2025

Annual

report

Fiscal 2025 was another strong year for Cardinal Health. We continued to accelerate our

momentum with a relentless focus on driving simplification and operational efficiencies

in our core, while investing for long-term growth. Our sustained performance is a result

of the progress we’ve made against our strategic priorities, as we continue evolving to

meet customer and patient needs while driving value creation for our shareholders.

Dear Shareholders,

Delivered GAAP earnings per share of

$6.45

and non-GAAP diluted earnings per share of

$8.24

, growth of over

Grew Pharmaceutical and Specialty Solutions

segment profit by

12%

Achieved

$135 million

in segment profit

and positive cash flow generation within the

Global Medical Products and Distribution

(GMPD) segment by continued execution

of the multi-year improvement plan

Achieved segment profit growth of

22%

for the year for the businesses reported as

“Other” (Nuclear and Precision Health Solutions,

at-Home Solutions and OptiFreight Logistics)

Generated operating cash flow and non-GAAP

adjusted free cash flow of

$2.4 billion

and

$2.5 billion

, respectively

Returned approximately

$1.25 billion

to shareholders through dividends and

share repurchases

This fiscal year, we:

Fiscal 2025 financial summary

GAAP basis fiscal 2025

Non-GAAP basis fiscal 2025

Operating earnings

% change

$2.3 billion

83%

$2.8 billion

15%

Revenue

% change

$222.6 billion

(2%)

N/A

Diluted EPS

% change

$6.45

87%

$8.24

Please see

Explanation and Reconciliation of Non-GAAP Financial Measures

in our fiscal 2025 Form 10-K for GAAP to Non-GAAP reconciliations.

Please find our Investor Day presentation at cardinalhealth.com/2025investorday.

Attributable to Cardinal Health, Inc.

The tremendous progress we’ve made is the result of our focus on continuous

improvement; as we outlined at our Investor Day

in June, we are seeing the positive

results of the strong, resilient foundation we’ve built over the last several years.

Jason Hollar

Chief Executive Officer

Pharmaceutical and Specialty Solutions segment highlights

The

Pharmaceutical and Specialty Solutions

segment

is our largest business, and we continue

to prioritize its growth and resilience, strengthening

its core and expanding in Specialty.

The new

Consumer Health Logistics Center (CHLC)

in Central

Ohio is the first step in a multi-year plan to increase capacity and

drive efficiencies across our pharmaceutical distribution network.

The CHLC, now fully operational, is a centralized replenishment

center for the distribution of over-the-counter medications,

treatments and diagnostic solutions for our pharmacy customers.

The segment is also investing in new technologies to create

efficiencies for our customers. Specifically,

Vantus™ HQ

, our

proprietary ordering platform, is a one-stop digital hub that

gives retail pharmacists enhanced capabilities to search products,

track orders and access reporting. The platform, piloted early

in fiscal 2025, is now rolling out to various customer classes.

Organic and inorganic investments are enhancing our broad

Specialty capabilities, furthering our goal of becoming a

multispecialty leader.

• The new Specialty Alliance is a multi-specialty managed

services organization (MSO) platform

that encompasses

GI Alliance, the leading gastroenterology MSO in the

United States (U.S.), in which we acquired a majority stake

for approximately $2.8 billion in cash, and the newly established

Urology Alliance, following our recent acquisitions of Urology

America and Potomac Urology. The Specialty Alliance provides

administrative and management services to physicians’ practices,

enabling providers to focus on patient care. The Specialty

Alliance will also include Solaris Health, the country’s leading

urology MSO, following the completion of the acquisition,

for approximately $1.9 billion in cash, as announced in August.

•

To accelerate the growth and capabilities of Navista,

we acquired Integrated Oncology Network (ION)

for

approximately $1.1 billion in cash. ION is an MSO that supports

more than 50 practice sites in 10 states. Navista is investing in

technology-enabled clinical tools, including the proprietary

Navista™ Practice Intelligence Suite, which enables users to gain

data-driven insights to make their practices more efficient.

• Specialty Networks, which creates value for independent

specialty providers and partners across multiple specialties,

is expanding into oncology

, and building its existing

capabilities in gastroenterology and rheumatology, as part of

our multispecialty strategy. Additionally, Specialty Networks'

PPS Analytics leverages real-world data to improve patient care

and clinical research.

Other highlights

Our three growth businesses, Nuclear and Precision

Health Solutions (NPHS), at-Home Solutions and

OptiFreight Logistics, have been reported together

as “

Other

” since 2024. Each of these businesses is a leader

within its industry and each is growing rapidly. We expect

continued demand for these businesses due to secular trends,

including preferred sites of care, evolving patient expectations,

and innovation through technology advancements. The strong

execution across each of these businesses gives us confidence

in our continued investment and long-term trajectory.

•

NPHS

plans to invest more than $150 million over the next

three years, enabling an expansion of its cyclotron network

for PET products in 11 markets across the U.S. and a further

expansion of its Center for Theranostics Advancement

capabilities to support a strong pipeline of growth into the

therapeutic areas of oncology, urology and neurology.

•

at-Home Solutions

will include Advanced Diabetes Supply

Group (ADSG), a leading diabetes medical supplies provider

that Cardinal Health acquired for approximately $1.1 billion

in cash. at-Home Solutions recently opened its Fort Worth,

Texas, facility, equipped with automation technologies, and

announced plans for further automation expansion in one

existing distribution center (DC) and in two new DCs planned

in the West and the Northeast.

•

OptiFreight Logistics

, which provides expertise in logistics

management to seven of the country’s top 10 health systems,

will expand its offerings within the hospital pharmacy setting.

This is a logical step in Cardinal Health’s evolution, given

the company’s freight management and pharmaceutical

distribution leadership.

Important information regarding forward-looking statements:

This Report contains forward-looking statements

addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments.

These statements 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 various accruals and estimates. These matters are subject to risks and uncertainties

that could cause actual results to differ materially from those projected, anticipated or implied. For more information

about these risks and uncertainties, please review our Forms 10-K, 10-Q and 8-K and Exhibits to those Reports, which are

available at ir.cardinalhealth.com. Except to the extent required by applicable law, we undertake no obligation to update

or revise any forward-looking statement.

Striving to be healthcare's

most trusted partner

90%

U.S. hospitals served

25K

physician offices or

clinics serviced by our

Specialty business

43K+

pharmaceutical

deliveries a day

PET cyclotron

facilities

130

nuclear pharmacies

2.2K

providers in 28 states

and more than 450 sites

of care supported by

our MSO platforms

6M+

patients served in

the home by direct

to patient business

24M+

parcel packages

managed through

OptiFreight Logistics

20+

product categories

as an integrated

medical manufacturer

Global Medical Products and Distribution

(GMPD) segment highlights

GMPD

continues to execute its improvement plan, focused on

accelerating the growth of its Cardinal Health™ Brand products

and, at the same time, driving simplification and cost optimization.

The multistep effort builds on the earlier progress of the GMPD improvement

plan, which returned the business to positive profit and cash flow generation.

Additionally, my leadership team and I continue to work to minimize the

impact of tariffs, which are affecting the Cardinal Health™ Brand portfolio.

Looking ahead

Cardinal Health is the crucial link in healthcare. Few companies offer the

combination of a resilient business model and compelling growth – the result

of favorable trends and our actions to evolve into higher-margin and faster-

growing areas of the market – while safely, securely and efficiently delivering

the products and solutions that improve the lives of people each day and

value for all stakeholders.

Our success is driven by our 57,700 employees and their work and commitment

to our critical role in healthcare. I extend my thanks to our Board of Directors

and to my senior leadership team. As always, I’m grateful to our customers

for their business and their trust, and appreciate the continued support of

our shareholders.

I am confident in our strategic direction and proud of our accomplishments.

Our team’s execution in support of our customers and patients throughout

fiscal 2025 is furthering our business growth and helping us to fulfill our role

as healthcare’s most trusted partner.

Sincerely,

Jason Hollar

Chief Executive Officer

Jason M. Hollar

Chief Executive Officer

Aaron E. Alt

Chief Financial Officer

Michelle D. Greene

Chief Information Officer

Stephen M. Mason

Chief Executive Officer, Global

Medical Products and Distribution

Jessica L. Mayer

Chief Legal and Compliance Officer

Ola M. Snow

Chief Human Resources Officer

Deborah L. Weitzman

Chief Executive Officer,

Pharmaceutical and Specialty Solutions

Executive team

Board of Directors

Board member

Title(s)

Committees

The Board of Directors oversees the conduct of our businesses and management’s efforts to establish and maintain high

standards of legal and ethical conduct; management’s accounting, financial reporting and controls; risk management policies

and practices; and our sustainability strategy, goal setting, performance and disclosures, among other responsibilities.

All Board members, with the exception of CEO Jason Hollar, are independent.

Robert W. Azelby

Former President and CEO of Eliem Therapeutics, Inc.

Audit, Risk Oversight

Michelle M. Brennan

Former Value Creation Leader of Johnson & Johnson

Governance and Sustainability

(Chair), Human Resources and

Compensation

Sheri H. Edison

Former Executive Vice President and General Counsel

of Amcor plc

Governance and Sustainability,

Risk Oversight (Chair)

David C. Evans

Former Executive Vice President and CFO of The Scotts

Miracle-Gro Company

Audit (Chair), Human Resources

and Compensation

Patricia A.

Hemingway Hall

Former President and CEO of Health Care Service

Corporation

Governance and Sustainability,

Human Resources and

Compensation

Jason M. Hollar

CEO of Cardinal Health, Inc.

Akhil Johri

Operating Advisor to CD&R; former Executive Vice President

and CFO of United Technologies Corporation

Audit, Risk Oversight

Gregory B. Kenny

Independent Chairman of the Board; former President

and CEO of General Cable Corporation

Governance and Sustainability

Nancy Killefer

Former Senior Partner, Public Sector Practice at McKinsey

& Company, Inc.

Governance and Sustainability,

Human Resources and

Compensation (Chair)

Christine A. Mundkur

Former CEO of Impopharma, Inc.

Audit, Risk Oversight

Robert W.

Musslewhite

Former CEO of Definitive Healthcare Corp.

Human Resources and

Compensation, Risk Oversight

Sudhakar

Ramakrishna

President and CEO of SolarWinds Corporation

Audit, Risk Oversight

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

☑

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

For the fiscal year ended June 30, 2025

☐

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes

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

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

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over

financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the

correction of an error to previously issued financial statements.

☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of

the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

The aggregate market value of voting stock held by non-affiliates on December 31, 2024, was the following: $28,372,319,280.

The number of the registrant’s common shares, without par value, outstanding as of July 31, 2025, was the following: 238,793,647.

Documents Incorporated by Reference:

Portions of the registrant’s Definitive Proxy Statement to be filed for its 2025 Annual Meeting of Shareholders are incorporated by reference into the sections of this Form 10-

K addressing the requirements of Part III of Form 10-K.

Table of Contents

Page

Introduction

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

Explanation and Reconciliation of Non-GAAP Financial Measures

Quantitative and Qualitative Disclosures about Market Risk

Business

Risk Factors

Cybersecurity

Properties

Legal Proceedings

Market for Registrant's Common Equity

Reports

Financial Statements and Supplementary Data

Directors, Executive Officers, and Corporate Governance

Exhibits

Form 10-K Cross Reference Index

Signatures

Cardinal Health

Fiscal 2025 Form 10-K

Cardinal Health

Fiscal 2025 Form 10-K

Introduction

References to Cardinal Health and Fiscal Years

As used in this report, "we," "our," "us," "Cardinal Health," 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 2026, 2025, 2024,

2023, 2022, and 2021 are to the fiscal years ended June 30, 2026, 2025, 2024, 2023, 2022, and 2021, respectively. Except as otherwise

specified, information in this report is provided as of June 30, 2025.

Non-GAAP Financial Measures

In this report, we use financial measures that are derived from consolidated financial data but are not presented in our financial statements

that are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). These measures are considered “non-GAAP

financial measures” under the 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 report.

Management's Discussion and Analysis ("MD&A") of Financial Condition and Results of Operations

Our MD&A within this Form 10-K generally discusses fiscal 2025 and fiscal 2024 items and year-over-year comparisons between fiscal

2025 and fiscal 2024. Fiscal 2023 items and discussions of year-over-year comparisons between fiscal 2024 and fiscal 2023 that are not

included in this Form 10-K can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our

Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the "Fiscal 2024 Form 10-K").

Important Information Regarding Forward-Looking Statements

This report (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 MD&A

and Risk Factors, but there are others throughout this report, 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 projected, anticipated, or implied. The most significant of these risks and uncertainties

are described in “Risk Factors” in this report and in Exhibit 99.1 to the Form 10-K included in this report. Forward-looking statements in this

report 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.

Available Information

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are

available free of charge on our website (www.cardinalhealth.com), under the “Investor Relations — Financials — SEC Filings” caption, as

soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. Information contained on or accessible

via our website is not part of or otherwise incorporated by reference into this Annual Report on Form 10-K. The SEC also maintains a

website (www.sec.gov) where you can search for annual, quarterly and current reports, proxy and information statements, and other

information regarding us and other public companies.

Introduction

Cardinal Health

Fiscal 2025 Form 10-K

Management's Discussion and Analysis of Financial Condition

and Results of Operations

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 services and solutions that enhance the healthcare

system and supply chain efficiency. We connect patients, providers, payers, pharmacists, and manufacturers for integrated care

coordination.

We report our financial results in two reportable segments: Pharmaceutical and Specialty Solutions ("Pharma") 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.

Pharmaceutical and Specialty Solutions Segment

Our Pharma 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; repackages generic pharmaceuticals and over the counter healthcare

products; and includes our managed services organization platforms for specialty physician offices.

Global Medical Products and Distribution Segment

Our GMPD segment manufactures, sources, and distributes Cardinal Health brand medical, surgical, and laboratory products, which are

sold in the United States, Canada, Europe, Asia, and other markets. This segment also distributes a broad range of medical, surgical, and

laboratory products known as national brand products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare

providers in the United States and Canada.

Other Operating Segments

Our Nuclear and Precision Health Solutions operating segment operates nuclear pharmacies and manufacturing facilities, which

manufacture, prepare, and deliver radiopharmaceuticals for use in nuclear imaging, theranostics, and other procedures in hospitals and

physician offices. This segment also contract manufactures a radiopharmaceutical treatment (Xofigo

) and holds the North American rights

to manufacture and distribute Lymphoseek

, a radiopharmaceutical diagnostic imaging agent.

Our at-Home Solutions operating segment has two main businesses: Edgepark, including ADS, directly providing medical supplies to

patients with chronic conditions in the home; and at-Home, a business-to-business distribution service that delivers medical supplies and

over-the-counter products to home medical equipment providers, home health and hospice agencies, and e-commerce providers.

Our OptiFreight

Logistics operating segment supports the shipping and logistics needs of healthcare providers by optimizing direct

shipments through integrated technology solutions. This segment serves hospitals, pharmacies, labs, and surgery centers.

Introduction

Cardinal Health

Fiscal 2025 Form 10-K

Consolidated Results

Fiscal 2025 Overview

Revenue

Revenue decreased 2 percent to $222.6 billion for fiscal 2025 from the prior year, primarily due to the expiration of the Pharma segment

OptumRx contracts, partially offset by branded and specialty pharmaceutical sales growth from existing and new customers.

GAAP and Non-GAAP Operating Earnings

(in millions)

2025

2024

Change

GAAP operating earnings

2,275

1,243

83 %

Shareholder cooperation agreement costs

—

Restructuring and employee severance

175

Amortization and other acquisition-related costs

464

284

Acquisition-related cash and share-based compensation costs

126

—

Impairments and (gain)/loss on disposal of assets, net

634

Litigation (recoveries)/charges, net

(185)

Non-GAAP operating earnings

2,786

2,414

15 %

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

During fiscal 2025, GAAP operating earnings increased 83%

to $2.3 billion and non-GAAP operating earnings increased 15%

$2.8 billion from the prior year. The increases in both GAAP and non-GAAP operating earnings were driven by the increased contribution

from branded and specialty pharmaceutical products and the acquisitions of MSO platforms and ADS, partially offset by the expiration of

the OptumRx contracts. The increase to GAAP operating earnings was primarily driven by the favorable comparison to the prior year,

which included pre-tax non-cash goodwill impairment charges of $675 million related to the GMPD segment. The increase to GAAP

operating earnings was also favorably impacted by net recoveries in class action antitrust litigation in which we were a class member or

plaintiff, for which we recognized $171 million during fiscal 2025. In fiscal 2025, GAAP operating earnings included $161 million of

transaction and integration costs associated with acquisitions.

MD&A

Overview

Cardinal Health

Fiscal 2025 Form 10-K

GAAP and Non-GAAP Diluted EPS

($ per share)

2025

(2)

2024

(2)

Change

GAAP diluted EPS

(1)

6.45

3.45

87 %

Restructuring and employee severance

0.28

0.54

Amortization and other acquisition-related costs

1.49

0.85

Acquisition-related cash and share-based compensation costs

0.51

—

Impairments and (gain)/loss on disposal of assets, net

(3)

0.05

2.38

Litigation (recoveries)/charges, net

(0.54)

0.30

Non-GAAP diluted EPS

(1)

8.24

7.53

9 %

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

(1)

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

(2)

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

section titled "Explanation and Reconciliation of Non-GAAP Financial Measures."

(3)

For fiscal 2024, impairments and (gain)/loss on disposals of assets, net included pre-tax goodwill impairment charges of $675 million related to the GMPD segment.

This had an adverse impact of $(2.50) per share to GAAP diluted EPS.

During fiscal 2025, GAAP and non-GAAP diluted EPS increased 87 percent to $6.45 and 9 percent to $8.24, respectively, from the prior

year due to the factors impacting operating earnings discussed in the preceding section, partially offset by increased interest expense.

Cash and Equivalents

Our cash and equivalents balance was $3.9 billion at June 30, 2025 compared to $5.1 billion at June 30, 2024. During fiscal 2025, net

cash provided by operating activities was $2.4 billion, which includes the impact of unwinding the negative net working capital associated

with the expiration of our OptumRx contracts and the normal timing of payments to vendors, partially offset by the benefit of onboarding

new customers. Cash provided by operating activities also includes the impact of payments totaling $798 million related to opioid litigation.

During fiscal 2025, we deployed $5.3 billion for acquisitions, $765 million for share repurchases, $400 million for debt repayment,

$547 million for capital expenditures, and $494 million for dividends. In addition, we issued new long-term debt and received net proceeds

of $2.9 billion to fund a portion of the consideration paid for acquisitions and for general purposes. Another portion of the consideration

paid for the acquisitions came from an $800 million term loan.

MD&A

Overview

Cardinal Health

Fiscal 2025 Form 10-K

Significant Developments in Fiscal 2025 and Trends

Acquisitions

Advanced Diabetes Supply Group ("ADS")

On April 1, 2025, we completed the acquisition of ADS, a diabetic medical supplies provider to patients in the home, for a purchase price of

$1.1 billion in cash, subject to certain adjustments. ADS serves approximately 500,000 patients annually providing diabetes therapies from

leading manufacturers. ADS is part of our at-Home Solutions operating segment and its results are reported in Other.

The Specialty Alliance

On January 30, 2025, we completed the acquisition of a 73 percent ownership interest in GI Alliance ("GIA"), a management services

organization ("MSO") primarily serving gastroenterologists, for a purchase price of approximately $2.8 billion in cash, subject to certain

adjustments. Beginning on the third anniversary of the closing, we have the ability to exercise a call right to purchase up to 100 percent of

the remaining outstanding equity. GIA's MSO provides services to over 900 physicians across 345 practice locations in 20 states.

Additionally, on May 30, 2025, we, through GIA, completed the acquisition of Urology America, a urology management services

organization, for a purchase price of $360 million in cash, subject to certain adjustments. In connection with this transaction, we issued

common units in GIA to certain physicians and management. See

Note 1

of the “Notes to Consolidated Financial Statements” for further

information on the GIA share-based compensation plans.

In recognition of the expansion into new practice areas, in June 2025, we announced that these businesses would be called The Specialty

Alliance. We consolidate the results of The Specialty Alliance in our consolidated financial statements and report those consolidated

results within our Pharma segment.

We financed the acquisitions of GIA, Urology America, and ADS with a combination of cash on hand and cash proceeds from the new debt

financing as described in

Note 7

of the "Notes to Consolidated Financial Statements".

Integrated Oncology Network ("ION")

On December 2, 2024, we completed the acquisition of ION, a physician-led independent community oncology network, for a purchase

price of $1.1 billion in cash, subject to certain adjustments. ION is a management services organization that supports more than 50

practice sites in 10 states representing more than 100 providers. ION supports a continuum of care across its member sites including

medical oncology, radiation oncology, urology, and other ancillary services. As part of the transaction, ION has been integrated into

Navista, our managed services organization intended to enhance efficiency for providers and patients, enable additional capabilities, and

increase practice profitability of independent community oncologists. We report ION results within our Pharma segment. We funded the

acquisition with available cash on hand.

These acquisitions have positively impacted their respective segment revenue and segment profit while increasing amortization and

acquisition-related costs and acquisition-related cash and share-based compensation costs during fiscal 2025. Those impacts are

expected to continue in fiscal 2026 and beyond.

See

Note 2

of the "Notes to Consolidated Financial Statements" for additional information on these acquisitions.

Tariffs

Recent U.S. tariffs imposed or threatened to be imposed on goods, materials, and products from countries where we do business and any

retaliatory or responsive actions taken by such countries could result in us incurring substantial additional costs to source materials, directly

and indirectly, from affected countries, and may require us to raise prices on certain products and seek alternative sources of supply. It is

also possible that we could experience supply disruptions or shortages as a result of tariffs or other protective measures.

We have taken action to reduce the potential impact of tariffs on our costs; however, at this time, the countries which will be subject to

tariffs and the tariff rate that may be imposed on each country is uncertain and dynamic and we do not expect to be able to establish

alternative sources of supply or otherwise mitigate the potential impact of tariffs on all of the products that we source, manufacture, or

distribute. If we are not able to offset the impact of tariffs through price increases or otherwise mitigate the impacts, our financial results

could be negatively impacted. Additionally, if tariffs are modified in the future, or our preliminary information is incorrect regarding their

impact, we may not be able to respond to such changes appropriately or in a timely manner and our financial results could be negatively

impacted. Furthermore, if our competitors do not increase prices, or increase prices to a lesser extent than we do, or are able to offset the

impact of tariffs through other actions, our competitive and financial position may be adversely affected.

MD&A

Overview

Cardinal Health

Fiscal 2025 Form 10-K

Pharmaceutical and Specialty Solutions Segment

OptumRx Contracts

In April 2024, we announced that our pharmaceutical distribution contracts with OptumRx would expire at the end of June 2024. Sales to

OptumRx generated 17 percent of our consolidated revenue in fiscal 2024. The expiration of the OptumRx contracts and unwinding of the

negative net working capital associated with the contracts adversely impacted our results of operations, including segment profit, financial

condition, and cash flows, during fiscal 2025.

Branded Pharmaceuticals

During fiscal 2025 and 2024, we saw increased demand for GLP-1 pharmaceuticals and our sales increased significantly, despite periodic

supply shortages. These increased sales positively impacted our Pharma segment and consolidated revenue for the fiscal 2025 and 2024;

however, increased GLP-1 sales did not meaningfully contribute to segment profit. Future demand and reimbursement for these

medications is unpredictable and our ability to meet demand may be impacted by supply constraints. Additionally, the recently issued

Executive Order titled “Delivering Most-Favored Nation Prescription Drug Pricing to American Patients” may impact sales or profitability of

branded pharmaceutical products, including GLP-1 products; however, the extent of the impact is uncertain and may vary depending on

the timeline for implementation and the extent of any price reductions.

Generics Program

During fiscal 2025, the performance of our Pharma segment generics program positively impacted the year-over-year comparison of

Pharma segment profit, excluding the impact of the OptumRx contracts expiration. The Pharma 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.

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 Pharma segment profit and are subject to risks and uncertainties.

BioPharma Solutions

The performance of BioPharma Solutions positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2025.

BioPharma Solutions consists of services to biopharmaceutical manufacturers and healthcare providers including, among other things,

Specialty Networks, third-party logistics ("3PL"), group purchasing organizations ("GPOs"), our Sonexus patient access and support

programs, regulatory and clinical consulting, and real world data and evidence.

The frequency, timing, magnitude, and profit impact of customer demand, new product launches, and our ongoing investments are subject

to risks and uncertainties. These risks and uncertainties may impact Pharma segment profit and consolidated operating earnings during

fiscal 2026 and beyond.

Management Service Organization Platforms

The performance of our MSO platforms positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2025

due to the acquisitions of GIA and ION. Our ability to successfully provide physician practice support and management services, and to

receive the value we expect to receive from our recent acquisition of MSO platforms, depends upon a number of factors, including: the

ability to develop or acquire and integrate appropriate practice management and support expertise; the ability to support recruitment,

integration, and retention of sufficient numbers of local providers and staff; the ability to successfully support negotiations with vendors,

suppliers, and payors; the reimbursement environment; and competition from other healthcare organizations.

Global Medical Products and Distribution Segment

Volumes

Cardinal Health brand medical products sales grew during fiscal 2025 and we expect further growth in fiscal 2026 and beyond. The timing,

magnitude, and profit impact of this anticipated sales growth is subject to risks and uncertainties, including the signing of new customers or

the expiration of customer contracts, and it is possible that sales volume may differ from our expectations and impact GMPD segment

profit to a greater or lesser extent than we currently expect.

MD&A

Overview

Cardinal Health

Fiscal 2025 Form 10-K

Results of Operations

Revenue

Pharma Segment

Revenue

(in billions)

$204.6

$210.0

FY25

FY24

GMPD Segment

Revenue

(in billions)

$12.6

$12.4

FY25

FY24

Other

Revenue

(in billions)

$5.4

$4.5

FY25

FY24

Revenue

(in millions)

2025

2024

Change

Pharmaceutical and Specialty Solutions

204,644

210,019

(3) %

Global Medical Products and Distribution

12,636

12,381

2 %

Other

5,382

4,512

19 %

Total segment revenue

222,662

226,912

(2) %

Corporate (1)

(84)

(85)

N.M.

Total revenue

222,578

226,827

(2) %

(1)

Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments.

Pharmaceutical and Specialty Solutions

Pharma segment revenue for fiscal 2025 decreased 3 percent to $204.6 billion from the prior year, primarily due to the expiration of the

OptumRx contracts, partially offset by branded and specialty pharmaceutical sales growth from existing and new customers.

Global Medical Products and Distribution

GMPD segment revenue for fiscal 2025 increased 2 percent to $12.6 billion from the prior year, primarily due to higher volumes from

existing customers.

Other

Other segment revenue for fiscal 2025 increased 19 percent to $5.4 billion from the prior year due to growth across at-Home Solutions,

Nuclear and Precision Health Solutions, and OptiFreight

Logistics.

MD&A

Results of Operations

Cardinal Health

Fiscal 2025 Form 10-K

Cost of Products Sold

Cost of products sold for fiscal 2025 decreased 2 percent to $214.4 billion from the prior year, primarily due to the factors affecting the

changes in revenue and gross margin.

Gross Margin

(in billions)

$8.2

$7.4

FY25

FY24

Gross Margin Rate

(Gross Margin as a Percent

of Revenue)

3.67%

3.27%

FY25

FY24

Gross Margin

(in millions)

2025

2024

Change

Gross margin

8,168

7,414

10 %

Gross margin for fiscal 2025 increased 10 percent to $8.2 billion from the prior year, primarily due to the acquisitions of MSO platforms and

ADS, increased contribution from branded and specialty pharmaceutical products, and BioPharma Solutions, partially offset by the

expiration of the OptumRx contracts.

Gross margin rate for fiscal 2025 grew 40 basis points from the prior year, primarily due to favorable changes in overall product and

customer mix, primarily related to branded and specialty pharmaceutical products and the expiration of the OptumRx contracts, and MSO

platforms acquisitions.

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

SG&A Expenses

(in millions)

2025

2024

Change

SG&A expenses

5,382

5,000

8 %

SG&A expenses for fiscal 2025 increased 8 percent to $5.4 billion from the prior year, primarily due to the acquisitions of MSO platforms

and ADS, higher costs to support sales growth for existing customers, and higher health and welfare costs, partially offset by the beneficial

impact of enterprise-wide cost savings measures.

MD&A

Results of Operations

Cardinal Health

Fiscal 2025 Form 10-K

Segment Profit

We evaluate segment performance based on segment profit, among other measures. See

Note 14

of the "Notes to Consolidated Financial

Statements" for additional information on segment profit.

Segment Profit and Operating Earnings

(in millions)

2025

2024

Change

Pharmaceutical and Specialty Solutions

2,258

2,015

12 %

Global Medical Products and Distribution

135

47 %

Other

516

423

22 %

Total segment profit

2,909

2,530

15 %

Corporate

(634)

(1,287)

N.M.

Total consolidated operating earnings

2,275

1,243

83 %

Pharmaceutical and Specialty Solutions

Pharma segment profit for fiscal 2025 increased 12 percent to $2.3 billion from the prior year, primarily due to increased contribution from

branded and specialty pharmaceutical products, BioPharma Solutions, and MSO platforms acquisitions, partially offset by the expiration of

the OptumRx contracts.

Global Medical Products and Distribution

GMPD segment profit for fiscal 2025 increased 47 percent to $135 million from the prior year, primarily due to volume growth from existing

customers. This increase also reflects the beneficial impact of cost optimization initiatives, mostly offset by higher manufacturing costs.

Other

Other segment profit for fiscal 2025 increased 22 percent to $516 million from the prior year, primarily due to the performance of at-Home

Solutions, which includes the acquisition of ADS, and OptiFreight

Logistics.

Corporate

The changes in Corporate during fiscal 2025 are due to the factors discussed in the "Other Components of Consolidated Operating

Earnings" section that follows.

MD&A

Results of Operations

Cardinal Health

Fiscal 2025 Form 10-K

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:

(in millions)

2025

2024

Restructuring and employee severance

175

Amortization and other acquisition-related costs

464

284

Acquisition-related cash and share-based compensation costs

126

—

Impairments and (gain)/loss on disposal of assets, net

634

Litigation (recoveries)/charges, net

(185)

Restructuring and Employee Severance

Restructuring and employee severance costs in fiscal 2025 and 2024 were primarily related to certain initiatives to rationalize our

manufacturing operations and the implementation of certain enterprise-wide cost-savings measures. In fiscal 2024, restructuring costs were

higher primarily due to certain projects resulting from the reviews of our strategy, portfolio, capital-allocation framework, and operations.

Amortization and Other Acquisition-Related Costs

Amortization of acquisition-related intangible assets was $303 million and $264 million for fiscal 2025 and 2024, respectively.

Transaction and integration costs associated with acquisitions were $161 million and $20 million for fiscal 2025 and 2024, respectively.

Acquisition-related Cash and Share-based Compensation Costs

Acquisition-related cash and share-based compensation costs were $126 million for fiscal 2025, primarily resulting from the acquisition of

GIA.

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

During fiscal 2024, we recognized $675 million of pre-tax non-cash goodwill impairment charges related to our GMPD segment, as

discussed further in the "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and

Note 5

of the "Notes to

Consolidated Financial Statements."

Litigation (Recoveries)/Charges, Net

During fiscal 2025, we recognized income of $171 million for net recoveries in class action lawsuits in which we were a class member or

plaintiff. We also recognized $13 million in opioid-related insurance recoveries.

During fiscal 2024, we recognized expense of $340 million in connection with opioid-related matters, including agreements to settle claims

brought by classes of third-party payors and acute care hospitals, the case brought by the City of Baltimore, and a settlement with the State

of Alabama. This expense was partially offset by a benefit of $105 million related to certain prepayments and $34 million in opioid-related

insurance recoveries. We also recognized income of $117 million for net recoveries in class action lawsuits in which we were a class

member or plaintiff.

See

Note 8

of the "Notes to Consolidated Financial Statements" for additional information.

MD&A

Results of Operations

Cardinal Health

Fiscal 2025 Form 10-K

Other Components of Earnings Before Income Taxes

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

Earnings Before Income Taxes

(in millions)

2025

2024

Change

Other (income)/expense, net

(41)

(9)

N.M.

Interest expense, net

215

N.M.

Interest Expense, Net

Interest expense, net for fiscal 2025 increased to $215 million from the prior year, primarily due to the new debt financing and decreased

interest income from cash and equivalents. See

Note 7

of the "Notes to Consolidated Financial Statements" for additional information on the

new debt financing.

Provision for Income Taxes

A reconciliation of the provision based on the federal statutory income tax rate to our effective income tax rate from continuing operations is

as follows

(see

Note 9

of the "Notes to Consolidated Financial Statements" for additional information):

2025

2024

Provision at Federal statutory rate

21.0 %

State and local income taxes, net of federal benefit

4.0

3.1

Tax effect of foreign operations

0.2

(1.6)

Nondeductible/nontaxable items

0.7

(0.1)

Withholding Taxes

0.3

1.0

Change in Valuation Allowances

0.1

(1.1)

US Taxes on International Income

(1)

(1.3)

(2.1)

Impact of Resolutions with IRS and other related matters

(0.1)

0.4

Opioid litigation

0.2

1.0

Goodwill Impairment

—

8.7

Specialty Alliance Share-based Compensation

1.4

—

Other

(1.2)

(1.4)

Effective income tax rate

25.3 %

28.9 %

(1) Includes the tax impact of the Foreign-Derived Intangible Income ("FDII") deduction offset by Global Intangible Low-Taxed Income ("GILTI") tax, and other foreign income

that is taxable under the U.S. tax code.

During fiscal 2025 and 2024, the effective tax rate was 25.3 percent and 28.9 percent, respectively. Included in the effective tax rate for

fiscal 2025 were non-deductible share based compensation costs for The Specialty Alliance and non-deductible transaction costs. Included

in the effective tax rate for fiscal 2024 was $58 million of benefit related to goodwill impairment charges related to our GMPD segment.

Ongoing Audits

We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. With few

exceptions, we are subject to audit by taxing authorities for fiscal 2015 through the current fiscal year. Tax laws are complex and subject to

varying interpretations. New challenges related to future audits may adversely affect our effective tax rate or tax payments.

MD&A

Results of Operations

Cardinal Health

Fiscal 2025 Form 10-K

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, depending on

the size and timing of such transactions, we may need to access capital markets for additional financing.

Cash and Equivalents

Our cash and equivalents balance was $3.9 billion at June 30,

2025 compared to $5.1 billion at June 30, 2024.

During fiscal 2025, net cash provided by operating activities was

$2.4 billion, which includes the impact of unwinding the negative

net working capital associated with the OptumRx contracts and the

normal timing of payments to vendors, partially offset by the

benefit of onboarding new customers. Cash provided by operating

activities also includes the impact of payments totaling $798 million

related to the opioid litigation.

During fiscal 2025, we deployed $5.3 billion for acquisitions,

$765 million for share repurchases, $400 million for debt

repayment, $547 million for capital expenditures, and $494 million

for dividends. In addition, we issued new long-term debt and

received net proceeds of $2.9 billion to fund a portion of the

consideration paid for acquisitions and for general purposes.

Another portion of the consideration paid for the acquisitions came

from an $800 million term loan. At June 30, 2025, our cash and

equivalents were held in cash depository accounts with major

banks or invested in high quality, short-term liquid investments.

During fiscal 2024, net cash provided by operating activities was

$3.8 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 (the "NOSA"). During

fiscal 2024, we deployed $750 million for share repurchases, $783

million for debt repayments, $511 million for capital expenditures,

and $499 million for dividends. In addition, we issued additional

long-term debt and received net proceeds of $1.14 billion, of which

$200 million is invested in short-term time deposits with initial

effective maturities of more than three months and classified as

prepaid expenses and other in our consolidated balance sheet as

of June 30, 2024.

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. In fiscal 2025, the unwinding of the negative net working

capital associated with the OptumRx contract negatively impacted

operating cash flow.

In fiscal 2025, we returned $393 million of cash held by foreign

subsidiaries to the United States.

The cash and equivalents balance at June 30, 2025 includes

$436 million of cash and equivalents held by subsidiaries outside

of the United States.

At June 30, 2025, foreign earnings of approximately $1.0 billion

are considered indefinitely reinvested for working capital and other

offshore investment needs. The computation of tax required if

those earnings are repatriated is not practicable. For amounts not

considered indefinitely reinvested, we have recorded an immaterial

amount of income tax expense in our consolidated financial

statements in fiscal 2025.

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 June 30, 2025 include a $3.0 billion

commercial paper program, backed by a $2.0 billion revolving

credit facility that expires in February 2028, and a $1.0 billion 364-

Day revolving credit facility that expires in October 2025. We also

have a $1.0 billion committed receivables sales facility through

September 2025. At June 30, 2025, we had no amounts

outstanding under our commercial paper program, revolving credit

facilities, or our committed receivables sales facility. During fiscal

2025, under our commercial paper program and our committed

receivables program, we had maximum combined total daily

amounts outstanding of $633 million.

On December 5, 2024, we entered into a term loan credit

agreement that, among other things, provides commitments for a

term loan facility in an aggregate amount of up to $1.0 billion. On

April 1, 2025, we closed on our acquisition of ADS and borrowed

$800 million under this term loan facility. The loan provided under

this term loan credit agreement will mature in April 2028 and

allows for prepayment, which may be accelerated pursuant to

certain conditions specified in the credit agreement. Interest rates

on borrowings will be based on prevailing interest rates,

benchmarked based on Term SOFR and subject to our credit

ratings.

In February 2023, we extended our 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

MD&A

Liquidity and Capital Resources

Cardinal Health

Fiscal 2025 Form 10-K

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 June 30, 2025, we were in compliance with

this financial covenant.

Long-Term Debt and Other Short-Term Borrowings

At June 30, 2025, we had total long-term obligations, including the

current portion and other short-term borrowings, of $8.5 billion.

In November 2024, we issued additional debt with the aggregate

principal amount of $2.9 billion to fund a portion of the

consideration payable in connection with the GIA and ADS

acquisitions, and for general purposes. The notes issued are

$500 million aggregate principal amount of 4.7% Notes that mature

on November 15, 2026, $750 million aggregate principal amount of

5.0% Notes that mature on November 15, 2029, $1.0 billion

aggregate principal amount of 5.35% Notes that mature on

November 15, 2034, and $650 million aggregate principal amount

of 5.75% Notes that mature on November 15, 2054. The proceeds

of the notes issued, net of discounts, premiums, and debt issuance

costs, were $2.9 billion. We also obtained a commitment letter on

November 11, 2024 from a financial institution for a $2.9 billion

unsecured bridge term loan facility that could have been used to

complete the acquisition of GIA. We incurred fees related to the

facility, which are included in interest expense, net. The unsecured

bridge term loan facility was never entered into and we terminated

the commitment letter on November 22, 2024.

During fiscal 2025, we repaid the full principal of $400 million of the

3.5% Notes due 2024 at maturity with proceeds from the debt

issuance in fiscal 2024, $200 million of which were invested in

short-term time deposits and classified as prepaid expenses and

other in our consolidated balance sheets at June 30, 2024. All

short-term time deposits related to the debt issuance in fiscal 2024

have matured.

Capital Deployment

Opioid Litigation Settlement Agreement

We have $4.9 billion accrued at June 30, 2025 related to certain

national opioid litigation settlements, as further described within

Note 8

of the "Notes to Consolidated Financial Statements." We

expect the majority of the remaining payment amounts to occur

through 2038. During fiscal 2025, we made payments totaling

$798 million, which included our fourth annual payment under the

agreement to settle the vast majority of the opioid lawsuits filed by

states and local governmental entities and payments related to the

settlement agreements with the City of Baltimore and classes of

third-party payors and acute care hospitals. In July 2025, we made

our fifth annual payment of $366 million under the NOSA. The

amounts of future annual payments under the NOSA may differ

from the payments that we have already made.

Capital Expenditures

Capital expenditures during fiscal 2025 and 2024 were

$547 million and $511 million, respectively.

We expect capital expenditures in fiscal 2026 to be approximately

$600 million and primarily related to manufacturing and distribution

infrastructure projects and technology investments.

Dividends

During fiscal 2025, we paid quarterly dividends totaling $2.02 per

share, an increase of 1 percent from fiscal 2024.

On May 5, 2025, our Board of Directors approved a quarterly

dividend of $0.5107 per share, or $2.04 per share on an

annualized basis, which was paid on July 15, 2025, to

shareholders of record on July 1, 2025.

Share Repurchases

During both fiscal 2025 and 2024, we deployed $750 million for

repurchases of our common shares in the aggregate under

accelerated share repurchase ("ASR") programs. We funded the

ASR programs with available cash. See

Note 12

of the "Notes to

Consolidated Financial Statements" for additional information.

During fiscal 2025, we paid $15 million for excise taxes related to

the completion of prior ASR programs.

As of June 30, 2025, we had $2.7 billion remaining under our

existing share repurchase authorization.

Acquisitions

During fiscal 2025, we deployed $5.3 billion for acquisitions. See

Note 2

of the "Notes to Consolidated Financial Statements" for

additional information on these acquisitions.

MD&A

Liquidity and Capital Resources

Cardinal Health

Fiscal 2025 Form 10-K

Contractual Obligations and Cash Requirements

At June 30, 2025, our contractual obligations and future cash

requirements, including estimated payments due by period, were

as follows:

(in millions)

2026

2027 to

2028

2029 to

2030

There-

after

Total

Long-term debt and short-

term borrowings (1)

$ 501

$ 2,627

$ 1,390

$ 3,796

$ 8,314

Interest on long-term debt

416

678

480

2,458

4,032

Finance lease obligations

(2)

233

Operating lease obligations

(3)

197

320

208

199

924

Purchase obligations and

other payments (4)

602

514

308

1,510

Opioid litigation settlement

agreements (5)

628

523

769

2,909

4,829

Total contractual

obligations and cash

requirements (6)

$ 2,396

$ 4,742

$ 3,199

$ 9,505

$ 19,842

(1)

Represents maturities of our long-term debt obligations and other short-term

borrowings excluding finance lease obligations described below. See

Note 7

of the “Notes to Consolidated Financial Statements” for further information.

(2)

Represents minimum finance lease obligations included within current portion

of long-term obligations and other short-term borrowings and long-term

obligations, less current portion in our consolidated balance sheets and

further described in

Note 6

of the “Notes to Consolidated Financial

Statements.”

(3)

Represents minimum operating lease obligations included within other

accrued liabilities and deferred income taxes and other liabilities in our

consolidated balance sheets and further described in

Note 6

of the “Notes to

Consolidated Financial Statements.”

(4)

A purchase obligation is defined as an agreement to purchase goods or

services that is legally enforceable and specifies all significant terms,

including fixed or minimum quantities to be purchased; fixed, minimum, or

variable price provisions; and approximate timing of the transaction. The

purchase obligation amounts disclosed above represent estimates of the

minimum for which we are obligated and the time period in which cash

outflows will occur. Purchase orders and authorizations to purchase that

involve no firm commitment from either party are excluded from the above

table. In addition, contracts that can be unilaterally canceled with no

termination fee or with proper notice are excluded from our total purchase

obligations except for the amount of the termination fee or the minimum

amount of goods that must be purchased during the requisite notice period.

Purchase obligations and other payments also includes quarterly payments to

CVS Health in connection with Red Oak Sourcing. See

Note 8

of the “Notes

to Consolidated Financial Statements” for additional information.

(5)

Represents future cash obligations under the NOSA as well as future cash

obligations under separate settlement agreements. See

Note 8

of the “Notes

to Consolidated Financial Statements” for additional information.

(6)

Long-term liabilities, such as unrecognized tax benefits, deferred taxes, and

other tax liabilities, have been excluded from the above table due to the

inherent uncertainty of the underlying tax positions or because of the inability

to reasonably estimate the timing of any cash outflows. See

Note 9

of the

"Notes to Consolidated Financial Statements" for further discussion of income

taxes.

Recent Financial Accounting Standards

See

Note 1

of the “Notes to Consolidated Financial Statements” for further information.

MD&A

Other

Cardinal Health

Fiscal 2025 Form 10-K

Critical Accounting Policies and Sensitive Accounting Estimates

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. In this section, we describe the significant policies applied in preparing our consolidated

financial statements that management believes are the most dependent on estimates and assumptions.

Allowance for Doubtful Accounts

The allowance for doubtful accounts includes general and specific

reserves. We determine our allowance for doubtful accounts by

reviewing accounts receivable aging, historical write-off trends,

payment history, pricing discrepancies, industry trends, customer

financial strength, customer credit ratings, or bankruptcies. We

regularly evaluate how changes in economic conditions may affect

credit risks.

A hypothetical 0.1 percent increase or decrease in the reserve as

a percentage of trade receivables at June 30, 2025, would result in

an increase or decrease in operating earnings of $13 million. We

believe the reserve maintained and expenses recorded in fiscal

2025 are appropriate.

At this time, we are not aware of any analytical findings or

customer issues that are likely to lead to a significant future

increase in the allowance for doubtful accounts as a percentage of

revenue. The following table presents information regarding our

allowance for doubtful accounts over the past three fiscal years.

(in millions, except percentages)

2025

2024

2023

Allowance for doubtful accounts at beginning of

period

$ 233

$ 240

$ 207

Charged to costs and expenses

108

165

Reduction to allowance for customer

deductions and write-offs

(109)

(115)

(132)

Allowance for doubtful accounts at end of period

$ 213

$ 233

$ 240

Allowance as a percentage of customer receivables

1.6 %

1.9 %

2.2 %

Allowance as a percentage of revenue

0.10 %

0.12 %

Inventories

LIFO Inventory

A portion of our inventories (52 percent and 50 percent at June 30,

2025 and 2024, respectively) are valued at the lower of cost, using

the last-in, first-out ("LIFO") method, or market. These are primarily

merchandise inventories at the core pharmaceutical distribution

facilities within our Pharma segment (“distribution facilities”). The

LIFO impact on the consolidated statements of earnings depends

on pharmaceutical manufacturer price appreciation or deflation

and our fiscal year-end inventory levels, which can be meaningfully

influenced by customer buying behavior immediately preceding our

fiscal year-end. Historically, prices for branded pharmaceuticals

have generally tended to rise, resulting in an increase in cost of

products sold, whereas prices for generic pharmaceuticals

generally tend to decline, resulting in a decrease in cost of

products sold.

Using LIFO, if there is a decrease in inventory levels that have

experienced pharmaceutical price appreciation, the result

generally will be a decrease in future cost of products sold as our

older inventory is held at a lower cost. Conversely, if there is a

decrease in inventory levels that have experienced a

pharmaceutical price decline, the result generally will be an

increase in future cost of products sold as our older inventory is

held at a higher cost.

We believe that the average cost method of inventory valuation

provides a reasonable approximation of the current cost of

replacing inventory within these distribution facilities. As such, the

LIFO reserve is the difference between (a) inventory at the lower of

LIFO cost or market and (b) inventory at replacement cost

determined using the average cost method of inventory valuation.

At June 30, 2025 and 2024, respectively, inventories valued at

LIFO cost were significantly in excess of the average cost value.

We do not record inventories in excess of replacement cost. As

such, we did not write-up the value of our inventory from average

cost to LIFO cost at June 30, 2025 or 2024.

FIFO Inventory

Our remaining inventory, including inventory in our GMPD

segment and certain inventory in our Pharma segment, that is not

valued at the lower of LIFO cost or market is stated at the lower of

cost, using the first-in, first-out ("FIFO") method, or net realizable

value. We reserve for the lower of cost or net realizable value

using the estimated selling prices and estimated sales demand in

the ordinary course of business, less reasonably predictable costs

of completion, disposal, and transportation. Our estimates for

selling prices and demand are inherently uncertain and if our

assumptions decline in the future, additional inventory reserves

may be required.

MD&A

Critical Accounting Policies and Sensitive Accounting Estimates

Cardinal Health

Fiscal 2025 Form 10-K

Excess and Obsolete Inventory

We reserve for inventory obsolescence using estimates based on

historical experience, historical and projected sales trends,

specific categories of inventory, age and expiration dates of on-

hand inventory, and manufacturer return policies. Inventories

presented in the consolidated balance sheets are net of reserves

for excess and obsolete inventory which were $132 million and

$149 million at June 30, 2025 and 2024, respectively. If actual

conditions are less favorable than our assumptions, additional

inventory reserves may be required.

Goodwill and Other Indefinite-Lived Intangible Assets

Purchased goodwill and intangible assets with indefinite lives are

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. There is an option to

bypass the qualitative assessment for any reporting unit in any

period and proceed directly to performing the quantitative goodwill

impairment test. We have elected to bypass the qualitative

assessment for the annual goodwill impairment test in the current

year. 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).

As of June 30, 2025, our reporting units are: Pharma (excluding

Navista & ION and GIA), Navista & ION, GIA, GMPD, Nuclear and

Precision Health Solutions, OptiFreight

Logistics, at-Home

Solutions, and ADS. We anticipate at-Home Solutions and ADS

will be combined as a single reporting unit as the businesses are

integrated in the future.

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.

Estimating the fair value of reporting units requires the use of

estimates and significant judgments that are based on a number of

factors including actual operating results. The use of alternate

estimates and assumptions, changes in the industry or peer

groups, or changes in weightings assigned to the discounted cash

flow method, guideline public company method, or guideline

transaction method could materially affect the determination of fair

value for each reporting unit and potentially result in goodwill

impairment. If a reporting unit fails to achieve expected earnings or

operating cash flow, or otherwise fails to meet current financial

plans, or if there were changes to any other key assumptions used

in the tests, the reporting unit could incur a goodwill impairment in

a future period.

We performed annual impairment testing in fiscal 2025, 2024, and

2023 for our reporting units, which included Navista & ION in fiscal

2025. Due to the recent timing of the acquisitions, GIA and ADS

were not included in our annual impairment testing in fiscal 2025

as no indicators of impairment were present.

During fiscal 2024 and 2023, we recognized goodwill impairment

charges related to GMPD of $675 million and $1.2 billion,

respectively, which were included in impairments and (gain)/loss

on disposal of assets, net in our consolidated statements of

earnings. GMPD had no goodwill balance remaining as of March

31, 2024.

We concluded that there were no impairments of goodwill for the

remaining reporting units, excluding GMPD, in fiscal 2025, 2024,

and 2023, as the estimated fair value of each reporting unit

exceeded its carrying amount.

Other indefinite-lived intangibles

The impairment test for indefinite-lived intangibles other than

goodwill (primarily trademarks) involves first assessing qualitative

factors to determine if it is more likely than not that the fair value of

the indefinite-lived intangible asset is less than its carrying amount.

If so, then a quantitative test is performed to compare the

estimated fair value of the indefinite-lived intangible asset to the

respective asset's carrying amount. Our qualitative evaluation

requires the use of estimates and significant judgments and

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 the indefinite-lived intangible asset is

less than its carrying amount.

See

Note 1

of "Notes to Consolidated Financial Statements" for

additional information regarding goodwill and other intangible

assets.

MD&A

Critical Accounting Policies and Sensitive Accounting Estimates

Cardinal Health

Fiscal 2025 Form 10-K

Loss Contingencies and Self-Insurance

We regularly review contingencies and self-insurance accruals to

determine whether our accruals and related disclosures are

adequate. Any adjustments for changes in reserves are recorded

in the period in which the change in estimate occurs.

Loss Contingencies

We accrue for contingencies related to disputes, litigation, and

regulatory matters if it is probable that a liability has been incurred

and the amount of the loss can be reasonably estimated. Because

these matters are inherently unpredictable and unfavorable

developments or outcomes can occur, assessing contingencies is

highly subjective and requires judgments about future events.

In connection with the opioid litigation as described further in

Note

of the “Notes to Consolidated Financial Statements," during

fiscal 2024, we reached agreements to settle claims brought by

classes of third-party payors and acute care hospitals, and the City

of Baltimore.

We develop and periodically update reserve estimates for inferior

vena cava ("IVC") claims received to date and expected to be

received in the future and related costs. In April 2023, we executed

a settlement agreement that, if certain conditions are satisfied, will

resolve approximately 4,375 IVC filter product liability claims for

$275 million. These settlements will not resolve all IVC filter

product liability claims and we intend to continue to vigorously

defend ourselves in the remaining lawsuits. To project future IVC

claim costs, we use a methodology based largely on recent

experience, including claim filing rates, blended average payout

influenced by claim severity, historical sales data, implant and

injury to report lag patterns, and estimated defense costs. At June

30, 2025, we have a total of $56 million accrued for losses and

legal defense costs, related to the IVC filter product liability

lawsuits in our consolidated balance sheets, which includes the

$49 million in the qualified settlement fund.

Self-Insurance

We self-insure through a wholly-owned insurance subsidiary for

employee healthcare, certain product liability matters, auto liability,

property and workers' compensation, and maintain insurance for

losses exceeding certain limits.

Self-insurance accruals include an estimate for expected

settlements on pending claims, defense costs, administrative fees,

claims adjustment costs, and an estimate for claims incurred but

not reported. For certain types of exposures, we develop the

estimate of expected ultimate costs to settle each claim based on

specific information related to each claim if available. Other

estimates are based on an assessment of outstanding claims,

historical analysis, and current payment trends. For claims

incurred but not reported, the liabilities are calculated and derived

in accordance with generally accepted actuarial practices or using

an estimated lag period.

The amount of loss may differ materially from these estimates. See

Note 8

of the “Notes to Consolidated Financial Statements” for

additional information regarding loss contingencies and product

liability lawsuits.

Provision for Income Taxes

We account for income taxes using the asset and liability method.

Deferred tax assets and liabilities are measured using enacted tax

rates in the respective jurisdictions in which we operate. Our

income tax expense, deferred income tax assets and liabilities,

and unrecognized tax benefits reflect management’s assessment

of estimated future taxes to be paid on items in the consolidated

financial statements.

The following table presents information about our tax position at

June 30:

(in millions)

2025

2024

Total deferred income tax assets (1)

$ 1,230

$ 1,491

Valuation allowance for deferred income tax assets (2)

(254)

(300)

Net deferred income tax assets

976

1,191

Total deferred income tax liabilities

(3,276)

(3,163)

Net deferred income tax liability

$ (2,300)

$ (1,972)

(1)

Total deferred income tax assets included $386 million and $512 million of

loss and tax credit carryforwards at June 30, 2025 and 2024, respectively.

(2)

The valuation allowance primarily relates to federal, state, and international

loss and credit carryforwards for which the ultimate realization of future

benefits is uncertain.

Expiring or unusable loss and credit carryforwards and the

required valuation allowances are adjusted quarterly when it is

more likely than not that at least a portion of the respective

deferred tax assets will not be realized. After applying the valuation

allowances, we do not anticipate any limitations on our use of any

of the other net deferred income tax assets described previously.

MD&A

Critical Accounting Policies and Sensitive Accounting Estimates

Cardinal Health

Fiscal 2025 Form 10-K

Tax benefits from uncertain tax positions are recognized when it is

more likely than not that the position will be sustained upon

examination of the technical merits of the position, including

resolutions of any related appeals or litigation. The amount

recognized is measured as the largest amount of tax benefit that is

greater than 50 percent likely of being realized upon settlement.

For tax benefits that do not qualify for recognition, we recognize a

liability for unrecognized tax benefits.

We operate in a complex multinational tax environment and are

subject to tax treaty arrangements and transfer pricing guidelines

for intercompany transactions that are subject to interpretation.

Uncertainty in a tax position may arise as tax laws are subject to

interpretation.

Tax Effects of Goodwill Impairment Charges

During fiscal 2024 and 2023, we recognized cumulative pre-tax

goodwill impairment charges of $675 million and $1.2 billion,

respectively, related to the GMPD segment. The net tax benefits

related to these charges were $58 million and $92 million,

respectively.

We file income tax returns in the U.S. federal jurisdiction, various

U.S. state jurisdictions, and various foreign jurisdictions. With few

exceptions, we are subject to audit by taxing authorities for fiscal

years 2015 through the current fiscal year. Tax laws are complex

and subject to varying interpretations. New challenges related to

future audits may adversely affect our effective tax rate or tax

payments.

Our assumptions and estimates around uncertain tax positions

require significant judgment; the actual amount of tax benefit

related to uncertain tax positions may differ from these estimates.

See

Note 9

of the “Notes to Consolidated Financial Statements” for

additional information regarding unrecognized tax benefits.

We believe that our estimates for the valuation allowances against

deferred tax assets and unrecognized tax benefits are appropriate

based on current facts and circumstances. The amount we

ultimately pay when matters are resolved may differ from the

amounts accrued. Changes in our current estimates due to

unanticipated market conditions, tax law changes, or other factors

could have a material effect on our ability to utilize deferred tax

assets. For a further discussion on Provision for Income Taxes,

see

Note 9

of the “Notes to the Consolidated Financial

Statements.”

New Tax Legislation

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was

signed into law, which includes a broad range of tax reform

provisions. The OBBBA includes changes to existing tax law,

including extending or making permanent certain business and

international tax measures initially established under the 2017 Tax

Cuts and Jobs Act ("Tax Act"). We are in the process of evaluating

the impact of the OBBBA on our consolidated financial statements

and will reflect any impact in the period of enactment.

MD&A

Critical Accounting Policies and Sensitive Accounting Estimates

Cardinal Health

Fiscal 2025 Form 10-K

Explanation and Reconciliation of Non-GAAP Financial

Measures

This report, including the "Fiscal 2025 Overview" section within MD&A, 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. These include costs incurred to negotiate and finalize the Cooperation Agreement and costs

incurred by the Business Review Committee of the Board of Directors, formed under this Cooperation Agreement, tasked with

undertaking a comprehensive review of our strategy, portfolio, capital allocation framework, and operations. 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. The Cooperation Agreement expired in the second

quarter of fiscal 2025.

•

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 and amortization as a

result of basis differences in equity method investments 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.

Explanation and Reconciliation of Non-GAAP Financial Measures

Cardinal Health

Fiscal 2025 Form 10-K

•

Acquisition-related cash and share-based compensation costs are incurred in connection with contingent cash payments or the

issuance of share-based payment awards, which include service requirements, as a part of certain physician practice

acquisitions. These costs include fair value adjustments for liability-classified awards. These costs are excluded because they

are unrelated to the underlying operating results of our business and to facilitate comparison of our current financial results to our

historical financial results and to our peer group companies’ financial results. In addition, the magnitude of these expenses is

significantly impacted by the timing and size of the acquisitions of physician practices.

•

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) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of

assets, net, and (8) 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) acquisition-related cash and share-based compensation costs, (7) impairments and

(gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt.

Non-GAAP net earnings attributable to non-controlling interests:

net earnings attributable to non-controlling interests 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) acquisition-related cash and share-based

compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early

extinguishment of debt, each net of tax.

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) acquisition-related cash and share-based compensation

costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) 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) acquisition-related cash and share-based compensation costs, (7) impairments and

(gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt divided by

(earnings before income taxes adjusted for the 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.

Explanation and Reconciliation of Non-GAAP Financial Measures

Cardinal Health

Fiscal 2025 Form 10-K

GAAP to Non-GAAP Reconciliations

(in millions, except per common share amounts)

Operating

Earnings

Operating

Earnings

Growth

Rate

Earnings

Before

Income

Taxes

Provision

for

Income

Taxes

Net

Earnings

Attributable

to Non-

controlling

Interests

Net

Earnings

Net

Earnings

Growth

Rate

Effective

Tax Rate

Diluted

EPS

Diluted

EPS

Growth

Rate

Fiscal Year 2025

GAAP

2,275

83 %

$ 2,101 $

532 $

(8) $

1,561

83 %

25.3 %

$ 6.45

87 %

Restructuring and employee severance

0.28

Amortization and other acquisition-related costs

464

104

360

1.49

Acquisition-related cash and share-based

compensation costs

126

125

0.51

Impairments and (gain)/loss on disposal of assets,

net

0.05

Litigation (recoveries)/charges, net

(185)

(54)

(131)

(0.54)

Non-GAAP

2,786

15 %

$ 2,612 $

609 $

(8) $

1,995

7 %

23.3 %

$ 8.24

9 %

Fiscal Year 2024

GAAP

1,243

65 %

$ 1,201 $

348 $

(1) $

852

N.M.

28.9 %

$ 3.45

N.M.

Shareholder cooperation agreement costs

—

Restructuring and employee severance

175

134

0.54

Amortization and other acquisition-related costs

284

210

0.85

Impairments and (gain)/loss on disposal of assets,

net

634

587

2.38

Litigation (recoveries)/charges, net

0.30

Non-GAAP

2,414

16 %

$ 2,372 $

515 $

(1) $

1,856

21 %

21.7 %

$ 7.53

29 %

Fiscal Year 2023

GAAP

752

N.M.

663 $

332 $

(1) $

330

N.M.

50.0 %

$ 1.26

N.M.

State opioid assessment related to prior fiscal years

(6)

(2)

(4)

(0.02)

Shareholder cooperation agreement costs

0.02

Restructuring and employee severance

0.28

Amortization and other acquisition-related costs

285

211

0.80

Impairments and (gain)/loss on disposal of assets,

net

1,246

108

1,138

4.35

Litigation (recoveries)/charges, net

(304)

(83)

(221)

(0.84)

Non-GAAP

2,076

5 %

$ 1,987 $

452 $

(1) $

1,534

22.8 %

$ 5.85

15 %

Attributable to Cardinal Health, Inc.

For fiscal 2024 and 2023, impairments and (gain)/loss on disposals of assets, net included pre-tax goodwill impairment charges of $675 million and $1.2 billion related

to the GMPD segment, respectively. For fiscal 2024 and 2023, the net tax benefit related to these charges was $58 million and $92 million, respectively, and were

included in the annual effective tax rate.

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.

Explanation and Reconciliation of Non-GAAP Financial Measures

Cardinal Health

Fiscal 2025 Form 10-K

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to cash flow and earnings fluctuations as a result of certain market risks. These market risks primarily relate to foreign

exchange, interest rate, and commodity price-related changes. We maintain a hedging program to manage volatility related to some of

these market exposures which employs operational, economic, and derivative financial instruments in order to mitigate risk. See

Note 1

and

Note 11

of the “Notes to Consolidated Financial Statements” for further discussion regarding our use of derivative instruments.

Foreign Exchange Rate Sensitivity

By the nature of our global operations, we are exposed to cash

flow and earnings fluctuations resulting from foreign exchange rate

variation. These exposures are transactional and translational in

nature. The following foreign currencies represent the principal

drivers of our foreign exchange exposure: Canadian dollar, euro,

Thai baht, Mexican peso, Chinese renminbi, Australian dollar,

British pound, Japanese yen, Philippine peso, Brazilian real, South

Korean won, Costa Rican colon, Singapore dollar, Dominican

peso, and Indian rupee.

We apply a Value-At-Risk ("VAR") methodology to our

transactional and translational exposures. The VAR model is a risk

estimation tool and is not intended to represent actual losses in fair

value that could be incurred.

Transactional Exposure

Transactional exposure arises from the purchase and sale of

goods and services in currencies other than our functional

currency or the functional currency of our subsidiaries. At the end

of each fiscal year, we perform sensitivity analyses on our

forecasted transactional exposure for the upcoming fiscal year.

These analyses include the estimated impact of our hedging

program, which is designed to mitigate transactional exposure.

Applying a VAR methodology to our transactional exposure and

including the impact of our hedging program, the potential

maximum loss in earnings for the upcoming fiscal year is

estimated to be $13 million, which is based on a one-year horizon

and a 95 percent confidence level.

Translational Exposure

We have exposure related to the translation of financial statements

of our foreign operations into U.S. dollars, our functional currency.

Applying a VAR methodology to our translational exposure, the

potential maximum loss in earnings for the upcoming fiscal year is

estimated to be $3 million, which is based on a one-year horizon

and a 95 percent confidence level.

Interest Rate Sensitivity

We are exposed to changes in interest rates primarily as a result of

our borrowing and investing activities to maintain liquidity and fund

operations. The nature and amount of our long-term and short-

term debt can be expected to fluctuate as a result of business

requirements, market conditions, and other factors. Our policy is to

manage exposures to interest rates using a mix of fixed and

floating rate debt as deemed appropriate by management. We

utilize interest rate swap instruments to mitigate our exposure to

interest rate movements.

As part of our risk management program related to our debt, we

perform an annual sensitivity analysis on our forecasted exposure

to interest rates for the upcoming fiscal year. At June 30, 2025, a

hypothetical increase or decrease of 50 basis points in interest

rates would result in an increase or decrease in interest expense

of $12 million, respectively.

We are also exposed to market risk from changes in interest rates

related to our cash and cash equivalents, which includes

marketable securities that are carried at fair value in the

consolidated balance sheets. The fair value of our cash and cash

equivalents is subject to change primarily as a result of changes in

market interest rates and investment risk related to the issuers'

credit worthiness. At June 30, 2025, a hypothetical increase or

decrease of 50 basis points in interest rates would result in an

increase or decrease in interest income of $14 million,

respectively.

Disclosures about Market Risk

Cardinal Health

Fiscal 2025 Form 10-K

Commodity Price Sensitivity

We are directly exposed to market price changes for certain

commodities, including oil-based resins, nitrile, cotton, diesel fuel,

and latex. We typically purchase raw materials at either market

prices or prices tied to a commodity index and some finished

goods at prices based in part on a commodity price index. During

fiscal 2025, the prices of certain commodities continued to

experience fluctuation due to inflationary impacts.

As part of our risk management program, we perform sensitivity

analysis on our forecasted direct commodity exposure for the

upcoming fiscal year. Our forecasted direct commodity exposure at

June 30, 2025 decreased approximately $86 million from June 30,

2024. There were no outstanding commodity contracts in our

hedging program at June 30, 2025.

Our forecasted direct commodity exposures for the upcoming fiscal

year is $491 million. The potential gain/loss for fiscal year 2026,

given a hypothetical 10 percent fluctuation in commodity prices,

assuming pricing collectively shifts in the same direction and there

is no change in customer pricing is $49 million at June 30, 2025.

Disclosures about Market Risk

Cardinal Health

Fiscal 2025 Form 10-K

Business

General

Cardinal Health, Inc. 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 medical

products and pharmaceuticals and cost-effective solutions that enhance the healthcare system and supply chain efficiency.

Pharmaceutical and Specialty Solutions Segment

In the United States, our Pharmaceutical and Specialty Solutions

segment:

▪through its Pharmaceutical Distribution businesses:

•

distributes branded and generic pharmaceutical and

over-the-counter healthcare and consumer products to

retailers (including chain and independent drug stores

and pharmacy departments of supermarkets and mass

merchandisers),

hospitals,

and

other

healthcare

providers;

▪maintains prime vendor relationships that streamline the

purchasing process, resulting in greater efficiency and

lower costs for our retail, hospital, and other healthcare

provider customers;

▪provides services to pharmaceutical manufacturers,

including distribution, inventory management, data

reporting, new product launch support, and chargeback

administration;

▪distributes specialty pharmaceutical products to hospitals

and other healthcare providers and provides consulting,

patient support, and other services for specialty

pharmaceutical

products

pharmaceutical

manufacturers and healthcare providers;

▪provides pharmacy management services to hospitals

and operates a limited number of pharmacies, including

in community health centers; and

▪repackages generic pharmaceuticals and over-the-

counter healthcare products.

▪through its Specialty businesses:

▪distributes

specialty

pharmaceutical

products

hospitals, specialty pharmacies, and other healthcare

providers and provides consulting, patient support, and

other services for specialty pharmaceutical products to

pharmaceutical manufacturers and healthcare providers;

▪provides services to pharmaceutical manufacturers,

including distribution, inventory management, data

reporting, new product launch support, and chargeback

administration;

▪provides support and management services to physician

practices through our MSO platforms; and

▪through Biopharma Solutions, we provide data analytics

and insight services to biopharmaceutical manufacturers

and healthcare providers.

See

Note 14

of the “Notes to Consolidated Financial Statements”

for Pharma segment revenue, profit, and assets for fiscal 2025,

2024, and 2023.

Pharmaceutical and Specialty Pharmaceutical

Distribution and Services

Our Pharmaceutical Distribution businesses' gross margin includes

margin from our generic pharmaceutical program, from distribution

services agreements with branded pharmaceutical manufacturers,

including manufacturers of Specialty pharmaceutical products, and

from over-the-counter healthcare and consumer products. It also

includes manufacturer cash discounts.

Margin from our generic pharmaceutical program includes price

discounts, rebates, and service fees from manufacturers and may,

in limited instances, include price appreciation. Our earnings on

generic pharmaceuticals are generally highest during the period

immediately following the initial launch of a product, because

generic pharmaceutical selling prices are generally highest during

that period and tend to decline over time.

Margin from distribution services agreements with branded

pharmaceutical manufacturers is derived from compensation we

receive for providing a range of distribution and related services to

manufacturers. Our compensation typically is a percentage of the

wholesale acquisition cost that is set by manufacturers. In addition,

under a limited number of agreements, branded pharmaceutical

price appreciation, which is determined by the manufacturers, also

serves as part of our compensation.

Specialty

pharmaceutical

products

include

oncology,

rheumatology, urology, nephrology, and other pharmaceutical

products. Through our Specialty businesses', we also distribute

human-derived plasma products to hospitals, dialysis clinics,

physician offices, and other healthcare providers. Our use of the

term “specialty pharmaceutical products” may not be comparable

to the terminology used by other industry participants. We also

provide consulting, patient support, logistics, group purchasing,

and other services to pharmaceutical manufacturers, healthcare

providers, and physician practices.

Business

Cardinal Health

Fiscal 2025 Form 10-K

Sourcing Venture with CVS Health Corporation

Red Oak Sourcing, LLC ("Red Oak Sourcing"), a U.S.-based

generic pharmaceutical sourcing venture with CVS Health,

negotiates generic pharmaceutical supply contracts on behalf of

both companies. The term of Red Oak Sourcing extends through

June 2029.

Global Medical Products and Distribution Segment

Our GMPD segment manufactures and sources Cardinal Health

branded general and specialty medical, surgical, and laboratory

products and devices. These products include exam and surgical

gloves; needle, syringe, and sharps disposal; compression;

incontinence; nutritional delivery; wound care; single-use surgical

drapes, gowns, and apparel; fluid suction and collection systems;

urology; operating room supply; and electrode product lines. Our

Cardinal Health brand products are sold directly or through third-

party distributors in the United States, Canada, Europe, Asia, and

other markets. These Cardinal Health brand products are generally

higher-margin products. The GMPD segment also distributes a

broad range of medical, surgical, and laboratory products known

as national brand products. In addition, this segment 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

assembles and sells sterile and non-sterile procedure kits.

The GMPD segment, through its Wavemark division, also provides

an automated technology platform for inventory management.

Other Operating Segments

Our Nuclear and Precision Health Solutions operating segment

operates nuclear pharmacies and manufacturing facilities, which

manufacture, prepare, and deliver radiopharmaceuticals for use in

nuclear imaging, theranostics, and other procedures in hospitals

and physician offices. This segment also contract manufactures a

radiopharmaceutical treatment (Xofigo

) and holds the North

American rights to manufacture and distribute Lymphoseek

, a

radiopharmaceutical diagnostic imaging agent.

Our at-Home Solutions operating segment has two main

businesses: Edgepark, including ADS, directly providing medical

supplies to patients with chronic conditions in the home; and at-

Home, a business-to-business distribution service that delivers

medical supplies and over-the-counter products to home medical

equipment providers, home health and hospice agencies, and e-

commerce providers.

Our OptiFreight

Logistics operating segment supports the

shipping and logistics needs of healthcare providers by optimizing

direct shipments through integrated technology solutions. This

segment serves hospitals, pharmacies, labs, and surgery centers.

Business

Cardinal Health

Fiscal 2025 Form 10-K

Acquisitions and Divestitures

Acquisitions

We have recently made a number of acquisitions in key strategic

areas, including our specialty offerings and managed service

organizations. We expect to continue to explore acquisitions and

strategic investments in the future.

In April 2025, we completed the acquisition of ADS, a diabetes

medical supplies provider to patients in the home, for a purchase

price of approximately $1.1 billion in cash, subject to certain

adjustments.

In January 2025, we completed the acquisition of an approximately

73 percent ownership interest in GIA, a gastroenterology

management services organization, for a purchase price of

approximately $2.8 billion in cash, subject to certain adjustments.

Additionally, in May 2025, we, through GIA, completed the

acquisition of Urology America, a urology management services

organization, for a purchase price of $360 million in cash and GIA

equity, subject to certain adjustments.

In December 2024, we completed the acquisition of ION, a

physician-led independent community oncology network, for a

purchase price of $1.1 billion in cash, subject to certain

adjustments.

In March 2024, we completed the acquisition of Specialty

Networks, a technology-enabled multi-specialty group purchasing

and practice enhancement organization, for $1.2 billion in cash.

We have also completed several smaller acquisitions during this

timeframe.

Date

Company

Location

Lines

of Business

Acquisition

Price

(in billions)

05/30/25

Urology

America MSO,

LLC

TX, CO, LA,

Urology

management

services

organization

(MSO)

$0.4

04/01/25

Advanced

Diabetes Supply

Group ("ADS")

Carlsbad, CA

Diabetic medical

supplies providers

$1.1

01/30/25

GI Alliance

("GIA")

Gastroenterology

management

services

organization

(MSO)

$2.8

12/02/24

Integrated

Oncology

Network ("ION")

Nashville, TN

Medical oncology,

radiation oncology,

urology diagnostic

testing, and other

ancillary services

(MSO)

$1.1

03/18/24

Specialty

Networks

Cleveland, OH

UroGPO,

Gastrologix,

GastroGPO, and

United

Rheumatology.

$1.2

Divestitures

We also complete divestitures from time to time, and we may

explore additional divestitures in the future.

In June 2023, we signed a definitive agreement to contribute our

Outcomes™ business to Transaction Data Systems ("TDS"), a

portfolio company of BlackRock Long Term Private Capital and

GTCR, in exchange for a minority stake in the combined entity.

The transaction closed in July 2023.

Business

Cardinal Health

Fiscal 2025 Form 10-K

Customers

Our largest customer, CVS Health, accounted for 30 percent of our

fiscal 2025 revenue. In the aggregate, our five largest customers,

including CVS Health, accounted for 43 percent of our fiscal 2025

revenue.

We have agreements with group purchasing organizations

(“GPOs”) that act as agents to negotiate vendor contracts on

behalf of their members. Our two largest GPO relationships in

terms of revenue are with Vizient, Inc. and Premier, Inc. Sales to

members of these two GPOs, under numerous contracts across

our businesses, collectively accounted for 27 percent of our

revenue in fiscal 2025.

The loss of any significant customer or GPO agreement could

adversely affect our business. For more information, please see

Item 1A "Risk Factors" for the risk factor entitled "Our sales and

credit concentration is significant."

Suppliers

We rely on many different suppliers. During fiscal 2025, revenue resulting from sales of products obtained from our five largest suppliers

accounted for an aggregate of 37 percent of our revenue and our largest supplier’s products accounted for approximately 9 percent of

revenue.

Competition

We operate in a highly competitive environment in the distribution

of pharmaceuticals and consumer healthcare products. We also

operate in a highly competitive environment in the manufacturing

and distribution of medical devices and surgical products. We

compete on many levels, including price, service offerings, support

services, customer service, breadth of product lines, and product

quality and efficacy.

In the Pharma segment, we compete with wholesale distributors

with national reach, including McKesson Corporation and Cencora,

Inc., regional wholesale distributors, self-warehousing chains,

specialty distributors, third-party logistics companies, and

companies that provide specialty pharmaceutical services and

managed services to specialty physicians, among others. In

addition, the Pharma segment has experienced competition from a

number of organizations offering generic pharmaceuticals,

including telemarketers. We also compete with manufacturers that

distribute their products directly to customers.

In the GMPD segment, we compete with many diversified

healthcare companies and national medical product distributors,

such as Medline Industries, Inc. and Owens & Minor, Inc., as well

as regional medical product distributors and companies that are

focused on specific product categories.

Our other operating segments compete with companies that

operate nuclear radiopharmacies and manufacturing facilities,

distribute medical products to patients' homes, and third-party

logistics companies.

Additionally, we compete with other service providers, customers,

and potential customers of our businesses, which may from time to

time develop, for their own internal needs, supply management

capabilities that may otherwise be provided by us. Across all

areas, key competitive factors include price, quality of service, and

breadth of product lines.

Human Capital Management

Employees

Through our employees, we improve the lives of people every day

by solving complex healthcare problems. As of June 30, 2025, we

had approximately 57,700 employees globally, of which

approximately:

•

18,500 are based outside the United States;

•

92% are full time employees;

•

35,000 worked in our distribution centers, manufacturing

facilities, pharmacies, or were non-provider employees

of our MSO platforms;

•

21,000 worked in other functions, including finance,

information technology, human resources, and sales;

•

1,900 are healthcare providers, including physicians,

nurse anesthetists, and Advance Level Providers; and

•

6% are covered by collective bargaining agreements or

similar representation. The majority of these employees

are based outside the United States.

Additionally, we have engaged global professional services firms

to perform certain business processes on our behalf, including

within finance, information technology, and human resources.

Board Oversight

Our Board of Directors assesses and monitors our corporate

culture and how it promotes our business strategies. To inform the

Board about human capital and cultural health, we have developed

and annually share with the Board a culture scorecard.

Business

Cardinal Health

Fiscal 2025 Form 10-K

Additionally, the Human Resources and Compensation Committee

of the Board of Directors (the “HRCC”) is tasked with,

among other

things, overseeing and advising the Board about our human capital

management strategies and policies, including with respect to

attracting, developing, retaining, and motivating management and

other employees; employee relations and engagement; and

workplace safety and culture. The HRCC is also responsible for

overseeing the management succession planning process for

senior executives.

Culture & Talent Focus

Culture

Cardinal Health’s culture is rooted in our values and behaviors and

aligned to the company’s strategic framework. Providing a positive

work environment supports our ability to attract, retain, and

develop our employees and helps to promote our business

performance. We reinforce, monitor, and assess our culture

through a variety of programs and processes which include

performance management, talent and succession planning, as well

as employee engagement surveys and other listening strategies.

Talent Management and Learning

Cardinal Health’s talent management strategy has a multi-pronged

approach to build capabilities, skills, and competencies of leaders

and employees throughout the enterprise, ensuring employees

capabilities connect to business needs and outcomes. This

approach includes broad based employee skill development and

learning and manager development.

We monitor our turnover data on a monthly and rolling 12-month

basis and benchmark against Bureau of Labor Statistics and

competitor data. Although turnover levels vary by site and region,

we primarily look at the connection between key operational

metrics and employee turnover.

Compensation and Benefits

Our employees are essential to our success and we strive to offer

comprehensive and competitive wages and benefits. The benefits

we offer include annual bonuses and stock awards for eligible

employees, 401(k) plans, health care and insurance benefits, paid

time off, flexible work schedules, family leave, dependent care

resources, employee assistance programs, and many others.

Employee Feedback

Cardinal Health solicits feedback from employees through various

mechanisms, including our full employee engagement survey,

which provides insight into the employee experience. The results

of this survey are reviewed with the Board of Directors and at all

levels throughout the organization.

Worker Health & Safety

The health, safety, and security of our employees and contractors

is a priority for us. We employ systems designed to continually

monitor our facilities and work environment to promote worker

safety and identify and prevent or mitigate any potential risks. This

includes procedures and equipment for security. We routinely

assess facilities to closely monitor adherence to established

security and safety standards. Our workers receive specialized

training related to their role, work setting, and equipment used in

their work environment. As our processes evolve, we update

relevant safety training modules, which may include new training

programs.

More Information

For more information on our approach to human capital

management, please refer to our annual Environmental, Social &

Governance Report, which is available on our website.

Intellectual Property

We rely on a combination of trade secret, patent, copyright and

trademark laws, nondisclosure, and other contractual provisions

and technical measures to protect our products, services, and

intangible assets. We hold patents, and continue to pursue patent

protection throughout the world, relating to the manufacture,

operation, and use of various medical and surgical products, to

certain distribution and logistics systems, to the production and

distribution of our nuclear pharmacy products, and to other service

offerings. We also operate under licenses for certain proprietary

technologies, and in certain instances we license our technologies

to third parties.

We believe that we have taken necessary steps to protect our

proprietary rights, but no assurance can be given that we will be

able to successfully enforce or protect our rights in the event that

they are infringed upon by a third party. While these proprietary

rights are important to our operations, we do not consider any

particular patent, trademark, license, franchise, or concession to

be material to our overall business.

Business

Cardinal Health

Fiscal 2025 Form 10-K

Regulatory Matters

Our business is highly regulated in the United States, at both the

federal and state level, and in foreign countries. Depending upon

the specific business, we may be subject to regulation by

government entities including:

•

the U.S. Drug Enforcement Administration (the “DEA”);

•

certain agencies within the U.S. Department of Health and

Human Services, including the U.S. Food and Drug

Administration (the “FDA”), the Centers for Medicare and

Medicaid Services, the Office of Inspector General, and the

Office for Civil Rights;

•

state and local health departments, insurance departments,

Medicaid departments, or other comparable state agencies;

•

state and local boards of pharmacy and other controlled

substance authorities;

•

the U.S. Nuclear Regulatory Commission (the “NRC”);

•

the U.S. Environmental Protection Agency and state

environmental authorities;

•

the U.S. Federal Trade Commission (the "FTC");

•

U.S. Customs and Border Protection; and

•

agencies comparable to those listed above in markets outside

the United States.

These regulatory agencies have a variety of civil, administrative,

and criminal sanctions at their disposal for failure to comply with

applicable legal or regulatory requirements. They can suspend our

ability to manufacture and distribute products, restrict our ability to

import products, require us to initiate product recalls, seize

products, or impose criminal, civil, and administrative sanctions.

Distribution

State Boards of Pharmacy, FDA, DEA, and various other state

authorities regulate the marketing, purchase, storage, and

distribution of pharmaceutical and medical products under various

federal and state statutes including the federal Prescription Drug

Marketing Act of 1987, Drug Quality and Security Act of 2013 (the

“DQSA”) and Controlled Substances Act (the "CSA"). The CSA

governs the sale, packaging, storage, and distribution of controlled

substances. Wholesale distributors of controlled substances must

hold valid DEA registrations and state-level licenses, meet various

security and operating standards including effective anti-diversion

programs and comply with the CSA. They must also comply with

state requirements relating to controlled substances that differ from

state to state.

The NOSA, as described in

Note 8

of the "Notes to Consolidated

Financial Statements" includes injunctive relief terms related to

settling distributors' controlled substance anti-diversion programs,

including with respect to: (1) governance; (2) independence and

training of the personnel operating our controlled substances

monitoring program; (3) due diligence for new and existing

customers; (4) ordering limits for certain products; and (5)

suspicious order monitoring. A monitor will oversee compliance

with these provisions for five years from entry into the NOSA, until

2027. In addition, the settling distributors have engaged a third-

party vendor to act as a clearinghouse for data aggregation and

reporting and will fund the clearinghouse, until 2032. See

Note 8

the "Notes to Consolidated Financial Statements" for more

information about the NOSA and other opioid-related matters.

Manufacturing, Sourcing, and Marketing

We sell our manufactured products in the United States, Canada,

Europe, Asia, Latin America, and other markets. The FDA and

other governmental agencies in the United States, as well as

foreign governmental agencies, administer requirements that cover

the design, testing, safety, effectiveness, manufacturing (including

good manufacturing practices), quality systems, labeling,

promotion and advertising (including restrictions on promoting or

advertising a product other than for the product's cleared or

approved uses), distribution, importation, and post-market

surveillance for most of our manufactured products. We are also

subject to these requirements when we source certain GMPD

segment products from third-party manufacturers.

We need specific approval or clearance from, and registrations

with, regulatory authorities before we can market and sell some

products in the United States and certain other countries, including

countries in the European Union ("EU").

In the United States, authorization to commercially market a

medical device is generally received in one of two ways. The first,

known as pre-market notification or the 510(k) process, requires us

to demonstrate that a medical device is substantially equivalent to

a legally marketed medical device. The second more rigorous

process, known as pre-market approval (“PMA”), requires us to

independently demonstrate that a medical device is safe and

effective. Many of our Medical segment branded products are

cleared through the 510(k) process and certain products must be

approved through the PMA process.

In the EU, we are required to obtain CE Mark Certification in order

to market medical devices. In 2017, EU regulatory bodies finalized

a new Medical Device Regulation ("MDR") became effective in

May 2021. Under the MDR, medical devices marketed in the EU

require significant pre-market and post-market requirements.

It can be costly and time-consuming to obtain regulatory

approvals, clearances, and registrations of medical devices, and

they might not be granted on a timely basis, if at all. For additional

information, please see our Risk Factor entitled

"Our business is

subject to rigorous regulatory and licensing requirements."

Privacy and Data Protection

We are subject to various and evolving privacy laws and

regulations in many jurisdictions. Because we collect, handle, and

maintain patient-identifiable health information, we are subject to

laws that require specified privacy and security measures and that

regulate the use and disclosure of such information, including the

U.S. Health Insurance Portability and Accountability Act of 1996

("HIPAA"), as augmented by the Health Information Technology for

Business

Cardinal Health

Fiscal 2025 Form 10-K

Economic and Clinical Health Act as well as state laws, in the

United States.

We also collect, handle, and maintain other personal and financial

information. Within the U.S., these activities are regulated by

certain federal and state laws. Certain states have recently

enacted privacy laws that grant specified rights to consumers over

the use of their personal information, including increased

transparency. Other states are considering adopting similar or

different comprehensive privacy laws and comprehensive privacy

legislation has been proposed at the U.S. federal level.

Internationally, we are also subject to privacy and data protection

laws that require significant compliance efforts, including the EU's

General Data Protection Regulation (GDPR), Canada's Personal

Information Protection and Electronic Documents Act, Japan's Act

on the Protection of Personal Information, and China's Personal

Information Protection Law, among many others.

Nuclear Pharmacies and Related Businesses

Our nuclear pharmacies and radiopharmaceutical manufacturing

facilities (including for Xofigo

) require licenses or permits and

must abide by regulations issued by the NRC, applicable state

boards of pharmacy and the radiologic health agency or

department of health of each state in which we operate, including

pharmacy sterile compounding standards and practices. In

addition, our radiopharmaceutical manufacturing facilities also

must comply with FDA regulations, including good manufacturing

practices.

Product Tracing and Supply Chain Integrity

Title II of the DQSA, known as the Drug Supply Chain Security Act

("DSCSA") or "Track and Trace" established a national system for

tracing prescription drug products through the pharmaceutical

distribution supply chain to detect, prevent, and rapidly respond to

the introduction of drugs that may be counterfeit, diverted, stolen,

adulterated, subject of a fraudulent transaction, or otherwise unfit

for distribution. The DSCSA requires standardized, unit-level

traceability of pharmaceutical products and requires all trading

partners to cooperate in a secure, electronic, interoperable

prescription drug traceability system. In October, 2024, the FDA

extended the compliance deadlines for the DSCSA sterilization

traceability requirements to May 27, 2025, for manufacturers,

August 27, 2025, for distributors, and November 27, 2025, for

dispensers. In addition, the FDA has also has issued regulations

requiring most medical device labeling to include a unique device

identifier that can be used to identify and track medical devices

throughout their lifecycles, improving traceability and facilitating

improved post-market surveillance through the Medical Device

Reporting Program.

Government Healthcare Programs

We are subject to U.S. federal healthcare fraud and abuse laws.

These laws generally prohibit persons from soliciting, offering,

receiving, or paying any compensation in order to induce someone

to order, recommend, or purchase products or services that are in

any way paid for by Medicare, Medicaid, or other federally-funded

healthcare programs. They also prohibit submitting any fraudulent

claim for payment by the federal government. There are similar

state healthcare fraud and abuse laws that apply to Medicaid and

other state-funded healthcare programs. Violations of these laws

may result in criminal or civil penalties, as well as breach of

contract claims and qui tam actions (false claims cases initiated by

private parties purporting to act on behalf of federal or state

governments).

Some of our businesses and entities that are managed by our

MSO businesses are Medicare-certified suppliers or participate in

other federal and state healthcare programs, such as state

Medicaid programs and the federal 340B drug pricing program.

These businesses are subject to accreditation and quality

standards and other rules and regulations, including applicable

reporting, billing, payment, and record-keeping requirements.

Other

businesses

within

each

segment

manufacture

pharmaceutical or medical products or repackage pharmaceuticals

that are purchased or reimbursed through, or are otherwise

governed by, federal or state healthcare programs. Failure to

comply with applicable eligibility requirements, standards, and

regulations could result in civil or criminal sanctions, including the

loss of our ability to participate in Medicare, Medicaid, and other

federal and state healthcare programs. In fiscal year 2022, our

Specialty Pharmaceutical Distribution business entered into a

Corporate Integrity Agreement with the Office of Inspector General

of the Department of Health and Human Services in connection

with an investigation into discounts and rebates offered or provided

to certain Specialty customers.

Our U.S. federal and state government contracts are subject to

specific procurement requirements. Failure to comply with

applicable rules or regulations or with contractual or other

requirements may result in monetary damages and criminal or civil

penalties as well as termination of our government contracts or our

suspension or debarment from government contract work.

Environmental, Health, and Safety Laws

In the United States and other countries, we are subject to various

federal, state, and local environmental laws, including laws

regulating the production or use of hazardous substances, as well

as laws relating to safe working conditions and laboratory

practices. Additionally, industry participants, including us, rely on

ethylene oxide ("EtO") and other compounds to sterilize certain

medical products that we manufacture or distribute. Regulatory

actions have been taken by certain environmental regulatory

authorities to reduce EtO emissions during the sterilization and

distribution process, including actions intended to regulate facilities

that sterilize medical products.

Antitrust Laws

The U.S. federal government, most U.S. states and many foreign

countries have laws that prohibit certain types of conduct deemed

to be anti-competitive. Violations of these laws can result in

various sanctions, including criminal and civil penalties. Private

plaintiffs also could bring civil lawsuits against us in the United

States for alleged antitrust law violations, including claims for

treble damages.

Business

Cardinal Health

Fiscal 2025 Form 10-K

Laws Relating to Foreign Trade and Operations

U.S. and foreign laws require us to abide by standards relating to

the import and export of finished goods, raw materials and

supplies, and the handling of information. We also must comply

with various export control and trade embargo laws, which may

require licenses or other authorizations for transactions within

some countries or with some counterparties.

Similarly, we are subject to U.S. and foreign laws concerning the

conduct of our foreign operations, including the U.S. Foreign

Corrupt Practices Act, the U.K. Bribery Act, and other foreign anti-

bribery laws. Among other things, these laws generally prohibit

companies and their intermediaries from offering, promising, or

making payments to officials of foreign governments for the

purpose of obtaining or retaining business.

Other Information

Certain Commercial Practices

Although our agreements with manufacturers sometimes require

us to maintain inventory levels within specified ranges, our

distribution businesses are generally not required by our

customers to maintain particular inventory levels other than as

needed to meet service level requirements. Certain customer

contracts require us to maintain sufficient inventory to meet

emergency demands, but we do not believe those requirements

materially affect inventory levels.

Our customer return policies generally require that the product be

physically returned, subject to restocking fees. We only allow

customers to return product for credit that can be added back to

inventory and resold at full value, or that can be returned to

vendors for credit.

We offer market payment terms to our customers.

Rule 10b5-1 Plan Adoptions and Modifications

During the quarter ended June 30, 2025, no director or officer

adopted 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.

Business

Cardinal Health

Fiscal 2025 Form 10-K

Risk Factors

The risks described below could materially and adversely affect

our results of operations, financial condition, liquidity, or cash

flows. These are not the only risks we face. Our businesses also

could be affected by risks we do not currently consider material to

our operations or of which we are not presently aware.

Legal, Regulatory, & Compliance

Risks

Our business is subject to rigorous regulatory and licensing

requirements.

As described in the "Business" section, products that we

manufacture, source, distribute, or market must comply with U.S.

federal, state, and foreign and regulatory requirements.

Noncompliance or concerns over noncompliance, including

noncompliance by suppliers, has in the past, and may in the future

result in suspension of our ability to distribute, import,

manufacture, or source products, recalls, safety alerts or seizures,

or criminal or civil sanctions, which, in turn, could result in product

liability claims and lawsuits, including class actions. If we fail to

comply with regulatory requirements, or if allegations are made

that we fail to comply, our results of operations and financial

condition could be adversely affected.

To lawfully operate our businesses, we are required to obtain and

hold permits, product registrations, licenses and other regulatory

approvals from, and to comply with operating and security

standards of, numerous governmental bodies. Failure to maintain

or renew necessary permits, product registrations, licenses, or

approvals, or to comply with required standards, could have an

adverse effect on our results of operations and financial condition.

We are required to comply with laws relating to healthcare fraud

and abuse. The requirements of these laws are complex and

subject to varying interpretations. From time to time, regulatory

authorities investigate our policies or practices, and may challenge

them. For example, in November 2023, we received a Civil

Investigative Demand ("CID") from the Department of Justice

focused on potential violations of the Anti-Kickback Statute and

False Claims Act in connection with a 2022 transaction in which

we purchased a group purchasing organization and a minority

ownership interest in a rheumatology managed services

organization. We are cooperating with this investigation. We are

also periodically subject to federal or state government

investigations or qui tam actions (false claims cases initiated by

private parties purporting to act on behalf of federal or state

governments), which could result in civil or criminal sanctions,

including the loss of licenses or the ability to participate in

Medicare, Medicaid, and other federal and state healthcare

programs or other remedial measures.

Some of our businesses are Medicare-certified suppliers or

participate in other federal and state healthcare programs, such as

state Medicaid programs and the federal 340B drug pricing

program.

addition,

some

businesses

manufacture

pharmaceutical or medical products or repackage pharmaceuticals

that are purchased or reimbursed through, or are otherwise

governed by, federal or state healthcare programs. Failure to

comply with applicable eligibility requirements, standards, and

regulations could result in civil or criminal sanctions, including the

loss of our ability to participate in Medicare, Medicaid, and other

federal and state healthcare programs.

We, and third parties acting on our behalf, collect, handle, and

maintain patient-identifiable health information and other sensitive

personal and financial information which are subject to federal,

state, and foreign laws that regulate the use and disclosure of such

information. Regulations currently in place continue to evolve, and

they are extensive and complex. Compliance with these laws is

difficult and costly. New laws in this area could further restrict our

ability to collect, handle, and maintain personal or patient

information, or could require us to incur additional compliance

costs, either of which could have an adverse impact on our results

of operations. From time to time, we have become aware of certain

isolated alleged violations of federal, state, or foreign laws

concerning privacy and data protection. When we become aware

of such allegations, we investigate and, if warranted, notify

affected people, entities, and regulatory bodies. As a result of

these violations, we are, and may in the future be, subject to civil

or criminal penalties, breach of contract claims, lawsuits, costs for

remediation, and harm to our reputation.

Industry participants, including us, rely on ethylene oxide (“EtO”)

and per- and polyfluoroalkyl (“PFA”) compounds to sterilize certain

medical products, including products that we manufacture or

distribute. Regulatory enforcement actions have been taken by

certain environmental regulatory authorities to reduce emissions of

these compounds during the sterilization and distribution process.

If such measures become more widespread, we could experience

increased costs to comply with reduced emissions standards and it

is possible that we and other industry participants may be unable

to effectively sterilize medical products, possibly resulting in supply

shortages or an industry-wide reduction in surgical or medical

procedures, which would negatively impact demand for our

products. Such increased costs or industry-wide reductions in

surgical and medical procedures would have a negative impact on

our profit. Additionally, we have been named as a defendant in

several lawsuits alleging personal injury as a result of EtO

emissions. Additionally, we have incurred, and may incur

additional costs associated with modifying certain manufacturing,

distribution, or replenishment facilities in accordance with state

environmental regulators' actions or requirements. It is possible

that these or future regulatory actions or lawsuits could adversely

impact our ability to procure products to distribute, resulting in

increased costs or industry supply disruptions.

Our government contracts are subject to specific procurement

requirements. Failure to comply with applicable rules or regulations

or with contractual or other requirements may result in monetary

damages and criminal or civil penalties as well as termination of

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our government contracts or our suspension or debarment from

government contract work.

Our global operations (including transition services in connection

with divestitures) are subject to the U.S. Foreign Corrupt Practices

Act ("FCPA"), the U.K. Bribery Act and similar anti-bribery laws in

other jurisdictions, and U.S. and foreign export control, trade

embargo, and customs laws. If we fail to comply, or are alleged to

fail to comply, with any of these laws, we could be subject to

investigations or suffer civil or criminal sanctions.

Product quality issues could adversely affect operations,

profitability, cash flows, and our financial condition.

As described in the "Business" section, products that we

manufacture, source, distribute, or market must comply with

rigorous quality requirements. These requirements include, among

others, regulations regarding manufacturing practices, labeling,

advertising, and post marketing reporting, including adverse event

reports and field alerts and actions. Several of our facilities and

procedures and those of our suppliers are subject to ongoing

regulation and periodic inspection by the FDA and other

authorities. Our products may not remain in compliance with

applicable FDA and other regulatory requirements. Actions

resulting from non-compliance with FDA and other regulations

include fines, warning letters, injunctions, civil penalties, damages,

recalls, consent decrees, seizures of products, and civil litigation

and/or criminal prosecution. For example, following a facility

inspection in December 2023, the FDA issued a warning letter to

Cardinal Health in April 2024 related to plastic syringes sourced

from a third party manufacturer in China asserting these products

did not have appropriate 510(k) clearance and restating some of

the observations from the December 2023 inspection. We promptly

took action on these products and submitted a timely and

comprehensive response to the warning letter describing our

investigation and corrective actions, and we continue to cooperate

with the FDA on this matter.

Noncompliance or concerns over noncompliance, including by

suppliers, as a result of use of third party manufactures, or planned

shifts in production sites, has in the past, and may in the future

result in substantial modifications to our business practices and

operations. These modifications can include suspension of our

ability to import and distribute, refunds, or recalls, total or partial

shutdown of production in one or more facilities while we or our

suppliers remedy any actual or potential issues, the inability to

obtain future pre-market approvals or marketing authorizations,

and withdrawals or suspensions of current products from the

market. In addition, it can be costly and time-consuming to obtain

regulatory approvals or product registrations to market a medical

device or other product, and such approvals or registrations might

not be granted on a timely basis, if at all. Any of these supply chain

and quality-related events could be disruptive to our business and

have a material adverse effect on operations, profitability, cash

flows, and our financial condition.

We could be subject to adverse changes in the tax laws or

challenges to our tax positions.

We are a large multinational corporation with operations in the

United States and many foreign countries. As a result, we are

subject to the tax laws of many jurisdictions.

From time to time, proposals are made in the United States and

other jurisdictions in which we operate that could adversely affect

our tax positions, effective tax rate, or tax payments. Additionally,

changes in tax laws or regulatory enforcement priorities may

impact our tax position. For example, in July 2025, the OBBBA

was signed into law and includes a broad range of tax reform

provisions, which, among other things, extend or make permanent

certain business and international tax measures initially

established under the 2017 Tax Cuts and Jobs Act ("Tax Act"),

which were set to expire, and reinstates 100% bonus depreciation.

Specific initiatives that may impact us include possible increases in

U.S. or foreign corporate income tax rates or other changes in tax

law to raise revenue, the repeal of the LIFO (last-in, first-out)

method of inventory accounting for income tax purposes, the

establishment or increase in taxation at the U.S. state level on the

basis of gross revenues, recommendations of the base erosion

and profit shifting project undertaken by the Organization for

Economic Cooperation, and Development and the European

Commission’s investigation into illegal state aid.

Additionally, in connection with the accruals taken in connection

with opioid-related lawsuits in fiscal year 2021, we recorded a net

tax benefit, reflecting our then-current assessment of the estimated

future deductibility of the amount that may be paid. We have made

reasonable estimates and recorded amounts based on

management's judgment and our current understanding of the Tax

Act; however, the tax law governing deductibility was changed by

the Tax Act, and these estimates require significant judgment and

it is possible that they could be subject to challenges by the U.S.

Internal Revenue Service ("IRS").

We also regularly review these estimates and assumptions from

time to time and adjust our accruals based on our review, resulting

in changes in our tax provisions/(benefit). The actual amount of tax

benefit related to uncertain tax positions may differ materially from

these estimates. See

Note 9

of the "Notes to Consolidated

Financial Statements" for more information regarding these

matters.

In fiscal year 2021, our provision for income taxes reflected a

$424 million benefit from the tax benefits of a self-insurance pre-

tax net operating loss carryback under the Coronavirus Aid, Relief

and Economic Security ("CARES") Act. Also, as a result of this net

operating loss carryback, we received a U.S. federal income tax

refund of $966 million. This fiscal year is being audited by the IRS,

and it is possible that the IRS could challenge our tax position with

respect to this self-insurance loss. If they do, our effective tax rate

or cash flows could be adversely impacted. Additionally, laws

governing insurance coverage vary by state and some state courts

have interpreted laws and insurance policies in ways that may

impact our self-insurance loss, which could negatively impact our

financial position.

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Fiscal 2025 Form 10-K

We file income tax returns in the U.S. federal jurisdiction, various

U.S. state jurisdictions, and various foreign jurisdictions. Tax laws

are complex and subject to varying interpretations. With few

exceptions, we are subject to audit by taxing authorities for fiscal

years 2015 through the current fiscal year, including specific

inquiries into a restructuring in connection with integrating the July

2017 acquisition of the Patient Recovery business and the net

operating loss carryback described above. Proposed adjustments

in ongoing audits may adversely affect our effective tax rate or tax

payments.

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. Federal, state,

and local governmental entities have also continued to increase

their scrutiny of the U.S. healthcare market.

Uncertainty surrounding possible changes to the healthcare

environment, including changes to regulatory enforcement

priorities, may directly or indirectly adversely affect us. The

recently issued Executive Order titled "Delivering Most-Favored

Nation Prescription Drug Pricing to American Patients" may impact

the sales or profitability of branded pharmaceutical products;

however, the extent of the impact may vary depending on the

timeline for implementation and the number of pharmaceutical

drugs that are impacted. Additionally, it is possible that the

adoption of the OBBBA could reduce participation in Medicare and

Medicaid programs, resulting in a change in utilization of the

healthcare system. This may adversely affect demand for our

products and services and could have an effect on our results of

operations and financial condition.

Private challenges to government healthcare policy may also have

an adverse impact on our business. For example, the federal 340B

drug pricing program requires pharmaceutical manufacturers to

offer discounts on certain drugs purchased by covered entities,

and some of our Pharma segment customers are covered entities

or contract pharmacies for covered entities. Over a dozen

pharmaceutical manufacturers have unilaterally restricted sales

under the 340B drug pricing program to contract pharmacies.

These practices are the subject of ongoing litigation; however, if

manufacturers continue this practice and if courts uphold this

practice, our customers may be adversely impacted, which could

adversely impact our business.

Opioid-related legal proceedings and the NOSA we have

entered into could have additional or unexpected negative

effects on our results of operations or business

Cardinal Health, along with other pharmaceutical wholesalers and

other participants in the pharmaceutical supply chain, was named

as a defendant in lawsuits related to the distribution of opioid pain

medications. Plaintiffs in these lawsuits included state attorneys

general, counties, and municipalities.

In April 2022, an agreement settling the vast majority of opioid-

related lawsuits filed against us by state and local governmental

entities became effective. It includes injunctive relief terms relating

to distributors' controlled substance anti-diversion programs, with

which we must comply. It is possible that the maintenance of the

required changes to distributors' controlled substance anti-

diversion programs may result in unforeseen costs or operational

challenges which could have an adverse impact on our results of

operations or performance. If we are unable to comply with these

requirements, or are alleged to have failed to comply with these

requirements, we could incur unforeseen costs or penalties, and

our financial results may be negatively impacted.

We are also being sued by private plaintiffs, such as unions, other

health and welfare funds, other healthcare providers, and

individuals alleging personal injury for the same activities, and

could be named as a defendant in additional lawsuits. We intend to

vigorously defend ourselves against these lawsuits; however, legal

proceedings are inherently unpredictable and it is possible that

these lawsuits, either individually or in the aggregate, could have a

negative impact on our results of operations.

We are involved in legal proceedings with insurers related to the

availability of insurance coverage for some matters described

above and our ability to recover losses from our insurers is

uncertain. Additionally, laws governing insurance coverage vary by

state and some state courts have interpreted laws and insurance

policies in ways that may negatively impact our ability to receive

indemnification under our insurance policies.

Ongoing unfavorable publicity regarding the abuse or misuse of

prescription opioid pain medications and the role of wholesale

distributors in the supply chain of such prescription medications

could continue to have an adverse effect on our reputation or

results of operations.

The outcome or resolution of certain legal proceedings could

adversely impact our cash flows or results of operations.

Due to the nature of our business, which includes the distribution

of controlled substances and other pharmaceutical products and

the sourcing, marketing, and manufacturing of medical products,

we regularly become involved in disputes, litigation, and regulatory

matters. Litigation is inherently unpredictable, disruptive, and time

consuming and the unfavorable outcome of legal proceedings

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could adversely affect our results of operations or financial

condition.

Additionally, some of the products that we distribute or

manufacture have been and may in the future be alleged to cause

personal injury, subjecting us to product liability claims. For

example, since July 2021, we have entered into settlement

agreements to settle the vast majority of product liability claims

alleging personal injuries associated with the use of Cordis

OptEase and TrapEase IVC filter products. Future settlements of

or judgments for product liability claims may not be covered by

insurance or exceed available insurance recoveries. If this

happens, our results of operations and financial condition could be

adversely affected.

In connection with legal proceedings, we occasionally enter into

settlement agreements or become subject to consent decrees

containing ongoing financial or operational obligations, including

the injunctive relief provisions of the NOSA and the Corporate

Integrity Agreement that our Specialty business entered into with

the Office of Inspector General of the Department of Health and

Human Services in connection with the rebates offered or provided

to certain Specialty Solutions customers. Failure to comply with

obligations under these agreements or decrees could lead to

monetary or other penalties.

We might infringe intellectual property rights or our own

intellectual property protections might be insufficient to

protect our commercial interests.

Third parties have in the past and may in the future assert

infringement claims against us. Litigation and proceedings related

to intellectual property are unpredictable, and we might be required

to pay significant damages, develop non-infringing products or

services, obtain a license, cease selling or using allegedly

infringing products or services, or incur other restrictions on our

operations. Trade secret, patent, copyright, and trademark laws,

nondisclosure obligations, and other contractual provisions are

critical to our business. Our efforts to protect our intellectual

property might be insufficient, and non-infringing products or

services equivalent or superior to ours might be developed by

competitors.

Industry & Economic Risks

Changes or uncertainty in U.S. or international trade policies

and exposure to economic, political and currency, and other

risks could disrupt our global operations or negatively impact

our financial results.

We conduct our operations in various regions of the world outside

of the United States, including Europe, Asia, and Latin America.

Global developments can affect our business in many ways. Our

global operations are affected by local economic environments,

including inflation, recession, and competition. Additionally,

divergent or unfamiliar regulatory systems and labor markets can

increase the risks and burdens of operating in numerous countries.

For example, recent U.S. tariffs imposed or threatened to be

imposed on goods, materials, and products from countries where

we do business, and any retaliatory actions taken by such

countries could result in us incurring substantial additional costs to

source materials, directly and indirectly, from affected countries,

and may require us to raise prices on certain products and seek

alternative sources of supply. If our competitors do not increase

prices, or increase prices to a lesser extent than we do, or are able

to offset the impact of tariffs through other actions, our competitive

and financial position may be adversely affected. Additionally, if we

are not able to find adequate alternate sources of supply, we may

experience supply shortages or disruptions. Additionally, in certain

circumstances, including in our Other operating segment, we may

not receive increased reimbursement commensurate with the

increase in costs, which may negatively impact our results of

operations. In addition, we conduct our business in U.S. dollars

and various functional currencies of our foreign subsidiaries.

Changes in foreign currency exchange rates could adversely affect

our financial results, which are reported in U.S. dollars. We may

not be able to hedge to protect us against these exposures, and

any hedges may not successfully mitigate these exposures.

We are also subject to government import and export controls and

regulations, including the requirement that we make a

determination as to the country of origin of products that we source

or manufacture outside the United States. From time to time,

Customs and Border protection agencies, whether in the U.S. or

other jurisdictions, have challenged these determinations. These

and other actions by border protection have resulted in products

being detained or delayed and supply disruptions and could result

in the imposition of fines and penalties. In addition, the Uyghur

Forced Labor Prevention Act, which went into effect in June 2022,

prohibits the importation of any goods grown, produced,

manufactured, or mined, wholly or in part, in the Xinjiang Uyghur

Autonomous Region of China unless importers can provide clear

and convincing evidence that goods were not made using forced

labor. We have experienced supply constraints as a result of these

and similar regulations, and it is possible that our business or

results of operations could be further negatively impacted by future

determinations and disruptions.

Our Pharmaceutical and Specialty Solutions segment’s profit

margin could be adversely affected by changes in industry or

market dynamics that we are not able to accurately predict.

The frequency, timing, magnitude, and profit impact of generic

pharmaceutical customer purchase volumes, pricing changes,

customer contract renewals, generic pharmaceutical launches, and

generic pharmaceutical manufacturer pricing changes, which

contribute to the performance of our generic pharmaceutical

program, remain uncertain. These factors have contributed to

declines in some prior years and have more than offset the

benefits from sourcing generic pharmaceuticals through our Red

Oak Sourcing venture with CVS Health. If performance of our

generic pharmaceutical program declines in future fiscal years and

we are unable to offset the decline, our Pharma segment profit and

consolidated operating earnings will be adversely affected.

Additionally, almost all of our distribution services agreements with

branded pharmaceutical manufacturers provide that we receive

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Fiscal 2025 Form 10-K

fees from the manufacturers to compensate us for services we

provide them. However, under certain agreements, branded

pharmaceutical price appreciation, which is determined by the

manufacturers, also serves as a part of our compensation. If

manufacturers change their historical approach to setting and

increasing wholesale acquisition cost, decide to reduce prices, not

to increase prices, or to implement only small increases, and we

are unable to negotiate alternative ways to be compensated by

manufacturers or customers for the value of our services, our

margins could be adversely affected.

We depend on direct and indirect suppliers to make their

products and raw materials available to us and are subject to

fluctuations in costs, availability, and regulatory risk

associated with these products and raw materials.

Our manufacturing businesses use oil-based resins, pulp, cotton,

latex, and other commodities as raw materials in many products.

Prices of oil and gas also affect our distribution and transportation

costs. Prices of these commodities are volatile and can fluctuate

significantly, causing our costs to produce and distribute our

products to fluctuate. Beginning in the fourth quarter of fiscal year

2021, we experienced higher supply chain costs, which had a

negative impact on our GMPD (former Medical) segment profit in

fiscal 2021, 2022, 2023, 2024, and 2025. Supply chain constraints

also had a negative impact on sales within our GMPD (former

Medical) segment.

We did not offset the full impact of these cost increases in fiscal

year 2023, 2024, and 2025; however, we implemented certain cost

reductions, price increases, and surcharges to mitigate the impact.

Due to competitive dynamics and contractual limitations, passing

along cost increases is challenging. If we are not able to mitigate

future cost increases through increased prices where necessary or

if supply chain cost significantly increase or become subject to

additional variability, GMPD segment profit could be negatively

impacted.

We depend on others to manufacture some products, including

pharmaceuticals, that we market and distribute. Our operations are

also dependent on various components, compounds, raw

materials, and energy supplied by others. We purchase many of

these components, raw materials, and energy, and source certain

products from numerous suppliers in various countries. In some

instances, for reasons of quality assurance, cost effectiveness, or

availability, we procure certain components and raw materials from

a sole supplier. Our supplier relationships could be interrupted,

become less favorable to us or be terminated and the supply of

these components, compounds, raw materials, or products could

be interrupted or become insufficient.

These supply interruptions or other disruptions in manufacturing

processes could be caused by events beyond our control,

including natural disasters, labor disputes, supplier facility

shutdowns, defective raw materials, the impact of epidemics or

pandemics, such as COVID-19, and actions by U.S. or

international governments, including import or export restrictions or

tariffs. Any material interruption in our supply chain or inability to

obtain key products from third parties in a timely and cost-effective

manner, including as a result of trade or other restrictions, could

adversely affect our business operations and results of operations,

financial condition and cash flows.

In addition, due to the stringent regulatory requirements regarding

the manufacture and sourcing of our products, we may not be able

to quickly establish additional or replacement sources for certain

components, materials, or products. A sustained supply reduction

or interruption, and an inability to develop alternative and

additional sources for such supply, could result in lost sales,

increased cost, damage to our reputation, and may have an

adverse effect on our business.

We could continue to suffer the adverse effects of competitive

pressures, and changes in our relationships with significant

customers could adversely affect us.

As described in greater detail in the "Business" section, we

operate in markets that are highly competitive and dynamic. In

addition, competitive pressures in each of our businesses may be

increased by new business models, new entrants, new regulations,

or changes in enforcement priorities, changes in consumer

demand, or general competitive dynamics. Additionally, we may

not be able to onboard new customers as efficiently as expected

due to customer service issues or competitive service level

offerings. We have also experienced delays in onboarding new

customers due to factors outside of our control. Our businesses

face continued pricing pressure from these factors, which

adversely affects our margins. If we are unable to offset margin

reductions caused by these pressures through steps such as

sourcing or cost control measures, additional service offerings and

sales of higher margin products, our results of operations could

continue to be adversely affected.

Employee attrition may have an adverse impact on our

business, results of operations, or internal controls.

Our ability to attract, retain, and develop qualified and experienced

employees, including key executives, key employees at companies

that we acquire, and other talent, is critical for us to meet our

business objectives. We compete with many other businesses to

attract and retain employees. It is possible that we could

experience loss of key personnel for a variety of causes. If we do

not adequately plan for succession of key roles or if we are not

successful in attracting or retaining new talent, our operations,

financial performance or internal control over financial reporting

could be adversely impacted.

Consolidation in the U.S. healthcare industry may negatively

impact our results of operations.

In recent years, U.S. healthcare industry participants, including

distributors, manufacturers, suppliers, healthcare providers,

insurers, and pharmacy chains, among others, have consolidated

or formed strategic alliances. Consolidations create larger

enterprises with greater negotiating power and could result in the

possible loss of a customer in the situation where the combined

enterprise selects one distributor from two incumbents or a

reduction in our ability to market our products and services to new

customers. Consolidations also impact other objectives, including

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Fiscal 2025 Form 10-K

our ability to use acquisitions to expand or complement our

existing businesses. If this consolidation trend continues, it could

adversely affect our results of operations.

Business & Operational Risks

Our business and operations depend on the proper

functioning of information systems, critical facilities, and

distribution networks and could be negatively impacted by

events outside of our control.

We rely on our and third-party service providers' information

systems for a wide variety of critical operations, including to obtain,

rapidly process, analyze, and manage data to:

•

facilitate the purchase and distribution of inventory items from

numerous distribution centers;

•

receive, process, and ship orders on a timely basis;

•

manage accurate billing and collections for thousands of

customers;

•

process payments to suppliers;

•

facilitate manufacturing and assembly of medical products; and

•

generate financial information.

Our business also depends on the proper functioning and security

of our and our suppliers' business processes, critical facilities,

including our national logistics center, and our distribution

networks. Our results of operations could be adversely affected if

our or a service provider's business processes, information

systems, critical facilities, or distribution networks are disrupted

(including disruption of access), are damaged or fail, whether due

to physical disruptions, such as extreme weather events, including

wildfires, hurricanes, extreme temperatures, or other natural

disasters, pandemics (as they were by the COVID-19 pandemic),

supply chain disruptions, or power outages, systems updates, or

due to cybersecurity incidents, ransomware, or other actions of

third parties, including labor strikes or shortages, political unrest,

and terrorist attacks. In addition, hardware, software, and other

applications and updates procured from third parties may contain

defects that have and may in the future unexpectedly restrict or

prevent access to or interfere with the proper operation of our

information systems and hardware. Manufacturing disruptions also

can occur due to regulatory action, production quality deviations,

safety issues, or raw material shortages or defects, planned shifts

in production sites, or because we need to transition

manufacturing facilities for any key products or components that is

manufactured at a single manufacturing facility where there are

limited alternate facilities. Additionally, we incur costs to remediate

these disruptions, and it is possible that these costs could be

significant.

Our ability to compete effectively is increasingly dependent on

access to and interpretation of data, and we may provide services

that involve hosting customer data and operating software on third-

party or our own systems. Data quality impacts customer ordering,

order fulfillment, and higher order processing. If we fail to

effectively implement and maintain data governance structures

across our businesses, to effectively interpret and utilize such

data, or protect the integrity of such data, including systems

learning, our operations could be impacted, and we may be at a

competitive disadvantage.

Our business and results of operations could be adversely

affected if we experience a material cyber-attack or other

systems breach.

Cybersecurity incidents and attacks resulting in unauthorized

access to our systems and those of third parties we use in our

business could have a material impact on our business operations

as a result of loss or misuse of our information, including personal

data and sensitive data, and disruption to normal business

operations. Our business relies on the secure transmission,

storage, and hosting of patient-identifiable health information,

financial information, and other sensitive protected information

relating to our customers, company, workforce, and individuals

with whom we and our customers conduct business. We have

programs in place to detect, contain, and respond to information

security incidents. However, because the techniques used to

obtain unauthorized access, disable, or degrade service or

sabotage systems change frequently and may be difficult to detect

for long periods of time, we may be unable to anticipate these

techniques or to implement adequate preventative measures. In

addition, hardware, software, or applications developed internally

or procured from third parties may contain defects in design or

manufacture or other problems beyond our control that could

unexpectedly compromise information security.

Unauthorized parties have gained access in the past, and will

continue to attempt to gain access, to our (including our recently

acquired entities) or a service provider's systems or facilities

through fraud, social engineering, or other forms of deception. The

sophistication of cybersecurity threats and AI-powered cyber-

attacks such as deep fakes and force attacks continues to

increase. Additionally, our recently acquired MSO businesses are

subject to cybersecurity-related risks which are, while similar in

many respects, incremental to the cybersecurity risks experienced

by our legacy businesses. If we are not able to adapt our systems

and processes to mitigate these risks, we could experience

additional financial losses, including as a result of class action

lawsuits.

We and our service providers have been the target of cyber

attacks. Although we do not believe these incidents had a material

impact on us, either individually or in the aggregate, similar

incidents or events in the future may negatively impact our

business, reputation, or financial results.

Any compromise of our or a service provider's information

systems, including unauthorized access to or use or disclosure of

sensitive information, could result in the loss or misuse of our

information, including personal data and sensitive data and

adversely impact our operations, results of operations, or our

ability to satisfy legal or regulatory requirements, including the EU

general data protection regulation (GDPR) and those related to

patient-identifiable health information and other sensitive personal

and financial information at the state and U.S. federal level as

further described in the Risk Factor titled “Our business is subject

to other rigorous regulatory and licensing requirements,” above. A

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cybersecurity incident could result in a violation of these and other

applicable laws and result in a loss of customers and revenues,

remediation and other costs, increased insurance premiums,

litigation, monetary fines and penalties, and damage to our

competitiveness and reputation, any of which could adversely

affect our financial condition and business.

In addition, insurance for losses arising from cyber-attacks or other

breaches is becoming more costly and limited and may not be

available to us at amounts that we historically have obtained or

that we would like to obtain. It is possible that we could incur

losses that may not be covered by insurance or that would exceed

available insurance recoveries. If this happens, our results of

operations and financial condition could be adversely affected.

Our sales and credit concentration is significant.

In fiscal year 2025, CVS Health was our largest customer. CVS

Health accounted for 30 percent of our fiscal 2025 revenue and 26

percent of our gross trade receivable balance at June 30, 2025. If

CVS or another significant customer reduces their purchases from

us, defaults in payment to us, does not renew or terminates their

agreements, whether due to an alleged default by us or otherwise,

our results of operations and financial condition could be adversely

affected.

Our ability to complete, integrate, and manage acquisitions

could impact our strategic objectives and financial condition.

From time to time, we acquire or look to acquire other businesses

that expand or complement our existing businesses or enable

entry into new lines of business. For example, in fiscal year 2025,

we completed several significant acquisitions in disparate

businesses: the acquisition of Integrated Oncology Network and GI

Alliance, which are part of our Specialty business, and the

acquisition of Advanced Diabetes Supply Group, which is part of

our Cardinal Health At-Home businesses.

Completion of acquisitions involves a number of risks, including

the risk that required financing may not be available on favorable

terms and the risk that we may not receive regulatory approvals

necessary to timely complete an acquisition or otherwise satisfy

closing conditions.

Additionally, we are subject to risks associated with the integration

and operation of acquired businesses, including the risk that our

management’s attention may be diverted to integration efforts at

the expense of the legacy businesses, we may fail to retain key

personnel of the acquired business, we may experience difficulties

or delays establishing, integrating, or combining operations and

systems, including manufacturing facilities and cybersecurity-

related systems and processes, we may become subject to

unforeseen liabilities arising from legal proceedings involving the

acquired business, we may face challenges retaining the

customers of the acquired business and we may encounter

unforeseen internal control, regulatory, or compliance issues.

Additionally, future developments may impair the value of our

purchased goodwill or intangible assets or may otherwise

negatively affect our ability to achieve the financial, strategic, or

other benefits we expect from the acquisitions. For example,

certain states have proposed legislation, and Oregon adopted

legislation, that would limit, restrict or prohibit corporate entities

from owning or managing physician practices, directly, or

indirectly, through a managed services organization. If these

regulations proliferate, our ability to continue to own certain of our

recently acquired businesses in certain jurisdictions and our ability

to execute on our strategy may be impacted.

Our results of operations and financial condition may be

adversely affected by risks associated with entering new lines

of business, and our ability to execute our strategy.

As a result of our recently announced acquisitions, we are entering

into new lines of business, including providing physician practice

support and management services, that complement our pre-

existing businesses. Such new lines of business involve numerous

risks and uncertainties that may be different from or more

significant than the risks and uncertainties facing our legacy

businesses, including risks arising under or related to fraud, waste,

and abuse laws, direct or indirect ownership of provider practices,

litigation involving physicians, and risks from regulatory or

legislative changes that may limit direct or indirect ownership of

provider practices or our ability to provide physician practice

support and management services. Additionally, these businesses

are subject to cybersecurity risks that are, while similar in many

respects, incremental to the cybersecurity risks experienced by our

legacy businesses. If we are not able to adapt our systems and

processes to mitigate these risks, we could experience additional

financial losses, including as a result of class action lawsuits.

Additionally, our ability to successfully execute on providing

physician practice support and management services, including

through direct or indirect ownership of provider practices as

permitted by applicable law, depends upon a number of factors,

including: the ability to develop or acquire and integrate

appropriate practice management and support expertise; the ability

to support recruitment, integration, and retention of sufficient

numbers of local providers and staff; the ability to successfully

support negotiations with vendors, suppliers, and payors; the

reimbursement environment; and competition from other

healthcare organizations with greater depth of experience or

market knowledge.

Failure to effectively or efficiently complete or manage critical

business processes could have unforeseen consequences.

From time to time, our businesses perform business process

improvements or infrastructure modernization or use service

providers for key systems and processes, such as receiving and

processing customer orders, customer service, and accounts

payable. These initiatives, transitions, and improvements require

an ongoing commitment of resources. If any of these initiatives,

including those related to the ongoing implementation of new

Enterprise Resource Planning technologies and supply chain

optimization initiatives, and initiatives related to artificial

intelligence and machine learning, are not successfully or

efficiently implemented or maintained, or if our relationship with

critical third-party service providers deteriorates, we could

experience negative impacts on our business, financial results,

and our internal control over financial reporting.

Risk Factors

Cardinal Health

Fiscal 2025 Form 10-K

Our business is affected by events outside of our control

including public health crises, extreme weather-related events

and natural disasters, geopolitical, and other catastrophic

events.

We have experienced and expect to continue to experience

weather-related impacts to the business, primarily driven by risks

to certain physical components of our operations and risks related

to the transition to a lower-carbon economy. For example, our

properties have experienced physical damage resulting from

adverse or extreme weather resulting in increased costs for repairs

and may cause disruptions in operations. Additional risks

associated with extreme weather may cause social and human

effects such as shifts in populations, increased costs for critical

services such as transportation, and other adverse effects. These

factors may negatively impact cost or availability of certain

products, commodities, or energy, and could impair our ability to

secure goods and services required for the operation of our

business at quantities and levels we require.

Environmental and other climate-related laws and regulations may

impose costs, including increased spend associated with carbon

pricing mechanisms, data gathering and reporting, third-party

attestations, capital expenditures to implement lower greenhouse

gas emissions technology, and other measures to reduce

emissions. We cannot predict the potential impact on our

competitive position, results of operations, or financial condition. A

shift in customer or consumer preference towards low-carbon

products and services may also place us at a competitive

disadvantage if we fail to effectively adjust for these shifts. Our

supply chain is subject to these same physical and transitional

risks.

Events outside of our control also have, and will continue to,

adversely impact our operations and financial results. These

events include those related to public health crises, including

epidemics or pandemics; geopolitical events or tensions, including

civil unrest, trade sanctions, tariffs and other trade restrictions,

armed

conflicts,

terrorism;

unstable

international

governments and legal systems. Among other potential affects,

these events may have a disruptive and unpredictable impact on

our operations and those of our suppliers and vendors, or

customers, hinder manufacturing and transportation, result in

significant excess costs, lead to shifts in customer demand, or

have a negative impact on capital markets. Such events are

inherently unpredictable, and our responses may involve the

implementation of measures which may not be as successful as

intended in mitigating adverse impacts.

Our results of operations or strategic objectives could be

adversely impacted if we fail to manage and complete

divestitures.

We regularly evaluate our portfolio of businesses to determine

whether an asset or business may no longer help us meet our

objectives or whether there may be a more advantaged owner for

that business. For example, in July 2023, we contributed our

Outcomes™ business to Transaction Data Systems in exchange

for a minority stake in the combined entity, and in fiscal year 2022,

we completed the divestiture of the Cordis business. When we

decide to sell assets or a business, we may encounter difficulty

finding buyers or alternative exit strategies, which could impact the

achievement of our strategic objectives. We could also fail to

obtain necessary regulatory approval or incur higher costs or

charges than planned or incur unexpected charges and could

experience greater dis-synergies than expected, which could have

a negative impact on our results of operations.

Our goodwill or other long-lived assets may be further

impaired, which could require us to record additional

significant charges to earnings in accordance with generally

accepted accounting principles.

U.S. GAAP requires us to test our goodwill for impairment on an

annual basis, or more frequently if indicators for potential

impairment exist. In addition, we review intangible assets with finite

lives and other long-lived assets for impairment whenever events

or changes in circumstances indicate that the related carrying

amounts may not be recoverable.

In fiscal 2025, we performed annual impairment testing and

concluded there were no impairments of goodwill for our reporting

units as the estimated fair value of each reporting unit exceeded its

carrying amount.

Impairment testing involves estimates and significant judgments by

management. We believe our assumptions and estimates are

reasonable and appropriate; however, additional adverse changes

in key assumptions, a failure to meet expected earnings or other

financial plans, or unanticipated events and circumstances, an

increase in the discount rate, a decrease in the terminal growth

rate, increases in tax rates, or a significant change in industry or

economic trends could affect the accuracy or validity of such

estimates and may result in goodwill impairment. It is possible that

we may record significant charges from impairment to our goodwill

reporting units, intangibles, and other long-lived assets in the

future. Any charge or charges could adversely affect our results of

operations.

During fiscal 2024 and 2023, we recorded aggregate goodwill

impairment charges of $675 million, and $1.2 billion, respectively,

related to GMPD (our former Medical unit) primarily driven by the

performance and long-term financial plan assumptions. GMPD had

no goodwill balance remaining at June 30, 2024.

See "Critical Accounting Policies and Sensitive Accounting

Estimates" in MD&A above for more information regarding goodwill

impairment testing.

Risk Factors

Cardinal Health

Fiscal 2025 Form 10-K

Cybersecurity

Risk Management and Strategy

As a large healthcare distribution and services company, we are

exposed to various cybersecurity threats and cybersecurity risk

management is integral to our overall enterprise risk management

strategy. We identify, assess, and manage risks related to

cybersecurity through documented policies, standards, and

procedures. Our approach to detection, mitigation, remediation,

and prevention of cybersecurity risks utilizes a range of measures

including, among other elements: benchmarking to generally

accepted industry standards and frameworks, such as the National

Institute of Standards and Technology cybersecurity framework;

use of periodic tabletop exercises to promote awareness and

improve internal processes; periodic penetration testing; a

dedicated staff of cybersecurity professionals; and implementation

of security measures and policies intended to identify as well as

assist in containing and remediating cybersecurity risks. We

maintain cybersecurity incident response, disaster recovery, and

business continuity plans that govern activities such as

preparation, detection coordination, remediation and recovery, and

escalation to senior management and, where appropriate, relevant

committees of the Board. These plans are routinely reviewed

under the leadership of our Chief Information Security Officer

("CISO"). We also maintain mandatory employee cybersecurity

and

privacy

compliance

awareness

training,

which

supplemented by employee engagement campaigns.

We utilize third parties to assist with, and assess the effectiveness

of, our cybersecurity posture, in addition to supporting incident

response and mitigation where necessary. We identify and assess

third party risks associated with suppliers and service providers

across a range of areas, including cybersecurity, through a third-

party risk management process that incorporates, among other

features, the use of risk assessments and, where appropriate,

contractual requirements around evaluations, security, technology,

service levels, and other terms.

To date, we are not aware of cybersecurity incidents that have

materially affected or are reasonably likely to materially affect

Cardinal Health. However, the scope and impact of any future

incident cannot be predicted. For more information, please see

Item 1A “Risk Factors” for the risk factor entitled “Our business and

results of operations could be adversely affected if we experience

a material cyber-attack or other systems breach.”

Governance

Our CISO, in coordination with our Chief Information Officer

(“CIO”) to whom the CISO reports, leads our approach to

assessing and managing cybersecurity-related risks. Our CISO

has over twenty-five years of experience in information technology

(“IT”), with twenty years in IT risk management, compliance, and

information security, as well as a background in leading technical

infrastructure teams and roles supporting business operations.

As part of management’s oversight of our cybersecurity program,

we maintain an IT risk governance process that includes multiple

levels of escalation from our IT Risk Advisory Board, which meets

on a monthly basis and whose membership includes the CISO and

IT functional area leadership, to an executive-level committee to

help address cybersecurity risks at an enterprise level.

The company’s Board oversees our overall risk management

process. The Board has delegated to the Audit Committee primary

responsibility for overseeing cybersecurity and other major

technology-related risks and our actions to monitor and mitigate

such risks. In coordination with the Audit Committee, the Risk

Oversight Committee of the Board monitors Cardinal Health’s

compliance with applicable legal and regulatory requirements,

including with respect to data privacy and security. Our Audit

Committee receives at least quarterly updates from the CISO and

CIO and the Board receives at least annual cybersecurity updates.

Among other items, these updates cover a range of matters

relevant to our cybersecurity program, including: the threat

environment and related business risks; the state, priorities of, and

investments in our cybersecurity program; the availability of cyber

insurance; review of certain cybersecurity incidents that have

occurred within the company and the industry; and relevant

cybersecurity operational metrics.

Cybersecurity

Cardinal Health

Fiscal 2025 Form 10-K

Properties

In the United States, at June 30, 2025, the Pharma segment operated one national logistics center and a number of primary

pharmaceutical and specialty distribution facilities. The GMPD segment operated medical-surgical distribution, assembly, manufacturing,

and other operating facilities in the United States.

At June 30, 2025, our GMPD segment also operated manufacturing facilities in Canada, Costa Rica, the Dominican Republic, Germany,

Ireland, Japan, Malaysia, Malta, Mexico, Puerto Rico, and Thailand.

Our Other Operating Segments operated facilities throughout the United States.

Our principal executive offices are headquartered in an owned building located at 7000 Cardinal Place in Dublin, Ohio.

We consider our operating properties to be in satisfactory condition and adequate to meet our present needs. However, we regularly

evaluate operating properties and may make further additions and improvements or consolidate locations as we seek opportunities to

expand or enhance the efficiency of our business.

Legal Proceedings

The legal proceedings described in

Note 8

of the "Notes to Consolidated Financial Statements" are incorporated in this "Legal

Proceedings" section by reference.

Properties and Legal Proceedings

Cardinal Health

Fiscal 2025 Form 10-K

Market for Registrant's Common Equity, Related Stockholder

Matters, and Issuer Purchases of Equity Securities

Our common shares are listed on the New York Stock Exchange under the symbol “CAH.”

At July 31, 2025, there were approximately 5,917 shareholders of record of our common shares.

We anticipate that we will continue to pay quarterly cash dividends in the future. The payment and amount of future dividends remain,

however, within the discretion of our Board of Directors and will depend upon our future earnings, financial condition, capital requirements,

and other factors.

Issuer Purchases of Equity Securities

Period

Total Number

of Shares

Purchased (1)

Average Price Paid per

Total Number of Shares

Purchased

as Part of Publicly

Announced Programs (2)

Approximate

Dollar Value of

Shares That May

Yet be Purchased

Under the Programs (2)

(in millions)

April 2025

133.13

—

2,743

May 2025

150.62

—

2,743

June 2025

158.38

—

2,743

Total

147.17

—

2,743

(1)

Reflects 7, 6, and 7 common shares purchased in April, May, and June 2025, 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 June 30, 2025, we had

$2.7 billion authorized for share repurchases remaining under this program.

Market for Registrant's Common Equity

Cardinal Health

Fiscal 2025 Form 10-K

Five Year Performance Graph

The following line graph compares the cumulative total return of our common shares with the cumulative total return of the Standard &

Poor’s Composite—500 Stock Index (the "S&P 500 Index") and the Standard & Poor's Composite—500 Healthcare Index (the "S&P 500

Healthcare Index"). The line graph assumes, in each case, an initial investment of $100 invested at the closing price on June 30, 2020, and

is based on the market prices at the end of each fiscal year through and including June 30, 2025, and reinvestment of dividends. The S&P

500 Index and S&P 500 Healthcare Index investments are weighted on the basis of market capitalization at the beginning of each period.

113.38

107.77

200.05

211.16

367.25

100.00

140.79

125.85

150.51

187.46

215.89

127.92

132.23

139.34

155.61

146.42

S&P 500 Healthcare Index

S&P 500 Index

Cardinal Health, Inc.

2020

2021

2022

2023

2024

2025

100

150

200

250

300

350

400

June 30

2020

2021

2022

2023

2024

2025

Cardinal Health, Inc.

100.00

113.38

107.77

200.05

211.16

367.25

S&P 500 Index

100.00

140.79

125.85

150.51

187.46

215.89

S&P 500 Healthcare Index

100.00

127.92

132.23

139.34

155.61

146.42

Market for Registrant's Common Equity

Cardinal Health

Fiscal 2025 Form 10-K

Management Reports

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 June 30,

2025. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls

and procedures were effective as of June 30, 2025 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.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)

under the Exchange Act. Our internal control system is designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, controls deemed

effective now may become inadequate in the future because of changes in conditions, or because compliance with policies or procedures

has deteriorated or been circumvented.

Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2025. In making this assessment,

management used the criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). Based on management’s assessment and the COSO

criteria, management has concluded that our internal control over financial reporting was effective as of June 30, 2025.

Our independent registered public accounting firm, Ernst & Young LLP, has issued a report on our internal control over financial reporting.

Ernst & Young LLP’s report appears following this "Management Reports" section and expresses an unqualified opinion on the

effectiveness of our internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

Reports

Cardinal Health

Fiscal 2025 Form 10-K

Report of Independent Registered Public Accounting Firm on

Internal Control Over Financial Reporting

To the Shareholders and the Board of Directors of Cardinal Health, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Cardinal Health, Inc. and subsidiaries’ internal control over financial reporting as of June 30, 2025, based on criteria

established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission

(2013 framework) (the COSO criteria). In our opinion, Cardinal Health, Inc. and subsidiaries (the Company) maintained, in all material

respects, effective internal control over financial reporting as of June 30, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the

consolidated balance sheets of the Company as of June 30, 2025 and 2024, the related consolidated statements of earnings,

comprehensive income, shareholders' deficit, and cash flows for each of the three years in the period ended June 30, 2025, and the

related notes and the financial statement schedule listed in the Index at Item 15(a)(2) and our report dated August 12, 2025 expressed an

unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the

effectiveness of internal control over financial reporting included in the accompanying “Management’s Report on Internal Control Over

Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our

audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in

accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and

the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness

exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such

other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance

of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide

reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with

generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with

authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely

detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial

statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Grandview Heights, Ohio

August 12, 2025

Reports

Cardinal Health

Fiscal 2025 Form 10-K

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Cardinal Health, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Cardinal Health, Inc. and subsidiaries (the Company) as of June 30,

2025 and 2024, the related consolidated statements of earnings, comprehensive income, shareholders' deficit, and cash flows for each of

the three years in the period ended June 30, 2025, and the related notes and the financial statement schedule listed in the Index at Item

15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present

fairly, in all material respects, the financial position of the Company at June 30, 2025 and 2024, and the results of its operations and its

cash flows for each of the three years in the period ended June 30, 2025, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the

Company's internal control over financial reporting as of June 30, 2025, based on criteria established in Internal Control-Integrated

Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and August 12, 2025

expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the

Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be

independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of

the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits

provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was

communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to

the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical

audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by

communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to

which they relate.

Reports

Cardinal Health

Fiscal 2025 Form 10-K

Valuation of Goodwill

Description

of the

Matter

The Company performed quantitative assessments of goodwill for the Company’s Navista & ION and Cardinal Health at-

Home Solutions reporting units during fiscal year 2025, by comparing the fair values of each of these reporting units with

their respective carrying amounts. As discussed in

Notes 1

and

to the consolidated financial statements, goodwill is

tested for impairment at least annually at the reporting unit level, or when indicators of impairment exist. During fiscal 2025,

there was no impairment recognized related to Navista & ION or Cardinal Health at-Home Solutions.

Auditing management’s goodwill impairment test for Navista & ION and Cardinal Health at-Home Solutions was challenging

because there is significant judgement required in determining the fair values of the reporting units. In particular, the fair

value estimates were sensitive to significant judgmental assumptions including the revenue growth rate; gross margin;

distribution, selling, general and administrative expenses, and company-specific risk premium, which are affected by

expectations about future market or economic conditions.

How We

Addressed

the Matter

in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the

Company’s goodwill impairment review process. For example, we tested controls over management’s review of significant

judgmental assumptions, including the revenue growth rate; gross margin; distribution, selling, general and administrative

expenses, and company-specific risk premium, among other assumptions.

To test the estimated fair values of Navista & ION and Cardinal Health at-Home Solutions, we performed audit procedures

that included, among others, evaluating methodologies used; involving our valuation specialists to assist with our

procedures related to the measurement of the fair values; and testing the underlying data used by the Company in its

analysis for completeness and accuracy. We compared the significant assumptions used by management to current

industry and economic trends, recent historical performance, and other relevant factors. We assessed the historical

accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the

changes in the fair values of the reporting units that would result from changes in the assumptions. We evaluated the

assumptions within the model and tested the model’s computational accuracy. In addition, we inspected the Company’s

reconciliation of the fair value of all reporting units to the market capitalization of the Company and assessed the result. We

have also assessed the adequacy of the Company’s disclosures included in

Notes 1

and

in relation to this matter.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2002.

Grandview Heights, Ohio

August 12, 2025

Reports

Cardinal Health

Fiscal 2025 Form 10-K

Financial Statements and Supplementary Data

Page

Consolidated Financial Statements and Schedule:

Consolidated Statements of Earnings for the Fiscal Years Ended June 30, 2025, 2024, and 2023

Consolidated Statements of Comprehensive Income for the Fiscal Years Ended June 30, 2025, 2024, and 2023

Consolidated Balance Sheets at June 30, 2025 and 2024

Consolidated Statements of Shareholders’ Deficit for the Fiscal Years Ended June 30, 2025, 2024, and 2023

Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2025, 2024, and 2023

Notes to Consolidated Financial Statements

Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Consolidated Statements of Earnings

(in millions, except per common share amounts)

2025

2024

2023

Revenue

222,578

226,827

204,979

Cost of products sold

214,410

219,413

198,105

Gross margin

8,168

7,414

6,874

Operating expenses:

Distribution, selling, general, and administrative expenses

5,382

5,000

4,800

Restructuring and employee severance

175

Amortization and other acquisition-related costs

464

284

285

Acquisition-related cash and share-based compensation costs

126

—

Impairments and (gain)/loss on disposal of assets, net

634

1,246

Litigation (recoveries)/charges, net

(185)

(304)

Operating earnings

2,275

1,243

752

Other (income)/expense, net

(41)

(9)

Interest expense, net

215

Earnings before income taxes

2,101

1,201

663

Provision for income taxes

532

348

332

Net earnings

1,569

853

331

Less: Net earnings attributable to noncontrolling interests

(8)

(1)

Net earnings attributable to Cardinal Health, Inc.

1,561

852

330

Earnings per common share attributable to Cardinal Health, Inc.

Basic

6.48

3.48

1.27

Diluted

6.45

3.45

1.26

Weighted-average number of common shares outstanding:

Basic

241

245

261

Diluted

242

247

262

The accompanying notes are an integral part of these consolidated statements.

Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Consolidated Statements of Comprehensive Income

(in millions)

2025

2024

2023

Net earnings

1,569

853

331

Other comprehensive income/(loss):

Foreign currency translation adjustments and other

(3)

(1)

(35)

Net unrealized income/(loss) on derivative instruments, net of tax

(15)

(2)

Total other comprehensive income/(loss), net of tax

(16)

(37)

Total comprehensive income

1,581

837

294

Less: comprehensive income attributable to noncontrolling interests

(8)

(1)

Total comprehensive income attributable to Cardinal Health, Inc.

1,573

836

293

The accompanying notes are an integral part of these consolidated statements.

Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Consolidated Balance Sheets

June 30

(in millions)

2025

2024

Assets

Current assets:

Cash and equivalents

3,874

5,133

Trade receivables, net

13,242

12,084

Inventories, net

16,831

14,957

Prepaid expenses and other

2,414

2,663

Assets held for sale

Total current assets

36,373

34,884

Property and equipment, net

2,858

2,529

Goodwill and other intangibles, net

12,177

6,450

Other assets

1,714

1,258

Total assets

53,122

45,121

Liabilities and Shareholders’ Deficit

Current liabilities:

Accounts payable

34,713

31,759

Current portion of long-term obligations and other short-term borrowings

550

434

Other accrued liabilities

3,634

3,447

Total current liabilities

38,897

35,640

Long-term obligations, less current portion

7,977

4,658

Deferred income taxes and other liabilities

8,882

8,035

Shareholders’ deficit:

Preferred shares, without par value:

Authorized—

500 thousand

shares, Issued—

none

—

Common shares, without par value:

Authorized—

755 million

shares, Issued—

271 million

shares 327 million shares at

June 30, 2025

and 2024, respectively

2,956

2,917

Retained earnings/(accumulated deficit)

783

(286)

Common shares in treasury, at cost:

32 million

shares and 83 million shares at

June 30, 2025

and 2024, respectively

(6,365)

(5,677)

Accumulated other comprehensive loss

(155)

(167)

Total Cardinal Health, Inc. shareholders' deficit

(2,781)

(3,213)

Noncontrolling interests

147

Total shareholders’ deficit

(2,634)

(3,212)

Total liabilities and shareholders’ deficit

53,122

45,121

The accompanying notes are an integral part of these consolidated statements.

Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Consolidated Statements of Shareholders' Deficit

Common Shares

Treasury Shares

Accumulated

Other

Comprehensive

Loss

Noncontrolling

Interests

Total

Shareholders’

Deficit

(in millions)

Issued

Amount

Retained

Earnings/

(Accumulated

Deficit)

Amount

Balance at June 30, 2022

327

$ 2,813

(456)

(54) $ (3,128) $

(114) $

(882)

Net earnings

330

331

Other comprehensive loss, net of tax

(37)

Purchase of noncontrolling interests

(3)

Employee stock plans activity, net of shares

withheld for employee taxes

—

124

157

Share repurchase program activity

(100)

(25)

(1,907)

(2,007)

Dividends declared

(515)

Other

(1)

Balance at June 30, 2023

327

2,746

(642)

(76)

(4,911)

(151)

(2,957)

Net earnings

852

853

Other comprehensive loss, net of tax

(16)

Employee stock plans activity, net of shares

withheld for employee taxes

—

164

Share repurchase program activity

100

(9)

(859)

(759)

Dividends declared

(496)

Other

(1)

Balance at June 30, 2024

327

2,917

(286)

(83)

(5,677)

(167)

(3,212)

Net earnings

1,561

1,569

Other comprehensive loss, net of tax

Acquisitions

151

Employee stock plans activity, net of shares

withheld for employee taxes

—

108

Share repurchase program activity

(6)

(757)

Retirement of treasury stock

(56)

—

Dividends declared

(492)

Payments to noncontrolling interests

(12)

Other

(1)

—

(1)

Balance at June 30, 2025

271

$ 2,956

783

(32) $ (6,365) $

(155) $

147

(2,634)

The accompanying notes are an integral part of these consolidated statements.

Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Consolidated Statements of Cash Flows

(in millions)

2025

2024

2023

Cash flows from operating activities:

Net earnings

1,569

853

331

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization

790

710

692

Impairments and loss on sale of other investments

Impairments and (gain)/loss on disposal of assets, net

634

1,246

Share-based compensation

244

121

Provision for/(benefit from) deferred income taxes

243

(104)

(40)

Provision for bad debts

Change in operating assets and liabilities, net of effects from acquisitions and divestitures:

Increase in trade receivables

(833)

(996)

(950)

(Increase)/decrease in inventories

(1,816)

1,115

(412)

Increase in accounts payable

2,732

1,824

2,816

Other accrued liabilities and operating items, net

(606)

(433)

(997)

Net cash provided by operating activities

2,397

3,762

2,844

Cash flows from investing activities:

Acquisition of subsidiaries, net of cash acquired

(5,250)

(1,190)

(10)

Additions to property and equipment

(547)

(511)

(481)

Proceeds from net investment hedge terminations

Purchase of short-term time deposits

—

(550)

—

Proceeds from short-term investment in time deposit

200

350

—

Other investing items, net

Net cash used in investing activities

(5,593)

(1,849)

(454)

Cash flows from financing activities:

Proceeds from long-term obligations, net of issuance costs

3,669

1,139

—

Purchases and payments of noncontrolling interests, net

(12)

—

(3)

Reduction of long-term obligations

(445)

(783)

(579)

Net tax proceeds/(withholding) from share-based compensation

(13)

Dividends on common shares

(494)

(499)

(525)

Purchase of treasury shares

(765)

(750)

(2,000)

Net cash provided by/(used in) financing activities

1,940

(847)

(3,051)

Effect of exchange rates changes on cash and equivalents

(3)

(9)

(8)

Net increase/(decrease) in cash and equivalents

(1,259)

1,057

(669)

Cash and equivalents at beginning of period

5,133

4,076

4,745

Cash and equivalents at end of period

3,874

5,133

4,076

Supplemental Information:

Cash payments for interest

315

214

203

Net cash payments for income taxes

444

191

156

The accompanying notes are an integral part of these consolidated statements.

Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Notes to Consolidated Financial Statements

1. Basis of Presentation and Summary of Significant Accounting Policies

Cardinal Health, Inc. is a global healthcare services and products

company providing customized solutions for hospitals, healthcare

systems, pharmacies, ambulatory surgery centers, clinical

laboratories, and physician offices. We provide pharmaceuticals

and medical products and cost-effective solutions that enhance the

healthcare system and supply chain efficiency. References to “we,”

“our,” "us," and similar pronouns in these consolidated financial

statements are to Cardinal Health, Inc. and its majority-owned or

controlled subsidiaries, unless the context otherwise requires.

Our fiscal year ends on June 30. References to fiscal 2025, 2024,

and 2023 in these consolidated financial statements are to the

fiscal years ended June 30, 2025, 2024, and 2023, respectively.

Basis of Presentation

Our 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 consolidated financial statements from the date of the

acquisition or up to the date of disposal, respectively. Certain prior

year amounts have been reclassified to conform to the current

year presentation.

Use of Estimates

Our consolidated financial statements are prepared in accordance

with accounting principles generally accepted in the United States

(“GAAP”). The preparation of financial statements in conformity

with GAAP requires us to make estimates, judgments, and

assumptions that affect the amounts reported in the consolidated

financial statements and accompanying notes. Estimates,

judgments, and assumptions are used in the accounting and

disclosure related to, among other items, allowance for doubtful

accounts, inventory valuation and reserves, goodwill and other

intangible asset impairment, vendor reserves, loss contingencies

(including product liability and self-insurance accruals), and

income taxes. Actual amounts may differ from these estimated

amounts.

Cash Equivalents

We consider liquid investments purchased with an initial effective

maturity of three months or less to be cash equivalents. The

carrying value of cash equivalents approximates fair value.

Receivables and Allowance for Doubtful Accounts

Trade receivables are reported at their estimated collectible

amounts and presented net of an allowance for doubtful accounts

of $213 million and $233 million at June 30, 2025 and 2024,

respectively. In addition to credit losses, the allowance also

includes reserves related to customer disputes and late fees billed

to customers, which are recognized within our consolidated

statements of earnings as reductions of revenue. An account is

considered past due on the first day after its due date. In

accordance with contract terms, we generally have the ability to

charge customers service fees or higher prices if an account is

considered past due. We regularly monitor past due accounts and

establish appropriate reserves to cover potential losses, and

consider historical experience, pricing discrepancies, the current

economic environment, customer credit ratings or bankruptcies,

and reasonable and supportable forecasts to develop our

allowance for credit losses. We review these factors quarterly to

determine if any adjustments are needed to the allowance. We

write off any amounts deemed uncollectible against the

established allowance for doubtful accounts.

We provide financing to various customers. Such financing

arrangements range from 1 year to 5 years at interest rates that

are generally subject to fluctuation. Interest income on these

arrangements is recognized as it is earned. The financings may be

collateralized, guaranteed by third parties or unsecured. Finance

notes, net and related accrued interest were $32 million (current

portion $7 million) and $43 million (current portion $14 million) at

June 30, 2025 and 2024, respectively, and are included in other

assets (current portion is included in prepaid expenses and other)

in the consolidated balance sheets. Finance notes receivable

allowance for doubtful accounts were $2 million and $3 million at

June 30, 2025 and 2024, respectively. We estimate an allowance

for these financing receivables based on historical collection rates

and the creditworthiness of the customer. We write off any

amounts deemed uncollectible against the established allowance

for doubtful accounts.

Concentrations of Credit Risk

We maintain cash depository accounts with major banks, and we

invest in high quality, short-term liquid instruments, and in

marketable securities. Our short-term liquid instruments mature

within three months and we have not historically incurred any

related losses.

Our trade receivables and finance notes and related accrued

interest are exposed to a concentration of credit risk with certain

large customers and with customers in the retail and healthcare

sectors. Credit risk can be affected by changes in reimbursement

and other economic pressures impacting the healthcare industry.

With respect to customers in the retail and healthcare sectors,

such credit risk is limited due to supporting collateral and the

diversity of the customer base, including its wide geographic

dispersion. We perform regular credit evaluations of our

customers’ financial conditions and maintain reserves for losses

through the established allowance for doubtful accounts.

Historically, such losses have been within our expectations. Refer

to the "Receivables and Allowance for Doubtful Accounts" section

within this Note for additional information on the accounting

treatment of reserves for allowance for doubtful accounts.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Major Customers

CVS Health Corporation ("CVS Health") is our only customer that

individually accounted for at least 10 percent of revenue and/or

gross trade receivables in fiscal 2025. In fiscal 2024, both CVS

Health and OptumRx individually accounted for at least 10 percent

of revenue and/or gross trade receivables. These customers were

primarily serviced through our Pharmaceutical and Specialty

Solutions ("Pharma") segment. Our pharmaceutical distribution

contracts with OptumRx expired at the end of June 2024.

The following table summarizes historical percent of revenue and

gross trade receivables from CVS Health and OptumRx:

Percent of Revenue

Percent of Gross

Trade Receivables

at June 30

2025

2024

2023

2025

2024

CVS Health

30 %

24 %

25 %

26 %

22 %

OptumRx

—

17 %

16 %

—

6 %

We have entered into agreements with group purchasing

organizations (“GPOs”) which act as purchasing agents that

negotiate vendor contracts on behalf of their members. Vizient,

Inc. and Premier, Inc. are our two largest GPO member

relationships in terms of revenue. Sales to members of these two

GPOs collectively accounted for 27 percent, 16 percent, and 15

percent of revenue for fiscal 2025, 2024, and 2023, respectively.

Our trade receivable balances are with individual members of the

GPO, and therefore no significant concentration of credit risk exists

with these types of arrangements.

Inventories

A portion of our inventories (52 percent and 50 percent at June 30,

2025 and 2024, respectively) are valued at the lower of cost, using

the last-in, first-out ("LIFO") method, or market. These inventories

are included within the core pharmaceutical distribution facilities of

our Pharma segment (“distribution facilities”) and are primarily

merchandise inventories. The LIFO method presumes that the

most recent inventory purchases are the first items sold, so LIFO

helps us better match current costs and revenue. We believe that

the average cost method of inventory valuation provides a

reasonable approximation of the current cost of replacing inventory

within the distribution facilities. As such, the LIFO reserve is the

difference between (a) inventory at the lower of LIFO cost or

market and (b) inventory at replacement cost determined using the

average cost method of inventory valuation.

At June 30, 2025 and 2024, inventories valued at LIFO cost were

significantly in excess of the average cost value, respectively. We

do not record inventories in excess of replacement cost. As such,

we did not write-up the value of our inventory from average cost to

LIFO cost at June 30, 2025 or 2024.

Our remaining inventory, including inventory in our Global Medical

Products and Distribution ("GMPD") segment and certain inventory

in our Pharma segment, that is not valued at the lower of LIFO

cost or market is stated at the lower of cost, using the first-in, first-

out method, or net realizable value. Net realizable value is defined

as the estimated selling prices and estimated sales demand in the

ordinary course of business, less reasonably predictable costs of

completion, disposal, and transportation.

We reserve for inventory obsolescence using estimates based on

historical experience, historical and projected sales trends,

specific categories of inventory, age and expiration dates of on-

hand inventory, and manufacturer return policies. Inventories

presented in the consolidated balance sheets are net of reserves

for excess and obsolete inventory which were $132 million and

$149 million at June 30, 2025 and 2024, respectively.

Cash Discounts

Manufacturer cash discounts are recorded as a component of

inventory cost and recognized as a reduction of cost of products

sold as inventory is sold.

Property and Equipment

Property and equipment are carried at cost less accumulated

depreciation. Property and equipment held for sale are recorded at

the lower of cost less accumulated depreciation before the

decision to dispose of the asset was made or fair value less cost to

sell. When certain events or changes in operating conditions

occur, an impairment assessment may be performed on the

recoverability of the carrying amounts.

We capitalize project costs relating to computer software

developed or obtained for internal use when the activities related

to the project reach the application stage. Costs that are

associated with the preliminary stage activities, training,

maintenance, and all other post-implementation stage activities are

expensed as they are incurred.

Depreciation expense is computed using the straight-line method

over the estimated useful lives of the assets, including finance

lease assets which are depreciated over the terms of their

respective leases. We generally use the following range of useful

lives for our property and equipment categories: buildings and

improvements—3 to 39 years; machinery and equipment—3 to 20

years; capitalized software held for internal use—3 to 7 years; and

furniture and fixtures—3 to 7 years. We recorded depreciation and

amortization of capitalized software of $488 million, $470 million,

and $441 million for fiscal 2025, 2024, and 2023, respectively.

The following table presents the components of property and

equipment, net at June 30:

(in millions)

2025

2024

Land, building, and improvements

2,178

1,879

Machinery and equipment

2,685

2,367

Capitalized software held for internal use

1,940

1,744

Furniture and fixtures

136

128

Construction in progress

577

Total property and equipment, at cost

7,516

6,695

Accumulated depreciation and amortization

(4,658)

(4,166)

Property and equipment, net

2,858

2,529

Repairs and maintenance expenditures are expensed as incurred.

Interest on long-term projects is capitalized using a rate that

approximates the weighted-average interest rate on long-term

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

obligations, which was 5 percent at June 30, 2025. The amount of

capitalized interest was immaterial for all periods presented.

Business Combinations

The assets acquired and liabilities assumed in a business

combination, including identifiable intangible assets, are recorded

at their estimated fair values as of the acquisition date. The excess

of the purchase price over the estimated fair value of the

identifiable net assets acquired is recorded as goodwill. We base

the fair values of identifiable intangible assets on detailed

valuations that require management to make significant

judgments, estimates, and assumptions. Critical estimates and

assumptions include: expected future cash flows for customer

relationships, trade names, developed technology, and other

identifiable intangible assets; discount rates that reflect the risk

factors associated with future cash flows; and estimates of useful

lives. When an acquisition involves contingent consideration, we

recognize a liability equal to the fair value of the contingent

consideration obligation at the acquisition date. The estimate of fair

value of a contingent consideration obligation requires subjective

assumptions to be made regarding future business results,

discount rates, discount periods, and probabilities assigned to

various potential business result scenarios. See

Note 2

for

additional information regarding our acquisitions.

Goodwill and Other Intangible Assets

Purchased goodwill and intangible assets with indefinite lives are

not amortized, but instead are tested for impairment annually or

when indicators of impairment exist.

Purchased goodwill is tested for impairment at least annually.

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. There is an option to bypass the qualitative

assessment for any reporting unit in any period and proceed

directly to performing the quantitative goodwill impairment test. We

have elected to bypass the qualitative assessment for our annual

goodwill impairment test in the current year. The quantitative

goodwill impairment test involves a comparison of the estimated

fair value of the reporting unit to the respective carrying amount.

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. Following the acquisitions of

Integrated Oncology Network ("ION"), GI Alliance ("GIA"),

Advanced Diabetes Supply Group ("ADS"), and Urology America

we have reassessed our reporting units for goodwill impairment

testing.

As of June 30, 2025, our reporting units are: Pharma (excluding

Navista & ION and GIA), Navista & ION, GIA, GMPD, Nuclear and

Precision Health Solutions, OptiFreight

Logistics, at-Home

Solutions, and ADS. We anticipate at-Home Solutions and ADS

will be combined as a single reporting unit as the businesses are

integrated in the future.

Fair value can be determined using market, income, or cost-based

approaches. Our determination of estimated fair value of the

reporting units is based on a combination of the income-based and

market-based approaches. Under the income-based approach, we

use a discounted cash flow model in which cash flows anticipated

over several future periods, plus a terminal value at the end of that

time horizon, are discounted to their present value using an

appropriate risk-adjusted rate of return. We use our internal

forecasts to estimate future cash flows, which we believe are

consistent with those of a market participant, and include an

estimate of long-term growth rates based on our most recent views

of the long-term outlook for each reporting unit. Actual results may

differ materially from those used in our forecasts. We use discount

rates that are commensurate with the risks and uncertainty

inherent in the respective reporting units and in our internally-

developed forecasts. During fiscal 2025, discount rates used in our

reporting unit valuations ranged from 9.5 to 11 percent. Under the

market-based guideline public company method, we determine fair

value by comparing our reporting units to similar businesses or

guideline companies whose securities are actively traded in public

markets. We also use the guideline transaction method to

determine fair value based on pricing multiples derived from the

sale of companies that are similar to our reporting units. To further

confirm fair value, we compare the aggregate fair value of our

reporting units to our total market capitalization. Estimating the fair

value of reporting units requires the use of estimates and

significant judgments that are based on a number of factors

including forecasted operating results. The use of alternate

estimates and assumptions or changes in the industry or peer

groups could materially affect the determination of fair value for

each reporting unit and potentially result in goodwill impairment.

We performed annual impairment testing in fiscal 2025, 2024, and

2023 for our reporting units, which included Navista & ION in fiscal

2025. Due to the recent timing of their acquisitions, GIA and ADS

were not included in our annual impairment testing in fiscal 2025

as no indicators of impairment were present.

During fiscal 2024 and 2023, we recognized goodwill impairment

charges related to GMPD of $675 million and $1.2 billion,

respectively, which were included in impairments and (gain)/loss

on disposal of assets, net in our consolidated statements of

earnings. GMPD had no goodwill balance remaining as of March

31, 2024.

We concluded that there were no impairments of goodwill for the

remaining reporting units, excluding GMPD, in fiscal 2025, 2024,

and 2023 as the estimated fair value of each reporting unit

exceeded its carrying amount.

The impairment test for indefinite-lived intangibles other than

goodwill involves first assessing qualitative factors to determine if it

is more likely than not that the fair value of the indefinite-lived

intangible asset is less than its carrying amount. If so, then a

quantitative test is performed to compare the estimated fair value

of the indefinite-lived intangible asset to the respective asset's

carrying amount. Our qualitative evaluation requires the use of

estimates and significant judgments and considers the weight of

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

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 the indefinite-lived intangible asset is less than its

carrying amount.

Intangible assets with finite lives, primarily customer relationships;

trademarks, trade names, and patents; and developed technology,

are amortized using a combination of straight-line and accelerated

methods based on the expected cash flows from the assets over

their estimated useful lives. We review intangible assets with finite

lives for impairment whenever events or changes in circumstances

indicate that the related carrying amounts may not be recoverable.

Determining whether an impairment loss occurred requires a

comparison of the carrying amount to the sum of the future

forecasted undiscounted cash flows expected to be generated by

the asset group. Actual results may differ materially from those

used in our forecasts.

Assets Held for Sale

We classify assets and liabilities (the “disposal group”) as held for

sale when management commits to a plan to sell the disposal

group in its present condition and at a price that is reasonable in

relation to its current fair value. We also consider whether an

active program to locate a buyer has been initiated and if it is

probable that the sale will occur within one year without significant

changes to the plan to sell. Upon classification of the disposal

group as held for sale, we test the assets for impairment and

cease related depreciation and amortization.

In June 2024, we signed an agreement to sell the West Campus

Dublin, Ohio office space. At that time, we met the criteria for the

related assets to be classified as held for sale. During fiscal 2025,

the purchase agreement was terminated and the related assets

were reclassified as assets held for use. We evaluated and

recognized an impairment during fiscal 2025.

Investments

Investments in non-marketable equity securities are accounted for

under the fair value, equity, or net asset value method

of accounting and are included in other assets in the consolidated

balance sheets. For equity securities without a readily

determinable fair value, we use the fair value measurement

alternative and measure the securities at cost less impairment, if

any, including adjustments for observable price changes in orderly

transactions for an identical or similar investment of the same

issuer. For investments in which we can exercise significant

influence but do not control, we use the equity method of

accounting. Our share of the earnings and losses are recorded in

other (income)/expense, net in the consolidated statements of

earnings. We monitor our investments for impairment by

considering factors such as the operating performance of the

investment and current economic and market conditions.

Leases

Our leases are primarily for corporate and physician offices,

distribution facilities, vehicles, and equipment. We determine if an

arrangement is a lease at its inception by evaluating whether the

arrangement conveys the right to use an identified asset and

whether we obtain substantially all of the economic benefits from

and have the ability to direct the use of the asset. Our lease

agreements generally do not contain any material residual value

guarantees or material restrictive covenants.

Operating lease right-of-use assets and corresponding operating

lease liabilities are recognized in our consolidated balance sheets

at lease commencement date based on the present value of lease

payments over the lease term. Operating lease expense for

operating lease assets is recognized on a straight-line basis over

the lease term. As most of our leases do not provide an implicit

rate, we use our collateralized incremental borrowing rate based

on the information available at the lease commencement date in

determining the present value of lease payments. We use the

implicit rate if it is readily determinable.

Our lease agreements contain lease components and non-lease

components. For all asset classes, we have elected to account for

both of these components as a single lease component. We also,

from time to time, sublease portions of our real estate property,

resulting in sublease income. Sublease income and the related

assets and cash flows are not material to the consolidated financial

statements at or for the fiscal years ended June 30, 2025, 2024,

and 2023.

We apply a practical expedient for short-term leases whereby we

do not recognize a lease liability and right-of-use asset for leases

with a term of less than 12 months. Short-term lease expense

recognized in fiscal 2025, 2024, and 2023 was immaterial.

Our leases have remaining lease terms from less than 1 year up to

approximately 17 years. Our lease terms may include options to

extend or terminate the lease when it is reasonably certain and

there is a significant economic incentive to exercise that option.

See

Note 6

for additional information regarding leases.

Vendor Reserves

In the ordinary course of business, our vendors may dispute

deductions taken against payments otherwise due to them or

assert other disputes. These disputes are researched and resolved

based upon the findings of the research performed. At any given

time, there are outstanding items in various stages of research and

resolution. In determining appropriate reserves for areas of

exposure with our vendors, we assess historical experience and

current outstanding claims. We have established various levels of

reserves based on the type of claim and status of review. Though

the claim types are relatively consistent, we periodically update our

reserve estimates to reflect actual historical experience. The

ultimate outcome of certain claims may be different than our

original estimate and may require an adjustment. Adjustments to

vendor reserves are included in cost of products sold. In addition,

the reserve balance will fluctuate due to variations of outstanding

claims from period-to-period, timing of settlements and specific

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

vendor issues. Vendor reserves were $96 million and $112 million

at June 30, 2025 and 2024 respectively, excluding third-party

returns. See "Third-Party Returns" section within this Note for a

description of third-party returns.

Distribution Services Agreement and Other Vendor

Fees

Our Pharma segment recognizes fees received from distribution

services agreements and other fees received from vendors related

to the purchase or distribution of the vendors’ inventory when

those fees have been earned and we are entitled to payment.

Since the benefit provided to a vendor is related to the purchase

and distribution of the vendor’s inventory, we recognize the fees as

a reduction in the carrying value of the inventory that generated

the fees, and as such, a reduction of cost of products sold in our

consolidated statements of earnings when the inventory is sold.

Loss Contingencies and Self-Insurance

Loss Contingencies

We accrue for contingencies related to disputes, litigation, and

regulatory matters if it is probable that a liability has been incurred

and the amount of the loss can be reasonably estimated.

In connection with the opioid litigation as described further in

Note

, we recorded pre-tax charges of $5.6 billion

during fiscal 2021,

which were retained at Corporate. In February 2022, we and two

other national distributors announced that each company had

determined that a sufficient number of political subdivisions had

agreed to participate in the previously disclosed National Opioid

Settlement Agreement (the "NOSA") to settle the vast majority of

the opioid lawsuits filed by states and local governmental entities.

This NOSA became effective on April 2, 2022.

During fiscal 2024, we reached agreements to settle claims

brought by classes of third-party payors and acute care hospitals,

and the City of Baltimore.

We develop and periodically update reserve estimates for all

litigation matters, including the Cordis OptEase and TrapEase

inferior vena cava ("IVC") claims received to date and expected to

be received in the future and related costs. To project future IVC

claim costs, we use a methodology based largely on recent

experience, including claim filing rates, blended average payout

influenced by claim severity, historical sales data, implant and

injury to report lag patterns, and estimated defense costs. At June

30, 2025, we have a total of $56 million accrued for losses and

legal defense costs, related to the IVC filter product liability

lawsuits in our consolidated balance sheets, which includes the

$49 million in the qualified settlement fund.

The amount of ultimate loss may differ materially from these

estimates. We recognize these estimated loss contingencies,

income from favorable resolution of litigation, and certain defense

costs in litigation (recoveries)/charges, net in our consolidated

statements of earnings. See

Note 8

for additional information

regarding loss contingencies and product liability lawsuits.

Self-Insurance

We self-insure for employee healthcare, general liability, certain

product liability matters, auto liability, property, and workers'

compensation. Self-insurance accruals include an estimate for

expected settlements or pending claims, defense costs,

administrative fees, claim adjustment costs, and an estimate for

claims incurred but not reported.

Because these matters are inherently unpredictable and

unfavorable developments or resolutions can occur, assessing

contingencies and other liabilities is highly subjective and requires

judgments about future events. We regularly review contingencies

and our self-insurance accruals to determine whether our accruals

and related disclosures are adequate. Any adjustments for

changes in reserves are recorded in the period in which the

change in estimate occurs.

Guarantees

In the ordinary course of business, we agree to indemnify certain

other parties under acquisition and disposition agreements,

customer agreements, intellectual property licensing agreements,

and other agreements. Such indemnification obligations vary in

scope and, when defined, in duration. In many cases, a maximum

obligation is not explicitly stated, and therefore the overall

maximum amount of the liability under such indemnification

obligations cannot be reasonably estimated. Where appropriate,

such indemnification obligations are recorded as a liability.

Historically, we have not, individually or in the aggregate, made

payments under these indemnification obligations in any material

amounts. In certain circumstances, we believe that existing

insurance arrangements, subject to the general deduction and

exclusion provisions, would cover portions of the liability that may

arise from these indemnification obligations. In addition, we believe

that the likelihood of a material liability being triggered under these

indemnification obligations is not probable.

From time to time we enter into agreements that obligate us to

make fixed payments upon the occurrence of certain events. Such

obligations primarily relate to obligations arising under acquisition

transactions, where we have agreed to make payments based

upon the achievement of certain financial performance measures

by the acquired business. Generally, the obligation is capped at an

explicit amount. There were no material obligations at June 30,

2025.

Income Taxes

We account for income taxes using the asset and liability method.

Deferred tax assets and liabilities are measured using enacted tax

rates in the respective jurisdictions in which we operate. We

assess the realizability of deferred tax assets on a quarterly basis

and provide a valuation allowance for deferred tax assets when it

is more likely than not that at least a portion of the deferred tax

assets will not be realized. The realizability of deferred tax assets

depends on our ability to generate sufficient taxable income within

the carryback or carryforward periods provided for in the tax law

for each applicable tax jurisdiction and also considers all available

positive and negative evidence.

Deferred taxes for non-U.S. liabilities are not provided on the

unremitted earnings of subsidiaries outside of the United

States when it is expected that these earnings are indefinitely

reinvested.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

We operate in a complex multinational tax environment and are

subject to tax treaty arrangements and transfer pricing guidelines

for intercompany transactions that are subject to interpretation.

Uncertainty in a tax position may arise as tax laws are subject to

interpretation.

Tax benefits from uncertain tax positions are recognized when it is

more likely than not that the position will be sustained upon

examination of the technical merits of the position, including

resolutions of any related appeals or litigation processes. The

amount recognized is measured as the largest amount of tax

benefit that is greater than 50 percent likely of being realized upon

settlement. For tax benefits that do not qualify for recognition, we

recognize a liability for unrecognized tax benefits.

See

Note 9

for additional information regarding income taxes.

Other Accrued Liabilities

Other accrued liabilities represent various current obligations,

including certain accrued operating expenses, accrued rebates,

and taxes payable.

Variable Interest Entities

We evaluate our ownership, contractual, and other interests in

entities to determine if they are a variable interest entity (“VIE”), if

we have a variable interest in those entities, and the nature and

extent of those interests. These evaluations may involve

management judgment and the use of estimates and assumptions

based on available historical information, among other factors.

Based on our evaluations, if we determine we are the primary

beneficiary of such VIEs, we consolidate such entities into our

financial statements.

Consolidated Variable Interest Entities

We consolidate a VIE when we have the power to direct the

activities that most significantly impact the VIE’s economic

performance and the obligation to absorb losses or the right to

receive benefits of the VIE and, as a result, are considered the

primary beneficiary of the VIE.

In relation to the acquisition of GIA, we concluded that GIA is the

primary beneficiary and it consolidates the VIEs. The GIA VIEs do

not have a material impact on our consolidated statements of

earnings or consolidated statements of cash flows. Total assets

and liabilities included in the consolidated balance sheets for the

GIA VIEs were $601 million and $187 million, respectively, as of

June 30, 2025.

Noncontrolling Interests

Noncontrolling interests represent the portion of net earnings,

comprehensive income, and net assets that is not attributable to

Cardinal Health, Inc. Noncontrolling interests as of June 30, 2025

primarily represents third-party equity interests in ION. See

Note 2

for additional information on the acquisition of ION.

Share-Based Compensation

Cardinal Health, Inc. Plan

Share-based compensation provided to employees is recognized

in the consolidated statements of earnings based on the grant date

fair value of the awards. The fair value of restricted share units

("RSUs") is determined by the grant date market price of our

common shares. The fair value of performance share units

("PSUs"), which include a market-based condition, is determined

using a Monte Carlo valuation model. The key assumptions for the

Monte Carlo valuation model are as follows:

Award Year

Risk-Free Interest Rate

(2)

Expected Volatility

(3)

2023

3.12%

32.41 %

2023 Modified

(1)

5.13%

26.58 %

2024

4.66%

23.99 %

2025

3.89%

24.54 %

(1)

There was a modification of prior year awards in fiscal 2024 that required a

new Monte Carlo Simulation valuation model.

(2)

Based on the U.S. Treasury yields over a term comparable to the remaining

performance period.

(3)

Based on historical volatility and implied volatility indications.

The compensation expense associated with nonvested PSUs is

dependent on our periodic assessment of the probability of the

performance goals being achieved. Based on the extent to which

the performance goals are achieved and the Company's total

shareholder return ("TSR") relative to the S&P 500 Health Care

Index, vested shares may range from zero to 240 percent of the

target award amount. Compensation expense is recognized

regardless of the extent to which the market-based condition, the

Company's relative TSR, is satisfied.

The compensation expense recognized for share-based awards is

net of estimated forfeitures and is recognized ratably over the

service period of the awards. All income tax effects of share-based

awards are recognized in the consolidated statements of earnings

as awards vest or are settled. We classify share-based

compensation expense in distribution, selling, general, and

administrative ("SG&A") expenses to correspond with the same

line item as the majority of the cash compensation paid to

employees. If awards are modified in connection with a

restructuring activity, the incremental share-based compensation

expense is classified in restructuring and employee severance.

See

Note 15

for additional information regarding share-based

compensation.

GIA Share-Based Compensation

GIA, a majority-owned subsidiary of Cardinal Health, maintains

standalone share-based compensation plans. In connection with

the acquisition of physician practices, GIA issues common units in

GIA (collectively the “GIA Units”) to certain physicians and

management. The GIA Units contain forfeiture provisions ranging

from 36 to 60 months. These forfeiture provisions provide that the

unit holders forfeit all or a portion of the GIA Units should they

leave GIA, except in certain limited situations, effectively requiring

the unit holders to stay employed with the physician practice

managed by GIA in order to retain all of the granted GIA Units

during the forfeiture period.

These GIA Units are classified as liabilities under Accounting

Standards Codification ("ASC") 718. The fair value of the vested

GIA Units with no future service requirement are recorded as an

assumed liability at the acquisition date. The fair value of GIA Units

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

with a future service requirement are recognized on a straight-line

basis over the requisite service period.

The fair value of the GIA Units is remeasured at each reporting

period using a discounted cash flow method. The compensation

costs recognized each period reflects the change in the fair value

of the liability for the portion of the awards for which the requisite

service has been rendered.

See

Note 15

for additional information regarding share-based

compensation.

Dividends

We paid cash dividends per common share of $2.02, $2.00, and

$1.98 in fiscal 2025, 2024, and 2023, respectively.

Revenue Recognition

We recognize revenue in an amount that reflects the consideration

to which we expect to be entitled in exchange for the transfer of

goods or services to customers.

Revenue in our Pharma, GMPD, Nuclear and Precision Health

Solutions, and at-Home Solutions operating segments is primarily

related to the distribution of pharmaceutical and medical products,

which include both manufactured and sourced products, and we

recognize at a point in time when title transfers to customers and

we have no further obligation to provide services related to such

merchandise. OptiFreight

Logistics revenue is related to shipping,

freight management, and logistics management services. Service

revenues are recognized over the period that services are

provided to the customer, reduced by contractual adjustments to

third-party payors, discounts and implicit price concessions to

customers. Revenues derived from services from all segments are

immaterial for all periods presented.

We are generally the principal in a transaction, therefore our

revenue is primarily recorded on a gross basis. When we are a

principal in a transaction, we have determined that we control the

ability to direct the use of the product or service prior to transfer to

a customer, are primarily responsible for fulfilling the promise to

provide the product or service to our customer, have discretion in

establishing prices, and ultimately control the transfer of the

product or services provided to the customer.

Sales Returns and Allowances

Revenue is recorded net of sales returns and allowances.

Revenues are measured based on the amount of consideration

that we expect to receive, reduced by estimates for return

allowances, discounts, rebates, and other variable consideration.

Sales returns are recorded based on estimates using historical

data. Our customer return policies generally require that the

product be physically returned, subject to restocking fees. We only

allow customers to return products for credit in a condition suitable

to be added back to inventory and resold at full value

(“merchantable product”) or returned to vendors for credit. Product

returns are generally consistent throughout the year and typically

are not specific to any particular product or customer.

We accrue for estimated sales returns and allowances at the time

of sale based upon historical customer return trends, margin rates,

and processing costs. Our accrual for sales returns is reflected as

a reduction of revenue and cost of products sold for the sales price

and cost, respectively. At June 30, 2025 and 2024, the accrual for

estimated sales returns and allowances was $447 million and

$441 million, respectively, which is reflected in trade receivables,

net and inventories, net in the consolidated balance sheets. Sales

returns and allowances were $2.2 billion, for fiscal 2025, 2024, and

2023, and the net impact on net earnings in the consolidated

statements of earnings was immaterial in fiscal 2025, 2024, and

2023.

Third-Party Returns

We generally do not accept non-merchantable pharmaceutical

product returns from our customers, so many of our customers

return non-merchantable pharmaceutical products to the

manufacturer through third parties. Since our customers generally

do not have a direct relationship with manufacturers, our vendors

pass the value of such returns to us (usually in the form of an

accounts payable deduction). We, in turn, pass the value received

to our customer. In certain instances, we pass the estimated value

of the return to our customer prior to our receipt of the value from

the vendor. Although we believe we have satisfactory protections,

from time to time, we become subject to claims from customers or

vendors that our administration of this overall process is deficient

in some respect or our contractual terms with vendors are in

conflict with our contractual terms with our customers. We maintain

reserves for some of these situations based on their nature and

our historical experience with their resolution.

Shipping and Handling

Shipping and handling costs are primarily included in SG&A

expenses in our consolidated statements of earnings and include

all delivery expenses as well as all costs to prepare the product for

shipment to the end customer. Shipping and handling costs were

$909 million, $866 million, and $835 million, for fiscal 2025, 2024,

and 2023, respectively.

Restructuring and Employee Severance

Restructuring activities are programs that are not part of the

ongoing operations of our underlying business, such as

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 (including

rationalizing headcount or other significant changes in personnel),

and realigning operations (including realignment of the

management structure in response to changing market conditions).

Also included within restructuring and employee severance are

employee severance costs that are not incurred in connection with

a restructuring activity. See

Note 4

for additional information

regarding our restructuring activities.

Amortization and Other Acquisition-Related Costs

We classify certain costs incurred in connection with acquisitions

as amortization and other acquisition-related costs in our

consolidated statements of earnings. These costs consist of

amortization of acquisition-related intangible assets, amortization

as a result of basis differences in equity method investments,

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

transaction costs, integration costs, and changes in the fair value

of contingent consideration obligations. Transaction costs are

incurred during the initial evaluation of a potential acquisition and

primarily relate to costs to analyze, negotiate, and consummate

the transaction as well as due diligence activities. Integration costs

relate to activities required to combine the operations of an

acquired enterprise into our operations and, in the case of the

significant acquisitions with international operations, to stand-up

the systems and processes needed to support an expanded

geographic footprint. We record changes in the fair value of

contingent consideration obligations relating to acquisitions as

income or expense in amortization and other acquisition-related

costs. See

Note 5

for additional information regarding amortization

of acquisition-related intangible assets.

Translation of Foreign Currencies

Financial statements of our subsidiaries outside the United

States are generally measured using the local currency as the

functional currency. Adjustments to translate the assets and

liabilities of these foreign subsidiaries into U.S. dollars are

accumulated in shareholders’ equity through accumulated and

other comprehensive loss ("AOCI") utilizing period-end exchange

rates. Revenues and expenses of these foreign subsidiaries are

translated using average exchange rates during the year.

The foreign currency translation gains/(losses) included in AOCI at

June 30, 2025 and 2024 are presented in

Note 12

. Foreign

currency transaction gains and losses for the period are included

in the consolidated statements of earnings in the respective

financial statement line item.

Interest Rate, Currency, and Commodity Risk

All derivative instruments are recognized at fair value on the

consolidated balance sheets and all changes in fair value are

recognized in net earnings or shareholders’ equity through AOCI,

net of tax.

For contracts that qualify for hedge accounting treatment, the

hedge contracts must be effective at reducing the risk associated

with the exposure being hedged and must be designated as a

hedge at the inception of the contract. Hedge effectiveness is

assessed periodically. Any contract not designated as a hedge, or

so designated but ineffective, is adjusted to fair value and

recognized immediately in net earnings. If a fair value or cash flow

hedge ceases to qualify for hedge accounting treatment, the

contract continues to be carried on the balance sheet at fair value

until settled and future adjustments to the contract’s fair value are

recognized immediately in net earnings. If a forecasted transaction

is probable not to occur, amounts previously deferred in AOCI are

recognized immediately in net earnings. Interest payments

received from the cross-currency swap are excluded from the net

investment hedge effectiveness assessment and are recorded in

interest expense, net in the consolidated statements of earnings.

See

Note 11

for additional information regarding our derivative

instruments, including the accounting treatment for instruments

designated as fair value, cash flow, net investment, and economic

hedges.

Fair Value Measurements

Fair value is defined as the price that would be received upon

selling an asset or the price paid to transfer a liability on the

measurement date. It focuses on the exit price in the principal or

most advantageous market for the asset or liability in an orderly

transaction between willing market participants. A three-tier fair

value hierarchy is established as a basis for considering such

assumptions and for inputs used in the valuation methodologies in

measuring fair value. This hierarchy requires entities to maximize

the use of observable inputs and minimize the use of unobservable

inputs. The three levels of inputs used to measure fair values are:

Level 1 - Observable prices in active markets for identical assets

and liabilities.

Level 2 - Observable inputs other than quoted prices in active

markets for identical assets and liabilities.

Level 3 - Unobservable inputs that are supported by little or no

market activity and that are significant to the fair value of

the assets and liabilities.

See

Note 10

for additional information regarding fair value

measurements.

Recently Adopted Financial Accounting Standards

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. The

Company adopted the new guidance in our fiscal 2025 Form 10-K.

The new standard did not have an impact on the company's

consolidated financial statements but required additional

disclosures. See

Note 14

for additional information.

Recently Issued Financial Accounting Standards

and Disclosure Rules Not Yet Adopted

We assess the adoption impacts of recently issued accounting

standards by the FASB on our consolidated financial statements

as well as material updates to previous assessments, if any, from

our fiscal 2024 Form 10-K.

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.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03 Income

Statement - Reporting Comprehensive Income - Expense

Disaggregation Disclosures (Subtopic 220-40), which requires

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

disaggregated disclosures of certain categories of expenses which

are included in any relevant income statement expense caption on

an annual and interim basis. Additionally, the guidance requires

the disclosure of total selling expenses and, in annual reporting

periods, an entity's definition of selling expenses. This guidance

will be effective for us in our fiscal 2028 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.

2. Acquisitions

Advanced Diabetes Supply Group ("ADS")

On April 1, 2025, we completed the acquisition of ADS, one of the

country's leading diabetic medical supplies providers to patients in

the home, for a purchase price of approximately $1.1 billion in

cash, subject to certain adjustments. ADS serves approximately

500,000 patients annually by providing diabetes therapies from

leading manufacturers. ADS is part of our at-Home Solutions

operating segment and we report ADS results in Other.

We financed the acquisition of ADS with a combination of cash on

hand and cash proceeds from new debt financing as described in

Note 6

Transaction and integration costs associated with the ADS

acquisition were $31 million during fiscal 2025.

GI Alliance ("GIA")

On January 30, 2025, we completed the acquisition of a 73

percent

ownership

interest

GIA,

gastroenterology

management services organization, for a purchase price of

approximately $2.8 billion in cash, subject to certain adjustments.

Beginning on the third anniversary of the closing, we have the

ability to exercise a call right to purchase up to 100 percent of the

remaining outstanding interests. GIA's management services

organization platform includes over 900 physicians across 345

practice locations in 20 states and has the ability to further expand

both geographically and in other key therapeutic areas.

We have accounted for the acquisition of the ownership interest in

GIA as a business combination in accordance with ASC 805. We

consolidate the results of GIA in our consolidated financial

statements and report those consolidated results within our

Pharma segment.

Additionally, on May 30, 2025, we, through GIA, completed the

acquisition of Urology America, a urology management services

organization, for a purchase price of $360 million in cash and GIA

equity, subject to certain adjustments.

Transaction and integration costs associated with the GIA

acquisitions were $75 million during fiscal 2025.

Integrated Oncology Network ("ION")

On December 2, 2024, we completed the acquisition of ION, a

physician-led independent community oncology network, for a

purchase price of $1.1 billion in cash, subject to certain

adjustments. ION is a management services organization that

supports more than 50 practice sites in 10 states representing

more than 100 providers. ION supports a continuum of care across

its member sites including medical oncology, radiation oncology,

urology diagnostic testing, and other ancillary services. As part of

the transaction, ION practices were integrated into Navista, our

managed services organization intended to enhance efficiency for

providers and patients, enable additional capabilities, and increase

practice profitability of independent community oncologists. We

report ION results within our Pharma segment. The portion of ION

net earnings attributable to noncontrolling interest holders is

reported as a reduction to net earnings in the consolidated

statements of earnings. The acquisition was funded with available

cash on hand.

Transaction and integration costs associated with the ION

acquisition were $30 million during fiscal 2025.

Specialty Networks

On March 18, 2024, we completed the acquisition of Specialty

Networks for a purchase price of $1.2 billion in cash. 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 results are reflected within our

Pharma segment.

Transaction and integration costs associated with the Specialty

Network acquisition were $7 million and $16 million during fiscal

2025 and 2024, respectfully.

The acquisitions have positively impacted respective segment

revenue and segment profit while increasing amortization and

other acquisition-related costs and acquisition-related cash and

share-based compensation costs during fiscal 2025.

Fair Value of Assets Acquired and Liabilities

Assumed

The allocation of the purchase price for the acquisition of Urology

America, ADS, GIA, and ION are not yet finalized and are subject

to adjustment as we complete the valuation analysis of these

acquisitions. The purchase prices are also subject to adjustment

based on working capital requirements as set forth in the

acquisition agreement.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

The following table summarizes the estimated fair values of the

assets acquired and liabilities assumed as of the acquisition date

for Urology America, ADS, GIA, ION, and Specialty Networks:

(in millions)

Urology

America

ADS

GIA

ION

Specialty

Networks

Identifiable intangible

assets:

Customer intangibles (1)

—

$ 472

—

$ 226

480

Trade names (2)

200

Developed technology and

Other (3)

—

Non-competition

agreements (4)

—

Total identifiable

intangible assets

acquired

500

223

299

520

Identifiable net assets/

(liabilities):

Cash and equivalents

Trade receivables, net

191

Inventories

—

Prepaid expenses and

other

Property and equipment,

net

—

Other assets

376

312

—

Accounts payable

(20) (104)

(89)

(10)

—

Current portion of long-

term obligations and other

short-term borrowings

—

(1)

(3)

—

Other accrued liabilities

(11) (493) (173)

(39)

(13)

Long-term obligations, less

current portion

(6)

—

(15)

(14)

—

Deferred income taxes and

other liabilities

(46)

(12) (947)

(90)

(120)

Total identifiable net

assets/(liabilities)

acquired

465

(336)

310

429

Noncontrolling interest

—

(151)

—

Goodwill

307

578

3,124

910

784

Total net assets

acquired

360

$ 1,043

$ 2,788

$ 1,069

1,213

(1) The weighted-average useful life of customer intangibles ranges from 10 years

to 20 years.

(2) The weighted-average useful life of trade names ranges from 2 years to 10

years.

(3) The weighted-average useful life of developed technology and other is 8 years.

(4) The weighted-average useful life of non-competition agreements is 4 years.

The valuation of identifiable intangible assets utilizes significant

unobservable inputs and thus represents a Level 3 nonrecurring

fair value measurement. The discount rates used to arrive at the

present values of the identifiable intangible assets for Urology

America, ADS, GIA, ION, and Specialty Networks ranged from 7 to

20 percent, and reflect their internal rates of return and uncertainty

in the cash flow projections, which is reflective of market

participant assumptions.

The estimated fair value of ION customer intangibles (customer

contracts) were 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 estimated fair value of ADS customer intangibles (payor

contracts) were determined using a multi-period excess earnings

method, which estimates an intangible asset's value based on the

present value of the incremental after-tax cash flows (or “excess

earnings”) attributable only to the intangible asset.

The fair value of the Urology America, ADS, GIA, and ION

trademark intangible assets were determined utilizing the relief

from royalty method, an income-based approach. Under this

method, a royalty rate based on observed market royalties is

applied to projected revenue supporting the trademarks and

discounted to present value using an appropriate discount rate.

The fair value of the non-compete intangibles acquired from GIA

were determined by applying the differential cash flow method

which compares the present value of cash flows with and without

the non-compete agreements in place.

The vested GIA Units were recognized at their acquisition date fair

values of $739 million in deferred income taxes and other liabilities

in the consolidated balance sheet. The valuation of the GIA Units

utilizes significant unobservable inputs and thus represents a

recurring Level 3 fair value measurement. The fair value of the GIA

Units was determined using a discount rate of 9.5% and an

estimated weighted average service period of two years.

The noncontrolling interest for ION was recognized at the

acquisition-date fair value of $151 million.

The allocation of the fair value of assets acquired and liabilities

assumed for the Specialty Networks acquisition was finalized

during fiscal 2025, resulting in goodwill of $784 million. There were

no significant adjustments to the allocation of the fair value of

assets acquired and liabilities assumed for the Specialty Networks

acquisition from those disclosed in our fiscal 2024 Form 10-K.

3. Divestitures

Outcomes

On June 5, 2023, we signed a definitive agreement to contribute

the Outcomes™ business to TDS, a portfolio company of

BlackRock Long Term Private Capital and GTCR, in exchange for

a 16 percent equity interest in the combined entity. The transaction

closed on July 10, 2023 and we recognized a pre-tax gain of $53

million during the three months ended September 30, 2023, which

was included in impairments and (gain)/loss on disposal of assets,

net in our consolidated statements of earnings. This gain includes

our initial recognition of an equity method investment in the

combined entity for $147 million, which was recorded in other

assets in our consolidated balance sheets.

We determined that the divestiture of the Outcomes™ business

does not meet the criteria to be classified as discontinued

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

operations. The Outcomes™ business operated and its results

were reported within our Pharma segment before the divestiture.

4. Restructuring and Employee Severance

The following table summarizes restructuring and employee

severance costs:

(in millions)

2025

2024

2023

Employee-related costs

Facility exit and other costs

Total restructuring and employee

severance

175

Employee-related costs primarily consist of termination benefits

provided to employees who have been involuntarily terminated,

duplicate payroll costs, and retention bonuses incurred during

transition periods. Facility exit and other costs primarily consist of

project consulting fees, accelerated depreciation, professional

project management and other service fees to support divestitures,

costs associated with vacant facilities, and certain other

divestiture-related costs.

Restructuring and employee severance costs in fiscal 2025, 2024,

and 2023 include costs related to certain initiatives to rationalize

our manufacturing operations and the implementation of certain

enterprise-wide

cost-savings

measures.

The

increase

restructuring and employee severance in fiscal 2024 was primarily

due to estimated severance costs related to these cost-savings

measures and costs related to certain projects resulting from the

reviews of our strategy, portfolio, capital-allocation framework, and

operations. During fiscal 2023, restructuring and employee

severance included costs related to the divestiture of the Cordis

business.

The following table summarizes activity related to liabilities

associated with restructuring and employee severance:

(in millions)

Employee-

Related Costs

Facility Exit

and Other Costs

Total

Balance at June 30, 2023

Additions

Payments and other adjustments

(26)

(10)

(36)

Balance at June 30, 2024

Additions

—

Payments and other adjustments

(53)

(5)

(58)

Balance at June 30, 2025

—

5. Goodwill and Other Intangible Assets

Goodwill

The following table summarizes the changes in the carrying

amount of goodwill for the two reportable segments and the

remaining operating segments, included in Other and in total:

(in millions)

Pharmaceutical

and Specialty

Solutions

Global

Medical

Products

and

Distribution

(1)

Other

(2) (3)

Total

Balance at June 30,

2023

2,762

681

1,170

4,613

Goodwill acquired,

net of purchase

price adjustments

793

(3)

—

790

Foreign currency

translation

adjustments and

other

—

(3)

—

(3)

Goodwill

Impairment

—

(675)

—

(675)

Balance at June 30,

2024

3,555

—

1,170

4,725

Goodwill acquired,

net

purchase

price adjustments

4,389

—

578

4,967

Foreign currency

translation

adjustments and

other

(1)

—

(1)

Balance at June

30, 2025

7,943

—

1,748

9,691

(1)

At June 30, 2025 and 2024, the GMPD segment accumulated goodwill

impairment loss was $5.4 billion.

(2)

At June 30, 2025 and 2024, the Nuclear and Precision Health Solutions

accumulated goodwill impairment loss was $829 million.

(3)

Comprised of the remaining operating segments, Nuclear and Precision

Health Solutions, at-Home Solutions, and OptiFreight

Logistics.

The increase in the Pharma segment goodwill is primarily due to

the GIA and ION acquisitions that occurred during fiscal 2025. The

increase in the Other segment goodwill is due to the ADS

acquisition that occurred during fiscal 2025. Goodwill recognized in

connection with these acquisitions primarily represent the

expected benefits from the expected growth from new customers,

the assembled workforce of the acquired entities, and synergies of

integrating these businesses. Substantially all of the goodwill

recorded is expected to be nondeductible for income tax purposes.

During fiscal 2025, we did not identify any indicators of impairment

within our reporting units.

We performed interim quantitative goodwill impairment testing for

GMPD at September 30, 2023 and March 31, 2024, which resulted

in pre-tax goodwill impairment charges of $585 million and

$90 million, respectively. GMPD goodwill was fully impaired during

the third quarter of fiscal 2024. During fiscal 2023, GMPD had

cumulative pre-tax impairment charges of $1.2 billion. These

goodwill impairment charges are recorded in impairments and

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

(gain)/loss on disposal of assets, net in our consolidated

statements of earnings.

In connection with the divestiture of the Outcomes business,

during fiscal 2023, we allocated and reclassified $24 million of

goodwill from the Pharma operating segment to the Outcomes

disposal group based on the estimated relative fair values of the

business to be disposed of and the portion of the reporting unit that

was retained.

Other Intangible Assets

The following tables summarize other intangible assets by class at

June 30:

2025

(in millions)

Gross

Intangible

Accumulated

Amortization

Net

Intangible

Weighted-

Average

Remaining

Amortization

Period (Years)

Indefinite-life

intangibles:

Trademarks and

patents

—

N/A

Total indefinite-

life intangibles

—

N/A

Definite-life

intangibles:

Customer

intangibles

3,876

2,639

1,237

Trademarks,

trade names, and

patents

1,340

459

881

Developed

technology and

other

1,030

726

304

Non-Competition

Agreements

Total definite-

life intangibles

6,318

3,845

2,473

Total other

intangible

assets

6,331

3,845

2,486

N/A

2024

(in millions)

Gross

Intangible

Accumulated

Amortization

Net

Intangible

Indefinite-life intangibles:

Trademarks and patents

—

Total indefinite-life intangibles

—

Definite-life intangibles:

Customer intangibles

3,628

2,431

1,197

Trademarks, trade names, and

patents

561

408

153

Developed technology and other

1,047

684

363

Total definite-life intangibles

5,236

3,523

1,713

Total other intangible assets

5,248

3,523

1,725

The increase in definite-life intangibles is primarily due to the ADS,

GIA, and ION acquisitions. Total amortization of intangible assets

was $303 million, $264 million, and $281 million for fiscal 2025,

2024, and 2023, respectively. The estimated annual amortization

for intangible assets for fiscal 2026 through 2030 is as follows:

$360 million, $364 million, $330 million, $307 million, and $284

million.

6. Leases

The following table summarizes the components of lease cost:

(in millions)

2025

2024

2023

Operating lease cost

157

120

112

Finance lease cost

Variable lease cost

Total lease cost

251

190

164

Variable lease cost primarily includes payments for property taxes,

maintenance, and insurance.

The following table summarizes supplemental balance sheet and

other information related to leases at June 30:

(in millions)

2025

2024

Operating Leases

Operating lease right-of-use assets

758

475

Current portion of operating lease

liabilities

164

117

Long-term operating lease liabilities

654

400

Total operating lease liabilities

818

517

Finance Leases

Finance lease right-of-use assets

192

102

Current portion of finance lease

liabilities

Long-term finance lease liabilities

157

Total finance lease liabilities

201

108

Weighted-average remaining lease

term (years)

Operating leases

5.9 years

5.5 years

Finance leases

6.3 years

4.1 years

Weighted-average discount rate

Operating leases

3.9 %

4.1 %

Finance leases

4.6 %

4.4 %

Increases in the right-of-use asset and liability balances are primarily due to

acquisitions.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Operating leases are included in other assets, other accrued

liabilities, and deferred income taxes and other liabilities in our

consolidated balance sheets. Finance leases are included in

property and equipment, net, current portion of long-term

obligations and other short-term borrowings, and long-term

obligations, less current portion in our consolidated balance

sheets.

The following table summarizes supplemental cash flow

information related to leases:

(in millions)

2025

2024

2023

Cash paid for lease liabilities:

Operating cash flows paid

for operating leases

167

124

119

Financing cash flows paid

for finance leases

Non-cash right-of-use assets

obtained in exchange for lease

obligations:

New operating leases

130

143

New finance leases

107

Future lease payments under non-cancellable leases as of

June 30, 2025 were as follows:

(in millions)

Operating

Leases

Finance

Leases

Total

2026

197

249

2027

174

219

2028

146

181

2029

111

136

2030

116

Thereafter

199

256

Total future lease payments

924

233

1,157

Less: imputed interest

106

138

Total lease liabilities

818

201

1,019

7. Long-Term Obligations and Other Short-Term

Borrowings

The following table summarizes long-term obligations and other

short-term borrowings at June 30:

(in millions) (1)

2025

2024

3.5% Notes due 2024

—

401

3.75% Notes due 2025

501

507

4.7% Notes due 2026

498

—

3.41% Notes due 2027

1,206

1,191

5.125% Notes due 2029

645

644

5.0% Notes due 2029

745

—

5.45% Notes due 2034

501

491

5.35% Notes due 2034

989

—

4.6% Notes due 2043

323

308

4.5% Notes due 2044

338

330

4.9% Notes due 2045

438

423

4.368% Notes due 2047

566

563

5.75% Notes due 2054

641

—

7.0% Debentures due 2026

124

Floating Rate Term Loan due 2028

799

—

Other Obligations

213

110

Total

8,527

5,092

Less: current portion of long-term obligations

and other short-term borrowings

550

434

Long-term obligations, less current

portion

7,977

4,658

(1) Maturities are presented on a calendar year basis.

Maturities of existing long-term obligations and other short-term

borrowings for fiscal 2026 through 2030 and thereafter are as

follows: $553 million, $1.9 billion, $834 million, $670 million,

$764 million, and $3.9 billion.

Long-Term Debt

All the notes represent unsecured obligations of Cardinal Health,

Inc. and rank equally in right of payment with all of our existing and

future unsecured and unsubordinated indebtedness. The 7.0%

Debentures represent unsecured obligations of Allegiance

Corporation (a wholly-owned subsidiary), which Cardinal Health,

Inc. has guaranteed. None of these obligations are subject to a

sinking fund and the Allegiance obligations are not redeemable

prior to maturity. Interest is paid pursuant to the terms of the

obligations. These notes are effectively subordinated to the

liabilities of our subsidiaries, including trade payables of

$34.7 billion and $31.8 billion at June 30, 2025 and 2024,

respectively.

During fiscal 2025, we issued additional debt, with the aggregate

principal amount of $2.9 billion, to fund a portion of the

consideration payable in connection with the GIA and ADS

acquisitions and for general purposes. The notes issued are

$500 million aggregate principal amount of 4.7% Notes that mature

on November 15, 2026, $750 million aggregate principal amount of

5.0% Notes that mature on November 15, 2029, $1.0 billion

aggregate principal amount of 5.35% Notes that mature on

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

November 15, 2034, and $650 million aggregate principal amount

of 5.75% Notes that mature on November 15, 2054. The proceeds

of the notes issued, net of discounts, premiums, and debt issuance

costs, were $2.9 billion.

During fiscal 2025, we repaid the full principal of $400 million of the

3.5% Notes due 2024 at maturity with proceeds from the debt

issuance in fiscal 2024, $200 million of which were invested in

short-term time deposits and classified as prepaid expenses and

other in our consolidated balance sheets at June 30, 2024. All

short-term time deposits related to the debt issuance in fiscal 2024

have matured.

During fiscal 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. During fiscal 2024, we repaid

the full principal of $750 million of the 3.079% Notes due 2024 at

maturity. 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.

If we undergo a change of control, as defined in the notes, and if

the notes receive specified ratings below investment grade by

each of Standard & Poor's Ratings Services, Moody’s Investors

Services and Fitch Ratings, any holder of the notes, excluding the

debentures, can require with respect to the notes owned by such

holder, or we can offer, to repurchase the notes at 101% of the

principal amount plus accrued and unpaid interest.

Other Financing Arrangements

In addition to cash and equivalents and operating cash flow, other

sources of liquidity include a $3.0 billion commercial paper

program backed by a $2.0 billion revolving credit facility that

expires in February 2028 and a $1.0 billion 364-Day revolving

credit facility that expires in October 2025. We also have a $1.0

billion committed receivables sales facility.

On December 5, 2024, we entered into a term loan credit

agreement that, among other things, provides commitments for a

term loan facility in an aggregate amount of up to $1.0 billion. On

April 1, 2025, we closed on our acquisition of ADS and borrowed

$800 million under this term loan facility. The loan provided under

this term loan credit agreement will mature in April 2028 and

allows for prepayment, which may be accelerated pursuant to

certain conditions specified in the credit agreement. Interest rates

on borrowings will be based on prevailing interest rates,

benchmarked based on Term SOFR and subject to our credit

ratings.

In November 2024, we also obtained a commitment letter from a

financial institution for a $2.9 billion unsecured bridge term loan

facility that could have been used to complete the acquisition of

GIA. We incurred fees related to the facility, which are included in

interest expense, net. The unsecured bridge term loan facility was

never entered into and we terminated the commitment letter on

November 22, 2024.

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

("CH-23 Funding") was added as a seller under our committed

receivables sales facility. Each of CHF and CH-23 Funding was

organized for

the sole purpose of buying receivables and selling

undivided interests in those receivables to third-party purchasers.

Although consolidated with Cardinal Health, Inc. in accordance

with GAAP, each of CHF and CH-23 Funding is a separate legal

entity from Cardinal Health, Inc. and from our respective subsidiary

that sells receivables to CHF or CH-23 Funding, as applicable.

Each of CHF and CH-23 Funding is designed to be a special

purpose, bankruptcy-remote entity whose assets are available

solely to satisfy the claims of its respective creditors.

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 June 30, 2025, we were in compliance with

this financial covenant.

At June 30, 2025 and 2024, we had no amounts outstanding under

the revolving credit facility; however, availability was reduced by

outstanding letters of credit of $1 million at both June 30, 2025 and

2024.

During fiscal 2025, we had a daily maximum amount outstanding

under our commercial paper and committed receivables programs

of $633 million.

We had no amounts outstanding as of June 30, 2025 under the

committed receivables sales facility program; however, availability

was reduced by outstanding standby letters of credit of $31 million

at both June 30, 2025 and 2024.

We had no amounts outstanding under the commercial paper

program as of June 30, 2025 and 2024.

The $213 million and $110 million balance of other obligations at

June 30, 2025 and 2024, respectively, consisted of finance leases

and short-term borrowings.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

8. Commitments, Contingent Liabilities, and

Litigation

Commitments

Generic Sourcing Venture with CVS Health

In July 2014, we established Red Oak Sourcing, LLC ("Red Oak

Sourcing"), a U.S.-based generic pharmaceutical sourcing venture

with CVS Health for an initial term of 10 years. Red Oak Sourcing

negotiates generic pharmaceutical supply contracts on behalf of its

participants. In August 2021, we amended our agreement to

extend the term through June 2029. We are required to make

quarterly payments to CVS Health for the term of the arrangement.

Contingencies

New York Opioid Stewardship Act

In 2018, the State of New York adopted the Opioid Stewardship

Act (the "OSA"), which created an aggregate $100 million annual

assessment on all manufacturers and distributors that was

assessed based on each manufacturer or distributor's share of the

total morphine milligram equivalents sold or distributed in New

York, the applicability of which was ultimately limited to two years

(2017 and 2018).

Since fiscal 2021, we have made certain payments to New York

State for our portion of the assessment. However, we, and other

distributors, challenged the OSA as unconstitutional. In May 2024,

the New York Appellate Division held that the 2017 assessment

was unconstitutionally retroactive, directing a refund of

assessments paid for calendar year 2017, but upheld the 2018

assessment. In fiscal 2025, both parties agreed to a settlement

which will result in a refund of the portion we paid for calendar year

2017. The refund will be recognized upon receipt of the settlement.

Legal Proceedings

We become involved from time to time in disputes, litigation, and

regulatory matters.

From time to time, we determine that products we distribute,

source, manufacture, or market do not meet our specifications,

regulatory requirements, or published standards. When we or a

regulatory agency identify a potential quality or regulatory issue,

we investigate and take appropriate corrective action. Such actions

have led to product recalls, costs to repair or replace affected

products, temporary interruptions in product sales, restrictions on

importation, product liability claims and lawsuits, and can lead to

action by regulators. Even absent an identified regulatory or quality

issue or product recall, we can become subject to product liability

claims and lawsuits.

From time to time, we become aware through employees, internal

audits, or other parties of possible compliance matters, such as

complaints or concerns relating to accounting, internal accounting

controls, financial reporting, auditing, or other ethical matters or

relating to compliance with laws such as healthcare fraud and

abuse, anti-corruption, or anti-bribery laws. When we become

aware of such possible compliance matters, we investigate

internally and take appropriate corrective action. In addition, from

time to time, we receive subpoenas or requests for information

from various federal or state agencies relating to our business or to

the business of a customer, supplier, or other industry participants.

Internal investigations, subpoenas, or requests for information

could directly or indirectly lead to the assertion of claims or the

commencement of legal proceedings against us or result in

sanctions.

We have been named from time to time in qui tam actions initiated

by private third parties. In such actions, the private parties purport

to act on behalf of federal or state governments, allege that false

claims have been submitted for payment by the government and

may receive an award if their claims are successful. After a private

party has filed a qui tam action, the government must investigate

the private party's claim and determine whether to intervene in and

take control over the litigation. These actions may remain under

seal while the government makes this determination. If the

government declines to intervene, the private party may

nonetheless attempt to continue to pursue the litigation on his or

her own purporting to act on behalf of the government.

We accrue for contingencies related to disputes, litigation, and

regulatory matters if it is probable that a liability has been incurred

and the amount of the loss can be reasonably estimated. Because

these matters are inherently unpredictable and unfavorable

developments or resolutions can occur, assessing contingencies is

highly subjective and requires judgments about future events. We

regularly review contingencies to determine whether our accruals

and related disclosures are adequate. The amount of ultimate loss

may differ from these estimates.

We recognize income from the favorable outcome of litigation

when we receive the associated cash or assets.

We recognize estimated loss contingencies for certain litigation

and regulatory matters and income from favorable resolution of

litigation in litigation (recoveries)/charges, net in our consolidated

statements of earnings; however, losses and recoveries of lost

profits from disputes that occur in the ordinary course of business

are included within segment profit.

Because loss contingencies are inherently unpredictable and

unfavorable developments or resolutions can occur, the

assessment is highly subjective and requires judgments about

future events. We regularly review litigation matters to determine

whether an accrual is appropriate or, where applicable, whether

our accrual is adequate. The amount of ultimate loss may differ

materially from amounts accrued, whether as a result of settlement

discussions, a judicial decision or verdict, or otherwise. Unless

otherwise disclosed, we are not able to estimate a range of

reasonably possible losses, or additional losses for these matters.

Opioid Lawsuits and Investigations

As of June 30, 2025, we have $4.9 billion accrued for the opioid-

related matters described below, of which $628 million is included

in other accrued liabilities and the remainder is included in

deferred income taxes and other liabilities in our consolidated

balance sheets. During fiscal 2025, we made payments totaling

$798 million, which included our fourth annual payment under the

agreement to settle the vast majority of the opioid lawsuits filed by

states and local governmental entities and payments related to the

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

settlement agreements with the City of Baltimore and classes of

third-party payors and acute care hospitals.

During fiscal 2025, there were no material expenses recognized

for these matters. During fiscal 2024, we recognized expense of

$340 million in connection with opioid-related matters, including

agreements to settle claims brought by classes of third-party

payors and acute care hospitals, and settlements with the City of

Baltimore and the State of Alabama. This expense was partially

offset by a benefit of $105 million related to prepayments at a

prenegotiated discount of certain future payments totaling

$344 million.

States & Political Subdivisions

In April 2022, we along with two other national distributors

(collectively, the "Distributors"), without admitting liability or

wrongdoing, became parties to the NOSA to settle the vast

majority lawsuits and claims brought by states and political

subdivisions related to the distribution of opioid pain medications.

In addition to the Distributors, parties to the NOSA include 48

states, the District of Columbia, and 5 U.S. territories. The NOSA

also resulted in the resolution of the opioid-related claims of over

99 percent of political subdivisions in settling states (together with

settling states and territories, the “Settling Governmental Entities").

Through July 2025, we have paid the Settling Governmental

Entities approximately $2.2 billion and we expect to pay Settling

Governmental Entities additional amounts up to $4.1 billion

through 2038. As required under the NOSA, a monitor is

overseeing compliance with the Injunctive Relief provisions of the

NOSA until 2027 and the distributors have engaged a third-party

vendor to act as a clearinghouse for data aggregation and

reporting, which distributors will fund until 2032.

During fiscal 2024, we recognized a $22 million charge in litigation

(recoveries)/charge, net in the consolidated statements of earnings

related to agreements with the Alabama Attorney General to pay

approximately $123 million to the State of Alabama over a period

of ten years and with the City of Baltimore to resolve their opioid-

related claims for approximately $153 million.

West Virginia subdivisions and Native American tribes were not a

part of the NOSA. In July 2022, a judgment in favor of the

Distributors was entered in bench trial before a federal judge in

West Virginia in a case brought by Cabell County and City of

Huntington Plaintiffs have appealed this decision to the Fourth

Circuit Court of Appeals. In July 2022, we entered into separate

agreements to settle the opioid-related claims of the majority of

remaining West Virginia subdivisions and Native American Tribes

for approximately $124 million over eleven years and $136 million

over five years, respectively.

We have now resolved the opioid-related claims of all 50 states

and the District of Columbia.

Private Plaintiffs

The NOSA does not address claims by private parties, which

includes unions and other health and welfare funds, hospital

systems and other healthcare providers, businesses, and

individuals alleging personal injury. There were approximately 291

lawsuits brought by private plaintiffs pending as of August 8, 2025.

Of these, approximately 11 are purported class actions. The

causes of action asserted by these plaintiffs are similar to those

asserted by public plaintiffs. We are vigorously defending

ourselves in all these matters.

Following resolution discussions with certain private plaintiffs

during the six months ended December 31, 2024, Distributors

finalized agreements with classes of third-party payors and acute

care hospitals. Our portion of these settlements totaled

$213 million. The settlement with the class of third-party payors

was approved by the court in January 2025 and was finalized in

August 2025. The settlement with the class of acute care hospitals

was approved by the court in March 2025 and became final in April

2025.

Insurance Litigation

We are involved in ongoing legal proceedings with insurers related

to their obligations to reimburse us for defense and indemnity

costs in connection with the lawsuits described above. We

received insurance recoveries related to these matters of

$25 million and $34 million during fiscal 2025 and 2024,

respectively. $12 million of the recoveries from our insurers in

fiscal 2025 were recorded in the Pharma segment. We have not

recorded a receivable for any additional recoveries related to these

insurance litigation matters as of June 30, 2025.

Department of Justice Civil Investigative Demand

In November 2023, we received a Civil Investigative Demand

("CID") from the Department of Justice focused on potential

violations of the Anti-Kickback Statute and False Claims Act in

connection with a 2022 transaction in which we purchased a

minority ownership interest in a rheumatology managed services

organization and a group purchasing organization. We are

cooperating with this investigation.

Cordis IVC Filter Matters

We have been named as a defendant in product liability lawsuits

involving claims by plaintiffs that allege personal injuries

associated with the use of IVC filter products. These lawsuits

sought a variety of remedies, including unspecified monetary

damages. The divestiture of the Cordis business did not include

product liability related to the IVC filters in the U.S. and Canada,

which we retained.

In April 2023, we executed a settlement agreement that, if certain

conditions are satisfied, will resolve approximately 4,375 claims for

$275 million. Between May and September 2023, we made

settlement payments totaling $275 million into a qualified

settlement fund. During the three months ended December 31,

2024, the minimum required sign-on threshold was met, and

beginning in January 2025, payments to qualified implantees were

being made out of the qualified settlement fund. We expect

continued payments out of the qualified settlement fund as

additional plaintiffs meet the procedural requirements.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

We have also entered into other agreements, which, in addition to

the settlement discussed above, resolved the vast majority of IVC

filter product liability claims. These settlements will not resolve all

IVC filter product liability claims, and we intend to continue to

vigorously defend ourselves in the remaining lawsuits.

We recognized income of $103 million during fiscal 2023, primarily

related to a reduction of the reserve for the estimated settlement

and defense costs for these matters due to the execution of the

settlements noted above. At June 30, 2025, we have a total of

$56 million accrued for losses and legal defense costs, related to

the IVC filter product liability lawsuits in our consolidated balance

sheets, which includes the $49 million in the qualified settlement

fund.

Other Civil Litigation

Generic Pharmaceutical Pricing Antitrust Litigation

In December 2019, pharmaceutical distributors including us were

added as defendants in a civil class action lawsuit filed by indirect

purchasers of generic drugs, such as hospitals and retail

pharmacies. The indirect purchaser case is part of a multidistrict

litigation consisting of multiple individual class action matters

consolidated in the Eastern District of Pennsylvania. The indirect

purchaser plaintiffs allege that pharmaceutical distributors

encouraged manufacturers to increase prices, provided anti-

competitive pricing information to manufacturers, and improperly

engaged in customer allocation. In May 2020, the court granted

our motion to dismiss. In July 2022, the indirect purchasers filed an

amended complaint and, in August 2022, we filed a motion to

dismiss the amended complaint. In February 2025, the court

granted our motion to dismiss, with prejudice.

Antitrust Litigation Proceeds

We recognized income for net recoveries in class action antitrust

lawsuits in which we were a class member or plaintiff of

$171 million, $117 million, and

$130 million during fiscal 2025,

2024, and 2023, respectively.

9. Income Taxes

Earnings before Income Taxes and Provision for Income

Taxes

The following table summarizes earnings before income taxes:

(in millions)

2025

2024

2023

U.S. operations

1,715

892

316

Non-U.S. operations

386

309

347

Earnings before income taxes

2,101

$ 1,201

663

The following table summarizes the components of provision for/

(benefit from) income taxes:

(in millions)

2025

2024

2023

Current:

Federal

135

305

219

State and local

Non-U.S.

Total current

289

452

372

Deferred:

Federal

205

(89) $

(23)

State and local

Non-U.S.

(1)

(27)

(28)

Total deferred

243

(104) $

(40)

Provision for income taxes

532

348

332

Tax Effects of Goodwill Impairment Charges

During fiscal 2024 and 2023, we recognized cumulative pre-tax

goodwill impairment charges of $675 million, $1.2 billion,

respectively, related to GMPD. The net tax benefits related to

these charges were $58 million and $92 million during fiscal 2024

and 2023, respectively.

Effective Tax Rate

The following table presents a reconciliation of the provision based

on the federal statutory income tax rate to our effective income tax

rate:

2025

2024

2023

Provision at Federal statutory rate

21.0 %

State and local income taxes, net of federal

benefit

4.0

3.1

6.5

Tax effect of foreign operations

0.2

(1.6)

(5.4)

Nondeductible/nontaxable items

0.7

(0.1)

(1.1)

Impact of Divestitures

—

(1.9)

Withholding Taxes

0.3

1.0

Change in Valuation Allowances

0.1

(1.1)

(5.1)

US Taxes on International Income (1)

(1.3)

(2.1)

0.6

Impact of Resolutions with IRS and other

related matters

(0.1)

0.4

0.3

Opioid litigation

0.2

1.0

0.1

Goodwill Impairment

—

8.7

33.8

Specialty Alliance Share-based

Compensation

1.4

—

Other

(1.2)

(1.4)

0.2

Effective income tax rate

25.3 %

28.9 %

50.0 %

(1) Includes the tax impact of the Foreign-Derived Intangible Income ("FDII")

deduction offset by Global Intangible Low-Taxed Income ("GILTI") tax, and other

foreign income that is taxable under the U.S. tax code.

The income tax rate was 25.3%, 28.9%, and 50.0% in fiscal 2025,

2024, and 2023, respectively. Included in the effective tax rate for

fiscal 2025 were non-deductible share based compensation costs

for The Specialty Alliance and non-deductible transaction costs.

Included in the effective tax rate for fiscal 2024 and 2023 was

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

$58 million and $92 million of benefit, respectively, related to

goodwill impairment charges related to our GMPD segment.

Additionally, laws governing insurance coverage vary by state and

some state courts have interpreted laws and insurance policies in

ways that may impact our self-insurance loss, which could

negatively impact our financial position.

Our effective tax rate has benefits from negotiated lower than

statutory tax rates in select foreign jurisdictions which individually

are not material to our effective tax rate but in aggregate had a

favorable tax impact of approximately $17 million during fiscal

2025.

As of June 30, 2025, foreign earnings of approximately $1.0 billion

are considered indefinitely reinvested for working capital and other

offshore investment needs. The computation of tax required if

those earnings are repatriated is not practicable. For amounts not

considered indefinitely reinvested, we have recorded an immaterial

amount of income tax expense in our consolidated financial

statements in fiscal 2025.

Deferred Income Taxes

Deferred income taxes arise from temporary differences between

financial reporting and tax reporting bases of assets and liabilities

and operating loss and tax credit carryforwards for tax purposes.

The following table presents the components of the deferred

income tax assets and liabilities at June 30:

(in millions)

2025

2024

Deferred income tax assets:

Receivable basis difference

Accrued liabilities

651

749

Share-based compensation

Loss and tax credit carryforwards

386

512

Deferred tax assets related to uncertain tax

positions

Other

Total deferred income tax assets

1,230

1,491

Valuation allowance for deferred income tax

assets

(254)

(300)

Net deferred income tax assets

976

1,191

Deferred income tax liabilities:

Inventory basis differences

(1,103)

(1,122)

Property-related

(358)

(350)

Goodwill and other intangibles

(834)

(710)

Self-Insurance

(981)

Total deferred income tax liabilities

(3,276)

(3,163)

Net deferred income tax liability

(2,300)

(1,972)

Deferred income tax assets and liabilities in the preceding table,

after netting by taxing jurisdiction and for uncertain tax positions,

are in the following captions in the consolidated balance sheets at

June 30:

(in millions)

2025

2024

Noncurrent deferred income tax asset (1)

Noncurrent deferred income tax liability (2)

(2,364)

(2,044)

Net deferred income tax liability

(2,300)

(1,972)

(1)

Included in other assets in the consolidated balance sheets.

(2)

Included in deferred income taxes and other liabilities in the consolidated

balance sheets.

At June 30, 2025 we had gross federal, state, and international

loss and credit carryforwards of $154 million, $11.6 billion, and

$1.1 billion, respectively, the tax effect of which is an aggregate

deferred tax asset of $386 million. Substantially all of these

carryforwards are available for at least three years. Approximately

$244 million of the valuation allowance at June 30, 2025 applies to

certain federal, state, and international loss carryforwards that, in

our opinion, are more likely than not to expire unutilized. However,

to the extent that tax benefits related

to these carryforwards are

realized in the future, the reduction in the valuation allowance

would reduce income tax expense.

Unrecognized Tax Benefits

We had $879 million, $981 million, and $1.0 billion of unrecognized

tax benefits at June 30, 2025, 2024, and 2023, respectively. The

June 30, 2025, 2024, and 2023 balances include $871 million,

$882 million, and $878 million, respectively, of unrecognized tax

benefits that, if recognized, would have an impact on the effective

tax rate. The remaining unrecognized tax benefits relate to tax

positions for which ultimate deductibility is highly certain but for

which there is uncertainty as to the timing of such deductibility.

Recognition of these tax benefits would not affect our effective tax

rate. We include the full amount of unrecognized tax benefits in

deferred income taxes and other liabilities in the consolidated

balance sheets. The following table presents a reconciliation of the

beginning and ending amounts of unrecognized tax benefits:

(in millions)

2025

2024

2023

Balance at beginning of fiscal year

981

$ 1,015

948

Additions for tax positions of the current

year

Additions for tax positions of prior years

133

Reductions for tax positions of prior years

(101)

(87)

(16)

Settlements with tax authorities

(22)

(3)

(73)

Expiration of the statute of limitations

(2)

Balance at end of fiscal year

879

981

$ 1,015

It is reasonably possible that there could be a change in the

amount of unrecognized tax benefits within the next 12 months

due to activities of the U.S. Internal Revenue Service ("IRS") or

other taxing authorities, possible settlement of IRS and other audit

issues, reassessment of existing unrecognized tax benefits, or the

expiration of statutes of limitations. We expect any changes to the

unrecognized benefits in the next 12 months will not be material.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

We recognize accrued interest and penalties related to

unrecognized tax benefits in the provision for income taxes. At

June 30, 2025, 2024, and 2023, we had $65 million, $65 million,

and $65 million, respectively, accrued for the payment of interest

and penalties. These balances are gross amounts before any tax

benefits and are included in deferred income taxes and other

liabilities in the consolidated balance sheets. As a result of our IRS

audit settlements and carryback claim, an immaterial amount of

interest was recorded in fiscal 2025, 2024, and 2023.

Other Tax Matters

We file income tax returns in the U.S. federal jurisdiction, various

U.S. state and local jurisdictions, and various foreign jurisdictions.

With few exceptions, we are subject to audit by taxing authorities

for fiscal years 2015 through the current fiscal year.

Expiring or unusable loss and credit carryforwards and the

required valuation allowances are adjusted quarterly based on

available information. This information may support either an

increase or a decrease in the required valuation allowance. After

applying the valuation allowances, we do not anticipate any

limitations on our use of any of the other net deferred income tax

assets described above. We operate in a complex multinational tax

environment and are subject to tax treaty arrangements and

transfer pricing guidelines for intercompany transactions that are

subject to interpretation. Uncertainty in a tax position may arise as

tax laws are subject to interpretation.

10. Fair Value Measurements

The following tables present the fair values for assets and

(liabilities) measured on a recurring basis at June 30:

2025

(in millions)

Level 1

Level 2

Level 3

Total

Assets:

Cash equivalents

$ 1,672

—

$ 1,672

Other investments (1)

108

—

108

Liabilities:

Forward contracts (2)

—

(48)

—

(48)

Share-based awards (3)

—

(843)

2024

(in millions)

Level 1

Level 2

Level 3

Total

Assets:

Cash equivalents

$ 1,442

—

$ 1,442

Other investments (1)

108

—

108

Liabilities:

Forward contracts (2)

—

(87)

—

(87)

(1)

The other investments balance includes investments in mutual funds, which

offset fluctuations in deferred compensation liabilities. These mutual funds

invest in the equity securities of companies with both large and small market

capitalization and high-quality fixed income debt securities. The fair value of

these investments is determined using quoted market prices.

(2)

The fair value of interest rate swaps, foreign currency contracts, and net

investment hedges is determined based on the present value of expected

future cash flows considering the risks involved, including non-performance

risk, and using discount rates appropriate for the respective maturities.

Observable Level 2 inputs are used to determine the present value of

expected future cash flows. The fair value of these derivative contracts, which

are subject to master netting arrangements under certain circumstances, is

presented on a gross basis in prepaid expenses and other, other assets,

other accrued liabilities, and deferred income taxes and other liabilities within

the consolidated balance sheets.

(3)

The shared-based awards are comprised of liability-classified awards, as

defined under ASC 718, resulting from the acquisition of GIA. The fair value

of the GIA Units is determined using the discounted cash flow method. These

are presented in deferred income taxes and other liabilities within the

consolidated balance sheets. See

Note 15

for additional information.

11. Financial Instruments

We utilize derivative financial instruments to manage exposure to

certain risks related to our ongoing operations. The primary risks

managed through the use of derivative instruments include interest

rate risk, currency exchange risk, and commodity price risk. We do

not use derivative instruments for trading or speculative purposes.

While the majority of our derivative instruments are designated as

hedging instruments, we also enter into derivative instruments that

are designed to hedge a risk but are not designated as hedging

instruments. These derivative instruments are adjusted to current

fair value through earnings at the end of each period. We are

exposed to counterparty credit risk on all of our derivative

instruments. Accordingly, we have established and maintain strict

counterparty credit guidelines and only enter into derivative

instruments with major financial institutions that are rated

investment grade or better. We do not have significant exposure to

any one counterparty and we believe the risk of loss is remote.

Additionally, we do not require collateral under these agreements.

Interest Rate Risk Management

We are exposed to the impact of interest rate changes. Our

objective is to manage the impact of interest rate changes on cash

flows and the market value of our borrowings. We utilize a mix of

debt maturities on our fixed-rate debt to manage changes in

interest rates. In addition, we enter into interest rate swaps to

further manage our exposure to interest rate variations related to

our borrowings and to lower our overall borrowing costs.

Currency Exchange Risk Management

We conduct business in several major international currencies and

are subject to risks associated with changing foreign exchange

rates. Our objective is to reduce earnings and cash flow volatility

associated with foreign exchange rate changes to allow

management to focus its attention on business operations.

Accordingly, we enter into various contracts that change in value

as foreign exchange rates change to protect the value of existing

foreign currency assets and liabilities, commitments, and

anticipated foreign currency revenue and expenses.

Commodity Price Risk Management

We are exposed to changes in the price of certain commodities.

Our objective is to reduce earnings and cash flow volatility

associated with forecasted purchases of these commodities to

allow management to focus its attention on business operations.

Accordingly, we enter into derivative contracts when possible to

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

manage the price risk associated with certain forecasted

purchases.

The following table summarizes the fair value of our assets and

liabilities related to derivatives designated as hedging instruments

and the respective line items in which they were recorded in the

consolidated balance sheets at June 30:

(in millions)

2025

2024

Assets:

Cross-currency swap (1)

—

Foreign currency contracts (1)

Pay-floating interest rate swaps (1)

Total assets

Liabilities:

Cross-currency swap (2)

Foreign currency contracts (2)

Pay-floating interest rate swaps (2)

Total liabilities

103

(1)

Included in other assets in the consolidated balance sheets.

(2)

Included in deferred income taxes and other liabilities in the consolidated

balance sheets.

Fair Value Hedges

We enter into pay-floating interest rate swaps to hedge the

changes in the fair value of fixed-rate debt resulting from

fluctuations in interest rates. These contracts are designated and

qualify as fair value hedges. Accordingly, the gain or loss recorded

on the pay-floating interest rate swaps is directly offset by the

change in fair value of the underlying debt. Both the derivative

instrument and the underlying debt are adjusted to market value at

the end of each period with any resulting gain or loss recorded in

interest expense, net in the consolidated statements of earnings.

During fiscal 2025, 2024, and 2023 there were no gains or losses

recorded to interest expense as changes in the market value of our

derivative instruments offset changes in the market value of the

underlying debt.

During fiscal 2024 and 2023, we entered into pay-floating interest

rate swaps with total notional amounts of $500 million, and $300

million, respectively. These swaps have been designated as fair

value hedges of our fixed rate debt and are included in deferred

income taxes and other liabilities in the consolidated balance

sheets.

The following tables summarize the outstanding interest rate

swaps designated as fair value hedges at June 30, 2025 and

2024:

(in millions)

Notional Amount

Maturity Date

Pay-floating interest rate swaps

1,600

Jun 2027

Feb 2031

The following table summarizes the gain/(loss) recognized in

earnings for interest rate swaps designated as fair value hedges:

(in millions)

2025

2024

2023

Pay-floating interest rate swaps (1)

(50)

Fixed-rate debt (1)

(51)

(2)

(1) Included in interest expense, net in the consolidated statements of earnings.

Cash Flow Hedges

We enter into derivative instruments to hedge our exposure to

changes in cash flows attributable to interest rate, foreign

currency, and commodity price fluctuations associated with certain

forecasted transactions. These derivative instruments are

designated and qualify as cash flow hedges. Accordingly, the gain

or loss on the derivative instrument is reported as a component of

accumulated other comprehensive loss and reclassified into

earnings in the same line item associated with the forecasted

transaction and in the same period during which the hedged

transaction affects earnings.

Gains currently included within accumulated other comprehensive

loss associated with our cash flow hedges to be reclassified into

net earnings within the next 12 months are $5 million.

We enter into foreign currency contracts to protect the value of

anticipated foreign currency revenues and expenses. At June 30,

2025 and 2024, we held contracts to hedge probable, but not firmly

committed, revenue and expenses. The principal currencies

hedged are the Canadian dollar, Mexican peso, Chinese renminbi,

Thai baht, and Philippine peso.

We enter into commodity contracts to manage the price risk

associated with forecasted purchases of certain commodities used

in our GMPD segment.

The following tables summarize the outstanding cash flow hedges

at June 30:

2025

(in millions)

Notional Amount

Maturity Date

Foreign currency contracts

381

Jul 2025

Jun 2026

2024

(in millions)

Notional Amount

Maturity Date

Foreign currency contracts

401

Jul 2024

Jun 2025

The following table summarizes the pre-tax gain/(loss) included in

OCI for derivative instruments designated as cash flow hedges:

(in millions)

2025

2024

2023

Foreign currency contracts

(7)

(2)

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

The following table summarizes the pre-tax gain/(loss) reclassified

from AOCI into earnings for derivative instruments designated as

cash flow hedges:

(in millions)

2025

2024

2023

Foreign currency contracts (1)

Foreign currency contracts (2)

(6)

Foreign currency contracts (3)

(1)

—

Forward interest rate swaps (4)

(1)

Included in revenue in the consolidated statements of earnings.

(2)

Included in cost of products sold in the consolidated statements of earnings.

(3)

Included in SG&A expenses in the consolidated statements of earnings.

(4)

Included in interest expense, net in the consolidated statements of earnings.

Net Investment Hedges

We hedge the foreign currency risk associated with certain net

investment positions in foreign subsidiaries. To accomplish this,

we enter into cross-currency swaps that are designated as hedges

of net investments.

In February 2025, we entered into €100 million ($105 million)

cross-currency swaps maturing in February 2027.

In February 2025, we terminated the €100 million ($107 million)

cross-currency swaps entered into in March 2023 and received net

settlement in cash of $2 million, recorded in proceeds from net

investment hedge terminations in our consolidated statements of

cash flows.

In June 2024, we terminated the ¥18 billion ($120 million) cross-

currency swaps with a maturity date of June 2027 entered into in

September 2023, and received net settlements in cash of

$6 million, which was recorded in proceeds from net investment

hedge terminations in our consolidated statements of cash flows.

In September 2023, we entered into ¥18 billion ($120 million)

cross-currency swaps maturing in September 2025 and ¥18 billion

($120 million) cross-currency swaps maturing in June 2027.

In September 2023, we terminated the ¥38 billion ($300 million)

cross-currency swaps entered into in January 2023 and received

net settlement in cash of $28 million, recorded in proceeds from

net investment hedge terminations in our consolidated statements

of cash flows.

In January 2023, we entered into ¥19 billion ($150 million) cross-

currency swaps maturing in September 2025 and ¥19 billion

($150 million) cross-currency swaps maturing in June 2027. In

March 2023, we entered into €100 million ($107 million) cross-

currency swaps maturing in March 2025, €100 million

($107 million) cross-currency swaps maturing in March 2026.

In January and March 2023, we terminated the ¥48 billion

($400 million) cross-currency swaps entered into in March 2022

and the €200 million ($233 million) cross-currency swap entered

into in September 2018, respectively, and received net settlements

in cash of $10 million and $19 million, respectively. These were

recorded in proceeds from net investment hedge terminations in

our consolidated statements of cash flows.

Cross-currency swaps designated as net investment hedges are

marked-to-market using the current spot exchange rate as of the

end of the period, with gains and losses included in the foreign

currency

translation

component

accumulated

other

comprehensive loss until the sale or substantial liquidation of the

underlying net investments. To the extent the cross-currency

swaps designated as net investment hedges are not highly

effective, changes in carrying value attributable to the change in

spot rates are recorded in earnings.

Pre-tax gains and losses from net investment hedges recorded in

the foreign currency translation component of accumulated other

comprehensive loss were a $33 million loss and a $26 million gain

during fiscal 2025 and 2024, respectively. Gains recognized in

interest expense, net in the consolidated statements of earnings

for the portion of the net investment hedges excluded from the

assessment of hedge effectiveness were $9 million and

$14 million

during fiscal 2025 and 2024, respectively.

Economic (Non-Designated) Hedges

We enter into foreign currency contracts to manage our foreign

exchange exposure related to sales transactions, intercompany

financing transactions, and other balance sheet items subject to

revaluation that do not meet the requirements for hedge

accounting treatment. Accordingly, these derivative instruments

are adjusted to current market value at the end of each period

through earnings. The gain or loss recorded on these instruments

is substantially offset by the remeasurement adjustment on the

foreign currency denominated asset or liability. The settlement of

the derivative instrument and the remeasurement adjustment on

the foreign currency denominated asset or liability are both

recorded in other (income)/expense, net in the consolidated

statements of earnings. The principal currencies managed through

foreign currency contracts are the Canadian dollar, euro, Chinese

renminbi, Mexican peso, and Brazilian real.

The following tables summarize the outstanding economic (non-

designated) derivative instruments at June 30:

2025

(in millions)

Notional Amount

Maturity Date

Foreign currency contracts

194

Jul 2025

2024

(in millions)

Notional Amount

Maturity Date

Foreign currency contracts

178

Jul 2024

The following table summarizes the gain/(loss) recognized in

earnings for economic (non-designated) derivative instruments:

(in millions)

2025

2024

2023

Foreign currency contracts

(6)

(7)

Fair Value of Financial Instruments

The carrying amounts of cash and equivalents, trade receivables,

net, accounts payable, and other accrued liabilities at June 30,

2025 and 2024 approximate fair value due to their short-term

maturities.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

The following table summarizes the estimated fair value of our

long-term obligations and other short-term borrowings compared to

the respective carrying amounts at June 30:

(in millions)

2025

2024

Estimated fair value

8,388

4,891

Carrying amount

8,527

5,092

The fair value of our long-term obligations and other short-term

borrowings is estimated based on either the quoted market prices

for the same or similar issues or other inputs derived from

available market information, which represents a Level 2

measurement.

The following table is a summary of the fair value gain/(loss) of our

derivative instruments based upon the estimated amount that we

would receive (or pay), considering counter-party credit risk, to

terminate the contracts at June 30:

2025

2024

(in millions)

Notional

Amount

Fair Value

Gain/(Loss)

Notional

Amount

Fair Value

Gain/(Loss)

Pay-floating interest rate

swaps

1,600

(29)

1,600

(91)

Foreign currency

contracts

575

579

(7)

Cross-currency swap

332

(24)

334

12. Shareholders' Deficit

At June 30, 2025 and 2024, authorized capital shares consisted of

the following: 750 million Class A common shares, without par

value; 5 million Class B common shares, without par value; and

500 thousand non-voting preferred shares, without par value. The

Class A common shares and Class B common shares are

collectively referred to below as “common shares.” Holders of

common shares are entitled to share equally in any dividends

declared by the Board of Directors and to participate equally in all

distributions of assets upon liquidation. Generally, the holders of

Class A common shares are entitled to one vote per share, and

the holders of Class B common shares are entitled to one-fifth of

one vote per share on proposals presented to shareholders for

vote. Under certain circumstances, the holders of Class B common

shares are entitled to vote as a separate class. Only Class A

common shares were outstanding at June 30, 2025 and 2024.

We repurchased $3.5 billion of our common shares, in the

aggregate, through share repurchase programs during fiscal 2025

2024, and 2023, as described below. We funded the repurchases

with available cash. The common shares repurchased are held in

treasury to be used for general corporate purposes.

During fiscal 2025, we repurchased 6.4 million common shares

having an aggregate cost of $757 million. We repurchased

3.4 million and 3.0 million common shares under multiple

accelerated share repurchase ("ASR") programs with average

prices paid per common share of $110.10 and $125.87,

respectively. These repurchases began on August 21, 2024 and

concluded on March 11, 2025.

During fiscal 2025, we paid $15 million for excise taxes related to

the completion of prior ASR programs and we retired 56 million of

common stock shares without par value.

During fiscal 2024, we repurchased 9.0 million common shares

having an aggregate cost of $759 million. We repurchased 0.9

million, 5.7 million, and 2.4 million common shares under multiple

ASR programs with average prices paid per common share of

$91.15, $88.22, and $103.67, respectively. These repurchases

began on August 16, 2023 and concluded on December 13, 2023.

During fiscal 2023, we repurchased 24.6 million common shares

having an aggregate cost of $2.0 billion. We repurchased 13.6

million, 3.2 million, 3.2 million, and 4.6 million common shares

under multiple ASR programs with average prices paid per

common share of $73.36, $77.50, $77.27, and $87.18,

respectively. These repurchases began on September 14, 2022

and concluded on August 16, 2023.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in the balance of

accumulated other comprehensive loss by component and in total:

(in millions)

Foreign

Currency

Translation

Adjustments

and Other

Unrealized

Gain/(Loss)

Derivatives,

net of tax

Accumulated

Other

Comprehensive

Loss

Balance at June 30, 2023

(137) $

(14)

(151)

Other comprehensive loss,

before reclassifications

(1)

(7)

(8)

Amounts reclassified to

earnings

—

(8)

Total other comprehensive

loss attributable to Cardinal

Health, Inc., net of tax

expense of $5 million

(1)

(15)

(16)

Balance at June 30, 2024

(138)

(29)

(167)

Other comprehensive income/

(loss), before reclassifications

(3)

Amounts reclassified to

earnings

—

Total other comprehensive

income/(loss) attributable to

Cardinal Health, Inc., net of tax

benefit of $6 million

(3)

Balance at June 30, 2025

(141) $

(14) $

(155)

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

13. Earnings Per Share Attributable to Cardinal

Health, Inc.

The following table reconcile the number of common shares used

to compute basic and diluted earnings per share attributable to

Cardinal Health, Inc. ("EPS"):

(in millions, except per share amounts)

2025

2024

2023

Net earnings

$ 1,569

$ 853

$ 331

Net earnings attributable to noncontrolling interest

(8)

(1)

Net earnings attributable to Cardinal Health,

Inc.

$ 1,561

$ 852

$ 330

Weighted-average common shares–basic

241

245

261

Effect of dilutive securities:

Employee stock options, restricted share units,

and performance share units

Weighted-average common shares–diluted

242

247

262

Basic earnings per common share attributable

to Cardinal Health, Inc.:

$ 6.48

$ 3.48

$ 1.27

Diluted earnings per common share

attributable to Cardinal Health, Inc.:

6.45

3.45

1.26

The potentially dilutive employee stock options, restricted share

units, and performance share units that were anti-dilutive were

immaterial, 1 million, and 2 million for fiscal 2025

2024, and 2023,

respectively.

14. Segment Information

We operate under two reportable segments: Pharma and GMPD.

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

. 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 Pharma 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; repackages generic pharmaceuticals

and over the counter healthcare products; and includes our

managed services organization platforms for physician offices.

Our GMPD segment manufactures, sources, and distributes

Cardinal Health brand medical, surgical, and laboratory products,

which are sold in the United States, Canada, Europe, Asia, and

other markets. This segment also distributes a broad range of

medical, surgical, and laboratory products known as national brand

products to hospitals, ambulatory surgery centers, clinical

laboratories, and other healthcare providers in the United States

and Canada.

The remaining three non-reportable operating segments included

in Other are Nuclear and Precision Health Solutions, at-Home

Solutions, and OptiFreight

Logistics. These operating segments

respectively operate nuclear pharmacies and radiopharmaceutical

manufacturing facilities, distribute medical products to patients'

homes in the United States, and provide supply chain services and

solutions to our customers.

Revenue

The following table presents revenue for the two reportable

segments and disaggregated revenue within the remaining

operating segments, included in Other, and Corporate:

(in millions)

2025

2024

2023

Pharmaceutical and Specialty

Solutions

204,644

210,019

188,814

Global Medical Products and

Distribution

12,636

12,381

12,222

Nuclear and Precision Health

Solutions

1,578

1,369

1,197

at-Home Solutions

3,480

2,869

2,584

OptiFreight

Logistics

324

274

240

Other

5,382

4,512

4,021

Total segment revenue

222,662

226,912

205,057

Corporate (1)

(84)

(85)

(78)

Total revenue

222,578

226,827

204,979

(1)

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:

(in millions)

2025

2024

2023

United States

220,993

225,231

203,440

International

1,669

1,681

1,617

Total segment revenue

222,662

226,912

205,057

Corporate (1)

(84)

(85)

(78)

Total revenue

222,578

226,827

204,979

(1)

Corporate revenue consists of the elimination of inter-segment revenue and

other revenue not allocated to the segments.

Segment Profit

The Company’s Chief Executive Officer, the chief operating

decision maker ("CODM"), evaluates 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 technology

and shared functions expenses, 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 operating segments based on

headcount, level of benefit provided and other ratable allocation

methodologies. The results attributable to noncontrolling interests

are recorded within segment profit.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

We do not allocate the following items to our segments:

•

last-in first-out, or ("LIFO"), inventory charges/(credits);

•

state opioid assessment related to prior fiscal years;

•

shareholder cooperation agreement costs;

•

restructuring and employee severance;

•

amortization and other acquisition-related costs;

•

acquisition-related cash and share-based compensation

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; 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 $72 million, $59 million,

and $35 million for fiscal 2025, 2024, and 2023, respectively.

The following tables present revenue, expenses, and segment

profit for the two reportable segments and the remaining operating

segments, included in Other, and Corporate:

2025

(in millions)

Pharma

GMPD

Other

Total

Segment revenue

$ 204,644

$ 12,636

$ 5,382

$ 222,662

Cost of products sold

199,999

10,470

4,023

214,492

SG&A

2,387

2,031

843

5,261

Total segment expenses

202,386

12,501

4,866

219,753

Segment profit

2,258

135

516

2,909

Corporate (1)

(634)

Consolidated operating

earnings

2,275

2024

(in millions)

Pharma

GMPD

Other

Total

Segment revenue

$ 210,019

$ 12,381

$ 4,512

$ 226,912

Cost of products sold

205,864

10,264

3,367

219,495

SG&A

2,140

2,025

722

4,887

Total segment expenses

208,004

12,289

4,089

224,382

Segment profit

2,015

423

2,530

Corporate (1)

(1,287)

Consolidated operating

earnings

1,243

2023

(in millions)

Pharma

GMPD

Other

Total

Segment revenue

$ 188,814

$ 12,222

$ 4,021

$ 205,057

Cost of products sold

184,814

10,377

2,990

198,181

SG&A

2,119

1,992

635

4,746

Total segment expenses

186,933

12,369

3,625

202,927

Segment profit

1,881

(147) $

396

2,130

Corporate (1)

(1,378)

Consolidated operating

earnings

752

(1)

Corporate revenue and expenses consists of the elimination of inter-segment

revenue and other revenue and expenses not allocated to the segments.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

The following tables present depreciation and amortization and

additions to property and equipment for the two reportable

segments and the remaining operating segments, included in

Other, and Corporate:

(in millions)

2025

2024

2023

Pharmaceutical and Specialty Solutions

185

184

194

Global Medical Products and Distribution

212

205

173

Other

Corporate

305

242

254

Total depreciation and amortization

790

710

692

(in millions)

2025

2024

2023

Pharmaceutical and Specialty Solutions

118

Global Medical Products and Distribution

133

136

191

Other

Corporate

208

218

182

Total additions to property and

equipment

547

511

481

The following table presents total assets for the two reportable

segments and the remaining operating segments, included in

Other, and Corporate at June 30:

(in millions)

2025

2024

Pharmaceutical and Specialty Solutions

$ 37,313

$ 29,149

Global Medical Products and Distribution

6,889

7,047

Other

4,045

2,606

Corporate

4,875

6,319

Total assets

$ 53,122

$ 45,121

The following table presents property and equipment, net by

geographic area:

(in millions)

2025

2024

United States

2,422

2,106

International

436

423

Property and equipment, net

2,858

2,529

15. Share-Based Compensation

We maintain Cardinal Health, Inc. stock incentive plans

(collectively, the “Plans”) for the benefit of certain of our officers,

directors, and employees. Upon vesting these units convert to

common shares without restrictions or future service requirements.

At June 30, 2025, 15 million shares remain available for future

grants under the Cardinal Health, Inc. 2021 Long-Term Incentive

Plan ("2021 LTIP"). Under the 2021 LTIP's fungible share counting

provisions, stock options are counted against the plan as one

share for every share issued; awards other than stock options are

counted against the plan as two and one-half shares for every

share issued. This means that only 6 million shares could be

issued under awards other than stock options while 15 million

shares could be issued under stock options. Shares are issued out

of treasury shares when stock options are exercised and when

restricted share units and performance share units vest. Until the

end of fiscal 2018, stock options were granted to our officers and

certain employees. There were no stock options granted to

employees during fiscal 2025, 2024, or 2023.

During fiscal 2024, we modified the equity incentive awards of four

employees to amend provisions over involuntary termination. We

recognized incremental share-based compensation expense of

$9 million.

The following table provides total share-based compensation

expense by type of award:

(in millions)

2025

2024

2023

Restricted share unit expense

Performance share unit expense

Total share-based compensation expense

121

The total tax benefit related to share-based compensation was

$14 million, $16 million, and $12 million for fiscal 2025, 2024, and

2023, respectively. Share-based compensation expense is

included in selling, general, and administrative expenses in the

consolidated statements of earnings. Our consolidated statements

of cash flows present our share-based compensation expense as

a reconciling adjustment between net income and net cash

provided by operating activities for all periods presented.

Restricted Share Units

Restricted share units granted under the Plans generally vest in

equal annual installments over three years. Restricted share units

accrue cash dividend equivalents that are payable upon vesting of

the awards.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

The following table summarizes all transactions related to

restricted share units under the Plans:

(in millions, except per share amounts)

Restricted

Share Units

Weighted-Average

Grant Date Fair

Value per Share

Nonvested at June 30, 2023

2.2

57.37

Granted

0.9

91.06

Vested

(1.2)

60.47

Canceled and forfeited

(0.2)

74.40

Nonvested at June 30, 2024

1.7

70.98

Granted

0.7

108.72

Vested

(0.9)

72.07

Canceled and forfeited

(0.1)

94.67

Nonvested at June 30, 2025

1.4

86.30

The following table provides additional data related to restricted

share unit activity:

(in millions)

2025

2024

2023

Total compensation cost, net of estimated

forfeitures, related to nonvested restricted

share and share unit awards not yet

recognized, pre-tax

Weighted-average period in years over

which restricted share and share unit cost is

expected to be recognized (in years)

Total fair value of shares vested during the

year

Performance Share Units

Performance share units generally vest over a three-year

performance period based on achievement of specific performance

goals. Based on the extent to which the performance goals are

achieved and the Company's TSR relative to the S&P 500 Health

Care Index, vested shares may range from zero to 240 percent of

the target award amount. Performance share units accrue cash

dividend equivalents that are payable upon vesting of the awards.

The following table summarizes all transactions related to

performance share units under the Plans (based on target award

amounts):

(in millions, except per share amounts)

Performance

Share Units

Weighted-Average

Grant Date Fair

Value per Share

Nonvested at June 30, 2023

1.2

82.17

Granted

0.5

94.66

Vested

(0.4)

62.26

Canceled and forfeited

—

Nonvested at June 30, 2024

1.3

97.03

Granted

0.5

113.88

Vested

(0.3)

108.79

Canceled and forfeited

—

Nonvested at June 30, 2025

1.5

99.45

The following table provides additional data related to performance

share unit activity:

(in millions)

2025

2024

2023

Total compensation cost, net of estimated

forfeitures, related to nonvested performance

share units not yet recognized, pre-tax

Weighted-average

period

over

which

performance share unit cost is expected to be

recognized (in years)

Total fair value of shares vested during the year

Employee Retirement Savings Plans

Substantially all of our domestic non-union employees are eligible

to be enrolled in our company-sponsored contributory retirement

savings plans, which include features under Section 401(k) of the

Internal Revenue Code of 1986 and provide for matching and

discretionary contributions by us. The total expense for our

employee retirement savings plans was $89 million, $65 million,

and $66 million for fiscal 2025, 2024, and 2023, respectively.

GIA Share-Based Compensation

GIA, a majority-owned subsidiary of Cardinal Health, maintains

standalone share-based compensation plans. Share-based

compensation expense associated with these awards of

$123 million was recognized during fiscal 2025, of which

$120 million is included in acquisition-related cash and share-

based compensation costs and $3 million is included in selling,

general, and administrative expenses in the consolidated

statements of earnings. The liability and associated future

expenses may vary based on the changes in the estimated fair

value.

The following table summarizes the fair market value of the GIA

Units as of June 30, 2025:

(in millions, except per share amounts)

GIA Share

Units

Fair Value

per Share

Nonvested at January 30, 2025

216

1.46

Granted

1.46

Vested

(56)

1.46

Canceled and forfeited

(1)

1.46

Nonvested at June 30, 2025

220

1.54

Vested at June 30, 2025

548

1.54

The total fair value of GIA Units vested during fiscal 2025 was

$82 million. During fiscal 2025, we recognized an increase in the

fair value of the liability, resulting in expense of $41 million, related

to the vested GIA Units, which is recognized in acquisition-related

cash and share-based compensation costs.

At June 30, 2025, the total pre-tax compensation cost related to

nonvested GIA Units not yet recognized was $339 million, which is

expected to be recognized over a weighted-average period of

approximately two years.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

16. Subsequent Events

Solaris Health

On August 12, 2025, we announced that we, through GIA, have

entered into a definitive agreement to acquire Solaris Health, a

urology MSO, for a purchase price of approximately $1.9 billion in

cash, subject to certain adjustments. In connection with the closing

of this transaction, we will issue common units in GIA to certain

physicians and management which are estimated to have a grant

date fair value of approximately $500 million, a portion of which will

be recognized as post-combination expense.

Solaris Health includes more than 750 providers across more than

250 practice locations in 14 states. Solaris Health will become part

of The Specialty Alliance, our multi-specialty MSO platform, and

their results will be reported within our Pharma segment. Following

the closing of this transaction, we will own approximately 75% of

The Specialty Alliance. This transaction is subject to the

satisfaction of customary closing conditions, including receipt of

required physician and regulatory approvals.

We intend to finance the announced transaction with a

combination of cash on hand and cash proceeds from new debt

financing.

Notes to Financial Statements

Cardinal Health

Fiscal 2025 Form 10-K

Cardinal Health, Inc. and Subsidiaries

Schedule II - Valuation and Qualifying Accounts

(in millions)

Balance at

Beginning of Period

Charged to Costs

and Expenses (1)

Charged to

Other Accounts (2)

Deductions (3)

Balance at

End of Period

Fiscal 2025

Accounts receivable

233

(109) $

213

Finance notes receivable

—

(4)

Sales returns and allowances

441

2,155

—

(2,149)

447

677

2,246

(2,262) $

662

Fiscal 2024

Accounts receivable

240

108

—

(115) $

233

Finance notes receivable

—

(5)

Sales returns and allowances

474

2,207

—

(2,240)

441

720

2,317

—

(2,360) $

677

Fiscal 2023

Accounts receivable

207

165

—

(132) $

240

Finance notes receivable

—

(2)

Sales returns and allowances

617

2,217

—

(2,360)

474

832

2,382

—

(2,494) $

720

(1)

Fiscal 2025, 2024, and 2023 accounts receivable operating earnings impacts include $38 million, $74 million, and $109 million, respectively, for reserves related to

service charges and customer disputes, excluded from provision for bad debts on the consolidated statements of cash flows and classified as a reduction in revenue in

the consolidated statements of earnings.

(2)

Recoveries of amounts provided for or written off were $1 million for fiscal 2025.

(3)

Write-off of uncollectible accounts or actual sales returns.

The sum of the components may not equal the total due to rounding.

Schedule II

Valuation and Qualifying Accounts

Cardinal Health

Fiscal 2025 Form 10-K

Directors, Executive Officers, and Corporate Governance

Information About Our Executive Officers

The following is a list of our executive officers:

Name

Age

Position

Jason M. Hollar

Chief Executive Officer

Aaron E. Alt

Chief Financial Officer

Deborah L. Weitzman

Chief Executive Officer, Pharma segment

Stephen M. Mason

Chief Executive Officer, GMPD segment

Ola M. Snow

Chief Human Resources Officer

Jessica L. Mayer

Chief Legal and Compliance Officer

Michelle D. Greene

Executive Vice President, Chief Information Officer, and Customer Support Services

The business experience summaries provided below for our executive officers describe positions held during the last five years (unless

otherwise indicated).

Mr. Hollar has served as Chief Executive Officer since September 2022. From May 2020 through August 2022, Mr. Hollar served as Chief

Financial Officer. Additionally, Mr. Hollar served as Chief Financial Officer of Sears Holding Corporation ("Sears") from October 2016 to

April 2017. Sears filed for Chapter 11 bankruptcy in October 2018.

Mr. Alt has served as Chief Financial Officer since February 2023. Prior to that, Mr. Alt served as Executive Vice President and Chief

Financial Officer of Sysco Corporation from December 2020. From October 2018 to November 2020, Mr. Alt served as Senior Vice

President and Chief Financial Officer of Sally Beauty Holdings, Inc. and President of Sally Beauty Supply.

Ms. Weitzman has served as Chief Executive Officer, Pharma segment since September 2022. From July 2017 until September 2022, Ms.

Weitzman served as the President of our Pharmaceutical Distribution division.

Mr. Mason has served as Chief Executive Officer, GMPD segment since August 2019.

Ms. Snow has served as Chief Human Resources Officer since October 2018.

Ms. Mayer has served as Chief Legal and Compliance Officer since March 2019.

Ms. Greene has served as Executive Vice President, Chief Information Officer, and Customer Support Services since August 2022. From

February 2021 until August 2022, Ms. Greene served as the Senior Vice President of our former Pharmaceutical segment Information

Technology. Prior to joining Cardinal Health, Ms. Greene served as Vice President, Information Technology, at Masco Corporation from

March 2018 through February 2021.

Directors and Corporate Governance

We have adopted

Standards of Business Conduct

that apply to all of our directors, officers, and employees. The

Standards of Business

Conduct

outline our corporate values and standards of integrity and behavior and are designed to protect and promote our reputation. The

full text of the

Standards of Business Conduct

is posted on our website at www.cardinalhealth.com under “About Us — Ethics and

Compliance.”

Any waiver of the

Standards of Business Conduct

for directors or executive officers must be approved by the Risk Oversight Committee of

our Board of Directors. As required under SEC and New York Stock Exchange rules, we will disclose future amendments to our

Standards

of Business Conduct

and waivers from the

Standards of Business Conduct

for our principal executive officer, principal financial officer and

principal accounting officer, or persons performing similar functions, and our other executive officers and directors on our website within

four business days following the date of the amendment or waiver.

The other information called for by Item 10 of Form 10-K is incorporated by reference to our Definitive Proxy Statement (which will be filed

with the SEC pursuant to Regulation 14A under the Exchange Act) relating to our 2025 Annual Meeting of Shareholders (our “2025 Proxy

Statement”) under the captions “Corporate Governance” and “Share Ownership Information.”

The other information called for by Item 12 of Form 10-K is incorporated by reference to our 2025 Proxy Statement under the caption

"Share Ownership Information."

Directors, Executive Officers, and Corporate Governance

Cardinal Health

Fiscal 2025 Form 10-K

Exhibits, Financial Statement Schedules

(a)(1) The following financial statements are included in the "Financial Statements" section of this report:

Page

Consolidated Financial Statements and Schedule:

Reports of Independent Registered Public Accounting Firm

(PCAOB ID: 42)

Consolidated Statements of Earnings for the Fiscal Years Ended June 30, 2025, 2024, and 2023

Consolidated Statements of Comprehensive Income for the Fiscal Years Ended June 30, 2025, 2024, and 2023

Consolidated Balance Sheets at June 30, 2025 and 2024

Consolidated Statements of Shareholders’ Deficit for the Fiscal Years Ended June 30, 2025, 2024, and 2023

Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2025, 2024, and 2023

Notes to Consolidated Financial Statements

(a)(2) The following Supplemental Schedule is included in this report:

Page

Schedule II - Valuation and Qualifying Accounts

All other schedules not listed above have been omitted as not applicable or because the required information is included in the

Consolidated Financial Statements or in the Notes thereto.

Exhibit

Number

Exhibit Description

3.1

Amended and Restated Articles of Incorporation of Cardinal Health, Inc., as amended (incorporated by reference to Exhibit 3.1 to Cardinal Health’s Quarterly

Report on Form 10-Q for the quarter ended September 30, 2008, File No. 1-11373)

3.2

Cardinal Health, Inc. Restated Code of Regulations (incorporated by reference to Exhibit 3.1 to Cardinal Health’s Current Report on Form 8-K filed on May 11,

2023, File No. 1-11373)

4.1

Specimen Certificate for Common Shares of Cardinal Health, Inc. (incorporated by reference to Exhibit 4.01 to Cardinal Health’s Annual Report on Form 10-K

for the fiscal year ended June 30, 2001, File No. 1-11373)

4.2.1

Indenture, dated as of June 2, 2008, between Cardinal Health, Inc. and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to

Cardinal Health’s Current Report on Form 8-K filed on June 2, 2008, File No. 1-11373)

4.2.2

Form of 3.200% Notes due 2022 (incorporated by reference to Exhibit 4.2 to Cardinal Health's Current Report on Form 8-K filed on May 21, 2012, File No.

1-11373)

4.2.3

Form of 3.200% Notes due 2023 (incorporated by reference to Exhibit 4.2 to Cardinal Health's Current Report on Form 8-K filed on February 22, 2013, File No.

1-11373)

4.2.4

Form of 4.600% Notes due 2043 (incorporated by reference to Exhibit 4.3 to Cardinal Health's Current Report on Form 8-K filed on February 22, 2013, File No.

1-11373)

4.2.5

Form of 3.500% Notes due 2024 (incorporated by reference to Exhibit 4.2 to Cardinal Health’s Current Report on Form 8-K filed on November 19, 2014, File

No. 1-11373)

4.2.6

Form of 4.500% Notes due 2044 (incorporated by reference to Exhibit 4.3 to Cardinal Health’s Current Report on Form 8-K filed on November 19, 2014, File

No. 1-11373)

4.2.7

Form of 3.750% Notes due 2025 (incorporated by reference to Exhibit 4.2 to Cardinal Health’s Current Report on Form 8-K filed on June 23, 2015, File No.

1-11373)

4.2.8

Form of 4.900% Notes due 2045 (incorporated by reference to Exhibit 4.3 to Cardinal Health’s Current Report on Form 8-K filed on June 23, 2015, File No.

1-11373)

4.2.11

Form of 2.616% notes due 2022 (incorporated by reference to Exhibit 4.2 to Cardinal Health's Current Report on Form 8-K filed on June 12, 2017, File No.

1-11373)

4.2.12

Form of Floating rate notes due 2022 (incorporated by reference to Exhibit 4.3 to Cardinal Health's Current Report on Form 8-K filed on June 12, 2017, File No.

1-11373)

4.2.13

Form of 3.079% notes due 2024 (incorporated by reference to Exhibit 4.4 to Cardinal Health's Current Report on Form 8-K filed on June 12, 2017, File No.

1-11373)

4.2.14

Form of 3.410% notes due 2027 (incorporated by reference to Exhibit 4.5 to Cardinal Health's Current Report on Form 8-K filed on June 12, 2017, File No.

1-11373)

4.2.15

Form of 4.368% notes due 2047 (incorporated by reference to Exhibit 4.6 to Cardinal Health's Current Report on Form 8-K filed on June 12, 2017, File No.

1-11373)

4.2.16

First Supplemental Indenture, dated as of February 20, 2024, between Cardinal Health, Inc., as issuer, and The Bank of New York Mellon Trust Company, N.A.,

as trustee (incorporated by reference to Exhibit 4.2 to Cardinal Health's Current Report on Form 8-K filed on February 20, 2024, File No. 1-11373)

Exhibits

Cardinal Health

Fiscal 2025 Form 10-K

4.2.17

Form of 5.125% Senior Notes due 2029 (incorporated by reference to Exhibit 4.3 to Cardinal Health's Current Report on Form 8-K filed on February 20, 2024,

File No. 1-11373)

4.2.18

Form of 5.450% Senior Notes due 2034 (incorporated by reference to Exhibit 4.4 to Cardinal Health's Current Report on Form 8-K filed on February 20, 2024,

File No. 1-11373)

4.3

Agreement to furnish to the Securities and Exchange Commission upon request a copy of instruments defining the rights of holders of certain long-term debt of

Cardinal Health, Inc. and consolidated subsidiaries (incorporated by reference to Exhibit 4.07 to Cardinal Health’s Annual Report on Form 10-K for the fiscal

year ended June 30, 2005, File No. 1-11373)

4.4

Description of Securities (incorporated by reference to Exhibit 4.4 to Cardinal Health's Annual Report on Form 10-K for the fiscal year ended June 30, 2019, File

No. 1-11373)

10.1.1

Cardinal Health, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health’s Current Report on Form 8-K filed on

November 9, 2021, File No. 1-11373)*

10.1.2

Form of Restricted Share Units Agreement under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2.2 to

Cardinal Health’s Quarterly Report on Form 10-Q filed on February 3, 2022, File No. 1-11373)*

10.1.3

Form of Performance Share Units Agreement under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3.2 to

Cardinal Health’s Quarterly Report on Form 10-Q filed on February 3, 2022, File No. 1-11373)*

10.1.4

Form of Nonqualified Stock Option Agreement under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4.2 to

Cardinal Health’s Quarterly Report on Form 10-Q filed on February 3, 2022, File No. 1-11373)*

10.1.5

Form of Directors’ Restricted Share Units Agreement under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5

to Cardinal Health’s Current Report on Form 8-K filed on November 9, 2021, File No. 1-11373)

10.1.6

First Amendment to the Cardinal Health, Inc. 2021 Long-Term Incentive Plan, effective as of January 29, 2024 (as amended, the "2021 LTIP") (incorporated by

reference to Exhibit 10.1.1 to Cardinal Health’s Quarterly Report on Form 10-Q filed on May 2, 2024, File No. 1-11373)*

10.1.7

Form of Nonqualified Stock Option Agreement under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.2 to

Cardinal Health’s Quarterly Report on Form 10-Q filed on May 2, 2024, File No. 1-11373)*

10.1.8

Form of Performance Share Units Agreement under the

Cardinal Health, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.3 to

Cardinal Health’s Quarterly Report on Form 10-Q filed on May 2, 2024, File No. 1-11373)*

10.1.9

Form of Restricted Share Units Agreement under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.4 to

Cardinal Health’s Quarterly Report on Form 10-Q filed on May 2, 2024, File No. 1-11373)*

10.1.10

Form of Performance Share Units Agreement under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan for grants to Jason M. Hollar (incorporated by

reference to Exhibit 10.1.10 of Cardinal Health's Annual Report on Form 10-K filed on August 14, 2024. File No 1-11373)*

10.1.11

Form of Restricted Share Units Agreement under the Cardinal Health, Inc. 2021 Long-Term Incentive Plan for grants to Jason M. Hollar*

(incorporated by

reference to Exhibit 10.1.11 of Cardinal Health's Annual Report on Form 10-K filed on August 14, 2024. File No 1-11373)*

10.1.12

Cardinal Health, Inc. Management Incentive Plan (incorporated by reference to Exhibit 10.6 to Cardinal Health’s Current Report on Form 8-K filed on November

9, 2021, File No. 1-11373)*

10.1.13

First Amendment to the Cardinal Health, Inc. Management Incentive Plan, effective as of January 29, 2024 (incorporated by reference to Exhibit 10.2 to

Cardinal Health’s Quarterly Report on Form 10-Q filed on May 2, 2024, File No. 1-11373)*

10.2.1

Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health’s Current Report on Form 8-K/A filed on

November 4, 2011, File No. 1-11373)*

10.2.2

First Amendment to Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.2 to Cardinal Health's Annual Report on

Form 10-K for the fiscal year ended June 30, 2014)*

10.2.3

Form of Nonqualified Stock Option Agreement under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to

Cardinal Health’s Current Report on Form 8-K/A filed on November 4, 2011, File No. 1-11373)*

10.2.4

Form of Nonqualified Stock Option Agreement under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.3 to

Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012, File No. 1-11373)*

10.2.5

Form of Amendment to Stock Option and Restricted Share Units Agreements under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan, the Cardinal

Health, Inc. 2005 Long-Term Incentive Plan and the Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to

Exhibit 10.1.9 to Cardinal Health's Annual Report on Form 10-K for the fiscal year ended June 30, 2013, File No. 1-11373)*

10.3.1

Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health's Current Report on Form 8-K filed

on November 7, 2016, File No. 1-11373)*

10.3.2

First Amendment to Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2.2 to Cardinal Health's Annual

Report on Form 10-K for the fiscal year end June 30, 2017, File No. 1-11373)*

10.3.3

Second Amendment to the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to Cardinal Health's

Quarterly Report on Form 10-Q for the quarter ended December 31, 3019, File No. 1-11373)*

10.3.4

Form of Nonqualified Stock Option Agreement under the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit

10.2.3 to Cardinal Health's Annual Report on Form 10-K for the fiscal year end June 30, 2017, File No. 1-11373)*

10.3.5

Form of Restricted Share Units Agreement under the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporate by reference to Exhibit 10.3

to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2019, File No. 1-11373)*

10.3.6

Form of Performance Share Units Agreement under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to

Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, File No. 1-11373)

10.4.1

Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to Cardinal Health’s Quarterly Report on

Form 10-Q for the quarter ended December 31, 2007, File No. 1-11373)*

10.4.2

First Amendment to Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to Exhibit 10.2.1 to Cardinal Health’s

Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-11373)*

Exhibits

Cardinal Health

Fiscal 2025 Form 10-K

10.4.3

Second Amendment to the Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to Cardinal

Health's Quarterly Report on Form 10-Q for the Quarter ended December 31, 2011, File No. 1-11373)*

10.5.1

Cardinal Health Deferred Compensation Plan, Amended and Restated effective January 1, 2020 (incorporated by reference to Exhibit 10.4 to Cardinal Health's

Quarterly Report on Form 10-Q for the quarter ended December 31, 2019, File No. 1-11373)*

10.5.2

First Amendment to the Cardinal Health Deferred Compensation Plan, as amended and restated on January 1, 2020 (incorporated by reference to Exhibit 10.2

to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, File No. 1-11373)*

10.5.3

Second Amendment to the Cardinal Health Deferred Compensation Plan, as amended and restated on January 1, 2020, dated November 4, 2022 (incorporated

by reference to Exhibit 10.2 to Cardinal Health's Quarterly Report on Form 10-Q for the for the quarter ended December 31, 2022)*

10.6.1

Cardinal Health, Inc. Senior Executive Severance Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health's Current Report on Form 8-K filed on

September 26, 2018, File No. 1-11373)

10.6.2

First Amendment to the Cardinal Health, Inc. Senior Executive Severance Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health's Quarterly Report

on Form 10-Q for the quarter ended December 31, 2019, File No. 1-11373)

10.6.3

Second Amendment to the Cardinal Health, Inc. Senior Executive Severance Plan (incorporated by reference to Exhibit 10.6.3 to Cardinal Health's Annual

Report on Form10-K for the fiscal year ended June 30, 2023, File No. 1-11373)

10.6.4

Third Amendment to the Cardinal Health, Inc. Senior Executive Severance Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health’s Quarterly Report

on Form 10-Q filed on November 3, 2023, File No. 1-11373)*

10.7

Cardinal Health, Inc. Policy Regarding Shareholder Approval of Severance Agreements (incorporated by reference to Exhibit 10.09 to Cardinal Health’s Current

Report on Form 8-K filed on August 7, 2006, File No. 1-11373)*

10.8.1

Confidentiality and Business Protection Agreement, between Cardinal Health, Inc. and Aaron E. Alt (incorporated by reference to Exhibit 10.2 to Cardinal

Health's Current Report on Form 8-K filed on December 19, 2022, File No. 1-11373)*

10.8.2

Aircraft Time Sharing Agreement, dated as of November 7, 2022, by and among Cardinal Health, Inc. and Jason M. Hollar (incorporated by reference to Exhibit

10.1 to Cardinal Health's Quarterly Report on Form 10-Q for the for the quarter ended December 31, 2022)*

10.9.1

Letter Agreement, dated March 9, 2020, between Cardinal Health, Inc. and Jason Hollar (incorporated by reference to Exhibit 10.1 to Cardinal Health's Current

Report on Form 8-K filed on March 19, 2020, File No. 1-11373)*

10.9.2

Letter Agreement, dated December 12, 2022, between Cardinal Health, Inc. and Aaron E. Alt (incorporated by reference to Exhibit 10.1 to Cardinal Health's

Current Report on Form 8-K filed on December 19, 2022, File No. 1-11373)*

10.9.3

Confidentiality and Business Protection Agreement, effective as of April 27, 2020, between Cardinal Health, Inc. and Jason Hollar (incorporated by reference to

Exhibit 10.2 to Cardinal Health's Current Report on Form 8-K filed on March 19, 2020, File No. 1-11373)*

10.9.4

Confidentiality and Business Protection Agreement, effective as of August 16, 2019, between Cardinal Health, Inc. and Stephen M. Mason (incorporated by

reference to Exhibit 10.9.4 to Cardinal Health's Annual Report on Form 10-K filed August 14, 2024. File No. 1-11373)*

10.9.5

Confidentiality and Business Protection Agreement, effective as of September 19, 2022, between Cardinal Health, Inc. and Deborah L. Weitzman (incorporated

by reference to Exhibit 10.9.5 to Cardinal Health's Annual Report on Form 10-K filed August 14, 2024. File No. 1-11373)*

10.10

Form of Indemnification Agreement between Cardinal Health, Inc. and certain individual directors (incorporated by reference to Exhibit 10.38 to Cardinal

Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004, File No. 1-11373)

10.11.1

Issuing and Paying Agency Agreement, dated August 9, 2006, between Cardinal Health, Inc. and The Bank of New York (incorporated by reference to Exhibit

10.01 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006, File No. 1-11373)

10.11.2

First Amendment to Issuing and Paying Agency Agreement, dated February 28, 2007, between Cardinal Health, Inc. and The Bank of New York (incorporated

by reference to Exhibit 10.01 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)

10.11.3

Second Amendment to Issuing and Paying Agency Agreement, effective as of December 1, 2016, between Cardinal Health, Inc. and The Bank of New York

(incorporated by reference to Exhibit 10.2 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)

10.11.4

Third Amendment to Issuing and Paying Agency Agreement, dated September 15, 2017, between Cardinal Health, Inc. and The Bank of New York

(incorporated by reference to Exhibit 10.2 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, File No. 1-11373)

10.11.5

Commercial Paper Dealer Agreement, dated August 9, 2006, between Cardinal Health, Inc. and J.P. Morgan Securities Inc. (incorporated by reference to

Exhibit 10.02 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006, File No. 1-11373)

10.11.6

First Amendment to Commercial Paper Dealer Agreement, dated February 28, 2007, between Cardinal Health, Inc. and J.P. Morgan Securities Inc.

(incorporated by reference to Exhibit 10.02 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)

10.11.7

Second Amendment to Commercial Paper Dealer Agreement, effective as of December 31, 2012, between Cardinal Health, Inc. and J.P. Morgan Securities

LLC (formerly known as J.P. Morgan Securities Inc.) (incorporated by reference to Exhibit 10.4 to Cardinal Health’s Quarterly Report on Form 10-Q for the

quarter ended December 31, 2012, File No. 1-11373)

10.11.8

Commercial Paper Dealer Agreement between Cardinal Health, Inc. and J.P. Morgan Securities LLC, effective as of December 1, 2016 (incorporated by

reference to Exhibit 10.6 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)

10.11.9

Commercial Paper Dealer Agreement, dated August 9, 2006, between Cardinal Health, Inc. and Banc of America Securities LLC (incorporated by reference to

Exhibit 10.03 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006, File No. 1-11373)

10.11.10

First Amendment to Commercial Paper Dealer Agreement, dated February 28, 2007, between Cardinal Health, Inc. and Banc of America Securities LLC

(incorporated by reference to Exhibit 10.03 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)

10.11.11

Second Amendment to Commercial Paper Dealer Agreement, effective as of December 31, 2012, between Cardinal Health, Inc. and Merrill Lynch, Pierce,

Fenner & Smith Incorporated, f/k/a Banc of America Securities LLC (incorporated by reference to Exhibit 10.5 to Cardinal Health’s Quarterly Report on Form

10-Q for the quarter ended December 31, 2012, File No. 1-11373)

10.11.12

Commercial Paper Dealer Agreement between Cardinal Health, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, effective as of December 1, 2016

(incorporated by reference to Exhibit 10.3 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)

10.11.13

Commercial Paper Dealer Agreement, dated August 9, 2006, between Cardinal Health, Inc. and Wachovia Capital Markets, LLC (incorporated by reference to

Exhibit 10.04 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006, File No. 1-11373)

Exhibits

Cardinal Health

Fiscal 2025 Form 10-K

10.11.14

First Amendment to Commercial Paper Dealer Agreement, dated February 28, 2007, between Cardinal Health, Inc. and Wachovia Capital Markets, LLC

(incorporated by reference to Exhibit 10.04 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)

10.11.15

Second Amendment to Commercial Paper Dealer Agreement, effective as of December 31, 2012, between Cardinal Health, Inc. and Wells Fargo Securities,

LLC, as successor in interest to Wachovia Capital Markets, LLC (incorporated by reference to Exhibit 10.6 to Cardinal Health’s Quarterly Report on Form 10-Q

for the quarter ended December 31, 2012, File No. 1-11373)

10.11.16

Commercial Paper Dealer Agreement between Cardinal Health, Inc. and Wells Fargo Securities, LLC, effective as of December 1, 2016 (incorporated by

reference to Exhibit 10.5 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)

10.11.17

Commercial Paper Dealer Agreement, dated August 9, 2006, between Cardinal Health, Inc. and Goldman, Sachs & Co. (incorporated by reference to Exhibit

10.05 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006, File No. 1-11373)

10.11.18

First Amendment to Commercial Paper Dealer Agreement, dated February 28, 2007, between Cardinal Health, Inc. and Goldman, Sachs & Co. (incorporated

by reference to Exhibit 10.05 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)

10.11.19

Second Amendment to Commercial Paper Dealer Agreement, effective as of December 31, 2012, between Cardinal Health, Inc. and Goldman, Sachs & Co.

(incorporated by reference to Exhibit 10.7 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, File No. 1-11373)

10.11.20

Commercial Paper Dealer Agreement between Cardinal Health, Inc. and Goldman Sachs & Co., effective as of December 1, 2016 (incorporated by reference to

Exhibit 10.4 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)

10.11.21

Form of Commercial Paper Dealer Agreement between Cardinal Health, Inc. and SunTrust Robinson Humphrey, Inc. (incorporated by reference to Exhibit 10.2

to Cardinal Health’s Current Report on Form 8-K filed on April 21, 2009, File No. 1-11373)

10.11.22

Form of First Amendment to Commercial Paper Dealer Agreement between Cardinal Health, Inc. and SunTrust Robinson Humphrey, Inc. (incorporated by

reference to Exhibit 10.8 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, File No. 1-11373)

10.11.23

Commercial Paper Dealer Agreement between Cardinal Health, Inc. and SunTrust Robinson Humphrey, Inc., effective as of December 1, 2016 (incorporated by

reference to Exhibit 10.7 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)

10.12.1

Third Amended and Restated Five-Year Credit Agreement, dated as of February 27, 2023 (incorporated by reference to Exhibit 10.1 to Cardinal Health's

Current Report on Form 8-K filed on March 2, 2023, File No. 1-11373)

10.13.1

Fourth Amended and Restated Receivables Purchase Agreement, dated as of November 1, 2013, among Cardinal Health Funding, LLC, as Seller, Griffin

Capital, LLC, as Servicer, the Conduits party thereto, the Financial Institutions Party thereto, the Managing Agents party thereto, and LC Banks party thereto

and the Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Agent (incorporated by reference to Exhibit 10.1 to Cardinal Health’s Quarterly Report on

Form 10-Q for the quarter ended September 30, 2013, File No. 1-11373)

10.13.2

First Amendment and Joinder, dated as of November 3, 2014, to the Fourth Amended and Restated Receivables Purchase Agreement, dated as of November

1, 2013 (incorporated by reference to Exhibit 10.3 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, File No.

1-11373)

10.13.3

Second Amendment, dated as of November 14, 2016, to the Fourth Amended and Restated Receivables Purchase Agreement, dated as of November 1, 2013

(incorporated by reference to Exhibit 10.4.3 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, File No. 1-11373)

10.13.4

Third Amendment, dated as of August 30, 2017, to the Fourth Amended and Receivables Purchase Agreement, dated as of November 1, 2013 (incorporated by

reference to Exhibit 10.1 to Cardinal Health's Current Report on Form 8-K filed on August 31, 2017, File No. 1-11373)

10.13.5

Fourth Amendment and Joinder, dated September 30, 2019, to the Fourth Amended and Restated Receivables Purchase Agreement (incorporated by

reference to Exhibit 10.1 to Cardinal Health's Current Report on Form 8-K filed on October 2, 2019, File No. 1-11373)

10.13.6

Fifth Amendment, dated as of May 13, 2022, to the Fourth Amended and Restated Receivables Purchase Agreement (incorporated by reference to Exhibit

10.14.6 to Cardinal Health's Annual Report on Form10-K for the fiscal year ended June 30, 2022, File No. 1-11373)

10.13.7

Sixth Amendment to the Fourth Amended and Restated Receivables Purchase Agreement, dated September 30, 2022 (incorporated by reference to Exhibit

10.1 to Cardinal Health's Current Report on Form 8-K filed on October 4, 2022, File No. 1-11373)

10.13.8

Fifth Amended and Restated Receivables Purchase Agreement, dated September 1, 2023 (incorporated by reference to Exhibit 10.2 to Cardinal Health’s

Quarterly Report on Form 10-Q filed on November 3, 2023, File No. 1-11373)

10.13.7

Sixth Amendment to the Fourth Amended and Restated Receivables Purchase Agreement, dated September 30, 2022 (incorporated by reference to Exhibit

10.1 to Cardinal Health's Current Report on Form 8-K filed on October 4, 2022, File No. 1-11373)

10.14.1

Seventh Amended and Restated Performance Guaranty, dated as of November 14, 2016, executed by Cardinal Health, Inc. in favor of Cardinal Health

Funding, LLC (incorporated by reference to Exhibit 10.5.1 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, File

No. 1-11373)

10.14.2

Amendment No. 1 to Seventh Amended and Restated Performance Guaranty, dated as of November 14, 2016 (incorporated by reference to Exhibit 10.5.2 to

Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, File No. 1-11373

10.14.3

Amendment No. 2 to Seventh Amended and Restated Performance Guaranty, dated as of November 6, 2018 (incorporated by reference to Exhibit 10.4 to

Cardinal Health's Quarterly Report on Form 10-Q for the Quarter ended September 30, 2018, File No. 1-11373)

10.14.4

Amendment No. 3 to Seventh Amended and Restated Performance Guaranty (incorporated by reference to Exhibit 10.2 to Cardinal Health's Current Report on

Form 8-K filed October 2, 2019, File No. 1-11373)

10.14.5

Consent to Amendment of Performance Guarantee (incorporated by reference to Exhibit 10.1 to Cardinal Health’s Quarterly Report on Form 10-Q filed on

February 1, 2024, File No. 1-11373)

10.14.6

Performance Guaranty, dated September 1, 2023 (incorporated by reference to Exhibit 10.2 to Cardinal Health's Current Report on Form 8-K filed on

September 6, 2023, File No. 1-11373)

10.15.1

Tax Matters Agreement, dated as of August 31, 2009, by and between Cardinal Health, Inc. and CareFusion Corporation (incorporated by reference to Exhibit

10.3 to Cardinal Health’s Current Report on Form 8-K filed on September 4, 2009, File No. 1-11373)

10.15.2

First Amendment to Tax Matters Agreement, dated as of May 28, 2012, by and between Cardinal Health, Inc. and CareFusion Corporation (incorporated by

reference to Exhibit 10.20.2 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012, File No. 1-11373)

10.16

Cooperation Agreement, dated as of September 5, 2022, by and among Cardinal Health, Inc., Elliott Associates, L.P. and Elliott International, L.P. (incorporated

by reference to Exhibit 10.1 to Cardinal Health's Form 8-K filed September 6, 2022, File No. 1-11373)

Exhibits

Cardinal Health

Fiscal 2025 Form 10-K

10.17

First Amendment to the Cooperation Agreement, dated as of May 3, 2023, by and among Elliott Associates, L.P., Elliott International, L.P., and Elliott

International Capital Advisors Inc., and Cardinal Health, Inc. (incorporated by reference to Exhibit 10.1 to Cardinal Health's Form 8-K filed May 4, 2023, File No.

1-11373)

19.1

Restrictions on buying and selling stock and securities (Insider trading) policy

21.1

List of Subsidiaries of Cardinal Health, Inc.

23.1

Consent of Independent Registered Public Accounting Firm

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-

Oxley Act of 2002

Cardinal Health, Inc. Clawback Policy

99.1

Statement Regarding Forward-Looking Information

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File - formatted in Inline XBRL (included as Exhibit 101)

* Management contract or compensatory plan or arrangement.

Exhibits

Cardinal Health

Fiscal 2025 Form 10-K

Form 10-K Cross Reference Index

Item

Page(s)

Part 1

Business

Risk Factors

Unresolved Staff Comments

N/A

Cybersecurity

Properties

Legal Proceedings

Mine Safety Disclosures

N/A

Part II

Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Reserved

N/A

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

Quantitative and Qualitative Disclosures about Market Risk

Financial Statements and Supplementary Data

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

N/A

Controls and Procedures

Other Information

N/A

Part III

Directors, Executive Officers, and Corporate Governance

Executive Compensation

(a)

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(b)

Certain Relationships and Related Transactions, and Director Independence

(c)

Principal Accounting Fees and Services

(d)

Part IV

Exhibits, Financial Statement Schedules

Form 10-K Summary

N/A

Signatures

N/A

Not applicable

(a)

The information called for by Item 11 of Form 10-K is incorporated by reference to our 2025 Proxy Statement under the captions “Corporate Governance” and

“Executive Compensation.”

(b)

The information called for by Item 12 of Form 10-K is incorporated by reference to our 2025 Proxy Statement under the captions "Executive Compensation" and

"Share Ownership Information."

(c)

The information called for by Item 13 of Form 10-K is incorporated by reference to our 2025 Proxy Statement under the caption "Corporate Governance."

(d)

The information called for by Item 14 of Form 10-K is incorporated by reference to our 2025 Proxy Statement under the caption “Audit Committee Matters.”

Form 10-K Cross Reference Index

Cardinal Health

Fiscal 2025 Form 10-K

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be

signed on its behalf by the undersigned, thereunto duly authorized on August 12, 2025.

Cardinal Health, Inc.

By:

/s/ JASON M. HOLLAR

JASON M. HOLLAR

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed below by the

following persons on behalf of the registrant and in the capacities indicated on August 12, 2025.

Name

Title

/s/ JASON M. HOLLAR

Chief Executive Officer and Director (principal executive officer)

Jason M. Hollar

/s/ AARON E. ALT

Chief Financial Officer (principal financial officer)

Aaron E. Alt

/s/ MARY C. SCHERER

Senior Vice President and Chief Accounting Officer (principal accounting officer)

Mary C. Scherer

/s/ ROBERT W. AZELBY

Director

Robert W. Azelby

/s/ MICHELLE M. BRENNAN

Director

Michelle M. Brennan

/s/ SHERI H. EDISON

Director

Sheri H. Edison

/s/ DAVID C. EVANS

Director

David C. Evans

/s/ PATRICIA A. HEMINGWAY HALL

Director

Patricia A. Hemingway Hall

/s/ AKHIL JOHRI

Director

Akhil Johri

/s/ GREGORY B. KENNY

Director

Gregory B. Kenny

/s/ NANCY KILLEFER

Director

Nancy Killefer

/s/ CHRISTINE A. MUNDKUR

Director

Christine A. Mundkur

/s/ ROBERT W. MUSSLEWHITE

Director

Robert W. Musslewhite

/s/ SUDHAKAR RAMAKRISHNA

Director

Sudhakar Ramakrishna

Signatures

Cardinal Health

Fiscal 2025 Form 10-K

Statement Regarding Forward-Looking Information

As used in this exhibit, “we,” “our,” “us” and similar pronouns refer to Cardinal Health, Inc. and its subsidiaries, unless the context requires

otherwise. Our filings with the Securities and Exchange Commission, including this Annual Report on Form 10-K for the fiscal year ended

June 30, 2025 (the “2025 Form 10-K”), and our quarterly reports on Form 10-Q, and our current reports on Form 8-K (along with any exhibits

and amendments to such reports), as well as our news releases or any other written or oral statements made by or on behalf of us, including

materials posted on our website, may include, directly or by incorporation by reference, forward-looking statements that reflect our current

view (as of the date the forward-looking statement is first made) about future events, prospects, projections or financial performance. The

matters discussed in these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ

materially from those projected, anticipated or implied in or by such statements. These risks and uncertainties include:

•

competitive pressures in the markets in which we operate, including pricing pressures;

•

uncertainties relating to the pricing of and demand for generic pharmaceuticals;

•

uncertainties related to recently imposed or threatened tariffs on China, Mexico and Canada and other countries, and any retaliatory

actions taken by these countries, which will result in us incurring additional costs to procure products or materials that we source,

manufacture and distribute, including the risk that we will not be successful at mitigating the negative impact of such increased costs, the

risk that we may not be able to establish alternate sources of supply and may experience supply disruptions or shortages;

•

uncertainties relating to the timing, frequency and profitability of generic pharmaceutical launches or other components of our

pharmaceutical generics program;

•

changes in the timing or frequency of the introduction of branded pharmaceuticals;

•

material reductions in purchases, pricing changes, non-renewal, early termination, or delinquencies or defaults under contracts with key

customers;

•

costs or claims resulting from quality issues, or other potential or alleged errors or defects in our manufacturing or sourcing of medical

devices or other products or in our compounding, repackaging, information systems or pharmacy management services that may injure

persons or damage property or operations, including costs from recalls, remediation efforts, and related product liability claims and

lawsuits, including class action lawsuits;

•

any compromise of our information systems or of those of a third-party service provider, including unauthorized access to or use or

disclosure of company or customer information, disruption of access and ancillary risks associated with our ability to effectively manage

any issues arising from any such compromise or disruption;

•

continuing risks associated with the resolution and defense of the lawsuits and investigations in which we have been or will be named

relating to the distribution of prescription opioid pain medication, including the investigations by the U.S. Department of Justice which

concerns our anti-diversion program, our anti-diversion policies and procedures and our distribution of certain controlled substances;

•

risks associated with the national opioid settlement agreement, including the risk that the maintenance of the required changes to

distributors' controlled substance anti-diversion programs may result in unforeseen costs or operational challenges and the risk that if we

fail to or are alleged to have failed to comply with the terms of the settlement agreement, we could incur monetary or other penalties or

result in additional lawsuits being filed against us;

•

uncertainties related to Cardinal Health Brand products, including our ability to manage cost and infrastructure, retain margin, increase

volume and improve performance;

•

significantly increased costs for commodities and other materials used in the Global Medical Products and Distribution segment

manufacturing, including various components, compounds, raw materials or energy such as oil-based resins, pulp, cotton, latex and

other commodities and the possibility that we may not successfully offset or mitigate these increases;

•

risks arising from acquisitions, including possible liabilities relating to the operations or activities of such businesses prior to their

acquisition, and uncertainties relating to our ability to achieve the anticipated results from acquisitions, including as a result of entering

new lines of business with risks and uncertainties that may be different from or more significant than risks and uncertainties facing our

legacy businesses;

•

risks associated with the tax benefit from our self-insurance loss claims, including, certain state courts' interpretation of laws and

insurance policies in ways that may impact our self-insurance loss, which could negatively impact our financial position;

•

disruption, damage or lack of access to, or failure of, our or our third-party service providers' information systems, our critical facilities,

including our national logistics center, or our distribution networks;

•

risks associated with our Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human

Services, including the risk that failure to comply with the requirements set forth therein could result in monetary or other penalties;

•

our high sales concentration with certain key customers, including CVS Health Corporation;

•

our ability to maintain the benefits of our generic pharmaceutical sourcing venture with CVS Health Corporation;

•

actions of regulatory bodies and other governmental authorities, including the U.S. Drug Enforcement Administration, certain agencies

within the U.S. Department of Health and Human Services (including the U.S. Food and Drug Administration, Centers for Medicare and

Medicaid Services, the Office of Inspector General and the Office for Civil Rights), the U.S. Nuclear Regulatory Commission, the U.S.

Exhibit 99.1

Federal Trade Commission, the U.S. Customs and Border Protection, various state boards of pharmacy, state controlled substance

authorities, state health departments, state insurance departments, state Medicaid departments or comparable regulatory bodies or

governmental authorities or foreign equivalents that, in each case, could delay, limit or suspend product development, manufacturing,

distribution, importation or sales or result in warning letters, recalls, seizures, injunctions or monetary sanctions;

•

shortages in commodities, components, compounds, raw materials or energy used by our businesses, including supply disruptions of

radioisotopes;

•

the loss of, or default by, one or more key suppliers for which alternative suppliers may not be readily available;

•

uncertainties with respect to certain business process initiatives, including IT infrastructure activities and outsourcing relationships,

including the ability to achieve the expected benefits from such initiatives, the risk that we could incur unexpected charges, and the risk

that we may fail to retain key personnel;

•

difficulties or delays in the development, production, manufacturing, sourcing and marketing of new or existing products and services,

including difficulties or delays associated with obtaining or maintaining requisite regulatory consents, whether our own or third parties', or

approvals associated with those activities;

•

manufacturing disruptions, whether due to regulatory action, including regulatory action to reduce ethylene oxide ("EtO") emissions,

production quality deviations, safety issues or raw material shortages or defects, or because a key product is manufactured at a single

manufacturing facility with limited alternate facilities;

•

risks associated with industry reliance on EtO to sterilize certain medical products that we manufacture or distribute, including the

possibility that regulatory actions to reduce EtO emissions could become more widespread, which may result in increased costs or

supply shortages; and risks that the lawsuits against us alleging personal injury resulting from EtO exposure could become more

widespread;

•

the possibility that we could be subject to adverse changes in the tax laws or challenges to our tax positions, including the possibility that

the corporate tax rate in the U.S. could be increased;

•

risks arising from possible violations of healthcare fraud and abuse laws;

•

risks arising from possible violations of the U.S. Foreign Corrupt Practices Act and other similar anti-corruption laws in other jurisdictions

and U.S. and foreign export control, trade embargo and customs laws;

•

risks arising from our collecting, handling and maintaining patient-identifiable health information and other sensitive personal and

financial information, which are subject to federal, state and foreign laws that regulate the use and disclosure of such information;

•

risks arising from certain of our businesses being Medicare-certified suppliers or participating in other federal and state healthcare

programs, such as state Medicaid programs and the federal 340B drug pricing program, which businesses are subject to accreditation

and quality standards and other rules and regulations, including applicable reporting, billing, payment and record-keeping requirements;

•

risks arising from pharmaceutical manufacturers' restriction of sales under the 340B drug pricing program to contract pharmacies, which

may adversely impact our customers;

•

risks arising from certain of our businesses manufacturing pharmaceutical and medical products or repackaging pharmaceuticals that

are purchased or reimbursed through, or are otherwise governed by, federal or state healthcare programs, which businesses are subject

to federal and state laws that establish eligibility for reimbursement by such programs and other applicable standards and regulations;

•

changes in laws or changes in the interpretation or application of laws or regulations, as well as possible failures to comply with

applicable laws or regulations, including as a result of possible misinterpretations or misapplications;

•

unfavorable changes to the terms or with our ability to meet contractual obligations of key customer or supplier relationships, or changes

in customer mix;

•

risks arising from changes in U.S. or foreign tax laws and unfavorable challenges to our tax positions and payments to settle these

challenges, which may adversely affect our effective tax rate or tax payments;

•

uncertainties due to possible government healthcare reform, including proposals related to Medicare drug rebate arrangements, possible

repeal or replacement of major parts of the Patient Protection and Affordable Care Act, proposals related to prescription drug pricing

transparency and the possible adoption of Medicare-For-All;

•

reductions or limitations on governmental funding at the state or federal level or efforts by healthcare insurance companies to limit

payments for products and services;

•

changes in manufacturers' pricing, selling, inventory, distribution or supply policies or practices;

•

changes in legislation or regulations governing prescription drug pricing, healthcare services or mandated benefits;

•

uncertainties arising as a result of the Supreme Court decision on Dobbs vs. Jackson, including uncertainties associated with states'

proposed and adopted laws which may impact our ability to distribute or store certain pharmaceutical products and the risk that we could

incur unforeseen costs to comply with these new laws in various jurisdictions;

•

changes in hospital buying groups or hospital buying practices;

Cardinal Health Annual Report — page 100

•

changes in distribution or sourcing models for pharmaceutical and medical and surgical products, including an increase in direct and

limited distribution;

•

changes to the prescription drug reimbursement formula and related reporting requirements for generic pharmaceuticals under

Medicaid;

•

continuing consolidation in the healthcare industry, which could give the resulting enterprises greater bargaining power and may

increase pressure on prices for our products and services or result in the loss of customers;

•

risks to our business and information and controls systems in the event that business process improvements, infrastructure

modernization or initiatives to use third-party service providers for key systems and processes are not effectively implemented;

•

the risk that we may not effectively implement and maintain data governance structures across businesses to allow us to access and

interpret our data, which could put us at a competitive disadvantage relative to our peers;

•

the results, costs, effects or timing of any commercial disputes, government contract compliance matters, patent infringement claims,

qui

tam

actions, government investigations, shareholder lawsuits or other legal proceedings;

•

the possibility that our business performance or internal control over financial reporting may be adversely impacted if we are not

successful at attracting, retaining and developing talent;

•

losses relating to product liability lawsuits and claims regarding products for which we cannot obtain product liability insurance or for

which such insurance may not be adequate to cover our losses, including the product liability lawsuits we are currently defending

relating to alleged personal injuries associated with the use of Cordis inferior vena cava filter products;

•

risks associated with the importation of products or source materials used in products that we manufacture or distribute, including risks

associated with our country-of-origin determinations and the possibility that we could experience additional supply disruptions as a result

of the Uyghur Forced Labor Prevention Act or other similar regulations;

•

our ability to maintain adequate intellectual property protections;

•

our ability to manage and complete divestitures or other strategic business combination transactions, including our ability to find buyers

or other strategic exit opportunities and risks associated with the possibility that we could experience greater dis-synergies than

anticipated or otherwise fail to achieve our strategic objectives;

•

bankruptcy, insolvency or other credit failure of a customer or supplier that owes us a substantial amount;

•

risks associated with global operations, including the effect of local economic environments, inflation, recession, currency volatility and

global competition, in addition to risks associated with compliance with U.S. and international laws relating to global operations;

•

uncertainties with respect to U.S. or international trade policies, tariffs, excise or border taxes and their impact on our ability to source

products or materials that we need to conduct our business;

•

risks associated with our use of and reliance on the global capital and credit markets, including our ability to access credit and our cost

of credit, which may adversely affect our ability to efficiently fund our operations or undertake certain expenditures;

•

our ability to introduce and market new products and our ability to keep pace with advances in technology;

•

significant charges to earnings if goodwill or intangible assets become impaired;

•

uncertainties relating to general political, business, industry, regulatory and market conditions; and

•

other factors described in the “Risk Factors” section of the 2025 Form 10-K.

The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue,” “likely,” and similar

expressions generally identify “forward-looking statements,” which speak only as of the date the statements were made, and also include

statements reflecting future results or guidance, statements of outlook and expense accruals. We undertake no obligation to update or revise

any forward-looking statements, except to the extent required by applicable law.

Cardinal Health Annual Report — page 101

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Cardinal Health Annual Report — page 102

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Corporate offices

Cardinal Health

7000 Cardinal Place

Dublin, Ohio 43017

614.757.5000

cardinalhealth.com

LinkedIn: linkedin.com/company/cardinal-health

X: @CardinalHealth

Facebook: facebook.com/cardinalhealthinc

Common shares

Cardinal Health common shares are listed on the New

York Stock Exchange under the ticker symbol “CAH” and

are a component of the Standard & Poor’s 500 Index.

Annual meeting

The 2025 Annual Meeting of Shareholders will be

held at 8 a.m. ET on November 5, 2025. This year’s

meeting is a virtual shareholder meeting at

www.virtualshareholdermeeting.com/CAH2025.

Shareholders are cordially invited to attend. For more

information on how to participate in the meeting, please

refer to our proxy statement at www.proxyvote.com.

Auditors

Ernst & Young LLP

Transfer agent and registrar

Shareholders with inquiries regarding address

corrections, dividend payments, lost certificates or

changes in registered ownership should contact the

Cardinal Health stock transfer agent:

Computershare Trust Company, N.A.

PO Box 43006

Providence, RI 02940-3066

United States

Phone: 877.498.8861

Courier delivery

150 Royall St., Suite 101

Canton, MA 02021

United States

Phone: 877.498.8861

computershare.com/investor

Financial information

Comprehensive financial and other information about

Cardinal Health can be obtained by visiting the Investor

Relations page at ir.cardinalhealth.com.

Available information includes historical stock information,

research analyst coverage, past and present financial

statements, recent company presentations, SEC filings,

corporate governance guidelines and board committee

charters. This information – including the Cardinal Health

Forms 10-K, 10-Q, 8-K and other published corporate

literature – is also available without charge upon written

request to the Investor Relations department at the corporate

office, by calling Investor Relations at 614.553.4460, or by

emailing Investor.Relations@cardinalhealth.com.

Cardinal Health uses its website as a channel of distribution

for important company information. Important information,

including news releases, financial information, earnings and

analyst presentations, and information about upcoming

presentations and events is routinely posted and accessible

on the Investor Relations page at ir.cardinalhealth.com. In

addition, the Cardinal Health website allows investors and

other interested persons to sign up to automatically receive

email alerts when the company posts news releases, SEC

filings and certain other information on its website.

For non-investor related inquiries, please call the company’s

main telephone number at 614.757.5000.

Fiscal 2025 cash dividend declarations

Fiscal quarter

Record date

Payment date

Per common share amount

1st

October 1, 2024

October 15, 2024

$0.5056

2nd

January 2, 2025

January 15, 2025

$0.5056

3rd

April 1, 2025

April 15, 2025

$0.5056

4th

July 1, 2025

July 15, 2025

$0.5107

Corporate and investor information

Cardinal Health Annual Report — page 104

of Cardinal Health and may be registered in the US and/or in other countries. All other trademarks are the

property of their respective owners. Patent cardinalhealth.com/patents. Lit. No. 5PR25-3600059 (09/2025)

Corporate offices

Cardinal Health

7000 Cardinal Place

Dublin, Ohio 43017

614.757.5000

cardinalhealth.com

Cardinal Health Annual Report

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