Segment Information

12 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

Our operations are principally managed on a products and services basis and are comprised of two operating segments, which are the same as our reportable segments: Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates performance for purposes of allocating resources and assessing performance combined with the nature of the individual business activities.

The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products in the United States. This segment also operates nuclear pharmacies and cyclotron facilities, provides pharmacy operations, medication therapy management and patient outcomes services to hospitals and other healthcare providers, provides services to healthcare companies supporting the marketing, distribution and payment for specialty pharmaceutical products and manufactures and repackages generic pharmaceuticals and over-the-counter healthcare products. This segment also imports and distributes pharmaceuticals, over-the-counter healthcare and consumer products as well as provides specialty pharmacy and other services in China.

The Medical segment distributes a broad range of medical, surgical and laboratory products and provides services to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers in the United States, Canada and China and to patients in the home in the United States. This segment also manufactures, sources and develops our own Cardinal Health brand medical and surgical products, which are sold directly or through third-party distributors in the United States, Canada, Europe and other regions internationally.

The following tables present revenue for each reportable segment and Corporate:

(in millions)	2015		2014		2013
Pharmaceutical (1)	$	91,116	$	80,110	$	91,097
Medical	11,395		10,962		10,060
Total segment revenue	102,511		91,072		101,157
Corporate (2)	20		12		(64		)
Total revenue	$	102,531	$	91,084	$	101,093

(1) Our pharmaceutical distribution contract with Walgreen Co. expired on August 31, 2013.

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

We evaluate segment performance based upon segment profit, among other measures. Segment profit is segment revenue, less segment cost of products sold, less segment SG&A expenses. Segment SG&A expenses include share-based compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial and customer care shared services, human resources, information technology and legal and compliance. Corporate expenses are allocated to the segments based upon headcount, level of benefit provided and other ratable allocation methodologies.

We do not allocate the following items to our segments: LIFO inventory charges/(credits); restructuring and employee severance; amortization and other acquisition-related costs; impairments and (gain)/loss on disposal of assets; litigation (recoveries)/charges, net; other income, net; interest expense, net; loss on extinguishment of debt; and provision for income taxes. We did not recognize any LIFO charges or credits during fiscal 2015, 2014, or 2013. In addition, certain investment and other spending are not allocated to the segments. Investment spending generally includes the first-year spend for certain projects that require incremental investments in the form of additional operating expenses. We encourage our segments and corporate functions to identify investment projects that will promote innovation and provide future returns. As approval decisions for such projects are dependent upon executive management, the expenses for such projects are often retained at Corporate. Investment spending within Corporate was $26 million, $33 million and $37 million for fiscal 2015, 2014 and 2013, respectively.

Beginning in fiscal 2016, we are changing our methodology for allocating certain portions of enterprise-wide incentive compensation expenses among Corporate and the segments. This change does not impact consolidated operating earnings or net earnings.

The following tables present segment profit by reportable segment and Corporate:

(in millions)	2015			2014			2013
Pharmaceutical	$	2,094		$	1,745		$	1,734
Medical	433			444			372
Total segment profit	2,527			2,189			2,106
Corporate	(366		)	(304		)	(1,110		)
Total operating earnings	$	2,161		$	1,885		$	996

The following tables present depreciation and amortization and additions to property and equipment by reportable segment and

at Corporate:

(in millions)	2015		2014		2013
Pharmaceutical	$	124	$	128	$	125
Medical	119		130		137
Corporate	208		201		135
Total depreciation and amortization	$	451	$	459	$	397

(in millions)	2015		2014		2013
Pharmaceutical	$	90	$	72	$	46
Medical	87		72		48
Corporate	123		105		101
Total additions to property and equipment	$	300	$	249	$	195

The following table presents total assets for each reportable segment and Corporate at June 30:

(in millions)	2015		2014		2013
Pharmaceutical	$	17,385	$	15,361	$	16,258
Medical	7,095		6,768		6,521
Corporate	5,662		3,904		3,040
Total assets	$	30,142	$	26,033	$	25,819

The following tables present revenue and property and equipment, net by geographic area:

(in millions)	2015		2014		2013
United States	$	98,435	$	87,449	$	97,994
International	4,096		3,635		3,099
Total revenue	$	102,531	$	91,084	$	101,093

(in millions)	2015		2014		2013
United States	$	1,327	$	1,301	$	1,355
International	179		158		134
Property and equipment, net	$	1,506	$	1,459	$	1,489