CAH Annual Report FY 2020

2020
Annual Report
Dear fellow shareholders,
A year ago, I closed my letter

to you with a reflection on our
role in healthcare. Over the
past several months, we have
seen that now more than ever,
what we do matters — to our
customers, to the patients they
serve, and to our communities.
In my nearly 30 years as part of the
Cardinal Health family, I have experienced
significant transformation, both within our
company and within the healthcare industry.
We have expanded our products, services
and markets, evolved with technological and
regulatory changes, and adapted in the face of
external challenges. In each of these moments,
we have demonstrated agility and embraced
change to emerge as a stronger company with
an even more solidified role in healthcare. Now,
as we navigate the unprecedented challenges
of a global pandemic, we are leaning on that
legacy of adaptability and dedication.
In fiscal 2020, we delivered on our

commitments and continued to execute on
our long-term strategic priorities, all as we
adapted our operations to address the unique
challenges presented by COVID-19.
Our fiscal 2020 financial performance
Across the company, in fiscal 2020, we demonstrated positive In the Medical segment, our cost savings initiatives,
performance despite significant global challenges. We grew particularly within our global manufacturing and supply
non-GAAP operating earnings, exceeded our non-GAAP chain, drove significant benefits throughout the year. We
EPS guidance range, surpassed our cost savings target, and expect these workstreams to continue to deliver greater
strengthened our balance sheet. In the year, we invested $375 efficiencies and additional value into the future. Also, during
million back into the business, with a focus on enhancing our the year we continued to make investments that enhance
IT infrastructure and fueling strategic growth opportunities. our strong strategic positions in our Cardinal Health at-Home
We paid down $1.4 billion of debt, and we returned more and Medical services businesses. And, although the pace of
than $900 million to shareholders through dividends and our commercial initiatives slowed as we and our customers
share repurchases. shifted our focus to address the challenges presented by
COVID-19, we remain committed to the strategies behind
Pharmaceutical segment performance exceeded our these initiatives and to their future progress.
expectations for the year. Importantly, our generics
program experienced overall consistent market dynamics In fiscal 2020, we demonstrated our adaptability and ability
and returned to growth this year. Also, we saw positive to execute through unprecedented changes. As these
contributions from our Specialty business, and from dynamics continue into fiscal 2021, we will continue to
our Connected Care business, and we made additional build upon our operational momentum and deliver on our
investments in these areas for long-term growth. strategic growth plans.
FY20 Highlights FY20 Financial summary

Financial performance Portfolio and strategic
positioning GAAP Non-GAAP
• Grew non-GAAP operating
basis ($M) basis ($M)
earnings and exceeded non- • Divested noncontrolling
FY20 FY20
GAAP EPS guidance range equity interest in naviHealth
• Received positive • Continued focus in Operating $(4,098) $2,384

evolving growth areas with earnings/(loss)1 N.M. 1%
contributions from
investments and partnerships % change
our generics program
in Specialty, at-Home,
• Surpassed enterprise cost Revenue $152,922 N/A
and Medical services
savings target, with excellent % change 5%
savings contributions from COVID-19 response
Medical global manufacturing Diluted EPS1,2 $(12.61) $5.45
• Maintained operations across
% change N.M. 3%
and supply chain all global manufacturing and
distribution facilities as well
Capital deployment
as all our nuclear pharmacies 1
GAAP results include a pre-tax charge of $5.63 billion ($5.14 billion after tax)
• Returned over $900M (>250 locations)
in the first quarter of the fiscal year for the estimated liability associated with
lawsuits and claims brought against us by states and political subdivisions
to shareholders through relating to the distribution of prescription opioid pain medications
2
Attributable to Cardinal Health, Inc.
dividends and • Leveraged Red Oak
Please see “Explanation and Reconciliation of non-GAAP Financial Measures”
share repurchases Sourcing capabilities to in our Fiscal Year 2020 Form 10-K for GAAP to Non-GAAP reconciliations.
ensure minimal disruptions

• Improved balance sheet by to pharmaceutical supply
paying down $1.4B of
long-term debt
What we value
Integrity
we hold ourselves
to the highest
ethical standards
Inclusive
we embrace
differences to drive
Our response to COVID-19
the best outcomes
As the global pandemic continues to unfold, I continue to be
humbled by and grateful for the contributions of every one of our
employees, especially our frontline teams. Our greatest priority is
the health and safety of our employees — and their families. The
commitment of our teams enables us to fulfill our mission every day
Innovative
of delivering critical products and solutions to frontline healthcare
we develop new ways
workers around the world.
of thinking, operating
and serving customers To that end, in March, we quickly and seamlessly transitioned our
office employees to a remote work model, and throughout the
pandemic, we have continuously maintained operations in all of our
distribution facilities, nuclear pharmacies and global manufacturing
Accountable plants. We have teams across the enterprise deployed to modify
we bring passion, existing strategies or adapt our operations to support our
determination and customers through the pandemic.
grit to deliver on our For example, to address the unprecedented and sustained increases
commitments in demand for certain product categories that are creating supply
challenges and cost pressures for us and for our customers, we have
and will continue to expand our self-manufacturing capacity and
sourcing capabilities. We have added new manufacturing lines or
repurposed lines where possible, and we are also building a longer-
Mission driven term strategy for supply assurance in the future, all with the focus
we serve the greater on being a good partner for our customers so they can safely serve
goal of healthcare their patients.
How we’ll succeed

Grow and develop Prioritize Optimize Invest
our people our work our core for growth
Our strategic direction
In response to these rapidly shifting global dynamics, in fiscal 2021 and beyond, we are focused on strengthening our core
businesses and investing for growth.
Pharmaceutical segment Across the company, our initiatives to enhance our

We continue to enhance our infrastructure, deploying operations, processes and technologies are delivering
technology across the segment to streamline our operations, meaningful value. We are on track to deliver savings beyond
improve our processes and enhance our ecommerce our multi-year, $500 million target. This disciplined approach
platforms. We are also growing in key areas of the segment, will enable strong cash flow and working capital efficiency
such as Specialty and our Connected Care businesses, in fiscal 2021 and will position us for consistent, sustained
through strategic investments. These investments will growth in the future.
diversify our capabilities, bolster our value proposition and As I said at the beginning of this letter, what we do matters —
improve the customer experience. and none of it would be possible without our people. We
Medical segment are fully committed to fostering a best-in-class, respectful
and diverse work environment that inspires excellence,
First and foremost, we continue to prioritize our support for
innovation and collaboration. This takes perseverance,
our customers and their patients as our industry navigates
awareness, humility, and at times, some uncomfortable
the complexities of the pandemic. The unprecedented and
conversations. We’re leaning into that discomfort, as it is
sustained increases in demand for certain product categories
necessary to create real change. I am meeting regularly
are creating supply challenges and cost pressures for us and
with our Diversity and Inclusion (D&I) Steering Council of
for our customers. In response, we have and will continue
senior leaders throughout the company to discuss diversity
to expand our self-manufacturing capacity and sourcing
and inclusion barriers, opportunities and successes. We will
capabilities, while at the same time continuing to optimize
continue these dialogues and continue to take actions, like
our end-to-end global supply chain. Simultaneously, we
unconscious bias training, D&I all employee meetings, and
will continue investing in our at-Home and Medical services
other educational opportunities, with a goal of fostering an
businesses to further the long-term growth strategies in
environment where everyone is truly comfortable bringing
these areas.
100% of themselves to work every day.
Overall, although this year presented significant global and

industry challenges, we delivered on our commitments
and our team responded with the grit and dedication to
our mission that I’ve seen time and time again at Cardinal
Health. Together, we will continue to support our customers
and their patients and continue to invest for growth — so
we can perform our essential role in healthcare now and
into the future.
With regards,
Mike Kaufmann
CEO
Important Information Regarding Forward-Looking Statements: This Report includes forward-looking statements addressing expectations, prospects and other matters that are dependent upon
future events or developments. These forward-looking statements may be identified by words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “continue,” “likely,”
and similar expressions. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. For more information about
these risks and uncertainties, please review our Forms 10-K, 10-Q and 8-K and Exhibits to those Reports, which are available at ir.cardinalhealth.com. Except to the extent required by applicable law, we
undertake no obligation to update or revise any forward-looking statement.
Where
We aspire to be healthcare’s most trusted partner
by building upon our scale and heritage in distribution,
products, and solutions, while driving growth in evolving
we are going areas of healthcare through customer insights, data and

analytics, and focusing our resources on what matters most.
We aspire to be healthcare’s
most trusted partner
“ At Cardinal Health, our more than 48,000 employees recognize that our work truly
is ‘essential to care.’ We are focused each day on serving our customers so they
can fulfill their critical role with patients around the world.
— Ola Snow, Chief Human Resources Officer

”
by building upon our scale and heritage

in distribution, products, and solutions,
“ Over the last nearly 50 years, we’ve grown and expanded across the
continuum of care. Distribution has been and will continue to be a core
capability across both of our segments. With this supply chain focus
as our foundation, we have expanded and evolved our robust product
portfolio and host of accompanying solutions across both segments.
Now, more than ever, we will lean on that legacy to navigate
”
current challenges and perform our critical role in healthcare.
— Steve Mason, CEO, Medical Segment
while driving growth in

evolving areas of healthcare
“ Going forward, we’re focused on growth to create long-term value. This includes
organic growth opportunities and strategic investments to diversify our capabilities
and enhance the customer experience in areas including our Specialty,
Cardinal Health at-Home, Medical services, and Connected Care businesses.
” ”
— Michele Holcomb, Chief Strategy and Business Development Officer
through customer insights,
“ We are committed to understanding and supporting the ever-changing needs
of our customers. Teams across the company are focused on continuing to
enhance the customer experience through strengthening our e-commerce
platforms and implementing new technologies. These efforts will improve our
interactions with our customers and their patients and will drive efficiencies to
create significant value.
” — Victor Crawford, CEO, Pharmaceutical Segment
data and analytics,

“ Data is critical to everything we do as a company, and to our future growth. We
are making significant IT investments to build our data capabilities and using
innovative new technologies like artificial intelligence and predictive analytics
to monitor trends and develop new solutions. We’re also continuing to
develop our innovation center, Fuse, so we can be at the forefront of
evolving trends in the healthcare industry.
”
— Brian Rice, EVP, Chief Information Officer and Customer Support Services
and focusing our resources

on what matters most.
“ To enable growth across the enterprise, we are committed to thoughtful
capital allocation and cost management. Our priorities of investing in
both our business and our people, strengthening our balance sheet, and
returning cash to shareholders remain unchanged.
”
— Jason Hollar, Chief Financial Officer
Board of directors
Gregory B. Kenny Patricia A. Hemingway Hall
Chairman of the Board Retired President and Chief Executive Officer,
Retired President and Chief Executive Officer, Health Care Service Corp.
General Cable Corp. Committees: H, N
Committees: N, AH, S
Akhil Johri
Colleen F. Arnold1 Retired Executive Vice President and Chief Financial Officer,
Retired Senior Vice President, Sales and Distribution, United Technologies Corp.
International Business Machines Corp. Committees: A, S
Committees: A
Michael C. Kaufmann
Carrie S. Cox Chief Executive Officer, Cardinal Health, Inc.
Retired Executive Vice President and President,
Global Pharmaceuticals, Schering-Plough Corp. Nancy Killefer
and Retired Chairman and Chief Executive Officer, Retired Senior Partner,
Humacyte, Inc. Public Sector Practice, McKinsey & Company, Inc.
Committees: H, AH Committees: H, S
Calvin Darden J. Michael Losh

Retired Senior Vice President, U.S. Operations, Retired Executive Vice President and
United Parcel Service, Inc. Chief Financial Officer, General Motors Corp.
Committees: H, AH Committees: A
Bruce L. Downey Dean A. Scarborough

Retired Chairman and Chief Executive Officer, Retired Chairman and Chief Executive Officer,
Barr Pharmaceuticals, Inc. and Avery Dennison Corp.
Partner, NewSpring Health Capital II, L.P. Committees: A
Committees: N, AH
John H. Weiland
Sheri H. Edison Retired President and Chief Operating Officer,
Executive Vice President, General Counsel, Amcor plc C. R. Bard, Inc.
Committees: A, S
David C. Evans
Retired Chief Financial Officer, The Scotts Miracle-Gro
Company and Battelle Memorial Institute
Executive team
Victor L. Crawford Jessica L. Mayer
Chief Executive Officer, Pharmaceutical Segment Chief Legal and Compliance Officer
Michele A.M. Holcomb Brian S. Rice

Chief Strategy and Business Development Officer Executive Vice President, Chief Information Officer
and Customer Support Services
Jason M. Hollar
Chief Financial Officer Ola M. Snow
Chief Human Resources Officer
Michael C. Kaufmann
Chief Executive Officer Sarah D. Wills
Executive Vice President, Chief Corporate Affairs Officer
Stephen M. Mason
Chief Executive Officer, Medical Segment
Committee codes The Ad Hoc Committee of independent directors assists the Board in overseeing
A: Audit the company’s response to the opioid crisis.
AH: Ad Hoc
The Surgical Gown Recall Oversight Committee of independent directors assists
H: Human Resources and Compensation
the Board in overseeing the company’s surgical gown recall.
N: Nominating and Governance
S: Surgical Gown Recall Oversight All Board members, with the exception of CEO Mike Kaufmann, are independent.
Colleen Arnold will not stand for re-election at the 2020 Annual Meeting of Shareholders.
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 1-11373
Cardinal Health, Inc.

(Exact name of registrant as specified in its charter)
Ohio 31-0958666
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7000 Cardinal Place , Dublin , Ohio 43017
(Address of principal executive offices) (Zip Code)
(614) 757-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common shares (without par value) CAH New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
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 No
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 No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer

Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value of voting stock held by non-affiliates on December 31, 2019, was the following: $14,729,138,108.
The number of the registrant’s common shares, without par value, outstanding as of July 31, 2020, was the following: 292,444,079.
Documents Incorporated by Reference:

Portions of the registrant’s Definitive Proxy Statement to be filed for its 2020 Annual Meeting of Shareholders are incorporated by reference into the sections of this Form 10-K
addressing the requirements of Part III of Form 10-K.
Cardinal Health
Fiscal 2020 Form 10-K
Table of Contents
Page
Introduction 2
Management's Discussion and Analysis of Financial Condition and Results of Operations 3
Explanation and Reconciliation of Non-GAAP Financial Measures 20
Selected Financial Data 23
Quantitative and Qualitative Disclosures about Market Risk 24
Business 26
Risk Factors 33
Properties 40
Legal Proceedings 40
Market for Registrant's Common Equity 41
Reports 43
Financial Statements and Supplementary Data 48
Directors, Executive Officers, and Corporate Governance 79
Exhibits 81
Form 10-K Cross Reference Index 85
Signatures 86
1 Cardinal Health | Fiscal 2020 Form 10-K

Introduction
Introduction
References to Cardinal Health and Fiscal Years
As used in this report, "we," "our," "us," "Cardinal Health" and similar pronouns refer to Cardinal Health, Inc. and its majority-owned subsidiaries,
unless the context requires otherwise. Our fiscal year ends on June 30. References to fiscal 2021, 2020, 2019, 2018, 2017 and 2016 are to
the fiscal years ended June 30, 2021, 2020, 2019, 2018, 2017 and 2016, respectively. Except as otherwise specified, information in this report
is provided as of June 30, 2020.
Non-GAAP Financial Measures
In this report, including in the "Fiscal 2020 Overview" section of Management's Discussion and Analysis of Financial Condition and Results
of Operations ("MD&A"), we use financial measures that are derived from consolidated financial data but are not presented in our financial
statements that are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). These measures are considered
“non-GAAP financial measures” under the Securities and Exchange Commission (“SEC”) rules. The reasons we use these non-GAAP financial
measures and the reconciliations to their most directly comparable GAAP financial measures are included in the “Explanation and Reconciliation
of Non-GAAP Financial Measures” section following MD&A in this report.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Our MD&A within this Form 10-K generally discusses fiscal 2020 and fiscal 2019 items and year-to-year comparisons between fiscal 2020
and fiscal 2019. Fiscal 2018 items and discussions of year-to-year comparisons between fiscal 2019 and fiscal 2018 that are not included
in this Form 10-K can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual
Report on Form 10-K for the fiscal year ended June 30, 2019.
Important Information Regarding Forward-Looking Statements
This report (including information incorporated by reference) includes forward-looking statements addressing expectations, prospects,
estimates and other matters that are dependent upon future events or developments. Many forward-looking statements appear in MD&A and
Risk Factors, but there are others throughout this report, which may be identified by words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “will,” “should,” “could,” “would,” “project,” “continue,” “likely,” and similar expressions, and include statements reflecting future results
or guidance, statements of outlook and expense accruals. These matters are subject to risks and uncertainties that could cause actual results
to differ materially from those projected, anticipated or implied. The most significant of these risks and uncertainties are described in “Risk
Factors” in this report and in Exhibit 99.1 to the Form 10-K included in this report. Forward-looking statements in this report speak only as of
the date of this document. Except to the extent required by applicable law, we undertake no obligation to update or revise any forward-looking
statement.
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are
available free of charge on our website (www.cardinalhealth.com), under the “Investor Relations — Financial Reporting — SEC Filings” caption,
as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. The SEC also maintains a website
(www.sec.gov) where you can search for annual, quarterly and current reports, proxy and information statements, and other information
regarding us and other public companies.
Cardinal Health | Fiscal 2020 Form 10-K 2

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

and Results of Operations
About Cardinal Health
Cardinal Health, Inc. is an Ohio corporation formed in 1979 and 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.
Pharmaceutical Segment Medical Segment
Our Pharmaceutical segment distributes branded and generic Our Medical segment manufactures, sources and distributes
pharmaceutical, specialty pharmaceutical and over-the-counter Cardinal Health branded medical, surgical and laboratory products,
healthcare and consumer products in the United States. This which are sold in the United States, Canada, Europe, Asia and other
segment also provides services to pharmaceutical manufacturers markets. In addition to distributing Cardinal Health branded products,
and healthcare providers for specialty pharmaceutical products; this segment also distributes a broad range of medical, surgical and
operates nuclear pharmacies and radiopharmaceutical laboratory products known as national brand products and provides
manufacturing facilities; provides pharmacy management services supply chain services and solutions to hospitals, ambulatory surgery
to hospitals, as well as medication therapy management and patient centers, clinical laboratories and other healthcare providers in the
outcomes services to hospitals, other healthcare providers and United States and Canada. This segment also distributes medical
payers; and repackages generic pharmaceuticals and over-the- products to patients' homes in the United States through our Cardinal
counter healthcare products. Health at-Home Solutions division.

Consolidated Results
Fiscal 2020 Overview
Revenue
Revenue for fiscal 2020 was $152.9 billion, a 5 percent increase from the prior year, primarily due to sales growth from pharmaceutical
distribution and specialty solutions customers.
GAAP and Non-GAAP Operating Earnings
(in millions) 2020 2019 Change
GAAP operating earnings/(loss) $ (4,098) $ 2,060 N.M.
Surgical gown recall costs 85 —
State opioid assessment related to prior fiscal years 3 —
Restructuring and employee severance 122 125
Amortization and other acquisition-related costs 524 621
Impairments and (gain)/loss on disposal of assets 7 (488)
Litigation (recoveries)/charges, net 5,741 36
Non-GAAP operating earnings $ 2,384 $ 2,353 1%
The sum of the components and certain computations may reflect rounding adjustments.
We had a GAAP operating loss of $4.1 billion during fiscal 2020 primarily due to a $5.63 billion pre-tax charge we recognized for the estimated
liability associated with lawsuits and claims brought against us by states and political subdivisions relating to the distribution of prescription
opioid pain medications as described in the Significant Developments in Fiscal 2020 and Trends section in this MD&A and Note 7 of the "Notes
to Consolidated Financial Statements." GAAP operating earnings during fiscal 2019 were favorably impacted by a $508 million pre-tax gain
from the divestiture of a majority interest in our naviHealth Holdings, LLC ("naviHealth") business.
The increase in non-GAAP operating earnings was primarily due to the beneficial impact of enterprise-wide cost-savings measures, a higher
contribution from branded pharmaceutical sales mix, the favorable year-over-year impact of fiscal 2019 charges related to an exclusive
distribution agreement with a Medical segment supplier and growth from specialty solutions, partially offset by the adverse impact of
Pharmaceutical segment customer contract renewals and the adverse impact of the pandemic associated with the novel strain of coronavirus
(“COVID-19”). See the Significant Developments in Fiscal 2020 and Trends section of this MD&A.
GAAP and Non-GAAP Diluted EPS
($ per share) 2020 (2) (3) 2019 (2) Change
GAAP diluted EPS (1) $ (12.61) $ 4.53 N.M.
Surgical gown recall costs 0.22 —
State opioid assessment related to prior fiscal years 0.01 —
Restructuring and employee severance 0.31 0.31
Amortization and other acquisition-related costs 1.34 1.57
Impairments and (gain)/loss on disposal of assets 0.02 (1.25)
Litigation (recoveries)/charges, net 17.84 0.09
Loss on early extinguishment of debt 0.04 —
Gain on sale of equity interest in naviHealth (1.68) —
Transitional tax benefit, net (0.01) 0.03
Non-GAAP diluted EPS (1) $ 5.45 $ 5.28 3%
(1) Diluted earnings/(loss) per share attributable to Cardinal Health, Inc. ("diluted EPS" or "diluted loss per share")
(2) The reconciling items are presented within this table net of tax. See quantification of tax effect of each reconciling item in our GAAP to Non-GAAP Reconciliations in the
"Explanation and Reconciliation of Non-GAAP Financial Measures."
(3) For fiscal 2020, GAAP diluted loss per share attributable to Cardinal Health, Inc. and the EPS impact from the GAAP to non-GAAP per share reconciling items are calculated
using a weighted average of 293 million common shares, which excludes potentially dilutive securities from the denominator due to their anti-dilutive effects resulting from
our GAAP net loss for the period. Fiscal 2020 non-GAAP diluted EPS is calculated using a weighted average of 295 million common shares, which includes potentially
dilutive shares.

We had a $12.61 GAAP diluted loss per share attributable to Cardinal Health, Inc. ("GAAP diluted EPS") during fiscal 2020 due to the charge
we recognized for the estimated liability associated with lawsuits and claims brought against us by states and political subdivisions relating
to the distribution of prescription opioid pain medications. The charge had a $(17.54) per share after tax impact on GAAP diluted EPS. GAAP
diluted EPS during fiscal 2020 was favorably impacted by a $1.68 per share gain from the sale of the remainder of our equity interest in
naviHealth described further in Significant Developments in Fiscal 2020 and Trends section in this MD&A and Note 2 of the "Notes to
Consolidated Financial Statements". GAAP diluted EPS during fiscal 2019 included a $1.26 per share gain from the divestiture of our majority
interest in naviHealth.
Fiscal 2020 non-GAAP diluted EPS increased 3% to $5.45. This increase was primarily due to the factors discussed above impacting non-
GAAP operating earnings, as well as a lower share count as a result of share repurchases and lower interest expense due to less debt
outstanding and lower interest rates. The year-over-year comparison was unfavorably impacted by a higher effective tax rate due to the benefit
in the prior-year from discrete tax items, largely related to international legal entity changes.
Cash and Equivalents

Our cash and equivalents balance was $2.8 billion at June 30, 2020 compared to $2.5 billion at June 30, 2019. The increase in cash during
fiscal 2020 was due to net cash provided by operating activities of $2.0 billion and $886 million of net cash proceeds from the sale of investments,
offset by cash deployed of $1.4 billion for debt repayments, $569 million for dividends and $350 million for share repurchases.

Significant Developments in Fiscal 2020 and Trends

COVID-19
The COVID-19 pandemic continues to severely impact the U.S. and global economies. Our businesses have been impacted in a variety of
ways beginning in the third quarter of fiscal 2020, as discussed in the following paragraphs and under “Results of Operations.” We estimate
that the COVID-19 pandemic had a net negative impact to operating earnings/(loss) of approximately $100 million in fiscal 2020.
Within our manufacturing and distribution facilities, we have implemented sustained protocols designed to protect the safety of our employees
and maintain continuity of our operations, and have generally continued to operate our distribution and manufacturing facilities in the ordinary
course of business. Additionally, in line with various governmental recommendations to reduce large gatherings and practice social distancing,
we have enabled most office-based employees to work remotely. These measures have created additional burdens on our infrastructure and
information technology systems. Furthermore, if a significant number of our employees are unable to perform their duties for a period of time,
we may experience difficulties in operating one or more of our facilities which could adversely impact our financial results.
Since the third quarter of fiscal 2020, our Medical segment has seen dramatically increased demand for certain personal protective equipment
(“PPE”), such as masks, gowns and gloves. We manufacture, source and distribute some PPE products and distribute PPE manufactured
by others. This increased demand resulted in an increase in sales volume for certain products in fiscal 2020. The cost to manufacture and
source certain PPE products has also significantly increased, which had a slight negative impact on our margin for these products in fiscal
2020 and is expected to have a larger negative impact in fiscal 2021. We continue to seek alternate and additional sources for these products
and otherwise mitigate cost increases. We also are increasing certain PPE product prices to reflect some of our higher costs and are seeking
to modify affected customer contracts. If these efforts are unsuccessful, our margins may be adversely impacted even more significantly. In
addition, we could experience decreased sales and customer disputes.
Federal, state and local governmental policies and orders and certain private initiatives designed to reduce the transmission of COVID-19
also resulted in, among other things, the cancellation or deferral of many elective medical procedures and some of our customers closing or
severely curtailing their operations. As a result, our Medical segment has experienced decreased sales volume (apart from PPE products
described above), which had a negative impact on Medical segment profit in fiscal 2020 and which we currently assume will have a negative
impact in fiscal 2021. The decrease in elective procedures and physician office visits has also resulted in a significant decrease in sales by
our Nuclear and Precision Health Solutions division in our Pharmaceutical segment in fiscal 2020. Fluctuating or decreasing elective procedure
volume may have a greater or lesser adverse impact on the sales of these products and services than we anticipate.
Our Pharmaceutical Distribution and Specialty Solutions businesses experienced a temporary increase in sales volume during the third quarter
of fiscal 2020, which we believe to be related to accelerated purchasing by some customers due to the COVID-19 pandemic and which was
largely offset by a decrease in sales volume in the fourth quarter of fiscal 2020. We assume fiscal 2021 Pharmaceutical segment revenue will
be negatively impacted by COVID-19, and we are uncertain when sales volume will return to pre-COVID-19 levels.
Political, legal or regulatory actions taken in response to the COVID-19 pandemic in certain jurisdictions where we manufacture, source or
distribute products have created supply disruptions within both our Medical and, to a lesser extent, our Pharmaceutical segments and are
likely to cause additional supply disruptions or shortages in the future. We cannot currently predict the frequency, duration or scope of these
governmental actions and supply disruptions. For example, several countries have increased or instituted new restrictions on the export of
medical or pharmaceutical products that we distribute or use in our businesses, including key components or raw materials. Additionally,
governmental authorities in many countries, including the U.S., are considering enacting legislative or regulatory changes to address the
impact of the pandemic, which may restrict or require changes in our operations, increase our costs, or otherwise adversely affect our operations.
In March 2020, the U.S enacted the Coronavirus Aid, Relief and Economic Security Act, which provided a variety of benefits for businesses
as a result of the COVID-19 pandemic. During fiscal 2020, we received a cash flow benefit related to the deferral of payroll and income tax
payments and a small tax benefit from the employee retention credit under this Act.
We currently anticipate that the COVID-19 pandemic will have a further negative impact on fiscal 2021 consolidated operating earnings and
Medical segment profit. However, we cannot estimate the length or severity of the COVID-19 pandemic or of the related U.S. or global economic
consequences on our business and operations, including whether and when historic economic and operating conditions will resume or the
extent to which the disruption may impact our business, financial position, results of operations or cash flow, and its impact maybe greater or
less than we anticipate.

Opioid Lawsuits
In October 2019, we agreed in principle to a global settlement framework with a leadership group of state attorneys general that is designed
to resolve all pending and future opioid lawsuits and claims by states and political subdivisions, but not private plaintiffs (the "Settlement
Framework"). This Settlement Framework is subject to contingencies and uncertainties as to final terms, but is the basis for our negotiation
of definitive terms and documentation. The Settlement Framework includes (1) a cash component, pursuant to which we would pay up to
$5.56 billion over eighteen years, (2) development and participation in a program for free or rebated distribution of opioid abuse treatment
medications for a period of ten years, and (3) to-be specified industry-wide changes to distributor controlled substance anti-diversion programs.
We also agreed, with two other national distributors, to a $215 million settlement with two plaintiff counties. Our portion of that settlement was
$66 million, which was paid in January 2020.
In connection with these matters, we recorded a total pre-tax charge of $5.63 billion ($5.14 billion after tax) during fiscal year 2020 in litigation
(recoveries)/charges, net, in the consolidated statement of earnings/(loss) for the cash component. We accrue for contingencies when it is
probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because loss contingencies are inherently
unpredictable and unfavorable developments or resolutions can occur, the assessment is highly subjective and requires judgments about
future events. Moreover, definitive terms for a settlement pursuant to the Settlement Framework continue to be negotiated, and there is no
assurance that the necessary parties will agree to a definitive settlement agreement or that the contingencies to any agreement will be satisfied.
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. See Note 7 of the "Notes to Consolidated Financial Statements" for additional information.
Also in connection with these matters, we recorded a tax benefit of $488 million, which is net of unrecognized tax benefits of $469 million,
during fiscal 2020, reflecting our current assessment of the estimated future deductibility of the amount that may be paid under the $5.63
billion accrual taken in connection with the opioid litigation. Tax benefits from uncertain tax positions are recognized when it is more likely than
not that the position will be sustained upon examination of the technical merits of the position, including resolutions of any related appeals or
litigation. The amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon
settlement. For tax benefits that do not qualify for recognition, we recognize a liability for unrecognized tax benefits. Our assumptions and
estimates around this benefit and uncertain tax position require significant judgment since the definitive settlement terms and documentation,
including provisions related to deductibility, under the Settlement Framework have not been negotiated and the U.S. tax law governing
deductibility was changed by the U.S. Tax Cuts and Jobs Act (“Tax Act”). We have made reasonable estimates and recorded amounts based
on management's judgment and our current understanding of the Tax Act. Further, it is possible that the tax authorities could challenge our
interpretation of the Tax Act or the estimates and assumptions used to assess the future deductibility of these benefits. The actual amount of
tax benefit related to uncertain tax positions may differ materially from these estimates. See Note 8 of the “Notes to the Consolidated Financial
Statements” for additional information.
Gain on Sale of Equity Interest in naviHealth

As described further in Note 2 of the "Notes to Consolidated Financial Statements," in May 2020 we sold the remainder of our equity interest
in a partnership that owned naviHealth. We recognized a pre-tax gain of $579 million ($493 million after tax) from this disposal in gain on sale
of equity interest in naviHealth in our consolidated statements of earnings/(loss).
Other Trends
In addition to the trends and uncertainties described above under the caption Significant Developments in Fiscal 2020 and Trends, the
performance of our Pharmaceutical segment generics program, which includes generic pharmaceutical customer pricing changes and Red
Oak Sourcing, adversely impacted Pharmaceutical segment profit in fiscal 2019 and fiscal 2018; however, in fiscal 2020 our generics program
had a slightly favorable impact on Pharmaceutical segment profit. As is generally the case, the frequency, timing, magnitude and profit impact
of generic pharmaceutical customer pricing changes, customer contract renewals, and branded and generic pharmaceutical manufacturer
pricing changes remain uncertain and their impact on Pharmaceutical segment profit and consolidated operating earnings in fiscal 2021 could
be more or less than we expect.

Results of Operations
Revenue
Revenue
Pharmaceutical $ 137,495 $ 129,917 6%
Medical 15,444 15,633 (1)%
Total segment revenue 152,939 145,550 5%
Corporate (17) (16) N.M.
Total revenue $ 152,922 $ 145,534 5%
Fiscal 2020 Compared to Fiscal 2019
Pharmaceutical Segment
Fiscal 2020 Pharmaceutical segment revenue grew primarily due to sales growth from pharmaceutical distribution and specialty solutions
customers, which together increased revenue by $7.6 billion.
Medical Segment
Fiscal 2020 Medical segment revenue decreased due to the adverse impact of the COVID-19 pandemic, partially offset by sales growth from
Cardinal Health at-Home Solutions.
Cost of Products Sold

Cost of products sold for fiscal 2020 increased $7.4 billion (5 percent) due to the factors affecting the changes in revenue and gross margin.

Gross Margin
Consolidated Gross
Margin
Gross margin $ 6,868 $ 6,834 —%
Fiscal 2020 consolidated gross margin is essentially flat with growth from pharmaceutical specialty solutions and higher contribution from
branded pharmaceutical sales, mostly offset by the adverse impact of Pharmaceutical segment customer contract renewals. Gross margin
comparison to the prior year benefitted from the fiscal 2019 charges related to an exclusive distribution agreement with a Medical segment
supplier.
Gross margin rate declined during fiscal 2020 mainly due to the adverse impact of pharmaceutical customer contract renewals and changes
in pharmaceutical distribution product mix.
Distribution, Selling, General and Administrative ("SG&A") Expenses
SG&A Expenses
SG&A expenses $ 4,572 $ 4,480 2%
Fiscal 2020 SG&A expenses increased due to higher costs to support sales growth and a $37 million charge in connection with a voluntary
recall for Association for the Advancement of Medical Instrumentation ("AAMI") Level 3 surgical gowns and a voluntary recall and field actions
for surgical procedure packs containing affected gowns (together, the "Recalls"), as described further within Note 7 of the "Notes to Consolidated
Financial Statements".

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

Operating Earnings
Pharmaceutical $ 1,753 $ 1,834 (4)%
Medical 663 576 15 %
Total segment profit 2,416 2,410 —%
Corporate (6,514) (350) N.M.
Total consolidated operating earnings $ (4,098) $ 2,060 N.M.
Pharmaceutical Segment Profit

Fiscal 2020 Pharmaceutical segment profit decreased largely due to the adverse impact of customer contract renewals, partially offset by higher
contribution from our branded pharmaceutical sales mix and growth from specialty solutions.
Pharmaceutical segment financial results do not include the $5.63 billion charge associated with the opioid litigation. See Significant
Developments in Fiscal 2020 and Trends section in this MD&A and Note 7 of the "Notes to Consolidated Financial Statements" for additional
information.
Medical Segment Profit
Fiscal 2020 Medical segment profit increased largely due to benefits from cost-savings measures and the favorable year-over-year impact of
the fiscal 2019 charges related to an exclusive distribution agreement with a Medical segment supplier, partially offset by decreased sales
resulting from the COVID-19 pandemic.
Medical segment financial results do not include the $85 million charge incurred during fiscal 2020 in connection with the Recalls, as described
further within Note 7 of the "Notes to Consolidated Financial Statements".
Corporate
The changes in Corporate during fiscal 2020 are due to the factors discussed in the Other Components of Consolidated Operating Earnings/
(Loss) section that follows.

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:
(in millions) 2020 2019

Restructuring and employee severance $ 122 $ 125
Amortization and other acquisition-related costs 524 621
Impairments and (gain)/loss on disposal of assets, net 7 (488)
Litigation (recoveries)/charges, net 5,741 36
Restructuring and Employee Severance

In fiscal 2020 and 2019, restructuring costs are primarily related to implementation of certain enterprise-wide cost-savings measures.
Amortization and Other Acquisition-Related Costs
Amortization of acquisition-related intangible assets was $512 million and $531 million for fiscal 2020 and 2019, respectively.
Transaction and integration costs associated with the acquisition of the Patient Recovery Business were $7 million and $75 million during fiscal
2020 and 2019, respectively.
Impairments and (Gain)/Loss on Disposal of Assets, Net
During fiscal 2019, we recognized a pre-tax gain of $508 million related to the divestiture of our majority interest in naviHealth. See also “Gain
on Sale of Equity Interest in naviHealth” below with respect to the sale of the remainder of our equity interest in naviHealth in fiscal 2020.
Litigation (Recoveries)/Charges, Net
During fiscal 2020, we recognized a pre-tax charge of $5.63 billion ($5.14 billion after tax) associated with the opioid litigation. See Significant
Developments in Fiscal 2020 and Trends section in this MD&A and Note 7 of the "Notes to Consolidated Financial Statements" for additional
information.
During fiscal 2020 and 2019, we recognized $103 million and $117 million, respectively, of estimated losses and legal defense costs associated
with inferior vena cava ("IVC") filter product liability claims.
During fiscal 2020 and 2019, we recognized income of $16 million and $94 million, respectively, for recoveries in class action antitrust lawsuits
in which we were a class member.
Other Components of Earnings/(Loss) Before Income Taxes

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

Other (income)/expense, net $ (1) $ 15 N.M.
Interest expense, net 238 294 (19)%
Loss on early extinguishment of debt 16 — N.M.
Gain on sale of equity interest in naviHealth (579) — N.M.
Interest Expense, Net

Fiscal 2020 interest expense decreased from fiscal 2019 primarily due to lower debt outstanding and lower interest rates.
Loss On Early Extinguishment Of Debt
During fiscal 2020, we recognized a $16 million loss in connection with the redemption and early debt repurchases as described further in Note
6 of the "Notes to Consolidated Financial Statements."
Gain on Sale of Equity Interest in naviHealth
During fiscal 2020, we recognized a pre-tax gain of $579 million from the sale of our equity interest in a partnership that owned naviHealth, as
described further in the Significant Developments in Fiscal 2020 and Trends section of this MD&A and Note 2 of the "Notes to Consolidated
Financial Statements." See also “Impairments and (Gain)/Loss on Disposal of Assets, Net” above with respect to the fiscal 2019 sale of our
majority interest in naviHealth.

Provision for Income Taxes

Generally, fluctuations in the effective tax rate are due to changes in the distribution of income among taxing jurisdictions with differing income
tax rates and other reconciling items.
A reconciliation of the provision based on the federal statutory income tax rate to our effective income tax rate from continuing operations is
as follows (see Note 8 of the "Notes to Consolidated Financial Statements" for additional information):
2020 (1) 2019 (2)

Provision at Federal statutory rate 21.0% 21.0%
State and local income taxes, net of federal benefit 2.5 0.9
Tax effect of foreign operations — (0.7)
Nondeductible/nontaxable items (0.1) 2.5
Tax Act 0.1 (0.8)
Change in valuation allowances 1.5 4.5
Foreign tax credits 0.5 (1.0)
Legal entity reorganization — (3.6)
Opioid litigation (23.2) —
Other (0.2) (0.7)
Effective income tax rate 2.1% 22.1%
(1) The effective income tax rate for fiscal 2020 represents an income tax benefit tax rate.
(2) The effective income tax rate for fiscal 2019 represents an income tax expense tax rate.
Fiscal 2020
The fiscal 2020 effective income tax rate was impacted by the Settlement Framework, as described further in the Significant Developments in
Fiscal 2020 and Trends section in this MD&A.
Ongoing Audits
We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. With few exceptions,
we are subject to audit by taxing authorities for fiscal years 2008 through the current fiscal year. Tax laws are complex and subject to varying
interpretations. Tax authorities have challenged some of our tax positions, including U.S. Internal Revenue Service ("IRS") challenges to our
international transfer pricing for the periods from 2008 to 2014, and it is possible that they will challenge others. These challenges may adversely
affect our effective tax rate or tax payments.

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; tax payments; and current and projected debt service requirements, early
extinguishment of debt, dividends and share repurchases as well as potential opioid litigation settlement payments associated with the
Settlement Framework. 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. To-date, the COVID-19 pandemic has not resulted in material changes to our liquidity
and capital resources and has not impacted our ability to comply with financial commitments.
Cash and Equivalents

Our cash and equivalents balance was $2.8 billion at June 30, 2020 payments in the regular course of business, as well as fluctuating
compared to $2.5 billion at June 30, 2019. The increase in cash working capital needs driven by customer and product mix.
during fiscal 2020 was due to net cash provided by operating activities The cash and equivalents balance at June 30, 2020 included $476
of $2.0 billion, which reflects increases to working capital associated million of cash and equivalents held by subsidiaries outside of the
with the timing of payments to vendors, and $886 million of net cash United States.
proceeds from the sale of investments, substantially all of which was
In June 2020, we returned $140 million of cash held by foreign
related to the sale of our equity interest in naviHealth, offset by cash
subsidiaries to the U.S.
deployed of $1.4 billion for debt repayments, $569 million for
dividends and $350 million for share repurchases. At June 30, 2020, As of June 30, 2020, foreign earnings of approximately $800 million
our cash and equivalents were held in cash depository accounts with are considered indefinitely reinvested for working capital and other
major banks or invested in high quality, short-term liquid investments. offshore investment needs. The computation of tax required if those
earnings are repatriated is not practicable. For amounts not
During fiscal 2019, our cash and equivalents increased by $700
considered indefinitely reinvested, we have recorded an immaterial
million due to $2.7 billion of net cash provided by operating activities
amount of income tax expense in our financial statements in fiscal
and $737 million of net cash proceeds from the sale of our majority
2020.
interest in naviHealth, offset by $1.1 billion paid for debt repayments,
$600 million paid for share repurchases, $577 million paid in
dividends and $328 million paid for capital expenditures.
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
Other Financing Arrangements and Financial Instruments

Credit Facilities and Commercial Paper Long-Term Obligations
In addition to cash and equivalents and operating cash flow, other At June 30, 2020, we had total long-term obligations, including the
sources of liquidity at June 30, 2020 include a $2.0 billion commercial current portion and other short-term borrowings of $6.8 billion.
paper program, backed by a $2.0 billion revolving credit facility. We In June 2020, we redeemed $500 million aggregate principle amount
also have a $1.0 billion committed receivables sales facility. At of 4.625% Notes due December 2020 at a redemption price equal
June 30, 2020, we had no amounts outstanding under our to 100% of the principal amount and accrued but unpaid interest,
commercial paper program, revolving credit facility or our committed plus the make-whole premium applicable to the notes. In connection
receivables sales facility. During fiscal 2020, under our commercial with the redemption, we recorded a $7 million loss on early
paper program and our committed receivables program, we had extinguishment of debt.
maximum combined total daily amounts outstanding of $1.7
In November 2019, we repaid the full principal of the 2.4% Notes due
billion and an average combined daily amount outstanding of $195
2019 at maturity for $450 million.
million.
During fiscal 2020, we also early repurchased $247 million of
Our revolving credit and committed receivables sales facilities require
the 2.616% Notes due 2022, $11 million of the 3.2% Notes due
us to maintain, as of the end of every fiscal quarter through December
2022, $20 million of the Floating Rate Notes due 2022, $104
2020, a consolidated net leverage ratio of no more than 4.00-to-1.
million of the 3.41% Notes due 2027, $6 million of the 4.6% Notes
The maximum permitted ratio will reduce to 3.75-to-1 in March 2021
due 2043, $5 million of the 4.9% Notes due 2045, and $35 million of
and as of the end of every quarter thereafter. As of June 30, 2020,
the 4.368% Notes due 2047. In connection with these early debt
we were in compliance with this financial covenant.

MD&A Liquidity and Capital Resources
repurchases, we recognized a $9 million loss on early We also use interest rate swaps to protect the value of our debt and
extinguishment of debt. use foreign currency forward contracts to protect the value of our
In fiscal 2019, we repaid $1.0 billion of 1.948% notes at maturity and existing and forecasted foreign currency assets and liabilities. See
repurchased a total of $100 million of notes due in 2022 and 2027. the "Quantitative and Qualitative Disclosures About Market Risk"
The loss on early extinguishment of debt from the fiscal 2019 early section as well as Note 1 and Note 10 of the “Notes to Consolidated
repurchases was immaterial. Financial Statements” for information regarding the use of financial
instruments and derivatives as well as foreign currency, interest rate
The redemption and repurchases were paid for with available cash
and commodity exposures.
and other short-term borrowings.
Risk Management
We use interest rate swaps, foreign currency contracts and
commodity contracts to manage our exposure to cash flow variability.
Capital Deployment
Opioid Settlement Framework Dividends
In October 2019, we agreed in principle to a Settlement Framework During fiscal 2020, we paid quarterly dividends totaling $1.92 per
which includes a cash component, pursuant to which we would pay share, an increase of 1 percent from fiscal 2019.
up to $5.56 billion over eighteen years. If a definitive agreement is On May 11, 2020, our Board of Directors approved a quarterly
reached, and subject to participation by states and political dividend of $0.4859 per share, or $1.94 per share on an annualized
subdivisions, we expect payment amounts under the Settlement basis, which was paid on July 15, 2020 to shareholders of record on
Framework to be spread through the 18-year period. We cannot July 1, 2020.
currently predict when those payments might begin, and it is possible On August 5, 2020, our Board of Directors approved a quarterly
that they may ultimately be made over a different time period, or not dividend of $0.4859 per share, payable on October 15, 2020 to
at all. See Significant Developments in Fiscal 2020 and Trends shareholders of record on October 1, 2020.
section in this MD&A for additional information.
Share Repurchases
Capital Expenditures During fiscal 2020 and 2019, we repurchased $350 million and $600
Capital expenditures during fiscal 2020 and 2019 were $375 million million, respectively, of our common shares. We funded the
and $328 million, respectively. repurchases with available cash and short-term borrowing. See Note
We expect capital expenditures in fiscal 2021 to be between $400 11 of the "Notes to Consolidated Financial Statements" for additional
million and $450 million and to be primarily for information technology information. At June 30, 2020, we had $943 million authorized for
and infrastructure projects. share repurchases remaining under all programs.

MD&A Other
Contractual Obligations
At June 30, 2020, our contractual obligations, including estimated minimum quantities to be purchased; fixed, minimum or variable price
provisions; and approximate timing of the transaction. The purchase obligation
payments due by period, were as follows: amounts disclosed above represent estimates of the minimum for which we are
obligated and the time period in which cash outflows will occur. Purchase orders
2022 to 2024 to There- and authorizations to purchase that involve no firm commitment from either
(in millions) 2021 2023 2025 after Total party are excluded from the above table. In addition, contracts that can be
unilaterally canceled with no termination fee or with proper notice are excluded
Long-term debt and short- from our total purchase obligations except for the amount of the termination fee
term borrowings (1) $ — $ 1,967 $ 1,222 $ 3,552 $ 6,741 or the minimum amount of goods that must be purchased during the requisite
notice period. Purchase obligations and other payments also includes quarterly
Interest on long-term debt 226 411 336 1,671 2,644 payments of $45.6 million that we are required to pay CVS Health Corporation
Finance lease obligations ("CVS") in connection with Red Oak Sourcing and will be in place for the
(2) 10 18 6 2 36 remaining five years of the agreement. See Note 7 of the “Notes to Consolidated
Operating lease Financial Statements” for additional information.
obligations (3) 117 168 95 123 503 (5) Long-term liabilities, such as unrecognized tax benefits, deferred taxes and
other tax liabilities, have been excluded from the above table due to the inherent
Purchase obligations and uncertainty of the underlying tax positions or because of the inability to
other payments (4) 623 481 210 36 1,350 reasonably estimate the timing of any cash outflows. See Note 8 of the "Notes
Total contractual to Consolidated Financial Statements" for further discussion of income taxes.
obligations (5) (6) $ 976 $ 3,045 $ 1,869 $ 5,384 $ 11,274 (6) Total contractual obligations do not include payments that may be made in
connection with the opioid litigation, as further described in Significant
(1) Represents maturities of our long-term debt obligations and other short-term Developments in Fiscal 2020 and Trends section in this MD&A and Note 7 of
borrowings excluding finance lease obligations described below. See Note 6 of the "Notes to Consolidated Financial Statements." If a definitive agreement is
the “Notes to Consolidated Financial Statements” for further information. reached, and subject to participation by states and political subdivisions, we
(2) Represents minimum finance lease obligations included within long-term expect payment amounts under the Settlement Framework to be spread through
obligations in our consolidated balance sheet and further described in Note 5 the 18-year period. We cannot currently predict when those payments might
of the “Notes to Consolidated Financial Statements.” begin, and it is possible that they may ultimately be made over a different time
(3) Represents minimum operating lease obligations included within other accrued period, or not at all. See Note 7 of the “Notes to Consolidated Financial
liabilities and deferred income taxes and other liabilities in our consolidated Statements” for additional information.
balance sheet and further described in Note 5 of the “Notes to Consolidated
Financial Statements.”
(4) A purchase obligation is defined as an agreement to purchase goods or services
that is legally enforceable and specifies all significant terms, including fixed or
Off-Balance Sheet Arrangements

We had no significant "off-balance sheet arrangements" at June 30, 2020, as that term is defined in the SEC rules.
Recent Financial Accounting Standards

See Note 1 of the “Notes to Consolidated Financial Statements” for a discussion of recent financial accounting standards.

MD&A Critical Accounting Policies and Sensitive Accounting Estimates
Critical Accounting Policies and Sensitive Accounting Estimates

Critical accounting policies are those accounting policies that (i) can have a significant impact on our financial condition and results of operations
and (ii) require the use of complex and subjective estimates based upon past experience and management’s judgment. Other people applying
reasonable judgment to the same facts and circumstances could develop different estimates. Because estimates are inherently uncertain,
actual results may differ. In this section, we describe the significant policies applied in preparing our consolidated financial statements that
management believes are the most dependent on estimates and assumptions. For further discussion of accounting policies for items within
this section and of additional accounting policies, see Note 1 of the “Notes to Consolidated Financial Statements.”
The COVID-19 pandemic has severely impacted, and continues to severely impact the U.S. and global economies and, beginning in the third
quarter of fiscal 2020, our businesses have been impacted in a variety of ways. We cannot estimate the length or severity of the COVID-19
pandemic or the related U.S. and global economic consequences on our business and operations, including whether and when normal
economic and operating conditions will resume or the extent to which the disruption may impact our business, financial position, results of
operations or cash flow. Our estimates, judgments and assumptions related to the COVID-19 pandemic could ultimately differ over time.
Allowance for Doubtful Accounts

The allowance for doubtful accounts includes general and specific on trade and other receivables using an "expected credit loss" model
reserves. We determine our allowance for doubtful accounts by that considers historical experience, current conditions and
reviewing accounts receivable aging, industry trends, customer reasonable supportable forecasts is effective for us in the first quarter
financial strength and credit standing, historical write-off trends and of fiscal 2021. We have evaluated the impact of adopting this new
payment history. We regularly evaluate how changes in economic guidance and have determined it will not have a material impact on
conditions, including the economic impact of the COVID-19 our consolidated financial statements or disclosures. The following
pandemic, may affect credit risks. See Note 1 of the “Notes to table presents information regarding our allowance for doubtful
Consolidated Financial Statements” for further information on our accounts over the past three fiscal years:
policy for Receivables and Allowance for Doubtful Accounts.
(in millions, except percentages) 2020 2019 2018
A hypothetical 0.1 percent increase or decrease in the reserve as a
Allowance for doubtful accounts at beginning of
percentage of trade receivables at June 30, 2020, would result in an period $ 193 $ 139 $ 137
increase or decrease in bad debt expense of $8 million. We believe Charged to costs and expenses 140 141 114
the reserve maintained and expenses recorded in fiscal 2020 are Reduction to allowance for customer
appropriate. deductions and write-offs (127) (87) (111)
At this time, we are not aware of any analytical findings or customer Allowance for doubtful accounts at end of period $ 206 $ 193 $ 139
issues that are likely to lead to a significant future increase in the Allowance as a percentage of customer receivables 2.5% 2.3% 1.8%
allowance for doubtful accounts as a percentage of revenue. In Allowance as a percentage of revenue 0.13% 0.13% 0.10%
addition, the Financial Accounting Standards Board’s amended
The sum of the components may not equal the total due to rounding.
accounting guidance that requires entities to measure credit losses
Inventories
A substantial portion of our inventories (56 percent at both June 30, Using LIFO, if there is a decrease in inventory levels that have
2020 and 2019) are valued at the lower of cost, using the last-in, first- experienced pharmaceutical price appreciation, the result generally
out ("LIFO") method, or market. These are primarily merchandise will be a decrease in future cost of products sold as our older inventory
inventories at the core pharmaceutical distribution facilities within our is held at a lower cost. Conversely, if there is a decrease in inventory
Pharmaceutical segment (“distribution facilities”). The LIFO impact levels that have experienced a pharmaceutical price decline, the
on the consolidated statements of earnings/(loss) depends on result generally will be an increase in future cost of products sold as
pharmaceutical manufacturer price appreciation or deflation and our our older inventory is held at a higher cost.
fiscal year-end inventory levels, which can be meaningfully
influenced by customer buying behavior immediately preceding our
fiscal year-end. Historically, prices for branded pharmaceuticals have
generally tended to rise, resulting in an increase in cost of products
sold, whereas prices for generic pharmaceuticals generally tend to
decline, resulting in a decrease in cost of products sold. See Note 1
of the “Notes to Consolidated Financial Statements” for further
information on our policy for Inventories.

We believe that the average cost method of inventory valuation the estimated selling prices in the ordinary course of business, less
provides a reasonable approximation of the current cost of replacing reasonably predictable costs of completion, disposal and
inventory within these distribution facilities. As such, the LIFO reserve transportation. Inventories presented in the consolidated balance
is the difference between (a) inventory at the lower of LIFO cost or sheets are net of reserves for excess and obsolete inventory which
market and (b) inventory at replacement cost determined using the were $155 million and $171 million at June 30, 2020 and 2019,
average cost method of inventory valuation. At June 30, 2020 and respectively. We reserve for inventory obsolescence using estimates
2019, respectively, inventories valued at LIFO cost were $411 million based on historical experience, historical and projected sales trends,
and $230 million higher than the average cost value. We do not record specific categories of inventory, age and expiration dates of on-hand
inventories in excess of replacement cost. As such, we did not write- inventory and manufacturer return policies.
up the value of our inventory from average cost to LIFO cost at If actual conditions are less favorable than our assumptions,
June 30, 2020 or 2019. additional inventory reserves may be required.
Our remaining inventory that is not valued at the lower of LIFO cost
or market is stated at the lower of cost, using the first-in, first-out
method, or net realizable value. Net realizable value is defined as
Goodwill and Other Indefinite-Lived Intangible Assets

Purchased goodwill and intangible assets with indefinite lives are internally-developed forecasts. Under the market-based guideline
tested for impairment annually or when indicators of impairment exist. public company method, we determine fair value by comparing our
Goodwill impairment testing involves a comparison of the estimated reporting units to similar businesses or guideline companies whose
fair value of reporting units to the respective carrying amount, which securities are actively traded in public markets. We also use the
may be performed utilizing either a qualitative or quantitative market-based guideline transaction method to determine fair value
assessment. Qualitative factors are first assessed to determine if it based on pricing multiples derived from the sale of companies that
is more likely than not that the fair value of a reporting unit is less are similar to our reporting units.
than its carrying amount. There is an option to bypass the qualitative Estimating the fair value of reporting units requires the use of
assessment for any reporting unit in any period and proceed directly estimates and significant judgments that are based on a number of
to performing the quantitative goodwill impairment test. We have factors including actual operating results. The use of alternate
elected to bypass the qualitative assessment for the annual goodwill estimates and assumptions, changes in the industry or peer groups,
impairment test in the current year. The quantitative goodwill or changes in weightings assigned to the discounted cash flow
impairment test involves a comparison of the estimated fair value of method, guideline public company method or guideline transaction
the reporting unit to the respective carrying amount. A reporting unit method could materially affect the determination of fair value for each
is defined as an operating segment or one level below an operating reporting unit and potentially result in goodwill impairment. If a
segment (also known as a component). reporting unit fails to achieve expected earnings or operating cash
We have two operating segments, which are the same as our flow, or otherwise fails to meet current financial plans, or if there were
reportable segments: Pharmaceutical and Medical. These operating changes to any other key assumptions used in the tests, the reporting
segments are comprised of divisions (which are components), for unit could incur a goodwill impairment in a future period.
which discrete financial information is available. Components are We performed annual impairment testing in fiscal 2020, 2019 and
aggregated into reporting units for purposes of goodwill impairment 2018 and, with the exception of our Medical Unit in fiscal 2018,
testing to the extent that they share similar economic characteristics. concluded that there were no impairments of goodwill as the
Our reporting units are: Pharmaceutical operating segment estimated fair value of each reporting unit exceeded its carrying value.
(excluding our Nuclear and Precision Health Solutions division);
For our annual impairment test in fiscal 2020, the fair value of our
Nuclear and Precision Health Solutions division; Medical operating
Medical Unit exceeded its carrying value of $10.1 billion by
segment (excluding our Cardinal Health at-Home Solutions division)
approximately 7 percent. For this test, we used a discount rate of 8.5
(“Medical Unit”); and Cardinal Health at-Home Solutions division.
percent and a terminal growth rate of 2 percent. Additionally, we
Goodwill impairment testing involves judgment, including the assigned a weighting of 80 percent to the discounted cash flow
identification of reporting units, qualitative evaluation of events and method, 10 percent to the guideline public company method, and 10
circumstances to determine if it is more likely than not that an percent to the guideline transaction method. The goodwill balance
impairment exists and, if necessary, the estimation of the fair value for our Medical Unit was $4.2 billion at June 30, 2020.
of the applicable reporting unit.
Adverse changes in key assumptions, such as assumptions related
Our determination of estimated fair value of our reporting units is to the COVID-19 pandemic which could cause a decrease in future
based on a combination of the income-based and market-based cash flows; an increase in the discount rate; or a decrease in the
approaches (using discount rates ranging from 8.5 percent to 10.5 terminal growth rate, among other things, could result in a goodwill
percent). We use discount rates that are commensurate with the risks impairment for the Medical Unit. For example, if we were to use a
and uncertainty inherent in the respective reporting units and in our
discount rate of 9.5 percent, the carrying value would have exceeded The impairment test for indefinite-lived intangibles other than goodwill
the fair value for our Medical Unit by 5.0 percent for fiscal 2020. (primarily IPR&D) involves first assessing qualitative factors to
Similarly, if we were to use a terminal growth rate of 0.5 percent, the determine if it is more likely than not that the fair value of the indefinite-
carrying value would have exceed the fair value for our Medical Unit lived intangible asset is less than its carrying amount. If so, then a
by less than 1.0 percent for fiscal 2020. For any of our other reporting quantitative test is performed to compare the estimated fair value of
units, the fair value would not have been less than the carrying amount the indefinite-lived intangible asset to the respective asset's carrying
for fiscal 2020 if we increased the discount rate by 1.0 percentage amount. Our qualitative evaluation requires the use of estimates and
point or decreased the terminal growth rate by 1.0 percentage point. significant judgments and considers the weight of evidence and
As discussed further in Note 1 of the "Notes to Consolidated Financial significance of all identified events and circumstances and most
Statements," during the fourth quarter of fiscal 2018 we recognized relevant drivers of fair value, both positive and negative, in
a $1.4 billion goodwill impairment charge related to our Medical Unit, determining whether it is more likely than not that the fair value of
which is included in impairments and (gain)/loss on disposal of assets the indefinite-lived intangible asset is less than its carrying amount.
in our consolidated statements of earnings/(loss). There was no tax See Note 1 of "Notes to Consolidated Financial Statements" for
benefit related to the goodwill impairment charge. additional information regarding goodwill and other intangible assets.
Loss Contingencies and Self-Insurance

We accrue for contingencies related to disputes, litigation and Examples of such contingencies include various lawsuits related to
regulatory matters if it is probable that a liability has been incurred the distribution of prescription opioid pain medications and the Cordis
and the amount of the loss can be reasonably estimated. Because IVC filter lawsuits.
these matters are inherently unpredictable and unfavorable In connection with the opioid litigation as described further in the
developments or outcomes can occur, assessing contingencies is Significant Developments in Fiscal 2020 and Trends section in this
highly subjective and requires judgments about future events. MD&A, we recorded a pre-tax charge of $5.63 billion ($5.14
We also self-insure for employee healthcare, certain product liability billion after tax) during fiscal 2020. Definitive terms of a settlement
matters, auto liability, property and workers' compensation and under the Settlement Framework continue to be negotiated, and there
maintain insurance for individual losses exceeding certain limits when is no assurance that the necessary parties will agree to a definitive
available. settlement agreement or that the contingencies to any agreement
Self-insurance accruals include an estimate for expected settlements will be satisfied.
on pending claims, defense costs, administrative fees, claims We develop and periodically update reserve estimates for the Cordis
adjustment costs and an estimate for claims incurred but not reported. inferior vena cava ("Cordis IVC") claims, including those received to
For certain types of exposures, we develop the estimate of expected date and expected to be received in the future and related costs. To
ultimate costs to settle each claim based on specific information project future Cordis IVC claim costs, we use a methodology based
related to each claim if available. Other estimates are based on an largely on recent experience, including claim filing rates, estimated
assessment of outstanding claims, historical analysis and current indemnity severity by claim type, sales data, implant and injury to
payment trends. For claims incurred but not reported, the liabilities report lag patterns and estimated defense costs.
are calculated and derived in accordance with generally accepted The amount of loss may differ materially from these estimates. See
actuarial practices or using an estimated lag period. Note 7 of the “Notes to Consolidated Financial Statements” for
We regularly review contingencies and self-insurance accruals to additional information regarding loss contingencies and product
determine whether our accruals and related disclosures are liability lawsuits.
adequate. Any adjustments for changes in reserves are recorded in
the period in which the change in estimate occurs.

Provision for Income Taxes

We account for income taxes using the asset and liability method. could challenge our interpretation of the Tax Act or the estimates and
Deferred tax assets and liabilities are measured using enacted tax assumptions used to assess the future deductibility of these benefits.
rates in the respective jurisdictions in which we operate. Our income The actual amount of the tax benefit related to uncertain tax positions
tax expense, deferred income tax assets and liabilities, and may differ materially from these estimates. See Note 8 for more
unrecognized tax benefits reflect management’s assessment of information regarding these matters.
estimated future taxes to be paid on items in the consolidated financial We file income tax returns in the U.S. federal jurisdiction, various
statements. U.S. state jurisdictions and various foreign jurisdictions. With few
The following table presents information about our tax position at exceptions, we are subject to audit by taxing authorities for fiscal
June 30: years 2008 through the current fiscal year. Tax laws are complex and
subject to varying interpretations. Tax authorities have challenged
some of our tax positions, including IRS challenges to our
Total deferred income tax assets (1) $ 1,412 $ 864 international transfer pricing for the periods from 2008 to 2014, and
Valuation allowance for deferred income tax assets (2) (470) (542) it is possible that they will challenge others. These challenges may
Net deferred income tax assets 942 322 adversely affect our effective tax rate or tax payments.
Total deferred income tax liabilities (2,161) (2,035) Our assumptions and estimates around uncertain tax positions
Net deferred income tax liability $ (1,219) $ (1,713) require significant judgment; the actual amount of tax benefit related
(1) Total deferred income tax assets included $589 million and $621 million of loss to uncertain tax positions may differ from these estimates. See Note
and tax credit carryforwards at June 30, 2020 and 2019, respectively. 8 of the “Notes to Consolidated Financial Statements” for additional
(2) The valuation allowance primarily relates to federal, state and international loss information regarding unrecognized tax benefits.
and credit carryforwards for which the ultimate realization of future benefits is We believe that our estimates for the valuation allowances against
uncertain.
deferred tax assets and unrecognized tax benefits are appropriate
Expiring or unusable loss and credit carryforwards and the required based on current facts and circumstances. The amount we ultimately
valuation allowances are adjusted quarterly when it is more likely pay when matters are resolved may differ from the amounts accrued.
than not that at least a portion of the respective deferred tax assets Changes in our current estimates due to unanticipated market
will not be realized. After applying the valuation allowances, we do conditions, tax law changes or other factors could have a material
not anticipate any limitations on our use of any of the other net effect on our ability to utilize deferred tax assets. For a further
deferred income tax assets described above. We operate in a discussion on Provision for Income Taxes, see Note 8 of the “Notes
complex multinational tax environment and are subject to tax treaty to the Consolidated Financial Statements.”
arrangements and transfer pricing guidelines for intercompany The calculation of our tax liabilities includes estimates for
transactions that are subject to interpretation. Uncertainty in a tax uncertainties in the application of broad and complex changes to the
position may arise as tax laws are subject to interpretation. U.S. tax code as per the Tax Act as enacted by the United States
Tax benefits from uncertain tax positions are recognized when it is government on December 22, 2017. We have made reasonable
more likely than not that the position will be sustained upon estimates and recorded amounts based on management judgment
examination of the technical merits of the position, including and our current understanding of the Tax Act which is subject to further
resolutions of any related appeals or litigation. The amount interpretation by the Internal Revenue Service ("IRS"). See Note 8
recognized is measured as the largest amount of tax benefit that is of the “Notes to Consolidated Financial Statements” for additional
greater than 50 percent likely of being realized upon settlement. For information regarding the Tax Act.
tax benefits that do not qualify for recognition, we recognize a liability
for unrecognized tax benefits.
In connection with the $5.63 billion pre-tax charge for the opioid
litigation, during fiscal year 2020, we recorded a tax benefit of $488
million, which is net of unrecognized tax benefits of $469 million,
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 Tax Act; however, these estimates
require significant judgment since the definitive settlement terms and
documentation, including provisions related to deductibility, under the
Settlement Framework have not been negotiated and the U.S. tax
law governing deductibility was changed by the U.S. Tax Cuts and
Jobs Act ("Tax Act"). Further, it is possible that the tax authorities

Explanation and Reconciliation of Non-GAAP Financial Measures
Explanation and Reconciliation of Non-GAAP Financial

Measures
This report, including the "Fiscal 2020 Overview" section within MD&A, contains financial measures that are not calculated in accordance
with GAAP.
In addition to analyzing our business based on financial information prepared in accordance with GAAP, we use these non-GAAP financial
measures internally to evaluate our performance, engage in financial and operational planning, and determine incentive compensation because
we believe that these measures provide additional perspective on and, in some circumstances are more closely correlated to, the performance
of our underlying, ongoing business. We provide these non-GAAP financial measures to investors as supplemental metrics to assist readers
in assessing the effects of items and events on our financial and operating results on a year-over-year basis and in comparing our performance
to that of our competitors. However, the non-GAAP financial measures that we use may be calculated differently from, and therefore may not
be comparable to, similarly titled measures used by other companies. The non-GAAP financial measures disclosed by us should not be
considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in
accordance with GAAP and reconciliations to those financial statements set forth below should be carefully evaluated.
Exclusions from Non-GAAP Financial Measures

Management believes it is useful to exclude the following items from the non-GAAP measures presented in this report for its own and for
investors’ assessment of the business for the reasons identified below:
• LIFO charges and credits are excluded because the factors that drive last-in first-out ("LIFO") inventory charges or credits, such as
pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels (which can be meaningfully influenced
by customer buying behavior immediately preceding our fiscal year-end), are largely out of our control and cannot be accurately
predicted. The exclusion of LIFO charges and credits from non-GAAP metrics facilitates comparison of our current financial results
to our historical financial results and to our peer group companies’ financial results. We did not recognize any LIFO charges or
credits during the periods presented.
• Surgical gown recall costs includes inventory write-offs and certain remediation and supply disruption costs 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. 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 fiscal year of the initial assessment. 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. Reversals
of these accruals have occurred when certain assessments were found by a Court unconstitutional.
• 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 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 are excluded because they do not occur in or reflect the ordinary course of our
ongoing business operations and are inherently unpredictable in timing and amount, and in the case of impairments, are non-cash
amounts, so their exclusion facilitates comparison of historical, current and forecasted financial results.
• Litigation recoveries or charges, net are excluded because they often relate to events that may have occurred in prior or multiple
periods, do not occur in or reflect the ordinary course of our business and are inherently unpredictable in timing and amount.

• Loss on early extinguishment of debt is excluded because it does not typically occur in the normal course of business and may
obscure analysis of trends and financial performance. Additionally, the amount and frequency of this type of charge is not consistent
and is significantly impacted by the timing and size of debt extinguishment transactions.
• Gain 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.
• Transitional tax benefit, net related to the Tax Cuts and Jobs Act is excluded because it results from the one-time impact of a very
significant change in the U.S. federal corporate tax rate and, due to the significant size of the benefit, obscures analysis of trends
and financial performance. The transitional tax benefit includes the initial estimate and subsequent adjustments for the re-
measurement of deferred tax assets and liabilities due to the reduction of the U.S. federal corporate income tax rate and the
repatriation tax on undistributed foreign earnings.
The tax effect for each of the items listed above, other than the transitional tax benefit item, 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/(loss) excluding (1) LIFO charges/(credits), (2) surgical gown recall costs, (3) state opioid
assessment related to prior fiscal years, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6)
impairments and (gain)/loss on disposal of assets, and (7) litigation (recoveries)/charges, net.
Non-GAAP earnings before income taxes: earnings/(loss) before income taxes excluding (1) LIFO charges/(credits), (2) surgical gown
recall costs, (3) state opioid assessment related to prior fiscal years, (4) restructuring and employee severance, (5) amortization and other
acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, (7) litigation (recoveries)/charges, net, (8) loss on early
extinguishment of debt and (9) gain on sale of equity interest in naviHealth.
Non-GAAP net earnings attributable to Cardinal Health, Inc.: net earnings/(loss) attributable to Cardinal Health, Inc. excluding (1) LIFO
charges/(credits), (2) surgical gown recall costs, (3) state opioid assessment related to prior fiscal years, (4) restructuring and employee
severance, (5) amortization and other acquisition-related costs, (6) impairments and (gain)/loss on disposal of assets, (7) litigation (recoveries)/
charges, net, (8) loss on early extinguishment of debt and (9) gain on sale of equity interest in naviHealth, each net of tax, and (10) transitional
tax benefit, net.
Non-GAAP effective tax rate: provision for/(benefit from) income taxes adjusted for (1) LIFO charges/(credits), (2) surgical gown recall costs,
(3) state opioid assessment related to prior fiscal years, (4) restructuring and employee severance, (5) amortization and other acquisition-
related costs, (6) impairments and (gain)/loss on disposal of assets, (7) litigation (recoveries)/charges, net, (8) loss on early extinguishment
of debt and (9) gain on sale of equity interest in naviHealth, each net of tax, and (10) transitional tax benefit, net divided by (earnings before
income taxes adjusted for the first nine items).
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.

GAAP to Non-GAAP Reconciliations

Provision
Operating Earnings/ for/ Net
Earnings/ (Loss) (Benefit Earnings/ Diluted
Operating (Loss) Before From) Net (Loss)1 EPS1
Earnings/ Growth Income Income Earnings/ Growth Effective Diluted Growth
(in millions, except per common share amounts) (Loss) Rate Taxes Taxes (Loss)1 Rate Tax Rate EPS1.2 Rate
Fiscal Year 2020
GAAP $ (4,098) N.M. $ (3,772) $ (79) $ (3,696) N.M. 2.1% $ (12.61) N.M.
Surgical gown recalls costs 85 85 22 63 0.22
State opioid assessment related to prior fiscal years 3 3 1 2 0.01
Restructuring and employee severance 122 122 29 93 0.31
Amortization and other acquisition-related costs 524 524 130 394 1.34
Impairments and (gain)/loss on disposal of assets 7 7 2 5 0.02
Litigation (recoveries)/charges, net3 5,741 5,741 514 5,227 17.84
Loss on early extinguishment of debt — 16 4 12 0.04
Gain on sale of equity interest in naviHealth — (579) (86) (493) (1.68)
Transitional tax benefit, net4 — — 2 (2) (0.01)
Non-GAAP $ 2,384 1% $ 2,147 $ 539 $ 1,605 1% 25.1% $ 5.45 3%
Fiscal Year 2019

GAAP $ 2,060 N.M. $ 1,751 $ 386 $ 1,363 N.M. 22.1% $ 4.53 N.M.
Impairments and (gain)/loss on disposal of assets5 (488) (488) (113) (375) (1.25)
Litigation (recoveries)/charges, net 36 36 10 26 0.09
Transitional tax benefit, net4 — — (9) 9 0.03
Non-GAAP $ 2,353 (9)% $ 2,044 $ 453 $ 1,589 1% 22.1% $ 5.28 6%
Fiscal Year 2018

GAAP $ 126 (94)% $ (228) $ (487) $ 256 (80)% 213.8% $ 0.81 (80)%
Impairments and (gain)/loss on disposal of assets6 1,417 1,417 (44) 1,461 4.64
Litigation (recoveries)/charges, net 159 159 48 111 0.35
Loss on early extinguishment of debt — 2 1 1 —
Transitional tax benefit, net4 — — 936 (936) (2.97)
Non-GAAP $ 2,585 (7)% $ 2,233 $ 655 $ 1,575 (9)% 29.3% $ 5.00 (7)%
1 Attributable to Cardinal Health, Inc.

2 For fiscal 2020, GAAP diluted loss per share attributable to Cardinal Health, Inc. and the EPS impact from the GAAP to non-GAAP per share reconciling items are calculated
using a weighted average of 293 million common shares, which excludes potentially dilutive securities from the denominator due to their anti-dilutive effects resulting from
our GAAP net loss for the period. Fiscal 2020 non-GAAP diluted EPS is calculated using a weighted average of 295 million common shares, which includes potentially
dilutive shares.
3 Litigation (recoveries)/charges, net includes a pre-tax charge of $5.63 billion ($5.14 billion after tax) recorded in the first quarter of fiscal 2020 related to the opioid litigation.
4 Reflects the net transitional benefit from the remeasurement of our deferred tax assets and liabilities partially offset by the repatriation tax on cash and earnings of foreign
subsidiaries. See Note 8 of the "Notes to Consolidated Financial Statements" for more information on the Tax Act.
5 During fiscal 2019, we sold our majority interest in naviHealth and recognized a pre-tax gain of $508 million ($378 million after tax).
6 Fiscal year 2018 includes a goodwill impairment charge of $1.4 billion related to our Medical segment. There was no tax benefit related to this goodwill impairment charge.
We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

Selected Financial Data
Selected Financial Data

The consolidated financial data below includes all business combinations as of the date of acquisition that occurred during these periods.
The following selected consolidated financial data should be read in conjunction with the consolidated financial statements and related
notes and MD&A.
(in millions, except per common share amounts) 20201,2,3 20194 20185,6 2017 2016
Earnings Data:
Revenue $ 152,922 $ 145,534 $ 136,809 $ 129,976 $ 121,546
Operating earnings/(loss) (4,098) 2,060 126 2,120 2,459
Net earnings/(loss) (3,693) 1,365 259 1,294 1,431

Less: Net earnings attributable to noncontrolling interests (3) (2) (3) (6) (4)
Net earnings/(loss) attributable to Cardinal Health, Inc. $ (3,696) $ 1,363 $ 256 $ 1,288 $ 1,427
Basic earnings/(loss) per common share attributable to Cardinal Health, Inc. $ (12.61) $ 4.55 $ 0.82 $ 4.06 $ 4.36
Diluted earnings/(loss) per common share attributable to Cardinal Health, Inc. $ (12.61) $ 4.53 $ 0.81 $ 4.03 $ 4.32
Cash dividends declared per common share $ 1.9292 $ 1.9100 $ 1.8635 $ 1.8091 $ 1.6099
Balance Sheet Data:

Total assets $ 40,766 $ 40,963 $ 39,951 $ 40,112 $ 34,122
Long-term obligations, less current portion 6,765 7,579 8,012 9,068 4,952
Total Cardinal Health, Inc. shareholders' equity 1,789 6,328 6,059 6,808 6,554
1During fiscal 2020, we recorded a pre-tax charge of $5.63 billion ($5.14 billion after tax) related to the opioid litigation.
2During fiscal 2020, we recorded a total charge of $85 million in connection with the Recalls.
3During fiscal 2020, we sold the remainder of our equity interest in a partnership that owned naviHealth and recognized a pre-tax gain of $579 million ($493 million million after
tax) within net earnings/(loss).
4During fiscal 2019, we sold our majority interest in naviHealth and recognized a pre-tax gain of $508 million ($378 million after tax) within operating earnings/(loss).
5During the fourth quarter of fiscal 2018, we recognized a non-cash goodwill impairment charge of $1.4 billion related to our Medical segment. There was no tax benefit related
to this goodwill impairment charge.
6During fiscal 2018, the United States enacted the Tax Cuts and Jobs Act. In fiscal 2018 we recognized a net transitional tax benefit of $936 million related to the enactment of
the act. See Note 8 for more information.

Disclosures about Market Risk
Quantitative and Qualitative Disclosures About Market Risk

We are exposed to cash flow and earnings fluctuations as a result of certain market risks. These market risks primarily relate to foreign
exchange, interest rate, and commodity price-related changes. We maintain a hedging program to manage volatility related to some of these
market exposures which employs operational, economic, and derivative financial instruments in order to mitigate risk. See Note 1 and Note
10 of the “Notes to Consolidated Financial Statements” for further discussion regarding our use of derivative instruments.
Foreign Exchange Rate Sensitivity

By the nature of our global operations, we are exposed to cash flow we perform sensitivity analyses on our forecasted transactional
and earnings fluctuations resulting from foreign exchange rate exposure for the upcoming fiscal year. These analyses include the
variation. These exposures are transactional and translational in estimated impact of our hedging program, which is designed to
nature. The following foreign currencies represent the principal mitigate transactional exposure. Applying a VAR methodology to our
drivers of our foreign exchange exposure: Canadian dollar, euro, Thai transactional exposure and including the impact of our hedging
baht, Mexican peso, Chinese renminbi, Australian dollar, British program, the potential maximum loss in earnings for the upcoming
pound and Japanese yen. fiscal year is estimated to be $12 million, which is based on a one-
We apply a Value-At-Risk ("VAR") methodology to our transactional year horizon and a 95 percent confidence level.
and translational exposures. The VAR model is a risk estimation tool Translational Exposure
and is not intended to represent actual losses in fair value that could We have exposure related to the translation of financial statements
be incurred. of our foreign operations into U.S. dollars, our functional currency.
Transactional Exposure Applying a VAR methodology to our translational exposure, the
Transactional exposure arises from the purchase and sale of goods potential maximum loss in earnings for the upcoming fiscal year is
and services in currencies other than our functional currency or the estimated to be $5 million, which is based on a one-year horizon and
functional currency of our subsidiaries. At the end of each fiscal year a 95 percent confidence level.
Interest Rate Sensitivity

We are exposed to changes in interest rates primarily as a result of We are also exposed to market risk from changes in interest rates
our borrowing and investing activities to maintain liquidity and fund related to our cash and cash equivalents, which includes marketable
operations. The nature and amount of our long-term and short-term securities that are carried at fair value in the consolidated balance
debt can be expected to fluctuate as a result of business sheets. The fair value of our cash and cash equivalents is subject to
requirements, market conditions and other factors. Our policy is to change primarily as a result of changes in market interest rates and
manage exposures to interest rates using a mix of fixed and floating investment risk related to the issuers' credit worthiness. At June 30,
rate debt as deemed appropriate by management. We utilize interest 2020, a hypothetical increase or decrease of 50 basis points in
rate swap instruments to mitigate our exposure to interest rate interest rates would result in a hypothetical $5 million change in the
movements. estimated fair value.
As part of our risk management program, we perform an annual
sensitivity analysis on our forecasted exposure to interest rates for
the upcoming fiscal year. This analysis assumes a hypothetical 50
basis point change in interest rates. At June 30, 2020, the potential
increase or decrease in annual interest expense under this analysis
as a result of this hypothetical change would be $5 million.

Disclosures about Market Risk
Commodity Price Sensitivity

We are directly exposed to market price changes for certain Our forecasted direct commodity exposures for the upcoming fiscal
commodities, including oil-based resins, nitrile, cotton, diesel fuel and year is $445 million. The potential gain/loss given a hypothetical 10
latex. We typically purchase raw materials at either market prices or percent fluctuation in commodity prices, assuming pricing collectively
prices tied to a commodity index and some finished goods at prices shifts in the same direction and we are unable to change customer
based in part on a commodity price index. pricing in response to those shifts or otherwise offset, for the
As part of our risk management program, we perform sensitivity upcoming fiscal year is $45 million at June 30, 2020. The hypothetical
analysis on our forecasted direct commodity exposure for the offsetting impact of hedges in both periods was minimal.
upcoming fiscal year. Our forecasted direct commodity exposure at
June 30, 2020 increased approximately $10 million from June 30,
2019. At June 30, 2020 and 2019, we had hedged a portion of these
direct commodity exposures (see Note 10 of the “Notes to
Consolidated Financial Statements” for further discussion).

Business
Business
General
Cardinal Health, Inc. is a global 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 medical
products and pharmaceuticals and cost-effective solutions that enhance supply chain efficiency.
Pharmaceutical Segment
In the United States, our Pharmaceutical segment: Pharmaceutical Distribution
• through its Pharmaceutical Distribution division, distributes Our Pharmaceutical Distribution division’s gross margin includes
branded and generic pharmaceutical and over-the-counter margin from our generic pharmaceutical program, from distribution
healthcare and consumer products to retailers (including chain and services agreements with branded pharmaceutical manufacturers
independent drug stores and pharmacy departments of and from over-the-counter healthcare and consumer products. It
supermarkets and mass merchandisers), hospitals and other also includes manufacturer cash discounts.
healthcare providers. This division: Margin from our generic pharmaceutical program includes price
• maintains prime vendor relationships that streamline the discounts and rebates from manufacturers and may in limited
purchasing process resulting in greater efficiency and lower instances include price appreciation. Our earnings on generic
costs for our retail, hospital and other healthcare provider pharmaceuticals are generally highest during the period
customers; immediately following the initial launch of a product, because
• provides services to pharmaceutical manufacturers, including generic pharmaceutical selling prices are generally highest during
distribution, inventory management, data reporting, new that period and tend to decline over time.
product launch support and chargeback administration; Margin from distribution services agreements with branded
• through the connected care service offering, provides pharmaceutical manufacturers is derived from compensation we
medication therapy management, telepharmacy and health receive for providing a range of distribution and related services to
messaging services and seeks to develop solutions to improve manufacturers. Our compensation typically is a percentage of the
patient care through improved coordination of manufacturers, wholesale acquisition cost that is set by manufacturers. In addition,
payers, pharmacies and patients; under a limited number of agreements, branded pharmaceutical
price appreciation, which is determined by the manufacturers, also
• provides pharmacy management services to hospitals and
serves as part of our compensation.
operates pharmacies, including in community health centers;
and Sourcing Venture with CVS Health Corporation
• repackages generic pharmaceuticals and over-the-counter In July 2014, we established Red Oak Sourcing, a U.S.-based
healthcare products; generic pharmaceutical sourcing venture with CVS with an initial
term of 10 years. Red Oak Sourcing negotiates generic
• through its Specialty Solutions division, distributes specialty pharmaceutical supply contracts on behalf of both companies.
pharmaceutical products to hospitals and other healthcare
providers and provides consulting, patient support and other Specialty Pharmaceutical Products and Services
services for specialty pharmaceutical products to pharmaceutical We refer to products and services offered by our Specialty Solutions
manufacturers and healthcare providers; and division as “specialty pharmaceutical products and services.” The
• through its Nuclear and Precision Health Solutions division, Specialty Solutions division distributes oncology, rheumatology,
operates nuclear pharmacies and manufacturing facilities, which urology, nephrology and other pharmaceutical products ("specialty
manufacture, prepare and deliver radiopharmaceuticals for use in pharmaceutical products") and human-derived plasma products to
nuclear imaging and other procedures in hospitals and physician hospitals, dialysis clinics, physician offices and other healthcare
offices. This division also contract manufactures a providers; provides consulting, patient support, logistics, group
radiopharmaceutical treatment (Xofigo) and holds the North purchasing and other services to pharmaceutical manufacturers
American rights to manufacture and distribute Lymphoseek, a and healthcare providers primarily supporting the development,
radiopharmaceutical diagnostic imaging agent. marketing and distribution of specialty pharmaceutical products;
and provides specialty pharmacy services. Our use of the
See Note 15 of the “Notes to Consolidated Financial Statements” for terminology "specialty pharmaceutical products and services" may
Pharmaceutical segment revenue, profit and assets for fiscal 2020, not be comparable to the terminology used by other industry
2019 and 2018. participants.

Business
Medical Segment
Our Medical segment manufactures and sources Cardinal Health The Medical segment also distributes a broad range of medical,
branded general and specialty medical, surgical and laboratory surgical and laboratory products known as national brand products
products and devices. These products include exam and surgical and provides supply chain services and solutions to hospitals,
gloves; needle, syringe and sharps disposal; compression; ambulatory surgery centers, clinical laboratories and other
incontinence; nutritional delivery; wound care; cardiovascular and healthcare providers in the United States and Canada and this
endovascular; single-use surgical drapes, gowns and apparel; fluid segment also assembles and sells sterile and non-sterile procedure
suction and collection systems; urology; operating room supply; and kits.
electrode product lines. Our Cardinal Health Brand products are Through Cardinal Health at-Home Solutions, this segment also
sold directly or through third-party distributors in the United States, distributes medical products to patients' homes in the United States.
Canada, Europe, Asia and other markets. These products are
generally higher-margin products.
Acquisitions and Divestitures

Acquisitions We also completed several smaller acquisitions during the last five
We have acquired a number of businesses over the years that have fiscal years, including, in fiscal 2017, the acquisition of the North
enhanced our core strategic areas of Cardinal Health Brand medical American rights to Lymphoseek, a radiopharmaceutical diagnostic
products, generic pharmaceutical distribution and services, imaging agent, from Navidea Biopharmaceuticals, Inc.
specialty pharmaceutical products and services, international and
Divestitures
post-acute care. We expect to continue to pursue additional
Over the past three fiscal years, we have also completed several
acquisitions in the future.
divestitures. In February 2018, we completed the sale of our
During the last five fiscal years, we completed the following three pharmaceutical and medical products distribution business in China
large acquisitions: to Shanghai Pharmaceuticals Holding Co., Ltd. for proceeds of $861
million (after adjusting for third party indebtedness and preliminary
Acquisition
Lines Price transaction adjustments).
Date Company Location of Business (in billions) In August 2018, we completed the sale of our equity interest in
07/17 Patient Recovery Mansfield, MA Patient Care, $6.1 naviHealth, Inc. to investor entities controlled by CD&R for proceeds
Business of Deep Vein
Medtronic, plc Thrombosis and of $737 million (after adjusting for certain fees and expenses) and a
Nutritional noncontrolling equity interest in a partnership that owned naviHealth.
Insufficiency
In May 2020, we sold the remainder of our equity interest in
10/15 Cordis business of Fremont, CA Cardiovascular $1.9
Johnson & and endovascular naviHealth.
Johnson products
We had acquired our equity interest in naviHealth through a series
07/15 The Harvard Drug Livonia, MI Pharmaceutical $1.1 of transactions beginning in fiscal 2016, when we acquired a majority
Group product
distribution equity interest.

Business
Customers
Our largest customers, CVS and OptumRx, accounted for 26 percent members. Our two largest GPO relationships in terms of revenue
and 14 percent of our fiscal 2020 revenue, respectively. In the are with Vizient, Inc. and Premier, Inc. Sales to members of these
aggregate, our five largest customers, including CVS and OptumRx, two GPOs, under numerous contracts across our businesses,
accounted for 49 percent of our fiscal 2020 revenue. collectively accounted for 16 percent of our revenue in fiscal 2020.
We have agreements with group purchasing organizations (“GPOs”)
that act as agents to negotiate vendor contracts on behalf of their
Suppliers
We rely on many different suppliers. Products obtained from our five largest suppliers accounted for an aggregate of 28 percent of our revenue
during fiscal 2020, and our largest supplier’s products accounted for approximately 6 percent of revenue.
Competition
We operate in a highly competitive environment in the distribution of Pharmaceutical segment has experienced competition from a
pharmaceuticals and consumer healthcare products. We also number of organizations offering generic pharmaceuticals, including
operate in a highly competitive environment in the manufacturing and telemarketers. We also compete with manufacturers that sell their
distribution of medical devices and surgical products. We compete products directly.
on many levels, including price, service offerings, support services, In the Medical segment, we compete with many diversified healthcare
breadth of product lines and product quality and efficacy. companies and national medical product distributors, such as
In the Pharmaceutical segment, we compete with wholesale Medline Industries, Inc., Owens & Minor, Inc. and Becton, Dickinson
distributors with national reach, including McKesson Corporation and and Company, as well as regional medical product distributors and
AmerisourceBergen Corporation, regional wholesale distributors, companies that are focused on specific product categories. We also
self-warehousing chains, specialty distributors, third-party logistics compete with companies that distribute medical products to patients'
companies, companies that provide specialty pharmaceutical homes and third-party logistics companies.
services and nuclear pharmacies, among others. In addition, the
Employees
At June 30, 2020, we had approximately 30,000 employees in the United States and approximately 18,000 employees outside of the United
States.
Intellectual Property
We rely on a combination of trade secret, patent, copyright and We believe that we have taken all necessary steps to protect our
trademark laws, nondisclosure and other contractual provisions, and proprietary rights, but no assurance can be given that we will be able
technical measures to protect our products, services and intangible to successfully enforce or protect our rights in the event that they are
assets. We hold patents, and continue to pursue patent protection infringed upon by a third party. While all of these proprietary rights
throughout the world, relating to the manufacture, operation and use are important to our operations, we do not consider any particular
of various medical and surgical products, to certain distribution and patent, trademark, license, franchise or concession to be material to
logistics systems, to the production and distribution of our nuclear our overall business.
pharmacy products and to other service offerings. We also operate
under licenses for certain proprietary technologies, and in certain
instances we license our technologies to third parties.

Business
Regulatory Matters
Our business is highly regulated in the United States, at both the these requirements when we source certain Medical segment
federal and state level, and in foreign countries. Depending upon the products from third-party manufacturers.
specific business, we may be subject to regulation by government We need specific approval or clearance from, and registrations with,
entities including: regulatory authorities before we can market and sell some products
• the U.S. Drug Enforcement Administration (the “DEA”); in the United States and certain other countries, including countries
• certain agencies within the U.S. Department of Health and Human in the European Union ("EU").
Services, including the U.S. Food and Drug Administration (the In the United States, authorization to commercially market a medical
“FDA”), the Centers for Medicare and Medicaid Services, the Office device is generally received in one of two ways. The first, known as
of Inspector General and the Office for Civil Rights; pre-market notification or the 510(k) process, requires us to
• state health departments, insurance departments, Medicaid demonstrate that a medical device is substantially equivalent to a
departments or other comparable state agencies; legally marketed medical device. The second more rigorous process,
known as pre-market approval (“PMA”), requires us to independently
• state boards of pharmacy and other controlled substance
demonstrate that a medical device is safe and effective. Many of our
authorities;
Medical segment branded products are cleared through the 510(k)
• the U.S. Nuclear Regulatory Commission (the “NRC”); process and certain products must be approved through the PMA
• the U.S. Federal Trade Commission (the "FTC"); process.
• U.S. Customs and Border Protection; and In the EU, we are required to comply with the Medical Device Directive
• agencies comparable to those listed above in markets outside the ("MDD") and obtain CE Mark Certification in order to market medical
United States. devices. In 2017, EU regulatory bodies finalized a new Medical
Device Regulation ("MDR") which will replace the MDD when it is
These regulatory agencies have a variety of civil, administrative and
implemented in May 2021. Under the MDR, medical devices
criminal sanctions at their disposal for failure to comply with
marketed in the EU will require significant additional pre-market and
applicable legal or regulatory requirements. They can suspend our
post-market requirements, except that devices with valid CE Mark
ability to manufacture and distribute products, require us to initiate
issued before May 2020 can be marketed until May 2024.
product recalls, seize products or impose criminal, civil and
administrative sanctions. It can be costly and time-consuming to obtain regulatory approvals,
clearances and registrations of medical devices, and they might not
Distribution be granted on a timely basis, if at all. Even after we obtain approval
State Boards of Pharmacy, FDA, DEA and various other state or clearance to market a product or obtain product registrations, the
authorities regulate the marketing, purchase, storage and distribution product and our manufacturing processes are subject to continued
of pharmaceutical and medical products under various federal and regulatory oversight, including periodic inspection of manufacturing
state statutes including the federal Prescription Drug Marketing Act facilities by FDA and other regulatory authorities both in the United
of 1987, Drug Quality and Security Act of 2013 (the “DQSA”), and States and internationally.
Controlled Substances Act (the "CSA"). The CSA governs the sale,
packaging, storage and distribution of controlled substances. From time to time, we may determine that products we manufacture
Wholesale distributors of controlled substances must hold valid DEA or market do not meet our specifications, regulatory requirements or
registrations and state-level licenses, meet various security and published standards. When we or a regulatory agency identify a
operating standards including effective anti-diversion programs, and quality or regulatory issue, we investigate and take appropriate
comply with the CSA. They must also comply with state requirements corrective action, which may include recalling the product, correcting
relating to controlled substances that differ from state to state. the product at the customer location, revising product labeling and
notifying customers. For example, in January, 2020, we issued a
Manufacturing, Sourcing and Marketing voluntary recall for 9.1 million AAMI Level 3 surgical gowns and two
We sell our manufactured products in the United States, Canada, voluntary field actions (a recall of some packs and a corrective action
Europe, Asia, Latin America and other markets. The FDA and other allowing overlabeling of other packs) for 2.9 million Presource
governmental agencies in the United States, as well as foreign Procedure Packs containing affected gowns because one of our
governmental agencies, administer requirements that cover the FDA-registered suppliers in China had shifted production of some
design, testing, safety, effectiveness, manufacturing (including good gowns to unapproved sites with uncontrolled environments, resulting
manufacturing practices), quality systems, labeling, promotion and in us being unable to assure the sterility of the gowns.
advertising (including restrictions on promoting or advertising a
product other than for the product's cleared or approved uses),
distribution, importation and post-market surveillance for most of our
manufactured products. We are also responsible for compliance with

Business
Any adverse regulatory action, depending on its magnitude, may limit Government Healthcare Programs
our ability to effectively manufacture, source, market and sell our We are subject to U.S. federal healthcare fraud and abuse laws.
products, limit our ability to obtain future premarket approvals or result These laws generally prohibit persons from soliciting, offering,
in a substantial modification to our business practices and operations. receiving or paying any compensation in order to induce someone
For additional information, please see our Risk Factor entitled "Our to order, recommend or purchase products or services that are in
business is subject to rigorous regulatory and licensing any way paid for by Medicare, Medicaid or other federally-funded
requirements." healthcare programs. They also prohibit submitting any fraudulent
Privacy and Data Protection claim for payment by the federal government. There are similar state
We are subject to various and evolving privacy laws and regulations healthcare fraud and abuse laws that apply to Medicaid and other
in many jurisdictions. Because we collect, handle and maintain state-funded healthcare programs. Violations of these laws may
patient-identifiable health information, we are subject to laws that result in criminal or civil penalties, as well as breach of contract claims
require specified privacy and security measures and that regulate and qui tam actions (false claims cases initiated by private parties
the use and disclosure of such information, including the U.S. Health purporting to act on behalf of federal or state governments).
Insurance Portability and Accountability Act of 1996 ("HIPAA"), as Some businesses within each of our segments are Medicare-certified
augmented by the Health Information Technology for Economic and suppliers or participate in other federal and state healthcare
Clinical Health Act as well as state laws, in the United States. programs, such as state Medicaid programs and the federal 340B
We also collect, handle, and maintain other sensitive personal and drug pricing program. These businesses are subject to accreditation
financial information. Within the U.S., these activities are regulated and quality standards and other rules and regulations, including
by certain federal and state laws. For example, the new California applicable reporting, billing, payment and record-keeping
Consumer Privacy Act became effective in January 2020 and grants requirements. Other businesses within each segment manufacture
specified rights to consumers over the use of their personal pharmaceutical or medical products or repackage pharmaceuticals
information, including increased transparency. Other states are that are purchased or reimbursed through, or are otherwise governed
considering adopting similar or different comprehensive privacy laws. by, federal or state healthcare programs. Failure to comply with
Internationally, we are also subject to privacy and data protection applicable eligibility requirements, standards and regulations could
laws that require significant compliance efforts, including the EU's result in civil or criminal sanctions, including the loss of our ability to
General Data Protection Regulation (GDPR), Canada's Personal participate in Medicare, Medicaid and other federal and state
Information Protection and Electronic Documents Act (PIPEDA) and healthcare programs.
Japan's Act on the Protection of Personal Information (APPI), among Our U.S. federal and state government contracts are subject to
many others. specific procurement requirements. Failure to comply with applicable
Nuclear Pharmacies and Related Businesses rules or regulations or with contractual or other requirements may
Our nuclear pharmacies and radiopharmaceutical manufacturing result in monetary damages and criminal or civil penalties as well as
facilities (including for Xofigo) require licenses or permits and must termination of our government contracts or our suspension or
abide by regulations issued by the NRC, applicable state boards of debarment from government contract work.
pharmacy and the radiologic health agency or department of health Environmental, Health and Safety Laws
of each state in which we operate, including pharmacy sterile In the United States and other countries, we are subject to various
compounding standards and practices. In addition, our federal, state and local environmental laws, including laws regulating
radiopharmaceutical manufacturing facilities also must comply with the production or use of hazardous substances, as well as laws
FDA regulations, including good manufacturing practices. relating to safe working conditions and laboratory practices.
Product Tracing and Supply Chain Integrity Antitrust Laws
Title II of the DQSA, known as the Drug Supply Chain Security Act The U.S. federal government, most U.S. states and many foreign
or "Track and Trace," establishes a phased-in national system for countries have laws that prohibit certain types of conduct deemed to
tracing pharmaceutical products through the pharmaceutical be anti-competitive. Violations of these laws can result in various
distribution supply chain to detect, prevent and rapidly respond to sanctions, including criminal and civil penalties. Private plaintiffs also
the introduction of drugs that may be counterfeit, diverted, stolen, could bring civil lawsuits against us in the United States for alleged
adulterated, subject of a fraudulent transaction or otherwise unfit for antitrust law violations, including claims for treble damages.
distribution. The first phase of implementation began in 2015, and
upon full implementation in 2023, we and other supply chain Laws Relating to Foreign Trade and Operations
stakeholders will participate in an electronic, interoperable, U.S. and foreign laws require us to abide by standards relating to the
prescription drug tracing system. In addition, the FDA also has issued import and export of finished goods, raw materials and supplies and
regulations requiring most medical device labeling to bear a unique the handling of information. We also must comply with various export
device identifier. These regulations are being phased in through control and trade embargo laws, which may require licenses or other
2020. The MDR, described above, also introduces a new unique authorizations for transactions within some countries or with some
device identifier requirement. counterparties.

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

conduct of our foreign operations, including the U.S. Foreign Corrupt
Practices Act, the U.K. Bribery Act and other foreign anti-bribery laws.
Among other things, these laws generally prohibit companies and
their intermediaries from offering, promising or making payments to
officials of foreign governments for the purpose of obtaining or
retaining business. For example, in February 2020, we paid
approximately $8.4 million to the Securities and Exchange
Commission to settle charges that our internal controls were not
sufficient to detect improper payments made by employees of our
former China distribution business.

Business
Other Information
Although our agreements with manufacturers sometimes require us Our customer return policies generally require that the product be
to maintain inventory levels within specified ranges, our distribution physically returned, subject to restocking fees. We only allow
businesses are generally not required by our customers to maintain customers to return product for credit that can be added back to
particular inventory levels other than as needed to meet service level inventory and resold at full value, or that can be returned to vendors
requirements. Certain customer contracts require us to maintain for credit.
sufficient inventory to meet emergency demands, but we do not
We offer market payment terms to our customers.
believe those requirements materially affect inventory levels.

Risk Factors
Risk Factors
The risks described below could materially and adversely affect our governmental authorities in many countries, including the U.S., are
results of operations, financial condition, liquidity or cash flows. These enacting legislative or regulatory changes to address the impact of
are not the only risks we face. Our businesses also could be affected the pandemic, which may restrict or require changes in our
by risks that we are not presently aware of or that we currently operations, increase our costs, or otherwise have an adverse effect
consider immaterial to our operations. In addition to the effects of the on our operations.
COVID-19 pandemic and resulting global disruptions on our business As a critical player in the global healthcare supply chain, we
and operations discussed in “Management’s Discussion and Analysis participated in industry-wide collaboration with the U.S. government
of Financial Condition and Results of Operations,” and in the risk and other distributors intended to increase the availability of PPE in
factors below, additional or unforeseen effects from the COVID-19 the U.S. In connection with these efforts, we, along with other
pandemic and the global economic climate may arise or may amplify distributor participants, have received information requests from
many of the risks discussed below. several members of the U.S. Congress.
We have been and expect to continue to be negatively affected Also, we may become subject to claims or lawsuits by employees,
by the ongoing COVID-19 pandemic. customers, suppliers or other parties regarding actions we take in
See the description of the actual and possible effects of the COVID-19 our operations in response to the pandemic. Financial hardship to
pandemic and resulting disruptions on our business and operations our customers and others could adversely impact the timing and
discussed above in “Management’s Discussion and Analysis of collectability of payments to us from customers and require an
Financial Condition and Results of Operations.” In addition to the increase in reserves against our accounts receivable.
adverse impacts and uncertainties from the COVID-19 pandemic We cannot estimate the length or severity of the COVID-19 pandemic
identified there, we face additional possible adverse impacts, or the related consequences on the U.S. and global economy and
including those described below. our business and operations, including whether and when normal
The cost to manufacture and source certain PPE products has economic and operating conditions will resume or the extent to which
significantly increased, which negatively impacted our margins for the disruption may impact our business, financial position, results of
these products in fiscal 2020 and is expected to negatively impact operations or cash flow. The COVID-19 pandemic also may give rise
our Medical segment profit in fiscal 2021. While we are seeking to new risks or heighten many of the risks we have previously
alternate and additional sources for these products and otherwise identified, including risks associated with competitive pressures,
seeking to mitigate cost increases, as well as increasing certain PPE supplier relationships, international operations, regulatory and
product prices to reflect some of our higher costs and seeking to licensing, changes to the U.S. healthcare environment, cyber
modify affected customer contracts, our segment profit may be security, and access to capital markets. COVID-19 may also
adversely impacted more significantly than we expect to the extent adversely affect our operating and financial results in a manner that
these efforts are not successful. In addition, we could experience is not currently known to us or that we do not currently consider a
decreased sales and customer disputes. significant risk.
Federal, state and local government policies and initiatives designed We could continue to suffer the adverse effects of competitive
to reduce the transmission of COVID-19 also resulted in the pressures.
cancellation or deferral of many elective medical procedures and As described in greater detail in the "Business" section, we operate
some of our customers closing or severely curtailing their operations. in markets that are highly competitive and dynamic. In addition,
If demand for these procedures does not return, or if these policies competitive pressures in our pharmaceutical and medical segments
remain effective over a sustained period we could experience a may be increased by new business models, new entrants, new
greater decrease in sales for the affected products and services than regulations, changes in consumer demand or general competitive
we currently expect. Additionally, sustained changes in the manner dynamics. Our businesses face continued pricing pressure from
in which patients access healthcare may result in shifts in consumer these factors, which adversely affects our margins. If we are unable
preferences that may not be favorable to us. to offset margin reductions caused by these pricing pressures
Political, legal or regulatory actions as a result of the COVID-19 through steps such as sourcing or cost control measures, additional
pandemic in jurisdictions where we manufacture, source or distribute service offerings and sales of higher margin products, our results of
products have created supply disruptions within both our Medical operations could continue to be adversely affected.
and, currently to a lesser extent, our Pharmaceutical segments and Our Pharmaceutical segment’s generic pharmaceutical
from time to time may cause additional supply disruptions or program may be adversely affected by pricing changes and
shortages in the future. We cannot currently predict the frequency, fewer product launches.
duration or scope of these governmental actions and supply The performance of our Pharmaceutical segment’s generic
disruptions. For example, several countries, including India and pharmaceutical program declined in fiscal 2019, 2018 and 2017 and
China, have increased or instituted new restrictions on the export of increased in fiscal 2020. Declines in earlier years were due, in large
medical or pharmaceutical products that we distribute or use in our part, to generic pharmaceutical customer pricing deflation and less
businesses, including key components or raw materials. Additionally, incremental benefit from new generic pharmaceutical launches,
Risk Factors
which more than offset the benefits from sourcing generic retail chains and others relating to the manufacturing, marketing or
pharmaceuticals through our Red Oak Sourcing venture with CVS. distribution of prescription opioid pain medications and additional
If performance of our generic pharmaceutical program declines in public plaintiffs are likely to file similar lawsuits. In addition, we are
future fiscal years and we are unable to offset the decline, our currently being sued by private plaintiffs, such as unions, other health
Pharmaceutical segment profit and consolidated operating earnings and welfare funds, hospital systems and other healthcare providers,
will be adversely affected. for the same activities and could be named as a defendant in
The extent and magnitude of generic pharmaceutical pricing changes additional lawsuits.
is uncertain in future fiscal years and may vary from what we We have also received federal grand jury subpoenas issued in
anticipate. Similarly, the number of new generic pharmaceutical connection with investigations being conducted by the U.S.
launches also varies from year to year, and the margin impact of Attorney’s Office for the Eastern District of New York and by the
these launches varies from product to product. Finally, the benefit Fraud Section of the U.S. Department of Justice (DOJ). The
from Red Oak Sourcing could be less than we anticipate. subpoenas seek documents and, with respect to the DOJ
Changes in manufacturer approaches to pricing branded investigation, testimony relating to our anti-diversion policies and
pharmaceutical products could have an adverse effect on our procedures, and our distribution of certain controlled substances.
Pharmaceutical segment’s margins. In October 2019, we agreed in principle to a Settlement Framework
Compensation under our contractual arrangements with that would resolve pending and future lawsuits and claims brought
manufacturers for the purchase of branded pharmaceutical products by states and political subdivisions. In connection with this
is generally based on the wholesale acquisition cost set by the development we recorded a pre-tax accrual of $5.56 billion in fiscal
manufacturer. Sales prices of branded pharmaceutical products to 2020. This Settlement Framework is subject to contingencies but is
our customers generally are a percentage discount from wholesale the basis for our negotiation of definitive terms and documentation.
acquisition cost. Definitive terms of a settlement under the Settlement Framework
continue to be negotiated, and there is no assurance that the
Historically, pharmaceutical manufacturers have generally increased
necessary parties will agree to a definitive settlement agreement or
the wholesale acquisition cost of their branded pharmaceuticals each
that the contingencies to any agreement will be satisfied. The amount
year. However, the U.S. government has announced plans to, among
of ultimate loss may differ materially from this accrual. See Note 7 of
other things, adopt policies to encourage manufacturers to limit
the "Notes to Consolidated Financial Statements" for more
increases in (or reduce) wholesale acquisition cost. In fiscal 2019
information regarding these matters.
and fiscal 2020, manufacturers, in the aggregate, increased prices
less than in prior years. If manufacturers change their historical The defense and resolution of current and future lawsuits and events
approach to setting and increasing wholesale acquisition cost and relating to these lawsuits are subject to uncertainty and could have
we are unable to negotiate alternative ways to be compensated by a material adverse effect on our results of operations, financial
manufacturers or customers for the value of our services, our condition, cash flows, liquidity, or our ability to pay dividends or
Pharmaceutical segment profit and consolidated operating earnings repurchase our shares, beyond the amounts accrued. In addition,
could be adversely affected. they could have adverse reputational or operational effects on our
business.
Also, almost all of our distribution services agreements with branded
pharmaceutical manufacturers generally provide that we receive fees Other legislative, regulatory or industry measures related to the public
from the manufacturers to compensate us for services we provide health crisis involving the abuse of prescription opioid pain
them. However, under a limited number of agreements, branded medication and the distribution of these medications could affect our
pharmaceutical price appreciation, which is determined by the business in ways that we may not be able to predict. For example,
manufacturers also serves as a part of our compensation. If several states have now adopted taxes or other fees on the sale of
manufacturers decide to reduce prices, not to increase prices or to opioids, and several other states have proposed similar legislative
implement only small increases and we are unable to negotiate initiatives. These laws and proposals vary in the tax amounts imposed
alternative ways to be compensated by manufacturers or customers and the means of calculation. Liabilities for taxes or assessments
for the value of our services, our margins could be adversely affected. under any such laws could have an adverse impact on our results of
operations unless we are able to mitigate them through operational
The public health crisis involving the abuse of prescription
changes or commercial arrangements where permitted.
opioid pain medication and our efforts to resolve related claims
could have additional or unexpected material negative effects Ongoing unfavorable publicity regarding the abuse or misuse of
on our business. prescription opioid pain medications and the role of wholesale
distributors in the supply chain of such prescription medications, as
Our Pharmaceutical segment distributes prescription opioid pain
well as the continued proliferation of the opioid lawsuits,
medications. In recent years, the abuse of prescription opioid pain
investigations, regulations and legislative actions, and unfavorable
medication has become a public health crisis.
publicity in relation to those lawsuits could have a material adverse
A significant number of states, counties, municipalities and other effect on our reputation or results of operations.
public plaintiffs, have filed lawsuits against pharmaceutical
manufacturers, pharmaceutical wholesale distributors (including us),

Risk Factors
Products that we manufacture, source and market are subject operating standards, and comply with the CSA. Failure to maintain
to strict quality and regulatory requirements. The recalls of or renew necessary permits, product registrations, licenses or
certain surgical gowns and related Presource Procedure Packs approvals, or to comply with required standards, could have an
had a negative impact on our financial results in fiscal 2020 and adverse effect on our results of operations and financial condition.
may have additional negative financial and operational impacts. We collect, handle and maintain patient-identifiable health
As described in greater detail in the "Business" section, products that information and other sensitive personal and financial information
we manufacture, source, distribute or market must comply with which are subject to federal, state and foreign laws that regulate the
quality and regulatory requirements. Noncompliance or concerns use and disclosure of such information. Regulations currently in place
over noncompliance, including noncompliance by third-party contract continue to evolve, and new laws in this area could further restrict
manufacturers, may result in suspension of our ability to distribute, our ability to collect, handle and maintain personal or patient
import, manufacture or source products, as well as product bans, information, or could require us to incur additional compliance costs,
recalls, safety alerts or seizures, or criminal or civil sanctions, which, either of which could have an adverse impact on our results of
in turn, could result in product liability claims and lawsuits, including operations. Violations of federal, state or foreign laws concerning
class actions. In addition, it can be costly and time-consuming to privacy and data protection could subject us to civil or criminal
obtain regulatory approvals or product registrations to market a penalties, breach of contract claims, costs for remediation and harm
medical device or other product, and such approvals or registrations to our reputation.
might not be granted on a timely basis, if at all. We are required to comply with laws relating to healthcare fraud and
In January, 2020, we issued a voluntary recall for 9.1 million AAMI abuse. The requirements of these laws are complex and subject to
Level 3 surgical gowns and two voluntary field actions (a recall of varying interpretations. From time to time, regulatory authorities
some packs and a corrective action allowing overlabeling of other investigate our policies or practices, and may challenge them. If we
packs) for 2.9 million Presource Procedure Packs containing affected fail to comply with these laws, we could be subject to federal or state
gowns (together, the "Recalls") because one of our FDA-registered government investigations or qui tam actions (false claims cases
suppliers in China had shifted production of some gowns to initiated by private parties purporting to act on behalf of federal or
unapproved sites with uncontrolled environments. Because of this, state governments), which could result in civil or criminal sanctions,
we could not assure sterility of the gowns. including the loss of licenses or the ability to participate in Medicare,
In connection with the Recalls, in fiscal year 2020, we recorded a Medicaid and other federal and state healthcare programs.
total charge of $85 million, of which $48 million is within cost of Some businesses within each of our segments are Medicare-certified
products sold and $37 million is within SG&A in the consolidated suppliers or participate in other federal and state healthcare
statements of earnings/(loss). See Note 7 of the "Notes to programs, such as state Medicaid program and the federal 340B drug
Consolidated Financial Statements" for more information regarding pricing program. In addition, some businesses manufacture
these matters. pharmaceutical or medical products or repackage pharmaceuticals
In addition, the Recalls may have other negative impacts, which could that are purchased or reimbursed through, or are otherwise governed
include government investigations and enforcement actions by the by, federal or state healthcare programs. Failure to comply with
U.S. Food and Drug Administration or other regulators or U.S. or applicable eligibility requirements, standards and regulations could
international governmental bodies, which could possibly result in the result in civil or criminal sanctions, including the loss of our ability to
suspension or revocation of the authority to produce, distribute and participate in Medicare, Medicaid and other federal and state
sell products and other civil or criminal sanctions or penalties. healthcare programs.
Our business is subject to other rigorous regulatory and Our government contracts are subject to specific procurement
licensing requirements. requirements. Failure to comply with applicable rules or regulations
or with contractual or other requirements may result in monetary
In addition to regulatory requirements relating to manufacturing,
damages and criminal or civil penalties as well as termination of our
sourcing and marketing our products described in the Risk Factor
government contracts or our suspension or debarment from
immediately above and as described in greater detail in the
government contract work.
"Business" section, our business is highly regulated in the United
States, at both the federal and state level, and in foreign countries. Our global operations are required to comply with the U.S. Foreign
If we fail to comply with regulatory requirements, or if allegations are Corrupt Practices Act ("FCPA"), the U.K. Bribery Act and similar anti-
made that we fail to comply, our results of operations and financial bribery laws in other jurisdictions and U.S. and foreign export control,
condition could be adversely affected. trade embargo and customs laws. If we fail to comply, or are alleged
to fail to comply, with any of these laws, we could suffer civil or criminal
To lawfully operate our businesses, we are required to obtain and
sanctions. For example, in February 2020, we paid approximately
hold permits, product registrations, licenses and other regulatory
$8.4 million to the Securities and Exchange Commission to settle
approvals from, and to comply with operating and security standards
charges that our internal controls were not sufficient to detect
of, numerous governmental bodies. For example, as a wholesale
improper payments made by employees of our former China
distributor of controlled substances, we must hold valid DEA
distribution business.
registrations and state-level licenses, meet various security and

Risk Factors
We could be subject to adverse changes in the tax laws or industry shifting away from traditional healthcare venues like
challenges to our tax positions. hospitals and into clinics, physician offices and patients’ homes.
We are a large multinational corporation with operations in the United We expect the U.S. healthcare industry to continue to change
States and many foreign countries. As a result, we are subject to the significantly in the future. Possible changes include further reduction
tax laws of many jurisdictions. or limitations on governmental funding at the state or federal level,
From time to time, initiatives are proposed in the United States and efforts by healthcare insurance companies to further limit payments
other jurisdictions in which we operate that could adversely affect our for products and services or changes in legislation or regulations
tax positions, effective tax rate or tax payments. Specific initiatives governing prescription pharmaceutical pricing, healthcare services
that may impact us include possible increases in U.S. or foreign or mandated benefits. These possible changes, and the uncertainty
corporate income tax rates or other changes in tax law to raise surrounding these possible changes, may adversely affect us.
revenue, the repeal of the LIFO (last-in, first-out) method of inventory Our business and operations depend on the proper functioning
accounting for income tax purposes, the establishment or increase of information systems, critical facilities and distribution
in taxation at the U.S. state level on the basis of gross revenues, networks.
recommendations of the recently completed base erosion and profit We rely on our and third-party service providers' information systems
shifting project undertaken by the Organization for Economic for a wide variety of critical operations, including to obtain, rapidly
Cooperation and Development and the European Commission’s process, analyze and manage data to:
investigation into illegal state aid.
• facilitate the purchase and distribution of inventory items from
Additionally, in connection with the $5.63 billion pre-tax charge for numerous distribution centers;
the opioid litigation, in the fiscal year ended June 30, 2020, we
• receive, process and ship orders on a timely basis;
recorded a tax benefit of $488 million, which is net of unrecognized
tax benefits of $469 million, reflecting our current assessment of the • manage accurate billing and collections for thousands of
estimated future deductibility of the amount that may be paid. We customers;
have made reasonable estimates and recorded amounts based on • process payments to suppliers;
management's judgment and our current understanding of the Tax • facilitate manufacturing and assembly of medical products; and
Act; however, these estimates require significant judgment since the
• generate financial information.
definitive settlement terms and documentation, including provisions
related to deductibility, under the Settlement Framework have not Our business also depends on the proper functioning of our and our
been negotiated and the U.S. tax law governing deductibility was suppliers' critical facilities, including our national logistics center, and
changed by the Tax Act. Further, the tax authorities could challenge our distribution networks. Our results of operations could be
our interpretation of the Tax Act or the estimates and assumptions adversely affected if our or a service provider's information systems,
used to assess the future deductibility of these benefits. The actual critical facilities or distribution networks are disrupted (including
amount of tax benefit related to uncertain tax positions may differ disruption of access), are damaged or fail, whether due to physical
materially from these estimates. See Note 7 of the "Notes to disruptions, such as fire, natural disaster, pandemic or power outage,
Consolidated Financial Statements" for more information regarding or due to cyber-security incidents, ransomware or other actions of
these matters. third parties, including labor strikes, political unrest and terrorist
attacks. Manufacturing disruptions also can occur due to regulatory
We file income tax returns in the U.S. federal jurisdiction, various
action, production quality deviations, safety issues or raw material
U.S. state jurisdictions and various foreign jurisdictions. With few
shortages or defects, or because a key product or component is
exceptions, we are subject to audit by taxing authorities for fiscal
manufactured at a single manufacturing facility with limited alternate
years 2008 through the current fiscal year. Tax laws are complex and
facilities.
subject to varying interpretations. Tax authorities have challenged
some of our tax positions, including IRS challenges to our From time to time, our businesses perform business process
international transfer pricing for the periods from 2008 to 2014, and improvements or infrastructure modernizations or use service
it is possible that they will challenge others. These challenges may providers for key systems and processes, such as receiving and
adversely affect our effective tax rate or tax payments. processing customer orders, customer service and accounts
payable. For example, our Pharmaceutical segment is currently
Changes to the U.S. healthcare environment may not be
engaged in a multi-year project to implement a replacement of certain
favorable to us.
finance and operating information systems. If any of these initiatives
Over a number of years, the U.S. healthcare industry has undergone are not successfully or efficiently implemented or maintained, they
significant changes designed to increase access to medical care, could adversely affect our business and our internal control over
improve safety and patient outcomes, contain costs and increase financial reporting.
efficiencies. These changes include a general decline in Medicare
and Medicaid reimbursement levels, efforts by healthcare insurance
companies to limit or reduce payments to pharmacies and providers,
the basis for payments beginning to transition from a fee-for-service
model to value-based payments and risk-sharing models, and the

Risk Factors
Our business and results of operations could be adversely pandemics, such as COVID-19, and actions by U.S. or international
affected if we experience a cyber-attack or other systems governments, including export restrictions or tariffs. In addition, due
breach. to the stringent regulatory requirements regarding the manufacture
Our business relies on the secure transmission, storage and hosting and sourcing of our products, we may not be able to quickly establish
of patient-identifiable health information, financial information and additional or replacement sources for certain components, materials
other sensitive protected information relating to our customers, or products. A sustained supply reduction or interruption, and an
company and workforce. We have programs in place to detect, inability to develop alternative and additional sources for such supply,
contain and respond to information security incidents. However, could result in lost sales, increased cost, damage to our reputation,
because the techniques used to obtain unauthorized access, disable and may have an adverse effect on our business.
or degrade service or sabotage systems change frequently and may Our manufacturing businesses use oil-based resins, pulp, cotton,
be difficult to detect for long periods of time, we may be unable to latex and other commodities as raw materials in many products.
anticipate these techniques or to implement adequate preventative Prices of oil and gas also affect our distribution and transportation
measures. In addition, hardware, software or applications developed costs. Prices of these commodities are volatile and can fluctuate
internally or procured from third parties may contain defects in design significantly, causing our costs to produce and distribute our products
or manufacture or other problems that could unexpectedly to fluctuate. Due to competitive dynamics and contractual limitations,
compromise information security. we may be unable to pass along cost increases through higher prices.
Unauthorized parties have gained access and will continue to attempt If we cannot fully offset cost increases through other cost reductions,
to gain access to our or a service provider's systems or facilities or recover these costs through price increases or surcharges, our
through fraud, trickery or other forms of deception. We have been results of operations could be adversely affected.
the target of cyber attacks, including incidents where certain Changes or uncertainty in U.S. or international trade policies
customer account information was accessed. Although we do not and exposure to economic, political and currency risks, could
believe these incidents had a material impact on us, similar incidents disrupt our global operations or negatively impact our financial
or events in the future may negatively impact our business, reputation results.
or financial results. We conduct our operations in various regions of the world outside of
Any compromise of our or a service provider's information systems, the United States, including Europe, Asia and Latin America. Global
including unauthorized access to or use or disclosure of sensitive developments can affect our business in many ways. Our global
information, could adversely impact our operations, results of operations are affected by local economic environments, including
operations or our ability to satisfy legal or regulatory requirements, inflation, recession and competition. Additionally, divergent or
including the California Consumer Privacy Act (CCPA), the new EU unfamiliar regulatory systems and labor markets can increase the
general data protection regulation (GDPR) and those related to risks and burdens of operating in numerous countries.
patient-identifiable health information as further described in the Risk Our foreign operations expose us to a number of risks related to trade
Factor titled “Our business is subject to rigorous regulatory and protection laws, tariffs, excise or other border taxes on goods sourced
licensing requirements,” above. from certain countries or on the importation or exportation of products
We depend on direct and indirect suppliers to make their or raw materials. Changes or uncertainty in U.S. or international trade
products and raw materials available to us and are subject to policies or tariffs could impact our global operations, as well as our
fluctuations in costs and availability of products and raw customers and suppliers. We may be required to spend more money
materials. to source certain products or materials that we need or to manufacture
We depend on others to manufacture some products that we market certain of our products. This could adversely impact our business
and distribute. Our operations are also dependent on various and results of operations.
components, compounds, raw materials and energy supplied by As a result of the COVID-19 pandemic, many governments, including
others. We purchase many of these components, raw materials and the U.S., China and India have, or have considered, restrictions on
energy, and source certain products from numerous suppliers in exports of medical and pharmaceutical products. If these restrictions
various countries. In some instances, for reasons of quality are implemented or not lifted, we may experience a significant
assurance, cost effectiveness, or availability, we procure certain disruption in our ability to source pharmaceutical and medical
components and raw materials from a sole supplier. Any of our products and could experience increased prices and lost sales.
supplier relationships could be interrupted, become less favorable In addition, we conduct our business in U.S. dollars and various
to us or be terminated and the supply of these components, functional currencies of our foreign subsidiaries. Changes in foreign
compounds, raw materials or products could be interrupted or currency exchange rates could adversely affect our financial results,
become insufficient. These risks are currently heightened with which are reported in U.S. dollars. We may not be able to hedge to
respect to certain PPE products due to the current and expected protect us against these exposures, and any hedges may not
future demand for such products. These supply interruptions or other successfully mitigate these exposures.
disruptions in manufacturing processes could be caused by events
beyond our control, including natural disasters, supplier facility shut-
downs, defective raw materials, the impact of epidemics or

Risk Factors
Our sales and credit concentration is significant. of affected products or force us to make royalty payments in order
CVS is a large customer that generates a significant amount of our to continue selling the affected products.
revenue. CVS accounted for 26 percent of our fiscal 2020 revenue Our results of operations could be adversely impacted if we fail
and 26 percent of our gross trade receivable balance at June 30, to manage and complete divestitures.
2020. If CVS does not renew our agreements, terminates the We regularly evaluate our portfolio of businesses to determine
agreements due to an alleged default by us, defaults in payment or whether an asset or business may no longer help us meet our
significantly reduces its purchases from us, our results of operations objectives or whether there may be a more advantaged owner for
and financial condition could be adversely affected. that business. For example, in the past few years, we divested our
Consolidation in the U.S. healthcare industry may negatively pharmaceutical and medical products distribution business in China
impact our results of operations. and our ownership interest in naviHealth, Inc. When we decide to
In recent years, U.S. healthcare industry participants, including sell assets or a business, we may encounter difficulty finding buyers
distributors, manufacturers, suppliers, healthcare providers, insurers or alternative exit strategies, which could delay the achievement of
and pharmacy chains, have consolidated or formed strategic our strategic objectives. We could also experience greater dis-
alliances. Consolidations create larger enterprises with greater synergies than expected and the impact of the divestiture on our
negotiating power, and also could result in the possible loss of a results of operations could be greater than anticipated.
customer where the combined enterprise selects one distributor from Our ability to manage and complete acquisitions could impact
two incumbents. If this consolidation trend continues, it could our strategic objectives and financial condition.
adversely affect our results of operations. An important element of our growth strategy has been to acquire
Legal proceedings could adversely impact our cash flows or other businesses that expand or complement our existing
results of operations. businesses. Completion of acquisitions and the integration of
Due to the nature of our business, which includes the distribution of acquired businesses involve a number of risks, including the
controlled substances and other pharmaceutical products and the following: we may overpay for a business or fail to realize the
sourcing, marketing and manufacturing of medical products, we synergies and other benefits we expect from the acquisition; our
regularly become involved in disputes, litigation and regulatory management’s attention may be diverted to integration efforts; we
matters. Litigation is inherently unpredictable and the unfavorable may fail to retain key personnel of the acquired business; future
outcome of one or more of these legal proceedings could adversely developments may impair the value of our purchased goodwill or
affect our results of operations or financial condition. intangible assets; we may face difficulties or delays establishing,
integrating or combining operations and systems, including
For example, we are subject to a number of lawsuits and
manufacturing facilities; we may assume liabilities related to legal
investigations related to the national health crisis involving the abuse
proceedings involving the acquired business; we may face
of opioid pain medication as described above in the Risk Factor titled
challenges retaining the customers of the acquired business; or we
"The public health crisis involving the abuse of prescription opioid
may encounter unforeseen internal control, regulatory or compliance
pain medication and our efforts to resolve related claims could have
issues.
additional or unexpected material negative effects on our business"
and in Note 7 to the "Notes to Consolidated Financial Statements." We may not realize the expected benefits from planned cost-
savings and business improvement initiatives.
Additionally, some of the products that we distribute or manufacture
have been and may in the future be alleged to cause personal injury, As a part of an ongoing effort to optimize and simplify our operating
subjecting us to product liability claims. For example, we are a model, we expect to transition portions of our finance operations to
defendant in product liability lawsuits that allege personal injuries a global professional services firm and we are making structural
associated with the use of Cordis OptEase and TrapEase inferior changes to certain other functional and commercial areas of our
vena cava (IVC) filter products and in lawsuits alleging impurities in organization as well. Additionally, our Pharmaceutical segment is in
the active pharmaceutical ingredients in certain pharmaceutical a multi-year project to implement a replacement of certain finance
products. In addition, product liability insurance for these types of and operating information systems. These initiatives, and any similar
claims is becoming more limited and may not be available to us at initiatives identified and implemented in the future, could result in
amounts that we historically have obtained or that we would like to unexpected charges and expenses that negatively impact our
obtain. It is possible that a settlement of or judgment for a product financial results and we could fail to achieve the desired efficiencies
liability claim may not be covered by insurance or exceed available and estimated cost savings. In addition, if we are not able to effectively
insurance recoveries. If this happens, and if any such settlement or implement these initiatives, or if they fail to operate as intended, our
judgment is in excess of any prior accruals, our results of operations internal control over financial reporting could be adversely affected.
and financial condition could be adversely affected. Additionally, these types of initiatives could yield unintended
We also operate in an industry characterized by extensive intellectual consequences such as distraction of management and employees,
property litigation. Patent litigation can result in significant damage business disruption, an inability to attract or retain key personnel,
awards and injunctions that could prevent the manufacture and sale which could negatively affect our business or financial condition and
results of operations.

Risk Factors
If we are not able to effectively develop, implement and manage our

outsourcing or similar third-party relationships, we may experience
operational difficulties and increased costs, which may adversely
affect our results of operations.
Our goodwill may be further impaired, which would require us
to record a significant charge to earnings in accordance with
generally accepted accounting principles.
U.S. GAAP requires us to test our goodwill for impairment on an
annual basis, or more frequently if indicators for potential impairment
exist. In the fourth quarter of fiscal year 2018, we recorded a $1.4
billion impairment to goodwill within our Medical segment. The testing
required by GAAP involves estimates and significant judgments by
management. Although we believe our assumptions and estimates
are reasonable and appropriate, any changes in key assumptions,
including a failure to meet business plans or other unanticipated
events and circumstances such as a rise in interest rates, may affect
the accuracy or validity of such estimates. It is possible that we may
record significant charges related to other reporting units or we may
record additional charges in our Medical segment, which charge or
charges could adversely affect our results of operations. See "Critical
Accounting Policies and Sensitive Accounting Estimates" in MD&A
above for more information regarding goodwill impairment testing.

Properties and Legal Proceedings
Properties
In the United States, at June 30, 2020, the Pharmaceutical segment Our principal executive offices are headquartered in an owned
operated one national logistics center; a number of primary building located at 7000 Cardinal Place in Dublin, Ohio.
pharmaceutical and specialty distribution facilities as well as nuclear We consider our operating properties to be in satisfactory condition
pharmacy and radiopharmaceutical manufacturing facilities. The and adequate to meet our present needs. However, we regularly
Medical segment operated medical-surgical distribution, assembly, evaluate operating properties and may make further additions and
manufacturing and other operating facilities in the United States. improvements or consolidate locations as we seek opportunities to
At June 30, 2020, our Medical segment operated manufacturing expand or enhance the efficiency of our business.
facilities in the United States, including Puerto Rico, Canada, Costa
Rica, the Dominican Republic, Germany, Ireland, Japan, Malaysia,
Malta, Mexico and Thailand.
Legal Proceedings
In addition to the proceedings described below, the legal proceedings described in Note 7 of the "Notes to Consolidated Financial Statements"
are incorporated in this "Legal Proceedings" section by reference.
In June 2019, Melissa Cohen, a purported shareholder, filed an action 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. In December 2019 and January 2020,
similar complaints were filed in the U.S. District Court for the Southern District of Ohio by purported shareholders, Stanley M. Malone and
Michael Splaine, respectively. In January, 2020, the court consolidated the derivative cases under the caption In re Cardinal Health, Inc.
Derivative Litigation and in March 2020, plaintiffs filed an amended complaint. The amended consolidated derivative complaint seeks, among
other things, unspecified money damages against the defendants and an award of attorneys' fees. In June 2020, the defendants filed a motion
to dismiss the complaint.

Market for Registrant's Common Equity
Market for Registrant's Common Equity, Related Stockholder

Matters and Issuer Purchases of Equity Securities
Our common shares are listed on the New York Stock Exchange under the symbol “CAH.”
At July 31, 2020 there were approximately 7,324 shareholders of record of our common shares.
We anticipate that we will continue to pay quarterly cash dividends in the future. The payment and amount of future dividends remain, however,
within the discretion of our Board of Directors and will depend upon our future earnings, financial condition, capital requirements and other
factors.
Issuer Purchases of Equity Securities
Approximate
Dollar Value of
Total Number of Shares Shares That May
Total Number Purchased Yet be Purchased
of Shares Average Price Paid per as Part of Publicly Under the Programs (2)
Period Purchased (1) Share Announced Programs (2) (in millions)
April 2020 1,406 $ 49.91 — $ 943
May 2020 325 51.44 — 943
June 2020 217 52.38 — 943
Total 1,948 $ 50.44 — $ 943
(1) Reflects 1,406, 325 and 217 common shares purchased in April, May and June 2020, respectively, through a rabbi trust as investments of participants in our Deferred
Compensation Plan.
(2) On November 7, 2018, our Board of Directors approved a $1.0 billion share repurchase program that expires on December 31, 2021. As of June 30, 2020, we have $943
million authorized for share repurchases remaining under this program.

Market for Registrant's Common Equity
Five Year Performance Graph

The following line graph compares the cumulative total return of our common shares with the cumulative total return of the Standard & Poor’s
Composite—500 Stock Index (the "S&P 500 Index") and the Standard & Poor's Composite—500 Healthcare Index (the "S&P 500 Healthcare
Index"). The line graph assumes, in each case, an initial investment of $100 invested at the closing price on June 30, 2015, and is based on
the market prices at the end of each fiscal year through and including June 30, 2020, and reinvestment of dividends. The S&P 500 Index and
S&P 500 Healthcare Index investments are weighted on the basis of market capitalization at the beginning of each period.
June 30
2015 2016 2017 2018 2019 2020
Cardinal Health, Inc. $ 100.00 $ 95.12 $ 97.26 $ 62.90 $ 63.11 $ 72.70
S&P 500 Index 100.00 103.99 122.60 140.23 154.83 166.45
S&P 500 Healthcare Index 100.00 97.98 110.19 118.02 133.35 147.89

Reports
Management Reports
Evaluation of Disclosure Controls and Procedures
We evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls
and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of June 30, 2020. Based
on this evaluation, our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures
were effective as of June 30, 2020 to provide reasonable assurance that information required to be disclosed in our reports under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information
is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f)
under the Exchange Act. Our internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of
its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, controls deemed effective now
may become inadequate in the future because of changes in conditions, or because compliance with policies or procedures has deteriorated
or been circumvented.
Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2020. In making this assessment,
management used the criteria established in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) (the “COSO criteria”). Based on management’s assessment and the COSO criteria,
management believes that our internal control over financial reporting was effective as of June 30, 2020.
Our independent registered public accounting firm, Ernst & Young LLP, has issued a report on our internal control over financial reporting.
Ernst & Young LLP’s report appears following this "Management Reports" section and expresses an unqualified opinion on the effectiveness
of our internal control over financial reporting.
Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2020 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
Implementation of Business Improvement Initiatives

We have certain business improvement initiatives underway that we expect to affect internal control over financial reporting in fiscal year
2021. During fiscal year 2021, as a part of an ongoing effort to optimize and simplify our operating model, we expect to transition portions of
our finance operations to a global professional services firm. Additionally, the Pharmaceutical segment is in a multi-year project to implement
a replacement of certain finance and operating information systems. If either of these initiatives are not effectively implemented, or fail to
operate as intended, it could adversely affect our internal control over financial reporting.

Reports
Report of Independent Registered Public Accounting Firm on

Internal Control Over Financial Reporting
The Shareholders and the Board of Directors of Cardinal Health, Inc.
Opinion on Internal Control over Financial Reporting

We have audited Cardinal Health, Inc. and subsidiaries’ internal control over financial reporting as of June 30, 2020, based on criteria established
in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)
(the COSO criteria). In our opinion, Cardinal Health, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal
control over financial reporting as of June 30, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated balance sheets of the Company as of June 30, 2020 and 2019, the related consolidated statements of earnings/(loss),
comprehensive income/(loss), shareholders' equity and cash flows for each of the three years in the period ended June 30, 2020, and the
related notes and the financial statement schedule listed in the Index at Item 15(a)(2) and our report dated August 13, 2020 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying “Management’s Report on Internal Control Over Financial
Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are
a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP

Grandview Heights, Ohio
August 13, 2020

Reports
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Cardinal Health, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Cardinal Health, Inc. and subsidiaries (the Company) as of June 30, 2020
and 2019, the related consolidated statements of earnings/(loss), comprehensive income/(loss), shareholders' equity and cash flows for each
of the three years in the period ended June 30, 2020, and the related notes and the financial statement schedule listed in the Index at Item
15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company at June 30, 2020 and 2019, and the results of its operations and its cash flows
for each of the three years in the period ended June 30, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
Company's internal control over financial reporting as of June 30, 2020, based on criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August 13, 2020
expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Medical Unit Goodwill

Description At June 30, 2020, goodwill related to the Company’s Medical segment, including the Medical Unit was $5.7 billion. As discussed in
of the Note 1 to the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level.
Matter
Auditing management’s goodwill impairment test for the Medical Unit was challenging because there is significant judgement required
in determining the fair value of the reporting unit. In particular, the fair value estimate was sensitive to significant judgmental
assumptions including the revenue growth rate, gross margin, distribution, selling, general and administrative expenses, and company
specific risk premium, which are affected by expectations about future market or economic conditions.
How We We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill
Addressed impairment review process. For example, we tested controls over management’s review of significant judgmental assumptions,
the Matter including the revenue growth rate, gross margin, distribution, selling, general and administrative expenses, and company specific
in Our Audit risk premium, among other assumptions.
To test the estimated fair value of the Medical Unit, we performed audit procedures that included, among others, evaluating
methodologies used, involving our valuation specialists in testing the significant assumptions described above and testing the
underlying data used by the Company in its analysis for completeness and accuracy. We compared the significant assumptions used
by management to current industry and economic trends, recent historical performance, changes to the reporting unit’s business
model, customer base or product mix and other relevant factors. We assessed the historical accuracy of management’s estimates
and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit that would
result from changes in the assumptions. We evaluated the incorporation of the applicable assumptions into the model and tested
the model’s computational accuracy. In addition, we inspected the Company’s reconciliation of the fair value of all reporting units to
the market capitalization of the Company and assessed the result.

Reports
Product Liability Lawsuits

Description As described in Note 1 and Note 7 to the consolidated financial statements, the Company is a defendant in various product liability
of the claims in which individuals seek damages associated with the use of Cordis OptEase and TrapEase inferior vena cava (IVC) filter
Matter products. The Company accrues for losses and defense costs related to product liability at the time a loss is probable and the amount
of loss can be reasonably estimated. The methodology used by the Company to project future Cordis IVC claim costs is based largely
on recent experience, including claim filing rates, indemnity severity by claim type, sales data, implant and injury to report lag patterns,
and defense costs. The Company periodically reviews such estimates and records adjustments for changes in reserves in the period
in which the change in estimate occurs. At June 30, 2020, the Company’s product liability reserve balance related to the Cordis IVC
lawsuits totaled $468 million, net of estimated insurance recoveries. The Company believes 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, the
Company has accrued the minimum amount in the range. The Company estimates the high end of the range to be approximately
$919 million, net of estimated insurance recoveries.
Auditing management’s accounting for and disclosure of loss contingencies related to the Cordis IVC product liability lawsuits was
challenging due to the significant judgment required to develop the key assumptions utilized in the model and the nature of information
available given the early stages of these lawsuits and the limited claims history.
How We We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over management’s
Addressed evaluation of the product liability litigation reserve. For example, we tested controls over management’s review of the model used
the Matter to estimate the product liability reserve amount and the significant assumptions as described above used within the model. We also
in Our Audit tested management’s controls over the completeness and accuracy of the data used in the model.
To test management’s assessment of the probability of occurrence of a loss and whether the loss was reasonably estimable, we
evaluated, for example, claims data of the Company, we evaluated the legal letters obtained from internal and external legal counsel,
and we discussed with internal and external legal counsel of the plaintiffs’ claims. Among other procedures we performed to test the
measurement of the product liability litigation reserve, we evaluated the method of measuring the reserve for claims including analyses
to determine the range of possible losses, obtained and performed audit procedures relative to the analysis, tested the accuracy
and completeness of the data, and evaluated new or contrary information affecting the estimate. In addition, we involved internal
actuarial specialists to assist with our procedures related to the measurement of the product liability reserve. We have also assessed
the adequacy of the Company’s disclosures included in Note 7 in relation to these matters.
Uncertain Tax Positions
Description As described in Note 8 to the consolidated financial statements, the Company’s unrecognized tax benefits related to its uncertain
of the tax positions were approximately $998 million at June 30, 2020. Uncertain tax positions may arise as tax laws are subject to
Matter interpretation. The Company uses significant judgment in (1) determining if the tax position is more likely than not to be sustained
upon examination, based on the technical merits of the position and (2) measuring the amount of tax benefit that qualifies for
recognition.
Auditing management's estimate of the amount of tax benefit related to the Company's uncertain tax positions that qualified for
recognition was challenging because management's estimate required significant judgment in evaluating the technical merits of the
positions, including interpretations of applicable tax laws and regulations.
How We We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process
Addressed to assess the technical merits of its uncertain tax positions, including the Company’s assessment as to whether a tax position is
the Matter more likely than not to be sustained and management’s process to measure the benefit of its tax positions.
in Our Audit
We involved our international tax, transfer pricing, and national tax professionals in assessing the technical merits of certain of the
Company’s tax positions. Depending on the nature of the specific tax position and, where applicable, developments with the relevant
tax authorities relating thereto, our procedures included obtaining and examining the Company’s analysis. For example, we evaluated
the underlying facts upon which the tax positions are based, and, where applicable, obtained the Company’s correspondence with
local tax authorities. We used our knowledge of international and local income tax laws, as well as historical settlement activity,
where applicable, with local income tax authorities, to evaluate the Company’s accounting for its uncertain tax positions. We evaluated
developments in the applicable tax jurisdictions to assess potential effects on the Company’s positions. We analyzed the Company’s
assumptions and data used to evaluate the appropriateness of the Company’s measurement of tax benefits. We have also evaluated
the Company’s income tax disclosures in relation to these matters.

Reports
Opioid Lawsuits
Description As discussed in Note 7 to the consolidated financial statements, the Company is a defendant in numerous lawsuits brought by certain
of the state governments and other political subdivisions related to opioid matters. The Company accrues for losses related to legal matters
Matter at the time a loss is probable and the amount of loss can be reasonably estimated. In October 2019, the Company agreed in principal
to a global settlement framework (the “Settlement Framework”). The Settlement Framework is subject to contingencies and
uncertainties as to final terms, however, it is the basis for the Company’s negotiation of definitive terms. The Company has accrued
$5.56 billion pretax under the cash component of the Settlement Framework as of June 30, 2020 and is unable to reasonably estimate
the liability associated with other components. Additionally, management is unable to estimate the range of possible loss associated
with these matters.
Auditing the Company’s accounting for, and disclosure of, loss contingencies related to the opioid lawsuits was challenging due to
the significant judgment required to evaluate management’s assessment of the likelihood of a loss being incurred and management’s
determination of whether a reasonable estimate of the range of loss can be made.
How We We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and
Addressed evaluation of this legal contingency. For example, we tested controls over management’s review of the assessment of the probability
the Matter of occurrence of a loss and whether the loss was reasonably estimable and whether the assessment considered all relevant facts.
in Our Audit
To test the Company’s assessment of the probability of a loss and whether the loss was reasonably estimable, among other procedures,
we read the Settlement Framework, requested and received internal and external legal counsel confirmation letters, met with internal
counsel to discuss the status of the proceedings and negotiations of the Settlement Framework, and evaluated the reasonableness
of management’s assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably
estimable. We also assessed the adequacy and the sufficiency of the Company’s disclosures included in Note 7 in relation to these
matters.
/s/ Ernst & Young LLP

We have served as the Company's auditor since 2002.
Grandview Heights, Ohio
August 13, 2020

Financial Statements
Financial Statements and Supplementary Data

Page
Consolidated Financial Statements and Schedule:

Consolidated Statements of Earnings/(Loss) for the Fiscal Years Ended June 30, 2020, 2019 and 2018 49
Consolidated Statements of Comprehensive Income/(Loss) for the Fiscal Years Ended June 30, 2020, 2019 and 2018 50
Consolidated Balance Sheets at June 30, 2020 and 2019 51
Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended June 30, 2020, 2019, and 2018 52
Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2020, 2019 and 2018 53
Notes to Consolidated Financial Statements 54

Consolidated Statements of Earnings/(Loss)

(in millions, except per common share amounts) 2020 2019 2018
Revenue $ 152,922 $ 145,534 $ 136,809
Cost of products sold 146,054 138,700 129,628
Gross margin 6,868 6,834 7,181
Operating expenses:
Distribution, selling, general and administrative expenses 4,572 4,480 4,596
Restructuring and employee severance 122 125 176
Amortization and other acquisition-related costs 524 621 707
Impairments and (gain)/loss on disposal of assets, net 7 (488) 1,417
Litigation (recoveries)/charges, net 5,741 36 159
Operating earnings/(loss) (4,098) 2,060 126
Other (income)/expense, net (1) 15 23

Interest expense, net 238 294 329
Loss on early extinguishment of debt 16 — 2
Gain on sale of equity interest in naviHealth (579) — —
Earnings/(loss) before income taxes (3,772) 1,751 (228)
Provision for/(benefit from) income taxes (79) 386 (487)

Net earnings/(loss) (3,693) 1,365 259
Less: Net earnings attributable to noncontrolling interests (3) (2) (3)

Net earnings/(loss) attributable to Cardinal Health, Inc. $ (3,696) $ 1,363 $ 256
Earnings/(loss) per common share attributable to Cardinal Health, Inc.

Basic $ (12.61) $ 4.55 $ 0.82
Diluted (12.61) 4.53 0.81
Weighted-average number of common shares outstanding:

Basic 293 300 313
Diluted 293 301 315
The accompanying notes are an integral part of these consolidated statements.

Consolidated Statements of Comprehensive Income/(Loss)

(in millions) 2020 2019 2018
Net earnings/(loss) $ (3,693) $ 1,365 $ 259
Other comprehensive income/(loss):

Foreign currency translation adjustments and other 3 18 58
Amounts reclassified to earnings — — (23)
Net unrealized gain/(loss) on derivative instruments, net of tax (28) (5) (2)
Total other comprehensive income/(loss), net of tax (25) 13 33
Total comprehensive income/(loss) (3,718) 1,378 292
Less: comprehensive income attributable to noncontrolling interests (3) (2) (3)

Total comprehensive income/(loss) attributable to Cardinal Health, Inc. $ (3,721) $ 1,376 $ 289

Consolidated Balance Sheets

June 30
Assets
Current assets:
Cash and equivalents $ 2,771 $ 2,531
Trade receivables, net 8,264 8,448
Inventories, net 13,198 12,822
Prepaid expenses and other 1,707 1,946
Total current assets 25,940 25,747
Property and equipment, net 2,366 2,356

Goodwill and other intangibles, net 11,275 11,808
Other assets 1,185 1,052
Total assets $ 40,766 $ 40,963
Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable $ 21,374 $ 21,535
Current portion of long-term obligations and other short-term borrowings 10 452
Other accrued liabilities 2,231 2,122
Total current liabilities 23,615 24,109
Long-term obligations, less current portion 6,765 7,579

Deferred income taxes and other liabilities 8,594 2,945
Shareholders’ equity:
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 June 30, 2020 and 2019, respectively 2,789 2,763
Retained earnings 1,170 5,434
Common shares in treasury, at cost: 34 million shares and 28 million shares at June 30, 2020 and 2019, respectively (2,066) (1,790)
Accumulated other comprehensive loss (104) (79)
Total Cardinal Health, Inc. shareholders' equity 1,789 6,328
Noncontrolling interests 3 2
Total shareholders’ equity 1,792 6,330
Total liabilities and shareholders’ equity $ 40,766 $ 40,963

Consolidated Statements of Shareholders' Equity

Common Shares Treasury Shares Accumulated
Other Total
Shares Retained Comprehensive Noncontrolling Shareholders’
(in millions) Issued Amount Earnings Shares Amount Loss Interests Equity
Balance at June 30, 2017 327 $ 2,697 $ 4,967 (11) $ (731) $ (125) $ 20 $ 6,828
Net earnings 256 (1) 255
Other comprehensive income, net of tax 33 33
Purchase of noncontrolling interests (19) (19)
Employee stock plans activity, including tax
benefit of $10 million — 33 1 57 90
Share repurchase program activity (8) (550) (550)
Dividends declared (584) (584)
Other 6 — 6
Balance at June 30, 2018 327 2,730 4,645 (18) (1,224) (92) — 6,059
Net earnings 1,363 2 1,365
Other comprehensive income, net of tax 13 13
Employee stock plans activity, net of shares
withheld for employee taxes — 33 1 34 67
Other 1 — 1
Balance at June 30, 2019 327 2,763 5,434 (28) (1,790) (79) 2 6,330
Net earnings/(loss) (3,696) 3 (3,693)
Other comprehensive loss, net of tax (25) (25)
Employee stock plans activity, net of shares
withheld for employee taxes — 26 — 74 100
Other 2 (2) —
Balance at June 30, 2020 327 $ 2,789 $ 1,170 (35) $ (2,066) $ (104) $ 3 $ 1,792

Consolidated Statements of Cash Flows

(in millions) 2020 2019 2018
Cash flows from operating activities:
Net earnings/(loss) $ (3,693) $ 1,365 $ 259
Adjustments to reconcile net earnings/(loss) to net cash provided by operating activities:
Depreciation and amortization 913 1,000 1,032
Impairments and loss on sale of other investments — 3 6
Gain on sale of equity interest in naviHealth (579) — —
Impairments and loss/(gain) on disposal of assets, net 7 (488) 1,417
Loss on early extinguishment of debt 16 — 2
Share-based compensation 90 82 85
Provision for/(benefit from) deferred income taxes (961) (83) (1,012)
Provision for bad debts 106 88 74
Change in fair value of contingent consideration obligation — — (2)
Change in operating assets and liabilities, net of effects from acquisitions and divestitures:
Decrease/(increase) in trade receivables 82 (751) (871)
Increase in inventories (409) (551) (1,211)
Increase/(decrease) in accounts payable (162) 1,864 2,574
Other accrued liabilities and operating items, net 6,550 193 415
Net cash provided by operating activities 1,960 2,722 2,768
Cash flows from investing activities:
Acquisition of subsidiaries, net of cash acquired — (82) (6,142)
Additions to property and equipment (375) (328) (384)
Purchase of other investments (20) (18) (9)
Proceeds from sale of investments and available-for-sale securities 886 3 65
Proceeds from divestitures, net of cash sold, and disposal of property and equipment 2 763 862
Net cash provided by/(used in) investing activities 493 338 (5,608)
Cash flows from financing activities:
Payment of contingent consideration obligation — — (35)
Net change in short-term borrowings (2) — (50)
Purchase of noncontrolling interests — — (106)
Proceeds from interest rate swap terminations 112 — —
Proceeds from long-term obligations, net of issuance costs — — 3
Reduction of long-term obligations (1,399) (1,102) (954)
Net tax proceeds/(withholding) from share-based compensation 8 (14) (3)
Dividends on common shares (569) (577) (581)
Purchase of treasury shares (350) (600) (550)
Net cash used in financing activities (2,200) (2,293) (2,276)
Effect of exchange rates changes on cash and equivalents (13) 1 4
Cash reclassified to assets held for sale — — (4)
Net increase/(decrease) in cash and equivalents 240 768 (5,116)
Cash and equivalents at beginning of period 2,531 1,763 6,879
Cash and equivalents at end of period $ 2,771 $ 2,531 $ 1,763
Supplemental Information:
Cash payments for interest $ 226 $ 285 $ 320
Cash payments for income taxes 368 311 425

Notes to Financial Statements
Notes to Consolidated Financial Statements

1. Basis of Presentation and Summary of Receivables and Allowance for Doubtful Accounts
Significant Accounting Policies Trade receivables are presented net of an allowance for doubtful
accounts of $206 million and $193 million at June 30, 2020 and 2019,
Cardinal Health, Inc. is a globally integrated healthcare services and respectively. An account is considered past due on the first day after
products company providing customized solutions for hospitals, its due date. In accordance with contract terms, we generally have
healthcare systems, pharmacies, ambulatory surgery centers, the ability to charge customers service fees or higher prices if an
clinical laboratories and physician offices. We provide medical account is considered past due. We regularly monitor past due
products and pharmaceuticals and cost-effective solutions that accounts and establish appropriate reserves to cover potential
enhance supply chain efficiency. References to “we”, “our” and similar losses, which are based primarily on historical collection rates and
pronouns in these consolidated financial statements are to Cardinal the credit worthiness of the customer. We write off any amounts
Health, Inc. and its majority-owned or controlled subsidiaries unless deemed uncollectible against the established allowance for doubtful
the context otherwise requires. accounts.
Our fiscal year ends on June 30. References to fiscal 2020, 2019 We provide financing to various customers. Such financing
and 2018 in these consolidated financial statements are to the fiscal arrangements range from 1 year to 5 years at interest rates that are
years ended June 30, 2020, 2019 and 2018, respectively. generally subject to fluctuation. Interest income on these
Basis of Presentation arrangements is recognized as it is earned. The financings may be
Our consolidated financial statements include the accounts of all collateralized, guaranteed by third parties or unsecured. Finance
majority-owned or controlled subsidiaries, and all significant notes, net and related accrued interest were $104 million (current
intercompany transactions and amounts have been eliminated. The portion $12 million) and $103 million (current portion $12 million) at
results of businesses acquired or disposed of are included in the June 30, 2020 and 2019, respectively, and are included in other
consolidated financial statements from the date of the acquisition or assets (current portion is included in prepaid expenses and other) in
up to the date of disposal, respectively. the consolidated balance sheets. Finance notes receivable
allowance for doubtful accounts were $27 million and $14 million at
Use of Estimates June 30, 2020 and 2019, respectively. We estimate an allowance for
Our consolidated financial statements are prepared in accordance these financing receivables based on historical collection rates and
with accounting principles generally accepted in the United States the credit worthiness of the customer. We write off any amounts
(“GAAP”). The preparation of financial statements in accordance with deemed uncollectible against the established allowance for doubtful
GAAP requires us to make estimates, judgments and assumptions accounts.
that affect the amounts reported in the consolidated financial
statements and accompanying notes. Estimates, judgments and Concentrations of Credit Risk
assumptions are used in the accounting and disclosure related to, We maintain cash depository accounts with major banks, and we
among other items, allowance for doubtful accounts, inventory invest in high quality, short-term liquid instruments, and in marketable
valuation and reserves, goodwill and other intangible asset securities. Our short-term liquid instruments mature within three
impairment, loss contingencies (including product liability and self- months and we have not historically incurred any related losses.
insurance accruals), and income taxes. Actual amounts could Our trade receivables and finance notes and related accrued interest
ultimately differ from these estimated amounts. are exposed to a concentration of credit risk with certain large
The outbreak of the novel strain of coronavirus (“COVID-19”) has customers and with customers in the retail and healthcare sectors.
severely impacted, and continues to severely impact the U.S. and Credit risk can be affected by changes in reimbursement and other
global economies, and beginning in the third quarter of fiscal 2020, economic pressures impacting the healthcare industry. With respect
our businesses have been impacted in a variety of ways. We cannot to customers in the retail and healthcare sectors, such credit risk is
estimate the length or severity of the COVID-19 pandemic or the limited due to supporting collateral and the diversity of the customer
related U.S. and global economic consequences on our business base, including its wide geographic dispersion. We perform regular
and operations, including whether and when historic economic and credit evaluations of our customers’ financial conditions and maintain
operating conditions will resume or the extent to which the disruption reserves for losses through the established allowance for doubtful
may impact our business, financial position, results of operations or accounts. Historically, such losses have been within our
cash flow. Our estimates, judgments and assumptions related to expectations. Refer to the "Receivables and Allowance for Doubtful
COVID-19 could ultimately differ over time. Accounts" section within this Note for additional information on the
accounting treatment of reserves for allowance for doubtful accounts.
Cash Equivalents
We consider liquid investments purchased with an initial maturity of Major Customers
three months or less to be cash equivalents. The carrying value of CVS Health Corporation ("CVS") and OptumRx, are our only
cash equivalents approximates fair value. customers that individually account for at least 10 percent of revenue

and gross trade receivables. These customers are primarily serviced Cash Discounts
through our Pharmaceutical segment. Manufacturer cash discounts are recorded as a component of
The following table summarizes historical percent of revenue and inventory cost and recognized as a reduction of cost of products sold
gross trade receivables from CVS and OptumRx: as inventory is sold.
Property and Equipment
Percent of Gross
Trade Receivables Property and equipment are carried at cost less accumulated
Percent of Revenue at June 30 depreciation. Property and equipment held for sale are recorded at
2020 2019 2018 2020 2019 the lower of cost or fair value less cost to sell. When certain events
CVS 26% 26% 25% 26% 24% or changes in operating conditions occur, an impairment assessment
OptumRx 14% 13% 11% 6% 4% may be performed on the recoverability of the carrying amounts.
Depreciation expense is computed using the straight-line method
We have entered into agreements with group purchasing over the estimated useful lives of the assets, including finance lease
organizations (“GPOs”) which act as purchasing agents that assets which are depreciated over the terms of their respective
negotiate vendor contracts on behalf of their members. Vizient, Inc. leases. We generally use the following range of useful lives for our
and Premier, Inc. are our two largest GPO member relationships in property and equipment categories: buildings and improvements—
terms of revenue. Sales to members of these two GPOs collectively 3 to 39 years; machinery and equipment—3 to 20 years; and furniture
accounted for 16 percent, 22 percent and 22 percent of revenue for and fixtures—3 to 7 years. We recorded depreciation and
fiscal 2020, 2019 and 2018, respectively. Our trade receivable amortization expense of $405 million, $455 million and $446 million
balances are with individual members of the GPO, and therefore no for fiscal 2020, 2019 and 2018, respectively.
significant concentration of credit risk exists with these types of
The following table presents the components of property and
arrangements.
equipment, net at June 30:
Inventories
A substantial portion of our inventories (56 percent at both June 30, (in millions) 2020 2019
2020 and 2019) are valued at the lower of cost, using the last-in, first- Land, building and improvements $ 2,185 $ 1,992
out ("LIFO") method, or market. These inventories are included within Machinery and equipment 3,008 3,038
the core pharmaceutical distribution facilities of our Pharmaceutical Furniture and fixtures 138 138
segment (“distribution facilities”) and are primarily merchandise Total property and equipment, at cost 5,331 5,168
inventories. The LIFO method presumes that the most recent Accumulated depreciation and amortization (2,965) (2,812)
inventory purchases are the first items sold, so LIFO helps us better Property and equipment, net $ 2,366 $ 2,356
match current costs and revenue. We believe that the average cost Repairs and maintenance expenditures are expensed as incurred.
method of inventory valuation provides a reasonable approximation Interest on long-term projects is capitalized using a rate that
of the current cost of replacing inventory within the distribution approximates the weighted-average interest rate on long-term
facilities. As such, the LIFO reserve is the difference between (a) obligations, which was 3 percent at June 30, 2020. The amount of
inventory at the lower of LIFO cost or market and (b) inventory at capitalized interest was immaterial for all periods presented.
replacement cost determined using the average cost method of
inventory valuation. Goodwill and Other Intangible Assets
Purchased goodwill and intangible assets with indefinite lives are not
At June 30, 2020 and 2019, respectively, inventories valued at LIFO amortized, but instead are tested for impairment annually or when
cost were $411 million and $230 million higher than the average cost indicators of impairment exist.
value. We do not record inventories in excess of replacement cost.
As such, we did not write-up the value of our inventory from average Purchased goodwill is tested for impairment at least annually.
cost to LIFO cost at June 30, 2020 or 2019. 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
Our remaining inventory that is not valued at the lower of LIFO cost amount. There is an option to bypass the qualitative assessment for
or market is stated at the lower of cost, using the first-in, first-out any reporting unit in any period and proceed directly to performing
method, or net realizable value. Net realizable value is defined as the quantitative goodwill impairment test. We have elected to bypass
the estimated selling prices in the ordinary course of business, less the qualitative assessment for our annual goodwill impairment test
reasonably predictable costs of completion, disposal and in the current year. The quantitative goodwill impairment test involves
transportation. a comparison of the estimated fair value of the reporting unit to the
Inventories presented in the consolidated balance sheets are net of respective carrying amount.
reserves for excess and obsolete inventory which were $155 million Goodwill impairment testing involves judgment, including the
and $171 million at June 30, 2020 and 2019, respectively. We reserve identification of reporting units, qualitative evaluation of events and
for inventory obsolescence using estimates based on historical circumstances to determine if it is more likely than not that an
experience, historical and projected sales trends, specific categories impairment exists, and, if necessary, the estimation of the fair value
of inventory, age and expiration dates of on-hand inventory and of the applicable reporting unit.
manufacturer return policies.
We have two operating segments, which are the same as our exceeded the fair value and resulted in an impairment charge of $1.4
reportable segments: Pharmaceutical and Medical. These operating billion related to our Medical Unit, which is included in impairments
segments are comprised of divisions (components), for which and loss on disposal of assets in our consolidated statements of
discrete financial information is available. Components are earnings/(loss). Our fair value estimates utilize significant
aggregated into reporting units for purposes of goodwill impairment unobservable inputs and thus represent Level 3 fair value
testing to the extent that they share similar economic characteristics. measurements.
Our reporting units are: Pharmaceutical operating segment The impairment was primarily driven by inventory and cost challenges
(excluding our Nuclear and Precision Health Solutions division); within our Cordis business which furthered in the fourth quarter of
Nuclear and Precision Health Solutions division; Medical operating fiscal 2018. This impairment charge did not impact our liquidity, cash
segment (excluding our Cardinal Health at-Home Solutions division) flows from operations, or compliance with debt covenants. There was
(“Medical Unit”); and Cardinal Health at-Home Solutions division. Our no tax benefit related to the goodwill impairment charge.
Nuclear and Precision Health Solutions division was formerly referred
The impairment test for indefinite-lived intangibles other than goodwill
to as our Nuclear Pharmacy Services division and our Cardinal Health
(primarily IPR&D) involves first assessing qualitative factors to
at-Home Solutions division was formerly referred to as our Cardinal
determine if it is more likely than not that the fair value of the indefinite-
Health at Home division.
lived intangible asset is less than its carrying amount. If so, then a
Fair value can be determined using market, income or cost-based quantitative test is performed to compare the estimated fair value of
approaches. Our determination of estimated fair value of the reporting the indefinite-lived intangible asset to the respective asset's carrying
units is based on a combination of the income-based and market- amount. Our qualitative evaluation requires the use of estimates and
based approaches. Under the income-based approach, we use a significant judgments and considers the weight of evidence and
discounted cash flow model in which cash flows anticipated over significance of all identified events and circumstances and most
several future periods, plus a terminal value at the end of that time relevant drivers of fair value, both positive and negative, in
horizon, are discounted to their present value using an appropriate determining whether it is more likely than not that the fair value of
risk-adjusted rate of return. We use our internal forecasts to estimate the indefinite-lived intangible asset is less than its carrying amount.
future cash flows, which we believe are consistent with those of a
Intangible assets with finite lives, primarily customer relationships;
market participant, and include an estimate of long-term growth rates
trademarks, trade names and patents; and developed technology,
based on our most recent views of the long-term outlook for each
are amortized using a combination of straight-line and accelerated
reporting unit. Actual results may differ materially from those used in
methods based on the expected cash flows from the asset over their
our forecasts. We use discount rates that are commensurate with the
estimated useful lives. We review intangible assets with finite lives
risks and uncertainty inherent in the respective reporting units and
for impairment whenever events or changes in circumstances
in our internally-developed forecasts. Discount rates used in our
indicate that the related carrying amounts may not be recoverable.
reporting unit valuations ranged from 8.5 percent to 10.5 percent.
Determining whether an impairment loss occurred requires a
Under the market-based guideline public company method, we
comparison of the carrying amount to the sum of the future forecasted
determine fair value by comparing our reporting units to similar
undiscounted cash flows expected to be generated by the asset
businesses or guideline companies whose securities are actively
group. Actual results may differ materially from those used in our
traded in public markets. We also use the guideline transaction
forecasts.
method to determine fair value based on pricing multiples derived
from the sale of companies that are similar to our reporting units. To Assets Held for Sale
further confirm fair value, we compare the aggregate fair value of our We classify assets and liabilities (the “disposal group”) as held for
reporting units to our total market capitalization. Estimating the fair sale when management commits to a plan to sell the disposal group
value of reporting units requires the use of estimates and significant in its present condition and at a price that is reasonable in relation to
judgments that are based on a number of factors including forecasted its current fair value. We also consider whether an active program to
operating results. The use of alternate estimates and assumptions locate a buyer has been initiated and if it is probable that the sale will
or changes in the industry or peer groups could materially affect the occur within one year without significant changes to the plan to sell.
determination of fair value for each reporting unit and potentially result Upon classification of the disposal group as held for sale, we test the
in goodwill impairment. assets for impairment and cease related depreciation and
We performed annual impairment testing in fiscal 2020, 2019 and amortization.
2018 and with the exception of our Medical Unit in fiscal 2018,
concluded that there were no impairments of goodwill as the
estimated fair value of each reporting unit exceeded its carrying value.
In conjunction with the preparation of our consolidated financial
statements for fiscal 2018, we completed our annual quantitative
goodwill impairment test, which we perform annually in the fourth
quarter. Using a combination of income and market-based
approaches (using a discount rate of 8.5 percent), the carrying value

Investments Loss Contingencies and Self-Insurance

Investments in non-marketable equity securities are accounted for We accrue for contingencies related to disputes, litigation and
under the fair value, equity or net asset value method of accounting regulatory matters if it is probable that a liability has been incurred
and are included in other assets in the consolidated balance sheets. and the amount of the loss can be reasonably estimated.
For equity securities without a readily determinable fair value, we use In connection with the opioid litigation as described further in the Note
the fair value measurement alternative and measure the securities 7, we recorded a pre-tax charge of $5.63 billion ($5.14 billion after
at cost less impairment, if any, including adjustments for observable tax) during fiscal 2020. Definitive terms of a settlement under the
price changes in orderly transactions for an identical or similar Settlement Framework continue to be negotiated, and there is no
investment of the same issuer. For investments in which we can assurance that the necessary parties will agree to a definitive
exercise significant influence but do not control, we use the equity settlement agreement or that the contingencies to any agreement
method of accounting. Our share of the earnings and losses are will be satisfied.
recorded in other (income)/expense, net in the consolidated
We develop and periodically update reserve estimates for the Cordis
statements of earnings/(loss). We monitor our investments for
inferior vena cava ("Cordis IVC") claims, including those received to
impairment by considering factors such as the operating
date and expected to be received in the future and related costs. To
performance of the investment and current economic and market
project future Cordis IVC claim costs, we use a methodology based
conditions.
largely on recent experience, including claim filing rates, estimated
Vendor Reserves indemnity severity by claim type, sales data, implant and injury to
In the ordinary course of business, our vendors may dispute report lag patterns and estimated defense costs.
deductions taken against payments otherwise due to them or assert We also self-insure for employee healthcare, general liability, certain
other disputes. These disputes are researched and resolved based product liability matters, auto liability, property and workers'
upon the findings of the research performed. At any given time, there compensation. Self-insurance accruals include an estimate for
are outstanding items in various stages of research and resolution. expected settlements or pending claims, defense costs,
In determining appropriate reserves for areas of exposure with our administrative fees, claim adjustment costs and an estimate for
vendors, we assess historical experience and current outstanding claims incurred but not reported.
claims. We have established various levels of reserves based on the
Because these matters are inherently unpredictable and unfavorable
type of claim and status of review. Though the claim types are
developments or resolutions can occur, assessing contingencies and
relatively consistent, we periodically refine our methodology by
other liabilities is highly subjective and requires judgments about
updating the reserve estimate percentages to reflect actual historical
future events. We regularly review contingencies and our self-
experience. The ultimate outcome of certain claims may be different
insurance accruals to determine whether our accruals and related
than our original estimate and may require an adjustment.
disclosures are adequate. Any adjustments for changes in reserves
Adjustments to vendor reserves are included in cost of products sold.
are recorded in the period in which the change in estimate occurs.
In addition, the reserve balance will fluctuate due to variations of
outstanding claims from period-to-period, timing of settlements and The amount of ultimate loss may differ materially from these
specific vendor issues, such as bankruptcies. Vendor reserves were estimates. We recognize these estimated loss contingencies, income
$77 million and $53 million at June 30, 2020 and 2019, respectively, from favorable resolution of litigation and certain defense costs in
excluding third-party returns. See Third-Party Returns section within litigation (recoveries)/charges in our consolidated statements of
this Note for a description of third-party returns. earnings/(loss). See Note 7 for additional information regarding loss
contingencies and product liability lawsuits.
Distribution Services Agreement and Other Vendor
Fees Guarantees
Our Pharmaceutical segment recognizes fees received from In the ordinary course of business, we agree to indemnify certain
distribution services agreements and other fees received from other parties under acquisition and disposition agreements, customer
vendors related to the purchase or distribution of the vendors’ agreements, intellectual property licensing agreements, and other
inventory when those fees have been earned and we are entitled to agreements. Such indemnification obligations vary in scope and,
payment. Since the benefit provided to a vendor is related to the when defined, in duration. In many cases, a maximum obligation is
purchase and distribution of the vendor’s inventory, we recognize the not explicitly stated, and therefore the overall maximum amount of
fees as a reduction in the carrying value of the inventory that the liability under such indemnification obligations cannot be
generated the fees, and as such, a reduction of cost of products sold reasonably estimated. Where appropriate, such indemnification
in our consolidated statements of earnings/(loss) when the inventory obligations are recorded as a liability. Historically, we have not,
is sold. individually or in the aggregate, made payments under these
indemnification obligations in any material amounts. In certain
circumstances, we believe that existing insurance arrangements,
subject to the general deduction and exclusion provisions, would
cover portions of the liability that may arise from these indemnification
obligations. In addition, we believe that the likelihood of a material

liability being triggered under these indemnification obligations is not compensation expense associated with nonvested performance
probable. share units is dependent on our periodic assessment of the probability
From time to time we enter into agreements that obligate us to make of the targets being achieved and our estimate, which may vary over
fixed payments upon the occurrence of certain events. Such time, of the number of shares that ultimately will be issued. The
obligations primarily relate to obligations arising under acquisition compensation expense recognized for share-based awards is net of
transactions, where we have agreed to make payments based upon estimated forfeitures and is recognized ratably over the service period
the achievement of certain financial performance measures by the of the awards. All income tax effects of share-based awards are
acquired business. Generally, the obligation is capped at an explicit recognized in the consolidated statements of earnings/(loss) as
amount. There were no material obligations at June 30, 2020. awards vest or are settled. We classify share-based compensation
expense in distribution, selling, general and administrative ("SG&A")
Income Taxes expenses to correspond with the same line item as the majority of
We account for income taxes using the asset and liability method. the cash compensation paid to employees. If awards are modified in
Deferred tax assets and liabilities are measured using enacted tax connection with a restructuring activity, the incremental share-based
rates in the respective jurisdictions in which we operate. We assess compensation expense is classified in restructuring and employee
the realizability of deferred tax assets on a quarterly basis and provide severance. See Note 14 for additional information regarding share-
a valuation allowance for deferred tax assets when it is more likely based compensation.
than not that at least a portion of the deferred tax assets will not be
realized. The realizability of deferred tax assets depends on our ability Dividends
to generate sufficient taxable income within the carryback or We paid cash dividends per common share of $1.92, $1.91 and $1.85
carryforward periods provided for in the tax law for each applicable in fiscal 2020, 2019 and 2018, respectively.
tax jurisdiction and also considers all available positive and negative Revenue Recognition
evidence. We recognize revenue in an amount that reflects the consideration
Deferred taxes for non-U.S. liabilities are not provided on the to which we expect to be entitled in exchange for the transfer of goods
unremitted earnings of subsidiaries outside of the United States when or services to customers.
it is expected that these earnings are indefinitely reinvested. Revenue in both segments is primarily related to the distribution of
We operate in a complex multinational tax environment and are pharmaceutical and medical products, which include both
subject to tax treaty arrangements and transfer pricing guidelines for manufactured and sourced products, and we recognize at a point in
intercompany transactions that are subject to interpretation. time when title transfers to customers and we have no further
Uncertainty in a tax position may arise as tax laws are subject to obligation to provide services related to such merchandise. Service
interpretation. revenues are recognized over the period that services are provided
Tax benefits from uncertain tax positions are recognized when it is to the customer. Revenues derived from services are not material for
more likely than not that the position will be sustained upon either segment for all periods presented.
examination of the technical merits of the position, including We are generally the principal in a transaction, therefore our revenue
resolutions of any related appeals or litigation processes. The amount is primarily recorded on a gross basis. When we are a principal in a
recognized is measured as the largest amount of tax benefit that is transaction, we have determined that we control the ability to direct
greater than 50 percent likely of being realized upon settlement. For the use of the product or service prior to transfer to a customer, are
tax benefits that do not qualify for recognition, we recognize a liability primarily responsible for fulfilling the promise to provide the product
for unrecognized tax benefits. or service to our customer, have discretion in establishing prices, and
See Note 8 for additional information regarding income taxes. ultimately control the transfer of the product or services provided to
the customer.
Other Accrued Liabilities
Other accrued liabilities represent various current obligations, Sales Returns and Allowances
including certain accrued operating expenses and taxes payable. Revenue is recorded net of sales returns and allowances. Revenues
are measured based on the amount of consideration that we expect
Noncontrolling Interests to receive, reduced by estimates for return allowances, discounts,
Noncontrolling interests represent the portion of net earnings, rebates and other variable consideration. Sales returns are recorded
comprehensive income and net assets that is not attributable to based on estimates using historical data. Our customer return
Cardinal Health, Inc. policies generally require that the product be physically returned,
subject to restocking fees. We only allow customers to return products
Share-Based Compensation
for credit in a condition suitable to be added back to inventory and
Share-based compensation provided to employees is recognized in
resold at full value (“merchantable product”) or returned to vendors
the consolidated statements of earnings/(loss) based on the grant
for credit. Product returns are generally consistent throughout the
date fair value of the awards. The fair value of restricted share units
year and typically are not specific to any particular product or
and performance share units is determined by the grant date market
customer.
price of our common shares. The fair value of stock options is
determined on the grant date using a lattice valuation model. The

We accrue for estimated sales returns and allowances at the time of costs and changes in the fair value of contingent consideration
sale based upon historical customer return trends, margin rates and obligations. Transaction costs are incurred during the initial
processing costs. Our accrual for sales returns is reflected as a evaluation of a potential acquisition and primarily relate to costs to
reduction of revenue and cost of products sold for the sales price and analyze, negotiate and consummate the transaction as well as due
cost, respectively. At both June 30, 2020 and 2019, the accrual for diligence activities. Integration costs relate to activities required to
estimated sales returns and allowances was $495 million and $479 combine the operations of an acquired enterprise into our operations
million, the impact of which is reflected in trade receivables, net and and, in the case of the Cordis and Patient Recovery businesses, to
inventories, net in the consolidated balance sheets. Sales returns stand-up the systems and processes needed to support an expanded
and allowances were $2.3 billion, $2.2 billion and $2.4 billion, for geographic footprint. We record changes in the fair value of
fiscal 2020, 2019 and 2018, respectively, and the net impact on net contingent consideration obligations relating to acquisitions as
earnings/(loss) in the consolidated statements of earnings/(loss) was income or expense in amortization and other acquisition-related
immaterial in fiscal 2020, 2019 and 2018. costs. See Note 4 for additional information regarding amortization
of acquisition-related intangible assets.
Third-Party Returns
We generally do not accept non-merchantable pharmaceutical Translation of Foreign Currencies
product returns from our customers, so many of our customers return Financial statements of our subsidiaries outside the United States are
non-merchantable pharmaceutical products to the manufacturer generally measured using the local currency as the functional
through third parties. Since our customers generally do not have a currency. Adjustments to translate the assets and liabilities of these
direct relationship with manufacturers, our vendors pass the value foreign subsidiaries into U.S. dollars are accumulated in
of such returns to us (usually in the form of an accounts payable shareholders’ equity through accumulated and other comprehensive
deduction). We, in turn, pass the value received to our customer. In loss ("AOCI") utilizing period-end exchange rates. Revenues and
certain instances, we pass the estimated value of the return to our expenses of these foreign subsidiaries are translated using average
customer prior to our receipt of the value from the vendor. Although exchange rates during the year.
we believe we have satisfactory protections, we could be subject to The foreign currency translation gains/(losses) included in AOCI at
claims from customers or vendors if our administration of this overall June 30, 2020 and 2019 are presented in Note 11. Foreign currency
process was deficient in some respect or our contractual terms with transaction gains and losses for the period are included in the
vendors are in conflict with our contractual terms with our customers. consolidated statements of earnings/(loss) in the respective financial
We have maintained reserves for some of these situations based on statement line item.
their nature and our historical experience with their resolution.
Interest Rate, Currency and Commodity Risk
Shipping and Handling All derivative instruments are recognized at fair value on the
Shipping and handling costs are primarily included in SG&A consolidated balance sheets and all changes in fair value are
expenses in our consolidated statements of earnings/(loss) and recognized in net earnings or shareholders’ equity through AOCI, net
include all delivery expenses as well as all costs to prepare the of tax.
product for shipment to the end customer. Shipping and handling
For contracts that qualify for hedge accounting treatment, the hedge
costs were $620 million, $622 million and $543 million, for fiscal 2020,
contracts must be effective at reducing the risk associated with the
2019 and 2018, respectively.
exposure being hedged and must be designated as a hedge at the
Restructuring and Employee Severance inception of the contract. Hedge effectiveness is assessed
Restructuring activities are programs that are not part of the ongoing periodically. Any contract not designated as a hedge, or so
operations of our underlying business, such as closing and designated but ineffective, is adjusted to fair value and recognized
consolidating facilities, changing the way we manufacture or immediately in net earnings. If a fair value or cash flow hedge ceases
distribute our products, moving manufacturing of a product to another to qualify for hedge accounting treatment, the contract continues to
location, changes in production or business process outsourcing or be carried on the balance sheet at fair value until settled and future
insourcing, employee severance (including rationalizing headcount adjustments to the contract’s fair value are recognized immediately
or other significant changes in personnel) and realigning operations in net earnings. If a forecasted transaction is probable not to occur,
(including realignment of the management structure in response to amounts previously deferred in AOCI are recognized immediately in
changing market conditions). Also included within restructuring and net earnings. Interest payments received from the cross currency
employee severance are employee severance costs that are not swap are excluded from the net investment hedge effectiveness
incurred in connection with a restructuring activity. See Note 3 for assessment and are recorded in interest expense, net in the
additional information regarding our restructuring activities. consolidated statements of earnings/(loss).
Amortization and Other Acquisition-Related Costs See Note 10 for additional information regarding our derivative
We classify certain costs incurred in connection with acquisitions as instruments, including the accounting treatment for instruments
amortization and other acquisition-related costs in our consolidated designated as fair value, cash flow and economic hedges.
statements of earnings/(loss). These costs consist of amortization of
acquisition-related intangible assets, transaction costs, integration

Fair Value Measurements historical experience, current conditions and reasonable supportable
Fair value is defined as the price that would be received upon selling forecasts. This guidance also requires that credit losses on available-
an asset or the price paid to transfer a liability on the measurement for-sale debt securities with unrealized losses be recognized as
date. It focuses on the exit price in the principal or most advantageous allowances rather than as deductions in the amortized cost of the
market for the asset or liability in an orderly transaction between securities. This guidance will be effective for us in the first quarter of
willing market participants. A three-tier fair value hierarchy is fiscal 2021. The adoption of this guidance will not have a material
established as a basis for considering such assumptions and for impact on our consolidated financial statements or disclosures.
inputs used in the valuation methodologies in measuring fair value.
2. Divestitures and Acquisitions
This hierarchy requires entities to maximize the use of observable
inputs and minimize the use of unobservable inputs. The three levels Divestitures
of inputs used to measure fair values are: naviHealth
Level 1 - Observable prices in active markets for identical assets In August 2018, we sold our majority ownership interest in naviHealth,
and liabilities. which operated within our Medical segment in exchange for cash
Level 2 - Observable inputs other than quoted prices in active proceeds of $737 million (after adjusting for certain fees and
markets for identical assets and liabilities. expenses) and a noncontrolling equity interest in a partnership that
owned naviHealth. We also had certain call rights to reacquire
Level 3 - Unobservable inputs that are supported by little or no naviHealth.
market activity and that are significant to the fair value of
the assets and liabilities. As a result of this divestiture, during the fiscal year ended June 30,
2019, we recognized a pre-tax gain of $508 million in impairments
See Note 9 for additional information regarding fair value and (gain)/loss on disposal of assets in our consolidated statements
measurements. of earnings/(loss). This gain included our initial recognition of an
Recently Adopted Financial Accounting Standards equity method investment for $358 million and the derecognition of
Derivatives and Hedging redeemable noncontrolling interests of $12 million. The fiscal 2019
In October 2018, the Financial Accounting Standards Board ("FASB") tax expense as a result of this transaction was $130 million. We
issued amended accounting guidance related to derivatives and determined that the sale of the naviHealth business did not meet the
hedging which permits the use of the Secured Overnight Financing criteria to be classified as discontinued operations.
Rate ("SOFR") Overnight Index Swap ("OIS") as a benchmark In May 2020 we sold the remainder of our noncontrolling equity
interest rate for hedge accounting purposes. This guidance was interest in a partnership that owned naviHealth. We recognized a
effective beginning the first quarter of fiscal 2020. The adoption did pre-tax gain of $579 million from this disposal in gain on sale of equity
not have a material impact on our consolidated financial statements. interest in naviHealth in our consolidated statements of earnings/
Leases (loss).
In February 2016, the FASB issued amended accounting guidance Our proportionate share of naviHealth’s results, which was recorded
that requires lessees to recognize most leases on the balance sheet in other (income)/expense, net in the consolidated statements of
as a lease liability and corresponding right-of-use asset. The earnings/(loss), was income of $2 million and a loss of $10 million
guidance also requires disclosures that meet the objective of enabling during fiscal 2020 and 2019, respectively.
financial statement users to assess the amount, timing and
China
uncertainty of cash flows arising from leases. We adopted this
In February 2018, we sold our pharmaceutical and medical products
guidance during the first quarter of fiscal 2020 and elected the
distribution business in China ("China distribution business") for
transition option which allows us to apply the guidance prospectively.
proceeds of $861 million (after adjusting for third party indebtedness
The initial adoption in the first quarter of fiscal 2020 resulted in the
and preliminary transaction adjustments).
recognition of lease liabilities in the amount of $422 million and did
not have a material impact on our results of operations, liquidity or We determined that the sale of the China distribution business did
debt covenant compliance under our current debt agreements. The not meet the criteria to be classified as discontinued operations. The
majority of our lease spend relates to certain real estate with the China distribution business primarily operated within our
remaining lease spend primarily related to vehicles and equipment. Pharmaceutical segment, and a smaller portion operated within our
The adoption required certain changes to our systems and Medical segment.
processes. See Note 5 for additional information regarding leases. During the fiscal year ended 2018, we recognized a pre-tax loss of
$41 million related to this divestiture.
Recently Issued Financial Accounting Standards
Not Yet Adopted
Financial Instruments - Credit Losses
In June 2016, the FASB issued amended accounting guidance that
will require entities to measure credit losses on trade and other
receivables, held-to-maturity debt securities, loans and other
instruments using an "expected credit loss" model that considers

Acquisitions The following table summarizes activity related to liabilities

associated with restructuring and employee severance:
We did not complete any acquisitions during fiscal 2020. While we
completed several small acquisitions during fiscal 2019, the pro forma Employee- Facility Exit
results of operations and the results of operations for acquired (in millions) Related Costs and Other Costs Total
businesses since the acquisition dates have not been separately Balance at June 30, 2018 $ 24 $ 4 $ 28
disclosed because the effects were not significant compared to the Additions 84 8 92
consolidated financial statements, individually or in the aggregate. Payments and other adjustments (44) (4) (48)
The cash paid for these acquisitions, net of cash acquired was $82 Balance at June 30, 2019 64 8 72
million for fiscal 2019.
Additions 85 24 109
Patient Recovery Business Payments and other adjustments (81) (4) (85)
On July 29, 2017, we acquired the Patient Care, Deep Vein Balance at June 30, 2020 $ 68 $ 28 $ 96
Thrombosis, and Nutritional Insufficiency businesses (the "Patient
Recovery Business") from Medtronic plc for $6.1 billion in cash. The 4. Goodwill and Other Intangible Assets
acquisition further expanded the Medical segment's portfolio of self-
manufactured products. Goodwill
Transaction and integration costs associated with the acquisition of The following table summarizes the changes in the carrying amount
the Patient Recovery Business were $7 million, $75 million, and of goodwill by segment and in total:
$109 million for the fiscal years ended June 30, 2020, 2019 and
2018, respectively. These costs are included in amortization and (in millions) Pharmaceutical (1) Medical (2) Total
other acquisition-related costs in the consolidated statement of Balance at June 30, 2018 $ 2,621 $ 5,695 $ 8,316
earnings/(loss). Goodwill acquired, net of purchase
price adjustments 45 7 52
3. Restructuring and Employee Severance Foreign currency translation
The following tables summarize restructuring and employee adjustments and other (3) 13 10
severance costs: Balance at June 30, 2019 2,663 5,715 8,378
Goodwill acquired, net of purchase
price adjustments (5) — (5)
(in millions) 2020 2019 2018
Foreign currency translation
Employee-related costs $ 66 $ 95 $ 34 adjustments and other (1) (15) (16)
Facility exit and other costs 56 30 142 Balance at June 30, 2020 $ 2,657 $ 5,700 $ 8,357
Total restructuring and employee
severance $ 122 $ 125 $ 176 (1) At June 30, 2020 and 2019, the Pharmaceutical segment accumulated goodwill
impairment loss was $829 million.
Employee-related costs primarily consist of termination benefits (2) At June 30, 2020 and 2019, the Medical segment accumulated goodwill
provided to employees who have been involuntarily terminated, impairment loss was $1.4 billion.
duplicate payroll costs and retention bonuses incurred during
transition periods. Facility exit and other costs primarily consist of
product distribution and lease contract termination costs, lease costs
associated with vacant facilities, accelerated depreciation,
equipment relocation costs, project consulting fees, vendor transition
fees, costs associated with restructuring our delivery of information
technology infrastructure services and certain other divestiture-
related costs.
In fiscal 2020 and 2019, restructuring costs are primarily related to
implementation of certain enterprise-wide cost-savings measures.
In fiscal 2018, we entered into an agreement to transition the
distribution of our Medical segment's surgeon gloves in certain
international markets from a third-party distribution arrangement to
a direct distribution model. The costs associated with this
restructuring included $125 million, on a pre-tax basis, in contract
termination costs that were paid during fiscal 2018. These costs are
reflected in restructuring and employee severance in the
consolidated statements of earnings/(loss) during the fiscal year
ended 2018.

Other Intangible Assets 5. Leases

The following tables summarize other intangible assets by class at
Our operating leases are primarily for corporate offices, distribution
June 30:
facilities, vehicles, and equipment. We determine if an arrangement
2020 is a lease at its inception by evaluating whether the arrangement
conveys the right to use an identified asset and whether we obtain
Weighted- substantially all of the economic benefits from and have the ability to
Average
Remaining direct the use of the asset. Our lease agreements generally do not
Gross Accumulated Net Amortization contain any material residual value guarantees or material restrictive
(in millions) Intangible Amortization Intangible Period (Years)
covenants.
Indefinite-life
intangibles: Beginning July 1, 2019, operating lease right-of-use assets and
IPR&D, corresponding operating lease liabilities are recognized in our
trademarks and consolidated balance sheet at lease commencement date based on
other $ 23 $ — $ 23 N/A
the present value of lease payments over the lease term. Operating
Total indefinite-
life intangibles 23 — 23 N/A lease expense for operating lease assets is recognized on a straight-
Definite-life line basis over the lease term. As most of our leases do not provide
intangibles: an implicit rate, we use our collateralized incremental borrowing rate
Customer based on the information available at the lease commencement date
relationships 3,554 1,828 1,726 13
in determining the present value of lease payments. We use the
Trademarks, implicit rate if it is readily determinable.
trade names and
patents 673 341 332 13 Our lease agreements contain lease components and non-lease
Developed components. For all asset classes, we have elected to account for
technology and
other 1,604 767 837 11 both of these components as a single lease component. We also,
Total definite- from time to time, sublease portions of our real estate property,
life intangibles 5,831 2,936 2,895 12 resulting in sublease income. Sublease income and the related
Total other assets and cash flows are not material to the consolidated financial
intangible statements at or for the fiscal year ended June 30, 2020.
assets $ 5,854 $ 2,936 $ 2,918 N/A
We also have elected to apply a practical expedient for short-term
2019 leases whereby we do not recognize a lease liability and right-of-use
Gross Accumulated Net
asset for leases with a term of less than 12 months. Short-term lease
(in millions) Intangible Amortization Intangible expense recognized in fiscal 2020 was not material. In addition, upon
Indefinite-life intangibles: adoption of the new lease standard, we elected the package of three
IPR&D, trademarks and other $ 22 $ — $ 22 practical expedients permitted under the transition guidance, which
Total indefinite-life intangibles 22 — 22 include the carry forward of our leases without reassessing 1) whether
Definite-life intangibles:
any contracts are leases or contain leases, 2) lease classification
and 3) initial direct costs.
Customer relationships 3,562 1,517 2,045
Trademarks, trade names and Our leases have remaining lease terms from less than 1 year up to
patents 672 295 377 approximately 22 years. Our lease terms may include options to
Developed technology and other 1,602 616 986 extend or terminate the lease when it is reasonably certain and there
Total definite-life intangibles 5,836 2,428 3,408 is a significant economic incentive to exercise that option.
Total other intangible assets $ 5,858 $ 2,428 $ 3,430 The following table summarizes the components of lease cost:
Total amortization of intangible assets was $512 million, $531 million (in millions) 2020
and $574 million for fiscal 2020, 2019 and 2018, respectively. The Operating lease cost $ 134
estimated annual amortization for intangible assets for fiscal 2021 Finance lease cost 13
through 2025 is as follows: $442 million, $408 million, $358 million, Variable lease cost 17
$329 million and $277 million.
Total lease cost $ 164
Variable lease cost primarily includes payments for property taxes,

maintenance and insurance. Our rental expense relating to operating
leases was $153 million and $172 million in fiscal 2019 and 2018,
respectively.

The following table summarizes supplemental balance sheet Future lease payments under non-cancellable leases as of
information related to leases at June 30: June 30, 2020 were as follows:
(in millions) 2020 Operating Finance

(in millions) Leases Leases Total
Operating Leases
2021 $ 117 $ 10 $ 127
Operating lease right-of-use assets $ 426
2022 96 9 105
2023 72 9 81
Current portion of operating lease liabilities 104
2024 51 4 55
Long-term operating lease liabilities 341
2025 44 2 46
Total operating lease liabilities 445
Thereafter 123 2 125
Total future lease payments 503 36 539
Finance Leases
Less: leases not yet commenced (1) 4 — 4
Finance lease right-of-use assets 33
Less: imputed interest 54 2 56
Total lease liabilities $ 445 $ 34 $ 479
Current portion of finance lease liabilities 9
(1) As of June 30, 2020, we had certain leases that were executed but did not have
Long-term finance lease liabilities 25
control of the underlying assets; therefore, the lease liabilities and right-of-use
Total finance lease liabilities $ 34 assets are not recorded in the consolidated balance sheet.
Operating leases are included in other assets, other accrued The future minimum rental payments for operating leases having
liabilities, and deferred income taxes and other liabilities in our initial or remaining non-cancelable lease terms in excess of one year
consolidated balance sheet. Finance leases are included in property at June 30, 2019 for fiscal 2020 through 2024 and thereafter were
and equipment, net, current portion of long-term obligations and other as follows: $126 million, $100 million, $76 million, $54 million, $33
short-term borrowings, and long-term obligations, less current portion million and $94 million.
in our consolidated balance sheet.
The following tables summarizes supplemental cash flow information 6. Long-Term Obligations and Other Short-Term
related to leases:
Borrowings
(in millions) 2020 The following table summarizes long-term obligations and other
Cash paid for lease liabilities: short-term borrowings at June 30:
Operating cash flows paid for operating leases $ 125
(in millions) (1) 2020 2019
Financing cash flows paid for finance leases 7
2.4% Notes due 2019 $ — $ 450
Non-cash right-of-use assets obtained in exchange for
lease obligations: 4.625% Notes due 2020 — 508
New operating leases 150 2.616% Notes due 2022 834 1,079
New finance leases 40 3.2% Notes due 2022 236 247
Amended lease standard adoption impact as of July 1, Floating Rate Notes due 2022 321 340
2019 (1) 400
3.2% Notes due 2023 576 551
(1) Includes the effect of $22 million from reclassifying deferred rent as an offset 3.079% Notes due 2024 809 781
to the lease right-of-use asset in accordance with the transition guidance.
3.5% Notes due 2024 413 402
Our operating leases had a weighted-average remaining lease term 3.75% Notes due 2025 529 494
of 6.4 years and a weighted-average discount rate of 2.9 percent. 3.41% Notes due 2027 1,215 1,318
Our finance leases had a weighted-average remaining lease term of 4.6% Notes due 2043 340 346
4.3 years and a weighted-average discount rate of 2.4 percent . 4.5% Notes due 2044 342 342
4.9% Notes due 2045 441 445
4.368% Notes due 2047 560 594
7.0% Debentures due 2026 124 124
Other Obligations 35 10
Total 6,775 8,031
Less: current portion of long-term obligations 10 452
and other short-term borrowings
Long-term obligations, less current $ 6,765 $ 7,579
portion
(1) Maturities are presented on a calendar year basis.

Maturities of existing long-term obligations and other short-term backed by a $2.0 billion revolving credit facility. We also have a $1.0
borrowings for fiscal 2021 through 2025 and thereafter are as follows: billion committed receivables sales facility.
$10 million, $1.4 billion, $585 million, $814 million, $414 million and In September 2019, we renewed our committed receivables sales
$3.6 billion. facility program through Cardinal Health Funding, LLC (“CHF”)
Long-Term Debt through September 30, 2022. CHF was organized for the sole
All the notes represent unsecured obligations of Cardinal Health, Inc. purpose of buying receivables and selling undivided interests in those
and rank equally in right of payment with all of our existing and future receivables to third-party purchasers. Although consolidated with
unsecured and unsubordinated indebtedness. The 7.0% Debentures Cardinal Health, Inc. in accordance with GAAP, CHF is a separate
represent unsecured obligations of Allegiance Corporation (a wholly- legal entity from Cardinal Health, Inc. and from our subsidiary that
owned subsidiary), which Cardinal Health, Inc. has guaranteed. None sells receivables to CHF. CHF is designed to be a special purpose,
of these obligations are subject to a sinking fund and the Allegiance bankruptcy-remote entity whose assets are available solely to satisfy
obligations are not redeemable prior to maturity. Interest is paid the claims of its creditors.
pursuant to the terms of the obligations. These notes are effectively Our revolving credit and committed receivables sales facilities require
subordinated to the liabilities of our subsidiaries, including trade us to maintain, as of the end of every fiscal quarter through December
payables of $21.4 billion. 2020, a consolidated net leverage ratio of no more than 4.00-to-1.
In June 2020, we redeemed $500 million aggregate principle amount The maximum permitted ratio will reduce to 3.75-to-1 in March 2021
of 4.625% Notes due December 2020 at a redemption price equal and as of the end of every quarter thereafter. As of June 30, 2020,
to 100% of the principal amount and accrued but unpaid interest, we were in compliance with this financial covenant.
plus the make-whole premium applicable to the notes. In connection At June 30, 2020 and 2019, we had no amounts outstanding under
with the redemption, we recorded a $7 million loss on early the revolving credit facility; however, availability was reduced by
extinguishment of debt. outstanding letters of credit of $1 million and $24 million at June 30,
During fiscal 2020, we also early repurchased $247 million of 2020 and 2019, respectively.
the 2.616% Notes due 2022, $11 million of the 3.2% Notes due Under our committed receivables sales facility program, we had a
2022, $20 million of the Floating Rate Notes due 2022, $104 maximum amount outstanding of $700 million and an average daily
million of the 3.41% Notes due 2027, $6 million of the 4.6% Notes amount outstanding of $12 million during fiscal 2020. We also had
due 2043, $5 million of the 4.9% Notes due 2045, and $35 million of no amounts outstanding under the committed receivables sales
the 4.368% Notes due 2047. In connection with the early debt facility program; however, availability was reduced by outstanding
repurchases, we recognized a $9 million loss on early standby letters of credit of $29 million and $30 million at June 30,
extinguishment of debt. 2020 and 2019, respectively.
In November 2019, we repaid the full principal of the 2.4% Notes due Under our commercial paper program we had a maximum amount
2019 at maturity for $450 million. outstanding of $1.7 billion and an average daily amount outstanding
The redemption and repurchases were paid for with available cash of $183 million during fiscal 2020. We had no amounts outstanding
and other short-term borrowings. under the commercial paper program as of June 30, 2020 and 2019.
In fiscal 2019, we repurchased $67 million of the 2.616% Notes due We also maintain other short-term credit facilities and an unsecured
2022, $1 million of the 3.2% Notes due 2022, 8 million of the Floating line of credit that allowed for borrowings up to $6 million and $9 million
Rate Notes due 2022, and $24 million of the 3.41% Notes due 2027 at June 30, 2020 and 2019, respectively. The $35 million and $10
for a total of $100 million. The repurchases were paid for with available million balance of other obligations at June 30, 2020 and 2019,
cash. The loss on early extinguishment of debt in connection with respectively, consisted of short-term borrowings and finance leases.
these early repurchases was immaterial. We also paid off the $1.0
billion 1.948% Notes due 2019 as they became due with available
cash. 7. Commitments, Contingent Liabilities and
In June 2018, we repaid the full principal of the 1.95% Notes due Litigation
2018 at maturity for $550 million. Commitments
If we undergo a change of control, as defined in the notes, and if the Generic Sourcing Venture with CVS Health Corporation ("CVS
notes receive specified ratings below investment grade by each of Health")
Standard & Poors Ratings Services, Moody’s Investors Services and Red Oak Sourcing, LLC ("Red Oak Sourcing") is a U.S.-based
Fitch Ratings, any holder of the notes, excluding the debentures, can generic pharmaceutical sourcing venture with CVS Health for an
require with respect to the notes owned by such holder, or we can initial term through June 2024. Red Oak Sourcing negotiates generic
offer, to repurchase the notes at 101% of the principal amount plus pharmaceutical supply contracts on behalf of its participants. Due to
accrued and unpaid interest. the achievement of predetermined milestones, we are required to
Other Financing Arrangements make quarterly payments of $45.6 million to CVS Health for the initial
In addition to cash and equivalents and operating cash flow, other term.
sources of liquidity include a $2.0 billion commercial paper program
Contingencies a qui tam action, the government must investigate the private party's
New York Opioid Stewardship Act claim and determine whether to intervene in and take control over
In April 2018, the State of New York passed a budget which included the litigation. These actions may remain under seal while the
the Opioid Stewardship Act (the "OSA"). The OSA created an government makes this determination. If the government declines to
aggregate $100 million annual assessment on all manufacturers and intervene, the private party may nonetheless continue to pursue the
distributors licensed to sell or distribute opioids in New York. Under litigation on his or her own purporting to act on behalf of the
the OSA, each licensed manufacturer and distributor would be government.
required to pay a portion of the assessment based on its share of the We accrue for contingencies related to disputes, litigation and
total morphine milligram equivalents sold or distributed in New York regulatory matters if it is probable that a liability has been incurred
during the applicable calendar year, beginning in 2017. and the amount of the loss can be reasonably estimated. Because
In December 2018, the U.S. District Court for the Southern District these matters are inherently unpredictable and unfavorable
of New York ruled that the OSA is unconstitutional and enjoined its developments or resolutions can occur, assessing contingencies is
enforcement (the "Ruling"). In January 2019, the State filed notice of highly subjective and requires judgments about future events. We
its intent to appeal the Ruling. In April 2019, the State, among other regularly review contingencies to determine whether our accruals
things, amended the OSA so that the assessment would only cover and related disclosures are adequate. The amount of ultimate loss
opioid sales in 2017 and 2018, subject to the State's pending appeal may differ from these estimates.
of the Ruling. We recognize income from the favorable outcome of litigation when
We accrue contingencies if it is probable that a liability has been we receive the associated cash or assets.
incurred and the amount can be estimated. At June 30, 2020, we We recognize estimated loss contingencies for certain litigation and
have no amounts accrued for the OSA because we do not believe it regulatory matters and income from favorable resolution of litigation
is probable that a liability has been incurred. in litigation (recoveries)/charges in our consolidated statements of
Legal Proceedings earnings/(loss).
We become involved from time to time in disputes, litigation and Opioid Lawsuits and Investigations
regulatory matters. Pharmaceutical wholesale distributors, including us, have been
From time to time, we determine that products we source, named as defendants in over 3,000 lawsuits relating to the distribution
manufacture or market do not meet our specifications, regulatory of prescription opioid pain medications. The lawsuits seek equitable
requirements, or published standards. When we or a regulatory relief and monetary damages based on a variety of legal theories
agency identify a potential quality or regulatory issue, we investigate including various common law claims, such as public nuisance,
and take appropriate corrective action. Such actions have led to negligence and unjust enrichment as well as violations of controlled
product recalls, costs to repair or replace affected products, substance laws, the Racketeer Influenced and Corrupt Organizations
temporary interruptions in product sales, product liability claims and Act and various other statutes. These lawsuits also name
lawsuits and can lead to action by regulators. Even absent an pharmaceutical manufacturers, retail pharmacy chains and other
identified regulatory or quality issue or product recall, we can become entities as defendants.
subject to product liability claims and lawsuits. States & Political Subdivisions
From time to time, we become aware through employees, internal Approximately 2,800 of these lawsuits have been filed by counties,
audits or other parties of possible compliance matters, such as municipalities, cities and political subdivisions in various federal,
complaints or concerns relating to accounting, internal accounting state, and other courts. The vast majority of these lawsuits were filed
controls, financial reporting, auditing, or other ethical matters or in U.S. federal court and have been transferred for consolidated pre-
relating to compliance with laws such as healthcare fraud and abuse, trial proceedings in a Multi-District Litigation proceeding in the U.S.
anti-corruption or anti-bribery laws. When we become aware of such District Court for the Northern District of Ohio (the “MDL”).
possible compliance matters, we investigate internally and take In January 2020, the complaints of Cabell County and City of
appropriate corrective action. In addition, from time to time, we Huntington, West Virginia were remanded from the MDL to U.S.
receive subpoenas or requests for information from various federal District Court in West Virginia. A trial date has been set for October
or state agencies relating to our business or to the business of a 2020. In addition, the complaints of San Francisco, California and
customer, supplier or other industry participants. Internal the Cherokee Nation have been remanded to their original district
investigations, subpoenas or requests for information could directly courts.
or indirectly lead to the assertion of claims or the commencement of
In addition, 25 state attorneys general have filed lawsuits against
legal proceedings against us or result in sanctions.
distributors, including us, in various state courts. A trial in New York
We may be named from time to time in qui tam actions initiated by for cases brought by the New York Attorney General and Nassau and
private third parties. In such actions, the private parties purport to act Suffolk counties was scheduled to begin in March 2020, but was
on behalf of federal or state governments, allege that false claims deferred due to the COVID-19 pandemic. A trial is scheduled to begin
have been submitted for payment by the government and may receive in Madison County, Ohio, in October 2020 for the case brought by
an award if their claims are successful. After a private party has filed the Ohio Attorney General. A state court trial in a case brought by

certain West Virginia political subdivisions is scheduled for March individuals. Private plaintiffs had brought approximately 400 lawsuits
2021. Additionally, we have received requests, civil investigative as of July 28, 2020. Of these, 106 are purported class actions. The
demands, subpoenas or requests for information from additional causes of action asserted by these plaintiffs are similar to those
state attorneys general offices and governmental authorities. asserted by public plaintiffs relating to the distribution of controlled
In October 2019, we agreed in principle to a global settlement substances. We are vigorously defending ourselves in these matters.
framework with a leadership group of state attorneys general that is Department of Justice Investigations
designed to resolve all pending and future opioid lawsuits and claims We have received federal grand jury subpoenas issued in connection
by states and political subdivisions (the "Settlement Framework"). with investigations being conducted by the U.S. Attorney's Office for
This Settlement Framework is subject to contingencies and the Eastern District of New York and the Fraud Section of the U.S.
uncertainties as to final terms, but is the basis for our negotiation of Department of Justice ("DOJ"). The subpoenas seek documents
definitive terms and documentation. relating to our anti-diversion policies, procedures and program, and
The Settlement Framework includes (1) a cash component, pursuant our distribution of certain controlled substances. We are cooperating
to which we would pay up to $5.56 billion over eighteen years, (2) with these requests.
development and participation in a program for distribution of opioid Product Liability Lawsuits
abuse treatment medications for a period of ten years, and (3) to-be As of July 28, 2020, we are named as a defendant in 334 product
specified industry-wide changes to controlled substance anti- liability lawsuits coordinated in Alameda County Superior Court in
diversion programs. Definitive terms for a settlement pursuant to the California involving claims by approximately 4,280 plaintiffs that
Settlement Framework continue to be negotiated, and there is no allege personal injuries associated with the use of Cordis OptEase
assurance that the necessary parties will agree to a definitive and TrapEase inferior vena cava (IVC) filter products. Another 31
settlement agreement or that the contingencies to any agreement lawsuits involving similar claims by approximately 36 plaintiffs are
will be satisfied. In connection with these matters, we have $5.56 pending in other jurisdictions. These lawsuits seek a variety of
billion accrued at June 30, 2020, included in deferred income taxes remedies, including unspecified monetary damages. We continue to
and other liabilities in the consolidated balance sheets, which vigorously defend ourselves in these lawsuits and have begun to
represents the cash component. We are unable to estimate the range engage in preliminary resolution discussions with plaintiffs.
of possible loss associated with these matters. We are unable to At June 30, 2020, we had a total of $468 million, net of estimated
reasonably estimate the liability or cost associated with the other insurance recoveries, accrued for losses and legal defense costs
components of the Settlement Framework, the potential distribution related to the Cordis IVC filter lawsuits which are presented on a
of treatment medications and any incremental costs for changes to gross basis in the consolidated balance sheets. We believe there is
our controlled substance anti-diversion program that we may agree a range of estimated losses with respect to these matters. Because
to. no amount within the range is a better estimate than any other amount
In the fiscal year ended June 30, 2020, we along with two other within the range, we have accrued the minimum amount in the range.
national distributors entered into a $215 million settlement with two We estimate the high end of the range to be approximately $919
Ohio counties, Cuyahoga and Summit, to resolve all claims in the million, net of estimated insurance recoveries.
first bellwether trial in the MDL, which had been set for trial for October Shareholder Securities Litigation
2019. In connection with this settlement, we incurred $66 million In August 2019, the Louisiana Sheriffs' Pension & Relief Fund filed
within litigation (recoveries)/charges, net during the fiscal year ended a purported class action complaint against Cardinal Health and
June 30, 2020. certain current and former officers and employees in the United
In connection with these matters (including the settlement with two States District Court for the Southern District of Ohio purportedly on
Ohio counties), we recorded a total pre-tax charge of $5.63 billion behalf of all purchasers of our common shares between March 2015
($5.14 billion after tax) during the fiscal year ended June 30, 2020 in and May 2018. The complaint alleges that the defendants violated
litigation (recoveries)/charges, net, in the consolidated statement of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934
earnings/(loss) for the cash component. Because loss contingencies by making misrepresentations and omissions related to the
are inherently unpredictable and unfavorable developments or integration of the Cordis business and inventory and supply chain
resolutions can occur, the assessment is highly subjective and problems within the Cordis business, and seeks to recover
requires judgments about future events. We regularly review these unspecified damages and equitable relief for the alleged
opioid litigation matters to determine whether our accrual is adequate. misstatements and omissions. In June 2020, the court appointed
The amount of ultimate loss may differ materially from this accrual. 1199 SEIU Health Care Employees Pension Fund as lead plaintiff.
We continue to strongly dispute the allegations made in these We believe that the claims asserted in this complaint are without merit
lawsuits and reaching an agreement in principle on a global and intend to vigorously defend against them.
settlement framework is not an admission of liability or wrongdoing. Surgical Gown Recalls
Private Plaintiffs In January 2020, we issued a voluntary recall for 9.1 million AAMI
The Settlement Framework does not address claims by private Level 3 surgical gowns and two voluntary field actions (a recall of
plaintiffs, which includes unions and other health and welfare funds, some packs and a corrective action allowing overlabeling of other
hospital systems and other healthcare providers, businesses and packs) for 2.9 million Presource Procedure Packs containing affected

gowns (together, the "Recalls"). These Recalls were necessary 8. Income Taxes
because we discovered in December 2019 that one of our FDA-
registered suppliers in China had shifted production of some gowns Earnings/(Loss) before Income Taxes and Provision for/
to unapproved sites with uncontrolled manufacturing environments. (Benefit From) Income Taxes
Because of this, we could not assure sterility of the gowns. The following table summarizes earnings/(loss) before income
taxes:
In connection with these Recalls, in the fiscal year ended June 30,
2020, we recorded total charges of $85 million, of which $48 million (in millions) 2020 2019 2018
is within cost of products sold and $37 million is within SG&A in the U.S. operations $ (4,056) $ 1,478 $ 391
consolidated statements of earnings/(loss). This charge represents Non-U.S. operations 284 273 (619)
our best estimate of costs for the Recalls and includes inventory write-
off costs and certain remediation and supply disruption costs, such Earnings/(loss) before income taxes $ (3,772) $ 1,751 $ (228)
as costs to replace recalled products. Because loss contingencies
The following table summarizes the components of provision for/
are inherently unpredictable and unfavorable developments or
(benefit from) income taxes:
resolutions can occur, the assessment is highly subjective and
requires judgments about future events. (in millions) 2020 2019 2018
Other Civil Litigation Current:
Generic Pharmaceutical Pricing Antitrust Litigation Federal $ 659 $ 295 $ 341
In December 2019, pharmaceutical distributors including us were State and local 154 89 41
added as defendants in a civil class action lawsuit filed by indirect
Non-U.S. 69 85 143
purchasers of generic drugs, such as hospitals and retail pharmacies.
Total current $ 882 $ 469 $ 525
The indirect purchaser case is part of a multidistrict litigation
consisting of multiple individual class action matters consolidated in Deferred:
the Eastern District of Pennsylvania. The indirect purchaser plaintiffs Federal $ (822) $ (28) $ (1,003)
allege that pharmaceutical distributors encouraged manufacturers to State and local (127) (37) 16
increase prices, provided anti-competitive pricing information to Non-U.S. (12) (18) (25)
manufacturers and improperly engaged in customer allocation. We Total deferred (961) (83) (1,012)
have filed a motion to dismiss the complaints and we intend to
Provision for/(benefit from) income
vigorously defend ourselves in this matter. taxes $ (79) $ 386 $ (487)
Active Pharmaceutical Ingredient Impurity Litigation
Effective Tax Rate
Many participants in the pharmaceutical supply chain, including
active pharmaceutical ingredient ("API") manufacturers, finished The following table presents a reconciliation of the provision based
dose manufacturers, repackagers (including us), distributors on the federal statutory income tax rate to our effective income tax
(including us), and retailers have been named as defendants in rate:
lawsuits arising out of recalls of certain medications due to alleged 2020 (1) 2019 (2) 2018 (1)
impurities in the active pharmaceutical ingredients or finished Provision at Federal statutory rate 21.0% 21.0% 28.1%
product.
State and local income taxes, net of federal
In February 2019, a Multidistrict Litigation was created in the U.S. benefit 2.5 0.9 (16.0)
District Court for the District of New Jersey (the “Sartan MDL”) Tax effect of foreign operations — (0.7) (48.4)
alleging API impurities in certain generic blood pressure medications. Nondeductible/nontaxable items (0.1) 2.5 (10.2)
We were recently named as a defendant in a Multidistrict Litigation Goodwill impairment — — (124.7)
alleging API impurities in Zantac and its generic form, ranitidine. We Tax Act 0.1 (0.8) 410.9
intend to vigorously defend ourselves in these matters. Change in valuation allowances 1.5 4.5 (76.9)
Antitrust Litigation Proceeds Foreign tax credits 0.5 (1.0) 27.3
We received and recognized income resulting from settlements of China tax related to divestiture — — (25.8)
lawsuits in which we were a class member or plaintiff of $16 million, Legal entity reorganization — (3.6) 71.4
$94 million and $22 million during fiscal 2020, 2019, and 2018, Opioid litigation (23.2) — —
respectively.
Other (0.2) (0.7) (21.9)
Effective income tax rate 2.1% 22.1% 213.8%
(1) The effective income tax rate for fiscal 2020 and 2018 represents an income
tax benefit tax rate.
(2) The effective income tax rate for fiscal 2019 represents an income tax expense
tax rate.

The income tax benefit rate was 2.1% and 213.8% in fiscal 2020 and considered indefinitely reinvested, we have recorded an immaterial
fiscal 2018 compared to an income tax expense rate of 22.1% in amount of income tax expense in our financial statements in fiscal
fiscal 2019. Fluctuations in the effective tax rates are primarily due 2020.
to the impact of opioid litigation in fiscal 2020 and the impact of the Deferred Income Taxes
U.S. Tax Cuts and Jobs Act ("Tax Act") in fiscal 2018, both described Deferred income taxes arise from temporary differences between
further below, as well as the Medical Unit goodwill impairment in fiscal financial reporting and tax reporting bases of assets and liabilities
2018, as described in Note 1. There were also changes in valuation and operating loss and tax credit carryforwards for tax purposes.
allowances related to capital losses, credit carryforwards and net
The following table presents the components of the deferred income
operating loss carryforwards in U.S. federal, U.S. state and
tax assets and liabilities at June 30:
international jurisdictions.
In connection with the $5.63 billion pre-tax charge for the opioid (in millions) 2020 2019
litigation, we recorded a tax benefit of $488 million in fiscal 2020, Deferred income tax assets:
which is net of unrecognized tax benefits of $469 million, reflecting Receivable basis difference $ 39 $ 35
our current assessment of the estimated future deductibility of the Accrued liabilities 607 133
amount that may be paid. We have made reasonable estimates and
Share-based compensation 38 39
recorded amounts based on management's judgment and our current
Loss and tax credit carryforwards 589 621
understanding of the tax law; however, these estimates require
Deferred tax assets related to uncertain tax
significant judgment since the definitive settlement terms and positions 52 30
documentation, including provisions related to deductibility, under the Other 87 6
Settlement Framework have not been negotiated and the U.S. tax
Total deferred income tax assets 1,412 864
law governing deductibility was changed by the Tax Act. Further, it is
Valuation allowance for deferred income tax
possible that the tax authorities could challenge our interpretation of assets (470) (542)
the currently enacted tax law or the estimates and assumptions used Net deferred income tax assets $ 942 $ 322
to assess the future deductibility of these benefits. The actual amount
of the tax benefit related to uncertain tax positions may differ
Deferred income tax liabilities:
materially from these estimates. See Note 7 for more information
Inventory basis differences $ (1,083) $ (1,056)
regarding these matters.
Property-related (327) (171)
Our effective tax rate has benefits from negotiated lower than
Goodwill and other intangibles (751) (808)
statutory tax rates in select foreign jurisdictions which individually are
Total deferred income tax liabilities $ (2,161) $ (2,035)
not material to our effective tax rate but in aggregate have a favorable
Net deferred income tax liability $ (1,219) $ (1,713)
tax impact of approximately $17 million during fiscal 2020.
On December 22, 2017, the United States enacted the Tax Act. The Deferred income tax assets and liabilities in the preceding table, after
Tax Act made broad and complex changes to the U.S. tax code that netting by taxing jurisdiction and for uncertain tax positions, are in
affected fiscal 2018 and incrementally affected our fiscal year 2019 the following captions in the consolidated balance sheets at June 30:
financial results in several ways. First, the U.S. statutory tax rate in
fiscal 2019 was reduced to 21.0%. Second, the Tax Act established (in millions) 2020 2019
new tax provisions that affected us beginning July 1, 2018 including, Noncurrent deferred income tax asset (1) $ 39 $ 36
(1) eliminating the U.S. manufacturing deduction; (2) establishing Noncurrent deferred income tax liability (2) (1,258) (1,749)
new limitations on deductible interest expense and certain executive Net deferred income tax liability $ (1,219) $ (1,713)
compensation; (3) eliminating the corporate alternative minimum tax; (1) Included in other assets in the consolidated balance sheets.
(4) creating the base erosion anti-abuse tax; (5) creating a new
(2) Included in deferred income taxes and other liabilities in the consolidated
provision designed to tax global intangible low-tax income (“GILTI”) balance sheets.
and allow for a deduction related to foreign derived intangible income
("FDII"); (6) generally eliminating U.S. federal income taxes on At June 30, 2020 we had gross federal, state and international loss
dividends from foreign subsidiaries; and (7) changing rules related and credit carryforwards of $123 million, $2.4 billion and $2.2 billion,
to uses and limitations of net operating loss carryforwards created in respectively, the tax effect of which is an aggregate deferred tax asset
tax years beginning after December 31, 2017. of $589 million. Substantially all of these carryforwards are available
for at least three years. Approximately $461 million of the valuation
Regarding the new GILTI tax rules, we elected to treat taxes due on
allowance at June 30, 2020 applies to certain federal, state and
future GILTI inclusions in U.S. taxable income as a current period
international loss carryforwards that, in our opinion, are more likely
expense when incurred.
than not to expire unutilized. However, to the extent that tax benefits
As of June 30, 2020, foreign earnings of approximately $800 million related to these carryforwards are realized in the future, the reduction
are considered indefinitely reinvested for working capital and other in the valuation allowance would reduce income tax expense.
offshore investment needs. The computation of tax required if those
earnings are repatriated is not practicable. For amounts not

Unrecognized Tax Benefits CareFusion is obligated to indemnify us for certain tax exposures
We had $998 million, $456 million and $423 million of unrecognized and transaction taxes prior to our fiscal 2010 spin-off of CareFusion.
tax benefits at June 30, 2020, 2019 and 2018, respectively. The The indemnification receivable was $176 million and $165 million at
June 30, 2020, 2019 and 2018 balances include $753 million, $303 June 30, 2020 and 2019, respectively, and is included in other assets
million and $262 million, respectively, of unrecognized tax benefits in the consolidated balance sheets.
that, if recognized, would have an impact on the effective tax rate. As a result of the acquisition of the Patient Recovery Business,
The remaining unrecognized tax benefits relate to tax positions for Medtronic plc is obligated to indemnify us for certain tax exposures
which ultimate deductibility is highly certain but for which there is and transaction taxes related to periods prior to the acquisition under
uncertainty as to the timing of such deductibility. Recognition of these the purchase agreement. The indemnification receivable was $19
tax benefits would not affect our effective tax rate. We include the full million and $22 million at June 30, 2020 and 2019, respectively, and
amount of unrecognized tax benefits in deferred income taxes and is included in other assets in the consolidated balance sheets.
other liabilities in the consolidated balance sheets. The following table
presents a reconciliation of the beginning and ending amounts of 9. Fair Value Measurements
unrecognized tax benefits: The following tables present the fair values for assets and (liabilities)
measured on a recurring basis at June 30:
(in millions) 2020 2019 2018
Balance at beginning of fiscal year $ 456 $ 423 $ 417 2020
Additions for tax positions of the current (in millions) Level 1 Level 2 Level 3 Total
year 500 24 15
Assets:
Additions for tax positions of prior years (1) 78 39 141
Cash equivalents $ 721 $ — $ — $ 721
Reductions for tax positions of prior years (27) (5) (40)
Other investments (1) 114 — — 114
Settlements with tax authorities (1) (6) (25) (99)
Forward contracts (2) — 53 — 53
Expiration of the statute of limitations (1) (3) — (11)
Balance at end of fiscal year $ 998 $ 456 $ 423
2019
(1) Included in fiscal 2018 additions for tax positions of prior years is $110 million (in millions) Level 1 Level 2 Level 3 Total
related to exposures acquired as part of the Patient Recovery Business for
Assets:
which we are fully indemnified. Also for fiscal 2018 are settlements of $81 million
related to the Patient Recovery Business as well as $11 million of statute Cash equivalents $ 297 $ — $ — $ 297
expirations. Other investments (1) 118 — — 118
It is reasonably possible that there could be a change in the amount Forward contracts (2) — 53 — 53
of unrecognized tax benefits within the next 12 months due to (1) The other investments balance includes investments in mutual funds, which are
activities of the U.S. Internal Revenue Service ("IRS") or other taxing used to offset fluctuations in deferred compensation liabilities. These mutual
authorities, possible settlement of audit issues, reassessment of funds invest in the equity securities of companies with both large and small
existing unrecognized tax benefits or the expiration of statutes of market capitalization and high-quality fixed income debt securities. The fair value
of these investments is determined using quoted market prices.
limitations. We estimate that the range of the possible change in
(2) The fair value of interest rate swaps, foreign currency contracts, net investment
unrecognized tax benefits within the next 12 months is a net decrease hedges and commodity contracts is determined based on the present value of
of $0 million to $370 million, exclusive of penalties and interest. expected future cash flows considering the risks involved, including non-
We recognize accrued interest and penalties related to unrecognized performance risk, and using discount rates appropriate for the respective
maturities. Observable Level 2 inputs are used to determine the present value
tax benefits in the provision for income taxes. At June 30, 2020, 2019 of expected future cash flows. The fair value of these derivative contracts, which
and 2018, we had $146 million, $122 million and $110 million, are subject to master netting arrangements under certain circumstances, is
respectively, accrued for the payment of interest and penalties. These presented on a gross basis in prepaid expenses and other, other assets, other
balances are gross amounts before any tax benefits and are included accrued liabilities, and deferred income taxes and other liabilities within the
consolidated balance sheets.
in deferred income taxes and other liabilities in the consolidated
balance sheets. During fiscal 2020, 2019, and 2018 we recognized 10. Financial Instruments
$16 million, $8 million, and $8 million of expense for interest and
penalties in income tax expense, respectively. We utilize derivative financial instruments to manage exposure to
certain risks related to our ongoing operations. The primary risks
Other Tax Matters managed through the use of derivative instruments include interest
We file income tax returns in the U.S. federal jurisdiction, various rate risk, currency exchange risk, and commodity price risk. We do
U.S. state and local jurisdictions, and various foreign jurisdictions. not use derivative instruments for trading or speculative purposes.
With few exceptions, we are subject to audit by taxing authorities for While the majority of our derivative instruments are designated as
fiscal years 2008 through the current fiscal year. hedging instruments, we also enter into derivative instruments that
We are a party to a tax matters agreement with CareFusion are designed to hedge a risk, but are not designated as hedging
Corporation ("CareFusion"), which has been acquired by Becton, instruments. These derivative instruments are adjusted to current fair
Dickinson and Company. Under the tax matters agreement, value through earnings at the end of each period. We are exposed

to counterparty credit risk on all of our derivative instruments. (1) Included in other assets in the consolidated balance sheets.
Accordingly, we have established and maintain strict counterparty (2) Included in prepaid expenses and other in the consolidated balance sheets.
(3) Included in deferred income taxes and other liabilities in the consolidated
credit guidelines and only enter into derivative instruments with major balance sheets.
financial institutions that are rated investment grade or better. We do (4) Included in other accrued liabilities in the consolidated balance sheets.
not have significant exposure to any one counterparty and we believe Fair Value Hedges
the risk of loss is remote. Additionally, we do not require collateral We enter into pay-floating interest rate swaps to hedge the changes
under these agreements. in the fair value of fixed-rate debt resulting from fluctuations in interest
Interest Rate Risk Management rates. These contracts are designated and qualify as fair value
We are exposed to the impact of interest rate changes. Our objective hedges. Accordingly, the gain or loss recorded on the pay-floating
is to manage the impact of interest rate changes on cash flows and interest rate swaps is directly offset by the change in fair value of the
the market value of our borrowings. We utilize a mix of debt maturities underlying debt. Both the derivative instrument and the underlying
along with both fixed-rate and variable-rate debt to manage changes debt are adjusted to market value at the end of each period with any
in interest rates. In addition, we enter into interest rate swaps to further resulting gain or loss recorded in interest expense, net in the
manage our exposure to interest rate variations related to our consolidated statements of earnings/(loss). During fiscal 2020 and
borrowings and to lower our overall borrowing costs. 2019, there was no gain or loss recorded to interest expense as
changes in the market value of our derivative instruments offset
Currency Exchange Risk Management changes in the market value of the underlying debt.
We conduct business in several major international currencies and
are subject to risks associated with changing foreign exchange rates. In May 2020, we unwound certain interest rate swap contracts. In
Our objective is to reduce earnings and cash flow volatility associated connection with the unwind of these contracts, we received cash
with foreign exchange rate changes to allow management to focus proceeds of $112 million. The related gain will be recognized in
its attention on business operations. Accordingly, we enter into interest expense, net in our statement of earnings/(loss) over the
various contracts that change in value as foreign exchange rates remaining term of the related debt agreements, which ranged from
change to protect the value of existing foreign currency assets and 48 months to 63 months at June 30, 2020.
liabilities, commitments and anticipated foreign currency revenue In connection with the debt repayment as described in Note 6, two
and expenses. pay-floating interest rate swaps with notional amounts of $200 million
matured in the second quarter of fiscal 2020.
Commodity Price Risk Management
We are exposed to changes in the price of certain commodities. Our During fiscal 2019, we terminated notional amounts of $163 million of
objective is to reduce earnings and cash flow volatility associated pay-floating interest rate swaps in connection with the debt
with forecasted purchases of these commodities to allow repurchases in fiscal 2019 described in Note 6. These swaps were
management to focus its attention on business operations. previously designated as fair value hedges.
Accordingly, we enter into derivative contracts when possible to During fiscal 2018 we entered into pay-floating interest rate swaps
manage the price risk associated with certain forecasted purchases. with total notional amounts of $1.1 billion. These swaps have been
The following table summarizes the fair value of our assets and designated as fair value hedges of our fixed rate debt and are included
liabilities related to derivatives designated as hedging instruments in deferred income taxes and other liabilities in the consolidated
and the respective line items in which they were recorded in the balance sheets. During fiscal 2018, $550 million of pay-floating
consolidated balance sheets at June 30: interest rate swaps matured.

Assets:
Pay-floating interest rate swaps (1) $ 27 $ 46
Cross-currency swap (1) 47 12
Foreign currency contracts (2) — 6
Total assets $ 74 $ 64
Liabilities:
Pay-floating interest rate swaps (3) $ — $ 6
Foreign currency contracts (4) 4 2
Forward interest rate swaps (3) 16 —
Commodity contracts (4) 1 3
Total liabilities $ 21 $ 11

The following tables summarize the outstanding interest rate swaps The following tables summarize the outstanding cash flow hedges
designated as fair value hedges at June 30: at June 30:
2020 2020
(in millions) Notional Amount Maturity Date (in millions) Notional Amount Maturity Date
Forward interest rate swaps $ 200 Jun 2022
Pay-floating interest rate swaps $ 550 Mar 2023 Foreign currency contracts 328 Jul 2020 - Jun 2021
Commodity contracts 16 Jul 2020 - Jun 2021
2019
(in millions) Notional Amount Maturity Date 2019
Nov Sep (in millions) Notional Amount Maturity Date
Pay-floating interest rate swaps $ 2,150 2019 - 2025
Foreign currency contracts $ 381 Jul 2019 - Jun 2020
The following table summarizes the gain/(loss) recognized in Commodity contracts 20 Jul 2019 - Jun 2020
earnings for interest rate swaps designated as fair value hedges:
The following table summarizes the pre-tax gain/(loss) included in
(in millions) 2020 2019 2018 OCI for derivative instruments designated as cash flow hedges:
Pay-floating interest rate swaps (1) $ 106 $ 9 $ 11
(in millions) 2020 2019 2018
Fixed-rate debt (1) (106) (9) (11)
Forward interest rate swaps $ (16) $ — $ —
(1) Included in interest expense, net in the consolidated statements of earnings/ Commodity contracts 1 (5) 3
(loss). Foreign currency contracts (8) 5 (1)
Cash Flow Hedges The following table summarizes the pre-tax gain/(loss) reclassified
We enter into derivative instruments to hedge our exposure to from AOCI into earnings for derivative instruments designated as
changes in cash flows attributable to interest rate, foreign currency cash flow hedges:
and commodity price fluctuations associated with certain forecasted
transactions. These derivative instruments are designated and (in millions) 2020 2019 2018
qualify as cash flow hedges. Accordingly, the gain or loss on the Foreign currency contracts (1) $ 7 $ 2 $ 1
derivative instrument is reported as a component of accumulated Foreign currency contracts (2) 1 — —
other comprehensive loss and reclassified into earnings in the same Foreign currency contracts (3) — 1 (2)
line item associated with the forecasted transaction and in the same Forward interest rate swaps (4) 2 2 2
period during which the hedged transaction affects earnings. Commodity contracts (3) (5) — —
During fiscal 2020, we entered into forward interest rate swaps with (1) Included in revenue in the consolidated statements of earnings/(loss).
a total notional amount of $200 million to hedge probable, but not (2) Included in cost of products sold in the consolidated statements of earnings/
firmly committed, future transactions associated with our debt. (loss).
All gains and losses currently included within accumulated other (3) Included in SG&A expenses in the consolidated statements of earnings/(loss).
comprehensive loss associated with our cash flow hedges that are (4) Included in interest expense, net in the consolidated statements of earnings/
expected to be reclassified into net earnings within the next 12 months (loss).
are immaterial. Net Investment Hedges
We enter into foreign currency contracts to protect the value of We hedge the foreign currency risk associated with certain net
anticipated foreign currency revenues and expenses. At June 30, investment positions in foreign subsidiaries. To accomplish this, we
2020 and 2019, we held contracts to hedge probable, but not firmly enter into cross-currency swaps that are designated as hedges of
committed, revenue and expenses. The principal currencies hedged net investments.
are the Canadian dollar, Mexican peso, euro, Thai baht, Chinese In August 2019, we entered into a ¥64 billion ($600 million) cross-
renminbi, Japanese yen, Australian dollar, and British pound. currency swap maturing in 2022.
We enter into commodity contracts to manage the price risk In September 2018, we entered into a €200 million ($233 million)
associated with forecasted purchases of certain commodities used cross-currency swap maturing in 2023.
in our Medical segment.
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 from net investment hedges recorded in other foreign The fair value of our long-term obligations and other short-term
currency translation was $35 million and $12 million during fiscal borrowings is estimated based on either the quoted market prices
2020 and 2019, respectively. Gain recognized in interest expense, for the same or similar issues or other inputs derived from available
net in the consolidated statements of earnings/(loss) for the portion market information, which represents a Level 2 measurement.
of the net investment hedges excluded from the assessment of hedge The following table is a summary of the fair value gain/(loss) of our
effectiveness was $17 million and $5 million during fiscal 2020 and derivative instruments based upon the estimated amount that we
2019, respectively. would receive (or pay), considering counter-party credit risk, to
Economic (Non-Designated) Hedges terminate the contracts at June 30:
We enter into foreign currency contracts to manage our foreign
2020 2019
exchange exposure related to sales transactions, intercompany
Notional Fair Value Notional Fair Value
financing transactions and other balance sheet items subject to (in millions) Amount Gain/(Loss) Amount Gain/(Loss)
revaluation that do not meet the requirements for hedge accounting Pay-floating interest rate
treatment. Accordingly, these derivative instruments are adjusted to swaps $ 550 $ 27 $ 2,150 $ 40
current market value at the end of each period through earnings. The Foreign currency
contracts 653 (4) 869 4
gain or loss recorded on these instruments is substantially offset by
Forward interest rate
the remeasurement adjustment on the foreign currency denominated swaps 200 (16) — —
asset or liability. The settlement of the derivative instrument and the Cross-currency swap 833 47 233 12
remeasurement adjustment on the foreign currency denominated Commodity contracts 16 (1) 20 (3)
asset or liability are both recorded in other (income)/expense, net.
The principal currency managed through foreign currency contracts 11. Shareholders' Equity
is the euro, Canadian dollar, British pound, Japanese yen, and
At June 30, 2020 and 2019, authorized capital shares consisted of
Chinese renminbi.
the following: 750 million Class A common shares, without par value;
The following tables summarize the outstanding economic (non- 5 million Class B common shares, without par value; and 500
designated) derivative instruments at June 30: thousand non-voting preferred shares, without par value. The Class
A common shares and Class B common shares are collectively
2020
referred to below as “common shares”. Holders of common shares
(in millions) Notional Amount Maturity Date
are entitled to share equally in any dividends declared by the Board
Foreign currency contracts $ 325 July 2020
of Directors and to participate equally in all distributions of assets
upon liquidation. Generally, the holders of Class A common shares
2019 are entitled to one vote per share, and the holders of Class B common
(in millions) Notional Amount Maturity Date shares are entitled to one-fifth of one vote per share on proposals
Foreign currency contracts $ 488 Jul 2019 presented to shareholders for vote. Under certain circumstances, the
The following table summarizes the gain/(loss) recognized in holders of Class B common shares are entitled to vote as a separate
earnings for economic (non-designated) derivative instruments: class. Only Class A common shares were outstanding at June 30,
2020 and 2019.
(in millions) 2020 2019 2018 We repurchased $1.5 billion of our common shares, in the aggregate,
Foreign currency contracts (1) $ (11) $ (13) $ (5) through share repurchase programs during fiscal 2020, 2019 and
(1) Included in other income, net in the consolidated statements of earnings/(loss).
2018, as described below. We funded the repurchases with available
cash and short term borrowings. The common shares repurchased
Fair Value of Financial Instruments are held in treasury to be used for general corporate purposes.
The carrying amounts of cash and equivalents, trade receivables, During fiscal 2020, we repurchased 7.3 million common shares
net, accounts payable, and other accrued liabilities at June 30, 2020 having an aggregate cost of $350 million. The average price paid per
and 2019 approximate fair value due to their short-term maturities. common share was $48.00. These repurchases were made under
The following table summarizes the estimated fair value of our long- an accelerated share repurchase ("ASR") program, which began on
term obligations and other short-term borrowings compared to the August 20, 2019 and was completed on December 4, 2019.
respective carrying amounts at June 30: During fiscal 2019, we repurchased 11.5 million common shares
having an aggregate cost of $600 million. The average price paid per
common share was $52.32. These repurchases were made under
Estimated fair value $ 7,273 $ 8,065
ASR program, which began on August 16, 2018 and was completed
Carrying amount 6,775 8,031
on October 25, 2018.
During fiscal 2018, we repurchased 8.4 million common shares
having an aggregate cost of $550 million. The average price paid per
common share was $65.30. These repurchases include $300 million

purchased under an ASR program, which began on February 14, stock options, restricted share units and performance share units not
2018 and was completed on March 21, 2018. We repurchased 4.3 included in the computation of diluted loss per common share
million shares under the ASR at an average price paid per share attributable to Cardinal Health, Inc. because their effect would be
of $69.26. anti-dilutive as a result of the net loss for the fiscal year.
Accumulated Other Comprehensive Loss 13. Segment Information
The following table summarizes the changes in the balance of
accumulated other comprehensive loss by component and in total: Our operations are principally managed on a products and services
basis and are comprised of two operating segments, which are the
Foreign Unrealized same as our reportable segments: Pharmaceutical and Medical. The
Currency Gain/(Loss) Accumulated factors for determining the reportable segments include the manner
Translation on Other
Adjustments Derivatives, Comprehensive in which management evaluates performance for purposes of
(in millions) and other net of tax Loss allocating resources and assessing performance combined with the
Balance at June 30, 2018 $ (113) $ 21 $ (92) nature of the individual business activities.
Other comprehensive income/ Revenue
(loss), net before
reclassifications 18 — 18 Our Pharmaceutical segment distributes branded and generic
Amounts reclassified to pharmaceutical, specialty pharmaceutical and over-the-counter
earnings — (5) (5) healthcare and consumer products in the United States. This
Total other comprehensive segment also provides services to pharmaceutical manufacturers
loss attributable to Cardinal
Health, Inc., net of tax of $1 and healthcare providers for specialty pharmaceutical products;
million 18 (5) 13 operates pharmacies, including pharmacies in community health
Balance at June 30, 2019 (95) 16 (79) centers, nuclear pharmacies and radiopharmaceutical
Other comprehensive loss, manufacturing facilities; provides pharmacy management services
before reclassifications 3 (23) (20) to hospitals as well as medication therapy management and patient
Amounts reclassified to outcomes services to hospitals, other healthcare providers and
earnings — (5) (5) payers; and repackages generic pharmaceuticals and over-the-
Total comprehensive counter healthcare products.
income/(loss) attributable to
Cardinal Health, Inc., net of Our Medical segment manufactures, sources and distributes
tax of $4 million 3 (28) (25)
Cardinal Health branded medical, surgical and laboratory products,
Balance at June 30, 2020 $ (92) $ (12) $ (104)
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
12. Earnings/(Loss) Per Share Attributable to laboratory products known as national brand products and provides
Cardinal Health, Inc. supply chain services and solutions to hospitals, ambulatory surgery
centers, clinical laboratories and other healthcare providers in the
The following table reconciles the computation of basic and diluted
United States and Canada. This segment also distributes medical
earnings per share attributable to Cardinal Health, Inc.:
products to patients' homes in the United States through our Cardinal
(in millions, except per share amounts) 2020 2019 2018
Health at-Home Solutions division.
Net earnings/(loss) $(3,693) $ 1,365 $ 259 The following table presents revenue for each reportable segment
Net earnings attributable to noncontrolling interest (3) (2) (3) and Corporate:
Net earnings/(loss) attributable to Cardinal
Health, Inc. $(3,696) $ 1,363 $ 256 (in millions) 2020 2019 2018
Weighted-average common shares–basic 293 300 313 Pharmaceutical $137,495 $129,917 $121,241
Effect of dilutive securities: Medical 15,444 15,633 15,581
Employee stock options, restricted share units, and Total segment revenue 152,939 145,550 136,822
performance share units — 1 2
Corporate (1) (17) (16) (13)
Weighted-average common shares–diluted 293 301 315
Total revenue $152,922 $145,534 $136,809
Basic earnings/(loss) per common share
attributable to Cardinal Health, Inc.: $(12.61) $ 4.55 $ 0.82 (1) Corporate revenue consists of the elimination of inter-segment revenue and
Diluted earnings/(loss) per common share other revenue not allocated to the segments.
attributable to Cardinal Health, Inc.: (12.61) 4.53 0.81
The potentially dilutive employee stock options, restricted share units

and performance share units that were anti-dilutive for fiscal 2020,
2019 and 2018 were 6 million, 7 million and 6 million, respectively.
During fiscal 2020, there were 2 million potentially dilutive employee

The following tables present revenue for each reportable segment on sale of equity interest in naviHealth and provision for/(benefit from)
and disaggregated revenue within our two reportable segments and income taxes.
Corporate: 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
Pharmaceutical Distribution and Specialty Solutions the first-year spend for certain projects that require incremental
(1) (2) $ 136,693 $ 129,067
investments in the form of additional operating expenses. Because
Nuclear and Precision Health Solutions 802 850
approval for these projects is dependent on executive management,
Pharmaceutical segment revenue 137,495 129,917
we retain these expenses at Corporate. Investment spending within
Medical distribution and products (3) 13,429 13,833
Corporate was $69 million, $55 million and $43 million for fiscal 2020,
Cardinal Health at-Home Solutions 2,015 1,800 2019 and 2018, respectively.
Medical segment revenue 15,444 15,633
In connection with the opioid litigation as discussed further in Note
Total segment revenue 152,939 145,550
7, we recognized a pre-tax charge of $5.63 billion during fiscal 2020
Corporate (4) (17) (16) which was retained at Corporate.
Total revenue $ 152,922 $ 145,534
In connection with the surgical gown recall as discussed further in
(1) Products and services offered by our Specialty Solutions division are referred Note 7, we recognized a pre-tax charge of $85 million during fiscal
to as “specialty pharmaceutical products and services" 2020 which was retained at Corporate.
(2) Comprised of all Pharmaceutical segment businesses except for Nuclear and
Precision Health Solutions division. In connection with the naviHealth divestiture discussed in Note 2, we
(3) Comprised of all Medical segment businesses except for Cardinal Health at- recognized a pre-tax gain of $508 million during fiscal 2019 which
Home Solutions division was retained at Corporate.
(4) Corporate revenue consists of the elimination of inter-segment revenue and In connection with the sale of our remaining equity interest in a
other revenue not allocated to the segments. partnership that owned naviHealth as discussed in Note 2, we
The following table presents revenue by geographic area: recognized a $579 million pre-tax gain ($493 million after tax) during
fiscal 2020, which is included in gain on sale of equity interest
(in millions) 2020 2019 2018 naviHealth in the consolidated statements of earnings/(loss) and did
United States $ 148,707 $ 141,479 $ 132,539 not impact segment profit or operating earnings.
International 4,232 4,071 4,283 The following tables present segment profit by reportable segment
Total segment revenue 152,939 145,550 136,822 and Corporate:
Corporate (1) (17) (16) (13)
Total revenue $ 152,922 $ 145,534 $ 136,809 (in millions) 2020 2019 2018
Pharmaceutical $ 1,753 $ 1,834 $ 1,992
(1) Corporate revenue consists of the elimination of inter-segment revenue and
Medical 663 576 662
other revenue not allocated to the segments.
Total segment profit 2,416 2,410 2,654
Segment Profit
Corporate (6,514) (350) (2,528)
We evaluate segment performance based on segment profit, among Total operating earnings $ (4,098) $ 2,060 $ 126
other measures. Segment profit is segment revenue, less segment
cost of products sold, less segment distribution, selling, general, and The following tables present depreciation and amortization and
administrative ("SG&A") expenses. Segment SG&A expenses additions to property and equipment by reportable segment and
include share-based compensation expense as well as allocated Corporate:
corporate expenses for shared functions, including corporate
management, corporate finance, financial and customer care shared (in millions) 2020 2019 2018
services, human resources, information technology, legal and Pharmaceutical $ 135 $ 147 $ 156
compliance, including certain litigation defense costs. Corporate Medical 243 288 278
expenses are allocated to the segments based on headcount, level Corporate 535 565 598
of benefit provided and other ratable allocation methodologies. The Total depreciation and
results attributable to noncontrolling interests are recorded within amortization $ 913 $ 1,000 $ 1,032
segment profit.
We do not allocate the following items to our segments: last-in first- (in millions) 2020 2019 2018
out, or ("LIFO"), inventory charges/(credits); surgical gown recall Pharmaceutical $ 47 $ 35 $ 58
costs; state opioid assessment related to prior fiscal years; Medical 86 74 127
restructuring and employee severance; amortization and other Corporate 242 219 199
acquisition-related costs; impairments and (gain)/loss on disposal of Total additions to property and
assets; litigation (recoveries)/charges, net; other (income)/expense, equipment $ 375 $ 328 $ 384
net; interest expense, net; loss on early extinguishment of debt; gain
The following table presents total assets for each reportable segment The following table summarizes all transactions related to restricted
and Corporate at June 30: share units under the Plans:
(in millions) 2020 2019 2018 Weighted-Average

Restricted Grant Date Fair
Pharmaceutical $ 22,398 $ 22,446 $ 21,421 (in millions, except per share amounts) Share Units Value per Share
Medical 14,691 15,284 16,066 Nonvested at June 30, 2018 2 $ 71.58
Corporate 3,677 3,233 2,464 Granted 2 50.13
Total assets $ 40,766 $ 40,963 $ 39,951 Vested (1) 74.52
The following tables present property and equipment, net by Canceled and forfeited (1) 62.32
geographic area: Nonvested at June 30, 2019 2 51.65
Granted 2 42.71
(in millions) 2020 2019 2018 Vested (1) 60.21
United States $ 1,880 $ 1,846 $ 1,950 Canceled and forfeited — —
International 486 510 537 Nonvested at June 30, 2020 3 $ 45.92
Property and equipment, net $ 2,366 $ 2,356 $ 2,487
The following table provides additional data related to restricted share
14. Share-Based Compensation unit activity:
We maintain stock incentive plans (collectively, the “Plans”) for the
(in millions) 2020 2019 2018
benefit of certain of our officers, directors and employees. At June 30,
Total compensation cost, net of estimated
2020, 12 million shares remain available for future grants under the forfeitures, related to nonvested restricted
Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan share and share unit awards not yet
recognized, pre-tax $ 77 $ 75 $ 78
("2011 LTIP"). Under the 2011 LTIP's fungible share counting
Weighted-average period in years over which
provisions, stock options are counted against the plan as one share restricted share and share unit cost is
for every share issued; awards other than stock options are counted expected to be recognized (in years) 2 2 2
against the plan as two and one-half shares for every share issued. Total fair value of shares vested during the
This means that only 5 million shares could be issued under awards year $ 57 $ 68 $ 65
other than stock options while 12 million shares could be issued under
stock options. Shares are issued out of treasury shares when stock Stock Options
options are exercised and when restricted share units and Employee stock options granted under the Plans generally vest in
performance share units vest. equal annual installments over three years and are exercisable for
a period up to ten years from the grant date. All stock options are
The following table provides total share-based compensation
exercisable at a price equal to the market value of the common shares
expense by type of award:
underlying the option on the grant date.
(in millions) 2020 2019 2018 The following table summarizes all stock option transactions under
Restricted share unit expense $ 70 $ 63 $ 73 the Plans:
Employee stock option expense 3 10 22
Weighted-Average
Performance share unit expense 17 9 (10) Stock Exercise Price per
Total share-based compensation (in millions, except per share amounts) Options Common Share
expense $ 90 $ 82 $ 85 Outstanding at June 30, 2018 7 $ 64.50
The total tax benefit related to share-based compensation was $16 Granted — —
million, $16 million and $23 million for fiscal 2020, 2019 and 2018, Exercised — —
respectively. Canceled and forfeited (1) 72.54
Outstanding at June 30, 2019 6 63.78
Restricted Share Units
Granted — —
Restricted share units granted under the Plans generally vest in equal
Exercised (1) 42.36
annual installments over three years. Restricted share units accrue
cash dividend equivalents that are payable upon vesting of the Canceled and forfeited — —
awards. Outstanding at June 30, 2020 5 $ 65.15
Exercisable at June 30, 2020 5 $ 65.25

The following table provides additional detail related to stock options: Performance Share Units
Performance share units generally vest over a three-year
(in millions, except per share amounts) 2020 2019 2018 performance period based on achievement of specific performance
Aggregate intrinsic value of outstanding goals. Based on the extent to which the targets are achieved, vested
options at period end $ 12 $ 10 $ 13
shares may range from zero to 240 percent of the target award
Aggregate intrinsic value of exercisable
options at period end 12 10 13 amount. Performance share units accrue cash dividend equivalents
Aggregate intrinsic value of exercised that are payable upon vesting of the awards.
options 8 1 14 The following table summarizes all transactions related to
Net proceeds/(withholding) from share- performance share units under the Plans (based on target award
based compensation 26 3 (3)
amounts):
Excess tax benefits from share based
compensation 6 7 10
Weighted-Average
Total compensation cost, net of estimated Performance Grant Date Fair
forfeitures, related to unvested stock options (in millions, except per share amounts) Share Units Value per Share
not yet recognized, pre-tax 1 5 17
Nonvested at June 30, 2018 0.4 $ 66.13
Total fair value of shares vested during the
year 8 20 19 Granted 0.6 50.96
Weighted-average grant date fair value per Vested — —
stock option $ 8.26 $ 8.34 $ 13.50
Canceled and forfeited (0.1) 52.20
Nonvested at June 30, 2019 0.9 51.45
(in years) 2020 2019 2018 Granted 0.7 44.03
Weighted-average remaining contractual life of Vested (0.1) 48.40
outstanding options 5 5 7 Canceled and forfeited (0.2) 50.92
Weighted-average remaining contractual life of Nonvested at June 30, 2020 1.3 $ 54.24
exercisable options 5 5 5
Weighted-average period over which stock option
compensation cost is expected to be recognized 1 1 2
The following table provides additional data related to performance
Until the end of fiscal 2018, stock options were granted to our officers share unit activity:
and certain employees. The fair values were estimated on the grant
date using a lattice valuation model. We believe the lattice model (in millions) 2020 2019 2018
provides reasonable estimates because it has the ability to take into Total compensation cost, net of estimated
account individual exercise patterns based on changes in our stock forfeitures, related to nonvested performance
share units not yet recognized, pre-tax $ 29 $ 12 $ 1
price and other variables, and it provides for a range of input
Weighted-average period over which
assumptions, which are disclosed in the table below. The risk-free performance share unit cost is expected to be
rate is based on the U.S. Treasury yield curve at the time of the grant. recognized (in years) 2 2 2
We analyzed historical data to estimate option exercise behaviors Total fair value of shares vested during the year $ 5 $ — $ 14
and employee terminations to be used within the lattice model. The
expected life of the options granted was calculated from the option Employee Retirement Savings Plans
valuation model and represents the length of time in years that the Substantially all of our domestic non-union employees are eligible to
options granted are expected to be outstanding. Expected volatilities be enrolled in our company-sponsored contributory retirement
are based on implied volatility from traded options on our common savings plans, which include features under Section 401(k) of the
shares and historical volatility over a period of time commensurate Internal Revenue Code of 1986, and provide for matching and
with the contractual term of the option grant (up to ten years). discretionary contributions by us. The total expense for our employee
retirement savings plans was $66 million, $99 million and $129 million
There were no stock options granted to employees during fiscal year for fiscal 2020, 2019 and 2018, respectively.
2020 or 2019. The following table provides the range of assumptions
used to estimate the fair value of stock options:
2018
Risk-free interest rate 2.1%
Expected volatility 25%
Dividend yield 2.7% - 2.8%
Expected life in years 7

15. Selected Quarterly Financial Data (Unaudited)

The following is selected quarterly financial data for fiscal 2020 and
2019. The sum of the quarters may not equal year-to-date due to
rounding.
First
(in millions, except per common Quarter Second Third Fourth
share amounts) (1) Quarter Quarter Quarter (2)
Fiscal 2020
Revenue $ 37,341 $ 39,735 $ 39,157 $ 36,689
Gross margin 1,679 1,714 1,885 1,590
Distribution, selling, general
and administrative expenses 1,107 1,163 1,165 1,137
Net earnings/(loss) (4,921) 220 351 657
Less: Net earnings attributable
to noncontrolling interests (1) — (1) (1)
Net earnings/(loss) attributable
to Cardinal Health, Inc. (4,922) 220 350 656
Net earnings/(loss)
attributable to Cardinal
Health, Inc. per common
share:
Basic $ (16.65) $ 0.75 $ 1.20 $ 2.25
Diluted (16.65) 0.75 1.19 2.23
(1) Includes a $5.63 billion pre-tax charge for the opioid litigation ($5.14 billion after
tax).
(2) Includes a $579 million pre-tax gain ($493 million after tax) in connection with
the sale of our remaining equity interest in a partnership that owned naviHealth.
First
(in millions, except per common Quarter Second Third Fourth
share amounts) (1) Quarter Quarter Quarter
Fiscal 2019
Revenue $ 35,213 $ 37,740 $ 35,228 $ 37,353
Gross margin 1,667 1,730 1,764 1,674
Distribution, selling, general and
administrative expenses 1,155 1,064 1,097 1,168
Net earnings/(loss) 594 281 296 194
Less: Net earnings attributable
to noncontrolling interests (1) (1) — —
to Cardinal Health, Inc. 593 280 296 194

to Cardinal Health, Inc. per
common share:
Basic $ 1.95 $ 0.94 $ 0.99 $ 0.65
Diluted (3) 1.94 0.93 0.99 0.65
(1) Includes a $508 million gain ($378 million after tax) related to the naviHealth
divestiture.

Schedule II Valuation and Qualifying Accounts
Cardinal Health, Inc. and Subsidiaries

Schedule II - Valuation and Qualifying Accounts
Balance at Charged to Costs Charged to Balance at
(in millions) Beginning of Period and Expenses (1) Other Accounts (2) Deductions (3) End of Period
Fiscal 2020
Accounts receivable $ 193 $ 139 $ 1 $ (127) $ 206
Finance notes receivable 14 15 — (2) 27
Sales returns and allowances 479 2,253 — (2,237) 495
Other 1 — — — 1
$ 687 $ 2,407 $ 1 $ (2,366) $ 729
Fiscal 2019
Finance notes receivable 7 8 — (1) 14
Other 1 — — — 1
$ 626 $ 2,353 $ 1 $ (2,293) $ 687
Fiscal 2018
Finance notes receivable 9 (2) — — 7
Other 1 — — — 1
$ 494 $ 2,513 $ 1 $ (2,381) $ 626
(1) Fiscal 2020, 2019 and 2018 include $49 million, $60 million and $37 million, respectively, for reserves related to service charges and customer pricing disputes, excluded
from provision for bad debts on the consolidated statements of cash flows and classified as a reduction in revenue in the consolidated statements of earnings/(loss).
(2) Recoveries of amounts provided for or written off in prior years was $1 million in each fiscal year 2020, 2019 and 2018.
(3) Write-off of uncollectible accounts or actual sales returns.
The sum of the components may not equal the total due to rounding.

Directors, Executive Officers, and Corporate Governance
Directors, Executive Officers and Corporate Governance

Information About Our Executive Officers
The following is a list of our executive officers:
Name Age Position

Michael C. Kaufmann 57 Chief Executive Officer
Jason M. Hollar 47 Chief Financial Officer
Victor L. Crawford 59 Chief Executive Officer, Pharmaceutical segment
Stephen M. Mason 49 Chief Executive Officer, Medical segment
Michele A. M. Holcomb 52 Executive Vice President, Strategy and Corporate Development
Ola M. Snow 53 Chief Human Resources Officer
Jessica L. Mayer 51 Chief Legal and Compliance Officer
Brian S. Rice 57 Executive Vice President, Chief Information Officer and Customer Support Services
The business experience summaries provided below for our executive officers describe positions held during the last five years (unless
otherwise indicated).
Mr. Kaufmann has served as Chief Executive Officer since January 2018. In August 2019, he was also appointed to serve as Interim Chief
Financial Officer, and served in that position until September 1, 2019. From November 2014 through December 2017, Mr. Kaufmann served
as Chief Financial Officer.
Mr. Hollar has served as Chief Financial Officer since May 2020. Mr. Hollar joined us from Tenneco Inc. ("Tenneco") where he was Executive
Vice President and Chief Financial Officer from July 2018. From June 2017 to June 2018, Mr. Hollar served as Senior Vice President Finance
at Tenneco. Prior to that, Mr. Hollar served as Chief Financial Officer of Sears Holding Corporation ("Sears") from October 2016 to April 2017
and was Senior Vice President, Finance, at Sears beginning in October 2014. Sears filed for Chapter 11 bankruptcy in October 2018.
Mr. Crawford has served as Chief Executive Officer, Pharmaceutical segment since November 2018. From September 2012 until November
2018, Mr. Crawford served as the Chief Operating Officer, Healthcare, Education, Business Dining for Aramark Corporation.
Mr. Mason has served as Chief Executive Officer, Medical segment since August 2019. From September 2016 through August 2019, he served
as President of our Cardinal Health at-Home Solutions within our Medical segment and from June 2013 until August 2016, he served as the
President of our Kinray pharmaceutical distribution business.
Ms. Holcomb has served as Executive Vice President, Strategy and Corporate Development since January 2017. She joined us from Teva
Pharmaceutical Industries Ltd., where she served as Senior Vice President, Strategy, Portfolio, Search, and Partnerships and Chief Operating
Officer, Global R&D from October 2015 to December 2016 and Senior Vice President, Chief Operating Officer, Global R&D from September
2012 to September 2015.
Ms. Snow has served as Chief Human Resources Officer since October 2018. From January 2016 through September 2018, Ms. Snow served
as Senior Vice President, Human Resources, Total Rewards, Talent Acquisition and Corporate Business Partner. From November 2012 to
January 2016, she served as the Senior Vice President of Human Resources for the Medical segment.
Ms. Mayer has served as Chief Legal and Compliance Officer since March 2019. Ms. Mayer served as Executive Vice President, Deputy
General Counsel and Secretary from September 2017 through March 2019. From December 2015 through September 2017, Ms. Mayer
served as Senior Vice President, Deputy General Counsel, and from June 2008 to December 2015, she was Vice President, Managing
Counsel.
Mr. Rice has served as Executive Vice President, Chief Information Officer and Customer Support Services since February 2019. From 2009
until the beginning of 2019, Mr. Rice served as Senior Vice President, Chief Information Officer & Global and Business Services for Kellogg
Company.
Directors and Corporate Governance

We have adopted Standards of Business Conduct that apply to all of our directors, officers and employees. The Standards of Business Conduct
outline our corporate values and standards of integrity and behavior and are designed to protect and promote our reputation. The full text of
the Standards of Business Conduct is posted on our website at www.cardinalhealth.com under “About Us — Ethics and Compliance.”

Directors, Executive Officers, and Corporate Governance
Any waiver of the Standards of Business Conduct for directors or executive officers must be approved by the Audit Committee. As required
under SEC and New York Stock Exchange rules, we will disclose future amendments to our Standards of Business Conduct and waivers from
the Standards of Business Conduct for our principal executive officer, principal financial officer, and principal accounting officer, or persons
performing similar functions, and our other executive officers and directors on our website within four business days following the date of the
amendment or waiver.
The other information called for by Item 10 of Form 10-K is incorporated by reference to our Definitive Proxy Statement (which will be filed
with the SEC pursuant to Regulation 14A under the Exchange Act) relating to our 2020 Annual Meeting of Shareholders (our “2020 Proxy
Statement”) under the captions “Corporate Governance” and “Share Ownership Information.”
The other information called for by Item 12 of Form 10-K is incorporated by reference to our 2020 Proxy Statement under the caption "Share
Ownership Information."

Exhibits
Exhibits, Financial Statement Schedules

(a)(1) The following financial statements are included in the "Financial Statements" section of this report:
Page
Consolidated Financial Statements and Schedule: 48

Consolidated Statements of Earnings/(Loss) for the Fiscal Years Ended June 30, 2020, 2019 and 2018 49
Consolidated Statements of Comprehensive Income/(Loss) for the Fiscal Years Ended June 30, 2020, 2019 and 2018 50
Consolidated Balance Sheets at June 30, 2020 and 2019 51
Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended June 30, 2020, 2019 and 2018 52
Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2020, 2019 and 2018 53
Notes to Consolidated Financial Statements 54
(a)(2) The following Supplemental Schedule is included in this report:
Page
Schedule II - Valuation and Qualifying Accounts 78
All other schedules not listed above have been omitted as not applicable or because the required information is included in the Consolidated
Financial Statements or in the Notes thereto.
Exhibit
Number Exhibit Description
2.1.1 Stock and Asset Purchase Agreement, dated April 18, 2017, between Cardinal Health, Inc. and Medtronic plc (incorporated by reference to Exhibit 2.1 to Cardinal
Health's Current Report on Form 8-K filed on April 18, 2017, File No. 1-11373)
2.1.2 Amendment No. 1, dated as of July 28, 2017, to Stock and Asset Purchase Agreement, dated April 18, 2017, between Cardinal Health, Inc. and Medtronic plc
(incorporated by reference to Exhibit 2.2.2 to Cardinal Health's Annual Report on Form 10-K for the year ended June 30, 2017, File No. 1-11373)
3.1 Amended and Restated Articles of Incorporation of Cardinal Health, Inc., as amended (incorporated by reference to Exhibit 3.1 to Cardinal Health’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2008, File No. 1-11373)
3.2 Cardinal Health, Inc. Restated Code of Regulations (incorporated by reference to Exhibit 3.2 to Cardinal Health’s Current Report on Form 8-K filed on November
12, 2019, File No. 1-11373)
4.1 Specimen Certificate for Common Shares of Cardinal Health, Inc. (incorporated by reference to Exhibit 4.01 to Cardinal Health’s Annual Report on Form 10-K for
the fiscal year ended June 30, 2001, File No. 1-11373)
4.2.1 Indenture, dated as of June 2, 2008, between Cardinal Health, Inc. and The Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to
Cardinal Health’s Current Report on Form 8-K filed on June 2, 2008, File No. 1-11373)
4.2.2 Form of 3.200% Notes due 2022 (incorporated by reference to Exhibit 4.2 to Cardinal Health's Current Report on Form 8-K filed on May 21, 2012, File No. 1-11373)
4.2.3 Form of 3.200% Notes due 2023 (incorporated by reference to Exhibit 4.2 to Cardinal Health's Current Report on Form 8-K filed on February 22, 2013, File No.
1-11373)
4.2.4 Form of 4.600% Notes due 2043 (incorporated by reference to Exhibit 4.3 to Cardinal Health's Current Report on Form 8-K filed on February 22, 2013, File No.
1-11373)
4.2.5 Form of 2.400% Notes due 2019 (incorporated by reference to Exhibit 4.1 to Cardinal Health’s Current Report on Form 8-K filed on November 19, 2014, File No.
1-11373)
1-11373)
1-11373)
4.2.8 Form of 3.750% Notes due 2025 (incorporated by reference to Exhibit 4.2 to Cardinal Health’s Current Report on Form 8-K filed on June 23, 2015, File No. 1-11373)
4.2.9 Form of 4.900% Notes due 2045 (incorporated by reference to Exhibit 4.3 to Cardinal Health’s Current Report on Form 8-K filed on June 23, 2015, File No. 1-11373)
4.2.10 Form of 2.616% notes due 2022 (incorporated by reference to Exhibit 4.2 to Cardinal Health's Current Report on Form 8-K filed on June 12, 2017, File No. 1-11373)
4.2.11 Form of Floating rate notes due 2022 (incorporated by reference to Exhibit 4.3 to Cardinal Health's Current Report on Form 8-K filed on June 12, 2017, File No.
1-11373)

Exhibits
4.3 Agreement to furnish to the Securities and Exchange Commission upon request a copy of instruments defining the rights of holders of certain long-term debt of
Cardinal Health, Inc. and consolidated subsidiaries (incorporated by reference to Exhibit 4.07 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year
ended June 30, 2005, File No. 1-11373)
4.4 Description of Securities (incorporated by reference to Exhibit 4.4 to Cardinal Health's Annual Report on Form 10-K for the fiscal year ended June 30, 2019, File
No. 1-11373)
10.1.1 Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health’s Current Report on Form 8-K/A filed on November
4, 2011, File No. 1-11373)*
10.1.2 First Amendment to Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.2 to Cardinal Health's Annual Report on Form
10-K for the fiscal year ended June 30, 2014)*
10.1.3 Form of Nonqualified Stock Option Agreement under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to Cardinal
Health’s Current Report on Form 8-K/A filed on November 4, 2011, File No. 1-11373)*
10.1.4 Form of Nonqualified Stock Option Agreement under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.3 to
Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012, File No. 1-11373)*
10.1.5 Form of Restricted Share Units Agreement under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.8 to Cardinal
Health's Annual Report on Form 10-K for the fiscal year ended June 30, 2014)*
10.1.6 Form of Performance Share Units Agreement under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to Cardinal
Health's Current Report on Form 8-K/A filed on November 4, 2011, File No. 1-11373)*
10.1.7 Form of Amendment to Stock Option and Restricted Share Units Agreements under the Cardinal Health, Inc. 2011 Long-Term Incentive Plan, the Cardinal Health,
Inc. 2005 Long-Term Incentive Plan and the Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to Exhibit 10.1.9
to Cardinal Health's Annual Report on Form 10-K for the fiscal year ended June 30, 2013, File No. 1-11373)*
10.2.1 Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health's Current Report on Form 8-K filed
on November 7, 2016, File No. 1-11373)*
10.2.2 First Amendment to Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2.2 to Cardinal Health's Annual Report
on Form 10-K for the fiscal year end June 30, 2017, File No. 1-11373)*
10.2.3 Second Amendment to the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to Cardinal Health's Quarterly
Report on Form 10-Q for the quarter ended December 31, 3019, File No. 1-11373)*
10.2.4 Form of Nonqualified Stock Option Agreement under the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.2.3 to Cardinal Health's Annual Report on Form 10-K for the fiscal year end June 30, 2017, File No. 1-11373)*
10.2.5 Form of Restricted Share Units Agreement under the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2.4
to Cardinal Health's Annual Report on Form 10-K for the fiscal year end June 30, 2017, File No. 1-11373)*
10.2.6 Form of Restricted Share Units Agreement under the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporate by reference to Exhibit 10.3 to
Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2019, File No. 1-11373)*
10.2.7 Form of Performance Share Units Agreement under the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.2.5 to Cardinal Health's Annual Report on Form 10-K for the fiscal year end June 30, 2017, File No. 1-11373)*
10.2.8 Form of Directors Restricted Share Units Agreement under the Amended Cardinal Health, Inc. 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit
10.4 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, File No. 1-11373)
10.3.1 Cardinal Health, Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2008, File No. 1-11373)*
10.3.2 First Amendment to Cardinal Health, Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.1 to Cardinal Health’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2009, File No. 1-11373)*
10.3.3 Second Amendment to Cardinal Health, Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.2 to Cardinal Health’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2009, File No. 1-11373)*
10.3.4 Third Amendment to Cardinal Health, Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2.4 to Cardinal Health's Annual Report on Form
10-K for the fiscal year ended June 30, 2014)*
10.3.5 Form of Nonqualified Stock Option Agreement under the Cardinal Health, Inc. 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1.11 to
Cardinal Health's Annual Report on Form 10-K for the fiscal year ended June 30, 2010, File No. 1-11373)*
10.4.1 Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to Cardinal Health’s Quarterly Report on Form
10-Q for the quarter ended December 31, 2007, File No. 1-11373)*
10.4.2 First Amendment to Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to Exhibit 10.2.1 to Cardinal Health’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, File No. 1-11373)*
10.4.3 Second Amendment to the Cardinal Health, Inc. 2007 Nonemployee Directors Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to Cardinal Health's
Quarterly Report on Form 10-Q for the Quarter ended December 31, 2011, File No. 1-11373)*
10.5.1 Cardinal Health Deferred Compensation Plan, as amended and restated effective January 1, 2016 (incorporated by reference to Exhibit 10.1 to Cardinal Health's
Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, File No. 1-11373)*
10.5.2 First Amendment to the Cardinal Health Deferred Compensation Plan, as amended and restated effective as of January 1, 2016 (incorporated by reference to
Exhibit 10.1 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)*
10.5.3 Second Amendment, effective as of January 1, 2018, to the Cardinal Health Deferred Compensation Plan, as amended and restated effective as of January 1,
2016 (incorporated by reference to Exhibit 10.2 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2017, File No. 1-11373)
10.5.4 Third Amendment, effective as of April 1, 2018, to the Cardinal Health Deferred Compensation Plan, as amended and restated effective January 1, 2016 (incorporated
by reference to Exhibit 10.3 to Cardinal Health's Quarterly Report on Form 10-Q for the Quarter ended December 31, 2018)*
10.5.6 Cardinal Health Deferred Compensation Plan, Amended and Restated effective January 1, 2020 (incorporated by reference to Exhibit 10.4 to Cardinal Health's
Quarterly Report on Form 10-Q for the quarter ended December 31, 2019, File No. 1-11373)*

Exhibits
10.6.1 Cardinal Health, Inc. Senior Executive Severance Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health's Current Report on Form 8-K filed on
September 26, 2018, File No. 1-11373)
10.6.2 First Amendment to the Cardinal Health, Inc. Senior Executive Severance Plan (incorporated by reference to Exhibit 10.1 to Cardinal Health's Quarterly Report
on Form 10-Q for the quarter ended December 31, 2019, File No. 1-11373)
10.7 Cardinal Health, Inc. Policy Regarding Shareholder Approval of Severance Agreements (incorporated by reference to Exhibit 10.09 to Cardinal Health’s Current
Report on Form 8-K filed on August 7, 2006, File No. 1-11373)*
10.8.1 Confidentiality and Business Protection Agreement, effective as of February 15, 2010, between Cardinal Health, Inc. and Michael C. Kaufmann (incorporated by
reference to Exhibit 10.15 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2010, File No. 1-11373)*
10.8.2 Aircraft Time Sharing Agreement, effective as of February 8, 2018, by and between Cardinal Health, Inc. and Michael C. Kaufmann (incorporated by reference to
Exhibit 10.2 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, File No. 1-11373)
10.9 Confidentiality and Business Protection Agreement, effective as of September 9, 2014, between Cardinal Health, Inc. and Jon L. Giacomin (incorporated by
reference to Exhibit 10.1 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, File No. 1-11373)*
10.10 Confidentiality and Business Protection Agreement, effective as of November 6, 2017, between Cardinal Health, Inc. and Jorge M. Gomez (incorporated by
reference to Exhibit 10.4 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2017 , File No. 1-11373)
10.11.1 Confidentiality and Business Protection Agreement, effective as of November 1, 2018, between Cardinal Health, Inc. and Victor L. Crawford (incorporated by
reference to Exhibit 10.13.1 to Cardinal Health's Annual Report on Form 10-K for the fiscal year ended June 30, 2019, File No. 1-11373)*
10.11.2 Letter Agreement, dated October 30, 2018, between Cardinal Health, Inc. and Victor L. Crawford (incorporated by reference to Exhibit 10.13.2 to Cardinal Health's
Annual Report on Form 10-K for the fiscal year ended June 30, 2019, File No. 1-11373) *
10.11.4 Letter Agreement, dated March 9, 2020, between Cardinal Health, Inc. and Jason Hollar (incorporated by reference to Exhibit 10.1 to Cardinal Health's Current
Report on Form 8-K filed on March 19, 2020, File No. 1-11373)*
10.11.5 Confidentiality and Business Protection Agreement, effective as of April 27, 2020, between Cardinal Health, Inc. and Jason Hollar (incorporated by reference to
Exhibit 10.2 to Cardinal Health's Current Report on Form 8-K filed on March 19, 2020, File No. 1-11373)*
10.12 Form of Indemnification Agreement between Cardinal Health, Inc. and certain individual directors (incorporated by reference to Exhibit 10.38 to Cardinal Health’s
Annual Report on Form 10-K for the fiscal year ended June 30, 2004, File No. 1-11373)
10.13.1 Issuing and Paying Agency Agreement, dated August 9, 2006, between Cardinal Health, Inc. and The Bank of New York (incorporated by reference to Exhibit
10.01 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006, File No. 1-11373)
10.13.2 First Amendment to Issuing and Paying Agency Agreement, dated February 28, 2007, between Cardinal Health, Inc. and The Bank of New York (incorporated by
reference to Exhibit 10.01 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)
10.13.3 Second Amendment to Issuing and Paying Agency Agreement, effective as of December 1, 2016, between Cardinal Health, Inc. and The Bank of New York
(incorporated by reference to Exhibit 10.2 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)
10.13.4 Third Amendment to Issuing and Paying Agency Agreement, dated September 15, 2017, between Cardinal Health, Inc. and The Bank of New York (incorporated
by reference to Exhibit 10.2 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, File No. 1-11373)
10.13.5 Commercial Paper Dealer Agreement, dated August 9, 2006, between Cardinal Health, Inc. and J.P. Morgan Securities Inc. (incorporated by reference to Exhibit
10.13.6 First Amendment to Commercial Paper Dealer Agreement, dated February 28, 2007, between Cardinal Health, Inc. and J.P. Morgan Securities Inc. (incorporated
by reference to Exhibit 10.02 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)
10.13.7 Second Amendment to Commercial Paper Dealer Agreement, effective as of December 31, 2012, between Cardinal Health, Inc. and J.P. Morgan Securities LLC
(formerly known as J.P. Morgan Securities Inc.) (incorporated by reference to Exhibit 10.4 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2012, File No. 1-11373)
10.13.8 Commercial Paper Dealer Agreement between Cardinal Health, Inc. and J.P. Morgan Securities LLC, effective as of December 1, 2016 (incorporated by reference
to Exhibit 10.6 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)
10.13.9 Commercial Paper Dealer Agreement, dated August 9, 2006, between Cardinal Health, Inc. and Banc of America Securities LLC (incorporated by reference to
Exhibit 10.03 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006, File No. 1-11373)
10.13.10 First Amendment to Commercial Paper Dealer Agreement, dated February 28, 2007, between Cardinal Health, Inc. and Banc of America Securities LLC
(incorporated by reference to Exhibit 10.03 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)
10.13.11 Second Amendment to Commercial Paper Dealer Agreement, effective as of December 31, 2012, between Cardinal Health, Inc. and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, f/k/a Banc of America Securities LLC (incorporated by reference to Exhibit 10.5 to Cardinal Health’s Quarterly Report on Form 10-Q for the
quarter ended December 31, 2012, File No. 1-11373)
10.13.12 Commercial Paper Dealer Agreement between Cardinal Health, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, effective as of December 1, 2016
(incorporated by reference to Exhibit 10.3 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)
10.13.13 Commercial Paper Dealer Agreement, dated August 9, 2006, between Cardinal Health, Inc. and Wachovia Capital Markets, LLC (incorporated by reference to
Exhibit 10.04 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006, File No. 1-11373)
10.13.14 First Amendment to Commercial Paper Dealer Agreement, dated February 28, 2007, between Cardinal Health, Inc. and Wachovia Capital Markets, LLC (incorporated
by reference to Exhibit 10.04 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)
10.13.15 Second Amendment to Commercial Paper Dealer Agreement, effective as of December 31, 2012, between Cardinal Health, Inc. and Wells Fargo Securities, LLC,
as successor in interest to Wachovia Capital Markets, LLC (incorporated by reference to Exhibit 10.6 to Cardinal Health’s Quarterly Report on Form 10-Q for the
quarter ended December 31, 2012, File No. 1-11373)
10.13.16 Commercial Paper Dealer Agreement between Cardinal Health, Inc. and Wells Fargo Securities, LLC, effective as of December 1, 2016 (incorporated by reference
to Exhibit 10.5 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)
10.13.17 Commercial Paper Dealer Agreement, dated August 9, 2006, between Cardinal Health, Inc. and Goldman, Sachs & Co. (incorporated by reference to Exhibit
10.13.18 First Amendment to Commercial Paper Dealer Agreement, dated February 28, 2007, between Cardinal Health, Inc. and Goldman, Sachs & Co. (incorporated by
reference to Exhibit 10.05 to Cardinal Health’s Current Report on Form 8-K filed on March 6, 2007, File No. 1-11373)

Exhibits
10.13.19 Second Amendment to Commercial Paper Dealer Agreement, effective as of December 31, 2012, between Cardinal Health, Inc. and Goldman, Sachs & Co.
(incorporated by reference to Exhibit 10.7 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, File No. 1-11373)
10.13.20 Commercial Paper Dealer Agreement between Cardinal Health, Inc. and Goldman Sachs & Co., effective as of December 1, 2016 (incorporated by reference to
Exhibit 10.4 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)
10.13.21 Form of Commercial Paper Dealer Agreement between Cardinal Health, Inc. and SunTrust Robinson Humphrey, Inc. (incorporated by reference to Exhibit 10.2
to Cardinal Health’s Current Report on Form 8-K filed on April 21, 2009, File No. 1-11373)
10.13.22 Form of First Amendment to Commercial Paper Dealer Agreement between Cardinal Health, Inc. and SunTrust Robinson Humphrey, Inc. (incorporated by reference
to Exhibit 10.8 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, File No. 1-11373)
10.13.23 Commercial Paper Dealer Agreement between Cardinal Health, Inc. and SunTrust Robinson Humphrey, Inc., effective as of December 1, 2016 (incorporated by
reference to Exhibit 10.7 to Cardinal Health's Quarterly Report on Form 10-Q for the quarter ended December 31, 2016, File No. 1-11373)
10.14 Second Amended and Restated Five-Year Credit Agreement, dated as of June 27, 2019, among JPMorgan Chase Bank, N.A. as Administrative Agent, Joint Lead
Arranger and Joint Book Manager, Bank of America, N.A. as Syndication Agent, MUFG Bank, Ltd. as Syndication Agent, Joint Lead Arranger and Joint Book
Manager, Barclays Bank PLC, Deutsche Bank AG New York Branch, Goldman Sachs Bank USA, HSBC Bank USA, N.A. and Wells Fargo Bank, N.A., as
Documentation Agents, and BOFA Securities, Inc., as Joint Lead Arranger and Joint Book Manager (incorporated by reference to Exhibit 10.1 to Cardinal Health's
Current Report on Form 8-K filed on June 28, 2019, File No. 1-11373)
10.15.1 Fourth Amended and Restated Receivables Purchase Agreement, dated as of November 1, 2013, among Cardinal Health Funding, LLC, as Seller, Griffin Capital,
LLC, as Servicer, the Conduits party thereto, the Financial Institutions Party thereto, the Managing Agents party thereto, and LC Banks party thereto and the Bank
of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Agent (incorporated by reference to Exhibit 10.1 to Cardinal Health’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2013, File No. 1-11373)
10.15.2
First Amendment and Joinder, dated as of November 3, 2014, to the Fourth Amended and Restated Receivables Purchase Agreement, dated as of November 1,
2013 (incorporated by reference to Exhibit 10.3 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, File No. 1-11373)
10.15.3 Second Amendment, dated as of November 14, 2016, to the Fourth Amended and Restated Receivables Purchase Agreement, dated as of November 1, 2013
(incorporated by reference to Exhibit 10.4.3 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, File No. 1-11373)
10.15.4 Third Amendment, dated as of August 30, 2017, to the Fourth Amended and Receivables Purchase Agreement, dated as of November 1, 2013 (incorporated by
reference to Exhibit 10.1 to Cardinal Health's Current Report on Form 8-K filed on August 31, 2017, File No. 1-11373)
10.15.5 Fourth Amendment and Joinder, dated September 30, 2019, to the Fourth Amended and Restated Receivables Purchase Agreement (incorporated by reference
to Exhibit 10.1 to Cardinal Health's Current Report on Form 8-K filed on October 2, 2019, File No. 1-11373)
10.16.1 Seventh Amended and Restated Performance Guaranty, dated as of November 14, 2016, executed by Cardinal Health, Inc. in favor of Cardinal Health Funding,
LLC (incorporated by reference to Exhibit 10.5.1 to Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, File No. 1-11373)
10.16.2 Amendment No. 1 to Seventh Amended and Restated Performance Guaranty, dated as of November 14, 2016 (incorporated by reference to Exhibit 10.5.2 to
Cardinal Health’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, File No. 1-11373
10.16.3 Amendment No. 2 to Seventh Amended and Restated Performance Guaranty, dated as of November 6, 2018 (incorporated by reference to Exhibit 10.4 to Cardinal
Health's Quarterly Report on Form 10-Q for the Quarter ended September 30, 2018, File No. 1-11373)
10.16.4 Amendment No. 3 to Seventh Amended and Restated Performance Guaranty (incorporated by reference to Exhibit 10.2 to Cardinal Health's Current Report on
Form 8-K filed October 2, 2019, File No. 1-11373)
10.17.1 Tax Matters Agreement, dated as of August 31, 2009, by and between Cardinal Health, Inc. and CareFusion Corporation (incorporated by reference to Exhibit
10.3 to Cardinal Health’s Current Report on Form 8-K filed on September 4, 2009, File No. 1-11373)
10.17.2 First Amendment to Tax Matters Agreement, dated as of May 28, 2012, by and between Cardinal Health, Inc. and CareFusion Corporation (incorporated by
reference to Exhibit 10.20.2 to Cardinal Health’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012, File No. 1-11373)
21.1 List of Subsidiaries of Cardinal Health, Inc.
23.1 Consent of Independent Registered Public Accounting Firm
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
99.1 Statement Regarding Forward-Looking Information
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File - formatted in Inline XBRL (included as Exhibit 101)
* Management contract or compensatory plan or arrangement.

Form 10-K Cross Reference Index
Form 10-K Cross Reference Index

Item Page(s)
Part 1
1 Business 26
1A Risk Factors 33
1B Unresolved Staff Comments N/A
2 Properties 40
3 Legal Proceedings 40
4 Mine Safety Disclosures N/A
Part II
5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 41
6 Selected Financial Data 23
7 Management's Discussion and Analysis of Financial Condition and Results of Operations 3
7A Quantitative and Qualitative Disclosures about Market Risk 24
8 Financial Statements and Supplementary Data 48
9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure N/A
9A Controls and Procedures 43
9B Other Information N/A
Part III
10 Directors, Executive Officers and Corporate Governance 79
11 Executive Compensation (a)
12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (b)
13 Certain Relationships and Related Transactions, and Director Independence (c)
14 Principal Accounting Fees and Services (d)
Part IV
15 Exhibits, Financial Statement Schedules 81
16 Form 10-K Summary N/A
Signatures 86
N/A Not applicable

(a) The information called for by Item 11 of Form 10-K is incorporated by reference to our 2020 Proxy Statement under the captions “Corporate Governance” and
“Executive Compensation.”
(b) The information called for by Item 12 of Form 10-K is incorporated by reference to our 2020 Proxy Statement under the caption "Executive Compensation."
(c) The information called for by Item 13 of Form 10-K is incorporated by reference to our 2020 Proxy Statement under the caption "Corporate Governance."
(d) The information called for by Item 14 of Form 10-K is incorporated by reference to our 2020 Proxy Statement under the caption “Audit Committee Matters.”

Signatures
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on August 13, 2020.
Cardinal Health, Inc.
By: /s/ MICHAEL C. KAUFMANN

Michael C. Kaufmann
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed below by the
following persons on behalf of the registrant and in the capacities indicated on August 13, 2020.
Name Title
/s/ MICHAEL C. KAUFMANN Chief Executive Officer and Director (principal executive officer)
Michael C. Kaufmann
/s/ JASON M. HOLLAR Chief Financial Officer (principal financial officer)
Jason M. Hollar
/s/ STUART G. LAWS Senior Vice President and Chief Accounting Officer (principal accounting officer)
Stuart G. Laws
/s/ COLLEEN F. ARNOLD Director

Colleen F. Arnold
/s/ CARRIE S. COX Director

Carrie S. Cox
/s/ CALVIN DARDEN Director

Calvin Darden
/s/ BRUCE L. DOWNEY Director

Bruce L. Downey
/s/ DAVID C. EVANS Director
David C. Evans
/s/ PATRICIA A. HEMINGWAY HALL Director

Patricia A. Hemingway Hall
/s/ AKHIL JOHRI Director

Akhil Johri
/s/ GREGORY B. KENNY Director

Gregory B. Kenny
/s/ NANCY KILLEFER Director

Nancy Killefer
/s/ J. MICHAEL LOSH Director

J. Michael Losh
/s/ DEAN A. SCARBOROUGH Director
Dean A. Scarborough
/s/ JOHN H. WEILAND Director
John H. Weiland

Exhibit 99.1
Statement Regarding Forward-Looking Information

As used in this exhibit, “we,” “our,” “us” and similar pronouns refer to Cardinal Health, Inc. and its subsidiaries, unless the context requires
otherwise. Our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended June 30,
2020 (the “2020 Form 10-K”), our quarterly reports on Form 10-Q, and our current reports on Form 8-K (along with any exhibits and amendments
to such reports), as well as our news releases or any other written or oral statements made by or on behalf of us, including materials posted on
our website, may include, directly or by incorporation by reference, forward-looking statements that reflect our current view (as of the date the
forward-looking statement is first made) about future events, prospects, projections or financial performance. The matters discussed in these
forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected,
anticipated or implied in or by such statements. These risks and uncertainties include:
• risks arising from the COVID-19 pandemic, including the possibility that our manufacturing or distribution facilities will be required to cease
operations, whether from government regulation in the United States or internationally, or from reduction in available workforce due to
illness; the possibility that we could experience significant delays or disruptions in our supply of medical or pharmaceutical products resulting
in an inability to fulfill customer demand; the risk that we will not be able to offset significant cost increases or that and price increases for
these products could result in lost sales or customer losses or disputes; the possibility that the widespread required cancellation or deferral
of elective medical procedures will result in a sustained reduction in demand for our products; and the potential for us to receive negative
publicity resulting from prolonged supply shortages or our participation in industry-wide collaboration to increase the supply of personal
protective equipment in the United States;
• competitive pressures in the markets in which we operate, including pricing pressures;
• uncertainties relating to the pricing of generic pharmaceuticals;
• uncertainties relating to the timing, frequency and profitability of generic pharmaceutical launches;
• our ability to maintain the benefits of our generic pharmaceutical sourcing venture with CVS Health Corporation;
• with respect to our distribution services agreements with branded pharmaceutical manufacturers, changes in the amount of service fees
we receive or, in cases where part of our compensation under these agreements is based on branded pharmaceutical price appreciation,
changes in the frequency or magnitude of such price appreciation;
• changes in manufacturer approaches to pricing branded pharmaceutical products and risks related to our compensation under contractual
arrangements with manufacturers being set as a percentage of the wholesale acquisition cost of branded pharmaceuticals;
• changes in the timing or frequency of the introduction of branded pharmaceuticals;
• risks associated with the resolution and defense of the lawsuits and investigations in which we have been or will be named relating to the
distribution of prescription opioid pain medication, including the risk that the outcome of these lawsuits and investigations could have a
material adverse effect on our results of operations, financial condition, cash flows or liquidity;
• potential damage to our reputation, adverse operational impacts or other effects that may result from the national opioid epidemic, the
allegations that have been made about our role in such epidemic and the ongoing unfavorable publicity surrounding the lawsuits and
investigations against us;
• risks associated with the ongoing discussions regarding a potential global settlement of certain opioid lawsuits and investigations against
us, including the risk that we could fail to reach a final settlement, that any final settlement reached could require us to pay more than we
currently anticipate or could have a negative effect on our liquidity or ability to return money to shareholders and the risk that any injunctive
or non-monetary remedies we may agree to could have unintended consequences;
• potential adverse impact to our financial results from enacted and proposed state taxes or other assessments on the sale or distribution
of opioid medications;
• our high sales concentration with certain key customers, including CVS Health Corporation and OptumRx;
• costs or claims resulting from a quality issue related to the manufacture of some of our sterile surgical gowns, or other potential errors or
defects in our manufacturing of medical devices or other products or in our compounding, repackaging, information systems or pharmacy
management services that may injure persons or damage property or operations, including costs from recalls, remediation efforts, and
related product liability claims and lawsuits, including class action lawsuits;
• actions of regulatory bodies and other governmental authorities, including the U.S. Drug Enforcement Administration, certain agencies
within the U.S. Department of Health and Human Services (including the U.S. Food and Drug Administration, Centers for Medicare and
Medicaid Services, the Office of Inspector General and the Office for Civil Rights), the U.S. Nuclear Regulatory Commission, the U.S.
Federal Trade Commission, the U.S. Customs and Border Protection, various state boards of pharmacy, state controlled substance
authorities, state health departments, state insurance departments, state Medicaid departments or comparable regulatory bodies or
governmental authorities or foreign equivalents that, in each case, could delay, limit or suspend product development, manufacturing,
distribution, importation or sales or result in warning letters, recalls, seizures, injunctions or monetary sanctions;
• any compromise of our information systems or of those of a third-party service provider, including unauthorized access to or use or disclosure
of company or customer information, disruption of access and ancillary risks associated with our ability to effectively manage any issues
arising from any such compromise or disruption;
• uncertainties related to our Medical segment's Cardinal Health Brand products, including our ability to manage cost, infrastructure and to
retain margin or improve its performance;
• risks associated with the realignment of our Medical segment's supply chain and other businesses, including our ability to achieve the
expected benefits from such realignment;
• uncertainties with respect to our cost-savings initiatives or IT infrastructure activities, including the ability to achieve the expected benefits
from such initiatives, the risk that we could incur unexpected charges, and the risk that we may fail to retain key personnel;
• difficulties or delays in the development, production, manufacturing, sourcing and marketing of new or existing products and services,
including difficulties or delays associated with obtaining or maintaining requisite regulatory consents, whether our own or third parties', or
approvals associated with those activities;
• manufacturing disruptions, whether due to regulatory action, production quality deviations, safety issues or raw material shortages or
defects, or because a key product is manufactured at a single manufacturing facility with limited alternate facilities;
• risks arising from possible violations of healthcare fraud and abuse laws;
• risks arising from possible violations of the U.S. Foreign Corrupt Practices Act and other similar anti-corruption laws in other jurisdictions
and U.S. and foreign export control, trade embargo and customs laws;
• risks arising from our collecting, handling and maintaining patient-identifiable health information and other sensitive personal and financial
information, which are subject to federal, state and foreign laws that regulate the use and disclosure of such information;
• risks arising from certain of our businesses being Medicare-certified suppliers or participating in other federal and state healthcare programs,
such as state Medicaid programs and the federal 340B drug pricing program, which businesses are subject to accreditation and quality
standards and other rules and regulations, including applicable reporting, billing, payment and record-keeping requirements;
• risks arising from certain of our businesses manufacturing pharmaceutical and medical products or repackaging pharmaceuticals that are
purchased or reimbursed through, or are otherwise governed by, federal or state healthcare programs, which businesses are subject to
federal and state laws that establish eligibility for reimbursement by such programs and other applicable standards and regulations;
• changes in laws or changes in the interpretation or application of laws or regulations, as well as possible failures to comply with applicable
laws or regulations, including as a result of possible misinterpretations or misapplications;
• material reductions in purchases, pricing changes, non-renewal, early termination, or delinquencies or defaults under contracts with key
customers;
• unfavorable changes to the terms or with our ability to meet contractual obligations of key customer or supplier relationships, or changes
in customer mix;
• risks arising from changes in U.S. or foreign tax laws and unfavorable challenges to our tax positions and payments to settle these challenges,
which may adversely affect our effective tax rate or tax payments;
• uncertainties due to possible government healthcare reform, including proposals related to Medicare drug rebate arrangements, possible
repeal or replacement of major parts of the Patient Protection and Affordable Care Act, proposals related to prescription drug pricing
transparency and the possible adoption of Medicare-For-All;
• reductions or limitations on governmental funding at the state or federal level or efforts by healthcare insurance companies to limit payments
for products and services;
• changes in manufacturers' pricing, selling, inventory, distribution or supply policies or practices;
• changes in legislation or regulations governing prescription drug pricing, healthcare services or mandated benefits;
• changes in hospital buying groups or hospital buying practices;
• changes in distribution or sourcing models for pharmaceutical and medical and surgical products, including an increase in direct and limited
distribution;
• changes to the prescription drug reimbursement formula and related reporting requirements for generic pharmaceuticals under Medicaid;
• continuing consolidation in the healthcare industry, which could give the resulting enterprises greater bargaining power and may increase
pressure on prices for our products and services or result in the loss of customers;
• disruption, damage or lack of access to, or failure of, our or our third-party service providers' information systems, our critical facilities,
including our national logistics center, or our distribution networks;
• risks to our business and information and controls systems in the event that business process improvements, infrastructure modernizations
or initiatives to use third-party service providers for key systems and processes are not effectively implemented;
• the results, costs, effects or timing of any commercial disputes, government contract compliance matters, patent infringement claims, qui
tam actions, government investigations, shareholder lawsuits or other legal proceedings;
• possible losses relating to product liability lawsuits and claims regarding products for which we cannot obtain product liability insurance or
for which such insurance may not be adequate to cover our losses, including the product liability lawsuits we are currently defending relating
to alleged personal injuries associated with the use of Cordis inferior vena cava filter products;
• our ability to maintain adequate intellectual property protections;
• the costs, difficulties and uncertainties related to the integration of acquired businesses, including liabilities relating to the operations or
activities of such businesses prior to their acquisition, and uncertainties relating to our ability to achieve the anticipated results from
acquisitions;
• our ability to manage and complete divestitures or other strategic business combination transactions, including our ability to find buyers or
other strategic exit opportunities and risks associated with the possibility that we could experience greater dis-synergies than anticipated
or otherwise fail to achieve our strategic objectives;
• increased costs for commodities and other materials used in the Medical segment manufacturing, including various components,
compounds, raw materials or energy such as oil-based resins, pulp, cotton, latex and other commodities;
• shortages in commodities, components, compounds, raw materials or energy used by our businesses, including supply disruptions of
radioisotopes;
• the loss of, or default by, one or more key suppliers for which alternative suppliers may not be readily available;
• bankruptcy, insolvency or other credit failure of a customer or supplier that owes us a substantial amount;
• risks associated with global operations, including the effect of local economic environments, inflation, recession, currency volatility and
global competition, in addition to risks associated with compliance with U.S. and international laws relating to global operations;
• uncertainties with respect to U.S. or international trade policies, tariffs, excise or border taxes and their impact on our ability to source
products or materials that we need to conduct our business;
• risks associated with our use of and reliance on the global capital and credit markets, including our ability to access credit and our cost of
credit, which may adversely affect our ability to efficiently fund our operations or undertake certain expenditures;
• our ability to introduce and market new products and our ability to keep pace with advances in technology;
• significant charges to earnings if goodwill or intangible assets become impaired;
• uncertainties relating to general political, business, industry, regulatory and market conditions; and
• other factors described in the “Risk Factors” section of the 2020 Form 10-K.
The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “will,” “should,” “could,” “would,” “project,” “continue,” “likely,” and similar expressions
generally identify “forward-looking statements,” which speak only as of the date the statements were made, and also include statements reflecting
future results or guidance, statements of outlook and expense accruals. We undertake no obligation to update or revise any forward-looking
statements, except to the extent required by applicable law.
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Corporate and
investor information
Corporate offices Financial information
Cardinal Health Comprehensive financial and other information about
7000 Cardinal Place Cardinal Health can be obtained by visiting the Investor
Dublin, Ohio 43017 Relations page at ir.cardinalhealth.com.
614.757.5000
www.cardinalhealth.com Available information includes historical stock information,
LinkedIn: linkedin.com/ company/cardinal-health research analyst coverage, past and present financial
Twitter: @CardinalHealth statements, recent company presentations, SEC filings,
Facebook: @cardinalhealthwings corporate governance guidelines and board committee
charters. This information — including the Cardinal Health
Common shares Forms 10-K, 10-Q, 8-K and other published corporate
Cardinal Health common shares are listed on the literature — is also available without charge upon written
New York Stock Exchange under the ticker symbol “CAH” request to the Investor Relations department at the corporate
and are a component of the Standard & Poor’s 500 Index. office, by calling Investor Relations at 614.757.1607, or by
emailing [email protected].
Annual meeting
The 2020 Annual Meeting of Shareholders will be held Cardinal Health uses its website as a channel of distribution
at 10 a.m. Eastern on November 4, 2020. This year’s for important company information. Important information,
meeting is a virtual shareholder meeting at including news releases, financial information, earnings and
www.virtualshareholdermeeting.com/CAH2020. analyst presentations, and information about upcoming
Shareholders are cordially invited to attend. For more presentations and events is routinely posted and accessible
information on how to participate in the meeting, please on the Investor Relations page at ir.cardinalhealth.com. In
refer to our proxy statement at www.proxyvote.com. addition, the Cardinal Health website allows investors and
other interested persons to sign up to automatically receive
Auditors email alerts when the company posts news releases, SEC
Ernst & Young LLP filings and certain other information on its website.
Transfer agent and registrar For non-investor related inquiries, please call the company’s
Shareholders with inquiries regarding address main telephone number at 614.757.5000.
corrections, dividend payments, lost certificates or
changes in registered ownership should contact
the Cardinal Health stock transfer agent:
Computershare Trust Company, N.A.

P.O. Box 505000
Louisville, KY 40233
877.498.8861
www.computershare.com/investor
Fiscal 2020 cash dividend declarations

Fiscal quarter Record date Payment date Per common share amount
1st October 1, 2019 October 15, 2019 $0.4811
2nd January 2, 2020 January 15, 2020 $0.4811
3rd April 1, 2020 April 15, 2020 $0.4811
4th July 1, 2020 July 15, 2020 $0.4859
Corporate Offices
Cardinal Health
7000 Cardinal Place
Dublin, Ohio 43017
614.757.5000
cardinalhealth.com
© 2020 Cardinal Health. All Rights Reserved. CARDINAL HEALTH, the Cardinal Health LOGO and
ESSENTIAL TO CARE are trademarks of Cardinal Health and may be registered in the US and/or in other
countries. All other marks are the property of their respective owners. Lit. No. 5FIN20-1226825 (08/2020)

CAH Annual Report FY 2020

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2020

A year ago, I closed my letter

In fiscal 2020, we delivered on our

FY20 Highlights FY20 Financial summary

• Received positive • Continued focus in Operating $(4,098) $2,384

ensure minimal disruptions

How we’ll succeed

Pharmaceutical segment Across the company, our initiatives to enhance our

Overall, although this year presented significant global and

we are going areas of healthcare through customer insights, data and

— Ola Snow, Chief Human Resources Officer

by building upon our scale and heritage

— Steve Mason, CEO, Medical Segment

while driving growth in

data and analytics,

and focusing our resources

Calvin Darden J. Michael Losh

Bruce L. Downey Dean A. Scarborough

Michele A.M. Holcomb Brian S. Rice

Cardinal Health, Inc.

Securities registered pursuant to Section 12(b) of the Act:

Large accelerated filer Accelerated filer

Documents Incorporated by Reference:

1 Cardinal Health | Fiscal 2020 Form 10-K

Cardinal Health | Fiscal 2020 Form 10-K 2

Management's Discussion and Analysis of Financial Condition

3 Cardinal Health | Fiscal 2020 Form 10-K

Cardinal Health | Fiscal 2020 Form 10-K 4

Cash and Equivalents

5 Cardinal Health | Fiscal 2020 Form 10-K

Significant Developments in Fiscal 2020 and Trends

Cardinal Health | Fiscal 2020 Form 10-K 6

Gain on Sale of Equity Interest in naviHealth

7 Cardinal Health | Fiscal 2020 Form 10-K

Fiscal 2020 Compared to Fiscal 2019

Cost of Products Sold

Cardinal Health | Fiscal 2020 Form 10-K 8

Fiscal 2020 Compared to Fiscal 2019

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

Fiscal 2020 Compared to Fiscal 2019

9 Cardinal Health | Fiscal 2020 Form 10-K

Segment Profit and

Fiscal 2020 Compared to Fiscal 2019

Pharmaceutical Segment Profit

Cardinal Health | Fiscal 2020 Form 10-K 10

Other Components of Consolidated Operating Earnings/(Loss)

(in millions) 2020 2019

Restructuring and Employee Severance

Other Components of Earnings/(Loss) Before Income Taxes

(in millions) 2020 2019 Change

Interest Expense, Net

11 Cardinal Health | Fiscal 2020 Form 10-K

Provision for Income Taxes

2020 (1) 2019 (2)

Cardinal Health | Fiscal 2020 Form 10-K 12

Liquidity and Capital Resources

Cash and Equivalents

Other Financing Arrangements and Financial Instruments

13 Cardinal Health | Fiscal 2020 Form 10-K