Cardinal Health 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. The company operates in a highly competitive environment in the distribution of pharmaceuticals and consumer healthcare products, as well as in the manufacturing and distribution of medical devices and surgical products. Key structural forces shaping competition include price, service offerings, support services, customer service, breadth of product lines, and product quality and efficacy. The company sits within this landscape as a national wholesale distributor with reach comparable to McKesson Corporation and Cencora, Inc. in the Pharma segment, and competes with Medline Industries, Inc. and Owens & Minor, Inc. in the GMPD segment.

Primary competitors named in the filing include McKesson Corporation and Cencora, Inc. in the Pharma segment, and Medline Industries, Inc. and Owens & Minor, Inc. in the GMPD segment. Stated competitive advantages include prime vendor relationships that streamline the purchasing process, resulting in greater efficiency and lower costs for customers, and the Red Oak Sourcing venture with CVS Health for generic pharmaceutical sourcing. The company's largest customer, CVS Health, accounted for 30 percent ¹ of fiscal 2025 revenue, and the five largest customers accounted for 43 percent ² of fiscal 2025 revenue. Sales to members of the two largest GPO relationships, Vizient, Inc. and Premier, Inc., collectively accounted for 27 percent ³ of revenue in fiscal 2025.

The company generates revenue primarily through the distribution of branded and generic pharmaceutical, specialty pharmaceutical, and over-the-counter healthcare and consumer products, as well as through the manufacturing, sourcing, and distribution of medical, surgical, and laboratory products. Revenue is recognized at a point in time when title transfers to customers, with service revenues recognized over the period services are provided. The company is generally the principal in transactions, recording revenue on a gross basis. Primary customer segments include retailers, hospitals, healthcare providers, ambulatory surgery centers, clinical laboratories, and patients in the home. The company also provides pharmacy management services to hospitals and operates a limited number of pharmacies, including in community health centers.

The Pharmaceutical and Specialty Solutions 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, repackages generic pharmaceuticals and over-the-counter healthcare products, and includes managed services organization platforms for specialty physician offices. Pharma segment revenue for fiscal 2025 decreased 3 percent to $204.644 billion ⁴ from the prior year, primarily due to the expiration of the OptumRx contracts, partially offset by branded and specialty pharmaceutical sales growth. Pharma segment profit for fiscal 2025 increased 12 percent to $2.258 billion ⁵ from the prior year.

The Global Medical Products and Distribution segment manufactures, sources, and distributes Cardinal Health brand medical, surgical, and laboratory products sold in the United States, Canada, Europe, Asia, and other markets, and distributes national brand products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers. GMPD segment revenue for fiscal 2025 increased 2 percent to $12.636 billion ⁶ from the prior year, primarily due to higher volumes from existing customers. GMPD segment profit for fiscal 2025 increased 47 percent to $135 million ⁷ from the prior year. Other operating segments include Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight Logistics. Other segment revenue for fiscal 2025 increased 19 percent to $5.382 billion ⁸ from the prior year, and Other segment profit increased 22 percent to $516 million ⁹ from the prior year.

During fiscal 2025, the company completed several significant acquisitions: Advanced Diabetes Supply Group on April 1, 2025 for a purchase price of $1.1 billion ¹⁰ in cash; a 73 percent ownership interest in GI Alliance on January 30, 2025 for approximately $2.8 billion ¹¹ in cash; Urology America through GIA on May 30, 2025 for $360 million ¹² in cash; and Integrated Oncology Network on December 2, 2024 for $1.1 billion ¹³ in cash. The company also deployed $765 million ¹⁴ for share repurchases, $400 million ¹⁵ for debt repayment, $547 million ¹⁶ for capital expenditures, and $494 million ¹⁷ for dividends. New long-term debt was issued with net proceeds of $2.9 billion ¹⁸, and an $800 million ¹⁹ term loan was borrowed. Cash payments totaling $798 million ²⁰ related to opioid litigation were made during the year.

Revenue decreased 2 percent to $222.578 billion ²¹ for fiscal 2025 from $226.827 billion ²² in the prior year. GAAP operating earnings increased 83 percent to $2.275 billion ²³ from $1.243 billion ²⁴ in the prior year. Non-GAAP operating earnings increased 15 percent to $2.786 billion ²⁵ from $2.414 billion ²⁶. GAAP diluted EPS increased 87 percent to $6.45 ²⁷ from $3.45 ²⁸ in the prior year. Non-GAAP diluted EPS increased 9 percent to $8.24 ²⁹ from $7.53 ³⁰. Cash and equivalents were $3.874 billion ³¹ at June 30, 2025 compared to $5.133 billion ³² at June 30, 2024. Net cash provided by operating activities was $2.397 billion ³³ for fiscal 2025.

A key growth vector is the expansion of managed services organization platforms through the acquisitions of GI Alliance, Integrated Oncology Network, and Urology America, which are part of The Specialty Alliance. GIA's MSO provides services to over 900 physicians ³⁴ across 345 practice locations ³⁵ in 20 states ³⁶. ION supports more than 50 practice sites ³⁷ in 10 states ³⁸ representing more than 100 providers ³⁹. The company expects these acquisitions to positively impact segment revenue and segment profit in fiscal 2026 and beyond, while increasing amortization and acquisition-related costs and acquisition-related cash and share-based compensation costs.

Another growth vector is the at-Home Solutions segment, including the acquisition of Advanced Diabetes Supply Group, which serves approximately 500,000 patients ⁴⁰ annually providing diabetes therapies from leading manufacturers. The company also expects further growth in Cardinal Health brand medical products sales in fiscal 2026 and beyond. Additionally, the Pharma segment generics program, including the Red Oak Sourcing venture with CVS Health which extends through June 2029 ⁴¹, and BioPharma Solutions are expected to continue contributing to segment profit, though the timing, magnitude, and profit impact are subject to risks and uncertainties.

Gross margin rate for fiscal 2025 grew 40 basis points ⁴² from the prior year, primarily due to favorable changes in overall product and customer mix and MSO platforms acquisitions. SG&A expenses for fiscal 2025 increased 8 percent to $5.382 billion ⁴³ from the prior year, partially offset by the beneficial impact of enterprise-wide cost savings measures. Restructuring and employee severance costs in fiscal 2025 were $88 million ⁴⁴, primarily related to initiatives to rationalize manufacturing operations and implement enterprise-wide cost-savings measures.

Capital expenditures during fiscal 2025 were $547 million ⁴⁵, and the company expects capital expenditures in fiscal 2026 to be approximately $600 million ⁴⁶, primarily related to manufacturing and distribution infrastructure projects and technology investments. During fiscal 2025, the company deployed $765 million ⁴⁷ for share repurchases under accelerated share repurchase programs. As of June 30, 2025, the company had $2.7 billion ⁴⁸ remaining under its existing share repurchase authorization. Dividends paid totaled $2.02 ⁴⁹ per share in fiscal 2025, an increase of 1 percent from fiscal 2024, and the Board approved a quarterly dividend of $0.5107 ⁵⁰ per share, or $2.04 ⁵¹ per share on an annualized basis.

The company faces headwinds from the expiration of the OptumRx pharmaceutical distribution contracts at the end of June 2024, which generated 17 percent ⁵² of consolidated revenue in fiscal 2024. The unwinding of the negative net working capital associated with these contracts adversely impacted results of operations, segment profit, financial condition, and cash flows during fiscal 2025. Additionally, recent U.S. tariffs imposed or threatened on goods from countries where the company does business could result in substantial additional costs to source materials and may require price increases or alternative sources of supply, with potential negative impacts on financial results if not offset.

The company faces constraints from the highly competitive environment in both the Pharma and GMPD segments, with continued pricing pressure that adversely affects margins. The company also faces risks related to the performance of its generic pharmaceutical program, as the frequency, timing, magnitude, and profit impact of generic pharmaceutical customer volumes, pricing changes, customer contract renewals, and manufacturer pricing changes remain uncertain. Additionally, changes in the U.S. healthcare environment, including 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.

Management's message emphasizes that the company is a global healthcare services and products company providing customized solutions that enhance the healthcare system and supply chain efficiency. The tone is forward-looking, highlighting the positive impact of 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. Key strategic priorities emphasized for the period ahead include the expansion into new practice areas through The Specialty Alliance, continued growth in Cardinal Health brand medical products, and enterprise-wide cost savings measures. Management notes that GAAP operating earnings increased 83 percent to $2.275 billion ⁵⁷ and non-GAAP operating earnings increased 15 percent to $2.786 billion ⁵⁸ for fiscal 2025, driven by the increased contribution from branded and specialty pharmaceutical products and acquisitions.

Total revenue for fiscal 2025 was $222.578 billion ⁵⁹, compared to $226.827 billion ⁶⁰ in fiscal 2024. Net earnings attributable to Cardinal Health, Inc. were $1.561 billion ⁶¹ for fiscal 2025, compared to $852 million ⁶² in fiscal 2024. Diluted EPS was $6.45 ⁶³ for fiscal 2025, compared to $3.45 ⁶⁴ in fiscal 2024. GAAP operating earnings were $2.275 billion ⁶⁵ for fiscal 2025, compared to $1.243 billion ⁶⁶ in fiscal 2024. Gross margin was $8.168 billion ⁶⁷ for fiscal 2025, compared to $7.414 billion ⁶⁸ in fiscal 2024. Cash and equivalents were $3.874 billion ⁶⁹ at June 30, 2025, compared to $5.133 billion ⁷⁰ at June 30, 2024. Net cash provided by operating activities was $2.397 billion ⁷¹ for fiscal 2025. Significant one-time items included pre-tax non-cash goodwill impairment charges of $675 million ⁷² related to the GMPD segment in fiscal 2024, net recoveries in class action antitrust litigation of $171 million ⁷³ in fiscal 2025, and transaction and integration costs associated with acquisitions of $161 million ⁷⁴ in fiscal 2025. Pharma segment profit was $2.258 billion ⁷⁵ for fiscal 2025, GMPD segment profit was $135 million ⁷⁶, and Other segment profit was $516 million ⁷⁷.

The company faces material risks from opioid-related legal proceedings, with $4.9 billion ⁵³ accrued at June 30, 2025 for settlements, and future annual payments under the NOSA expected through 2038. The expiration of the OptumRx contracts, which generated 17 percent ⁵⁴ of consolidated revenue in fiscal 2024, has adversely impacted results and cash flows. The company's business is subject to rigorous regulatory and licensing requirements, and noncompliance could result in suspension of distribution, recalls, or criminal sanctions. Recent U.S. tariffs on goods from affected countries could result in substantial additional costs, and if not offset through price increases, financial results could be negatively impacted. The company's goodwill or other long-lived assets may be further impaired, as evidenced by $675 million ⁵⁵ in GMPD goodwill impairment charges in fiscal 2024 and $1.2 billion ⁵⁶ in fiscal 2023.