Segment Information (Tables)

6 Months Ended

Dec. 31, 2018

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.

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



	Three Months Ended December 31,
(in millions)	2018			2017
Pharmaceutical	$	33,740		$	31,146
Medical	4,006			4,044
Total segment revenue	37,746			35,190
Corporate (1)	(6		)	(4		)
Total revenue	$	37,740		$	35,186



	Six Months Ended December 31,
(in millions)	2018			2017
Pharmaceutical	$	65,155		$	60,066
Medical	7,807			7,768
Total segment revenue	72,962			67,834
Corporate (1)	(9		)	(7		)
Total revenue	$	72,953		$	67,827


(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 December 31, 2018			Six months ended December 31, 2018
(in millions)
Pharmaceutical distribution and specialty	$	33,534		$	64,742
Nuclear and Precision Health Solutions (1)	206			413
Pharmaceutical segment revenue	33,740			65,155
Medical distribution and products (2)	3,527			6,907
Cardinal Health At Home	479			900
Medical segment revenue	4,006			7,807
Total segment revenue	37,746			72,962
Corporate (3)	(6		)	(9		)
Total revenue	$	37,740		$	72,953


(1)	Our Nuclear and Precision Health Solutions 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 December 31, 2018			Six months ended December 31, 2018
(in millions)
United States	$	36,716		$	70,960
International	1,030			2,002
Total segment revenue	37,746			72,962
Corporate (1)	(6		)	(9		)
Total revenue	$	37,740		$	72,953


(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 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, legal and compliance. Corporate expenses 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)/expense, 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 $12 million and $6 million for the three months ended December 31, 2018 and 2017, respectively, and $19 million and $11 million for the six months ended December 31, 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 six months ended December 31, 2018, which was retained at Corporate.

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



	Three Months Ended December 31,
(in millions)	2018			2017
Pharmaceutical	$	443		$	514
Medical	188			220
Total segment profit	631			734
Corporate	(127		)	(335		)
Total operating earnings	$	504		$	399



	Six Months Ended December 31,
(in millions)	2018		2017
Pharmaceutical	$	851	$	981
Medical	323		348
Total segment profit	1,174		1,329
Corporate	146		(668		)
Total operating earnings	$	1,320	$	661

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



(in millions)	December 31, 2018		June 30, 2018
Pharmaceutical	$	22,101	$	21,421
Medical	15,697		16,066
Corporate	2,664		2,464
Total assets	$	40,462	$	39,951

Revenue by Reportable Segment

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



	Three Months Ended December 31,
(in millions)	2018			2017
Pharmaceutical	$	33,740		$	31,146
Medical	4,006			4,044
Total segment revenue	37,746			35,190
Corporate (1)	(6		)	(4		)
Total revenue	$	37,740		$	35,186



	Six Months Ended December 31,
(in millions)	2018			2017
Pharmaceutical	$	65,155		$	60,066
Medical	7,807			7,768
Total segment revenue	72,962			67,834
Corporate (1)	(9		)	(7		)
Total revenue	$	72,953		$	67,827


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

Disaggregation of Revenue [Table Text Block]

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



	Three months ended December 31, 2018			Six months ended December 31, 2018
(in millions)
Pharmaceutical distribution and specialty	$	33,534		$	64,742
Nuclear and Precision Health Solutions (1)	206			413
Pharmaceutical segment revenue	33,740			65,155
Medical distribution and products (2)	3,527			6,907
Cardinal Health At Home	479			900
Medical segment revenue	4,006			7,807
Total segment revenue	37,746			72,962
Corporate (3)	(6		)	(9		)
Total revenue	$	37,740		$	72,953


(1)	Our Nuclear and Precision Health Solutions 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.

Revenue from External Customers by Geographic Areas [Table Text Block]

The following table presents revenue by geographic area:



	Three months ended December 31, 2018			Six months ended December 31, 2018
(in millions)
United States	$	36,716		$	70,960
International	1,030			2,002
Total segment revenue	37,746			72,962
Corporate (1)	(6		)	(9		)
Total revenue	$	37,740		$	72,953


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

Segment Profit by Reportable Segment

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



	Three Months Ended December 31,
(in millions)	2018			2017
Pharmaceutical	$	443		$	514
Medical	188			220
Total segment profit	631			734
Corporate	(127		)	(335		)
Total operating earnings	$	504		$	399



	Six Months Ended December 31,
(in millions)	2018		2017
Pharmaceutical	$	851	$	981
Medical	323		348
Total segment profit	1,174		1,329
Corporate	146		(668		)
Total operating earnings	$	1,320	$	661

Assets by Reportable Segment

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



(in millions)	December 31, 2018		June 30, 2018
Pharmaceutical	$	22,101	$	21,421
Medical	15,697		16,066
Corporate	2,664		2,464
Total assets	$	40,462	$	39,951