UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 1-11373

Cardinal Health, Inc.

(Exact name of registrant as specified in its charter)

Ohio					31-0958666
(State or other jurisdiction of incorporation or organization)					(IRS Employer Identification No.)
7000 Cardinal Place	,	Dublin	,	Ohio	43017
(Address of principal executive offices)					(Zip Code)

(614) 757-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common shares (without par value)	CAH	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    þ    No    o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes    þ    No    o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    ☐    No    þ

The number of the registrant’s common shares, without par value, outstanding as of April 26, 2024, was the following: 243,566,952.

Cardinal Health

Q3 Fiscal 2024 Form 10-Q

Table of Contents

	Page
Management's Discussion and Analysis of Financial Condition and Results of Operations	2
Explanation and Reconciliation of Non-GAAP Financial Measures	16
Quantitative and Qualitative Disclosures about Market Risk	19
Controls and Procedures	19
Legal Proceedings	20
Risk Factors	20
Unregistered Sales of Equity Securities and Use of Proceeds	20
Financial Statements	21
Exhibits	42
Form 10-Q Cross Reference Index	43
Signatures	44

About Cardinal Health

Cardinal Health, Inc., an Ohio corporation formed in 1979, is a global healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices and patients in the home. We provide pharmaceuticals and medical products and cost-effective solutions that enhance supply chain efficiency. We connect patients, providers, payers, pharmacists and manufacturers for integrated care coordination. Effective January 1, 2024, we began operating under an updated organizational structure and re-aligned our financial reporting structure under two reportable segments: Pharmaceutical and Specialty Solutions ("PSS") segment and Global Medical Products and Distribution ("GMPD") segment. All remaining operating segments that are not significant enough to require separate reportable segment disclosures are included in Other, which is comprised of Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics. As used in this report, “we,” “our,” “us,” and similar pronouns refer to Cardinal Health, Inc. and its majority-owned and consolidated subsidiaries, unless the context requires otherwise. Our fiscal year ends on June 30. References to fiscal 2024 and fiscal 2023 and to FY24 and FY23 are to the fiscal years ending or ended June 30, 2024 and June 30, 2023, respectively.

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (this "Form 10-Q") (including information incorporated by reference) includes "forward-looking statements" addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. Many forward-looking statements appear in Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), but there are others in this Form 10-Q, which may be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue,” “likely,” and similar expressions, and include statements reflecting future results or guidance, statements of outlook and expense accruals. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those made, projected or implied. The most significant of these risks and uncertainties are described in this Form 10-Q, including Exhibit 99.1, and in "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (our “2023 Form 10-K”), our Forms 10-Q for the quarters ending September 30, 2023 and December 31, 2023, and other SEC filings made since June 30, 2023. Forward-looking statements in this Form 10-Q speak only as of the date of this document. Except to the extent required by applicable law, we undertake no obligation to update or revise any forward-looking statement.

Non-GAAP Financial Measures

In the "Overview of Consolidated Results" section of MD&A, we use financial measures that are derived from our consolidated financial data but are not presented in our condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). These measures are considered "non-GAAP financial measures" under the United States Securities and Exchange Commission ("SEC") rules. The reasons we use these non-GAAP financial measures and the reconciliations to their most directly comparable GAAP financial measures are included in the “Explanation and Reconciliation of Non-GAAP Financial Measures” section following MD&A in this Form 10-Q.

 1 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Overview

Management's Discussion and Analysis of Financial Condition and Results of Operations

The discussion and analysis presented below is concerned with material changes in financial condition and results of operations, including amounts and certainty of cash flows from operations and from outside sources, between the periods specified in our condensed consolidated balance sheets at March 31, 2024 and June 30, 2023, and in our condensed consolidated statements of earnings for the three and nine months ended March 31, 2024 and 2023. All comparisons presented are with respect to the prior-year period, unless stated otherwise. Our previously reported segment results have been recast to conform to our new reporting structure and reflect changes in the elimination of inter-segment revenue and allocated corporate technology and shared function expenses, which are driven by the reporting structure change. The discussion and analysis in this Form 10-Q should be read in conjunction with the MD&A included in our 2023 Form 10-K.

 2 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Overview

Overview of Consolidated Results

Revenue

During the three and nine months ended March 31, 2024, revenue increased 9 percent and 10 percent to $54.9 billion and $167.1 billion, respectively, primarily due to branded and specialty pharmaceutical sales growth from existing customers.

GAAP and Non-GAAP Operating Earnings

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2024		2023		Change		2024		2023		Change
GAAP operating earnings	$	367	$	572	(36)	%	$	835	$	590	42	%
State opioid assessment related to prior fiscal years	—		—				—		(6)
Shareholder cooperation agreement costs	1		—				1		8
Restructuring and employee severance	53		16				106		62
Amortization and other acquisition-related costs	80		74				207		216
Impairments and (gain)/loss on disposal of assets, net	84		20				622		883
Litigation (recoveries)/charges, net	81		(76)				29		(256)
Non-GAAP operating earnings	$	666	$	606	10	%	$	1,799	$	1,497	20	%

The sum of the components and certain computations may reflect rounding adjustments.

We had GAAP operating earnings of $367 million and $572 million during the three months ended March 31, 2024 and 2023, respectively, and $835 million and $590 million during the nine months ended March 31, 2024 and 2023, respectively. GAAP operating earnings during the three and nine months ended March 31, 2024 were favorably impacted by GMPD and Pharmaceutical and Specialty Solutions segment profit. GAAP operating earnings also reflects the pre-tax non-cash goodwill impairment charges related to the GMPD segment of $90 million during the three months ended March 31, 2024 and the $671 million and $863 million during the nine months ended March 31, 2024 and 2023, respectively. See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 5 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

GAAP operating earnings during the three months ended March 31, 2024 reflects $193 million of litigation charges recognized in connection with opioid-related matters, which were partially offset by a benefit of $105 million related to opioid-related prepayments. GAAP operating earnings during the three and nine months ended March 31, 2023 were favorably impacted by litigation recoveries and a reduction in litigation reserves. See "Results of Operations" section of this MD&A and Note 7 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

Non-GAAP operating earnings during the three and nine months ended March 31, 2024 increased 10 percent and 20 percent, respectively, due to increases in GMPD and Pharmaceutical and Specialty Solutions segment profit.

 3 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Overview

GAAP and Non-GAAP Diluted EPS

	Three Months Ended March 31,						Nine Months Ended March 31,
($ per share)	2024		2023		Change		2024		2023		Change
GAAP diluted EPS (1)	$	1.05	$	1.34	(22)	%	$	2.49	$	1.23	N.M.
State opioid assessment related to prior fiscal years	—		—				—		0.02
Shareholder cooperation agreement costs	—		—				—		(0.02)
Restructuring and employee severance	0.16		0.05				0.32		0.18
Amortization and other acquisition-related costs	0.24		0.21				0.62		0.61
Impairments and (gain)/loss on disposal of assets, net (2)	0.44		0.35				2.14		2.82
Litigation (recoveries)/charges, net	0.19		(0.21)				0.05		(0.60)
Non-GAAP diluted EPS (1)	$	2.08	$	1.74	20	%	$	5.62	$	4.24	33	%

The sum of the components and certain computations may reflect rounding adjustments.

The reconciling items are presented within this table net of tax. See quantification of tax effect of each reconciling item in our GAAP to Non-GAAP Reconciliations in the "Explanation and Reconciliation of Non-GAAP Financial Measures."

(1)Diluted earnings per share attributable to Cardinal Health, Inc. ("diluted EPS").

(2)For the three and nine months ended March 31, 2024, impairments and (gain)/loss on disposal of assets, net includes pre-tax goodwill impairment charges of $90 million and $671 million, respectively, related to the GMPD segment. For fiscal 2024, the estimated net tax benefit related to the impairments is $56 million and is included in the annual effective tax rate. The incremental interim tax benefit recognized during the nine months ended March 31, 2024 is $36 million and will reverse in the fourth quarter of the fiscal year.

For the nine months ended March 31, 2023, impairments and (gain)/loss on disposal of assets, net included cumulative pre-tax goodwill impairment charges of $863 million related to the former Medical segment. For fiscal 2023, the net tax benefit related to the impairment was $68 million and was included in the annual effective tax rate. The incremental interim tax benefit recognized during the nine months ended March 31, 2023 was $66 million and reversed in the fourth quarter of fiscal 2023.

The changes in GAAP diluted EPS during the three and nine months ended March 31, 2024 were primarily due to the factors impacting GAAP operating earnings. GAAP diluted EPS was adversely impacted by goodwill impairment charges related to the GMPD segment, which had a $(0.29) per share after tax impact during the three months ended March 31, 2024, and a $(2.35) and $(2.76) per share after tax impact during the nine months ended March 31, 2024 and 2023, respectively. See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A, and Note 5 and Note 8 of the "Notes to Condensed Consolidated Financial Statements" for additional details.

During the three and nine months ended March 31, 2024, non-GAAP diluted EPS increased 20 percent and 33 percent to $2.08 and $5.62 per share, respectively, due to higher non-GAAP operating earnings and a lower share count.

Cash and Equivalents

Our cash and equivalents balance was $3.7 billion at March 31, 2024 compared to $4.0 billion at June 30, 2023. During the nine months ended March 31, 2024, net cash provided by operating activities was $1.7 billion, which includes the impact of our annual payment of $378 million and prepayments of $239 million primarily related to the agreement to settle the vast majority of the opioid lawsuits filed by states and local governmental entities (the "National Opioid Settlement Agreement"). During the three months ended March 31, 2024, we issued additional long-term debt and received net proceeds of $1.14 billion, of which $589 million were classified as cash and equivalents in our condensed consolidated balance sheets as of March 31, 2024. The remaining proceeds were invested in short-term time deposits with initial effective maturities of more than three months and classified as prepaid expenses and other. In addition, during the nine months ended March 31, 2024, we deployed $1.2 billion for the Specialty Networks acquisition, $750 million for share repurchases, $377 million for cash dividends and $318 million for capital expenditures.

 4 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Overview

Significant Developments in Fiscal 2024 and Trends

Operating and Segment Reporting Structure Changes

Effective January 1, 2024, we began operating under an updated organizational structure and re-aligned our financial reporting structure under two reportable segments: Pharmaceutical and Specialty Solutions segment and GMPD segment. All remaining operating segments that are not significant enough to require separate reportable segment disclosures are included in Other. The following indicates the changes from the second quarter of fiscal 2024 to the new reporting structure:

•Pharmaceutical and Specialty Solutions segment: This reportable segment is comprised of all businesses formerly within our Pharmaceutical segment except Nuclear and Precision Health Solutions.

•GMPD segment: This reportable segment is comprised of all businesses formerly within our Medical segment except at-Home Solutions and OptiFreight® Logistics.

•Other: This is comprised of the remaining operating segments, Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics.

Our previously reported segment results have been recast to conform to our new reporting structure and reflect changes in the elimination of inter-segment revenue and allocated corporate technology and shared function expenses, which are driven by the reporting structure change.

Pharmaceutical and Specialty Solutions Segment

OptumRx Contracts

On April 22, 2024, we announced that our pharmaceutical distribution contracts with OptumRx, which expire at the end of June 2024, will not be renewed. Sales to OptumRx generated 16% of our consolidated revenue in fiscal 2023. Total sales to OptumRx generate a meaningfully lower operating margin than the overall Pharmaceutical and Specialty Solutions segment. We expect the nonrenewal of the OptumRx contracts to adversely impact our results of operations, including segment profit, financial condition and cash flows. In particular, we expect to generate lower than average operating cash flow in fiscal 2025 due to the unwinding of the negative net working capital associated with the contract.

Specialty Networks Acquisition

On March 18, 2024, we completed the acquisition of Specialty Networks for a purchase price of $1.2 billion in cash, subject to certain adjustments. Specialty Networks creates clinical and economic value for independent specialty providers and partners across multiple specialty group purchasing organizations ("GPOs"): UroGPO,Gastrologix and GastroGPO, and United Rheumatology. Specialty Networks’ PPS Analytics platform analyzes data from electronic medical records, practice management, imaging, and dispensing systems and transforms it into meaningful and actionable insights for providers and other stakeholders by using artificial intelligence and modern data analytics capabilities. The acquisition further expands our offerings in key therapeutic areas, accelerates our upstream data and research opportunities with biopharma manufacturers, and creates a platform for our expansion across therapeutic areas. We expect the Specialty Networks acquisition to positively impact Pharmaceutical and Specialty Solutions segment revenue and profit while increasing amortization and other acquisition-related costs during the remainder of fiscal 2024 and fiscal 2025.

COVID-19 Vaccine Distribution

Pharmaceutical and Specialty Solutions segment profit was favorably impacted during the nine months ended March 31, 2024 and on a year-over-year basis in part due to the company beginning to distribute the commercially available COVID-19 vaccines following U.S. Food and Drug Administration approval of updated vaccines in September 2023. The timing, magnitude and profit impact of vaccine distribution volume for the remainder of fiscal 2024 and beyond remains uncertain.

Generics Program

The performance of our Pharmaceutical and Specialty Solutions segment generics program positively impacted the year-over-year comparison of Pharmaceutical and Specialty Solutions segment profit during the three and nine months ended March 31, 2024. The Pharmaceutical and Specialty Solutions segment generics program includes, among other things, the impact of generic pharmaceutical product launches, customer volumes, pricing changes, the Red Oak Sourcing, LLC venture ("Red Oak Sourcing") with CVS Health Corporation ("CVS Health") and generic pharmaceutical contract manufacturing and sourcing costs.

 5 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Overview

The frequency, timing, magnitude and profit impact of generic pharmaceutical customer volumes, pricing changes, customer contract renewals, generic pharmaceutical manufacturer pricing changes and generic pharmaceutical contract manufacturing and sourcing costs all impact Pharmaceutical and Specialty Solutions segment profit and are subject to risks and uncertainties. These risks and uncertainties may impact Pharmaceutical and Specialty Solutions segment profit and consolidated operating earnings during the remainder of fiscal 2024.

Global Medical Products and Distribution Segment

Inflationary Impacts

Beginning in fiscal 2022, GMPD segment profit was negatively affected by incremental inflationary impacts, primarily related to transportation (including ocean and domestic freight), commodities and labor, and global supply chain constraints. Since that time, we have taken actions to partially mitigate these impacts, including implementing certain price increases and evolving our pricing and commercial contracting processes to provide us with greater pricing flexibility. In addition, decreases in some product-related costs have been recognized as the higher-cost inventory moved through our supply chain and was replaced by lower-cost inventory. These net inflationary impacts negatively affected the GMPD segment profit during fiscal 2023. The net inflationary impacts were less significant during the three and nine months ended March 31, 2024 and had a favorable impact on GMPD segment profit on a year-over-year basis.

We expect these net inflationary impacts to continue to affect GMPD segment profit during the remainder of fiscal 2024, but to a significantly lesser extent than in fiscal 2023 and prior periods due to our mitigation actions, together with continued decreases in certain product-related costs. However, these inflationary costs are difficult to predict and may be greater than we expect or continue longer than our current expectations. Our actions to increase prices and evolve our contracting strategies are subject to contingencies and uncertainties and it is possible that our results of operations will be adversely impacted to a greater extent than we currently anticipate or that we may not be able to mitigate the negative impact to the extent or on the timeline we anticipate.

Volumes

The GMPD segment profit was adversely impacted during fiscal 2023 in part due to lower volumes, which includes our Cardinal Health branded medical products. We have experienced Cardinal Health branded medical products sales growth during fiscal 2024 and expect further growth for the remainder of fiscal 2024 and beyond. The timing, magnitude and profit impact of this anticipated sales growth is subject to risks and uncertainties, which may impact GMPD segment profit.

Goodwill

The change in segment structure as discussed above resulted in changes to the composition of our reporting units. Accordingly, we are required to reallocate the goodwill in reporting units affected by the change using a relative fair value approach and assess goodwill for impairment both before and after the reallocation.

During the three months ended March 31, 2024, we allocated $90 million and $48 million of goodwill from the former Medical segment excluding our at-Home Solutions division (the "Medical Unit") to the GMPD reporting unit and the OptiFreight® Logistics reporting unit, respectively. We also assessed GMPD's goodwill for impairment and determined there was an impairment of GMPD’s remaining goodwill balance of $90 million. See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 5 of the "Notes to Condensed Consolidated Financial Statements" for additional detail.

Shareholder Cooperation Agreement

In September 2022, we entered into a Cooperation Agreement (the "Cooperation Agreement") with Elliott Associates, L.P. and Elliott International, L.P. (together, "Elliott") under which our Board of Directors (the "Board"), among other things, (1) appointed four new independent directors, including a representative from Elliott, and (2) formed an advisory Business Review Committee of the Board, which is tasked with undertaking a comprehensive review of our strategy, portfolio, capital-allocation framework and operations. In May 2023, we extended the term of the Cooperation Agreement until the later of July 15, 2024 or until Elliott's representative ceases to serve on, or resigns from, the Board. In connection with this extension, the Board has extended the term of the Business Review Committee until July 15, 2024.

The evaluation and implementation of any actions recommended by the Business Review Committee and the Board have impacted and may continue to impact our business, financial position and results of operations during the remainder of fiscal 2024 and beyond. We have incurred, and may incur additional legal, consulting and other expenses related to the Cooperation Agreement and the activities of the Business Review Committee.

 6 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Results of Operations

Results of Operations

Revenue

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2024		2023		Change		2024		2023		Change
Pharmaceutical and Specialty Solutions	$	50,651	$	46,496	9	%	$	154,524	$	139,441	11	%
Global Medical Products and Distribution	3,113		2,989		4	%	9,264		9,140		1	%
Other	1,167		1,025		14	%	3,392		3,038		12	%
Total segment revenue	54,931		50,510		9	%	167,180		151,619		10	%
Corporate	(20)		(23)		N.M.		(61)		(60)		N.M.
Total revenue	$	54,911	$	50,487	9	%	$	167,119	$	151,559	10	%

Pharmaceutical and Specialty Solutions

Pharmaceutical and Specialty Solutions segment revenue increased $4.2 billion and $15.1 billion during the three and nine months ended March 31, 2024, respectively, due to branded and specialty pharmaceutical sales growth from existing customers.

Global Medical Products and Distribution

GMPD segment revenue increased during the three and nine months ended March 31, 2024, driven by higher volumes from existing customers. Additionally, during the nine months ended March 31, 2024 GMPD segment revenue was adversely impacted by personal protective equipment ("PPE") volumes and pricing, partially offset by price increases to mitigate inflationary impacts.

Other

Other revenue increased during the three and nine months ended March 31, 2024 due to growth across the three operating segments: at-Home Solutions, Nuclear and Precision Health Solutions and OptiFreight® Logistics.

Cost of Products Sold

Cost of products sold for the three and nine months ended March 31, 2024 increased 9 percent and 10 percent to $53.0 billion and $161.6 billion, respectively, compared to the prior-year periods due to the factors affecting the changes in revenue and gross margin.

 7 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Results of Operations

Gross Margin

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2024		2023		Change		2024		2023		Change
Gross margin	$	1,947	$	1,785	9	%	$	5,561	$	5,062	10	%

Gross margin increased during the three and nine months ended March 31, 2024 primarily due to the beneficial comparison of the prior-year net inflationary impacts in the GMPD segment and the performance of our generics program in the Pharmaceutical and Specialty Solutions segment. Gross margin also increased during the nine months ended March 31, 2024 due to increased contribution from branded pharmaceutical and specialty pharmaceutical products in the Pharmaceutical and Specialty Solutions segment, which includes the favorable impact of COVID-19 vaccine distribution.

Gross margin rates were relatively flat during the three and nine months ended March 31, 2024 with the impact of the overall product mix mostly offset by the beneficial comparison to the prior-year net inflationary impacts in the GMPD segment. The changes in overall product mix were primarily driven by increased pharmaceutical distribution branded sales, which have a dilutive impact on our overall gross margin rate.

Distribution, Selling, General and Administrative ("SG&A") Expenses

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2024		2023		Change		2024		2023		Change
SG&A expenses	$	1,282	$	1,179	9	%	$	3,762	$	3,567	5	%

During the three and nine months ended March 31, 2024, SG&A expenses increased primarily due to investment projects, higher costs to support sales growth, and compensation-related costs.

 8 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Results of Operations

Segment Profit

We evaluate segment performance based on segment profit, among other measures. See Note 13 of the "Notes to Condensed Consolidated Financial Statements" for additional information on segment profit.

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2024		2023		Change		2024		2023		Change
Pharmaceutical and Specialty Solutions	$	580	$	560	4	%	$	1,541	$	1,394	11	%
Global Medical Products and Distribution	20		(46)		N.M.		18		(175)		N.M.
Other	111		106		5	%	319		305		5	%
Total segment profit	711		620		15	%	1,878		1,524		23	%
Corporate	(344)		(48)		N.M.		(1,043)		(934)		N.M.
Total consolidated operating earnings	$	367	$	572	(36)	%	$	835	$	590	(31)	%

Pharmaceutical and Specialty Solutions

Pharmaceutical and Specialty Solutions segment profit increased during the three and nine months ended March 31, 2024 primarily due to the performance of our generics program. During the nine months ended March 31, 2024, Pharmaceutical and Specialty Solutions segment profit also increased due to the increased contribution from branded pharmaceutical and specialty pharmaceutical products, which includes the favorable impact of COVID-19 vaccine distribution, partially offset by higher costs to support sales growth.

Global Medical Products and Distribution

Global Medical Product and Distribution segment profit increased during the three and nine months ended March 31, 2024 primarily due to beneficial comparison to the prior-year inflationary impacts, net of the effects of mitigation actions.

Other

Other segment profit increased during the three and nine months ended March 31, 2024 primarily due to the performance of OptiFreight® Logistics.

Corporate

The changes in Corporate during the three and nine months ended March 31, 2024 were due to the factors discussed in the "Other Components of Consolidated Operating Earnings" section that follows.

 9 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Results of Operations

Other Components of Consolidated Operating Earnings

In addition to revenue, gross margin and SG&A expenses discussed previously, consolidated operating earnings were impacted by the following:

	Three Months Ended March 31,				Nine Months Ended March 31,
(in millions)	2024		2023		2024		2023
Restructuring and employee severance	$	53	$	16	$	106	$	62
Amortization and other acquisition-related costs	80		74		207		216
Impairments and (gain)/loss on disposal of assets, net	84		20		622		883
Litigation (recoveries)/charges, net	81		(76)		29		(256)

Restructuring and Employee Severance

Restructuring and employee severance costs during the three and nine months ended March 31, 2024 and 2023 include costs related to the implementation of certain enterprise-wide cost-savings measures, which include certain initiatives to rationalize our manufacturing operations. The increase in restructuring costs during the three and nine months ended March 31, 2024 was primarily due to these initiatives and certain projects resulting from the review of our strategy portfolio, capital-allocation framework and operations. During the three and nine months ended March 31, 2023, restructuring and employee severance costs also included costs related to the divestiture of the Cordis business.

Amortization and Other Acquisition-Related Costs

Amortization of acquisition-related intangible assets was $64 million and $69 million for the three months ended March 31, 2024 and 2023, respectively, and $191 million and $211 million for the nine months ended March 31, 2024 and 2023, respectively.

Impairments and (Gain)/Loss on Disposal of Assets, Net

We recognized a $90 million pre-tax non-cash goodwill impairment charge related to the GMPD segment during the three months ended March 31, 2024 and charges of $671 million and $863 million during the nine months ended March 31, 2024 and 2023, respectively, as discussed further in the "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 5 of the "Notes to Condensed Consolidated Financial Statements."

Litigation (Recoveries)/Charges, Net

During the three months ended March 31, 2024, we recognized expense of $193 million in connection with opioid-related matters, which was offset by a benefit of $105 million related to prepayments at a prenegotiated discount of certain future payment amounts totaling $344 million. During the nine months ended March 31, 2024, we also recognized a $22 million charge related to an agreement in principle with the Alabama Attorney General. See Note 7 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

We recognized income for net recoveries in class action antitrust lawsuit in which we were a class member or plaintiff of $6 million and $77 million during the three and nine months ended March 31, 2024, respectively, and $66 million during the nine months ended March 31, 2023.

During the three and nine months ended March 31, 2023, we recognized income of $71 million and $95 million, respectively, primarily related to a reduction of the reserve for the estimated settlement and defense costs for the Cordis OptEase and TrapEase inferior vena cava ("IVC") product liability due to the execution of certain settlement agreements.

During the nine months ended March 31, 2023, we recognized income of $93 million due to net proceeds from the settlement of a shareholder derivative litigation matter.

Earnings Before Income Taxes

In addition to the items discussed above, earnings before income taxes were impacted by the following:

	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2024		2023		Change		2024		2023		Change
Other (income)/expense, net	$	(7)	$	—	N.M.		$	(25)	$	(5)	N.M.
Interest expense, net	33		28		18	%	55		78		(29)	%

 10 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Results of Operations

Interest Expense, Net

During the nine months ended March 31, 2024, interest expense decreased by 29 percent primarily due to increased interest income from cash and equivalents.

Provision for Income Taxes

The effective tax rate was 24.2 percent and 36.3 percent during the three months ended March 31, 2024 and 2023, respectively, and 23.2 percent and 36.7 percent during the nine months ended March 31, 2024 and 2023, respectively. These tax rates reflect the impact of the tax effects of goodwill impairment charges as well as certain other discrete items. See Note 8 of the "Notes to Condensed Consolidated Financial Statements" for additional information, during the three and nine months ended March 31, 2024 and 2023.

Tax Effects of Goodwill Impairment Charges

During the nine months ended March 31, 2024, we recognized cumulative pre-tax goodwill impairment charges of $671 million related to the GMPD segment. The net tax benefit related to these charges is $56 million for fiscal 2024.

Unless an item is considered discrete because it is unusual or infrequent, the tax impact of the item is included in our estimated annual effective tax rate. When items are recognized through our estimated annual effective tax rate, we apply our estimated annual effective tax rate to the earnings before income taxes for the year-to-date period to compute our impact from income taxes for the current quarter and year-to-date period. The tax impacts of discrete items are recognized in their entirety in the period in which they occur.

The tax effect of the goodwill impairment charges recorded during the nine months ended March 31, 2024 was included in our estimated annual effective tax rate because it was not considered unusual or infrequent, given that we recorded goodwill impairments in prior fiscal years. The impact of the non-deductible goodwill increased the estimated annual effective tax rate for fiscal 2024. Applying the higher tax rate to the pre-tax income for the nine months ended March 31, 2024 resulted in recognizing an incremental interim tax benefit of approximately $36 million, which impacted the provision for income taxes in the condensed consolidated statements of earnings during the nine months ended March 31, 2024 and prepaid expenses and other assets in the condensed consolidated balance sheet at March 31, 2024. The incremental interim tax benefit will reverse in the fourth quarter of fiscal 2024.

 11 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Liquidity and Capital Resources

Liquidity and Capital Resources

We currently believe that, based on available capital resources and projected operating cash flow, we have adequate capital resources to fund our operations and expected future cash needs as described below. If we decide to engage in one or more acquisitions we may need to access capital markets for additional financing, depending on the size and timing of such transactions.

Cash and Equivalents

Our cash and equivalents balance was $3.7 billion at March 31, 2024 compared to $4.0 billion at June 30, 2023.

During the nine months ended March 31, 2024, net cash provided by operating activities was $1.7 billion, which includes the impact of our annual payment of $378 million and prepayments of $239 million primarily related to the National Opioid Settlement Agreement. During the three months ended March 31, 2024, we issued additional long-term debt and received net proceeds of $1.14 billion, of which $589 million were classified as cash and equivalents in our condensed consolidated balance sheets as of March 31, 2024. The remaining proceeds were invested in short-term time deposits with initial effective maturities of more than three months and classified as prepaid expenses and other. In addition, we deployed cash of $750 million for share repurchases, $377 million for cash dividends and $318 million for capital expenditures.

On March 18, 2024, we completed the acquisition of Specialty Networks for a purchase price of $1.2 billion in cash, subject to certain adjustments. See Note 2 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

At March 31, 2024, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

Changes in working capital, which impact operating cash flow, can vary significantly depending on factors such as the timing of customer payments, inventory purchases, payments to vendors and tax payments in the regular course of business, as well as fluctuating working capital needs driven by customer and product mix.

The cash and equivalents balance at March 31, 2024 includes $650 million of cash held by subsidiaries outside of the United States.

Other Financing Arrangements and Financial Instruments

Credit Facilities and Commercial Paper

In addition to cash and equivalents and operating cash flow, other sources of liquidity at March 31, 2024 include a $2.0 billion commercial paper program, backed by a $2.0 billion revolving credit facility. We also have a $1.0 billion committed receivables sales facility. At March 31, 2024, we had no amounts outstanding under our commercial paper program, revolving credit facility, or our committed receivables sales facility.

In February 2023, we extended our $2.0 billion revolving credit facility through February 25, 2028. In September 2022, we renewed our committed receivables sales facility program through Cardinal Health Funding, LLC ("CHF") through September 30, 2025. In September 2023, Cardinal Health 23 Funding, LLC was added as a seller under our committed receivables sales facility.

Our revolving credit and committed receivables sales facilities require us to maintain a consolidated net leverage ratio of no more than 3.75-to-1. As of March 31, 2024, we were in compliance with this financial covenant.

Long-Term Debt and Other Short-Term Borrowings

We had total long-term obligations, including the current portion and other short-term borrowings, of $5.9 billion and $4.7 billion at March 31, 2024 and June 30, 2023, respectively.

In February 2024, we issued additional debt with the aggregate principal amount of $1.15 billion to fund the repayment of all of the aggregate principal amount outstanding of our 3.5% Notes due 2024 and 3.079% Notes due 2024, at their respective maturities, and for general corporate purposes. The notes issued are $650 million aggregate principal amount of 5.125% Notes that mature on February 15, 2029 and $500 million aggregate principal amount of 5.45% Notes that mature on February 15, 2034. The proceeds of the notes issued, net of discounts, premiums, and debt issuance costs were $1.14 billion. A portion of the proceeds were invested in short-term time deposits of $550 million with initial effective maturities of more than three months and classified as prepaid expenses and other in our condensed consolidated balance sheets as of March 31, 2024. The remaining proceeds of $589 million were invested in short-term time deposits classified as cash and equivalents in our condensed consolidated balance sheets as of March 31, 2024.

 12 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Liquidity and Capital Resources

Capital Deployment

Opioid Litigation Settlement Agreement

We had $5.3 billion accrued at March 31, 2024 related to certain opioid litigation, as further described within Note 7 of the "Notes to Condensed Consolidated Financial Statements." We expect the majority of the remaining payment amounts to occur through 2038. During the nine months ended March 31, 2024, we made our third annual payment of $378 million under the National Opioid Settlement Agreement. The amounts of future annual payments may differ from the payments that we have already made.

In January 2024, we made additional payments of approximately $239 million to prepay at a prenegotiated discount of certain future payment amounts totaling approximately $344 million owed under each of the National Opioid Settlement Agreement, West Virginia Subdivisions Settlement Agreement and settlement agreements with Native American tribes and Cherokee Nation. The majority of the prepayment relates to the seventh annual payment due under the National Opioid Settlement Agreement. As a result of these prepayments, we recognized income of $105 million in litigation charges/(recoveries), net in our condensed consolidated statements of earnings during the nine months ended March 31, 2024.

Capital Expenditures

Capital expenditures during the nine months ended March 31, 2024 and 2023 were $318 million and $264 million, respectively.

Dividends

On each of May 11, 2023, August 9, 2023, November 14, 2023 and February 6, 2024, our Board of Directors approved a quarterly dividend of $0.5006 per share, or $2.00 per share on an annualized basis, which were paid on July 15, 2023, October 15, 2023, January 15, 2024 and April 15, 2024 to shareholders of record on July 3, 2023, October 3, 2023, January 2, 2024 and April 1, 2024, respectively.

Share Repurchases

During the nine months ended March 31, 2024, we deployed $750 million of our common shares, in the aggregate, under accelerated share repurchase ("ASR") programs. We funded the ASR programs with available cash. See Note 11 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

As of March 31, 2024, we have $3.5 billion remaining under our existing share repurchase authorization.

Specialty Networks Acquisition

On March 18, 2024, we completed the acquisition of Specialty Networks for a purchase price of $1.2 billion in cash, subject to certain adjustments. See Note 2 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

 13 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Other Items

Other Items

The MD&A in our 2023 Form 10-K addresses our contractual obligations and cash requirements, as of and for the fiscal year ended June 30, 2023. Other than the acquisition of Specialty Networks and our debt issuance, there have been no subsequent material changes outside of the ordinary course of business to those items. See Note 2 and Note 6 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

Critical Accounting Policies and Sensitive Accounting Estimates

The discussion and analysis presented below is a supplemental disclosure to the critical accounting policies and sensitive accounting estimates specified in our consolidated balance sheet at June 30, 2023. This discussion and analysis should be read in conjunction with the Critical Accounting Policies and Sensitive Accounting Estimates included in our 2023 Form 10-K and our Form 10-Q for the quarters ended September 30, 2023 and December 31, 2023.

Critical accounting policies are those accounting policies that (i) can have a significant impact on our financial condition and results of operations and (ii) require the use of complex and subjective estimates based upon past experience and management’s judgment. Other people applying reasonable judgment to the same facts and circumstances could develop different estimates. Because estimates are inherently uncertain, actual results may differ, including due to the risks discussed in "Risk Factors" and other risks discussed in our 2023 Form 10-K and our other filings with the SEC since June 30, 2023.

Goodwill

Purchased goodwill is tested for impairment annually or when indicators of impairment exist. Goodwill impairment testing involves a comparison of the estimated fair value of reporting units to the respective carrying amount, which may be performed utilizing either a qualitative or quantitative assessment. Qualitative factors are first assessed to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined that it is more likely than not that the fair value does not exceed the carrying amount, then a quantitative test is performed. The quantitative goodwill impairment test involves a comparison of the estimated fair value of the reporting unit to the respective carrying amount. A reporting unit is defined as an operating segment or one level below an operating segment (also known as a component).

Goodwill impairment testing involves judgment, including the identification of reporting units, qualitative evaluation of events and circumstances to determine if it is more likely than not that an impairment exists, and, if necessary, the estimation of the fair value of the applicable reporting unit. Our qualitative evaluation considers the weight of evidence and significance of all identified events and circumstances and most relevant drivers of fair value, both positive and negative, in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

As discussed in the Overview section of this MD&A, effective January 1, 2024, we implemented a new enterprise operating and segment reporting structure. The updated structure is comprised of two reportable segments: Pharmaceutical and Specialty Solutions segment and Global Medical Products and Distribution segment. All remaining operating segments that are not significant enough to

require separate reportable segment disclosures are included in Other.

This change in segment structure resulted in changes to the composition of our former Medical operating segment excluding at-Home Solutions reporting unit ("Medical Unit"). Effective January 1, 2024, our reporting units are: Pharmaceutical and Specialty Solutions, GMPD, Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics. GMPD and OptiFreight® Logistics comprised our former Medical Unit.

Accordingly, we allocated $90 million and $48 million of goodwill from the former Medical Unit to GMPD and OptiFreight® Logistics, respectively, based on the estimated relative fair values of the reporting units. We also assessed goodwill for impairment for these reporting units before and after the reallocation and determined there was no impairment for the Medical Unit and OptiFreight® Logistics during the three months ended March 31, 2024 as their fair values substantially exceeded their carrying values. However, the quantitative test resulted in an impairment of GMPD’s remaining goodwill balance of $90 million.

Our previously reported goodwill balances have been recast to conform to the new structure. Prior-period goodwill impairment charges related to the former Medical Unit were primarily driven by the performance and long-term financial plan assumptions of GMPD and have been fully allocated to GMPD under the new structure.

Global Medical Products and Distribution Goodwill

Our determinations of the estimated fair value of GMPD was based on a combination of the income-based approach (using a discount rate of 11 percent and a terminal growth rate of 2 percent) and market-based approaches at January 1, 2024. Additionally, we

 14 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

MD&A Other Items

assigned a weighting of 80 percent to the discounted cash flow method, 10 percent to the guideline public company method, and 10 percent to the guideline transaction method.

During the three months ended September 30, 2023, we elected to bypass the qualitative assessment and perform quantitative goodwill impairment testing for the former Medical Unit. The carrying amount exceeded the fair value, which resulted in a pre-tax impairment charge of $581 million for the three months ended September 30, 2023. We did not identify any indicators of impairment during the three months ended December 31, 2023.

During the three months ended December 31, 2022 and September 30, 2022, we performed quantitative goodwill impairment testing for the former Medical Unit and recorded impairment charges of $709 million and $154 million, respectively. We also performed interim quantitative goodwill impairment testing at March 31, 2023 and concluded that there was no impairment as of March 31, 2023 as the estimated fair value of the former Medical Unit exceeded its carrying value by approximately 4 percent.

 15 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Explanation and Reconciliation of Non-GAAP Financial Measures

Explanation and Reconciliation of Non-GAAP Financial Measures

The "Overview of Consolidated Results" section within MD&A in this Form 10-Q contains financial measures that are not calculated in accordance with GAAP.

In addition to analyzing our business based on financial information prepared in accordance with GAAP, we use these non-GAAP financial measures internally to evaluate our performance, engage in financial and operational planning, and determine incentive compensation because we believe that these measures provide additional perspective on and, in some circumstances are more closely correlated to, the performance of our underlying, ongoing business. We provide these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on our financial and operating results on a year-over-year basis and in comparing our performance to that of our competitors. However, the non-GAAP financial measures that we use may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The non-GAAP financial measures disclosed by us should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth below should be carefully evaluated.

Exclusions from Non-GAAP Financial Measures

Management believes it is useful to exclude the following items from the non-GAAP measures presented in this report for its own and for investors’ assessment of the business for the reasons identified below:

•LIFO charges and credits are excluded because the factors that drive last-in first-out ("LIFO") inventory charges or credits, such as pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels (which can be meaningfully influenced by customer buying behavior immediately preceding our fiscal year-end), are largely out of our control and cannot be accurately predicted. The exclusion of LIFO charges and credits from non-GAAP metrics facilitates comparison of our current financial results to our historical financial results and to our peer group companies’ financial results. We did not recognize any LIFO charges or credits during the periods presented.

•State opioid assessments related to prior fiscal years is the portion of state assessments for prescription opioid medications that were sold or distributed in periods prior to the period in which the expense is incurred. This portion is excluded from non-GAAP financial measures because it is retrospectively applied to sales in prior fiscal years and inclusion would obscure analysis of the current fiscal year results of our underlying, ongoing business. Additionally, while states' laws may require us to make payments on an ongoing basis, the portion of the assessment related to sales in prior periods are contemplated to be one-time, nonrecurring items. Income from state opioid assessments related to prior fiscal years represents reversals of accruals due to changes in estimates or when the underlying assessments were invalidated by a Court or reimbursed by manufacturers.

•Shareholder cooperation agreement costs includes costs such as legal, consulting and other expenses incurred in relation to the agreement (the "Cooperation Agreement") entered into among Elliott Associates, L.P., Elliott International, L.P. (together, "Elliott") and Cardinal Health, including costs incurred to negotiate and finalize the Cooperation Agreement and costs incurred by the Business Review Committee of the Board of Directors, which was formed under this Cooperation Agreement. We have excluded these costs from our non-GAAP metrics because they do not occur in or reflect the ordinary course of our ongoing business operations and may obscure analysis of trends and financial performance.

•Restructuring and employee severance costs are excluded because they are not part of the ongoing operations of our underlying business and include, but are not limited to, costs related to divestitures, closing and consolidating facilities, changing the way we manufacture or distribute our products, moving manufacturing of a product to another location, changes in production or business process outsourcing or insourcing, employee severance and realigning operations.

•Amortization and other acquisition-related costs, which include transaction costs, integration costs, and changes in the fair value of contingent consideration obligations, are excluded because they are not part of the ongoing operations of our underlying business and to facilitate comparison of our current financial results to our historical financial results and to our peer group companies' financial results. Additionally, costs for amortization of acquisition-related intangible assets are non-cash amounts, which are variable in amount and frequency and are significantly impacted by the timing and size of acquisitions, so their exclusion facilitates comparison of historical, current and forecasted financial results. We also exclude other acquisition-related costs, which are directly related to an acquisition but do not meet the criteria to be recognized on the acquired entity’s initial balance sheet as part of the purchase price allocation. These costs are also significantly impacted by the timing, complexity and size of acquisitions.

 16 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Explanation and Reconciliation of Non-GAAP Financial Measures

•Impairments and gain or loss on disposal of assets, net are excluded because they do not occur in or reflect the ordinary course of our ongoing business operations and are inherently unpredictable in timing and amount, and in the case of impairments, are non-cash amounts, so their exclusion facilitates comparison of historical, current and forecasted financial results.

•Litigation recoveries or charges, net are excluded because they often relate to events that may have occurred in prior or multiple periods, do not occur in or reflect the ordinary course of our business and are inherently unpredictable in timing and amount.

•Loss on early extinguishment of debt is excluded because it does not typically occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of this type of charge is not consistent and is significantly impacted by the timing and size of debt extinguishment transactions.

The tax effect for each of the items listed above is determined using the tax rate and other tax attributes applicable to the item and the jurisdiction(s) in which the item is recorded. The gross, tax and net impact of each item are presented with our GAAP to non-GAAP reconciliations.

Definitions

Growth rate calculation: growth rates in this report are determined by dividing the difference between current-period results and prior-period results by prior-period results.

Non-GAAP operating earnings: operating earnings excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, net and (7) litigation (recoveries)/charges, net.

Non-GAAP earnings before income taxes: earnings before income taxes excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, net, (7) litigation (recoveries)/charges, net and (8) loss on early extinguishment of debt.

Non-GAAP net earnings attributable to Cardinal Health, Inc.: net earnings attributable to Cardinal Health, Inc. excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, net, (7) litigation (recoveries)/charges, net and (8) loss on early extinguishment of debt, each net of tax.

Non-GAAP effective tax rate: provision for income taxes adjusted for the tax impacts of (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, net, (7) litigation (recoveries)/charges, net and (8) loss on early extinguishment of debt divided by (earnings before income taxes adjusted for the eight items above).

Non-GAAP diluted earnings per share attributable to Cardinal Health, Inc.: non-GAAP net earnings attributable to Cardinal Health, Inc. divided by diluted weighted-average shares outstanding.

 17 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Explanation and Reconciliation of Non-GAAP Financial Measures

GAAP to Non-GAAP Reconciliation

(in millions, except per common share amounts)	Operating Earnings		Operating Earnings Growth Rate		Earnings Before Income Taxes		Provision for Income Taxes		Net Earnings1		Net Earnings1 Growth Rate		Diluted EPS1		Diluted EPS1 Growth Rate
	Three Months Ended March 31, 2024
GAAP	$	367	(36)	%	$	341	$	82	$	258	(25)	%	$	1.05	(22)	%
Shareholder cooperation agreement costs	1				1		—		1				—
Restructuring and employee severance	53				53		14		39				0.16
Amortization and other acquisition-related costs	80				80		21		59				0.24
Impairments and (gain)/loss on disposal of assets, net 2	84				84		(21)		105				0.44
Litigation (recoveries)/charges, net	81				81		34		47				0.19
Non-GAAP	$	666	10	%	$	640	$	130	$	509	14	%	$	2.08	20	%
	Three Months Ended March 31, 2023
GAAP	$	572	N.M.		$	544	$	197	$	345	N.M.		$	1.34	N.M.
Restructuring and employee severance	16				16		4		12				0.05
Amortization and other acquisition-related costs	74				74		19		55				0.21
Impairments and (gain)/loss on disposal of assets, net	20				20		(69)		89				0.35
Litigation (recoveries)/charges, net	(76)				(76)		(22)		(54)				(0.21)
Non-GAAP	$	606	11	%	$	578	$	129	$	447	11	%	$	1.74	20	%
	Nine Months Ended March 31, 2024
GAAP	$	835	42	%	$	805	$	186	$	616	90	%	$	2.49	N.M.
Shareholder cooperation agreement costs	1				1		—		1				—
Restructuring and employee severance	106				106		28		78				0.32
Amortization and other acquisition-related costs	207				207		54		153				0.62
Impairments and (gain)/loss on disposal of assets, net 2	622				622		92		530				2.14
Litigation (recoveries)/charges, net	29				29		17		12				0.05
Non-GAAP	$	1,799	20	%	$	1,769	$	377	$	1,389	24	%	$	5.62	33	%
	Nine Months Ended March 31, 2023
GAAP	$	590	N.M.		$	517	$	189	$	325	N.M.		$	1.23	N.M.
State opioid assessment related to prior fiscal years	(6)				(6)		(2)		(4)				0.02
Shareholder cooperation agreement costs	8				8		2		6				(0.02)
Restructuring and employee severance	62				62		14		48				0.18
Amortization and other acquisition-related costs	216				216		56		160				0.61
Impairments and (gain)/loss on disposal of assets, net 2	883				883		138		745				2.82
Litigation (recoveries)/charges, net	(256)				(256)		(98)		(158)				(0.60)
Non-GAAP	$	1,497	(3)	%	$	1,424	$	299	$	1,122	(1)	%	$	4.24	6	%

1     Attributable to Cardinal Health, Inc.

2    For the three and nine months ended March 31, 2024, impairments and (gain)/loss on disposal of assets, net includes pre-tax goodwill impairment charges of $90 million and $671 million, respectively, related to the GMPD segment. For fiscal 2024, the estimated net tax benefit related to the impairments is $56 million and is included in the annual effective tax rate. The incremental interim tax benefit recognized during the nine months ended March 31, 2024 is $36 million and will reverse in the fourth quarter of the fiscal year.

For the nine months ended March 31, 2023, impairments and (gain)/loss on disposal of assets, net included cumulative pre-tax goodwill impairment charges of $863 million related to the former Medical segment. For fiscal 2023, the net tax benefit related to the impairment was $68 million and was included in the annual effective tax rate. The incremental interim tax benefit recognized during the nine months ended March 31, 2023 was $66 million and reversed in the fourth quarter of fiscal 2023.

The sum of the components and certain computations may reflect rounding adjustments.

We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

 18 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Other

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the quantitative and qualitative market risk disclosures included in our 2023 Form 10-K since the end of fiscal 2023 through March 31, 2024.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of March 31, 2024. Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of March 31, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 19 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Other

Legal Proceedings

The legal proceedings described in Note 7 of the "Notes to Condensed Consolidated Financial Statements" are incorporated in this "Legal Proceedings" section by reference.

Risk Factors

You should carefully consider the information in this Form 10-Q including the Risk Factors below and the risk factors discussed in "Risk Factors" and other risks discussed in our 2023 Form 10-K, our Forms 10-Q for the quarters ended December 31, 2023 and September 30, 2023, and our other filings with the SEC since June 30, 2023. These risks could materially and adversely affect our results of operations, financial condition, liquidity, and cash flows. Our business also could be affected by risks that we are not presently aware of or that we currently consider immaterial to our operations.

Changes to the U.S. healthcare environment may not be favorable to us.

Over a number of years, the U.S. healthcare industry has undergone significant changes designed to increase access to medical care, improve safety and patient outcomes, contain costs and increase efficiencies. These changes include a general decline in Medicare and Medicaid reimbursement levels, efforts by healthcare insurance companies to limit or reduce payments to pharmacies and providers, the basis for payments beginning to transition from a fee-for-service model to value-based payments and risk-sharing models and the industry shifting away from traditional healthcare venues like hospitals and into clinics, physician offices and patients’ homes.

We expect the U.S. healthcare industry to continue to change significantly in the future. Possible changes include changes in

legislation or regulations governing prescription pharmaceutical pricing, healthcare services, U.S.-based medical product manufacturing, mandated benefits, efforts to promote increased transparency in the pharmaceutical supply chain, drug shortages, further reduction of or limitations on governmental funding at the state or federal level or efforts by healthcare insurance companies to further limit payments for products and services. For example, the Federal Trade Commission has issued public requests for information related to pharmaceutical wholesalers' and group purchasing organizations' impacts on generic drug shortages and the impact of pharmacy benefits managers on drug affordability and access. These possible changes, and the uncertainty surrounding these possible changes, may directly or indirectly adversely affect us.

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs (2)	Approximate Dollar Value of Shares That May Yet be Purchased Under the Program (2) (in millions)
January 2024	106	$	105.98	—	$	3,493
February 2024	157	107.33		—	3,493
March 2024	51	110.14		—	3,493
Total	314	$	107.33	—	$	3,493

(1)Reflects 106, 157 and 51 common shares purchased in January, February, and March 2024, respectively, through a rabbi trust as investments of participants in our Deferred Compensation Plan.

(2)On June 7, 2023, our Board of Directors approved a new $3.5 billion share repurchase program, which will expire on December 31, 2027. As of March 31, 2024, we had $3.5 billion authorized for share repurchases remaining under this program.

Other Information

Rule 10b5-1 Plan Adoptions and Modifications

During the three months ended March 31, 2024, no director or officer adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule10b5-1 trading arrangement" as each term is defined in Section 408(a) of Regulation S-K under the Exchange Act.

 20 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Financial Statements

Condensed Consolidated Statements of Earnings

(Unaudited)

	Three Months Ended March 31,				Nine Months Ended March 31,
(in millions, except per common share amounts)	2024		2023		2024		2023
Revenue	$	54,911	$	50,487	$	167,119	$	151,559
Cost of products sold	52,964		48,702		161,558		146,497
Gross margin	1,947		1,785		5,561		5,062
Operating expenses:
Distribution, selling, general and administrative expenses	1,282		1,179		3,762		3,567
Restructuring and employee severance	53		16		106		62
Amortization and other acquisition-related costs	80		74		207		216
Impairments and (gain)/loss on disposal of assets, net	84		20		622		883
Litigation (recoveries)/charges, net	81		(76)		29		(256)
Operating earnings	367		572		835		590
Other (income)/expense, net	(7)		—		(25)		(5)
Interest expense, net	33		28		55		78
Earnings before income taxes	341		544		805		517
Provision for income taxes	82		197		186		189
Net earnings	259		347		619		328
Less: Net earnings attributable to noncontrolling interests	(1)		(2)		(3)		(3)
Net earnings attributable to Cardinal Health, Inc.	$	258	$	345	$	616	$	325
Earnings per common share attributable to Cardinal Health, Inc.:
Basic	$	1.06	$	1.35	$	2.51	$	1.24
Diluted	1.05		1.34		2.49		1.23
Weighted-average number of common shares outstanding:
Basic	243		256		245		263
Diluted	245		258		247		264
Cash dividends declared per common share	$	0.5006	$	0.4957	$	1.5018	$	1.4871

See notes to condensed consolidated financial statements.

 21 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Financial Statements

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended March 31,				Nine Months Ended March 31,
(in millions)	2024		2023		2024		2023
Net earnings	$	259	$	347	$	619	$	328
Other comprehensive income/(loss):
Foreign currency translation adjustments and other	1		4		(4)		(34)
Net unrealized gain/(loss) on derivative instruments, net of tax	(6)		—		(5)		6
Total other comprehensive income/(loss), net of tax	(5)		4		(9)		(28)
Total comprehensive income	254		351		610		300
Less: comprehensive income attributable to noncontrolling interests	(1)		(2)		(3)		(3)
Total comprehensive income attributable to Cardinal Health, Inc.	$	253	$	349	$	607	$	297

See notes to condensed consolidated financial statements.

 22 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Financial Statements

Condensed Consolidated Balance Sheets

(in millions)	March 31, 2024		June 30, 2023
	(Unaudited)
Assets
Current assets:
Cash and equivalents	$	3,718	$	4,043
Trade receivables, net	11,566		11,344
Inventories, net	17,277		15,940
Prepaid expenses and other	3,161		2,362
Assets held for sale	12		144
Total current assets	35,734		33,833
Property and equipment, net	2,470		2,462
Goodwill and other intangibles, net	6,507		6,081
Other assets	1,169		1,041
Total assets	$	45,880	$	43,417
Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable	$	32,089	$	29,813
Current portion of long-term obligations and other short-term borrowings	1,187		792
Other accrued liabilities	3,030		3,059
Liabilities related to assets held for sale	—		42
Total current liabilities	36,306		33,706
Long-term obligations, less current portion	4,667		3,909
Deferred income taxes and other liabilities	8,169		8,653
Shareholders’ deficit:
Preferred shares, without par value:
Authorized—500 thousand shares, Issued—none	—		—
Common shares, without par value:
Authorized—755 million shares, Issued—327 million shares at March 31, 2024 and June 30, 2023	2,887		2,747
Accumulated deficit	(289)		(534)
Common shares in treasury, at cost: 83 million shares and 76 million shares at March 31, 2024 and June 30, 2023, respectively	(5,703)		(4,914)
Accumulated other comprehensive loss	(160)		(151)
Total Cardinal Health, Inc. shareholders' deficit	(3,265)		(2,852)
Noncontrolling interests	3		1
Total shareholders’ deficit	(3,262)		(2,851)
Total liabilities and shareholders’ deficit	$	45,880	$	43,417

See notes to condensed consolidated financial statements.

 23 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Financial Statements

Condensed Consolidated Statements of Shareholders' Deficit

(Unaudited)

	Common Shares			Accumulated Deficit		Treasury Shares			Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Shareholders’ Deficit
(in millions)	Shares Issued	Amount				Shares	Amount
	Three Months Ended March 31, 2024
Balance at December 31, 2023	327	$	2,855	$	(425)	(83)	$	(5,724)	$	(155)	$	2	$	(3,447)
Net earnings				258							1		259
Other comprehensive loss, net of tax									(5)				(5)
Employee stock plans activity, net of shares withheld for employee taxes	—	32				—	21						53
Dividends declared				(123)									(123)
Other				1									1
Balance at March 31, 2024	327	$	2,887	$	(289)	(83)	$	(5,703)	$	(160)	$	3	$	(3,262)

	Three Months Ended March 31, 2023
Balance at December 31, 2022	327	$	2,747	$	(560)	(68)	$	(4,254)	$	(146)	$	1	$	(2,212)
Net earnings				345							2		347
Other comprehensive income, net of tax									4				4
Employee stock plans activity, net of shares withheld for employee taxes	—	21				—	3						24
Share repurchase program activity		50				(4)	(303)						(253)
Dividends declared				(128)									(128)
Other				1							(1)		—
Balance at March 31, 2023	327	$	2,818	$	(342)	(72)	$	(4,554)	$	(142)	$	2	$	(2,218)

	Nine Months Ended March 31, 2024
Balance at June 30, 2023	327	$	2,747	$	(534)	(76)	$	(4,914)	$	(151)	$	1	$	(2,851)
Net earnings				616							3		619
Other comprehensive loss, net of tax									(9)				(9)
Employee stock plans activity, net of shares withheld for employee taxes	—	40				1	70						110
Share repurchase program activity		100				(9)	(859)						(759)
Dividends declared				(372)									(372)
Other				1		1					(1)		—
Balance at March 31, 2024	327	$	2,887	$	(289)	(83)	$	(5,703)	$	(160)	$	3	$	(3,262)

	Nine Months Ended March 31, 2023
Balance at June 30, 2022	327	$	2,813	$	(280)	(54)	$	(3,128)	$	(114)	$	3	$	(706)
Net earnings				325							3		328
Other comprehensive loss, net of tax									(28)				(28)
Purchase of noncontrolling interests											(2)		(2)
Employee stock plans activity, net of shares withheld for employee taxes	—	5				2	77						82
Share repurchase program activity						(20)	(1,503)						(1,503)
Dividends declared				(388)									(388)
Other				1							(2)		(1)
Balance at March 31, 2023	327	$	2,818	$	(342)	(72)	$	(4,554)	$	(142)	$	2	$	(2,218)

See notes to condensed consolidated financial statements.

 24 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Financial Statements

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended March 31,
(in millions)	2024		2023
Cash flows from operating activities:
Net earnings	$	619	$	328
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	524		516
Impairments and (gain)/loss on disposal of assets, net	622		883
Share-based compensation	88		69
Provision for bad debts	59		79
Change in operating assets and liabilities, net of effects from acquisitions and divestitures:
Increase in trade receivables	(262)		(510)
Increase in inventories	(1,371)		(1,012)
Increase in accounts payable	2,276		2,473
Other accrued liabilities and operating items, net	(870)		(845)
Net cash provided by operating activities	1,685		1,981
Cash flows from investing activities:
Acquisition of subsidiaries, net of cash acquired	(1,192)		(10)
Proceeds from divestitures, net of cash sold	9		—
Additions to property and equipment	(318)		(264)
Proceeds from disposal of property and equipment	10		2
Purchases of investments	(3)		(6)
Proceeds from investments	1		1
Proceeds from net investment hedge terminations	28		29
Purchases of short-term time deposits	(550)		—
Net cash used in investing activities	(2,015)		(248)
Cash flows from financing activities:
Proceeds from long-term obligations, net of issuance costs	1,139		—
Reduction of long-term obligations	(23)		(571)
Net tax proceeds from share-based compensation	23		11
Dividends on common shares	(377)		(399)
Purchase of treasury shares	(750)		(1,500)
Net cash provided by/(used in) financing activities	12		(2,459)
Effect of exchange rate changes on cash and equivalents	(7)		(1)
Net decrease in cash and equivalents	(325)		(727)
Cash and equivalents at beginning of period	4,043		4,717
Cash and equivalents at end of period	$	3,718	$	3,990

See notes to condensed consolidated financial statements.

 25 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Notes to Financial Statements

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

Our condensed consolidated financial statements include the accounts of all majority-owned or consolidated subsidiaries, and all significant intercompany transactions and amounts have been eliminated. The results of businesses acquired or disposed of are included in the condensed consolidated financial statements from the date of the acquisition or up to the date of disposal, respectively.

References to "we," "our," and similar pronouns in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 (this "Form 10-Q") are to Cardinal Health, Inc. and its majority-owned or consolidated subsidiaries unless the context requires otherwise.

Our fiscal year ends on June 30. References to fiscal 2024 and 2023 in these condensed consolidated financial statements are to the fiscal years ending or ended June 30, 2024 and June 30, 2023, respectively.

Our condensed consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission ("SEC") instructions to Quarterly Reports on Form 10-Q and include the information and disclosures required by accounting principles generally accepted in the United States ("GAAP") for interim financial reporting. The preparation of financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Actual amounts may differ from these estimated amounts.

In our opinion, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Except as disclosed elsewhere in this Form 10-Q, all such adjustments are of a normal and recurring nature. In addition, financial results presented for this fiscal 2024 interim period are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2024. These condensed consolidated financial statements are unaudited and, accordingly, should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (our "2023 Form 10-K").

Major Customers

On April 22, 2024, we announced that our pharmaceutical distribution contracts with OptumRx, which expire at the end of June 2024, will not be renewed. Sales to OptumRx generated 16% of our consolidated revenue in fiscal 2023.

Recently Issued Financial Accounting Standards

and Disclosure Rules Not Yet Adopted

We assess the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board ("FASB") on our condensed consolidated financial statements as well as material updates to previous assessments, if any, from our fiscal 2023 Form 10-K.

Segment Reporting

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements, primarily through disclosures of significant segment expenses. This guidance will be effective for us in our fiscal 2025 Form 10-K and the guidance must be applied retrospectively to all prior periods presented. We are currently evaluating the impact of adoption of this guidance on our disclosures.

Income Tax Disclosure

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for us in our fiscal 2026 Form 10-K and should be applied on a prospective basis, with retrospective application permitted. We are currently evaluating the impact of adoption of this guidance on our disclosures.

Climate-Related Disclosures

In March 2024, the SEC issued final rules on climate-related disclosures that will require annual disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or controlled (Scope 1) and material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain financial thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates. These rules also require disclosure of climate risk oversight practices of the Board of Directors and management, and the disclosure of governance, risk management and strategy related to material climate-related risks. In April 2024, the SEC voluntarily stayed the new rules pending the completion of judicial review. The disclosure requirements, if ultimately upheld as adopted, will begin phasing in for reports and registration statements including financial information with respect to annual periods beginning in our fiscal 2026. We are currently evaluating the impact of adoption of these final rules on our disclosures.

 26 Cardinal Health | Q3 Fiscal 2024 Form 10-Q

Notes to Financial Statements

Recently Adopted Financial Accounting Standards

There were no new material accounting standards adopted during the nine months ended March 31, 2024.

Updated Segment Reporting Structure

Effective January 1, 2024, we operated under an updated organizational structure and re-aligned our reporting structure under two reportable segments: Pharmaceutical and Specialty Solutions segment and Global Medical Products and Distribution ("GMPD") segment. The remaining operating segments, Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics, are not significant enough to require separate reportable disclosures and are included in Other. The Pharmaceutical and Specialty Solutions reportable segment consists of all businesses formerly within our Pharmaceutical segment, excluding Nuclear and Precision Health Solutions. The Global Medical Products and Distribution reportable segment consists of all businesses formerly within our Medical segment, excluding at-Home Solutions and OptiFreight® Logistics. Our previously reported segment results have been recast to conform to this re-aligned reporting structure and reflect changes in the elimination of inter-segment revenue and allocated corporate technology and shared function expenses, which are driven by the reporting structure change. See Note 13 for segment results under the new reporting structure.

2. Acquisitions

On March 18, 2024, we completed the acquisition of Specialty Networks for a purchase price of $1.2 billion in cash, subject to certain adjustments. Specialty Networks creates clinical and economic value for providers and partners across multiple specialty group purchasing organizations ("GPOs"): UroGPO, Gastrologix and GastroGPO, and United Rheumatology.

Specialty Networks’ PPS Analytics platform analyzes data from electronic medical records, practice management, imaging, and dispensing systems and transforms it into meaningful and actionable insights for providers and other stakeholders by using artificial intelligence and modern data analytics capabilities. The acquisition further expands our offering in key therapeutic areas, accelerates our upstream data and research opportunities with biopharma manufacturers, and creates a platform for our expansion across therapeutic areas.

The pro forma results of operations and the results of operations for Specialty Networks have not been separately disclosed because the effects were not significant compared to the condensed consolidated financial statements.

Transaction costs associated with the Specialty Networks acquisition were $15 million during the three and nine months ended March 31, 2024, and are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings.

Fair Value of Assets Acquired and Liabilities Assumed

The allocation of the purchase price for the acquisition of Specialty Networks is not yet finalized and is subject to adjustment as we complete the valuation analysis of the acquisition. The purchase price is also subject to adjustment based on working capital requirements as set forth in the acquisition agreement.

The valuation of identifiable intangible assets utilizes significant unobservable inputs and thus represents a Level 3 nonrecurring fair value measurement. The estimated fair value of the identifiable intangible assets was determined using an income-based approach, which includes market participant expectations of the cash flows that an asset could generate over its remaining useful life, discounted back to present value using an appropriate rate of return. The discount rate used to arrive at the present value of the identifiable intangible assets was 10 percent, and reflects the internal rate of return and uncertainty in the cash flow projections.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for Specialty Networks:

(in millions)	Specialty Networks
Identifiable intangible assets:
Customer relationships (1)	$	404
Trade names (2)	15
Developed technology (3)	20
Total identifiable intangible assets acquired	439
Identifiable net assets/(liabilities):
Cash and equivalents	23
Trade receivables, net	19
Prepaid expenses and other	2
Other accrued liabilities	(15)
Deferred income taxes and other liabilities	(109)
Total identifiable net assets/(liabilities) acquired	359
Goodwill	856
Total net assets acquired	$	1,215

(1)    The weighted-average useful life of customer relationships is 14 years.

(2)    The weighted-average useful life of trade names is 8 years.

(3)    The weighted-average useful life of developed technology is 9 years.