
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

For the quarterly period ended ~~December~~March 31, ~~2022~~2023


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

For the transition period from ________ to ________

Commission File Number: 1-11373

Cardinal Health, Inc.

(Exact name of registrant as specified in its charter)

Ohio

31-0958666

(State or other jurisdiction of
incorporation or organization)

(IRS Employer
Identification No.)

7000 Cardinal Place

Dublin

Ohio

43017

(Address of principal executive offices)

(Zip Code)

(614) 757-5000

(Registrant’s telephone number, including area code)


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

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

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

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

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

The number of the registrant’s common shares, without par value, outstanding as of ~~January 31,~~April 30, 2023, was the following: ~~257,639,059.~~254,600,182.


Cardinal Health Q2Q3 Fiscal 2023 Form 10-Q

Table of Contents

About Cardinal Health

Cardinal Health, Inc., an Ohio corporation formed in 1979, is a globally integrated healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices and patients in the home. We provide pharmaceuticals and medical products and cost-effective solutions that enhance supply chain efficiency. We connect patients, providers, payers, pharmacists and manufacturers for integrated care coordination and better patient management. We manage our business and report our financial results in two segments: Pharmaceutical and Medical. As used in this report, “we,” “our,” “us,” and similar pronouns refer to Cardinal Health, Inc. and its majority-owned and consolidated subsidiaries, unless the context requires otherwise. Our fiscal year ends on June 30. References to fiscal 2023 and fiscal 2022 and to FY23 and FY22 are to the fiscal years ending or ended June 30, 2023 and June 30, 2022, respectively.

Forward-Looking Statements

This Quarterly Report on Form 10-Q for the quarter ended ~~December~~March 31, ~~2022~~2023 (this "Form 10-Q") (including information incorporated by reference) includes "forward-looking statements" addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. Many forward-looking statements appear in Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), but there are others in this Form 10-Q, which may be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "will," "should," "could," "would," "project," "continue," "likely," and similar expressions, and include statements reflecting future results or guidance, statements of outlook and expense accruals. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those made, projected or implied. The most significant of these risks and uncertainties are described in this Form 10-Q, including Exhibit 99.1, and in "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 (our “2022 Form 10-K”). Forward-looking statements in this Form 10-Q speak only as of the date of this document. Except to the extent required by applicable law, we undertake no obligation to update or revise any forward-looking statement.

Non-GAAP Financial Measures

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



1			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Overview

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

The discussion and analysis presented below is concerned with material changes in financial condition and results of operations, including amounts and certainty of cash flows from operations and from outside sources, between the periods specified in our condensed consolidated balance sheets at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, and in our condensed consolidated statements of earnings/(loss) for the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021.~~2022. All comparisons presented are with respect to the prior-year period, unless stated otherwise. This discussion and analysis should be read in conjunction with the MD&A included in our 2022 Form 10-K.



2			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Overview

Overview of Consolidated Results

Revenue

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, revenue increased 13 percent to ~~$51.5~~$50.5 billion and ~~$101.1~~$151.6 billion, respectively, primarily due to branded and specialty pharmaceutical sales growth from existing ~~and~~customers. During the nine months ended March 31, 2023, pharmaceutical sales growth from net new ~~customers.~~customers also contributed to increased revenue.

GAAP and Non-GAAP Operating Earnings/(Loss)


		Three Months Ended December 31,						Six Months Ended December 31,							Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		Change		2022		2021		Change		(in millions)	2023		2022		Change		2023		2022		Change
GAAP operating earnings/(loss)	GAAP operating earnings/(loss)	$	(119)	$	(950)	(87)	%	$	18	$	(535)	N.M.		GAAP operating earnings/(loss)	$	572	$	(97)	N.M.		$	590	$	(632)	N.M.
Surgical gown recall costs/(income)	Surgical gown recall costs/(income)	—		1				—		1				Surgical gown recall costs/(income)	—		—				—		1
State opioid assessment related to prior fiscal years	State opioid assessment related to prior fiscal years	(6)		—				(6)		—				State opioid assessment related to prior fiscal years	—		—				(6)		—

Shareholder cooperation agreement costs	Shareholder cooperation agreement costs	2		—				8		—				Shareholder cooperation agreement costs	—		—				8		—
Restructuring and employee severance	Restructuring and employee severance	17		7				46		25				Restructuring and employee severance	16		31				62		56
Amortization and other acquisition-related costs	Amortization and other acquisition-related costs	71		79				142		158				Amortization and other acquisition-related costs	74		79				216		237
Impairments and (gain)/loss on disposal of assets, net	Impairments and (gain)/loss on disposal of assets, net	710		1,295				863		1,293				Impairments and (gain)/loss on disposal of assets, net	20		471				883		1,764
Litigation (recoveries)/charges, net	Litigation (recoveries)/charges, net	(207)		34				(180)		52				Litigation (recoveries)/charges, net	(76)		61				(256)		113

Non-GAAP operating earnings	Non-GAAP operating earnings	$	467	$	467	—	%	$	891	$	994	(10)	%	Non-GAAP operating earnings	$	606	$	545	11	%	$	1,497	$	1,540	(3)	%

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

We had GAAP operating earnings of $572 million during the three months ended March 31, 2023 and a GAAP operating loss of ~~$119~~$97 million during the three months ended March 31, 2022, which reflects no goodwill impairment charge recognized during the three months ended March 31, 2023 and the $474 million pre-tax non-cash goodwill impairment charge related to the Medical segment recognized during the three months ended March 31, 2022.

We had GAAP operating earnings of ~~$18~~$590 million and a GAAP operating loss of $632 million during the ~~three and six~~nine months ended ~~December~~March 31, 2023 and 2022, respectively, which included the ~~impact of~~$863 million and $1.8 billion pre-tax non-cash goodwill impairment charges related to the Medical segment, ~~of $709 million and $863 million,~~ respectively.

We had GAAP operating losses of $950 million and $535 million during the three and six months ended December 31, 2021, respectively, which included the impact of a pre-tax non-cash goodwill impairment charge related to the Medical segment of $1.3 billion.

See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 4 of the "Notes to Condensed Consolidated Financial Statements" for additional detail related to goodwill impairment.

GAAP operating earnings during the three and nine months ended March 31, 2023 were favorably impacted by litigation recoveries. See "Results of Operations" section of this MD&A and Note 6 of the "Notes to Condensed Consolidated Financial Statements" for additional detail related to litigation recoveries.

Non-GAAP operating earnings during the three months ended ~~December~~March 31, ~~2022 was flat~~2023 increased 11 percent to $606 million primarily due to an increase in Pharmaceutical segment profit largely driven by the performance of our generics program and an increased contribution from branded ~~pharmaceutical~~ and specialty pharmaceutical ~~products, mostly~~products. This increase was partially offset by a decrease in Medical segment profit largely resulting from lower volumes inand unfavorable product sales mix within products and distribution.

Non-GAAP operating earnings during ~~six~~the nine months ended ~~December~~March 31, ~~2022~~2023 decreased 103 percent to $1.5 billion primarily due to a decrease in Medical segment profit largely resulting from lower volumes inand unfavorable product sales mix within products and distribution and net inflationary ~~impacts, which primarily related to increased transportation and commodities costs, partially offset by price increases.~~impacts. This decrease was partially offset by an increase in Pharmaceutical segment profit primarily driven by the performance of our generics ~~program.~~program and an increased contribution from branded and specialty pharmaceutical products.



3			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Overview

GAAP and Non-GAAP Diluted EPS


		Three Months Ended December 31,						Six Months Ended December 31,							Three Months Ended March 31,						Nine Months Ended March 31,
($ per share)	($ per share)	2022 (2)		2021		Change		2022 (2)		2021		Change		($ per share)	2023		2022(2)		Change		2023		2022(2)		Change
GAAP diluted EPS (1)	GAAP diluted EPS (1)	$	(0.50)	$	0.17	N.M.		$	(0.08)	$	1.12	N.M.		GAAP diluted EPS (1)	$	1.34	$	(5.05)	N.M.		$	1.23	$	(3.82)	N.M.

State opioid assessment related to prior fiscal years	State opioid assessment related to prior fiscal years	(0.02)		—				(0.02)		—				State opioid assessment related to prior fiscal years	—		—				0.02		—

Shareholder cooperation agreement costs	Shareholder cooperation agreement costs	0.01		—				0.02		—				Shareholder cooperation agreement costs	—		—				(0.02)		—
Restructuring and employee severance	Restructuring and employee severance	0.05		0.02				0.13		0.07				Restructuring and employee severance	0.05		0.08				0.18		0.15
Amortization and other acquisition-related costs	Amortization and other acquisition-related costs	0.20		0.21				0.40		0.41				Amortization and other acquisition-related costs	0.21		0.21				0.61		0.63
Impairments and (gain)/loss on disposal of assets, net (3)	Impairments and (gain)/loss on disposal of assets, net (3)	2.06		0.77				2.46		0.78				Impairments and (gain)/loss on disposal of assets, net (3)	0.35		6.03				2.82		6.71
Litigation (recoveries)/charges, net	Litigation (recoveries)/charges, net	(0.48)		0.10				(0.39)		0.15				Litigation (recoveries)/charges, net	(0.21)		0.18				(0.60)		0.33
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—		—				—		0.03				Loss on early extinguishment of debt	—		—				—		0.03

Non-GAAP diluted EPS (1)	Non-GAAP diluted EPS (1)	$	1.32	$	1.27	4	%	$	2.52	$	2.56	(2)	%	Non-GAAP diluted EPS (1)	$	1.74	$	1.45	20	%	$	4.24	$	4.01	6	%

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

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

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

(2)For the three and ~~six~~nine months ended ~~December~~March 31, 2022, GAAP diluted EPS and the EPS impact from the GAAP to non-GAAP per share reconciling items are calculated using a weighted average of ~~261~~275 million and ~~266~~281 million common shares, respectively, which excludes potentially dilutive securities from the denominator due to their anti-dilutive effects resulting from our GAAP net loss for the periods. For the three and ~~six~~nine months ended ~~December~~March 31, 2022, non-GAAP diluted EPS is calculated using a weighted average of ~~263~~277 million and ~~268~~282 million common shares, respectively, which includes potentially dilutive shares.

(3)Impairments and (gain)/loss on disposal of assets, net included pre-tax goodwill impairment charges related to the Medical segment of ~~$709 million and~~ $863 million recorded during the ~~three and six~~nine months ended ~~December~~March 31, ~~2022, respectively.~~2023. For fiscal 2023, the estimated net tax benefit related to the impairments is $68 million and is included in the annual effective tax rate. As a result, the amount of tax ~~benefit~~expense recognized increased approximately by an incremental ~~$118~~$74 million during the three months ended March 31, 2023. The incremental interim tax benefit recognized during the nine months ended March 31, 2023 was $66 million and ~~$140 million for~~will reverse in the ~~three and six months ended December 31, 2022, respectively, and is expected to increase the provision for income taxes during the remainder~~fourth quarter of the fiscal year.

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, impairments and (gain)/loss on disposal of assets, net included a pre-tax goodwill impairment ~~charge~~charges of ~~$1.3~~$474 million and $1.8 billion, respectively, related to the Medical segment. For fiscal 2022, the estimated net tax benefit related to the impairment was ~~$92~~$126 million and was included in the annual effective tax rate. As a result, the amount of tax ~~benefit in~~expense recognized during the ~~second quarter~~three and nine months ended March 31, 2022 increased approximately by ~~approximately~~ an incremental ~~$1.0~~$1.2 billion and ~~significantly increased~~$180 million, respectively, and lowered the provision for income taxes during the ~~remainder~~fourth quarter of fiscal ~~2022.~~2022 by approximately $180 million.

GAAP diluted EPS was adversely impacted by the goodwill impairment charges related to the Medical segment, which had a ~~$(2.05) and $(2.46)~~$(2.76) per share ~~after-tax~~after tax impact during the ~~three and six~~nine months ended ~~December~~March 31, ~~2022, respectively,~~2023, and ~~a $(0.77)~~$(6.01) and ~~$(0.76)~~$(6.67) per share after tax impact during the three and ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, respectively. See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A, and Note 4 and Note 7 of the "Notes to Condensed Consolidated Financial Statements" for additional detail. GAAP EPS during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 also includes the favorable impact of litigation recoveries as described further in the "Results of Operations" section of this MD&A and Note 6 of "Notes to Condensed Consolidated Financial Statements."

During the three months ended ~~December~~March 31, ~~2022,~~2023, non-GAAP diluted EPS increased 420 percent to ~~$1.32~~$1.74 per share due to higher non-GAAP operating earnings and a lower share count.

During the nine months ended March 31, 2023, non-GAAP diluted EPS increased 6 percent to $4.24 per share due to a lower share count ~~as a result of share repurchases,~~and interest expense, partially offset by ~~unfavorable changes in discrete tax items.~~

~~During the six months ended December 31, 2022, non-GAAP diluted EPS decreased 2 percent to $2.52 per share due to the factors impacting~~lower non-GAAP operating ~~earnings discussed above, partially offset by a lower share count as a result of share repurchases and net favorable changes in discrete tax items.~~earnings.

Cash and Equivalents

Our cash and equivalents balance was ~~$3.7~~$4.0 billion at ~~December~~March 31, ~~2022~~2023 compared to $4.7 billion at June 30, 2022. During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, net cash provided by operating activities was ~~$620 million,~~$2.0 billion, which includes the impact of our second annual payment of $372 million related to the agreement to settle the vast majority of the opioid lawsuits filed by states and local governmental entities (the "Settlement Agreement"). In addition, during the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we deployed ~~$1.3~~$1.5 billion for share repurchases, ~~and $271~~$571 million for debt repayments, $399 million for cash ~~dividends.~~

dividends and $264 million for capital expenditures.



4			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Overview

Significant Developments in Fiscal 2023 and Trends

Inflationary Impacts

~~We expect these inflationary impacts to continue to adversely affect Medical segment profit in fiscal 2023 and beyond. In order~~global supply chain constraints. Since that time, we have taken certain actions to mitigate ~~this impact, we have implemented~~these impacts, including implementing certain price increases and ~~are also~~ evolving our pricing and commercial contracting processes to provide us with greater pricing flexibility. In addition, certain decreases in some product-related costs are beginning to be recognized as the higher-cost inventory is moving through our supply chain. As a result, during the three months ended March 31, 2023, these inflationary impacts, net of our mitigation actions, and global supply chain constraints had a slightly favorable impact on Medical segment profit on a year-over-year basis. During the nine months ended March 31, 2023, these net inflationary impacts negatively affected Medical segment profit on a year-over-year basis.

We expect these net inflationary impacts to continue to affect Medical segment profit in fiscal 2023 and beyond, but to a lesser extent than in prior periods. These inflationary costs are difficult to predict and may be greater than we expect or continue longer than our current expectations. ~~In the event these costs decrease, the~~Any additional benefit to Medical segment profit from further decreases in these product-related costs will be delayed until the higher-cost inventory has moved through our supply chain. Our ~~plans to continue~~actions to increase prices and evolve our contracting strategies are subject to contingencies and uncertainties and it is possible that our results of operations will be adversely impacted to a greater extent than we currently anticipate or that we may not be able to mitigate the negative impact to the extent or on the timeline we anticipate.

To a lesser extent, inflationary impacts, primarily related to increased transportation and labor costs, also adversely affected Pharmaceutical segment profit during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and on a year-over-year ~~basis. We expect~~basis during the nine months ended March 31, 2023. During the three months ended March 31, 2023, these inflationary ~~supply chain costs to continue to adversely~~impacts did not have a meaningful impact on Pharmaceutical segment profit ~~during the remainder of fiscal 2023~~ on a year-over-year ~~basis, but to a lesser extent than during the six months ended December 31, 2022.~~basis.

PPE Demand and Pricing

Personal protective equipment ("PPE") refers to protective clothing, medical gloves, face shields, face masks and other equipment designed to protect the wearer from injury or the spread of infection or illness.

PPE adversely impacted Medical segment revenue during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022 and~~2023 on a year-over-year basis, primarily due to declines in ~~pricing~~volumes and ~~volumes.~~pricing.

Medical segment profit was favorably impacted during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and on a year-over-year basis by a net positive contribution from PPE, primarily driven by ~~decreased~~lower costs.

The demand and pricing for PPE is subject to risks and uncertainties, which may continue to impact Medical segment revenue, Medical segment profit and consolidated operating ~~earnings/(loss)~~earnings during the remainder of fiscal 2023.

Medical Goodwill

Due to ~~certain reductions~~changes in our long-term financial plan assumptions made during the three months ended ~~December~~March 31, ~~2022, including those related to Cardinal Health branded medical products sales growth,~~2023, we performed interim goodwill impairment testing for the Medical operating segment (excluding our Cardinal Health at-Home Solutions division) (the “Medical Unit”) at ~~December~~March 31, ~~2022. This testing resulted in a pre-tax~~2023. We concluded that there was no impairment of goodwill ~~impairment charge~~at March 31, 2023, as the estimated fair value of ~~$709 million.~~the Medical Unit exceeded its carrying value.

~~During the three months ended September 30, 2022, we~~We performed ~~interim~~quantitative goodwill impairment testing for the Medical Unit at December 31, 2022 and September 30, 2022, which resulted in a pre-tax goodwill impairment ~~charge~~charges of $709 million and $154 million, ~~primarily due to an increase in the risk-free interest rate.~~

respectively. The cumulative pre-tax goodwill impairment charges of $863 million were recognized in impairments and (gain)/loss on disposal of assets, net in our condensed consolidated statements of earnings/(loss) for the ~~six~~nine months ended ~~December~~March 31, ~~2022.~~2023. See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 4 of the "Notes to Condensed Consolidated Financial Statements" for additional detail.

Adverse changes in key assumptions, including an increase in the discount rate, or a significant change in industry or economic trends during the remainder of fiscal 2023 and beyond could result in additional goodwill ~~impairment.~~impairments.



5			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Overview

Shareholder Cooperation Agreement



5			~~Cardinal Health~~ \| Q2~~Fiscal 2023 Form 10-Q~~


~~MD&A~~			~~Overview~~

independent directors, including a representative from Elliott, and (2) formed an advisory Business Review Committee of the Board, which is tasked with undertaking a comprehensive review of our strategy, portfolio, capital-allocation framework and operations. In May 2023, we extended the term of the Cooperation Agreement until the later of July 15, 2024 or until Elliott's representative ceases to serve on, or resigns from, the Board. In connection with this extension, the Board has extended the term of the Business Review Committee until July 15, 2024.

The evaluation and implementation of any actions recommended by the Business Review Committee and the Board may impact our financial position and results of operations during the remainder of fiscal 2023 and beyond. In addition, during the ~~three and six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we incurred ~~$2 million and~~ $8 million ~~respectively,~~ of expenses related to the negotiation and finalization of the Cooperation Agreement and other consulting expenses. We have incurred, and expect to continue to incur additional legal, consulting and other expenses related to the Cooperation Agreement and the activities of the Business Review ~~Committee during the remainder of fiscal 2023.~~Committee. See "Risk Factors" section for additional detail related to risks associated with the Cooperation Agreement.

Pharmaceutical Segment Generics Program

The performance of our Pharmaceutical segment generics program positively impacted the year-over-year comparison of Pharmaceutical segment profit during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022.~~2023. The Pharmaceutical 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. During the ~~three and six~~nine months ended ~~December~~March 31, ~~2022,~~2023, generic pharmaceutical contract manufacturing inventory-related charges adversely impacted the performance of our generics program.

The frequency, timing, magnitude and profit impact of generic pharmaceutical customer volumes, pricing changes, customer contract renewals, generic pharmaceutical manufacturer pricing changes and generic pharmaceutical contract manufacturing and sourcing costs all impact Pharmaceutical segment profit and are subject to risks and uncertainties. These risks and uncertainties may impact Pharmaceutical segment profit and consolidated operating ~~earnings/(loss)~~earnings during the remainder of fiscal 2023.



6			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Results of Operations

Revenue


		Three Months Ended December 31,						Six Months Ended December 31,							Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		Change		2022		2021		Change		(in millions)	2023		2022		Change		2023		2022		Change
Pharmaceutical	Pharmaceutical	$	47,673	$	41,375	15	%	$	93,501	$	81,197	15	%	Pharmaceutical	$	46,809	$	40,957	14	%	$	140,310	$	122,154	15	%
Medical	Medical	3,797		4,085		(7)	%	7,575		8,234		(8)	%	Medical	3,684		3,884		(5)	%	11,259		12,118		(7)	%
Total segment revenue	Total segment revenue	51,470		45,460		13	%	101,076		89,431		13	%	Total segment revenue	50,493		44,841		13	%	151,569		134,272		13	%
Corporate	Corporate	(1)		(3)		N.M.		(4)		(6)		N.M.		Corporate	(6)		(5)		N.M.		(10)		(11)		N.M.
Total revenue	Total revenue	$	51,469	$	45,457	13	%	$	101,072	$	89,425	13	%	Total revenue	$	50,487	$	44,836	13	%	$	151,559	$	134,261	13	%

Pharmaceutical Segment

Pharmaceutical segment revenue increased during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022 primarily~~2023 due to branded and specialty pharmaceutical sales growth, which increased revenue by $5.8 billion and $17.9 billion, respectively, primarily from existing ~~and~~customers. During the nine months ended March 31, 2023, pharmaceutical sales growth from net new customers ~~which together~~also contributed to increased ~~revenue by $6.2 billion and $12.2 billion, respectively.~~revenue.

Medical Segment

Medical segment revenue decreased during the three ~~and six~~ months ended ~~December~~March 31, ~~2022~~2023 primarily due to an adverse impact of PPE volumes and pricing within products and distribution.

Medical segment revenue decreased during the nine months ended March 31, 2023 primarily due to lower sales within products and distribution, which includes an adverse impact from PPE ~~pricing~~volumes and ~~volumes,~~pricing, and was partially offset by sales growth in at-Home Solutions.

Cost of Products Sold

Cost of products sold for the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 increased ~~14 percent to $49.8 billion and~~ 13 percent to ~~$97.8~~$48.7 billion and $146.5 billion, respectively, compared to the prior-year periods due to the factors affecting the changes in revenue and gross margin.



7			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Gross Margin


		Three Months Ended December 31,						Six Months Ended December 31,							Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		Change		2022		2021		Change		(in millions)	2023		2022		Change		2023		2022		Change
Gross margin	Gross margin	$	1,663	$	1,616	3	%	$	3,277	$	3,258	1	%	Gross margin	$	1,785	$	1,682	6	%	$	5,062	$	4,940	2	%

Gross margin increased during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 primarily due to the Pharmaceutical segment, which included the performance of our generics program and a higher contribution from branded and specialty pharmaceutical products. ~~During the six months ended December 31, 2022, the~~The increase in gross margin due to the Pharmaceutical segment during the nine months ended March 31, 2023 was partially offset by the ~~adverse impact~~performance of ~~lower volumes within~~ products and distribution inwithin the Medical ~~segment.~~segment, primarily driven by lower volumes and unfavorable product sales mix.

Gross margin rate declined 3321 basis points and 4034 basis points during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, respectively, mainly due to changes in overall product mix, primarily driven by increased pharmaceutical distribution branded sales, which have a dilutive impact on our overall gross margin rate.

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


		Three Months Ended December 31,						Six Months Ended December 31,							Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		Change		2022		2021		Change		(in millions)	2023		2022		Change		2023		2022		Change
SG&A expenses	SG&A expenses	$	1,191	$	1,151	3	%	$	2,388	$	2,265	5	%	SG&A expenses	$	1,179	$	1,137	4	%	$	3,567	$	3,402	5	%

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, SG&A expenses increased ~~largely~~primarily due to inflationary impacts, primarily related to increased transportation and labor costs, and higher operating expenses (which were partially offset by the beneficial impact of enterprise-wide cost-savings ~~measures.~~measures).

During the ~~three and six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we incurred ~~$2 million and~~ $8 million of expenses primarily related to the finalization of the Cooperation Agreement. See ~~the Significant~~"Significant Developments in Fiscal 2023 and ~~Trends~~Trends" section in this MD&A for additional detail related to the Cooperation Agreement.

During the ~~three and six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we recorded $6 million of income to reduce our accrual for the assessment on prescription opioid medications that were sold or distributed in New York state in calendar year 2018 to the amount invoiced. See Note 6 of the "Notes to Condensed Consolidated Financial Statements" for additional information.



8			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Segment Profit

We evaluate segment performance based on segment profit, among other measures. See Note 12 of the "Notes to Condensed Consolidated Financial Statements" for additional information on segment profit.


		Three Months Ended December 31,						Six Months Ended December 31,							Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		Change		2022		2021		Change		(in millions)	2023		2022		Change		2023		2022		Change
Pharmaceutical	Pharmaceutical	$	464	$	426	9	%	$	895	$	832	8	%	Pharmaceutical	$	600	$	487	23	%	$	1,495	$	1,319	13	%
Medical	Medical	17		50		(66)	%	9		173		(95)	%	Medical	20		59		(66)	%	29		232		(88)	%
Total segment profit	Total segment profit	481		476		1	%	904		1,005		(10)	%	Total segment profit	620		546		14	%	1,524		1,551		(2)	%
Corporate	Corporate	(600)		(1,426)		N.M.		(886)		(1,540)		N.M.		Corporate	(48)		(643)		N.M.		(934)		(2,183)		N.M.
Total consolidated operating earnings/(loss)	Total consolidated operating earnings/(loss)	$	(119)	$	(950)	(87)	%	$	18	$	(535)	N.M.		Total consolidated operating earnings/(loss)	$	572	$	(97)	N.M.		$	590	$	(632)	N.M.

Pharmaceutical Segment Profit

Pharmaceutical segment profit increased during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 primarily due to the performance of our generics program and an increased contribution from branded and specialty pharmaceutical ~~products and the performance of our generics program, partially offset by inflationary impacts, primarily related to increased transportation and labor costs.~~products.

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

~~Medical Segment Profit~~Cash and Equivalents

~~Medical segment profit decreased~~

Our cash and equivalents balance was $4.0 billion at March 31, 2023 compared to $4.7 billion at June 30, 2022. During the nine months ended March 31, 2023, net cash provided by operating activities was $2.0 billion, which includes the impact of our second annual payment of $372 million related to the agreement to settle the vast majority of the opioid lawsuits filed by states and local governmental entities (the "Settlement Agreement"). In addition, during the ~~three and six~~nine months ended ~~December~~March 31, ~~2022 largely due to the lower volumes in products~~2023, we deployed $1.5 billion for share repurchases, $571 million for debt repayments, $399 million for cash dividends and distribution and net inflationary impacts, which primarily related to increased transportation and commodities costs, partially offset by price increases. Medical segment profit during the three months ended December 31, 2022 was favorably impacted by a net positive contribution from PPE, primarily driven by decreased costs.

~~Corporate~~

The changes in Corporate during the three and six months ended December 31, 2022 were due to the factors discussed in the Other Components of Consolidated Operating Earnings/(Loss) section that follows.$264 million for capital expenditures.



94			Cardinal Health \| Q2Q3Fiscal 2023 Form 10-Q


MD&A			Overview

Significant Developments in Fiscal 2023 and Trends

Inflationary Impacts

Beginning in fiscal 2022, Medical segment profit was negatively affected by incremental inflationary impacts, primarily related to transportation (including ocean and domestic freight), commodities and labor, and global supply chain constraints. Since that time, we have taken certain actions to mitigate these impacts, including implementing certain price increases and evolving our pricing and commercial contracting processes to provide us with greater pricing flexibility. In addition, certain decreases in some product-related costs are beginning to be recognized as the higher-cost inventory is moving through our supply chain. As a result, during the three months ended March 31, 2023, these inflationary impacts, net of our mitigation actions, and global supply chain constraints had a slightly favorable impact on Medical segment profit on a year-over-year basis. During the nine months ended March 31, 2023, these net inflationary impacts negatively affected Medical segment profit on a year-over-year basis.

We expect these net inflationary impacts to continue to affect Medical segment profit in fiscal 2023 and beyond, but to a lesser extent than in prior periods. These inflationary costs are difficult to predict and may be greater than we expect or continue longer than our current expectations. Any additional benefit to Medical segment profit from further decreases in these product-related costs will be delayed until the higher-cost inventory has moved through our supply chain. Our actions to increase prices and evolve our contracting strategies are subject to contingencies and uncertainties and it is possible that our results of operations will be adversely impacted to a greater extent than we currently anticipate or that we may not be able to mitigate the negative impact to the extent or on the timeline we anticipate.

To a lesser extent, inflationary impacts, primarily related to increased transportation and labor costs, also adversely affected Pharmaceutical segment profit during the three and nine months ended March 31, 2023 and on a year-over-year basis during the nine months ended March 31, 2023. During the three months ended March 31, 2023, these inflationary impacts did not have a meaningful impact on Pharmaceutical segment profit on a year-over-year basis.

PPE Demand and Pricing

PPE adversely impacted Medical segment revenue during the three and nine months ended March 31, 2023 on a year-over-year basis, primarily due to declines in volumes and pricing.

Medical segment profit was favorably impacted during the three and nine months ended March 31, 2023 and on a year-over-year basis by a net positive contribution from PPE, primarily driven by lower costs.

The demand and pricing for PPE is subject to risks and uncertainties, which may continue to impact Medical segment revenue, Medical segment profit and consolidated operating earnings during the remainder of fiscal 2023.

Medical Goodwill

Due to changes in our long-term financial plan assumptions made during the three months ended March 31, 2023, we performed interim goodwill impairment testing for the Medical operating segment (excluding our Cardinal Health at-Home Solutions division) (the “Medical Unit”) at March 31, 2023. We concluded that there was no impairment of goodwill at March 31, 2023, as the estimated fair value of the Medical Unit exceeded its carrying value.

We performed quantitative goodwill impairment testing for the Medical Unit at December 31, 2022 and September 30, 2022, which resulted in pre-tax goodwill impairment charges of $709 million and $154 million, respectively. The cumulative pre-tax goodwill impairment charges of $863 million were recognized in impairments and (gain)/loss on disposal of assets, net in our condensed consolidated statements of earnings/(loss) for the nine months ended March 31, 2023. See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 4 of the "Notes to Condensed Consolidated Financial Statements" for additional detail.



5			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Overview

Shareholder Cooperation Agreement

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

The evaluation and implementation of any actions recommended by the Business Review Committee and the Board may impact our financial position and results of operations during the remainder of fiscal 2023 and beyond. In addition, during the nine months ended March 31, 2023, we incurred $8 million of expenses related to the negotiation and finalization of the Cooperation Agreement and other consulting expenses. We have incurred, and expect to continue to incur additional legal, consulting and other expenses related to the Cooperation Agreement and the activities of the Business Review Committee. See "Risk Factors" section for additional detail related to risks associated with the Cooperation Agreement.

Pharmaceutical Segment Generics Program

The performance of our Pharmaceutical segment generics program positively impacted the year-over-year comparison of Pharmaceutical segment profit during the three and nine months ended March 31, 2023. The Pharmaceutical 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. During the nine months ended March 31, 2023, generic pharmaceutical contract manufacturing inventory-related charges adversely impacted the performance of our generics program.



6			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Results of Operations

Revenue


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
Pharmaceutical	$	46,809	$	40,957	14	%	$	140,310	$	122,154	15	%
Medical	3,684		3,884		(5)	%	11,259		12,118		(7)	%
Total segment revenue	50,493		44,841		13	%	151,569		134,272		13	%
Corporate	(6)		(5)		N.M.		(10)		(11)		N.M.
Total revenue	$	50,487	$	44,836	13	%	$	151,559	$	134,261	13	%

Pharmaceutical Segment

Pharmaceutical segment revenue increased during the three and nine months ended March 31, 2023 due to branded and specialty pharmaceutical sales growth, which increased revenue by $5.8 billion and $17.9 billion, respectively, primarily from existing customers. During the nine months ended March 31, 2023, pharmaceutical sales growth from net new customers also contributed to increased revenue.

Medical Segment

Medical segment revenue decreased during the three months ended March 31, 2023 primarily due to an adverse impact of PPE volumes and pricing within products and distribution.

Medical segment revenue decreased during the nine months ended March 31, 2023 primarily due to lower sales within products and distribution, which includes an adverse impact from PPE volumes and pricing, and was partially offset by sales growth in at-Home Solutions.

Cost of Products Sold

Cost of products sold for the three and nine months ended March 31, 2023 increased 13 percent to $48.7 billion and $146.5 billion, respectively, compared to the prior-year periods due to the factors affecting the changes in revenue and gross margin.



7			Cardinal Health \| Q3 Fiscal 2023 Form 10-Q


MD&A			Results of Operations

~~Other Components of Consolidated Operating Earnings/(Loss)~~Gross Margin

~~In addition to revenue, gross~~ 818


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
Gross margin	$	1,785	$	1,682	6	%	$	5,062	$	4,940	2	%

Gross margin ~~and SG&A expenses discussed previously, consolidated operating earnings/(loss) were impacted by the following:~~

Three Months Ended December 31, Six Months Ended December 31,
(in millions) 2022 2021 2022 2021
Restructuring and employee severance $ 17 $ 7 $ 46 $ 25
Amortization and other acquisition-related costs 71 79 142 158
Impairments and (gain)/loss on disposal of assets, net 710 1,295 863 1,293
Litigation (recoveries)/charges, net (207) 34 (180) 52

~~Restructuring and Employee Severance~~

~~Restructuring and employee severance costs~~increased during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 primarily due to the Pharmaceutical segment, which included the performance of our generics program and a higher contribution from branded and specialty pharmaceutical products. The increase in gross margin due to the Pharmaceutical segment during the nine months ended March 31, 2023 was partially offset by the performance of products and distribution within the Medical segment, primarily driven by lower volumes and unfavorable product sales mix.

Gross margin rate declined 21 basis points and 34 basis points during the three and nine months ended March 31, 2023, respectively, mainly due to changes in overall product mix, primarily driven by increased pharmaceutical distribution branded sales, which have a dilutive impact on our overall gross margin rate.

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


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
SG&A expenses	$	1,179	$	1,137	4	%	$	3,567	$	3,402	5	%

During the three and nine months ended March 31, 2023, SG&A expenses increased primarily due to inflationary impacts, primarily related to increased transportation and labor costs, and higher operating expenses (which were partially offset by the beneficial impact of enterprise-wide cost-savings measures).

During the nine months ended March 31, 2023, we incurred $8 million of expenses primarily related to the ~~implementation~~finalization of ~~certain enterprise-wide cost-savings measures. During~~ the ~~three months~~Cooperation Agreement. See "Significant Developments in Fiscal 2023 and ~~six months ended December 31, 2021, restructuring also included costs~~Trends" section in this MD&A for additional detail related to the ~~divestiture~~Cooperation Agreement.

During the nine months ended March 31, 2023, we recorded $6 million of ~~the Cordis business.~~

~~Amortization and Other Acquisition-Related Costs~~

~~Amortization of acquisition-related intangible assets was $71 million and $79 million~~income to reduce our accrual for the ~~three months ended December 31, 2022 and 2021, respectively, and $142 million and $157 million for~~assessment on prescription opioid medications that were sold or distributed in New York state in calendar year 2018 to the ~~six months ended December 31, 2022 and 2021, respectively.~~

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

We recognized $709 million and $863 million of pre-tax non-cash goodwill impairment charges related to our Medical segment during the three and six months ended December 31, 2022, respectively, and $1.3 billion during the three and six months ended December 31, 2021, as discussed further in the "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and ~~Note 4~~ ~~of the "Notes to Condensed Consolidated Financial Statements."~~

~~Litigation (Recoveries)/Charges, Net~~

We recognized income of $93 million due to net proceeds from the settlement of a shareholder derivative litigation matter as described further in the Legal Proceedings section during the three and six months ended December 31, 2022.

We recognized income for net recoveries in class action antitrust lawsuits in which we were a class member or plaintiff of $66 million during the three and six months ended December 31, 2022, and of $17 million during the six months ended December 31, 2021.

We recognized net income of $46 million and $25 million during the three and six months ended December 31, 2022, respectively, to reduce the reserve for the estimated settlement and defense costs for the Cordis OptEase and TrapEase inferior vena cava ("IVC") product liability due to certain claim settlements and to reflect insurance recoveries received. During the three and six months ended December 31, 2021, we recognized estimated losses and legal defense costs associated with the IVC filter product liability claims of $13 million and $39 million, respectively.amount invoiced. See Note 6 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

~~Earnings/(Loss) Before Income Taxes~~

~~In addition to the items discussed above, earnings/(loss) before income taxes were impacted by the following:~~

Three Months Ended December 31, Six Months Ended December 31,
(in millions) 2022 2021 Change 2022 2021 Change
Other (income)/expense, net $ (7) $ (13) N.M. $ (5) $ (17) N.M.
Interest expense, net 25 37 (32) % 50 77 (35) %
Loss on early extinguishment of debt — — N.M. — 10 N.M.
(Gain)/loss on sale of equity interest in naviHealth — (1) N.M. — (1) N.M.

~~Interest Expense, Net~~

~~During the three and six months ended December 31, 2022, interest expense decreased by 32 percent and 35 percent, respectively, primarily due to increased interest income from cash and equivalents.~~

~~Loss on Early Extinguishment of Debt~~

~~During the six months ended December 31, 2021, we recognized a $10 million loss in connection with the debt redemption as described further inNote 5~~ ~~of the “Notes to Condensed Consolidated Financial Statements.”~~



108			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Results of Operations

~~Provision for/(Benefit from) Income Taxes~~Segment Profit

The effective tax rate was 5.4 percent and 105.0 percent during the three months ended December 31, 2022 and 2021, respectively, and 30.0 percent and 153.1 percent during the six months ended December 31, 2022 and 2021, respectively. These tax rates reflect the impactWe evaluate segment performance based on segment profit, among other measures. See Note 12 of the ~~tax effects of the goodwill impairment charges recognized~~"Notes to Condensed Consolidated Financial Statements" for additional information on segment profit.


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
Pharmaceutical	$	600	$	487	23	%	$	1,495	$	1,319	13	%
Medical	20		59		(66)	%	29		232		(88)	%
Total segment profit	620		546		14	%	1,524		1,551		(2)	%
Corporate	(48)		(643)		N.M.		(934)		(2,183)		N.M.
Total consolidated operating earnings/(loss)	$	572	$	(97)	N.M.		$	590	$	(632)	N.M.

Pharmaceutical Segment Profit

Pharmaceutical segment profit increased during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022 and 2021.~~

~~Tax Effects of Goodwill Impairment Charges~~

~~During the six months ended December 31, 2022, we recognized cumulative pre-tax goodwill impairment charges of $863 million related~~2023 primarily due to the ~~Medical Unit. The net tax benefit related to this charge is $68 million for fiscal 2023.~~

~~Unless~~performance of our generics program and an item is considered discrete because it is unusual or infrequent, the tax impact of the item is included in our estimated annual effective tax rate. When items are recognized through our estimated annual effective tax rate, we apply our estimated annual effective tax rate to the earnings/(loss) before income taxes for the year-to-date period to compute our benefitincreased contribution from ~~income taxes for the current quarter~~branded and ~~year-to-date period. The tax impacts of discrete items are recognized in their entirety in the period in which they occur.~~specialty pharmaceutical products.

The tax effect of the goodwill impairment charges recorded during the six months ended December 31, 2022 was included in our estimated annual effective tax rate because it was not considered unusual or infrequent, given that we recorded goodwill impairment in prior fiscal years. The impact of the non-deductible goodwill significantly increased the estimated annual effective tax rate for fiscal 2023. Applying the higher tax rate to the pre-tax loss for the six months ended December 31, 2022 resulted in recognizing an incremental interim tax benefit of approximately $140 million, which impacted the benefit from income taxes in the condensed consolidated statements of earnings/(loss) during the six months ended December 31, 2022 and prepaid expenses and other assets in the condensed consolidated balance sheet at December 31, 2022. This incremental interim tax benefit will reverse in the future quarters of fiscal 2023.



11			~~Cardinal Health~~ \| Q2~~Fiscal 2023 Form 10-Q~~


~~MD&A~~			~~Liquidity and Capital Resources~~

~~Liquidity and Capital Resources~~

We currently believe that, based on available capital resources (cash on hand and committed credit facilities) and projected operating cash flow, we have adequate capital resources to fund working capital needs; currently anticipated capital expenditures; currently anticipated business growth and expansion; contractual obligations and cash requirements; tax payments; current and projected debt service requirements, upcoming debt maturities, dividends and share repurchases; and known opioid litigation settlement payments. 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



4			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Overview

Significant Developments in Fiscal 2023 and Trends

Inflationary Impacts

We expect these net inflationary impacts to continue to affect Medical segment profit in fiscal 2023 and beyond, but to a lesser extent than in prior periods. These inflationary costs are difficult to predict and may be greater than we expect or continue longer than our current expectations. Any additional benefit to Medical segment profit from further decreases in these product-related costs will be delayed until the higher-cost inventory has moved through our supply chain. Our actions to increase prices and evolve our contracting strategies are subject to contingencies and uncertainties and it is possible that our results of operations will be adversely impacted to a greater extent than we currently anticipate or that we may not be able to mitigate the negative impact to the extent or on the timeline we anticipate.

To a lesser extent, inflationary impacts, primarily related to increased transportation and labor costs, also adversely affected Pharmaceutical segment profit during the three and nine months ended March 31, 2023 and on a year-over-year basis during the nine months ended March 31, 2023. During the three months ended March 31, 2023, these inflationary impacts did not have a meaningful impact on Pharmaceutical segment profit on a year-over-year basis.

PPE Demand and Pricing

PPE adversely impacted Medical segment revenue during the three and nine months ended March 31, 2023 on a year-over-year basis, primarily due to declines in volumes and pricing.

Medical Goodwill



5			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Overview

Shareholder Cooperation Agreement

The evaluation and implementation of any actions recommended by the Business Review Committee and the Board may impact our financial position and results of operations during the remainder of fiscal 2023 and beyond. In addition, during the nine months ended March 31, 2023, we incurred $8 million of expenses related to the negotiation and finalization of the Cooperation Agreement and other consulting expenses. We have incurred, and expect to continue to incur additional legal, consulting and other expenses related to the Cooperation Agreement and the activities of the Business Review Committee. See "Risk Factors" section for additional detail related to risks associated with the Cooperation Agreement.

Pharmaceutical Segment Generics Program



6			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Results of Operations

Revenue


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
Pharmaceutical	$	46,809	$	40,957	14	%	$	140,310	$	122,154	15	%
Medical	3,684		3,884		(5)	%	11,259		12,118		(7)	%
Total segment revenue	50,493		44,841		13	%	151,569		134,272		13	%
Corporate	(6)		(5)		N.M.		(10)		(11)		N.M.
Total revenue	$	50,487	$	44,836	13	%	$	151,559	$	134,261	13	%

Pharmaceutical Segment

Medical Segment

Medical segment revenue decreased during the three months ended March 31, 2023 primarily due to an adverse impact of PPE volumes and pricing within products and distribution.

Medical segment revenue decreased during the nine months ended March 31, 2023 primarily due to lower sales within products and distribution, which includes an adverse impact from PPE volumes and pricing, and was partially offset by sales growth in at-Home Solutions.

Cost of Products Sold



7			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Gross Margin


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
Gross margin	$	1,785	$	1,682	6	%	$	5,062	$	4,940	2	%

Gross margin increased during the three and nine months ended March 31, 2023 primarily due to the Pharmaceutical segment, which included the performance of our generics program and a higher contribution from branded and specialty pharmaceutical products. The increase in gross margin due to the Pharmaceutical segment during the nine months ended March 31, 2023 was partially offset by the performance of products and distribution within the Medical segment, primarily driven by lower volumes and unfavorable product sales mix.

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


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
SG&A expenses	$	1,179	$	1,137	4	%	$	3,567	$	3,402	5	%

During the nine months ended March 31, 2023, we incurred $8 million of expenses primarily related to the finalization of the Cooperation Agreement. See "Significant Developments in Fiscal 2023 and Trends" section in this MD&A for additional detail related to the Cooperation Agreement.

During the nine months ended March 31, 2023, we recorded $6 million of income to reduce our accrual for the assessment on prescription opioid medications that were sold or distributed in New York state in calendar year 2018 to the amount invoiced. See Note 6 of the "Notes to Condensed Consolidated Financial Statements" for additional information.



8			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Segment Profit

We evaluate segment performance based on segment profit, among other measures. See Note 12 of the "Notes to Condensed Consolidated Financial Statements" for additional information on segment profit.


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
Pharmaceutical	$	600	$	487	23	%	$	1,495	$	1,319	13	%
Medical	20		59		(66)	%	29		232		(88)	%
Total segment profit	620		546		14	%	1,524		1,551		(2)	%
Corporate	(48)		(643)		N.M.		(934)		(2,183)		N.M.
Total consolidated operating earnings/(loss)	$	572	$	(97)	N.M.		$	590	$	(632)	N.M.

Pharmaceutical Segment Profit

Pharmaceutical segment profit increased during the three and nine months ended March 31, 2023 primarily due to the performance of our generics program and an increased contribution from branded and specialty pharmaceutical products.

Medical Segment Profit

Medical segment profit decreased during the three and nine months ended March 31, 2023 primarily due to the performance of products and distribution, largely driven by lower volumes and unfavorable product sales mix. Medical segment profit during the nine months ended March 31, 2023 was also unfavorably affected by net inflationary impacts.

Corporate

The changes in Corporate during the three and nine months ended March 31, 2023 were due to the factors discussed in the "Other Components of Consolidated Operating Earnings/(Loss)" section that follows.



9			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Other Components of Consolidated Operating Earnings/(Loss)

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


	Three Months Ended March 31,				Nine Months Ended March 31,
(in millions)	2023		2022		2023		2022
Restructuring and employee severance	$	16	$	31	$	62	$	56
Amortization and other acquisition-related costs	74		79		216		237
Impairments and (gain)/loss on disposal of assets, net	20		471		883		1,764
Litigation (recoveries)/charges, net	(76)		61		(256)		113

Restructuring and Employee Severance

Restructuring and employee severance costs during the three and nine months ended March 31, 2023 were primarily related to the implementation of certain enterprise-wide cost-savings measures and the divestiture of the Cordis business. During the three and nine months ended March 31, 2022, restructuring also included facility exit costs related to decreasing our overall office space.

Amortization and Other Acquisition-Related Costs

Amortization of acquisition-related intangible assets was $69 million and $78 million for the three months ended March 31, 2023 and 2022, respectively, and $211 million and $235 million for the nine months ended March 31, 2023 and 2022, respectively.

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

We recognized $863 million of pre-tax non-cash goodwill impairment charges related to our Medical segment during the nine months ended March 31, 2023, and $474 million and $1.8 billion during the three and nine months ended March 31, 2022, respectively, as discussed further in the "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 4 of the "Notes to Condensed Consolidated Financial Statements."

Litigation (Recoveries)/Charges, Net

We recognized income of $71 million and $95 million during the three and nine months ended March 31, 2023, respectively, primarily related to a reduction of the reserve for the estimated settlement and defense costs for the Cordis OptEase and TrapEase inferior vena cava ("IVC") product liability due to the execution of certain settlement agreements. During the three and nine months ended March 31, 2022, we recognized estimated losses and legal defense costs associated with the IVC filter product liability claims of $24 million and $63 million, respectively. See Note 6 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

During the nine months ended March 31, 2023, we recognized income of $93 million due to net proceeds from the settlement of a shareholder derivative litigation matter as described further in the "Legal Proceedings" section.

We recognized income for net recoveries in class action antitrust lawsuits in which we were a class member or plaintiff of $66 million and $17 million during the nine months ended March 31, 2023 and 2022, respectively.

During the three and nine months ended March 31, 2022, we incurred a one-time contingent attorney fee of $18 million related to the finalization of the Settlement Agreement resulting in the settlement of the vast majority of opioid lawsuits filed by state and local governmental entities. Due to the unique nature and significance of the Settlement Agreement, and the one-time, contingent nature of the fee, this related fee was included in litigation (recoveries)/charges, net.

Earnings/(Loss) Before Income Taxes

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


	Three Months Ended March 31,						Nine Months Ended March 31,
(in millions)	2023		2022		Change		2023		2022		Change
Other (income)/expense, net	$	—	$	3	N.M.		$	(5)	$	(14)	N.M.
Interest expense, net	28		38		(26)	%	78		115		(32)	%
Loss on early extinguishment of debt	—		—		N.M.		—		10		N.M.
(Gain)/loss on sale of equity interest in naviHealth	—		(1)		N.M.		—		(2)		N.M.



10			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Results of Operations

Interest Expense, Net

During the three and nine months ended March 31, 2023, interest expense decreased by 26 percent and 32 percent, respectively, primarily due to increased interest income from cash and equivalents.

Loss on Early Extinguishment of Debt

During the nine months ended March 31, 2022, we recognized a $10 million loss in connection with the debt redemption as described further inNote 5 of the “Notes to Condensed Consolidated Financial Statements.”

Provision for Income Taxes

The effective tax rate was 36.3 percent and (916.5) percent during the three months ended March 31, 2023 and 2022, respectively, and 36.7 percent and (44.4) percent during the nine months ended March 31, 2023 and 2022, respectively. These tax rates reflect the impact of the tax effects of goodwill impairment charges recognized during the three and nine months ended March 31, 2023 and 2022.

Tax Effects of Goodwill Impairment Charges

During the nine months ended March 31, 2023, we recognized cumulative pre-tax goodwill impairment charges of $863 million related to the Medical Unit. The net tax benefit related to these charges is $68 million for fiscal 2023.

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

The tax effect of the goodwill impairment charges recorded during the nine months ended March 31, 2023 was included in our estimated annual effective tax rate because it was not considered unusual or infrequent, given that we recorded goodwill impairments in prior fiscal years. The impact of the non-deductible goodwill increased the estimated annual effective tax rate for fiscal 2023. Applying the higher tax rate to the pre-tax income for the nine months ended March 31, 2023 resulted in recognizing an incremental interim tax expense of approximately $74 million, which impacted the provision for income taxes in the condensed consolidated statements of earnings/(loss) during the three months ended March 31, 2023 and prepaid expenses and other assets in the condensed consolidated balance sheet at March 31, 2023. The incremental interim tax benefit recognized during the nine months ended March 31, 2023 was $66 million and will reverse in the fourth quarter of fiscal 2023.



11			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


MD&A			Liquidity and Capital Resources

Liquidity and Capital Resources

Cash and Equivalents

Our cash and equivalents balance was ~~$3.7~~$4.0 billion at ~~December~~March 31, ~~2022~~2023 compared to $4.7 billion at June 30, 2022.

During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, net cash provided by operating activities was ~~$620 million,~~$2.0 billion, which includes the impact of our second annual payment of $372 million related to the Settlement Agreement. For additional information, see ~~Opioid~~"Opioid Litigation Settlement ~~Agreement~~Agreement" section below. In addition, we deployed cash of ~~$1.3~~$1.5 billion for share repurchases, ~~and $271~~$571 million for debt repayments, $399 million for cash ~~dividends.~~dividends and $264 million for capital expenditures.

At ~~December~~March 31, ~~2022,~~2023, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments.

Changes in working capital, which impact operating cash flow, can vary significantly depending on factors such as the timing of

customer payments, inventory purchases, payments to vendors and tax payments in the regular course of business, as well as fluctuating working capital needs driven by customer and product mix.

The cash and equivalents balance at ~~December~~March 31, ~~2022~~2023 includes ~~$605~~$689 million of cash held by subsidiaries outside of the United States.

Other Financing Arrangements and Financial Instruments

Credit Facilities and Commercial Paper

In addition to cash and equivalents and operating cash flow, other sources of liquidity at ~~December~~March 31, ~~2022~~2023 include a $2.0 billion commercial paper program, backed by a $2.0 billion revolving credit facility. We also have a $1.0 billion committed receivables sales facility. During the nine months ended March 31, 2023, under our commercial paper program and our committed receivables program, we had maximum combined total daily amounts outstanding of $445 million and average combined daily amount outstanding of $4 million. At ~~December~~March 31, ~~2022,~~2023, we had no amounts outstanding under our commercial paper program, revolving credit facility, or our committed receivables sales facility.

In February 2023, we extended our 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.

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 ~~December~~March 31, ~~2022,~~2023, we were in compliance with this financial covenant.

Long-Term Debt and Other Short-Term Borrowings

At ~~both December~~March 31, ~~2022~~2023 and June 30, 2022, we had total long-term obligations, including the current portion and other short-term borrowings, of $4.7 billion and $5.3 ~~billion. We plan to repay our outstanding~~billion, respectively. In March 2023, we repaid $550 million 3.2% Notes due 2023 at maturity ~~in March 2023~~ with ~~$550 million of~~ available cash.



12			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Liquidity and Capital Resources

Capital Deployment

Opioid Litigation Settlement Agreement

We had ~~$5.89~~$5.85 billion accrued at ~~December~~March 31, ~~2022~~2023 related to certain opioid litigation, as further described within Note 6 of the "Notes to Condensed Consolidated Financial Statements." We expect the majority of the remaining payment amounts to be spread over the next 17 years. The effective date of the Settlement Agreement was April 2, 2022. During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we made our second annual payment of $372 million under the Settlement Agreement. We expect to make subsequent annual payments under the Settlement Agreement every July for the remainder of the 18-year term of the Settlement Agreement. The amounts of these future payments may differ from the payments that we have already made.

Capital Expenditures

Capital expenditures during the ~~six~~nine months ended ~~December~~March 31, 2023 and 2022 ~~and 2021~~ were ~~$155~~$264 million and ~~$141~~$223 million, respectively.

Dividends

On each of May 10, 2022, August 10, 2022, ~~and~~ November 8, 2022 and February 10, 2023, our Board of Directors approved a quarterly dividend of $0.4957 per share, or $1.98 per share on an annualized basis, which were paid on July 15, 2022, October 17, 2022, January 15, 2023 and ~~January~~April 15, 2023 to shareholders of record on July 1, 2022, October 3, 2022, January 3, 2023 and ~~January~~April 3, 2023, respectively.

Share Repurchases

During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we repurchased ~~$1.3~~$1.5 billion of our common shares, in the aggregate, under accelerated share repurchase ("ASR") programs. We funded the ASR programs with available cash. The ASR program initiated in the second quarter of fiscal 2023 concluded in the third quarter of fiscal 2023, which reduced the amount remaining under our existing share repurchase authorization to approximately $1.5 billion. See Note 10 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

On November 4, 2021, our Board of Directors approved a new $3.0 billion share repurchase program, which will expire on December 31, 2024. As of March 31, 2023, we have $1.2 billion authorized for share repurchases remaining under this program.



13			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Other Items

Other Items

The MD&A in our 2022 Form 10-K addresses our contractual obligations and cash requirements, as of and for the fiscal year ended June 30, 2022. There have been no subsequent material changes outside the ordinary course of business to those items.

Critical Accounting Policies and Sensitive Accounting Estimates

The discussion and analysis presented below is a supplemental disclosure to the critical accounting policies and sensitive accounting estimates specified in our consolidated balance sheet at June 30, 2022. This discussion and analysis should be read in conjunction with the Critical Accounting Policies and Sensitive Accounting Estimates included in our 2022 Form 10-K and our Form 10-Q for the ~~quarter~~quarters ended September 30, 2022 and December 31, 2022.

Critical accounting policies are those accounting policies that (i) can have a significant impact on our financial condition and results of operations and (ii) require the use of complex and subjective estimates based upon past experience and management’s judgment. Other people applying reasonable judgment to the same facts and circumstances could develop different estimates. Because estimates are inherently uncertain, actual results may differ, including due to the risks discussed in "Risk Factors" and other risks discussed in our 2022 Form 10-K and our other filings with the SEC since June 30, 2022.

Goodwill

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

Our reporting units are: Pharmaceutical operating segment (excluding our Nuclear and Precision Health Solutions division); Nuclear and Precision Health Solutions division; Medical operating segment (excluding our Cardinal Health at-Home Solutions division) (“Medical Unit”); and Cardinal Health at-Home Solutions division.

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

Medical Unit Goodwill

Due to ~~certain reductions~~changes in our long-term financial plan assumptions made during the three months ended ~~December~~March 31, ~~2022, including those related to Cardinal Health branded medical products sales growth,~~2023, we elected to bypass the qualitative assessment and perform quantitative goodwill impairment testing for the Medical Unit. ~~This quantitative testing resulted in~~We concluded that there was no impairment of goodwill at March 31, 2023, as the ~~carrying amount~~estimated fair value of the Medical Unit ~~exceeding the fair~~exceeded its carrying value ~~resulting in~~by approximately 4 percent, primarily driven by a ~~pre-tax goodwill impairment charge of $709 million.~~lower discount rate as described below.

~~During the three months ended September 30, 2022, we~~We performed quantitative goodwill impairment testing for the Medical Unit at December 31, 2022 and September 30, 2022, which resulted in a pre-tax goodwill impairment ~~charge~~charges of $709 million and $154 million, respectively. The impairment charge recognized in the second quarter was driven by certain reductions in our long-term financial plan assumptions, and the impairment charge recognized in the first quarter was driven by an increase in the discount rate primarily due to an increase in the risk-free interest rate. The cumulative pre-tax goodwill impairment charges of $863 million were recognized in impairments and (gain)/loss on disposal of assets, net in our condensed consolidated statements of earnings/(loss) for ~~six~~the nine months ended ~~December~~March 31, ~~2022.~~2023.

~~In connection with~~ The decrease in the discount rate for the interim testing performed at ~~December~~March 31, ~~2022, we updated our long-term financial plan assumptions, including reductions related~~2023 was primarily due to a decrease in the timing and magnitude of the impact of key initiatives related to optimizing and growing sales of Cardinal Health branded medical products. The impairment charge recognized during the three months ended December 31, 2022risk-free interest rate.



14			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


MD&A			Other Items

~~was driven primarily by~~While we consider the ~~impact~~assumptions used in our determination of the ~~reductions in our long-term financial plan assumptions.~~

~~The carrying~~estimated fair value of the Medical Unit ~~at December 31, 2022 after recognizing the impairment charge was $6.2 billion, of which $1.1 billion was goodwill. See~~ ~~Note 4~~ ~~of the "Notes to Condensed Consolidated Financial Statements" for further discussion.~~

~~While we consider these assumptions~~ to be reasonable and appropriate, they are complex and subjective, and additional adverse changes in one key assumption or a combination of key assumptions during fiscal 2023 may significantly affect future estimates. These assumptions include, among other things, a failure to meet expected earnings or other financial plans, including the execution of key initiatives related to optimizing and growing sales of Cardinal Health branded medical products, increasing growth in certain strategic divisions within our Medical segment, and driving simplification efforts and cost optimization projects, or unanticipated events and circumstances, such as changes in assumptions about the duration and magnitude of increased supply chain and commodities costs and our ~~planned~~ efforts to mitigate such impact, including price increases or surcharges; further disruptions in the supply chain; manufacturing cost inefficiencies resulting from lower than anticipated sales volume; estimated demand and selling prices for PPE; 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.

Adverse changes in key assumptions may result in a decline in fair value below the carrying value in the future and therefore, an impairment of our Medical Unit goodwill in future periods, which could adversely affect our results of operations. For example, if we were to increase the discount rate by a hypothetical 0.5 percent to 1110.5 percent or decrease the terminal growth rate by a hypothetical ~~1.75~~1.7 percent to ~~0.25~~0.3 percent, the carrying value would have exceeded the fair value ~~for~~of the Medical Unit ~~would have further decreased~~ by approximately ~~$250 million.~~1 percent.

During the three months ended March 31, 2022 and December 31, 2021, we performed quantitative goodwill impairment testing for the Medical Unit. This quantitative testing resulted in the carrying amount of the Medical Unit exceeding the fair value, resulting in a pre-tax impairment ~~charge~~charges of $474 million and $1.3 billion recorded during the three months ended March 31, 2022 and December 31, ~~2021.~~2021, respectively. Refer to our 2022 Form 10-K for additional detail.



15			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Explanation and Reconciliation of Non-GAAP Financial Measures

Explanation and Reconciliation of Non-GAAP Financial Measures

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

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

Exclusions from Non-GAAP Financial Measures

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

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

•Surgical gown recall costs or income includes inventory write-offs and certain remediation and supply disruption costs, net of related insurance recoveries, arising from the January 2020 recall of select Association for the Advancement of Medical Instrumentation ("AAMI") Level 3 surgical gowns and voluntary field actions (a recall of some packs and a corrective action allowing overlabeling of other packs) for Presource Procedure Packs containing affected gowns. Income from surgical gown recall costs represents insurance recoveries of these certain costs. We have excluded these costs from our non-GAAP metrics to allow investors to better understand the underlying operating results of the business and to facilitate comparison of our current financial results to our historical financial results and to our peer group companies’ financial results.

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

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

•Restructuring and employee severance costs are excluded because they are not part of the ongoing operations of our underlying business.

•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



16			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Explanation and Reconciliation of Non-GAAP Financial Measures

companies' financial results. Additionally, costs for amortization of acquisition-related intangible assets are non-cash amounts, which are variable in amount and frequency and are significantly impacted by the timing and size of acquisitions, so their exclusion facilitates comparison of historical, current and forecasted financial results. We also exclude other acquisition-related costs, which are directly related to an acquisition but do not meet the criteria to be recognized on the acquired entity’s initial balance sheet as part of the purchase price allocation. These costs are also significantly impacted by the timing, complexity and size of acquisitions.

•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. During fiscal 2022, we incurred a one-time contingent attorneys' fee of $18 million related to the finalization of the settlement agreement (the “Settlement Agreement”) resulting in the settlement of the vast majority of opioid lawsuits filed by state and local governmental entities. Due to the unique nature and significance of the Settlement Agreement, and the one-time, contingent nature of the fee, this fee was included in litigation recoveries or charges, net. Additionally, during fiscal 2022 our Pharmaceutical segment profit was positively impacted by a $16 million judgment for lost profits. This judgment was the result of an ordinary course intellectual property rights claim and, therefore, is not adjusted in calculating the litigation recoveries or charges, net adjustment. During fiscal 2021, we incurred a tax benefit related to a carryback of a net operating loss. Some pre-tax amounts, which contributed to this loss, relate to litigation charges. As a result, we allocated substantially all of the tax benefit to litigation charges.

•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.

•(Gain)/Loss on sale of equity interest in naviHealth was incurred in connection with the sale of our remaining equity interest in naviHealth in fiscal 2020. The equity interest was retained in connection with the initial sale of our majority interest in naviHealth during fiscal 2019. We exclude this significant gain because gains or losses on investments of this magnitude do not typically occur in the normal course of business and are similar in nature to a gain or loss from a divestiture of a majority interest, which we exclude from non-GAAP results. The gain on the initial sale of our majority interest in naviHealth in fiscal 2019 was also excluded from our non-GAAP measures.

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

Non-GAAP earnings before income taxes: ~~earnings~~earnings/(loss) before income taxes excluding (1) LIFO charges/(credits), (2) surgical gown recall costs/(income), (3) state opioid assessment related to prior fiscal years, (4) shareholder cooperation agreement costs, (5) restructuring and employee severance, (6) amortization and other acquisition-related costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, (9) loss on early extinguishment of debt and (10) (gain)/loss on sale of equity interest in naviHealth.

Non-GAAP net earnings attributable to Cardinal Health, Inc.: net ~~earnings~~earnings/(loss) attributable to Cardinal Health, Inc. excluding (1) LIFO charges/(credits), (2) surgical gown recall costs/(income), (3) state opioid assessment related to prior fiscal years, (4) shareholder cooperation agreement costs, (5) restructuring and employee severance, (6) amortization and other acquisition-related costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, (9) loss on early extinguishment of debt and (10) (gain)/loss on sale of equity interest in naviHealth, each net of tax.



17			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Explanation and Reconciliation of Non-GAAP Financial Measures

Non-GAAP effective tax rate: provision ~~for/(benefit from)~~for income taxes adjusted for the tax impacts of (1) LIFO charges/(credits), (2) surgical gown recall costs/(income), (3) state opioid assessment related to prior fiscal years, (4) shareholder cooperation agreement costs, (5) restructuring and employee severance, (6) amortization and other acquisition-related costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, (9) loss on early extinguishment of debt and (10) (gain)/loss on sale of equity interest in naviHealth divided by (earnings before income taxes adjusted for the ten 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.



18			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Explanation and Reconciliation of Non-GAAP Financial Measures

GAAP to Non-GAAP Reconciliation


(in millions, except per common share amounts)	(in millions, except per common share amounts)	Operating Earnings/(Loss)		Operating Earnings Growth Rate		Earnings/(Loss) Before Income Taxes		Provision for/ (Benefit from) Income Taxes		Net Earnings/(Loss)1		Net Earnings1 Growth Rate		Diluted EPS1,2		Diluted EPS1 Growth Rate		(in millions, except per common share amounts)	Operating Earnings/(Loss)		Operating Earnings Growth Rate		Earnings/(Loss) Before Income Taxes		Provision for Income Taxes		Net Earnings/(Loss)1		Net Earnings1 Growth Rate		Diluted EPS1,2		Diluted EPS1 Growth Rate
		Three Months Ended December 31, 2022																	Three Months Ended March 31, 2023
GAAP	GAAP	$	(119)	(87)	%	$	(137)	$	(7)	$	(130)	N.M.		$	(0.50)	N.M.		GAAP	$	572	N.M.		$	544	$	197	$	345	N.M.		$	1.34	N.M.

State opioid assessment related to prior fiscal years		(6)				(6)		(2)		(4)				(0.02)
Shareholder cooperation agreement costs		2				2		1		1				0.01

Restructuring and employee severance	Restructuring and employee severance	17				17		4		13				0.05				Restructuring and employee severance	16				16		4		12				0.05
Amortization and other acquisition-related costs	Amortization and other acquisition-related costs	71				71		18		53				0.20				Amortization and other acquisition-related costs	74				74		19		55				0.21
Impairments and (gain)/loss on disposal of assets, net 3	Impairments and (gain)/loss on disposal of assets, net 3	710				710		173		537				2.06				Impairments and (gain)/loss on disposal of assets, net 3	20				20		(69)		89				0.35
Litigation (recoveries)/charges, net	Litigation (recoveries)/charges, net	(207)				(207)		(83)		(124)				(0.48)				Litigation (recoveries)/charges, net	(76)				(76)		(22)		(54)				(0.21)

Non-GAAP	Non-GAAP	$	467	—	%	$	450	$	104	$	346	(3)	%	$	1.32	4	%	Non-GAAP	$	606	11	%	$	578	$	129	$	447	11	%	$	1.74	20	%
		Three Months Ended December 31, 2021																	Three Months Ended March 31, 2022
GAAP	GAAP	$	(950)	N.M.		$	(973)	$	(1,022)	$	49	N.M.		$	0.17	N.M.		GAAP	$	(97)	N.M.		$	(137)	$	1,253	$	(1,391)	N.M.		$	(5.05)	N.M.

Surgical gown recall costs/(income)		1				1		—		1				—

Restructuring and employee severance	Restructuring and employee severance	7				7		2		5				0.02				Restructuring and employee severance	31				31		8		23				0.08
Amortization and other acquisition-related costs	Amortization and other acquisition-related costs	79				79		20		59				0.21				Amortization and other acquisition-related costs	79				79		20		59				0.21
Impairments and (gain)/loss on disposal of assets, net 3	Impairments and (gain)/loss on disposal of assets, net 3	1,295				1,295		1,080		215				0.77				Impairments and (gain)/loss on disposal of assets, net 3	471				471		(1,189)		1,660				6.03
Litigation (recoveries)/charges, net 4	Litigation (recoveries)/charges, net 4	34				34		6		28				0.10				Litigation (recoveries)/charges, net 4	61				61		10		51				0.18
(Gain)/Loss on sale of equity interest in naviHealth	(Gain)/Loss on sale of equity interest in naviHealth	—				(1)		—		(1)				—				(Gain)/Loss on sale of equity interest in naviHealth	—				(1)		—		(1)				—

Non-GAAP	Non-GAAP	$	467	(26)	%	$	443	$	86	$	357	(31)	%	$	1.27	(27)	%	Non-GAAP	$	545	(21)	%	$	504	$	101	$	402	(11)	%	$	1.45	(5)	%
		Six Months Ended December 31, 2022																	Nine Months Ended March 31, 2023
GAAP	GAAP	$	18	N.M.		$	(27)	$	(8)	$	(20)	N.M.		$	(0.08)	N.M.		GAAP	$	590	N.M.		$	517	$	189	$	325	N.M.		$	1.23	N.M.

State opioid assessment related to prior fiscal years	State opioid assessment related to prior fiscal years	(6)				(6)		(2)		(4)				(0.02)				State opioid assessment related to prior fiscal years	(6)				(6)		(2)		(4)				0.02
Shareholder cooperation agreement costs	Shareholder cooperation agreement costs	8				8		2		6				0.02				Shareholder cooperation agreement costs	8				8		2		6				(0.02)
Restructuring and employee severance	Restructuring and employee severance	46				46		10		36				0.13				Restructuring and employee severance	62				62		14		48				0.18
Amortization and other acquisition-related costs	Amortization and other acquisition-related costs	142				142		37		105				0.40				Amortization and other acquisition-related costs	216				216		56		160				0.61
Impairments and (gain)/loss on disposal of assets, net 3	Impairments and (gain)/loss on disposal of assets, net 3	863				863		207		656				2.46				Impairments and (gain)/loss on disposal of assets, net 3	883				883		138		745				2.82
Litigation (recoveries)/charges, net	Litigation (recoveries)/charges, net	(180)				(180)		(76)		(104)				(0.39)				Litigation (recoveries)/charges, net	(256)				(256)		(98)		(158)				(0.60)

Non-GAAP	Non-GAAP	$	891	(10)	%	$	846	$	170	$	675	(7)	%	$	2.52	(2)	%	Non-GAAP	$	1,497	(3)	%	$	1,424	$	299	$	1,122	(1)	%	$	4.24	6	%
		Six Months Ended December 31, 2021																	Nine Months Ended March 31, 2022
GAAP	GAAP	$	(535)	N.M.		$	(604)	$	(925)	$	320	(15)	%	$	1.12	(12)	%	GAAP	$	(632)	N.M.		$	(741)	$	328	$	(1,071)	N.M.		$	(3.82)	N.M.

Surgical gown recall costs/(income)	Surgical gown recall costs/(income)	1				1		—		1				—				Surgical gown recall costs/(income)	1				1		—		1				—

Restructuring and employee severance	Restructuring and employee severance	25				25		6		19				0.07				Restructuring and employee severance	56				56		14		42				0.15
Amortization and other acquisition-related costs	Amortization and other acquisition-related costs	158				158		41		117				0.41				Amortization and other acquisition-related costs	237				237		61		176				0.63
Impairments and (gain)/loss on disposal of assets, net 3	Impairments and (gain)/loss on disposal of assets, net 3	1,293				1,293		1,070		223				0.78				Impairments and (gain)/loss on disposal of assets, net 3	1,764				1,764		(119)		1,883				6.71
Litigation (recoveries)/charges, net 4		52				52		10		42				0.15
Litigation (recoveries)/charges, net 4,5																		Litigation (recoveries)/charges, net 4,5	113				113		19		94				0.33
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—				10		3		7				0.03				Loss on early extinguishment of debt	—				10		3		7				0.03
(Gain)/Loss on sale of equity interest in naviHealth	(Gain)/Loss on sale of equity interest in naviHealth	—				(1)		—		(1)				—				(Gain)/Loss on sale of equity interest in naviHealth	—				(2)		—		(2)				—

Non-GAAP	Non-GAAP	$	994	(20)	%	$	934	$	205	$	728	(24)	%	$	2.56	(21)	%	Non-GAAP	$	1,540	(20)	%	$	1,438	$	306	$	1,131	(20)	%	$	4.01	(16)	%



19			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Explanation and Reconciliation of Non-GAAP Financial Measures

1 Attributable to Cardinal Health, Inc.

2 For the three and ~~six~~nine months ended ~~December~~March 31, 2022, GAAP diluted EPS and the EPS impact from the GAAP to non-GAAP per share reconciling items are calculated using a weighted average of ~~261~~275 million and ~~266~~281 million common shares, respectively, which excludes potentially dilutive securities from the denominator due to their anti-dilutive effects resulting from our GAAP net loss for the periods. For the three and ~~six~~nine months ended ~~December~~March 31, 2022, non-GAAP diluted EPS is calculated using a weighted average of ~~263~~277 million and ~~268~~282 million common shares, respectively, which includes potentially dilutive shares.

3 Impairments and (gain)/loss on disposal of assets, net included pre-tax goodwill impairment charges related to the Medical segment of ~~$709 million and~~ $863 million recorded during the ~~three and six~~nine months ended ~~December~~March 31, ~~2022, respectively.~~2023. For fiscal 2023, the estimated net tax benefit related to the impairments is $68 million and is included in the annual effective tax rate. As a result, the amount of tax ~~benefit~~expense recognized increased approximately by an incremental ~~$118~~$74 million during the three months ended March 31, 2023. The incremental interim tax benefit recognized during the nine months ended March 31, 2023 was $66 million and ~~$140 million for~~will reverse in the ~~three and six months ended December 31, 2022, respectively, and is expected to increase the provision for income taxes during the remainder~~fourth quarter of the fiscal year.

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, impairments and (gain)/loss on disposal of assets, net included a pre-tax goodwill impairment ~~charge~~charges of ~~$1.3~~$474 million and $1.8 billion, respectively, related to the Medical segment. For fiscal 2022, the estimated net tax benefit related to the impairment was $126 million and was included in the annual effective tax rate. As a result, the amount of tax expense recognized during the three and nine months ended March 31, 2022 increased approximately by an incremental $1.2 billion and $180 million, respectively, and lowered the provision for income taxes during the fourth quarter of fiscal 2022 by approximately $180 million.

4 Litigation (recoveries)/charges, net includes a one-time contingent attorney fee of $18 million recorded during the three and nine months ended March 31, 2022 related to the finalization of the settlement agreement (the "Settlement Agreement") resulting in the settlement of the vast majority of opioid lawsuits filed by state and local governmental entities. Due to the unique nature and significance of the Settlement Agreement, and the one-time, contingent nature of the fee, this related fee was included in litigation (recoveries)/charges, net.

5 Litigation (recoveries)/charges, net for the ~~three~~nine months ended ~~December~~March 31, ~~2021~~2022 does not include a $16 million judgement for lost profits related to an ordinary course intellectual property claim, which positively impacted Pharmaceutical segment ~~profit in the quarter.~~profit.

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.



20			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Other

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the quantitative and qualitative market risk disclosures included in our 2022 Form 10-K since the end of fiscal 2022 through ~~December~~March 31, ~~2022.~~2023.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of ~~December~~March 31, ~~2022.~~2023. Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of ~~December~~March 31, ~~2022,~~2023, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~December~~March 31, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



21			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Other

Legal Proceedings

In addition to the proceeding described below, the legal proceedings described in Note 6 of the "Notes to Condensed Consolidated Financial Statements" are incorporated in this "Legal Proceedings" section by reference.

Between June 2019 and January 2020, three purported shareholders filed actions on behalf of Cardinal Health, Inc. in the U.S. District Court for the Southern District of Ohio against certain current and former members of our Board of Directors alleging that the defendants breached their fiduciary duties by failing to effectively monitor Cardinal Health's distribution of controlled substances and approving certain payments of executive compensation. In January, 2020, the court consolidated these derivative cases under the caption In re Cardinal Health, Inc. Derivative Litigation and in March 2020, plaintiffs filed an amended complaint.

In December 2021, the parties reached an agreement in principle to settle this matter and in October 2022, the court entered an order approving the settlement and dismissing the case. This settlement does not include any admission of liability. Under the settlement, in December 2022, ~~Cardinal's~~Cardinal Health's director and ~~officer's~~officer liability insurance carriers, on behalf of the defendants, paid Cardinal Health $124 million, less approximately $31 million in attorneys' fees and expenses awarded by the court to plaintiffs' counsel.



22			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Other

Risk Factors

You should carefully consider the information in this Form 10-Q, including the Risk Factors below, and the risk factors discussed in "Risk Factors" and other risks discussed in our 2022 Form 10-K, our Form 10-Q for the quarter ended December 31, 2022 and September 30, 2022, and our other filings with the SEC since June 30, 2022. These risks could materially and adversely affect our results of operations, financial condition, liquidity, and cash flows. Our business also could be affected by risks that we are not presently aware of or that we currently consider immaterial to our operations.

Our business could be affected by activist shareholders.

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

The Cooperation Agreement may create unintended consequences, such as creating uncertainty about our management, operations or future strategic direction, which could result in the loss of future business opportunities or negatively impact our ability to attract and retain qualified talent. Additionally, implementing any actions recommended by the Business Review Committee and the Board may be costly and time-consuming, may be disruptive to our ongoing business operations and may ultimately be unsuccessful.

It is possible that activist shareholders may, among other things, attempt to effect additional changes and exert influence over our Board of Directors and management or initiate a proxy contest, which may disrupt our operations by diverting the attention of management and the Board and be costly and time-consuming. Any such proxy contests, actions or requests, or the mere public presence of activist shareholders, may cause the market price for our shares to experience ~~volatility.~~volatility, which could be significant.

We could be subject to adverse changes in the tax laws or additional 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. 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. In August 2022, the U.S. federal government enacted the Inflation Reduction Act, which imposed a 15 percent corporate minimum tax on certain large corporations and a 1

percent tax on share repurchases after December 31, 2022. These provisions may adversely impact our financial position and results of operations.

Additionally, in connection with the accruals taken in connection with opioid-related lawsuits in fiscal years 2021 and 2020, we recorded net tax benefits of $228 million and $488 million, respectively, reflecting our 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 U.S. Tax Cuts and Jobs Act ("Tax Act"); however, these estimates require significant judgment, and it is possible that they could be subject to challenges by the U.S. Internal Revenue Service ("IRS").

The U.S. tax law governing deductibility was changed by the Tax Act. The taxing authorities could challenge our interpretation of the Tax Act or the estimates and assumptions used to assess the future deductibility of these benefits, or tax law could change again. 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 provision/(benefit). The actual amount of tax benefit related to uncertain tax positions may differ materially from these estimates. See Note 7 of the "Notes to Condensed 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. In connection with this net operating loss carryback, certain industry participants, including us, received a letter from the U.S. House of Representatives’ Committee on Oversight and Reform questioning, among other things, our plans to take tax deductions for opioid-related losses, including our use of the net operating loss carryback provisions under the CARES Act and deductibility under the Tax Act. We responded to the letter. It is possible that the IRS could challenge our tax position with respect to this self-insurance loss. If these initiatives are successful, our effective tax rate 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.~~



23			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Other

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.

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. Proposed adjustments in ongoing audits may adversely affect our effective tax rate or tax payments.



24			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Other

Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period Total Number
of Shares
Purchased (1) Average Price Paid per Share (2,3) Total Number of Shares
Purchased
as Part of Publicly Announced Programs (2,3,4) Approximate
Dollar Value of
Shares That May
Yet be Purchased
Under the Program (4)
(in millions)
October 2022 713 $ 70.72 — $ 1,943
November 2022 2,611,836 76.58 2,611,648 1,743
December 2022 1,645,191 73.36 1,645,010 1,543
Total 4,257,740 $ 75.33 4,256,658 $ 1,543




Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2,3)		Total Number of Shares Purchased as Part of Publicly Announced Programs (2,3,4)	Approximate Dollar Value of Shares That May Yet be Purchased Under the Program (4) (in millions)
January 2023	614,596	$	81.40	614,248	$	1,493
February 2023	2,596,570	77.03		2,596,391	1,293
March 2023	639,115	78.25		638,930	1,243
Total	3,850,281	$	77.93	3,849,569	$	1,243

(1)Reflects ~~713, 188,~~348, 179 and ~~181~~185 common shares purchased in ~~October, November,~~January, February, and ~~December 2022,~~March 2023, respectively, through a rabbi trust as investments of participants in our Deferred Compensation Plan.

(2)On ~~November 17, 2022,~~February 6, 2023, we entered into an accelerated share repurchase ("ASR") program to purchase common shares for an aggregate purchase price of $250 million and received an initial delivery of 2.6 million common shares using a reference price of ~~$76.58.~~$77.03. The ASR program concluded on ~~January 13,~~February 28, 2023 at a volume weighted average price per common share of ~~$77.50~~$77.27 resulting in a final delivery of 0.6 million common shares. See Note 10 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

(3)On ~~September 14,~~November 17, 2022, we entered into an ASR program to purchase common shares for an aggregate purchase price of ~~$1.0 billion~~$250 million and received an initial delivery of ~~12.0~~2.6 million common shares using a reference price of ~~$66.74.~~$76.58. The ASR program concluded on ~~December 23, 2022~~January 13, 2023 at a volume weighted average price per common share of ~~$73.36~~$77.50 resulting in a final delivery of ~~1.6~~0.6 million common shares. See Note 10 of the "Notes to Condensed Consolidated Financial Statements" for additional information.

(4)On November 4, 2021, our Board of Directors approved a new $3.0 billion share repurchase program, which will expire on December 31, 2024. As of ~~December~~March 31, ~~2022,~~2023, we have ~~$1.5~~$1.2 billion authorized for share repurchases remaining under this program.



25			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Financial Statements

Condensed Consolidated Statements of Earnings/(Loss)

(Unaudited)


		Three Months Ended December 31,				Six Months Ended December 31,					Three Months Ended March 31,				Nine Months Ended March 31,
(in millions, except per common share amounts)	(in millions, except per common share amounts)	2022		2021		2022		2021		(in millions, except per common share amounts)	2023		2022		2023		2022
Revenue	Revenue	$	51,469	$	45,457	$	101,072	$	89,425	Revenue	$	50,487	$	44,836	$	151,559	$	134,261
Cost of products sold	Cost of products sold	49,806		43,841		97,795		86,167		Cost of products sold	48,702		43,154		146,497		129,321
Gross margin	Gross margin	1,663		1,616		3,277		3,258		Gross margin	1,785		1,682		5,062		4,940

Operating expenses:	Operating expenses:									Operating expenses:
Distribution, selling, general and administrative expenses	Distribution, selling, general and administrative expenses	1,191		1,151		2,388		2,265		Distribution, selling, general and administrative expenses	1,179		1,137		3,567		3,402
Restructuring and employee severance	Restructuring and employee severance	17		7		46		25		Restructuring and employee severance	16		31		62		56
Amortization and other acquisition-related costs	Amortization and other acquisition-related costs	71		79		142		158		Amortization and other acquisition-related costs	74		79		216		237
Impairments and (gain)/loss on disposal of assets, net	Impairments and (gain)/loss on disposal of assets, net	710		1,295		863		1,293		Impairments and (gain)/loss on disposal of assets, net	20		471		883		1,764
Litigation (recoveries)/charges, net	Litigation (recoveries)/charges, net	(207)		34		(180)		52		Litigation (recoveries)/charges, net	(76)		61		(256)		113
Operating earnings/(loss)	Operating earnings/(loss)	(119)		(950)		18		(535)		Operating earnings/(loss)	572		(97)		590		(632)

Other (income)/expense, net	Other (income)/expense, net	(7)		(13)		(5)		(17)		Other (income)/expense, net	—		3		(5)		(14)
Interest expense, net	Interest expense, net	25		37		50		77		Interest expense, net	28		38		78		115
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—		—		—		10		Loss on early extinguishment of debt	—		—		—		10
(Gain)/loss on sale of equity interest in naviHealth	(Gain)/loss on sale of equity interest in naviHealth	—		(1)		—		(1)		(Gain)/loss on sale of equity interest in naviHealth	—		(1)		—		(2)
Loss before income taxes		(137)		(973)		(27)		(604)
Earnings/(loss) before income taxes										Earnings/(loss) before income taxes	544		(137)		517		(741)

Benefit from income taxes		(7)		(1,022)		(8)		(925)
Provision for income taxes										Provision for income taxes	197		1,253		189		328
Net earnings/(loss)	Net earnings/(loss)	(130)		49		(19)		321		Net earnings/(loss)	347		(1,390)		328		(1,069)

Less: Net earnings attributable to noncontrolling interests	Less: Net earnings attributable to noncontrolling interests	—		—		(1)		(1)		Less: Net earnings attributable to noncontrolling interests	(2)		(1)		(3)		(2)
Net earnings/(loss) attributable to Cardinal Health, Inc.	Net earnings/(loss) attributable to Cardinal Health, Inc.	$	(130)	$	49	$	(20)	$	320	Net earnings/(loss) attributable to Cardinal Health, Inc.	$	345	$	(1,391)	$	325	$	(1,071)

Earnings/(Loss) per common share attributable to Cardinal Health, Inc.:	Earnings/(Loss) per common share attributable to Cardinal Health, Inc.:									Earnings/(Loss) per common share attributable to Cardinal Health, Inc.:
Basic	Basic	$	(0.50)	$	0.17	$	(0.08)	$	1.13	Basic	$	1.35	$	(5.05)	$	1.24	$	(3.82)
Diluted	Diluted	(0.50)		0.17		(0.08)		1.12		Diluted	1.34		(5.05)		1.23		(3.82)

Weighted-average number of common shares outstanding:	Weighted-average number of common shares outstanding:									Weighted-average number of common shares outstanding:
Basic	Basic	261		279		266		283		Basic	256		275		263		281
Diluted	Diluted	261		281		266		285		Diluted	258		275		264		281

Cash dividends declared per common share	Cash dividends declared per common share	$	0.4957	$	0.4908	$	0.9914	$	0.9816	Cash dividends declared per common share	$	0.4957	$	0.4908	$	1.4871	$	1.4724

See notes to condensed consolidated financial statements.



26			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Financial Statements

Condensed Consolidated Statements of Comprehensive Income/(Loss)

(Unaudited)


		Three Months Ended December 31,				Six Months Ended December 31,					Three Months Ended March 31,				Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		2022		2021		(in millions)	2023		2022		2023		2022
Net earnings/(loss)	Net earnings/(loss)	$	(130)	$	49	$	(19)	$	321	Net earnings/(loss)	$	347	$	(1,390)	$	328	$	(1,069)

Other comprehensive income/(loss):	Other comprehensive income/(loss):									Other comprehensive income/(loss):
Foreign currency translation adjustments and other	Foreign currency translation adjustments and other	20		(18)		(38)		(43)		Foreign currency translation adjustments and other	4		(4)		(34)		(47)

Net unrealized gain/(loss) on derivative instruments, net of tax		10		(6)		6		(8)
Net unrealized gain on derivative instruments, net of tax										Net unrealized gain on derivative instruments, net of tax	—		12		6		4
Total other comprehensive income/(loss), net of tax	Total other comprehensive income/(loss), net of tax	30		(24)		(32)		(51)		Total other comprehensive income/(loss), net of tax	4		8		(28)		(43)

Total comprehensive income/(loss)	Total comprehensive income/(loss)	(100)		25		(51)		270		Total comprehensive income/(loss)	351		(1,382)		300		(1,112)

Less: comprehensive income/(loss) attributable to noncontrolling interests		—		—		(1)		(1)
Less: comprehensive income attributable to noncontrolling interests										Less: comprehensive income attributable to noncontrolling interests	(2)		(1)		(3)		(2)

Total comprehensive income/(loss) attributable to Cardinal Health, Inc.	Total comprehensive income/(loss) attributable to Cardinal Health, Inc.	$	(100)	$	25	$	(52)	$	269	Total comprehensive income/(loss) attributable to Cardinal Health, Inc.	$	349	$	(1,383)	$	297	$	(1,114)

See notes to condensed consolidated financial statements.



27			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Financial Statements

Condensed Consolidated Balance Sheets

(in millions) December 31, 2022 June 30, 2022
(Unaudited)
Assets
Current assets:
Cash and equivalents $ 3,654 $ 4,717
Trade receivables, net 11,421 10,561
Inventories, net 17,263 15,636
Prepaid expenses and other 2,258 2,021
Total current assets 34,596 32,935
Property and equipment, net 2,341 2,361
Goodwill and other intangibles, net 6,618 7,629
Other assets 927 953
Total assets $ 44,482 $ 43,878
Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable $ 30,083 $ 27,128
Current portion of long-term obligations and other short-term borrowings 577 580
Other accrued liabilities 2,552 2,842
Total current liabilities 33,212 30,550
Long-term obligations, less current portion 4,685 4,735
Deferred income taxes and other liabilities 8,797 9,299
Shareholders’ deficit:
Preferred shares, without par value:
Authorized—500 thousand shares, Issued—none
— —
Common shares, without par value:
Authorized—755 million shares, Issued—327 million shares at December 31, 2022 and June 30, 2022
2,747 2,813
Accumulated deficit (560) (280)
Common shares in treasury, at cost: 68 million shares and 54 million shares at December 31, 2022 and June 30, 2022, respectively
(4,254) (3,128)
Accumulated other comprehensive loss (146) (114)
Total Cardinal Health, Inc. shareholders' deficit (2,213) (709)
Noncontrolling interests 1 3
Total shareholders’ deficit (2,212) (706)
Total liabilities and shareholders’ deficit $ 44,482 $ 43,878


(in millions)	March 31, 2023		June 30, 2022
	(Unaudited)
Assets
Current assets:
Cash and equivalents	$	3,990	$	4,717
Trade receivables, net	10,992		10,561
Inventories, net	16,620		15,636
Prepaid expenses and other	1,895		2,021

Total current assets	33,497		32,935

Property and equipment, net	2,362		2,361
Goodwill and other intangibles, net	6,567		7,629

Other assets	951		953
Total assets	$	43,377	$	43,878

Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable	$	29,601	$	27,128
Current portion of long-term obligations and other short-term borrowings	26		580
Other accrued liabilities	2,876		2,842

Total current liabilities	32,503		30,550

Long-term obligations, less current portion	4,708		4,735
Deferred income taxes and other liabilities	8,384		9,299

Shareholders’ deficit:
Preferred shares, without par value:
Authorized—500 thousand shares, Issued—none	—		—
Common shares, without par value:
Authorized—755 million shares, Issued—327 million shares at March 31, 2023 and June 30, 2022	2,818		2,813
Accumulated deficit	(342)		(280)
Common shares in treasury, at cost: 72 million shares and 54 million shares at March 31, 2023 and June 30, 2022, respectively	(4,554)		(3,128)
Accumulated other comprehensive loss	(142)		(114)
Total Cardinal Health, Inc. shareholders' deficit	(2,220)		(709)
Noncontrolling interests	2		3
Total shareholders’ deficit	(2,218)		(706)
Total liabilities and shareholders’ deficit	$	43,377	$	43,878

See notes to condensed consolidated financial statements.



28			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Financial Statements

Condensed Consolidated Statements of Shareholders'

Equity/(Deficit)

(Unaudited)


		Common Shares					Treasury Shares			Accumulated Other Comprehensive Loss				Noncontrolling Interests				Total Shareholders’ Equity/ (Deficit)						Common Shares				Retained Earnings/ (Accumulated Deficit)			Treasury Shares				Accumulated Other Comprehensive Loss				Noncontrolling Interests				Total Shareholders’ Equity/(Deficit)
(in millions)	(in millions)	Shares Issued	Amount		Retained Earnings/ (Accumulated Deficit)		Shares	Amount												(in millions)		Shares Issued			Amount					Shares		Amount
		Three Months Ended December 31, 2022																						Three Months Ended March 31, 2023
Balance at September 30, 2022		327	$	2,576	$	(301)	(65)	$	(3,880)			$	(176)			$	1			$	(1,780)
Net loss					(130)									—				(130)
Balance at December 31, 2022																							Balance at December 31, 2022	327		$	2,747	$	(560)		(68)		$	(4,254)			$	(146)			$	1			$	(2,212)
Net earnings																							Net earnings					345											2				347
Other comprehensive income, net of tax	Other comprehensive income, net of tax									30								30					Other comprehensive income, net of tax												4								4

Employee stock plans activity, net of shares withheld for employee taxes	Employee stock plans activity, net of shares withheld for employee taxes	—	21				1	26										47					Employee stock plans activity, net of shares withheld for employee taxes	—		21					—		3										24
Share repurchase program activity	Share repurchase program activity		150				(4)	(400)										(250)					Share repurchase program activity			50					(4)		(303)										(253)
Dividends declared	Dividends declared				(129)													(129)					Dividends declared					(128)															(128)

Balance at December 31, 2022		327	$	2,747	$	(560)	(68)	$	(4,254)	$	(146)			$	1			$	(2,212)
Other																							Other					1											(1)				—
Balance at March 31, 2023																							Balance at March 31, 2023	327		$	2,818	$	(342)		(72)		$	(4,554)	$	(142)			$	2			$	(2,218)


		Three Months Ended December 31, 2021															Three Months Ended March 31, 2022
Balance at September 30, 2021		327	$	2,666	$	1,335	(43)	$	(2,547)	$	(61)	$	3	$	1,396
Net earnings					49							—		49
Other comprehensive loss, net of tax										(24)				(24)
Balance at December 31, 2021																Balance at December 31, 2021	327	$	2,721	$	1,245	(50)	$	(2,883)	$	(85)	$	4	$	1,002
Net earnings/(loss)																Net earnings/(loss)				(1,391)							1		(1,390)
Other comprehensive income, net of tax																Other comprehensive income, net of tax									8				8

Employee stock plans activity, net of shares withheld for employee taxes	Employee stock plans activity, net of shares withheld for employee taxes	—	15					4						19		Employee stock plans activity, net of shares withheld for employee taxes	—	20					3						23
Share repurchase program activity	Share repurchase program activity		40				(7)	(340)						(300)		Share repurchase program activity		20				(4)	(220)						(200)
Dividends declared	Dividends declared				(139)									(139)		Dividends declared				(135)									(135)
Other	Other				—							1		1		Other											(1)		(1)
Balance at December 31, 2021		327	$	2,721	$	1,245	(50)	$	(2,883)	$	(85)	$	4	$	1,002
Balance at March 31, 2022																Balance at March 31, 2022	327	$	2,761	$	(281)	(54)	$	(3,100)	$	(77)	$	4	$	(693)


		Six Months Ended December 31, 2022															Nine Months Ended March 31, 2023
Balance at June 30, 2022	Balance at June 30, 2022	327	$	2,813	$	(280)	(54)	$	(3,128)	$	(114)	$	3	$	(706)	Balance at June 30, 2022	327	$	2,813	$	(280)	(54)	$	(3,128)	$	(114)	$	3	$	(706)
Net loss					(20)							1		(19)
Net earnings																Net earnings				325							3		328
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax									(32)				(32)		Other comprehensive loss, net of tax									(28)				(28)
Purchase of noncontrolling interests	Purchase of noncontrolling interests											(2)		(2)		Purchase of noncontrolling interests											(2)		(2)
Employee stock plans activity, net of shares withheld for employee taxes	Employee stock plans activity, net of shares withheld for employee taxes	—	(16)				2	74						58		Employee stock plans activity, net of shares withheld for employee taxes		5				2	77						82
Share repurchase program activity	Share repurchase program activity		(50)				(16)	(1,200)						(1,250)		Share repurchase program activity						(20)	(1,503)						(1,503)
Dividends declared	Dividends declared				(260)									(260)		Dividends declared				(388)									(388)
Other	Other											(1)		(1)		Other				1							(2)		(1)
Balance at December 31, 2022		327	$	2,747	$	(560)	(68)	$	(4,254)	$	(146)	$	1	$	(2,212)
Balance at March 31, 2023																Balance at March 31, 2023	327	$	2,818	$	(342)	(72)	$	(4,554)	$	(142)	$	2	$	(2,218)


		Six Months Ended December 31, 2021															Nine Months Ended March 31, 2022
Balance at June 30, 2021	Balance at June 30, 2021	327	$	2,806	$	1,205	(36)	$	(2,186)	$	(34)	$	3	$	1,794	Balance at June 30, 2021	327	$	2,806	$	1,205	(36)	$	(2,186)	$	(34)	$	3	$	1,794
Net earnings					320							1		321
Net earnings/(loss)																Net earnings/(loss)				(1,071)							2		(1,069)
Other comprehensive loss, net of tax	Other comprehensive loss, net of tax									(51)				(51)		Other comprehensive loss, net of tax									(43)				(43)

Employee stock plans activity, net of shares withheld for employee taxes	Employee stock plans activity, net of shares withheld for employee taxes	—	(25)				1	43						18		Employee stock plans activity, net of shares withheld for employee taxes	—	(5)				1	46						41
Share repurchase program activity	Share repurchase program activity		(60)				(15)	(740)						(800)		Share repurchase program activity		(40)				(19)	(960)						(1,000)
Dividends declared	Dividends declared				(280)									(280)		Dividends declared				(415)									(415)

Balance at December 31, 2021		327	$	2,721	$	1,245	(50)	$	(2,883)	$	(85)	$	4	$	1,002
Other																Other											(1)		(1)
Balance at March 31, 2022																Balance at March 31, 2022	327	$	2,761	$	(281)	(54)	$	(3,100)	$	(77)	$	4	$	(693)

See notes to condensed consolidated financial statements.



29			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Financial Statements

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Six Months Ended December 31,					Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net earnings/(loss)	Net earnings/(loss)	$	(19)	$	321	Net earnings/(loss)	$	328	$	(1,069)

Adjustments to reconcile net earnings/(loss) to net cash provided by operating activities:	Adjustments to reconcile net earnings/(loss) to net cash provided by operating activities:					Adjustments to reconcile net earnings/(loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	341		332		Depreciation and amortization	516		513

Impairments and (gain)/loss on disposal of assets, net						Impairments and (gain)/loss on disposal of assets, net	883		1,764
Impairments and loss on sale of other investments						Impairments and loss on sale of other investments	—		3
(Gain)/loss on sale of equity interest in naviHealth	(Gain)/loss on sale of equity interest in naviHealth	—		(1)		(Gain)/loss on sale of equity interest in naviHealth	—		(2)
Impairments and (gain)/loss on disposal of assets, net		863		1,293
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—		10		Loss on early extinguishment of debt	—		10
Share-based compensation	Share-based compensation	48		42		Share-based compensation	69		65

Provision for bad debts	Provision for bad debts	59		25		Provision for bad debts	79		46
Change in operating assets and liabilities, net of effects from acquisitions and divestitures:	Change in operating assets and liabilities, net of effects from acquisitions and divestitures:					Change in operating assets and liabilities, net of effects from acquisitions and divestitures:
Increase in trade receivables	Increase in trade receivables	(919)		(329)		Increase in trade receivables	(510)		(1,193)
Increase in inventories	Increase in inventories	(1,643)		(361)		Increase in inventories	(1,012)		(922)
Increase in accounts payable	Increase in accounts payable	2,954		1,059		Increase in accounts payable	2,473		1,121
Other accrued liabilities and operating items, net	Other accrued liabilities and operating items, net	(1,064)		(1,842)		Other accrued liabilities and operating items, net	(845)		(206)
Net cash provided by operating activities	Net cash provided by operating activities	620		549		Net cash provided by operating activities	1,981		130

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from divestitures, net of cash sold	Proceeds from divestitures, net of cash sold	—		938		Proceeds from divestitures, net of cash sold	—		923

Acquisition of subsidiaries, net of cash acquired						Acquisition of subsidiaries, net of cash acquired	(10)		—
Additions to property and equipment	Additions to property and equipment	(155)		(141)		Additions to property and equipment	(264)		(223)
Proceeds from disposal of property and equipment	Proceeds from disposal of property and equipment	2		—		Proceeds from disposal of property and equipment	2		11
Purchases of investments	Purchases of investments	(5)		(4)		Purchases of investments	(6)		(38)
Proceeds from investments	Proceeds from investments	1		22		Proceeds from investments	1		27

Proceeds from net investment hedge terminations						Proceeds from net investment hedge terminations	29		71
Net cash provided by/(used in) investing activities	Net cash provided by/(used in) investing activities	(157)		815		Net cash provided by/(used in) investing activities	(248)		771

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Reduction of long-term obligations	Reduction of long-term obligations	(13)		(592)		Reduction of long-term obligations	(571)		(597)
Net tax proceeds/(withholdings) from share-based compensation	Net tax proceeds/(withholdings) from share-based compensation	9		(27)		Net tax proceeds/(withholdings) from share-based compensation	11		(26)

Dividends on common shares	Dividends on common shares	(271)		(289)		Dividends on common shares	(399)		(425)
Purchase of treasury shares	Purchase of treasury shares	(1,250)		(800)		Purchase of treasury shares	(1,500)		(1,000)
Net cash used in financing activities	Net cash used in financing activities	(1,525)		(1,708)		Net cash used in financing activities	(2,459)		(2,048)

Effect of exchange rate changes on cash and equivalents	Effect of exchange rate changes on cash and equivalents	(1)		(11)		Effect of exchange rate changes on cash and equivalents	(1)		(13)
Cash and equivalents reclassified from assets held for sale	Cash and equivalents reclassified from assets held for sale	—		109		Cash and equivalents reclassified from assets held for sale	—		109

Net decrease in cash and equivalents	Net decrease in cash and equivalents	(1,063)		(246)		Net decrease in cash and equivalents	(727)		(1,051)
Cash and equivalents at beginning of period	Cash and equivalents at beginning of period	4,717		3,407		Cash and equivalents at beginning of period	4,717		3,407
Cash and equivalents at end of period	Cash and equivalents at end of period	$	3,654	$	3,161	Cash and equivalents at end of period	$	3,990	$	2,356

See notes to condensed consolidated financial statements.



30			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Notes to Financial Statements

Notes to Condensed Consolidated Financial Statements

1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

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

References to "we," "our," and similar pronouns in this Quarterly Report on Form 10-Q for the quarter ended ~~December~~March 31, ~~2022~~2023 (this "Form 10-Q") refer to Cardinal Health, Inc. and its majority-owned or consolidated subsidiaries unless the context requires otherwise.

Our fiscal year ends on June 30. References to fiscal 2023 and 2022 in these condensed consolidated financial statements are to the fiscal years ending or ended June 30, 2023 and June 30, 2022, respectively.

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

In our opinion, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Except as disclosed elsewhere in this Form 10-Q, all such adjustments are of a normal and recurring nature. In addition, financial results presented for this fiscal 2023 interim period are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2023. These condensed consolidated financial statements are unaudited and, accordingly, should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 ~~(the~~(our "2022 Form 10-K").

Recently Issued Financial Accounting Standards

Not Yet Adopted

We assess the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board ("FASB") on our condensed consolidated financial statements as well as material updates to previous assessments, if any, from our fiscal 2022 Form 10-K. There were no accounting standards issued in fiscal 2023 that will have a material impact on our condensed consolidated financial statements.

Recently Adopted Financial Accounting Standards

There were no new material accounting standards adopted during the ~~six~~nine months ended ~~December~~March 31, ~~2022.~~2023.

2. Divestitures

In August 2021, we sold the Cordis business to Hellman & Friedman for proceeds of $923 million, net of cash transferred, and we retained certain working capital accounts. Cardinal Health also retained product liability associated with lawsuits and claims related to the Cordis OptEase and TrapEase inferior vena cava ("IVC") filter products in the U.S. and Canada, as well as authority for these matters discussed in Note 6. The Cordis business operated within our Medical segment.



31			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Notes to Financial Statements

3. Restructuring and Employee Severance

The following table summarizes restructuring and employee severance:


		Three Months Ended December 31,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Employee-related	Employee-related	$	10	$	2	Employee-related	$	3	$	12
Facility exit and other	Facility exit and other	7		5		Facility exit and other	13		19
Total restructuring and employee severance	Total restructuring and employee severance	$	17	$	7	Total restructuring and employee severance	$	16	$	31


		Six Months Ended December 31,					Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Employee-related	Employee-related	$	29	$	10	Employee-related	$	32	$	22
Facility exit and other	Facility exit and other	17		15		Facility exit and other	30		34
Total restructuring and employee severance	Total restructuring and employee severance	$	46	$	25	Total restructuring and employee severance	$	62	$	56

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, ~~costs associated with vacant facilities,~~ professional, project management and other service fees to support divestitures, ~~vendor transition fees, project consulting fees,~~costs associated with vacant facilities, and certain other divestiture-related costs.

Restructuring and employee severance costs during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~December~~March 31, ~~2021~~2022 were primarily related to the implementation of certain enterprise-wide cost-savings ~~measures.~~measures and the divestiture of the Cordis business. During the three ~~months~~ and ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, restructuring also included costs related to ~~the divestiture of the Cordis business.~~decreasing our overall office space.

The following table summarizes activity related to liabilities associated with restructuring and employee severance:


(in millions)	(in millions)	Employee- Related Costs		Facility Exit and Other Costs		Total		(in millions)	Employee- Related Costs		Facility Exit and Other Costs		Total
Balance at June 30, 2022	Balance at June 30, 2022	$	56	$	10	$	66	Balance at June 30, 2022	$	56	$	10	$	66
Additions	Additions	25		5		30		Additions	29		8		37
Payments and other adjustments	Payments and other adjustments	(20)		(13)		(33)		Payments and other adjustments	(36)		(15)		(51)
Balance at December 31, 2022		$	61	$	2	$	63
Balance at March 31, 2023								Balance at March 31, 2023	$	49	$	3	$	52

4. Goodwill and Other Intangible Assets

Goodwill

The following table summarizes the changes in the carrying amount of goodwill by segment and in total:


(in millions)	(in millions)	Pharmaceutical		Medical (1)		Total		(in millions)	Pharmaceutical		Medical (1)		Total
Balance at June 30, 2022	Balance at June 30, 2022	$	2,673	$	3,182	$	5,855	Balance at June 30, 2022	$	2,673	$	3,182	$	5,855

Goodwill acquired, net of purchase price adjustments								Goodwill acquired, net of purchase price adjustments	—		13		13
Foreign currency translation adjustments and other	Foreign currency translation adjustments and other	—		(6)		(6)		Foreign currency translation adjustments and other	—		(5)		(5)
Goodwill impairment	Goodwill impairment	—		(863)		(863)		Goodwill impairment	—		(863)		(863)
Balance at December 31, 2022		$	2,673	$	2,313	$	4,986
Balance at March 31, 2023								Balance at March 31, 2023	$	2,673	$	2,327	$	5,000

(1)At ~~December~~March 31, ~~2022~~2023 and June 30, 2022, the Medical segment accumulated goodwill impairment loss was $4.4 billion and $3.5 billion, respectively.

Due to ~~certain reductions~~changes in our long-term financial plan assumptions made during the three months ended ~~December~~March 31, ~~2022, including those related to Cardinal Health branded medical products sales growth,~~2023, we elected to bypass the qualitative assessment and perform quantitative goodwill impairment testing for the Medical Unit. ~~This quantitative testing resulted in the carrying amount~~The fair value of the ~~Medical Unit exceeding the fair~~reporting unit was estimated to be approximately 4 percent in excess of its carrying value, ~~resulting in~~primarily driven by a pre-tax goodwill impairment charge of $709 million. The impairment charge recognized during the three months ended December 31, 2022 was driven primarily by the impact of the reductions in our long-term financial plan assumptions.lower discount rate as described below.

Our determinations of the estimated fair value of the Medical Unit at March 31, 2023, December 31, 2022 and at September 30, 2022 were based on a combination of the income-based approach (using a terminal growth rate of 2 percent), and the market-based approaches. For the income-based approach, we used discount rates of 10 percent, 10.5 percent and 10.5 percent for ~~both periods.~~each quarter, respectively. The decrease in the discount rate for the interim testing performed at March 31, 2023 was primarily due to a decrease in the risk-free interest rate. Additionally, we assigned a weighting of 80 percent to the discounted cash flow method, 10 percent to the guideline public company method, and 10 percent to the guideline transaction method. Our fair value estimates utilize significant unobservable inputs and thus represent Level 3 fair value measurements.

~~The carrying value of the Medical Unit at December 31, 2022 after recognizing the impairment charges was $6.2 billion, of which $1.1 billion was goodwill.~~



32			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Notes to Financial Statements

amount of the Medical Unit exceeding the fair value, resulting in a pre-tax impairment ~~charge~~charges of $474 million and $1.3 billion recorded during the three months ended March 31, 2022 and December 31, ~~2021.~~2021, respectively.

Other Intangible Assets

The following tables summarize other intangible assets by class at:


		December 31, 2022								March 31, 2023
(in millions)	(in millions)	Gross Intangible		Accumulated Amortization		Net Intangible		Weighted- Average Remaining Amortization Period (Years)	(in millions)	Gross Intangible		Accumulated Amortization		Net Intangible		Weighted- Average Remaining Amortization Period (Years)
Indefinite-life intangibles:	Indefinite-life intangibles:								Indefinite-life intangibles:
Trademarks and patents	Trademarks and patents	$	11	$	—	$	11	N/A	Trademarks and patents	$	11	$	—	$	11	N/A
Total indefinite-life intangibles	Total indefinite-life intangibles	11		—		11		N/A	Total indefinite-life intangibles	11		—		11		N/A

Definite-life intangibles:	Definite-life intangibles:								Definite-life intangibles:
Customer relationships	Customer relationships	3,234		2,220		1,014		10	Customer relationships	3,235		2,267		968		10
Trademarks, trade names and patents	Trademarks, trade names and patents	547		369		178		9	Trademarks, trade names and patents	550		376		174		9
Developed technology and other	Developed technology and other	1,036		607		429		9	Developed technology and other	1,037		623		414		9
Total definite-life intangibles	Total definite-life intangibles	4,817		3,196		1,621		10	Total definite-life intangibles	4,822		3,266		1,556		10
Total other intangible assets	Total other intangible assets	$	4,828	$	3,196	$	1,632	N/A	Total other intangible assets	$	4,833	$	3,266	$	1,567	N/A


	June 30, 2022
(in millions)	Gross Intangible		Accumulated Amortization		Net Intangible
Indefinite-life intangibles:
Trademarks and patents	$	11	$	—	$	11
Total indefinite-life intangibles	11		—		11

Definite-life intangibles:
Customer relationships	3,272		2,165		1,107
Trademarks, trade names and patents	552		360		192
Developed technology and other	1,038		574		464
Total definite-life intangibles	4,862		3,099		1,763
Total other intangible assets	$	4,873	$	3,099	$	1,774

Total amortization of intangible assets was ~~$71~~$69 million and ~~$79~~$78 million for the three months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$142~~$211 million and ~~$157~~$235 million for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Estimated annual amortization of intangible assets for the remainder of fiscal 2023 through 2027 is as follows: ~~$147~~$71 million, ~~$260~~$261 million, ~~$235~~$236 million, ~~$208~~$209 million and ~~$176~~$177 million.

5. Long-Term Obligations and Other Short-Term Borrowings

Long-Term Debt

We had total long-term obligations, including the current portion and other short-term borrowings, of $4.7 billion and $5.3 billion ~~at both December~~for March 31, ~~2022~~2023 and June 30, ~~2022.~~2022, respectively. 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. 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 ~~$30.1~~$29.6 billion and $27.1 billion at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively.

During the ~~six~~three months ended ~~December~~March 31, ~~2021,~~2023, we repaid the full principal of the $550 million 3.2% Notes due 2023 at maturity with available cash.

During the nine months ended March 31, 2022, we redeemed all outstanding $572 million principal amount of 2.616% Notes due June 2022 at a redemption price equal to 100% of the principal amount and accrued but unpaid interest, plus the make-whole premium applicable to the notes. In connection with this redemption, we recorded a $10 million loss on early extinguishment of debt. The early redemption was funded with available cash.

Other Financing Arrangements

In addition to cash and equivalents and operating cash flow, other sources of liquidity include a $2.0 billion commercial paper program backed by a $2.0 billion revolving credit facility. We also have a $1.0 billion committed receivables sales facility. During the nine months ended March 31, 2023, under our commercial paper program and our committed receivables program, we had maximum combined total daily amounts outstanding of $445 million and average combined daily amount outstanding of $4 million. At ~~December~~March 31, ~~2022,~~2023, we had no amounts outstanding under our commercial paper program, revolving credit facility or our committed receivables sales facility.

In February 2023, we extended our $2.0 billion revolving credit facility through February 25, 2028. In September 2022, we renewed our committed receivables sales facility program through Cardinal Health Funding, LLC (“CHF”) through September 30, 2025. CHF 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,



33			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


Notes to Financial Statements

Inc. in accordance with GAAP, CHF is a separate legal entity from Cardinal Health, Inc. and from our subsidiary that sells receivables to CHF. CHF is designed to be a special purpose, bankruptcy-remote entity whose assets are available solely to satisfy the claims of its creditors.



33			~~Cardinal Health~~ \| Q2~~Fiscal 2023 Form 10-Q~~


~~Notes to Financial Statements~~

6. Commitments, Contingent Liabilities and Litigation

Commitments

Generic Sourcing Venture with CVS Health Corporation ("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 April 2018, the State of New York passed a budget which included the Opioid Stewardship Act (the "OSA"). The OSA created an aggregate $100 million annual assessment on all manufacturers and distributors licensed to sell or distribute opioids in New York. Under the OSA, each licensed manufacturer and distributor would be required to pay a portion of the assessment based on its share of the total morphine milligram equivalents sold or distributed in New York during the applicable calendar year, beginning in 2017. Subsequently, New York passed a new statute that modified the assessment going forward and limited the OSA to two years (2017 and 2018).

We accrue contingencies if it is probable that a liability has been incurred and the amount can be estimated. In the second quarter of fiscal year 2022, we paid the State of New York $20 million, our portion of the assessment for calendar year 2017. At June 30, 2022, we had an accrual of $20 million, which represented our estimate of our portion of the assessment for calendar year 2018. During the ~~three and six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we recorded $6 million of income to reduce this accrual to the invoiced amount for the calendar year 2018 ~~assessment.~~assessment and we paid $7 million, resulting in an accrual of $7 million at March 31, 2023.

Legal Proceedings

We become involved from time to time in disputes, litigation and regulatory matters.

From time to time, we determine that products we 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, 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 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 condensed consolidated statements of earnings/(loss); however, losses and recoveries of lost profits from disputes that occur in the ordinary course of business are included within segment profit. For example, in the second quarter of fiscal year 2022, our



34			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


Notes to Financial Statements

Pharmaceutical segment profit was positively impacted by a $16 million judgment for lost profits related to an ordinary course intellectual property rights claim.

Opioid Lawsuits and Investigations

States & Political Subdivisions

National Settlement

As previously disclosed, in February 2022, we along with two other national distributors (collectively, the "Distributors") independently approved a settlement and settlement agreement (the "Settlement Agreement") to settle the vast majority of opioid lawsuits and



34			~~Cardinal Health~~ \| Q2~~Fiscal 2023 Form 10-Q~~


~~Notes to Financial Statements~~

claims brought by states and political subdivisions. This Settlement Agreement became effective on April 2, 2022. In May and June 2022, the Distributors reached agreements with the States of Washington and Oklahoma, respectively, to resolve the opioid-related claims of those states and their political subdivisions. Under these agreements, Cardinal Health agreed to pay approximately $160 million to the State of Washington and its participating subdivisions and approximately $95 million to the State of Oklahoma and its participating subdivisions. These amounts are consistent with the amounts that would have been allocated to Washington and Oklahoma under the Settlement Agreement. Each of Washington and Oklahoma is now subject to the Settlement Agreement.

In addition to the Distributors, parties to the Settlement Agreement include 48 states, the District of Columbia and 5 U.S. territories. Over 99 percent of political subdivisions (by population as calculated under the Settlement Agreement) that had brought opioid-related suits against us ~~had~~have chosen to join the Settlement Agreement or have had their claims addressed by state legislation.

Under the Settlement Agreement, we agreed to pay up to approximately $6.3 ~~billion.~~billion over 18 years. The Settlement Agreement also includes injunctive relief terms related to distributors’ controlled substance anti-diversion programs. For more information on the terms of the Settlement Agreement, refer to our 2022 Form 10-K. As a result of the Settlement Agreement, most lawsuits brought against us by states and other political subdivisions have been ~~dismissed and we expect additional lawsuits to be dismissed over the coming months.~~dismissed. We continue to engage in resolution discussions with certain non-participating political subdivisions, including the Attorney General for the State of Alabama, and we intend to defend ourselves vigorously against all remaining lawsuits.

During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we made our second annual payment of $372 million under the Settlement Agreement. In total, we have ~~$5.89~~$5.85 billion accrued at ~~December~~March 31, ~~2022,~~2023, of which ~~$480~~$437 million is included in other accrued liabilities and the remainder is included in deferred income taxes and other liabilities in our condensed consolidated balance sheets.

ultimate loss may differ materially from this accrual, whether as a result of settlement discussions, a judicial decision or verdict or otherwise, but we are not able to estimate a range of reasonably possible additional losses for these matters. We continue to strongly dispute the allegations made in these lawsuits and none of these agreements is an admission of liability or wrongdoing.

Other Settlements

West Virginia subdivisions and Native American tribes were not a part of the national settlement, and we had separate negotiations with these groups. A bench trial before a federal judge in West Virginia in a case brought by Cabell County and City of Huntington against the Distributors concluded in July 2021. In July 2022, a ~~judgement~~judgment in favor of the Distributors was entered. In July 2022, the Distributors reached an agreement to settle the opioid-related claims of the majority of the remaining West Virginia subdivisions. Under this agreement, we have agreed to pay eligible West Virginia subdivisions up to approximately $124 million over an eleven-year period. This agreement became effective in October 2022 when all participating subdivisions dismissed their cases.

~~In January 2022, the Distributors entered into a term sheet with Native American tribes to resolve their opioid claims.~~ In October 2022, we executed a final settlement agreement with the Native American Tribes, pursuant to which we will pay up to approximately $136 million over five years. In connection with this settlement, the court entered dismissals for the Native American tribes' cases.

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 these opioid litigation matters to determine whether our accrual is adequate. The amount of ultimate loss may differ materially from this accrual, whether as a result of settlement discussions, a judicial decision or verdict or otherwise, but we are not able to estimate a range of reasonably possible additional losses for these matters. We continue to strongly dispute the allegations made in these lawsuits and none of these agreements is an admission of liability or wrongdoing.

Department of Justice Investigations

We have received federal grand jury subpoenas issued in connection with investigations being conducted by the U.S. Attorney's Office for the Eastern District of New York and the Fraud Section of the U.S. Department of Justice ("DOJ"). We have also received civil requests for information from other DOJ offices. We believe that these investigations concern operation of our anti-diversion program, our anti-diversion policies and procedures, and distribution of certain controlled substances. We are cooperating with these investigations. We are unable to predict the outcome of any of these investigations.

Private Plaintiffs

The Settlement Agreement 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. Private parties had brought approximately ~~468~~457 lawsuits as of ~~January 31,~~April 28, 2023. Of these, 88107 are purported class actions. The causes of action asserted by these plaintiffs are similar to those asserted by public plaintiffs.

A trial in a case involving 21 plaintiffs began in state court in Georgia in ~~July 2022. A mistrial was declared shortly thereafter due to rising COVID-19 cases~~January 2023 and concluded in March 2023 with a verdict for the company and other defendants on all claims. The plaintiffs' motion for a new trial ~~began in January 2023.~~is pending. A trial involving eight hospital plaintiffs is scheduled to begin in Alabama in July 2023. We are vigorously defending ourselves in all of these matters; however, trials are inherently unpredictable and it is possible that an unfavorable outcome in these matters, individually or in the aggregate, could have a negative impact on our financial results.

~~Insurance Litigation~~

We are involved in ongoing legal proceedings with insurers related their obligations to reimburse us for defense and indemnity costs in connection with the lawsuits described above. In the three months ended December 31, 2022, we received approximately $10 million in insurance recoveries related to these matters; however, we



35			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Notes to Financial Statements

Insurance Litigation

We are involved in ongoing legal proceedings with insurers related their obligations to reimburse us for defense and indemnity costs in connection with the lawsuits described above. In the nine months ended March 31, 2023, we received approximately $10 million in insurance recoveries related to these matters; however, we have not recorded a receivable for any additional recoveries as of~~December~~ March 31, ~~2022.~~2023.

Cordis IVC Filter Matters

Product Liability Lawsuits

~~As of January 31, 2023, we are~~We have been named as a defendant in approximately ~~450~~453 product liability lawsuits coordinated in Alameda County Superior Court in California involving claims by approximately ~~5,161~~5,171 plaintiffs that allege personal injuries associated with the use of IVC filter products. ~~Another 3~~These lawsuits ~~involving similar~~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 4,376 claims byfor $275 million. This settlement agreement is subject to certain conditions, including certain opt-in thresholds. Between May and September 2023, we will make settlement payments totaling $275 million into a qualified settlement fund, which will be disbursed to the plaintiffs if required conditions are satisfied. Since July 2021, we have also entered into other agreements to settle approximately ~~3 plaintiffs are pending~~2,881 product liability claims. These settlements will not resolve all IVC filter product liability claims and we will continue to vigorously defend ourselves in ~~other jurisdictions. In~~the remaining lawsuits.

Additionally, in August 2021, the Attorney General for the State of New Mexico filed an action against certain IVC filter manufacturers, including us, alleging claims under New Mexico's Unfair Practices Act, Medicaid Fraud Act and Fraud Against Taxpayers Act. The allegations are similar to those made in the product liability lawsuits.

These lawsuits seek a variety of remedies, including unspecified monetary damages. Since July 2021, we have entered into agreements to settle approximately 2,885 product liability claims. As a result, certain lawsuits have been dismissed and we expect additional lawsuits to be dismissed over the coming months. We continue to vigorously defend ourselves in the remaining lawsuits and are engaged in ongoing resolution discussions with certain plaintiffs.

We recognized ~~net~~ income of ~~$46~~$71 million and ~~$25~~$95 million during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, respectively, primarily related to ~~reduce~~a reduction of the reserve for the estimated settlement and defense costs for these matters due to ~~certain claim~~the execution of the settlements ~~and to reflect insurance recoveries received in the quarter.~~noted above. At ~~December~~March 31, ~~2022,~~2023, we had a total of ~~$471~~$385 million accrued for losses and legal defense costs, related to the IVC filter product liability lawsuits in our condensed consolidated balance sheets. We believe there is a range of estimated losses with respect to these matters. Because no amount within the range is a better estimate than any other amount within the range, we have accrued the minimum amount in the range. We estimate the high end of the range to be approximately $826 million. 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.

Shareholder Securities Litigation

In August 2019, the Louisiana Sheriffs' Pension & Relief Fund filed a purported class action complaint against Cardinal Health and certain current and former officers and employees in the United States District Court for the Southern District of Ohio purportedly on behalf of all purchasers of our common shares between March 2015 and May 2018. In June 2020, the court appointed 1199 SEIU Health Care Employees Pension Fund as lead plaintiff and a

consolidated amended complaint was filed in September 2020. The amended complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making misrepresentations and omissions related to the acquisition and integration of the Cordis business and inventory

and supply chain problems within the Cordis business, and seeks to recover unspecified damages and equitable relief for the alleged misstatements and omissions. The complaint also alleges that one of the individual defendants violated Section 20A of the Exchange Act because he sold shares of Cardinal Health stock during the time period. In February 2023, we reached an agreement in principle with the plaintiffs to settle this matter for $109 million, subject to final approval by the court. The court granted its preliminary approval in April 2023 and will conduct a final hearing in September ~~2021,~~2023. If the ~~court denied~~settlement is approved, our ~~motion~~insurance carriers will pay $109 million to ~~dismiss. In September 2022,~~ the ~~court entered an order staying the case while the parties participate in mediation. We continue to vigorously defend ourselves against these claims.~~plaintiffs.

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 intended complaint. We are vigorously defending ourselves in this matter.

Antitrust Litigation Proceeds

In October 2022, we received net cash proceeds resulting from the settlement of a lawsuit in which we were a class member or plaintiff of $66 million, which was recognized in litigation (recoveries)/charges, net, during the ~~three~~nine months ended ~~December~~March 31, ~~2022.~~2023.

Shareholder Derivative Litigation

Between June 2019 and January 2020, three purported shareholders filed actions on behalf of Cardinal Health, Inc. in the U.S. District Court for the Southern District of Ohio against certain current and former members of our Board of Directors alleging that the defendants breached their fiduciary duties by failing to effectively monitor Cardinal Health's distribution of controlled substances and approving certain payments of executive compensation. In January 2020, the court consolidated these derivative cases under the caption In re Cardinal Health, Inc. Derivative Litigation and in March 2020, plaintiffs filed an amended complaint.



36			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Notes to Financial Statements

In ~~December 2021, the parties reached an agreement in principle to settle this matter. In~~ October 2022, athe court entered an order approving the settlement agreement reached between the parties and dismissing the case. The settlement does not include any admission of liability. Under this settlement, in December 2022, ~~Cardinal's~~Cardinal Health's director and ~~officer's~~officer liability insurance carriers, on behalf of the defendants, paid Cardinal Health $124 million, less approximately $31 million in attorneys' fees and expenses awarded by the court to plaintiffs' counsel. Cardinal Health received net cash proceeds resulting from this settlement of $93 million, which was recognized in litigation (recoveries)/charges, net, during the ~~three~~nine months ended ~~December~~March 31, ~~2022.~~2023.

7. Income Taxes

Fluctuations in our provision ~~for/(benefit from)~~for income taxes as a percentage of pre-tax earnings/(loss) (“effective tax rate”) are due to changes in international and U.S. state effective tax rates resulting from our business mix and discrete items.

Effective Tax Rate

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, the effective tax rate was ~~5.4~~36.3 percent and ~~30.0~~36.7 percent, respectively, and reflects ~~the~~any impact of the tax effects of the goodwill impairment charges recognized during the three and ~~six~~nine months ended ~~December~~March 31, ~~2022.~~2023.

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2021,~~2022, the effective tax rate was ~~105.0~~(916.5) percent and ~~153.1~~(44.4) percent, respectively, and reflects the impact of the tax effect of the goodwill impairment ~~charge~~charges recognized during the three and ~~six~~nine months ended ~~December~~March 31, ~~2021.~~2022.

Tax Effects of Goodwill Impairment Charges

During the ~~six~~nine months ended ~~December~~March 31, ~~2022,~~2023, we recognized pre-tax goodwill impairment charges of $863 million related to the Medical Unit. The net tax benefit related to ~~this charge~~these charges is $68 million for fiscal 2023.

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

The tax effect of the goodwill impairment charges during the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 was included in our estimated annual effective tax rate because it was not considered unusual or infrequent, given that we recorded goodwill ~~impairment~~impairments in prior fiscal years. The impact of the non-deductible goodwill ~~significantly~~ increased the estimated annual effective tax rate for fiscal 2023. Applying the higher tax rate to the pre-tax ~~loss~~income for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 resulted in recognizing an incremental interim tax ~~benefit~~expense of approximately ~~$140~~$74 million, which impacted the

~~the benefit from~~provision for income taxes in the condensed consolidated statements of earnings/(loss) during the ~~six~~three months ended ~~December~~March 31, ~~2022~~2023 and prepaid expenses and other assets in the condensed consolidated balance sheet at ~~December~~March 31, ~~2022. This~~2023. The incremental interim tax benefit recognized during the nine months ended March 31, 2023 was $66 million and will reverse in the ~~future quarters~~fourth quarter of fiscal 2023.

Unrecognized Tax Benefits

We had ~~$1.0~~$1.1 billion and $943 million of unrecognized tax benefits, at ~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively. The ~~December~~March 31, ~~2022~~2023 and June 30, 2022 balances include ~~$889~~$897 million and $858 million of unrecognized tax benefits, respectively, that if recognized, would have an impact on the effective tax rate.

At ~~December~~March 31, ~~2022~~2023 and June 30, 2022, we had ~~$56~~$61 million and $48 million, respectively, accrued for the payment of interest and penalties related to unrecognized tax benefits, which we recognize in the provision ~~for/(benefit from)~~for income taxes in the condensed consolidated statements of earnings/(loss). These balances are gross amounts before any tax benefits and are included in deferred income taxes and other liabilities in the condensed consolidated balance sheets.

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 estimate that the range of the possible change in unrecognized tax benefits within the next 12 months is between zero and a net decrease of up to ~~$120~~$125 million, exclusive of penalties and interest.

Other Tax Matters

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.

We are a party to a tax matters agreement with CareFusion Corporation ("CareFusion"), a subsidiary of Becton, Dickinson and Company. Under the tax matters agreement, CareFusion is obligated to indemnify us for certain tax exposures and transaction taxes prior to our fiscal 2010 spin-off of CareFusion. The indemnification receivable was ~~$78~~$80 million and $75 million at



37			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Notes to Financial Statements

~~December~~March 31, ~~2022~~2023 and June 30, 2022, respectively, and is included in other assets in the condensed consolidated balance sheets.

8. Fair Value Measurements

The following tables present the fair values for assets and (liabilities) measured on a recurring basis at:


		December 31, 2022									March 31, 2023
(in millions)	(in millions)	Level 1		Level 2		Level 3		Total		(in millions)	Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents	Cash equivalents	$	1,146	$	—	$	—	$	1,146	Cash equivalents	$	1,302	$	—	$	—	$	1,302

Other investments (1)	Other investments (1)	94		—		—		94		Other investments (1)	95		—		—		95

Liabilities:	Liabilities:									Liabilities:
Forward contracts (2)	Forward contracts (2)	—		(48)		—		(48)		Forward contracts (2)	—		(52)		—		(52)


	June 30, 2022
(in millions)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	2,425	$	—	$	—	$	2,425

Other investments (1)	97		—		—		97
Forward contracts (2)	—		15		—		15

(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 condensed consolidated balance sheets.

9. 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 manage the price risk associated with certain forecasted purchases.

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 condensed consolidated statements of earnings/(loss). For the three and ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, there was no gain or loss 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 the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, we entered into pay-floating interest rate swaps with total notional amounts of $200 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 condensed consolidated balance sheets.



38			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Notes to Financial Statements

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.

Pre-tax gains ~~and losses~~ recognized in other comprehensive income/(loss) were a $2 million ~~loss~~ and a $1 million ~~gain~~ for the three months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~a $2~~$4 million ~~gain and a $3 million gain~~ for both the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021, respectively.~~2022. Gains ~~and losses~~ recognized in accumulated other comprehensive loss and reclassified into earnings were $4 million and immaterial for the three ~~and six~~ months ended ~~December~~March 31, 2023 and 2022, respectively, and ~~2021. All gains~~were $8 million and ~~losses~~immaterial for the nine months ended March 31, 2023 and 2022, respectively. 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 ~~immaterial.~~$7 million.

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.

During the three months ended March 31, 2023, we entered into ¥19 billion ($150 million) cross-currency swaps maturing in September 2025, ¥19 billion ($150 million) cross-currency swaps maturing in June 2027, €100 million ($107 million) cross-currency swaps maturing in March 2025 and €100 million ($107 million) cross-currency swaps maturing in March 2026.

During the three months ended March 31, 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 and received net settlements of $10 million and $19 million in cash, respectively, recorded in proceeds from net investment hedge terminations in our condensed 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 of 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 gain and loss from net investment hedges recorded in the foreign currency translation component of accumulated other

comprehensive loss was ~~a $43 million~~an immaterial loss and a ~~$17~~$22 million gain during the three months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, and a $21 million loss and a ~~$22~~$44 million gain during the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Gains recognized in interest expense, net in the condensed consolidated statements of earnings/(loss) for the portion of the net investment hedges excluded from the assessment of hedge effectiveness were $4 million and $5 million during the three months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, and $8$12 million and ~~$11~~$16 million during the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, 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. We recorded ~~a $3 million gain~~an immaterial loss and a $2$4 million ~~gain~~loss during the three months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, and a $3 million loss and ~~a $4 million gain~~an immaterial loss during the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The principal currencies managed through foreign currency contracts are Canadian dollar, Euro, Chinese renminbi, Indian rupee and Thai ~~baht..~~baht.

Fair Value of Financial Instruments

The carrying amounts of cash and equivalents, trade receivables, accounts payable and other accrued liabilities at ~~December~~March 31, ~~2022~~2023 and June 30, 2022 approximate fair value due to their short-term maturities.

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:


(in millions)	(in millions)	December 31, 2022		June 30, 2022		(in millions)	March 31, 2023		June 30, 2022
Estimated fair value	Estimated fair value	$	4,912	$	5,049	Estimated fair value	$	4,466	$	5,049
Carrying amount	Carrying amount	5,262		5,315		Carrying amount	4,734		5,315

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.

10. Shareholders' Equity/(Deficit)

We repurchased ~~$1.3~~$1.5 billion and ~~$800 million~~$1.0 billion of our common shares, in the aggregate, through share repurchase programs during the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~ 2022,



39			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


Notes to Financial Statements

respectively. We funded the repurchases with available cash. The common shares repurchased are held in treasury to be used for general corporate purposes.

During the three months ended ~~December~~March 31, ~~2022,~~2023, we entered into an accelerated share repurchase ("ASR") program to repurchase common shares for an aggregate purchase price of $250 million. We received an initial delivery of 2.6 million common shares using a reference price of $77.03. The program concluded on February 28, 2023 at a volume weighted average price per common share of $77.27 resulting in a final delivery of 0.6 million common shares.

During the three months ended December 31, 2022, we entered into an ASR program to repurchase common shares for an aggregate purchase price of $250 million. We received an initial delivery of 2.6 million common shares using a reference price of $76.58. The program concluded on January 13, 2023 at a volume weighted average price per common share of $77.50 resulting in a final delivery of 0.6 million common shares.

During the three months ended September 30, 2022, we entered into an ASR program to repurchase common shares for an aggregate purchase price of $1.0 billion. We received an initial



39			~~Cardinal Health~~ \| Q2~~Fiscal 2023 Form 10-Q~~


~~Notes to Financial Statements~~

delivery of 12.0 million common shares using a reference price of $66.74. The program concluded on December 23, 2022 at a volume weighted average price per common share of $73.36 resulting in a final delivery of 1.6 million common shares.

During the three months ended March 31, 2022, we entered into an ASR program to repurchase common shares for an aggregate purchase price of $200 million. We received an initial delivery of 3.0 million common shares using a reference price of $54.01. The program concluded on April 18, 2022 at a volume weighted average price per common share of $56.02 resulting in a final delivery of 0.6 million common shares.

During the three months ended December 31, 2021, we entered into an ASR program to repurchase common shares for an aggregate purchase price of $300 million. We received an initial delivery of 4.8 million common shares using a reference price of $50.30. The program concluded on January 31, 2022 at a volume weighted average price per common share of $49.39 resulting in a final delivery of 1.3 million common shares.

During the three months ended September 30, 2021, we entered into an ASR program to repurchase common shares for an aggregate purchase price of $500 million. We received an initial delivery of 7.8 million common shares using a reference price of $51.53. The program concluded on October 4, 2021 at a volume weighted average price per common share of $51.10 resulting in a final delivery of 2.0 million common shares.

Accumulated Other Comprehensive Loss

The following tables summarize the changes in the balance of accumulated other comprehensive loss by component and in total:


(in millions)	(in millions)	Foreign Currency Translation Adjustments		Unrealized Gain/(Loss) on Derivatives, net of tax		Accumulated Other Comprehensive Loss		(in millions)	Foreign Currency Translation Adjustments		Unrealized Gain/(Loss) on Derivatives, net of tax		Accumulated Other Comprehensive Loss
Balance at June 30, 2022	Balance at June 30, 2022	$	(102)	$	(12)	$	(114)	Balance at June 30, 2022	$	(102)	$	(12)	$	(114)
Other comprehensive loss, before reclassifications	Other comprehensive loss, before reclassifications	(38)		11		(27)		Other comprehensive loss, before reclassifications	(34)		15		(19)
Amounts reclassified to earnings	Amounts reclassified to earnings	—		(5)		(5)		Amounts reclassified to earnings	—		(9)		(9)
Total other comprehensive loss attributable to Cardinal Health, Inc. net of tax benefit of $5 million	Total other comprehensive loss attributable to Cardinal Health, Inc. net of tax benefit of $5 million	(38)		6		(32)		Total other comprehensive loss attributable to Cardinal Health, Inc. net of tax benefit of $5 million	(34)		6		(28)
Balance at December 31, 2022		$	(140)	$	(6)	$	(146)
Balance at March 31, 2023								Balance at March 31, 2023	$	(136)	$	(6)	$	(142)


(in millions)	(in millions)	Foreign Currency Translation Adjustments		Unrealized Gain/(Loss) on Derivatives, net of tax		Accumulated Other Comprehensive Loss		(in millions)	Foreign Currency Translation Adjustments		Unrealized Gain/(Loss) on Derivatives, net of tax		Accumulated Other Comprehensive Loss
Balance at June 30, 2021	Balance at June 30, 2021	$	(46)	$	12	$	(34)	Balance at June 30, 2021	$	(46)	$	12	$	(34)
Other comprehensive loss, before reclassifications	Other comprehensive loss, before reclassifications	(43)		(5)		(48)		Other comprehensive loss, before reclassifications	(47)		9		(38)
Amounts reclassified to earnings	Amounts reclassified to earnings	—		(3)		(3)		Amounts reclassified to earnings	—		(5)		(5)
Total other comprehensive loss attributable to Cardinal Health, Inc. net of tax expense of $7 million		$	(43)	(8)		(51)
Balance at December 31, 2021		$	(89)	$	4	$	(85)
Total other comprehensive loss attributable to Cardinal Health, Inc. net of tax benefit of $6 million								Total other comprehensive loss attributable to Cardinal Health, Inc. net of tax benefit of $6 million	(47)		4		(43)
Balance at March 31, 2022								Balance at March 31, 2022	$	(93)	$	16	$	(77)

11. Earnings/(Loss) Per Share Attributable to Cardinal Health, Inc.

The following table reconciles the number of common shares used to compute basic and diluted earnings/(loss) per share attributable to Cardinal Health, Inc.:


		Three Months Ended December 31,			Three Months Ended March 31,
(in millions)	(in millions)	2022	2021	(in millions)	2023	2022
Weighted-average common shares–basic	Weighted-average common shares–basic	261	279	Weighted-average common shares–basic	256	275
Effect of dilutive securities:	Effect of dilutive securities:			Effect of dilutive securities:
Employee stock options, restricted share units and performance share units	Employee stock options, restricted share units and performance share units	—	2	Employee stock options, restricted share units and performance share units	2	—
Weighted-average common shares–diluted	Weighted-average common shares–diluted	261	281	Weighted-average common shares–diluted	258	275

Six Months Ended December 31,
(in millions) 2022 2021
Weighted-average common shares–basic 266 283
Effect of dilutive securities:
Employee stock options, restricted share units and performance share units — 2
Weighted-average common shares–diluted 266 285



40			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


Notes to Financial Statements


	Nine Months Ended March 31,
(in millions)	2023	2022
Weighted-average common shares–basic	263	281
Effect of dilutive securities:
Employee stock options, restricted share units and performance share units	1	—
Weighted-average common shares–diluted	264	281

The potentially dilutive employee stock options, restricted share units and performance share units that were antidilutive were 32 million ~~and 5 million~~ for ~~the three and six months ended December 31, 2022, respectively. For~~ both the three and ~~six~~nine months ended ~~December~~March 31, 2023.

The potentially dilutive employee stock options, restricted share units and performance share units that were antidilutive were 5 million for both the three and nine months ended March 31, 2022. For the three and nine months ended March 31, 2022, there were 2 million and 1 million potentially dilutive employee stock options, restricted share units and performance share units not included in the computation of diluted loss per common share attributable to Cardinal Health, Inc. because their effect would have been antidilutive as a result of the net loss during those periods.

The potentially dilutive employee stock options, restricted share units and performance share units that were antidilutive were 5 million and 4 million for the three and six months ended December 31, 2021, respectively.

12. Segment Information

Our operations are principally managed on a products and services basis and are comprised of two operating segments, which are the same as our reportable segments: Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates performance for purposes of allocating resources and assessing performance combined with the nature of the individual business activities.



40			~~Cardinal Health~~ \| Q2~~Fiscal 2023 Form 10-Q~~


~~Notes to Financial Statements~~

Our Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical and over-the-counter healthcare and consumer products in the United States. This segment also provides services to pharmaceutical manufacturers and healthcare providers for specialty pharmaceutical products; provides pharmacy management services to hospitals and operates a limited number of pharmacies, including pharmacies in community health centers; operates nuclear pharmacies and radiopharmaceutical manufacturing facilities; and connects pharmacists, payers and pharmaceutical companies and delivers health solutions for medication therapy management, digital patient engagement and telepharmacy; and repackages generic pharmaceuticals and over-the-counter healthcare products.

Our Medical segment manufactures, sources and distributes Cardinal Health branded medical, surgical and laboratory products, which are sold in the United States, Canada, Europe, Asia and other markets. In addition to distributing Cardinal Health branded products, this segment also distributes a broad range of medical, surgical and laboratory products known as national brand products and provides supply chain services and solutions to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers in the United States and Canada. This

segment also distributes medical products to patients' homes in the United States through our Cardinal Health at-Home Solutions division.

Revenue

The following tables present revenue for each reportable segment and disaggregated revenue within our two reportable segments and Corporate:


		Three Months Ended December 31,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Pharmaceutical Distribution and Specialty Solutions (1) (2)	Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	47,391	$	41,164	Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	46,497	$	40,723
Nuclear and Precision Health Solutions (3)	Nuclear and Precision Health Solutions (3)	282		211		Nuclear and Precision Health Solutions (3)	312		234
Pharmaceutical segment revenue	Pharmaceutical segment revenue	47,673		41,375		Pharmaceutical segment revenue	46,809		40,957
Medical distribution and products (4)	Medical distribution and products (4)	3,099		3,446		Medical distribution and products (4)	3,034		3,283
Cardinal Health at-Home Solutions	Cardinal Health at-Home Solutions	698		639		Cardinal Health at-Home Solutions	650		601
Medical segment revenue	Medical segment revenue	3,797		4,085		Medical segment revenue	3,684		3,884
Total segment revenue	Total segment revenue	51,470		45,460		Total segment revenue	50,493		44,841
Corporate (5)	Corporate (5)	(1)		(3)		Corporate (5)	(6)		(5)
Total revenue	Total revenue	$	51,469	$	45,457	Total revenue	$	50,487	$	44,836


		Six Months Ended December 31,					Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Pharmaceutical Distribution and Specialty Solutions (1) (2)	Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	92,938	$	80,778	Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	139,435	$	121,501
Nuclear and Precision Health Solutions (3)	Nuclear and Precision Health Solutions (3)	563		419		Nuclear and Precision Health Solutions (3)	875		653
Pharmaceutical segment revenue	Pharmaceutical segment revenue	93,501		81,197		Pharmaceutical segment revenue	140,310		122,154
Medical distribution and products (4)	Medical distribution and products (4)	6,239		7,013		Medical distribution and products (4)	9,273		10,296
Cardinal Health at-Home Solutions	Cardinal Health at-Home Solutions	1,336		1,221		Cardinal Health at-Home Solutions	1,986		1,822
Medical segment revenue	Medical segment revenue	7,575		8,234		Medical segment revenue	11,259		12,118
Total segment revenue	Total segment revenue	101,076		89,431		Total segment revenue	151,569		134,272
Corporate (5)	Corporate (5)	(4)		(6)		Corporate (5)	(10)		(11)
Total revenue	Total revenue	$	101,072	$	89,425	Total revenue	$	151,559	$	134,261

(1)Products and services offered by our Specialty Solutions division are referred to as “specialty pharmaceutical products and services."

(2)Comprised of all Pharmaceutical segment businesses except for Nuclear and Precision Health Solutions division.

(3)Increase from prior year relates to new product launches and changes in revenue recognition presentation from agent to principal for certain customer contracts.

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

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



41			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


Notes to Financial Statements

The following tables present revenue by geographic area:


		Three Months Ended December 31,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
United States	United States	$	50,333	$	44,382	United States	$	49,326	$	43,710
International	International	1,137		1,078		International	1,167		1,131
Total segment revenue	Total segment revenue	51,470		45,460		Total segment revenue	50,493		44,841
Corporate (1)	Corporate (1)	(1)		(3)		Corporate (1)	(6)		(5)
Total revenue	Total revenue	$	51,469	$	45,457	Total revenue	$	50,487	$	44,836


		Six Months Ended December 31,					Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
United States	United States	$	98,810	$	87,223	United States	$	148,136	$	130,933
International	International	2,266		2,208		International	3,433		3,339
Total segment revenue	Total segment revenue	101,076		89,431		Total segment revenue	151,569		134,272
Corporate (1)	Corporate (1)	(4)		(6)		Corporate (1)	(10)		(11)
Total revenue	Total revenue	$	101,072	$	89,425	Total revenue	$	151,559	$	134,261

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

Segment Profit

We evaluate segment performance based on segment profit, among other measures. Segment profit is segment revenue, less segment cost of products sold, less segment distribution, selling, general and administrative ("SG&A") expenses. Segment SG&A expenses include share-based compensation expense as well as allocated corporate expenses for shared functions, including corporate management, corporate finance, financial and customer care shared services, human resources, information technology and legal and compliance, including certain litigation defense



41			~~Cardinal Health~~ \| Q2~~Fiscal 2023 Form 10-Q~~


~~Notes to Financial Statements~~

costs. Corporate expenses are allocated to the segments based on headcount, level of benefit provided and other ratable allocation methodologies. The results attributable to noncontrolling interests are recorded within segment profit.

We do not allocate the following items to our segments:

•last-in first-out, or ("LIFO"), inventory charges/(credits);

•surgical gown recall costs/(income);

•shareholder cooperation agreement costs;

•state opioid assessment related to prior fiscal years;

•restructuring and employee severance;

•amortization and other acquisition-related costs;

•impairments and (gain)/loss on disposal of assets, net; in connection with goodwill impairment testing for the Medical Unit as discussed further in Note 4, we recognized cumulative goodwill impairment charges of ~~$709 million and~~ $863 million during the ~~three and six~~nine months ended ~~December~~March 31, ~~2022, respectively;~~2023;

•litigation (recoveries)/charges, net;

•other (income)/expense, net;

•interest expense, net;

•loss on early extinguishment of debt;

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

•provision ~~for/(benefit from)~~for income taxes

In addition, certain investment spending, certain portions of enterprise-wide incentive compensation and other spending are not allocated to the segments. Investment spending generally includes the first-year spend for certain projects that require incremental investments in the form of additional operating expenses. Because approval for these projects is dependent on executive management, we retain these expenses at Corporate. Investment spending within Corporate was $5$9 million and ~~$11~~$20 million for the three months ended ~~December~~March 31, 2023 and 2022, and ~~2021, and $11~~$20 million and ~~$18~~$38 million for the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

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


		Three Months Ended December 31,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Pharmaceutical (1)	Pharmaceutical (1)	$	464	$	426	Pharmaceutical (1)	$	600	$	487
Medical	Medical	17		50		Medical	20		59
Total segment profit	Total segment profit	481		476		Total segment profit	620		546
Corporate	Corporate	(600)		(1,426)		Corporate	(48)		(643)
Total operating loss		$	(119)	$	(950)
Total operating earnings/(loss)						Total operating earnings/(loss)	$	572	$	(97)


		Six Months Ended December 31,					Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Pharmaceutical (1)	Pharmaceutical (1)	$	895	$	832	Pharmaceutical (1)	$	1,495	$	1,319
Medical	Medical	9		173		Medical	29		232
Total segment profit	Total segment profit	904		1,005		Total segment profit	1,524		1,551
Corporate	Corporate	(886)		(1,540)		Corporate	(934)		(2,183)
Total operating earnings/(loss)	Total operating earnings/(loss)	$	18	$	(535)	Total operating earnings/(loss)	$	590	$	(632)

(1)Pharmaceutical segment profit includes opioid-related litigation defense and compliance costs, but does not include a one-time contingent attorney fee of $18 million incurred during the three and ~~six~~nine months ended ~~December~~March 31, ~~2021~~2022 related to the finalization of the Settlement Agreement. Due to the unique nature and significance of the Settlement Agreement, and the one-time, contingent nature of the fee, this related fee was included in litigation (recoveries)/charges, net in the condensed consolidated statements of earnings/(loss). Additionally, pharmaceutical segment profit during the nine months ended March 31, 2022 was positively impacted by a $16 million judgment for lost profits related to an ordinary course intellectual property rights claim.



42			Cardinal Health \| Q3Fiscal 2023 Form 10-Q


Notes to Financial Statements

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


(in millions)	(in millions)	December 31, 2022		June 30, 2022		(in millions)	March 31, 2023		June 30, 2022
Pharmaceutical	Pharmaceutical	$	28,992	$	26,409	Pharmaceutical	$	27,954	$	26,409
Medical (1)	Medical (1)	10,757		11,632		Medical (1)	10,544		11,632
Corporate	Corporate	4,733		5,837		Corporate	4,879		5,837
Total assets	Total assets	$	44,482	$	43,878	Total assets	$	43,377	$	43,878

(1)Medical reflects cumulative $863 million goodwill impairment charges recorded in connection with the interim goodwill impairment testing for the Medical Unit during the ~~three and six~~nine months ended ~~December~~March 31, ~~2022, respectively.~~2023.

13. Share-Based Compensation

We maintain stock incentive plans (collectively, the “Plans”) for the benefit of certain of our officers, directors and employees.

The following table provides total share-based compensation expense by type of award:


		Three Months Ended December 31,					Three Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Restricted share unit expense	Restricted share unit expense	$	15	$	17	Restricted share unit expense	$	17	$	18

Performance share unit expense	Performance share unit expense	10		1		Performance share unit expense	4		5
Total share-based compensation	Total share-based compensation	$	25	$	18	Total share-based compensation	$	21	$	23


		Six Months Ended December 31,					Nine Months Ended March 31,
(in millions)	(in millions)	2022		2021		(in millions)	2023		2022
Restricted share unit expense	Restricted share unit expense	$	32	$	35	Restricted share unit expense	$	49	$	53

Performance share unit expense	Performance share unit expense	16		7		Performance share unit expense	20		12
Total share-based compensation	Total share-based compensation	$	48	$	42	Total share-based compensation	$	69	$	65

The total tax benefit related to share-based compensation was $3 million ~~and $2 million~~ for both the three months ended ~~December~~March 31, 2023 and 2022, and ~~2021, respectively, and $6~~$9 million for both the ~~six~~nine months ended ~~December~~March 31, ~~2022~~2023 and ~~2021.~~2022.

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.



42			~~Cardinal Health~~ \| Q2~~Fiscal 2023 Form 10-Q~~


~~Notes to Financial Statements~~

The following table summarizes all transactions related to restricted share units under the Plans:


(in millions, except per share amounts)	(in millions, except per share amounts)	Restricted Share Units	Weighted-Average Grant Date Fair Value per Share		(in millions, except per share amounts)	Restricted Share Units	Weighted-Average Grant Date Fair Value per Share
Nonvested at June 30, 2022	Nonvested at June 30, 2022	2.7	$	46.03	Nonvested at June 30, 2022	2.7	$	46.03
Granted	Granted	1.3	70.15		Granted	1.3	70.26
Vested	Vested	(1.3)	49.95		Vested	(1.3)	50.03
Canceled and forfeited	Canceled and forfeited	(0.4)	57.75		Canceled and forfeited	(0.5)	58.30
Nonvested at December 31, 2022		2.3	$	56.86
Nonvested at March 31, 2023					Nonvested at March 31, 2023	2.2	$	57.14

At ~~December~~March 31, ~~2022,~~2023, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested restricted share units

not yet recognized was ~~$108~~$87 million, which is expected to be recognized over a weighted-average period of two years.

Performance Share Units

Performance share units vest over a 3-year performance period based on achievement of specific performance goals. Based on the extent to which the targets are achieved, vested shares may range from zero to ~~240~~234 percent of the target award ~~amount for the fiscal 2020 and 2021 grants and zero to 234 percent for the fiscal 2022 and 2023 grants.~~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)	(in millions, except per share amounts)	Performance Share Units	Weighted-Average Grant Date Fair Value per Share		(in millions, except per share amounts)	Performance Share Units	Weighted-Average Grant Date Fair Value per Share
Nonvested at June 30, 2022	Nonvested at June 30, 2022	1.2	$	54.32	Nonvested at June 30, 2022	1.2	$	54.32
Granted	Granted	0.6	76.93		Granted	0.6	70.52
Vested	Vested	(0.4)	59.04		Vested	(0.4)	59.04
Canceled and forfeited	Canceled and forfeited	(0.3)	64.32		Canceled and forfeited	(0.3)	65.59
Nonvested at December 31, 2022		1.1	$	76.49
Nonvested at March 31, 2023					Nonvested at March 31, 2023	1.1	$	76.24

At ~~December~~March 31, ~~2022,~~2023, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested performance share units not yet recognized was ~~$41~~$39 million, which is expected to be recognized over a weighted-average period of two years if performance goals are achieved.



43			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Exhibits

Exhibits


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, as amended (incorporated by reference to Exhibit 3.2 to Cardinal Health’s Quarterly Report on Form 10-Q filed on November 9, 2021, File No. 1-11373)
10.1			~~Aircraft Time Sharing~~Third Amended and Restated Five-Year Credit Agreement, dated as of ~~November 7,~~ ~~2022, by and~~ ~~among~~ ~~Cardinal Health, Inc. and~~ ~~Jason M. Hollar~~
~~10.2~~			~~Second~~ ~~Amendment to the Cardinal Health Deferred Compensation Plan, as amended and restated on January 1,~~ ~~2020, dated November 4, 2022~~
~~10.3~~			~~Offer Letter~~February 27, 2023 (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)~~
~~10.4~~			~~Confidentiality and Business Protection Agreement (incorporated by reference to Exhibit 10.2 to Cardinal Health's Current Report on Form 8-K filed on December 19, 2022,~~March 2, 2023, File No. 1-11373)
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 the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1			Statement Regarding Forward-Looking Information

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)

Cardinal Health Website

Cardinal Health uses its website as a channel of distribution for material 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 at ir.cardinalhealth.com. In addition, the website allows investors and other interested persons to sign up automatically to receive e-mail alerts when we post news releases, SEC filings and certain other information on its website.



44			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Form 10-Q Cross Reference Index

Form 10-Q Cross Reference Index


Item Number		Page

	Part I. Financial Information
Item 1	Financial Statements	26
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	2
Item 3	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4	Controls and Procedures	21

	Part II. Other Information
Item 1	Legal Proceedings	22
Item 1A	Risk Factors	23
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3	Defaults Upon Senior Securities	N/A
Item 4	Mine Safety Disclosures	N/A
Item 5	Other Information	N/A
Item 6	Exhibits	44
	Signatures	46


N/A			Not applicable



45			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q


Additional Information

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.


		Cardinal Health, Inc.

Date:	~~February 2,~~May 4, 2023	/s/ JASON M. HOLLAR
		Jason M. Hollar
		Chief Executive Officer

		/s/ ~~PATRICIA M. ENGLISH~~AARON E. ALT
		~~Patricia M. English~~Aaron E. Alt
		Chief Financial Officer



46			Cardinal Health \| Q2Q3 Fiscal 2023 Form 10-Q