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.

This Quarterly Report on Form 10-Q for the quarter ended MarchDecember 31, 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, 20222023 (our “2022“2023 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.

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.

We had GAAP operating earnings of $572$482 million during the three months ended MarchDecember 31, 2023 and a GAAP operating loss of $97$119 million during the three months ended MarchDecember 31, 2022, which reflects no goodwill impairment charge recognized during the three months ended March 31, 2023 and the $474$709 million pre-tax non-cash goodwill impairment charge related to the Medical segment recognized during the three months ended MarchDecember 31, 2022.

Non-GAAP operating earnings during the three and six months ended MarchDecember 31, 2023 increased 1120 percent to $606 million primarilyand 27 percent, respectively, due to an increase in Pharmaceutical segment profit largely driven by the performance of our generics program and an increased contribution from branded and specialty pharmaceutical products. This increase was partially offset by a decrease in Medical segment profit largely resulting from lower volumes and unfavorable product sales mix within products and distribution.

Our cash and equivalents balance was $4.0$4.6 billion at MarchDecember 31, 2023 compared to $4.7$4.0 billion at June 30, 2022.2023. During the ninesix months ended MarchDecember 31, 2023, net cash provided by operating activities was $2.0$1.7 billion, which includes the impact of our second annual payment of $372$378 million related to the agreement to settle the vast majority of the opioid lawsuits filed by states and local governmental entities (the "Settlement"National Opioid Settlement Agreement"). In addition, during the ninesix months ended MarchDecember 31, 2023, we deployed $1.5 billion$750 million for share repurchases, $571 million for debt repayments, $399$255 million for cash dividends and $264$206 million for capital expenditures.

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 partially mitigate these impacts, including implementing certain price increases and evolving our pricing and

commercial contracting processes to provide us with greater pricing flexibility. In addition, certain decreases in some product-related costs are beginning to behave been recognized as the higher-cost inventory is movingmoved through our supply chain. As a result, during the three months ended March 31, 2023, these inflationary impacts, net of our mitigation actions,chain 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, thesewas replaced by lower-cost inventory. These net inflationary impacts negatively affected Medical segment profit during fiscal 2023. The net inflationary impacts were less significant during the three and six months ended December 31, 2023 and had a favorable impact on Medical segment profit on a year-over-year basis.

We expect these net inflationary impacts to continue to affect Medical segment profit during the remainder of fiscal 2024, but to a significantly lesser extent than in fiscal 2023 and beyond, butprior periods, due to a lesser extent thanour mitigation actions, together with continued decreases in prior periods. Thesecertain product-related costs. However, these inflationary costs are difficult to predict and may be greater than we expect or continue longer than our current expectations. 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.

Medical segment profit was favorablyadversely impacted during the threefiscal 2023 in part due to lower volumes within products and nine months ended March 31, 2023distribution, which includes our Cardinal Health branded medical products. We expect Cardinal Health branded medical products sales growth in fiscal 2024 and on a year-over-year basis by a net positive contribution from PPE, primarily driven by lower costs.

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

The evaluation and implementation of any actions recommended by the Business Review Committee and the Board have impacted and may continue to impact our business, financial position and results of operations during the remainder of fiscal 20232024 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 tomay 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 revenue increased during the three and ninesix months ended MarchDecember 31, 2023 due to branded and specialty pharmaceutical sales growth, largely from existing customers, which increased revenue by $5.8 billion and $17.9$10.9 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.respectively.

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

Gross margin rate declined 21 basis points and 342 basis points during both the three and ninesix months ended MarchDecember 31, 2023, respectively, mainly due towith the impact of unfavorable changes in overall product mix mostly offset by the beneficial comparison to the prior-year net inflationary impacts in the Medical segment and the performance of our generics program in the Pharmaceutical segment. The changes in overall product mix were primarily driven by increased pharmaceutical distribution branded sales, which have a dilutive impact on our overall gross margin rate.

During the three and ninesix months ended MarchDecember 31, 2023, SG&A expenses increased primarily due to inflationary impacts, primarilyhigher costs to support sales growth, expenses related to increased transportationinvestment projects and labor costs, and higher operating expenses (which were partially offset by the beneficial impact of enterprise-wide cost-savings measures).

Pharmaceutical segment profit increased during the three and ninesix months ended MarchDecember 31, 2023 primarily due to the performance of our generics program and an increased contribution from branded pharmaceutical and specialty pharmaceutical products.products, which includes the favorable impact from COVID-19 vaccine distribution, partially offset by higher costs to support sales growth.

Medical segment profit decreasedincreased during the three and ninesix months ended MarchDecember 31, 2023 primarily due to the performance of products and distribution, largely driven by lower volumes and unfavorable product sales mix. Medical segment profit duringbeneficial comparison to the nine months ended March 31, 2023 was also unfavorably affected byprior-year net inflationary impacts.impacts, including the effects of mitigation actions.

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

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

Restructuring and employee severance costs during the three and ninesix months ended MarchDecember 31, 2023 were primarily related to certain projects resulting from reviews of our strategy, portfolio, capital-allocation framework and operations and the implementation of certain enterprise-wide cost-savings measures. During the three and six months ended December 31, 2022, costs 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.measures.

Amortization of acquisition-related intangible assets was $69$63 million and $78$71 million for the three months ended MarchDecember 31, 2023 and 2022, respectively, and $211$127 million and $235$142 million for the ninesix months ended MarchDecember 31, 2023 and 2022, respectively.

We recognized income of $46 million and $25 million during the three and six months ended December 31, 2022, 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 ninesix months ended MarchDecember 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.

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

During the ninesix months ended MarchDecember 31, 2023, we recognized cumulative pre-tax goodwill impairment charges of $863$581 million related to the Medical Unit. The net tax benefit related to these charges is $68$45 million for fiscal 2023.2024.

Unless an item is considered discrete because it is unusual or infrequent, the tax impact of the item is included in our estimated annual effective tax rate. When items are recognized through our estimated annual effective tax rate, we apply our estimated annual effective tax rate to the earnings/(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 ninesix months ended MarchDecember 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 2023.2024. Applying the higher tax rate to the pre-tax income for the ninesix months ended MarchDecember 31, 2023 resulted in recognizing an incremental interim tax expensebenefit of approximately $74$65 million which impacted the provision for income taxes in the condensed consolidated statements of earnings/(loss) during the three months ended MarchDecember 31, 2023 and prepaid expenses and other assets in the condensed consolidated balance sheet at MarchDecember 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 quarterfuture quarters of fiscal 2023.2024.

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 growthour operations and expansion; contractual obligations andexpected future cash requirements; tax payments; current and projected debt service requirements, upcoming debt maturities, dividends and share repurchases; and known opioid litigation settlement payments.needs as described below. If we decide to engage in one or more acquisitions in addition to the acquisition of Specialty Networks, depending on the size and timing of such transactions, we may need to access capital markets for additional financing.

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, 2022.2023. This discussion and analysis should be read in conjunction with the Critical Accounting Policies and Sensitive Accounting Estimates included in our 20222023 Form 10-K and our Form 10-Q for the quarters ended September 30, 2022 and December 31, 2022.2023.

Critical accounting policies are those accounting policies that (i) can have a significant impact on our financial condition and results of operations and (ii) require the use of complex and subjective estimates based upon past experience and management’s judgment. Other people applying reasonable judgment to the same facts and circumstances could develop different estimates. Because estimates are inherently uncertain, actual results may differ, including due to the risks discussed in "Risk Factors" and other risks discussed in our 20222023 Form 10-K and our other filings with the SEC since June 30, 2022.2023.

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.

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:

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.