14. 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.

Revenue

Our Pharmaceutical 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 to support the development, marketing, and distribution of specialty pharmaceutical products; operates nuclear pharmacies and radiopharmaceutical manufacturing facilities; provides pharmacy management services to hospitals as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers; and repackages generic pharmaceuticals and over-the-counter healthcare products.

Our Medical segment manufactures, sources and distributes Cardinal Health branded medical, surgical and laboratory products, which are sold in the United States, Canada, Europe, Asia and other markets. In addition to distributing Cardinal Health branded products, this segment also distributes a broad range of national brand products and provides supply chain services and solutions to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers in the United States and Canada.

Revenue in both segments is primarily related to the distribution of pharmaceutical and medical products, which we recognize at a point in time when title transfers to customers and we have no further obligation to provide services related to such merchandise. Service revenues are recognized over the period that services are provided to the customer. Revenues derived from services are not material for either segment for all periods presented.

We are generally the principal in a transaction, therefore our revenue is primarily recorded on a gross basis. When we are a principal in a transaction, we have determined that we control the ability to direct the use of the product or service prior to transfer to a customer, are primarily responsible for fulfilling the promise to provide the product or service to our customer, have discretion in establishing prices, and ultimately control the transfer of the product or services provided to the customer.

Revenue is recorded net of sales returns and allowances. Revenues are measured based on the amount of consideration that we expect to receive, reduced by estimates for return allowances, discounts, rebates and other variable consideration. Sales returns are recorded based on estimates using historical data. Shipping and handling costs are primarily included in SG&A expenses in our condensed consolidated statements of earnings and include all delivery expenses as well as all costs to prepare the product for shipment to the end customer. Shipping and handling costs incurred after control has transferred to the customer are treated as fulfillment costs. As of September 30, 2018, assets recorded for the right to recover products from customers and the associated refund liabilities for return allowances were not material.

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



	Three Months Ended September 30,
(in millions)	2018			2017
Pharmaceutical	$	31,416		$	28,920
Medical	3,801			3,724
Total segment revenue	39,018			32,644
Corporate (1)	(4		)	(3		)
Total revenue	$	35,213		$	32,641


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

The following table presents disaggregated revenue within our two reportable segments:



	Three Months Ended September 30,
(in millions)	2018
Pharmaceutical distribution and specialty	$	31,209
Nuclear Precision Health Services (1)	207
Pharmaceutical segment revenue	31,416
Medical distribution and products (2)	3,380
Cardinal Health At Home	421
Medical segment revenue	3,801
Total segment revenue	39,018
Corporate (3)	(4		)
Total revenue	$	35,213


(1)	Our Nuclear Precision Health Services division was formerly referred to as our Nuclear Pharmacy Services division.


(2)	Comprised of all Medical segment businesses except for Cardinal Health At Home division.


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

The following table presents revenue by geographic area:



	Three Months Ended September 30,
(in millions)	2018
United States	$	38,046
International	972
Total segment revenue	39,018
Corporate (1)	(4		)
Total revenue	$	35,213


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

Segment Profit

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, which are allocated to the segments based on headcount, level of benefit provided and other ratable allocation methodologies. The results attributable to noncontrolling interests are recorded within segment profit.

We do not allocate the following items to our segments: last-in first-out, or ("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; state opioid assessment related to prior fiscal years; other income, net; interest expense, net; loss on extinguishment of debt; and provision for/(benefit from) 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. Because approval for these projects is dependent on executive management, we retain these expenses at Corporate. Investment spending within Corporate was $7 million and $5 million for the three months ended September 30, 2018 and 2017, respectively.

In connection with the naviHealth divestiture discussed in Note 4, we recognized a pre-tax gain of $508 million during the three months ended September 30, 2018, which was retained at Corporate.

The following table presents segment profit by reportable segment and Corporate:



	Three Months Ended September 30,
(in millions)	2018		2017
Pharmaceutical	$	409	$	467
Medical	135		129
Total segment profit	544		596
Corporate	272		(334		)
Total operating earnings	$	816	$	262

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



(in millions)	September 30, 2018		June 30, 2018
Pharmaceutical	$	21,733	$	21,421
Medical	15,670		16,066
Corporate	2,608		2,464
Total assets	$	40,011	$	39,951