Segment Information

12 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

15. 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 management services to hospitals as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers, provides services to healthcare companies supporting the development, marketing, and distribution of specialty pharmaceutical products, 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. This segment distributes medical products 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. This segment also provides post-acute care management and transition services and software to hospitals, other healthcare providers, and payers.

The following table presents revenue for each reportable segment and Corporate:

(in millions)	2016			2015		2014
Pharmaceutical	$	109,131		$	91,116	$	80,110
Medical	12,430			11,395		10,962
Total segment revenue	121,561			102,511		91,072
Corporate (1)	(15		)	20		12
Total revenue	$	121,546		$	102,531	$	91,084

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

We evaluate segment performance based on segment profit, among other measures. Segment profit is segment revenue, less segment cost of products sold, less segment distribution, selling, general, and administrative ("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. The results attributable to noncontrolling interests of consolidated entities are recorded within segment profit. Corporate expenses are allocated to the segments based on 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.

In addition, certain investment spending, certain portions of enterprise-wide incentive compensation, 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 $34 million, $26 million and $33 million for fiscal 2016, 2015 and 2014, respectively.

Beginning in fiscal 2016, we changed our methodology for allocating certain portions of enterprise-wide incentive compensation expenses among Corporate and the segments. This change did not impact consolidated operating earnings or net earnings and did not materially impact either segment during fiscal 2016.

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

(in millions)	2016			2015			2014
Pharmaceutical	$	2,488		$	2,094		$	1,745
Medical	457			433			444
Total segment profit	2,945			2,527			2,189
Corporate	(486		)	(366		)	(304		)
Total operating earnings	$	2,459		$	2,161		$	1,885

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

(in millions)	2016		2015		2014
Pharmaceutical	$	128	$	124	$	128
Medical	136		119		130
Corporate	377		208		201
Total depreciation and amortization	$	641	$	451	$	459

(in millions)	2016		2015		2014
Pharmaceutical	$	88	$	90	$	72
Medical	96		87		72
Corporate	281		123		105
Total additions to property and equipment	$	465	$	300	$	249

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

(in millions)	2016		2015		2014
Pharmaceutical	$	20,662	$	17,385	$	15,361
Medical	10,236		7,095		6,768
Corporate	3,224		5,662		3,904
Total assets	$	34,122	$	30,142	$	26,033

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

(in millions)	2016		2015		2014
United States	$	116,864	$	98,435	$	87,449
International	4,682		4,096		3,635
Total revenue	$	121,546	$	102,531	$	91,084

(in millions)	2016		2015		2014
United States	$	1,558	$	1,327	$	1,301
International	238		179		158
Property and equipment, net	$	1,796	$	1,506	$	1,459