Segment Information

3 Months Ended

Sep. 30, 2022

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; provides pharmacy management services to hospitals and operates a limited number of pharmacies, including pharmacies in community health centers; operates nuclear pharmacies and radiopharmaceutical manufacturing facilities; and connects pharmacists, payers and pharmaceutical companies and delivers health solutions for medication therapy management, digital patient engagement and telepharmacy; 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.

Revenue

The following table presents revenue for each reportable segment, disaggregated revenue within our two reportable segments and Corporate:

	Three Months Ended September 30,
(in millions)	2022		2021
Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	45,547	$	39,614
Nuclear and Precision Health Solutions (3)	281		208
Pharmaceutical segment revenue	45,828		39,822
Medical distribution and products (4)	3,140		3,567
Cardinal Health at-Home Solutions	638		582
Medical segment revenue	3,778		4,149
Total segment revenue	49,606		43,971
Corporate (5)	(3)		(3)
Total revenue	$	49,603	$	43,968

(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)Increase from prior year primarily relates to new product launches and, to a lesser extent, the impact of a change in revenue recognition presentation from agent to principal for certain customer contracts.

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

(5)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 September 30,
(in millions)	2022		2021
United States	$	48,477	$	42,841
International	1,129		1,130
Total segment revenue	49,606		43,971
Corporate (1)	(3)		(3)
Total revenue	$	49,603	$	43,968

(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);

•shareholder cooperation agreement 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, net;

•litigation (recoveries)/charges, net;

•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/(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 $6 million and $7 million for the three months ended September 30, 2022 and 2021, respectively.

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

	Three Months Ended September 30,
(in millions)	2022		2021
Pharmaceutical	$	431	$	406
Medical	(8)		123
Total segment profit	423		529
Corporate	(286)		(114)
Total operating earnings	$	137	$	415

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

(in millions)	September 30, 2022		June 30, 2022
Pharmaceutical	$	27,253	$	26,409
Medical	11,338		11,632
Corporate	4,796		5,837
Total assets	$	43,387	$	43,878