | 0.16% | 0.38% | 0.70% |
| Operating margin | 2.02% | 1.63% | 0.09% | 1.42% | -2.68% | 0.29% | -0.33% | 0.37% | 0.55% | 1.02% |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance

## Latest 10-K MD&A

Extracted from a later financial-section MD&A body after the formal Item 7 span was a short reference.
Confidence: high

Management's Discussion and Analysis of Financial Condition and Results of Operations

About Cardinal Health

Cardinal Health, Inc., an Ohio corporation formed in 1979, is a global healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. We provide pharmaceuticals and medical products and cost-effective services and solutions that enhance the healthcare system and supply chain efficiency. We connect patients, providers, payers, pharmacists, and manufacturers for integrated care coordination.

We report our financial results in two reportable segments: Pharmaceutical and Specialty Solutions ("Pharma") segment and Global Medical Products and Distribution ("GMPD") segment. All remaining operating segments that are not significant enough to require separate reportable segment disclosures are included in Other, which is comprised of Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight® Logistics.

Pharmaceutical and Specialty Solutions Segment

Our Pharma segment distributes branded and generic pharmaceutical, specialty pharmaceutical, and over-the-counter healthcare and consumer products in the United States. This segment also provides services to pharmaceutical manufacturers and healthcare providers for specialty pharmaceutical products; provides pharmacy management services to hospitals and operates a limited number of pharmacies, including pharmacies in community health centers; repackages generic pharmaceuticals and over the counter healthcare products; and includes our managed services organization platforms for specialty physician offices.

Global Medical Products and Distribution Segment

Our GMPD segment manufactures, sources, and distributes Cardinal Health brand medical, surgical, and laboratory products, which are sold in the United States, Canada, Europe, Asia, and other markets. This segment also distributes a broad range of medical, surgical, and laboratory products known as national brand products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers in the United States and Canada.

Other Operating Segments

Our Nuclear and Precision Health Solutions operating segment operates nuclear pharmacies and manufacturing facilities, which manufacture, prepare, and deliver radiopharmaceuticals for use in nuclear imaging, theranostics, and other procedures in hospitals and physician offices. This segment also contract manufactures a radiopharmaceutical treatment (Xofigo®) and holds the North American rights to manufacture and distribute Lymphoseek®, a radiopharmaceutical diagnostic imaging agent.

Our at-Home Solutions operating segment has two main businesses: Edgepark, including ADS, directly providing medical supplies to patients with chronic conditions in the home; and at-Home, a business-to-business distribution service that delivers medical supplies and over-the-counter products to home medical equipment providers, home health and hospice agencies, and e-commerce providers.

Our OptiFreight® Logistics operating segment supports the shipping and logistics needs of healthcare providers by optimizing direct shipments through integrated technology solutions. This segment serves hospitals, pharmacies, labs, and surgery centers.

3

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Overview

Consolidated Results

Fiscal 2025 Overview

Revenue

Revenue decreased 2 percent to $222.6 billion for fiscal 2025 from the prior year, primarily due to the expiration of the Pharma segment OptumRx contracts, partially offset by branded and specialty pharmaceutical sales growth from existing and new customers.

GAAP and Non-GAAP Operating Earnings

(in millions)

2025

2024

Change

GAAP operating earnings

$

2,275 

$

1,243 

83 

%

Shareholder cooperation agreement costs

— 

1 

Restructuring and employee severance

88 

175 

Amortization and other acquisition-related costs

464 

284 

Acquisition-related cash and share-based compensation costs

126 

— 

Impairments and (gain)/loss on disposal of assets, net

18 

634 

Litigation (recoveries)/charges, net

(185)

78 

Non-GAAP operating earnings

$

2,786 

$

2,414 

15 

%

The sum of the components and certain computations may reflect rounding adjustments.

During fiscal 2025, GAAP operating earnings increased 83% to $2.3 billion and non-GAAP operating earnings increased 15% to $2.8 billion from the prior year. The increases in both GAAP and non-GAAP operating earnings were driven by the increased contribution from branded and specialty pharmaceutical products and the acquisitions of MSO platforms and ADS, partially offset by the expiration of the OptumRx contracts. The increase to GAAP operating earnings was primarily driven by the favorable comparison to the prior year, which included pre-tax non-cash goodwill impairment charges of $675 million related to the GMPD segment. The increase to GAAP operating earnings was also favorably impacted by net recoveries in class action antitrust litigation in which we were a class member or plaintiff, for which we recognized $171 million during fiscal 2025. In fiscal 2025, GAAP operating earnings included $161 million of transaction and integration costs associated with acquisitions.

 4

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Overview

GAAP and Non-GAAP Diluted EPS

($ per share)

2025 (2)

2024 (2)

Change

GAAP diluted EPS (1)

$

6.45 

$

3.45 

87 

%

Restructuring and employee severance

0.28 

0.54 

Amortization and other acquisition-related costs

1.49 

0.85 

Acquisition-related cash and share-based compensation costs

0.51 

— 

Impairments and (gain)/loss on disposal of assets, net (3)

0.05 

2.38 

Litigation (recoveries)/charges, net

(0.54)

0.30 

Non-GAAP diluted EPS (1)

$

8.24 

$

7.53 

9 

%

The sum of the components and certain computations may reflect rounding adjustments.

(1)Diluted earnings per share attributable to Cardinal Health, Inc. ("diluted EPS").

(2)The reconciling items are presented within this table net of tax. See quantification of tax effect of each reconciling item in our GAAP to Non-GAAP Reconciliations in the section titled "Explanation and Reconciliation of Non-GAAP Financial Measures."

(3)For fiscal 2024, impairments and (gain)/loss on disposals of assets, net included pre-tax goodwill impairment charges of $675 million related to the GMPD segment. This had an adverse impact of $(2.50) per share to GAAP diluted EPS.

During fiscal 2025, GAAP and non-GAAP diluted EPS increased 87 percent to $6.45 and 9 percent to $8.24, respectively, from the prior year due to the factors impacting operating earnings discussed in the preceding section, partially offset by increased interest expense.

Cash and Equivalents

Our cash and equivalents balance was $3.9 billion at June 30, 2025 compared to $5.1 billion at June 30, 2024. During fiscal 2025, net cash provided by operating activities was $2.4 billion, which includes the impact of unwinding the negative net working capital associated with the expiration of our OptumRx contracts and the normal timing of payments to vendors, partially offset by the benefit of onboarding new customers. Cash provided by operating activities also includes the impact of payments totaling $798 million related to opioid litigation.

During fiscal 2025, we deployed $5.3 billion for acquisitions, $765 million for share repurchases, $400 million for debt repayment, $547 million for capital expenditures, and $494 million for dividends. In addition, we issued new long-term debt and received net proceeds of $2.9 billion to fund a portion of the consideration paid for acquisitions and for general purposes. Another portion of the consideration paid for the acquisitions came from an $800 million term loan.

Cardinal Health | Fiscal 2025 Form 10-K

5

MD&A

Overview

Significant Developments in Fiscal 2025 and Trends

Acquisitions

Advanced Diabetes Supply Group ("ADS")

On April 1, 2025, we completed the acquisition of ADS, a diabetic medical supplies provider to patients in the home, for a purchase price of $1.1 billion in cash, subject to certain adjustments. ADS serves approximately 500,000 patients annually providing diabetes therapies from leading manufacturers. ADS is part of our at-Home Solutions operating segment and its results are reported in Other.

The Specialty Alliance

On January 30, 2025, we completed the acquisition of a 73 percent ownership interest in GI Alliance ("GIA"), a management services organization ("MSO") primarily serving gastroenterologists, for a purchase price of approximately $2.8 billion in cash, subject to certain adjustments. Beginning on the third anniversary of the closing, we have the ability to exercise a call right to purchase up to 100 percent of the remaining outstanding equity. GIA's MSO provides services to over 900 physicians across 345 practice locations in 20 states.

Additionally, on May 30, 2025, we, through GIA, completed the acquisition of Urology America, a urology management services organization, for a purchase price of $360 million in cash, subject to certain adjustments. In connection with this transaction, we issued common units in GIA to certain physicians and management. See Note 1 of the “Notes to Consolidated Financial Statements” for further information on the GIA share-based compensation plans.

In recognition of the expansion into new practice areas, in June 2025, we announced that these businesses would be called The Specialty Alliance. We consolidate the results of The Specialty Alliance in our consolidated financial statements and report those consolidated results within our Pharma segment.

We financed the acquisitions of GIA, Urology America, and ADS with a combination of cash on hand and cash proceeds from the new debt financing as described in Note 7 of the "Notes to Consolidated Financial Statements".

Integrated Oncology Network ("ION")

On December 2, 2024, we completed the acquisition of ION, a physician-led independent community oncology network, for a purchase price of $1.1 billion in cash, subject to certain adjustments. ION is a management services organization that supports more than 50 practice sites in 10 states representing more than 100 providers. ION supports a continuum of care across its member sites including medical oncology, radiation oncology, urology, and other ancillary services. As part of the transaction, ION has been integrated into Navista, our managed services organization intended to enhance efficiency for providers and patients, enable additional capabilities, and increase practice profitability of independent community oncologists. We report ION results within our Pharma segment. We funded the acquisition with available cash on hand.

These acquisitions have positively impacted their respective segment revenue and segment profit while increasing amortization and acquisition-related costs and acquisition-related cash and share-based compensation costs during fiscal 2025. Those impacts are expected to continue in fiscal 2026 and beyond.

See Note 2 of the "Notes to Consolidated Financial Statements" for additional information on these acquisitions.

Tariffs

Recent U.S. tariffs imposed or threatened to be imposed on goods, materials, and products from countries where we do business and any retaliatory or responsive actions taken by such countries could result in us incurring substantial additional costs to source materials, directly and indirectly, from affected countries, and may require us to raise prices on certain products and seek alternative sources of supply. It is also possible that we could experience supply disruptions or shortages as a result of tariffs or other protective measures.

We have taken action to reduce the potential impact of tariffs on our costs; however, at this time, the countries which will be subject to tariffs and the tariff rate that may be imposed on each country is uncertain and dynamic and we do not expect to be able to establish alternative sources of supply or otherwise mitigate the potential impact of tariffs on all of the products that we source, manufacture, or distribute. If we are not able to offset the impact of tariffs through price increases or otherwise mitigate the impacts, our financial results could be negatively impacted. Additionally, if tariffs are modified in the future, or our preliminary information is incorrect regarding their impact, we may not be able to respond to such changes appropriately or in a timely manner and our financial results could be negatively impacted. Furthermore, if our competitors do not increase prices, or increase prices to a lesser extent than we do, or are able to offset the impact of tariffs through other actions, our competitive and financial position may be adversely affected.

 6

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Overview

Pharmaceutical and Specialty Solutions Segment

OptumRx Contracts

In April 2024, we announced that our pharmaceutical distribution contracts with OptumRx would expire at the end of June 2024. Sales to OptumRx generated 17 percent of our consolidated revenue in fiscal 2024. The expiration of the OptumRx contracts and unwinding of the negative net working capital associated with the contracts adversely impacted our results of operations, including segment profit, financial condition, and cash flows, during fiscal 2025.

Branded Pharmaceuticals

During fiscal 2025 and 2024, we saw increased demand for GLP-1 pharmaceuticals and our sales increased significantly, despite periodic supply shortages. These increased sales positively impacted our Pharma segment and consolidated revenue for the fiscal 2025 and 2024; however, increased GLP-1 sales did not meaningfully contribute to segment profit. Future demand and reimbursement for these medications is unpredictable and our ability to meet demand may be impacted by supply constraints. Additionally, the recently issued Executive Order titled “Delivering Most-Favored Nation Prescription Drug Pricing to American Patients” may impact sales or profitability of branded pharmaceutical products, including GLP-1 products; however, the extent of the impact is uncertain and may vary depending on the timeline for implementation and the extent of any price reductions.

Generics Program

During fiscal 2025, the performance of our Pharma segment generics program positively impacted the year-over-year comparison of Pharma segment profit, excluding the impact of the OptumRx contracts expiration. The Pharma segment generics program includes, among other things, the impact of generic pharmaceutical product launches, customer volumes, pricing changes, the Red Oak Sourcing, LLC venture ("Red Oak Sourcing") with CVS Health Corporation ("CVS Health"), and generic pharmaceutical contract manufacturing and sourcing costs.

The frequency, timing, magnitude, and profit impact of generic pharmaceutical customer volumes, pricing changes, customer contract renewals, generic pharmaceutical manufacturer pricing changes, and generic pharmaceutical contract manufacturing and sourcing costs all impact Pharma segment profit and are subject to risks and uncertainties.

BioPharma Solutions

The performance of BioPharma Solutions positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2025. BioPharma Solutions consists of services to biopharmaceutical manufacturers and healthcare providers including, among other things, Specialty Networks, third-party logistics ("3PL"), group purchasing organizations ("GPOs"), our Sonexus patient access and support programs, regulatory and clinical consulting, and real world data and evidence.

The frequency, timing, magnitude, and profit impact of customer demand, new product launches, and our ongoing investments are subject to risks and uncertainties. These risks and uncertainties may impact Pharma segment profit and consolidated operating earnings during fiscal 2026 and beyond.

Management Service Organization Platforms

The performance of our MSO platforms positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2025 due to the acquisitions of GIA and ION. Our ability to successfully provide physician practice support and management services, and to receive the value we expect to receive from our recent acquisition of MSO platforms, depends upon a number of factors, including: the ability to develop or acquire and integrate appropriate practice management and support expertise; the ability to support recruitment, integration, and retention of sufficient numbers of local providers and staff; the ability to successfully support negotiations with vendors, suppliers, and payors; the reimbursement environment; and competition from other healthcare organizations.

Global Medical Products and Distribution Segment

Volumes

Cardinal Health brand medical products sales grew during fiscal 2025 and we expect further growth in fiscal 2026 and beyond. The timing, magnitude, and profit impact of this anticipated sales growth is subject to risks and uncertainties, including the signing of new customers or the expiration of customer contracts, and it is possible that sales volume may differ from our expectations and impact GMPD segment profit to a greater or lesser extent than we currently expect.

Cardinal Health | Fiscal 2025 Form 10-K

7

MD&A

Results of Operations

Results of Operations

Revenue

Revenue

(in millions)

2025

2024

Change

Pharmaceutical and Specialty Solutions

$

204,644 

$

210,019 

(3)

%

Global Medical Products and Distribution

12,636 

12,381 

2 

%

Other

5,382 

4,512 

19 

%

Total segment revenue

222,662 

226,912 

(2)

%

Corporate (1)

(84)

(85)

N.M.

Total revenue

$

222,578 

$

226,827 

(2)

%

(1)Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments.

Pharmaceutical and Specialty Solutions

Pharma segment revenue for fiscal 2025 decreased 3 percent to $204.6 billion from the prior year, primarily due to the expiration of the OptumRx contracts, partially offset by branded and specialty pharmaceutical sales growth from existing and new customers.

Global Medical Products and Distribution

GMPD segment revenue for fiscal 2025 increased 2 percent to $12.6 billion from the prior year, primarily due to higher volumes from existing customers.

Other

Other segment revenue for fiscal 2025 increased 19 percent to $5.4 billion from the prior year due to growth across at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight® Logistics.

 8

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Results of Operations

Cost of Products Sold

Cost of products sold for fiscal 2025 decreased 2 percent to $214.4 billion from the prior year, primarily due to the factors affecting the changes in revenue and gross margin.

Gross Margin

Gross Margin

(in millions)

2025

2024

Change

Gross margin

$

8,168 

$

7,414 

10 

%

Gross margin for fiscal 2025 increased 10 percent to $8.2 billion from the prior year, primarily due to the acquisitions of MSO platforms and ADS, increased contribution from branded and specialty pharmaceutical products, and BioPharma Solutions, partially offset by the expiration of the OptumRx contracts.

Gross margin rate for fiscal 2025 grew 40 basis points from the prior year, primarily due to favorable changes in overall product and customer mix, primarily related to branded and specialty pharmaceutical products and the expiration of the OptumRx contracts, and MSO platforms acquisitions.

Distribution, Selling, General, and Administrative ("SG&A") Expenses

SG&A Expenses

(in millions)

2025

2024

Change

SG&A expenses

$

5,382 

$

5,000 

8 

%

SG&A expenses for fiscal 2025 increased 8 percent to $5.4 billion from the prior year, primarily due to the acquisitions of MSO platforms and ADS, higher costs to support sales growth for existing customers, and higher health and welfare costs, partially offset by the beneficial impact of enterprise-wide cost savings measures.

Cardinal Health | Fiscal 2025 Form 10-K

9

MD&A

Results of Operations

Segment Profit

We evaluate segment performance based on segment profit, among other measures. See Note 14 of the "Notes to Consolidated Financial Statements" for additional information on segment profit.

Segment Profit and Operating Earnings

(in millions)

2025

2024

Change

Pharmaceutical and Specialty Solutions

$

2,258 

$

2,015 

12 

%

Global Medical Products and Distribution

135 

92 

47 

%

Other

516 

423 

22 

%

Total segment profit

2,909 

2,530 

15 

%

Corporate

(634)

(1,287)

N.M.

Total consolidated operating earnings

$

2,275 

$

1,243 

83 

%

Pharmaceutical and Specialty Solutions

Pharma segment profit for fiscal 2025 increased 12 percent to $2.3 billion from the prior year, primarily due to increased contribution from branded and specialty pharmaceutical products, BioPharma Solutions, and MSO platforms acquisitions, partially offset by the expiration of the OptumRx contracts.

Global Medical Products and Distribution

GMPD segment profit for fiscal 2025 increased 47 percent to $135 million from the prior year, primarily due to volume growth from existing customers. This increase also reflects the beneficial impact of cost optimization initiatives, mostly offset by higher manufacturing costs.

Other

Other segment profit for fiscal 2025 increased 22 percent to $516 million from the prior year, primarily due to the performance of at-Home Solutions, which includes the acquisition of ADS, and OptiFreight® Logistics.

Corporate

The changes in Corporate during fiscal 2025 are due to the factors discussed in the "Other Components of Consolidated Operating Earnings" section that follows.

 10

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Results of Operations

Other Components of Consolidated Operating Earnings

In addition to revenue, gross margin, and SG&A expenses discussed previously, consolidated operating earnings were impacted by the following:

(in millions)

2025

2024

Restructuring and employee severance

$

88 

$

175 

Amortization and other acquisition-related costs

464 

284 

Acquisition-related cash and share-based compensation costs

126 

— 

Impairments and (gain)/loss on disposal of assets, net

18 

634 

Litigation (recoveries)/charges, net

(185)

78 

Restructuring and Employee Severance

Restructuring and employee severance costs in fiscal 2025 and 2024 were primarily related to certain initiatives to rationalize our manufacturing operations and the implementation of certain enterprise-wide cost-savings measures. In fiscal 2024, restructuring costs were higher primarily due to certain projects resulting from the reviews of our strategy, portfolio, capital-allocation framework, and operations.

Amortization and Other Acquisition-Related Costs

Amortization of acquisition-related intangible assets was $303 million and $264 million for fiscal 2025 and 2024, respectively.

Transaction and integration costs associated with acquisitions were $161 million and $20 million for fiscal 2025 and 2024, respectively.

Acquisition-related Cash and Share-based Compensation Costs

Acquisition-related cash and share-based compensation costs were $126 million for fiscal 2025, primarily resulting from the acquisition of GIA.

Impairments and (Gain)/Loss on Disposal of Assets, Net

During fiscal 2024, we recognized $675 million of pre-tax non-cash goodwill impairment charges related to our GMPD segment, as discussed further in the "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 5 of the "Notes to Consolidated Financial Statements."

Litigation (Recoveries)/Charges, Net

During fiscal 2025, we recognized income of $171 million for net recoveries in class action lawsuits in which we were a class member or plaintiff. We also recognized $13 million in opioid-related insurance recoveries.

During fiscal 2024, we recognized expense of $340 million in connection with opioid-related matters, including agreements to settle claims brought by classes of third-party payors and acute care hospitals, the case brought by the City of Baltimore, and a settlement with the State of Alabama. This expense was partially offset by a benefit of $105 million related to certain prepayments and $34 million in opioid-related insurance recoveries. We also recognized income of $117 million for net recoveries in class action lawsuits in which we were a class member or plaintiff.

See Note 8 of the "Notes to Consolidated Financial Statements" for additional information.

Cardinal Health | Fiscal 2025 Form 10-K

11

MD&A

Results of Operations

Other Components of Earnings Before Income Taxes

In addition to the items discussed above, earnings before income taxes was impacted by the following:

Earnings Before Income Taxes

(in millions)

2025

2024

Change

Other (income)/expense, net

$

(41)

$

(9)

N.M.

Interest expense, net

215 

51 

N.M.

Interest Expense, Net

Interest expense, net for fiscal 2025 increased to $215 million from the prior year, primarily due to the new debt financing and decreased interest income from cash and equivalents. See Note 7 of the "Notes to Consolidated Financial Statements" for additional information on the new debt financing.

Provision for Income Taxes

A reconciliation of the provision based on the federal statutory income tax rate to our effective income tax rate from continuing operations is as follows (see Note 9 of the "Notes to Consolidated Financial Statements" for additional information):

2025

2024

Provision at Federal statutory rate

21.0 

%

21.0 

%

State and local income taxes, net of federal benefit

4.0 

3.1 

Tax effect of foreign operations

0.2 

(1.6)

Nondeductible/nontaxable items

0.7 

(0.1)

Withholding Taxes

0.3 

1.0 

Change in Valuation Allowances

0.1 

(1.1)

US Taxes on International Income (1)

(1.3)

(2.1)

Impact of Resolutions with IRS and other related matters

(0.1)

0.4 

Opioid litigation

0.2 

1.0 

Goodwill Impairment

— 

8.7 

Specialty Alliance Share-based Compensation

1.4 

— 

Other

(1.2)

(1.4)

Effective income tax rate

25.3 

%

28.9 

%

(1) Includes the tax impact of the Foreign-Derived Intangible Income ("FDII") deduction offset by Global Intangible Low-Taxed Income ("GILTI") tax, and other foreign income that is taxable under the U.S. tax code.

During fiscal 2025 and 2024, the effective tax rate was 25.3 percent and 28.9 percent, respectively. Included in the effective tax rate for fiscal 2025 were non-deductible share based compensation costs for The Specialty Alliance and non-deductible transaction costs. Included in the effective tax rate for fiscal 2024 was $58 million of benefit related to goodwill impairment charges related to our GMPD segment.

Ongoing Audits

We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. With few exceptions, we are subject to audit by taxing authorities for fiscal 2015 through the current fiscal year. Tax laws are complex and subject to varying interpretations. New challenges related to future audits may adversely affect our effective tax rate or tax payments.

 12

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Liquidity and Capital Resources

Liquidity and Capital Resources

We currently believe that, based on available capital resources and projected operating cash flow, we have adequate capital resources to fund our operations and expected future cash needs as described below. If we decide to engage in one or more acquisitions, depending on the size and timing of such transactions, we may need to access capital markets for additional financing.

Cash and Equivalents

Our cash and equivalents balance was $3.9 billion at June 30, 2025 compared to $5.1 billion at June 30, 2024.

During fiscal 2025, net cash provided by operating activities was $2.4 billion, which includes the impact of unwinding the negative net working capital associated with the OptumRx contracts and the normal timing of payments to vendors, partially offset by the benefit of onboarding new customers. Cash provided by operating activities also includes the impact of payments totaling $798 million related to the opioid litigation.

During fiscal 2025, we deployed $5.3 billion for acquisitions, $765 million for share repurchases, $400 million for debt repayment, $547 million for capital expenditures, and $494 million for dividends. In addition, we issued new long-term debt and received net proceeds of $2.9 billion to fund a portion of the consideration paid for acquisitions and for general purposes. Another portion of the consideration paid for the acquisitions came from an $800 million term loan. At June 30, 2025, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

During fiscal 2024, net cash provided by operating activities was $3.8 billion, which includes the impact of our annual payment of $378 million and prepayments of $239 million primarily related to the National Opioid Settlement Agreement (the "NOSA"). During fiscal 2024, we deployed $750 million for share repurchases, $783 million for debt repayments, $511 million for capital expenditures, and $499 million for dividends. In addition, we issued additional

long-term debt and received net proceeds of $1.14 billion, of which $200 million is invested in short-term time deposits with initial effective maturities of more than three months and classified as prepaid expenses and other in our consolidated balance sheet as of June 30, 2024.

Changes in working capital, which impact operating cash flow, can vary significantly depending on factors such as the timing of customer payments, inventory purchases, payments to vendors, and tax payments in the regular course of business, as well as fluctuating working capital needs driven by customer and product mix. In fiscal 2025, the unwinding of the negative net working capital associated with the OptumRx contract negatively impacted operating cash flow.

In fiscal 2025, we returned $393 million of cash held by foreign subsidiaries to the United States.

The cash and equivalents balance at June 30, 2025 includes $436 million of cash and equivalents held by subsidiaries outside of the United States.

At June 30, 2025, foreign earnings of approximately $1.0 billion are considered indefinitely reinvested for working capital and other offshore investment needs. The computation of tax required if those earnings are repatriated is not practicable. For amounts not considered indefinitely reinvested, we have recorded an immaterial amount of income tax expense in our consolidated financial statements in fiscal 2025.

Other Financing Arrangements and Financial Instruments

Credit Facilities and Commercial Paper

In addition to cash and equivalents and operating cash flow, other sources of liquidity at June 30, 2025 include a $3.0 billion commercial paper program, backed by a $2.0 billion revolving credit facility that expires in February 2028, and a $1.0 billion 364-Day revolving credit facility that expires in October 2025. We also have a $1.0 billion committed receivables sales facility through September 2025. At June 30, 2025, we had no amounts outstanding under our commercial paper program, revolving credit facilities, or our committed receivables sales facility. During fiscal 2025, under our commercial paper program and our committed receivables program, we had maximum combined total daily amounts outstanding of $633 million.

On December 5, 2024, we entered into a term loan credit agreement that, among other things, provides commitments for a term loan facility in an aggregate amount of up to $1.0 billion. On April 1, 2025, we closed on our acquisition of ADS and borrowed $800 million under this term loan facility. The loan provided under this term loan credit agreement will mature in April 2028 and allows for prepayment, which may be accelerated pursuant to certain conditions specified in the credit agreement. Interest rates on borrowings will be based on prevailing interest rates, benchmarked based on Term SOFR and subject to our credit ratings.

In February 2023, we extended our revolving credit facility through February 25, 2028. In September 2022, we renewed our committed receivables sales facility program through Cardinal Health Funding, LLC ("CHF") through September 30, 2025. In

Cardinal Health | Fiscal 2025 Form 10-K

13

MD&A

Liquidity and Capital Resources

September 2023, Cardinal Health 23 Funding, LLC was added as a seller under our committed receivables sales facility.

Our revolving credit and committed receivables sales facilities require us to maintain a consolidated net leverage ratio of no more than 3.75-to-1. As of June 30, 2025, we were in compliance with this financial covenant.

Long-Term Debt and Other Short-Term Borrowings

At June 30, 2025, we had total long-term obligations, including the current portion and other short-term borrowings, of $8.5 billion.

In November 2024, we issued additional debt with the aggregate principal amount of $2.9 billion to fund a portion of the consideration payable in connection with the GIA and ADS acquisitions, and for general purposes. The notes issued are $500 million aggregate principal amount of 4.7% Notes that mature on November 15, 2026, $750 million aggregate principal amount of 5.0% Notes that mature on November 15, 2029, $1.0 billion aggregate principal amount of 5.35% Notes that mature on

November 15, 2034, and $650 million aggregate principal amount of 5.75% Notes that mature on November 15, 2054. The proceeds of the notes issued, net of discounts, premiums, and debt issuance costs, were $2.9 billion. We also obtained a commitment letter on November 11, 2024 from a financial institution for a $2.9 billion unsecured bridge term loan facility that could have been used to complete the acquisition of GIA. We incurred fees related to the facility, which are included in interest expense, net. The unsecured bridge term loan facility was never entered into and we terminated the commitment letter on November 22, 2024.

During fiscal 2025, we repaid the full principal of $400 million of the 3.5% Notes due 2024 at maturity with proceeds from the debt issuance in fiscal 2024, $200 million of which were invested in short-term time deposits and classified as prepaid expenses and other in our consolidated balance sheets at June 30, 2024. All short-term time deposits related to the debt issuance in fiscal 2024 have matured.

Capital Deployment

Opioid Litigation Settlement Agreement

We have $4.9 billion accrued at June 30, 2025 related to certain national opioid litigation settlements, as further described within Note 8 of the "Notes to Consolidated Financial Statements." We expect the majority of the remaining payment amounts to occur through 2038. During fiscal 2025, we made payments totaling $798 million, which included our fourth annual payment under the agreement to settle the vast majority of the opioid lawsuits filed by states and local governmental entities and payments related to the settlement agreements with the City of Baltimore and classes of third-party payors and acute care hospitals. In July 2025, we made our fifth annual payment of $366 million under the NOSA. The amounts of future annual payments under the NOSA may differ from the payments that we have already made.

Capital Expenditures

Capital expenditures during fiscal 2025 and 2024 were $547 million and $511 million, respectively.

We expect capital expenditures in fiscal 2026 to be approximately $600 million and primarily related to manufacturing and distribution infrastructure projects and technology investments.

Dividends

During fiscal 2025, we paid quarterly dividends totaling $2.02 per share, an increase of 1 percent from fiscal 2024.

On May 5, 2025, our Board of Directors approved a quarterly dividend of $0.5107 per share, or $2.04 per share on an annualized basis, which was paid on July 15, 2025, to shareholders of record on July 1, 2025.

Share Repurchases

During both fiscal 2025 and 2024, we deployed $750 million for repurchases of our common shares in the aggregate under

accelerated share repurchase ("ASR") programs. We funded the ASR programs with available cash. See Note 12 of the "Notes to Consolidated Financial Statements" for additional information.

During fiscal 2025, we paid $15 million for excise taxes related to the completion of prior ASR programs.

As of June 30, 2025, we had $2.7 billion remaining under our existing share repurchase authorization.

Acquisitions

During fiscal 2025, we deployed $5.3 billion for acquisitions. See Note 2 of the "Notes to Consolidated Financial Statements" for additional information on these acquisitions.

 14

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Other

Contractual Obligations and Cash Requirements

At June 30, 2025, our contractual obligations and future cash requirements, including estimated payments due by period, were as follows:

(in millions)

2026

2027 to 2028

2029 to 2030

There-after

Total

Long-term debt and short-term borrowings (1)

$

501 

$

2,627 

$

1,390 

$

3,796 

$

8,314 

Interest on long-term debt

416 

678 

480 

2,458 

4,032 

Finance lease obligations (2)

52 

80 

44 

57 

233 

Operating lease obligations (3)

197 

320 

208 

199 

924 

Purchase obligations and other payments (4)

602 

514 

308 

86 

1,510 

Opioid litigation settlement agreements (5)

628 

523 

769 

2,909 

4,829 

Total contractual obligations and cash requirements (6)

$

2,396 

$

4,742 

$

3,199 

$

9,505 

$

19,842 

(1)Represents maturities of our long-term debt obligations and other short-term borrowings excluding finance lease obligations described below. See Note 7 of the “Notes to Consolidated Financial Statements” for further information.

(2)Represents minimum finance lease obligations included within current portion of long-term obligations and other short-term borrowings and long-term obligations, less current portion in our consolidated balance sheets and further described in Note 6 of the “Notes to Consolidated Financial Statements.”

(3)Represents minimum operating lease obligations included within other accrued liabilities and deferred income taxes and other liabilities in our consolidated balance sheets and further described in Note 6 of the “Notes to Consolidated Financial Statements.”

(4)A purchase obligation is defined as an agreement to purchase goods or services that is legally enforceable and specifies all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and approximate timing of the transaction. The purchase obligation amounts disclosed above represent estimates of the minimum for which we are obligated and the time period in which cash outflows will occur. Purchase orders and authorizations to purchase that involve no firm commitment from either party are excluded from the above table. In addition, contracts that can be unilaterally canceled with no termination fee or with proper notice are excluded from our total purchase obligations except for the amount of the termination fee or the minimum amount of goods that must be purchased during the requisite notice period. Purchase obligations and other payments also includes quarterly payments to CVS Health in connection with Red Oak Sourcing. See Note 8 of the “Notes to Consolidated Financial Statements” for additional information.

(5)Represents future cash obligations under the NOSA as well as future cash obligations under separate settlement agreements. See Note 8 of the “Notes to Consolidated Financial Statements” for additional information.

(6)Long-term liabilities, such as unrecognized tax benefits, deferred taxes, and other tax liabilities, have been excluded from the above table due to the inherent uncertainty of the underlying tax positions or because of the inability to reasonably estimate the timing of any cash outflows. See Note 9 of the "Notes to Consolidated Financial Statements" for further discussion of income taxes.

Recent Financial Accounting Standards

See Note 1 of the “Notes to Consolidated Financial Statements” for further information.

Cardinal Health | Fiscal 2025 Form 10-K

15

MD&A

Critical Accounting Policies and Sensitive Accounting Estimates

Critical Accounting Policies and Sensitive Accounting Estimates

Critical accounting policies are those accounting policies that (i) can have a significant impact on our financial condition and results of operations and (ii) require the use of complex and subjective estimates based upon past experience and management’s judgment. Other people applying reasonable judgment to the same facts and circumstances could develop different estimates. Because estimates are inherently uncertain, actual results may differ. In this section, we describe the significant policies applied in preparing our consolidated financial statements that management believes are the most dependent on estimates and assumptions.

Allowance for Doubtful Accounts

The allowance for doubtful accounts includes general and specific reserves. We determine our allowance for doubtful accounts by reviewing accounts receivable aging, historical write-off trends, payment history, pricing discrepancies, industry trends, customer financial strength, customer credit ratings, or bankruptcies. We regularly evaluate how changes in economic conditions may affect credit risks.

A hypothetical 0.1 percent increase or decrease in the reserve as a percentage of trade receivables at June 30, 2025, would result in an increase or decrease in operating earnings of $13 million. We believe the reserve maintained and expenses recorded in fiscal 2025 are appropriate.

At this time, we are not aware of any analytical findings or customer issues that are likely to lead to a significant future

increase in the allowance for doubtful accounts as a percentage of revenue. The following table presents information regarding our allowance for doubtful accounts over the past three fiscal years.

(in millions, except percentages)

2025

2024

2023

Allowance for doubtful accounts at beginning of period

$

233 

$

240 

$

207 

Charged to costs and expenses

89 

108 

165 

Reduction to allowance for customer deductions and write-offs

(109)

(115)

(132)

Allowance for doubtful accounts at end of period

$

213 

$

233 

$

240 

Allowance as a percentage of customer receivables

1.6 

%

1.9 

%

2.2 

%

Allowance as a percentage of revenue

0.10 

%

0.10 

%

0.12 

%

Inventories

LIFO Inventory

A portion of our inventories (52 percent and 50 percent at June 30, 2025 and 2024, respectively) are valued at the lower of cost, using the last-in, first-out ("LIFO") method, or market. These are primarily merchandise inventories at the core pharmaceutical distribution facilities within our Pharma segment (“distribution facilities”). The LIFO impact on the consolidated statements of earnings depends on pharmaceutical manufacturer price appreciation or deflation and our fiscal year-end inventory levels, which can be meaningfully influenced by customer buying behavior immediately preceding our fiscal year-end. Historically, prices for branded pharmaceuticals have generally tended to rise, resulting in an increase in cost of products sold, whereas prices for generic pharmaceuticals generally tend to decline, resulting in a decrease in cost of products sold.

Using LIFO, if there is a decrease in inventory levels that have experienced pharmaceutical price appreciation, the result generally will be a decrease in future cost of products sold as our older inventory is held at a lower cost. Conversely, if there is a decrease in inventory levels that have experienced a pharmaceutical price decline, the result generally will be an increase in future cost of products sold as our older inventory is held at a higher cost.

We believe that the average cost method of inventory valuation provides a reasonable approximation of the current cost of replacing inventory within these distribution facilities. As such, the LIFO reserve is the difference between (a) inventory at the lower of LIFO cost or market and (b) inventory at replacement cost determined using the average cost method of inventory valuation. At June 30, 2025 and 2024, respectively, inventories valued at LIFO cost were significantly in excess of the average cost value. We do not record inventories in excess of replacement cost. As such, we did not write-up the value of our inventory from average cost to LIFO cost at June 30, 2025 or 2024.

FIFO Inventory

Our remaining inventory, including inventory in our GMPD segment and certain inventory in our Pharma segment, that is not valued at the lower of LIFO cost or market is stated at the lower of cost, using the first-in, first-out ("FIFO") method, or net realizable value. We reserve for the lower of cost or net realizable value using the estimated selling prices and estimated sales demand in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Our estimates for selling prices and demand are inherently uncertain and if our assumptions decline in the future, additional inventory reserves may be required.

 16

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Critical Accounting Policies and Sensitive Accounting Estimates

Excess and Obsolete Inventory

We reserve for inventory obsolescence using estimates based on historical experience, historical and projected sales trends, specific categories of inventory, age and expiration dates of on-hand inventory, and manufacturer return policies. Inventories presented in the consolidated balance sheets are net of reserves

for excess and obsolete inventory which were $132 million and $149 million at June 30, 2025 and 2024, respectively. If actual conditions are less favorable than our assumptions, additional inventory reserves may be required.

Goodwill and Other Indefinite-Lived Intangible Assets

Purchased goodwill and intangible assets with indefinite lives are tested for impairment annually or when indicators of impairment exist. Goodwill impairment testing involves a comparison of the estimated fair value of reporting units to the respective carrying amount, which may be performed utilizing either a qualitative or quantitative assessment. Qualitative factors are first assessed to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There is an option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. We have elected to bypass the qualitative assessment for the annual goodwill impairment test in the current year. The quantitative goodwill impairment test involves a comparison of the estimated fair value of the reporting unit to the respective carrying amount. A reporting unit is defined as an operating segment or one level below an operating segment (also known as a component).

As of June 30, 2025, our reporting units are: Pharma (excluding Navista & ION and GIA), Navista & ION, GIA, GMPD, Nuclear and Precision Health Solutions, OptiFreight® Logistics, at-Home Solutions, and ADS. We anticipate at-Home Solutions and ADS will be combined as a single reporting unit as the businesses are integrated in the future.

Goodwill impairment testing involves judgment, including the identification of reporting units, qualitative evaluation of events and circumstances to determine if it is more likely than not that an impairment exists, and, if necessary, the estimation of the fair value of the applicable reporting unit.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. The use of alternate estimates and assumptions, changes in the industry or peer groups, or changes in weightings assigned to the discounted cash flow method, guideline public company method, or guideline transaction method could materially affect the determination of fair value for each reporting unit and potentially result in goodwill impairment. If a reporting unit fails to achieve expected earnings or operating cash flow, or otherwise fails to meet current financial plans, or if there were changes to any other key assumptions used in the tests, the reporting unit could incur a goodwill impairment in a future period.

We performed annual impairment testing in fiscal 2025, 2024, and 2023 for our reporting units, which included Navista & ION in fiscal 2025. Due to the recent timing of the acquisitions, GIA and ADS were not included in our annual impairment testing in fiscal 2025 as no indicators of impairment were present.

During fiscal 2024 and 2023, we recognized goodwill impairment charges related to GMPD of $675 million and $1.2 billion, respectively, which were included in impairments and (gain)/loss on disposal of assets, net in our consolidated statements of earnings. GMPD had no goodwill balance remaining as of March 31, 2024.

We concluded that there were no impairments of goodwill for the remaining reporting units, excluding GMPD, in fiscal 2025, 2024, and 2023, as the estimated fair value of each reporting unit exceeded its carrying amount.

Other indefinite-lived intangibles

The impairment test for indefinite-lived intangibles other than goodwill (primarily trademarks) involves first assessing qualitative factors to determine if it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If so, then a quantitative test is performed to compare the estimated fair value of the indefinite-lived intangible asset to the respective asset's carrying amount. Our qualitative evaluation requires the use of estimates and significant judgments and considers the weight of evidence and significance of all identified events and circumstances and most relevant drivers of fair value, both positive and negative, in determining whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount.

See Note 1 of "Notes to Consolidated Financial Statements" for additional information regarding goodwill and other intangible assets.

Cardinal Health | Fiscal 2025 Form 10-K

17

MD&A

Critical Accounting Policies and Sensitive Accounting Estimates

Loss Contingencies and Self-Insurance

We regularly review contingencies and self-insurance accruals to determine whether our accruals and related disclosures are adequate. Any adjustments for changes in reserves are recorded in the period in which the change in estimate occurs.

Loss Contingencies

We accrue for contingencies related to disputes, litigation, and regulatory matters if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because these matters are inherently unpredictable and unfavorable developments or outcomes can occur, assessing contingencies is highly subjective and requires judgments about future events.

In connection with the opioid litigation as described further in Note 8 of the “Notes to Consolidated Financial Statements," during fiscal 2024, we reached agreements to settle claims brought by classes of third-party payors and acute care hospitals, and the City of Baltimore.

We develop and periodically update reserve estimates for inferior vena cava ("IVC") claims received to date and expected to be received in the future and related costs. In April 2023, we executed a settlement agreement that, if certain conditions are satisfied, will resolve approximately 4,375 IVC filter product liability claims for $275 million. These settlements will not resolve all IVC filter product liability claims and we intend to continue to vigorously defend ourselves in the remaining lawsuits. To project future IVC claim costs, we use a methodology based largely on recent experience, including claim filing rates, blended average payout influenced by claim severity, historical sales data, implant and

injury to report lag patterns, and estimated defense costs. At June 30, 2025, we have a total of $56 million accrued for losses and legal defense costs, related to the IVC filter product liability lawsuits in our consolidated balance sheets, which includes the $49 million in the qualified settlement fund.

Self-Insurance

We self-insure through a wholly-owned insurance subsidiary for employee healthcare, certain product liability matters, auto liability, property and workers' compensation, and maintain insurance for losses exceeding certain limits.

Self-insurance accruals include an estimate for expected settlements on pending claims, defense costs, administrative fees, claims adjustment costs, and an estimate for claims incurred but not reported. For certain types of exposures, we develop the estimate of expected ultimate costs to settle each claim based on specific information related to each claim if available. Other estimates are based on an assessment of outstanding claims, historical analysis, and current payment trends. For claims incurred but not reported, the liabilities are calculated and derived in accordance with generally accepted actuarial practices or using an estimated lag period.

The amount of loss may differ materially from these estimates. See Note 8 of the “Notes to Consolidated Financial Statements” for additional information regarding loss contingencies and product liability lawsuits.

Provision for Income Taxes

We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are measured using enacted tax rates in the respective jurisdictions in which we operate. Our income tax expense, deferred income tax assets and liabilities, and unrecognized tax benefits reflect management’s assessment of estimated future taxes to be paid on items in the consolidated financial statements.

The following table presents information about our tax position at June 30:

(in millions)

2025

2024

Total deferred income tax assets (1)

$

1,230 

$

1,491 

Valuation allowance for deferred income tax assets (2)

(254)

(300)

Net deferred income tax assets

976 

1,191 

Total deferred income tax liabilities

(3,276)

(3,163)

Net deferred income tax liability

$

(2,300)

$

(1,972)

(1)    Total deferred income tax assets included $386 million and $512 million of loss and tax credit carryforwards at June 30, 2025 and 2024, respectively.

(2)    The valuation allowance primarily relates to federal, state, and international loss and credit carryforwards for which the ultimate realization of future benefits is uncertain.

Expiring or unusable loss and credit carryforwards and the required valuation allowances are adjusted quarterly when it is more likely than not that at least a portion of the respective deferred tax assets will not be realized. After applying the valuation allowances, we do not anticipate any limitations on our use of any of the other net deferred income tax assets described previously.

 18

Cardinal Health | Fiscal 2025 Form 10-K

MD&A

Critical Accounting Policies and Sensitive Accounting Estimates

Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination of the technical merits of the position, including resolutions of any related appeals or litigation. The amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement. For tax benefits that do not qualify for recognition, we recognize a liability for unrecognized tax benefits.

We operate in a complex multinational tax environment and are subject to tax treaty arrangements and transfer pricing guidelines for intercompany transactions that are subject to interpretation. Uncertainty in a tax position may arise as tax laws are subject to interpretation.

Tax Effects of Goodwill Impairment Charges

During fiscal 2024 and 2023, we recognized cumulative pre-tax goodwill impairment charges of $675 million and $1.2 billion, respectively, related to the GMPD segment. The net tax benefits related to these charges were $58 million and $92 million, respectively.

We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and various foreign jurisdictions. With few exceptions, we are subject to audit by taxing authorities for fiscal years 2015 through the current fiscal year. Tax laws are complex and subject to varying interpretations. New challenges related to future audits may adversely affect our effective tax rate or tax payments.

Our assumptions and estimates around uncertain tax positions require significant judgment; the actual amount of tax benefit

related to uncertain tax positions may differ from these estimates. See Note 9 of the “Notes to Consolidated Financial Statements” for additional information regarding unrecognized tax benefits.

We believe that our estimates for the valuation allowances against deferred tax assets and unrecognized tax benefits are appropriate based on current facts and circumstances. The amount we ultimately pay when matters are resolved may differ from the amounts accrued. Changes in our current estimates due to unanticipated market conditions, tax law changes, or other factors could have a material effect on our ability to utilize deferred tax assets. For a further discussion on Provision for Income Taxes, see Note 9 of the “Notes to the Consolidated Financial Statements.”

New Tax Legislation

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law, which includes a broad range of tax reform provisions. The OBBBA includes changes to existing tax law, including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act ("Tax Act"). We are in the process of evaluating the impact of the OBBBA on our consolidated financial statements and will reflect any impact in the period of enactment.

Cardinal Health | Fiscal 2025 Form 10-K

19

Explanation and Reconciliation of Non-GAAP Financial Measures

Explanation and Reconciliation of Non-GAAP Financial Measures

This report, including the "Fiscal 2025 Overview" section within MD&A, contains financial measures that are not calculated in accordance with GAAP.

In addition to analyzing our business based on financial information prepared in accordance with GAAP, we use these non-GAAP financial measures internally to evaluate our performance, engage in financial and operational planning, and determine incentive compensation because we believe that these measures provide additional perspective on and, in some circumstances are more closely correlated to, the performance of our underlying, ongoing business. We provide these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on our financial and operating results on a year-over-year basis and in comparing our performance to that of our competitors. However, the non-GAAP financial measures that we use may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The non-GAAP financial measures disclosed by us should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth below should be carefully evaluated.

Exclusions from Non-GAAP Financial Measures

Management believes it is useful to exclude the following items from the non-GAAP measures presented in this report for its own and for investors’ assessment of the business for the reasons identified below:

•LIFO charges and credits are excluded because the factors that drive last-in first-out ("LIFO") inventory charges or credits, such as pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels (which can be meaningfully influenced by customer buying behavior immediately preceding our fiscal year-end), are largely out of our control and cannot be accurately predicted. The exclusion of LIFO charges and credits from non-GAAP metrics facilitates comparison of our current financial results to our historical financial results and to our peer group companies’ financial results. We did not recognize any LIFO charges or credits during the periods presented.

•State opioid assessments related to prior fiscal years is the portion of state assessments for prescription opioid medications that were sold or distributed in periods prior to the period in which the expense is incurred. This portion is excluded from non-GAAP financial measures because it is retrospectively applied to sales in prior fiscal years and inclusion would obscure analysis of the current fiscal year results of our underlying, ongoing business. Additionally, while states' laws may require us to make payments on an ongoing basis, the portion of the assessment related to sales in prior periods are contemplated to be one-time, nonrecurring items. Income from state opioid assessments related to prior fiscal years represents reversals of accruals due to changes in estimates or when the underlying assessments were invalidated by a Court or reimbursed by manufacturers.

•Shareholder cooperation agreement costs includes costs such as legal, consulting, and other expenses incurred in relation to the agreement (the "Cooperation Agreement") entered into among Elliott Associates, L.P., Elliott International, L.P. (together, "Elliott"), and Cardinal Health. These include costs incurred to negotiate and finalize the Cooperation Agreement and costs incurred by the Business Review Committee of the Board of Directors, formed under this Cooperation Agreement, tasked with undertaking a comprehensive review of our strategy, portfolio, capital allocation framework, and operations. We have excluded these costs from our non-GAAP metrics because they do not occur in or reflect the ordinary course of our ongoing business operations and may obscure analysis of trends and financial performance. The Cooperation Agreement expired in the second quarter of fiscal 2025.

•Restructuring and employee severance costs are excluded because they are not part of the ongoing operations of our underlying business and include, but are not limited to, costs related to divestitures, closing and consolidating facilities, changing the way we manufacture or distribute our products, moving manufacturing of a product to another location, changes in production or business process outsourcing or insourcing, employee severance, and realigning operations.

•Amortization and other acquisition-related costs, which include transaction costs, integration costs, and changes in the fair value of contingent consideration obligations, are excluded because they are not part of the ongoing operations of our underlying business and to facilitate comparison of our current financial results to our historical financial results and to our peer group companies' financial results. Additionally, costs for amortization of acquisition-related intangible assets and amortization as a result of basis differences in equity method investments are non-cash amounts, which are variable in amount and frequency and are significantly impacted by the timing and size of acquisitions, so their exclusion facilitates comparison of historical, current, and forecasted financial results. We also exclude other acquisition-related costs, which are directly related to an acquisition but do not meet the criteria to be recognized on the acquired entity’s initial balance sheet as part of the purchase price allocation. These costs are also significantly impacted by the timing, complexity, and size of acquisitions.

 20

Cardinal Health | Fiscal 2025 Form 10-K

Explanation and Reconciliation of Non-GAAP Financial Measures

•Acquisition-related cash and share-based compensation costs are incurred in connection with contingent cash payments or the issuance of share-based payment awards, which include service requirements, as a part of certain physician practice acquisitions. These costs include fair value adjustments for liability-classified awards. These costs are excluded because they are unrelated to the underlying operating results of our business and to facilitate comparison of our current financial results to our historical financial results and to our peer group companies’ financial results. In addition, the magnitude of these expenses is significantly impacted by the timing and size of the acquisitions of physician practices.

•Impairments and gain or loss on disposal of assets, net are excluded because they do not occur in or reflect the ordinary course of our ongoing business operations and are inherently unpredictable in timing and amount, and in the case of impairments, are non-cash amounts, so their exclusion facilitates comparison of historical, current, and forecasted financial results.

•Litigation recoveries or charges, net are excluded because they often relate to events that may have occurred in prior or multiple periods, do not occur in or reflect the ordinary course of our business, and are inherently unpredictable in timing and amount.

•Loss on early extinguishment of debt is excluded because it does not typically occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of this type of charge is not consistent and is significantly impacted by the timing and size of debt extinguishment transactions.

The tax effect for each of the items listed above is determined using the tax rate and other tax attributes applicable to the item and the jurisdiction(s) in which the item is recorded. The gross, tax, and net impact of each item are presented with our GAAP to non-GAAP reconciliations.

Definitions

Growth rate calculation: growth rates in this report are determined by dividing the difference between current period results and prior period results by prior period results.

Non-GAAP operating earnings: operating earnings excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, and (8) litigation (recoveries)/charges, net.

Non-GAAP earnings before income taxes: earnings before income taxes excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt.

Non-GAAP net earnings attributable to non-controlling interests: net earnings attributable to non-controlling interests excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt, each net of tax.

Non-GAAP net earnings attributable to Cardinal Health, Inc.: net earnings attributable to Cardinal Health, Inc. excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt, each net of tax.

Non-GAAP effective tax rate: provision for income taxes adjusted for the tax impacts of (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt divided by (earnings before income taxes adjusted for the items above).

Non-GAAP diluted earnings per share attributable to Cardinal Health, Inc.: non-GAAP net earnings attributable to Cardinal Health, Inc. divided by diluted weighted-average shares outstanding.

Cardinal Health | Fiscal 2025 Form 10-K

21

Explanation and Reconciliation of Non-GAAP Financial Measures

GAAP to Non-GAAP Reconciliations

(in millions, except per common share amounts)

Operating Earnings

Operating Earnings Growth Rate

Earnings Before Income Taxes

Provision for Income Taxes

Net Earnings Attributable to Non-controlling Interests

Net Earnings1

Net Earnings1 Growth Rate

Effective Tax Rate

Diluted EPS1

Diluted EPS1 Growth Rate

Fiscal Year 2025

GAAP

$

2,275 

83 

%

$

2,101 

$

532 

$

(8)

$

1,561 

83 

%

25.3 

%

$

6.45 

87 

%

Restructuring and employee severance

88 

88 

21 

67 

0.28 

Amortization and other acquisition-related costs

464 

464 

104 

360 

1.49 

Acquisition-related cash and share-based compensation costs

126 

126 

1 

125 

0.51 

Impairments and (gain)/loss on disposal of assets, net

18 

18 

5 

13 

0.05 

Litigation (recoveries)/charges, net

(185)

(185)

(54)

(131)

(0.54)

Non-GAAP

$

2,786 

15 

%

$

2,612 

$

609 

$

(8)

$

1,995 

7 

%

23.3 

%

$

8.24 

9 

%

Fiscal Year 2024

GAAP

$

1,243 

65 

%

$

1,201 

$

348 

$

(1)

$

852 

N.M.

28.9 

%

$

3.45 

N.M.

Shareholder cooperation agreement costs

1 

1 

— 

1 

— 

Restructuring and employee severance

175 

175 

41 

134 

0.54 

Amortization and other acquisition-related costs

284 

284 

74 

210 

0.85 

Impairments and (gain)/loss on disposal of assets, net 2

634 

634 

47 

587 

2.38 

Litigation (recoveries)/charges, net

78 

78 

5 

73 

0.30 

Non-GAAP

$

2,414 

16 

%

$

2,372 

$

515 

$

(1)

$

1,856 

21 

%

21.7 

%

$

7.53 

29 

%

Fiscal Year 2023

GAAP

$

752 

N.M.

$

663 

$

332 

$

(1)

$

330 

N.M.

50.0 

%

$

1.26 

N.M.

State opioid assessment related to prior fiscal years

(6)

(6)

(2)

(4)

(0.02)

Shareholder cooperation agreement costs

8 

8 

2 

6 

0.02 

Restructuring and employee severance

95 

95 

21 

74 

0.28 

Amortization and other acquisition-related costs

285 

285 

74 

211 

0.80 

Impairments and (gain)/loss on disposal of assets, net 2

1,246 

1,246 

108 

1,138 

4.35 

Litigation (recoveries)/charges, net

(304)

(304)

(83)

(221)

(0.84)

Non-GAAP

$

2,076 

5 

%

$

1,987 

$

452 

$

(1)

$

1,534 

8%

22.8 

%

$

5.85 

15 

%

1    Attributable to Cardinal Health, Inc.

2    For fiscal 2024 and 2023, impairments and (gain)/loss on disposals of assets, net included pre-tax goodwill impairment charges of $675 million and $1.2 billion related to the GMPD segment, respectively. For fiscal 2024 and 2023, the net tax benefit related to these charges was $58 million and $92 million, respectively, and were included in the annual effective tax rate.

The sum of the components and certain computations may reflect rounding adjustments.

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

 22

Cardinal Health | Fiscal 2025 Form 10-K

Disclosures about Market Risk