Segment Information

12 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Information

13. 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 for specialty pharmaceutical products; operates pharmacies, including pharmacies in community health centers, 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 medical, surgical and laboratory products known as 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. This segment also distributes medical products to patients' homes in the United States through our Cardinal Health at-Home Solutions division.

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

(in millions)	2020			2019			2018
Pharmaceutical	$	137,495		$	129,917		$	121,241
Medical	15,444			15,633			15,581
Total segment revenue	152,939			145,550			136,822
Corporate (1)	(17		)	(16		)	(13		)
Total revenue	$	152,922		$	145,534		$	136,809

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

The following tables present revenue for each reportable segment and disaggregated revenue within our two reportable segments and Corporate:

(in millions)	2020			2019
Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	136,693		$	129,067
Nuclear and Precision Health Solutions	802			850
Pharmaceutical segment revenue	137,495			129,917
Medical distribution and products (3)	13,429			13,833
Cardinal Health at-Home Solutions	2,015			1,800
Medical segment revenue	15,444			15,633
Total segment revenue	152,939			145,550
Corporate (4)	(17		)	(16		)
Total revenue	$	152,922		$	145,534

(1) Products and services offered by our Specialty Solutions division are referred to as “specialty pharmaceutical products and services"

(2) Comprised of all Pharmaceutical segment businesses except for Nuclear and Precision Health Solutions division.

(3) Comprised of all Medical segment businesses except for Cardinal Health at-Home Solutions division

(4) 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:

(in millions)	2020			2019			2018
United States	$	148,707		$	141,479		$	132,539
International	4,232			4,071			4,283
Total segment revenue	152,939			145,550			136,822
Corporate (1)	(17		)	(16		)	(13		)
Total revenue	$	152,922		$	145,534		$	136,809

(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, legal and compliance, including certain litigation defense costs. 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); surgical gown recall costs; state opioid assessment related to prior fiscal years; restructuring and employee severance; amortization and other acquisition-related costs; impairments and (gain)/loss on disposal of assets; litigation (recoveries)/charges, net; other (income)/expense, net; interest expense, net; loss on early extinguishment of debt; gain on sale of equity interest in naviHealth 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 $69 million, $55 million and $43 million for fiscal 2020, 2019 and 2018, respectively.

In connection with the opioid litigation as discussed further in Note 7, we recognized a pre-tax charge of $5.63 billion during fiscal 2020 which was retained at Corporate.

In connection with the surgical gown recall as discussed further in Note 7, we recognized a pre-tax charge of $85 million during fiscal 2020 which was retained at Corporate.

In connection with the naviHealth divestiture discussed in Note 2, we recognized a pre-tax gain of $508 million during fiscal 2019 which was retained at Corporate.

In connection with the sale of our remaining equity interest in a partnership that owned naviHealth as discussed in Note 2, we recognized a $579 million pre-tax gain ($493 million after tax) during fiscal 2020, which is included in gain on sale of equity interest naviHealth in the consolidated statements of earnings/(loss) and did not impact segment profit or operating earnings.

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

(in millions)	2020			2019			2018
Pharmaceutical	$	1,753		$	1,834		$	1,992
Medical	663			576			662
Total segment profit	2,416			2,410			2,654
Corporate	(6,514		)	(350		)	(2,528		)
Total operating earnings	$	(4,098	)	$	2,060		$	126

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

(in millions)	2020		2019		2018
Pharmaceutical	$	135	$	147	$	156
Medical	243		288		278
Corporate	535		565		598
Total depreciation and amortization	$	913	$	1,000	$	1,032

(in millions)	2020		2019		2018
Pharmaceutical	$	47	$	35	$	58
Medical	86		74		127
Corporate	242		219		199
Total additions to property and equipment	$	375	$	328	$	384

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

(in millions)	2020		2019		2018
Pharmaceutical	$	22,398	$	22,446	$	21,421
Medical	14,691		15,284		16,066
Corporate	3,677		3,233		2,464
Total assets	$	40,766	$	40,963	$	39,951

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

(in millions)	2020		2019		2018
United States	$	1,880	$	1,846	$	1,950
International	486		510		537
Property and equipment, net	$	2,366	$	2,356	$	2,487