Segment Information

6 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment Information

12. 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)	2021		2020
Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	41,164	$	37,040
Nuclear and Precision Health Solutions	211		196
Pharmaceutical segment revenue	41,375		37,236
Medical distribution and products (3)	3,446		3,729
Cardinal Health at-Home Solutions	639		581
Medical segment revenue	4,085		4,310
Total segment revenue	45,460		41,546
Corporate (4)	(3)		(5)
Total revenue	$	45,457	$	41,541

	Six Months Ended December 31,
(in millions)	2021		2020
Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	80,778	$	71,956
Nuclear and Precision Health Solutions	419		392
Pharmaceutical segment revenue	81,197		72,348
Medical distribution and products (3)	7,013		7,167
Cardinal Health at-Home Solutions	1,221		1,100
Medical segment revenue	8,234		8,267
Total segment revenue	89,431		80,615
Corporate (4)	(6)		(9)
Total revenue	$	89,425	$	80,606

(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)	2021		2020
United States	$	44,382	$	40,360
International	1,078		1,186
Total segment revenue	45,460		41,546
Corporate (1)	(3)		(5)
Total revenue	$	45,457	$	41,541

	Six Months Ended December 31,
(in millions)	2021		2020
United States	$	87,223	$	78,336
International	2,208		2,279
Total segment revenue	89,431		80,615
Corporate (1)	(6)		(9)
Total revenue	$	89,425	$	80,606

(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/(income);

•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;

•(gain)/loss on sale of equity interest in naviHealth; or

•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 $11 million and $6 million for the three months ended December 31, 2021 and 2020, and $18 million and $11 million for the six months ended December 31, 2021 and 2020, respectively.

In connection with the interim goodwill impairment testing for the Medical Unit as discussed further in Note 4, we recognized a $1.3 billion goodwill impairment charge during the three and six months ended December 31, 2021 which was retained at Corporate.

In connection with the opioid litigation as discussed further in Note 6, we recognized a pre-tax charge of $1.02 billion during the six months ended December 31, 2020 which was retained at Corporate.

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

	Three Months Ended December 31,
(in millions)	2021		2020
Pharmaceutical (1)	$	426	$	413
Medical	50		236
Total segment profit	476		649
Corporate	(1,426)		(188)
Total operating earnings/(loss)	$	(950)	$	461

	Six Months Ended December 31,
(in millions)	2021		2020
Pharmaceutical (1)	$	832	$	815
Medical	173		466
Total segment profit	1,005		1,281
Corporate	(1,540)		(1,444)
Total operating loss	$	(535)	$	(163)

(1)Pharmaceutical segment profit during the three and six months ended December 31, 2021 was positively impacted by a $16 million judgment for lost profits related to an ordinary course intellectual property rights claim.

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

(in millions)	December 31, 2021		June 30, 2021
Pharmaceutical	$	24,427	$	23,624
Medical (1) (2)	12,737		15,408
Corporate	6,516		5,421
Total assets	$	43,680	$	44,453

(1)Assets of $1.1 billion classified as held for sale related to the Cordis divestiture were included within Medical at June 30, 2021.

(2)Medical reflects a $1.3 billion goodwill impairment charge recorded in connection with the interim goodwill impairment testing for the Medical Unit at December 31, 2021.