Segment Information

6 Months Ended

Dec. 31, 2020

Segment Reporting [Abstract]

Segment Information

11. 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.

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 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. This segment also distributes medical products to patients' homes in the United States through our Cardinal Health at-Home Solutions division.

Revenue

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

	Three Months Ended December 31,
(in millions)	2020		2019
Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	37,040	$	35,501
Nuclear and Precision Health Solutions	196		213
Pharmaceutical segment revenue	37,236		35,714
Medical distribution and products (3)	3,729		3,498
Cardinal Health at-Home Solutions	581		525
Medical segment revenue	4,310		4,023
Total segment revenue	41,546		39,737
Corporate (4)	(5)		(2)
Total revenue	$	41,541	$	39,735

	Six Months Ended December 31,
(in millions)	2020		2019
Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	71,956	$	68,713
Nuclear and Precision Health Solutions	392		429
Pharmaceutical segment revenue	72,348		69,142
Medical distribution and products (3)	7,167		6,944
Cardinal Health at-Home Solutions	1,100		996
Medical segment revenue	8,267		7,940
Total segment revenue	80,615		77,082
Corporate (4)	(9)		(6)
Total revenue	$	80,606	$	77,076

(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 tables present revenue by geographic area:

	Three Months Ended December 31,
(in millions)	2020		2019
United States	$	40,360	$	38,670
International	1,186		1,067
Total segment revenue	41,546		39,737
Corporate (1)	(5)		(2)
Total revenue	$	41,541	$	39,735

	Six Months Ended December 31,
(in millions)	2020		2019
United States	$	78,336	$	74,980
International	2,279		2,102
Total segment revenue	80,615		77,082
Corporate (1)	(9)		(6)
Total revenue	$	80,606	$	77,076

(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, 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; 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 early 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. Because approval for these projects is dependent on executive management, we retain these expenses at Corporate. Investment spending within Corporate was $6 million and $17 million for the three months ended December 31, 2020 and 2019, and $11 million and $20 million for the six months ended December 31, 2020 and 2019, respectively.

In connection with the opioid litigation as discussed further in Note 5, we recognized pre-tax charges of $1.02 billion and $5.63 billion during the six months ended December 31, 2020 and 2019, respectively, which were retained at Corporate.

In connection with the New York Opioid Stewardship Act as discussed further in Note 5, we recognized a pre-tax charge of $41 million during the six months ended December 31, 2020, related to calendar year 2017 and 2018 assessments, which was retained at corporate.

In connection with a voluntary recall for certain surgical gowns and a voluntary recall and field actions for surgical procedure packs containing affected gowns, we recognized a pre-tax charge of $96 million during the three and six months ended December 31, 2019 which was retained at Corporate.

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

	Three Months Ended December 31,
(in millions)	2020		2019
Pharmaceutical	$	413	$	462
Medical	236		195
Total segment profit	649		657
Corporate	(188)		(323)
Total operating earnings	$	461	$	334

	Six Months Ended December 31,
(in millions)	2020		2019
Pharmaceutical	$	815	$	860
Medical	466		365
Total segment profit	1,281		1,225
Corporate	(1,444)		(6,155)
Total operating loss	$	(163)	$	(4,930)

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

(in millions)	December 31, 2020		June 30, 2020
Pharmaceutical	$	23,567	$	22,398
Medical	15,259		14,691
Corporate	5,893		3,677
Total assets	$	44,719	$	40,766