Divestitures and Acquisitions

12 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

2. Divestitures and Acquisitions

Divestitures

Cordis Assets Held for Sale

On March 12, 2021, we signed a definitive agreement with Hellman & Friedman to sell our Cordis business for gross proceeds of $927 million in cash, subject to customary purchase price adjustments, and we retained certain working capital accounts and certain liabilities. The transaction closed on August 2, 2021 and we received proceeds of $927 million, net of cash transferred. Cardinal Health will retain product liability associated with lawsuits and claims related to inferior vena cava ("IVC") filters in the U.S. and Canada, as well as authority for these matters discussed in Note 7.

Upon signing the agreement, we met the criteria for the related assets and liabilities of the Cordis business to be classified as held for sale. In connection with the divestiture, we allocated $388 million of goodwill from the Medical Unit (within our Medical Segment) to the Cordis disposal group based on the estimated relative fair values of the business to be disposed of and the portion of the reporting unit that will be retained. We determined that the sale of the Cordis business does not meet the criteria to be classified as discontinued operations.

At June 30, 2021, the book value of the disposal group exceeded its fair value less costs to sell. Accordingly, we recognized a $60 million pre-tax write-down on the disposal group in impairments and (gain)/loss on disposal of assets in our consolidated statement of earnings/(loss). This write-down includes a $3 million loss related to currency translation adjustments in accumulated other comprehensive loss. We recorded a net tax expense of $9 million associated with the impact of the write-down and the required tax adjustments related to held for sale accounting.

The following table presents information related to the assets and liabilities that were classified as held for sale at June 30, 2021 related to the Cordis divestiture in the consolidated balance sheets:


(in millions)	June 30, 2021
Cash and equivalents	$	109
Inventories, net	164
Property and equipment, net	90
Goodwill and other intangibles, net	778
Other assets	10
Write-down of assets held for sale	(60)
Total assets held for sale	$	1,091

Other accrued liabilities	$	61
Deferred income taxes and other liabilities	34
Total liabilities related to assets held for sale	$	95

naviHealth

In August 2018, we sold our majority ownership interest in naviHealth, which operated within our Medical segment in exchange for cash proceeds of $737 million (after adjusting for certain fees and expenses) and a noncontrolling equity interest in a partnership that owned naviHealth. We also had certain call rights to reacquire naviHealth.

As a result of this divestiture, during the fiscal year ended June 30, 2019, we recognized a pre-tax gain of $508 million in impairments and (gain)/loss on disposal of assets in our consolidated statements of earnings/(loss). This gain included our initial recognition of an equity method investment for $358 million and the derecognition of redeemable noncontrolling interests of $12 million. The fiscal 2019 tax expense as a result of this transaction was $130 million. We determined that the sale of the naviHealth business did not meet the criteria to be classified as discontinued operations.

In May 2020 we sold the remainder of our noncontrolling equity interest in a partnership that owned naviHealth. We recognized a pre-tax gain of $579 million from this disposal in gain on sale of equity interest in naviHealth in our consolidated statements of earnings/(loss) during fiscal year 2020.

Our proportionate share of naviHealth’s results, which was recorded in other (income)/expense, net in the consolidated statements of earnings/(loss), was income of $2 million and a loss of $10 million during fiscal 2020 and 2019, respectively.

Acquisitions

We did not complete any acquisitions during fiscal 2020. While we completed several small acquisitions during fiscal 2021 and 2019, the pro forma results of operations and the results of operations for acquired businesses since the acquisition dates have not been separately disclosed because the effects were not significant compared to the consolidated financial statements, individually or in the aggregate. The cash paid for these acquisitions, net of cash acquired was $3 million and $82 million for fiscal 2021 and 2019, respectively.