CAH 10-K & 10-Q changes, risk factors and insider trading

GAAP operating earnings for fiscal 2026 increased 15% to $2.6 billion from the prior year. The increase in GAAP operating earnings was driven by the increased contribution from branded and specialty pharmaceuticals and the performance of our generics program in our Pharma segment, the impact of the acquisitions of MSO platforms and ADS, and growth from existing customers in our GMPD segment. This increase was partially offset by the $184 million pre-tax goodwill impairment charge recognized in fiscal 2026 related to the Navista & Integrated Oncology Network ("ION") reporting unit within our Pharma segment, higher cash and share-based compensation costs resulting from the timing of acquisitions within The Specialty Alliance, and $171 million of net recoveries in class action antitrust litigation recognized in fiscal 2025. See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 4 of the "Notes to the Consolidated Financial Statements" for further information on the goodwill impairment.

Non-GAAP operating earnings for fiscal 2026 increased 30% to $3.6 billion from the prior year, primarily driven by the increased contribution from branded and specialty pharmaceuticals and the performance of our generics program in our Pharma segment and the impact of the acquisitions of MSO platforms and ADS.

(4)During fiscal 2026, we recognized a pre-tax impairment charge of $122 million in connection with the observed reduction of the estimated fair value of the Outcomes business, of which we hold a 16 percent equity interest.

Non-GAAP diluted EPS for fiscal 2026 increased 37 percent to $11.26 from the prior year due to the factors impacting non-GAAP operating earnings discussed in the preceding section and favorable changes in discrete tax items, partially offset by increased interest expense.

Pharma Segment

Solaris Health Acquisition

Solaris Health includes more than 750 providers across more than 250 practice locations in 14 states. Solaris Health is part of The Specialty Alliance, our multi-specialty MSO platform, and its results are reported within our Pharma segment. With the closing of this transaction, we own approximately 76% of The Specialty Alliance. We funded the acquisition with a combination of cash proceeds from the recent debt financing and cash on hand. See Note 6 of the "Notes to Consolidated Financial Statements" for additional information on the debt financing.

The performance of The Specialty Alliance positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2026, primarily due to the impact of the acquisitions of GI Alliance ("GIA") and Solaris Health. The Specialty Alliance is our multi-specialty MSO platform, which is primarily comprised of GIA, Urology America, Solaris Health, and other gastroenterology- and urology-focused practices. Additionally, Navista is our oncology MSO platform, which is primarily comprised of ION and other oncology-focused practices. Our ability to successfully provide physician practice support and management services, and to receive the value we expect to receive from our recent acquisitions of MSO platforms, depends upon a number of factors, including: the ability to develop or acquire and integrate appropriate practice management and support expertise; the ability to support recruitment, integration, and retention of sufficient numbers of local providers and staff; ensuring the alignment of interests between Cardinal Health and the physicians; the ability to successfully support negotiations with vendors, suppliers, and payors; the reimbursement and regulatory environment; and competition from other healthcare organizations.

There are a number of proposed and adopted U.S. government policy initiatives being considered that could directly or indirectly impact pharmaceutical manufacturer list prices for branded pharmaceutical products. The Inflation Reduction Act has and will continue to adversely impact our revenue by capping prices for certain drugs; however, our profitability has not been negatively impacted. Additionally, the Executive Order titled “Delivering Most-Favored Nation Prescription Drug Pricing to American Patients” and other administrative policies or actions may impact sales or profitability of branded pharmaceutical products. The extent of any future impacts is uncertain and may vary depending on the timeline for implementation and the extent of any price reductions.

An April 2026 proclamation issued by the President of the United States imposed tariffs on imports of branded pharmaceutical products and associated ingredients imported into the United States. If pharmaceutical manufacturers raise their prices or stop importing certain products, we could experience increased costs or supply disruptions which may impact our financial results.

With respect to GLP-1 medications, during fiscal 2026, we experienced increased demand, which positively impacted our Pharma segment revenue and consolidated revenue; however, increased GLP-1 sales did not meaningfully contribute to segment profit. Demand growth for GLP-1 medications began to moderate in fiscal year 2026 and we expect future demand growth moderation to continue; however, demand for these medications is unpredictable.

The performance of our Pharma segment generics program positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2026. The Pharma segment generics program includes, among other things, the impact of generic pharmaceutical product launches, customer volumes, pricing changes, the Red Oak Sourcing, LLC venture ("Red Oak Sourcing") with CVS Health Corporation ("CVS Health"), and generic pharmaceutical contract manufacturing and sourcing costs.

The frequency, timing, magnitude, and profit impact of generic pharmaceutical customer volumes, pricing changes, customer contract renewals, generic pharmaceutical manufacturer pricing changes, and generic pharmaceutical contract manufacturing and sourcing costs all impact Pharma segment profit and are subject to risks and uncertainties. Additionally, while generic pharmaceutical products are not currently subject to U.S. tariffs, it is possible that this may change in the future, which may impact our costs or decrease available supply. These risks and uncertainties may impact Pharma segment profit and consolidated operating earnings during fiscal 2027 and beyond.

International Emergency Economic Powers Act ("IEEPA")Tariffs

In February 2025, the United States imposed tariffs under the IEEPA on certain goods, materials, and products imported into the United States from countries where we do business. In February 2026, the U.S. Supreme Court ruled that the IEEPA tariffs were unlawful. Subsequent to this ruling, U.S. Customs and Border Protection (the "CBP") worked to establish a phased process to administer refunds required by the Supreme Court ruling. In April 2026 and June 2026, the U.S. Government launched its program to administer refund requests under Phase 1 and Phase 2, respectively, and additional phases are expected to be communicated in the future. The majority of our refund requests fall under Phase 2. Our refund requests under Phases 1 and 2 have been submitted and accepted by the CBP. We expect that the remainder of our refund requests will be submitted in later phases or through other established mechanics.

Since February 2025, we have paid approximately $200 million in IEEPA tariffs, related to products that we source, manufacture or distribute, primarily in our GMPD segment. After receiving refunds of IEEPA tariffs from the U.S. Government, we expect to return to customers the portion of those refunds that reflect the estimated increased prices paid related to IEEPA tariffs.

During the fourth quarter of fiscal 2026, we recorded a receivable of approximately $200 million in relation to the expected refund of IEEPA tariffs from the U.S. Government. This resulted in a net benefit to operating earnings of approximately $100 million during the three months ended June 30, 2026, primarily due to the recording of a corresponding expense related to the payments to customers. The net operating earnings impact was immaterial for fiscal 2026, due to the timing of tariff related expense recognition and the IEEPA tariff refund. The ultimate resolution of this matter could impact our results of operations in future periods, including GMPD segment profit and consolidated operating income.

Tariff Environment

The tariff environment remains dynamic and we do not expect to be able to establish alternative sources of supply or otherwise mitigate the potential impact of tariffs on all of the products that we source, manufacture, or distribute. For example, in addition to the IEEPA tariffs discussed above, our GMPD segment has experienced, and expects to continue to experience increased costs as a result of tariffs imposed or expected to be imposed under different legal authority, including Sections 122, 232 and 301 of the Trade Act of 1974 and Section 308 of the Smoot-Hawley Tariff Act. Our GMPD segment continues to take action to reduce the impact of these tariffs and other potential tariffs on our financial results, including through cost optimization initiatives and by increasing prices on impacted products to customers; however, these measures have not fully offset the adverse impact. We are still incurring increased costs from tariffs, and if we are not successful at increasing prices to customers, our financial results will continue to be negatively impacted. Furthermore, if our competitors do not increase prices, or increase prices to a lesser extent than we do or are able to offset the impact of tariffs through other actions, our competitive and financial position may be adversely affected.

It is also possible that our Pharma segment could be impacted by tariffs. An April 2026 proclamation issued by the President of the United States imposed tariffs on imports of branded pharmaceutical products and associated ingredients imported into the United States. If pharmaceutical manufacturers raise their prices or stop importing certain products, we could experience increased costs or supply disruptions which may impact our financial results.

Additionally, while generic pharmaceutical products are not currently subject to U.S. tariffs, the President recently issued a statement indicating that generic pharmaceutical products will be subject to 100% tariffs beginning in 2028 and 200% tariffs beginning in 2029. There remains significant uncertainty about the ultimate implementation of this proposal; however, these potential tariffs may impact our costs or decrease available supply, which could impact Pharma segment profit and consolidated operating earnings.

Changes or uncertainty in U.S. or international trade policies and exposure to economic, political and currency, and other risks could disrupt our global operations or negatively impact our financial results.

We conduct our operations in various regions of the world outside of the United States, including Europe, Asia, and Latin America. Global developments can affect our business in many ways. Our global operations are affected by local economic environments, including inflation, recession, and competition. Additionally, divergent or unfamiliar regulatory systems and labor markets can increase the risks and burdens of operating in numerous countries.

In February 2025, the United States imposed tariffs under the International Emergency Economic Powers Act (IEEPA) on certain goods, materials and products imported into the United States from countries where we do business. In February 2026, the U.S. Supreme Court ruled that the IEEPA tariffs were unlawful but did not establish a mechanism for issuing refunds and uncertainty remains concerning the timing, scope and administrative process to receive refunds for IEEPA tariffs paid. In April 2026, Customs and Border Protection (CBP) launched its program to administer Phase 1 refund requests; however, substantially all of our IEEPA tariffs will fall under Phase 2 or later phases. CBP has not communicated a date on which the refund process for such Phase 2 or later phases will be established or available.

As of the third quarter of fiscal year 2026, we have paid approximately $200 million in IEEPA tariffs, primarily related to products that we source, manufacture or distribute in our GMPD segment. In the event that we receive refunds of IEEPA tariffs from the government, we expect to return to those customers the portion of those refunds that reflect the estimated increased prices related to IEEPA tariffs.

We have not recognized any financial impact related to potential tariff refunds or payments to our customers as of March 31, 2026. The ultimate resolution of this matter could positively impact our results of operations in future periods, including GMPD segment profit and consolidated operating income; however the timing and process for receipt of these refunds remains uncertain.

Following the Supreme Court IEEPA ruling, the U.S. government replaced IEEPA tariffs with tariffs imposed under Section 122 of the Trade Act of 1974. We continue to evaluate the impact of these and other tariffs, including tariffs imposed under Sections 301 and 232 of the Trade Act of 1974.

We have taken actions to reduce the impact of IEEPA and other tariffs on our financial results, including through cost optimization initiatives and by increasing prices on impacted products to customers; however, these measures have not fully offset the negative impact. Tariffs imposed or threatened to be imposed on goods, materials, and products from countries where we do business, and any retaliatory actions taken by such countries could result in us incurring substantial additional costs to source materials, directly and indirectly, from affected countries, and require us to raise prices on certain products and seek alternative sources of supply. If our competitors do not increase prices, or increase prices to a lesser extent than we do, or are able to offset the impact of tariffs through other actions, our competitive and financial position may be adversely affected. Additionally, if we are not able to find adequate alternate sources of supply, we may experience supply shortages or disruptions. Additionally, in certain circumstances, including in our Other operating segment, we may not receive increased reimbursement commensurate with the increase in costs, which may negatively impact our results of operations.

In addition, we conduct our business in U.S. dollars and various functional currencies of our foreign subsidiaries. Changes in foreign currency exchange rates could adversely affect our financial results, which are reported in U.S. dollars. We may not be able to hedge to protect us against these exposures, and any hedges may not successfully mitigate these exposures.

We are also subject to government import and export controls and regulations, including the requirement that we make a determination as to the country of origin of products that we source or manufacture outside the United States. From time to time, Customs and Border protection agencies, whether in the U.S. or other jurisdictions, have challenged these determinations. These and other actions by border protection have resulted in products being detained or delayed and supply disruptions and could result in the imposition of fines and penalties. In addition, the Uyghur Forced Labor Prevention Act, which went into effect in June 2022, prohibits the importation of any goods grown, produced, manufactured, or mined, wholly or in part, in the Xinjiang Uyghur Autonomous Region of China unless importers can provide clear and convincing evidence that goods were not made using forced labor. We have experienced supply constraints as a result of these and similar regulations, and it is possible that our business or results of operations could be further negatively impacted by future determinations and disruptions.

Our business is affected by events outside of our control including public health crises, extreme weather-related events and natural disasters, geopolitical, and other catastrophic events.

We have experienced and expect to continue to experience weather-related impacts to the business, primarily driven by risks to certain physical components of our operations and risks related to the transition to a lower-carbon economy. For example, our properties have experienced physical damage resulting from adverse or extreme weather resulting in increased costs for repairs and may cause disruptions in operations. Additional risks associated with extreme weather may cause social and human effects such as shifts in populations, increased costs for critical services such as transportation, and other adverse effects. These factors may negatively impact cost or availability of certain products, commodities, or energy, and could impair our ability to secure goods and services required for the operation of our business at quantities and levels we require.

Environmental and other climate-related laws and regulations may impose costs, including increased spend associated with carbon pricing mechanisms, data gathering and reporting, third-party attestations, capital expenditures to implement lower greenhouse gas emissions technology, and other measures to reduce emissions. We cannot predict the potential impact on our competitive position, results of operations, or financial condition. A shift in customer or consumer preference towards low-carbon products and services may also place us at a competitive disadvantage if we fail to effectively adjust for these shifts. Our supply chain is subject to these same physical and transitional risks.

Events outside of our control also have, and will continue to, adversely impact our operations and financial results. These events include those related to public health crises, including epidemics or pandemics; geopolitical events or tensions, including civil unrest, trade sanctions, tariffs and other trade restrictions, armed conflicts, or terrorism; or unstable international governments and legal systems. Among other potential affects, these events may have a disruptive and unpredictable impact on our operations and those of our suppliers and vendors, or customers, hinder manufacturing and transportation, result in significant excess costs, lead to shifts in customer demand, or have a negative impact on capital markets. For example, the recent conflict in Iran has resulted increased fuel prices which may lead to increased costs for products that we source, manufacture or distribute and may also cause supply chain or manufacturing disruptions, impacting our ability to meet demand. Such events are inherently unpredictable, and our responses may involve the implementation of measures which may not be as successful as intended in mitigating adverse impacts.

GAAP operating earnings for the three and nine months ended March 31, 2026 decreased 30 percent to $509 million and increased 2 percent to $1.9 billion from the comparative prior-year periods, respectively. GAAP operating earnings for the three and nine months ended March 31, 2026 was unfavorably impacted by the $184 million pre-tax non-cash goodwill impairment charge related to the Navista & ION reporting unit within the Pharma segment recognized in the current quarter, the $106 million and $165 million of net recoveries in class action antitrust litigation recognized in the comparative prior-year periods, respectively, and higher cash and share-based compensation costs resulting from the timing of acquisitions within The Specialty Alliance. See "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 4 of the "Notes to the Condensed Consolidated Financial Statements" for further information on the goodwill impairment.

Non-GAAP diluted EPS for the three and nine months ended March 31, 2026 increased 35 percent to $3.17 and 36 percent to $8.35 from the comparative prior-year periods, respectively, primarily due to the factors impacting non-GAAP operating earnings discussed in the preceding section and favorable changes in discrete tax items, partially offset by increased interest expense.

In February 2025, the United States imposed tariffs under the International Emergency Economic Powers Act ("IEEPA") on certain goods, materials and products imported into the United States from countries where we do business. In February 2026, the U.S. Supreme Court ruled that the IEEPA tariffs were unlawful but did not establish a mechanism for issuing refunds. Subsequent to this ruling, U.S. Customs and Border Protection ("CBP") worked to establish a phased process to administer refunds required by the Supreme Court ruling; however, uncertainty remains concerning the timing, scope and administrative process to receive refunds for all IEEPA tariffs paid. In April 2026, CBP launched its program to administer Phase 1 refund requests; however, substantially all of our IEEPA tariffs paid will fall under Phase 2 or later phases. As of the date hereof, CBP has not communicated a date on which the refund process for such Phase 2 or later phases will be established or available.

We have taken actions to reduce the impact of IEEPA and other tariffs on our financial results, including through cost optimization initiatives and by increasing prices on impacted products to customers; however, these measures have not fully offset the negative impact. As of the third quarter of fiscal year 2026, we have paid approximately $200 million in IEEPA tariffs, primarily related to products that we source, manufacture or distribute in our GMPD segment. In the event that we receive refunds of IEEPA tariffs from the government, we expect to return to those customers the portion of those refunds that reflect the estimated increased prices paid related to IEEPA tariffs.

We have not recognized any financial impact related to potential tariff refunds or payments to our customers as of March 31, 2026. The ultimate resolution of this matter could positively impact our results of operations in future periods, including GMPD segment profit and consolidated operating income.

Following the Supreme Court IEEPA ruling, the U.S. government replaced IEEPA tariffs with tariffs imposed under Section 122 of the Trade Act of 1974. We continue to evaluate the impact of these and other tariffs, including tariffs imposed under Sections 301 and 232 of the Trade Act of 1974.

GMPD segment revenue for the nine months ended March 31, 2026 increased 2 percent to $9.6 billion from the comparative prior-year period, primarily due to Cardinal Health brand growth, partially offset by lower distribution volumes.

Other segment revenue for the three and nine months ended March 31, 2026 increased 31 percent to $1.7 billion and 34 percent to $5.1 billion from the comparative prior-year periods, respectively, due to growth across at-Home Solutions (including the acquisition of ADS), Nuclear and Precision Health Solutions, and OptiFreight® Logistics.

GMPD segment profit for the three months ended March 31, 2026 decreased 36 percent to $25 million from the comparative prior-year quarter, primarily due to the adverse net impact of tariffs.

GMPD segment profit for the nine months ended March 31, 2026 increased 66 percent to $108 million from the comparative prior-year period, primarily due to growth from existing customers, partially offset by the adverse net impact of tariffs.

Other segment profit for the three and nine months ended March 31, 2026 increased 34 percent to $179 million and 47 percent to $524 million from the comparative prior-year periods, respectively, primarily due to the performance of at-Home Solutions (including the acquisition of ADS), OptiFreight® Logistics, and Nuclear and Precision Health Solutions.

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

We recognized a pre-tax goodwill impairment charge of $184 million related to the Navista & ION reporting unit within the Pharma segment during the three and nine months ended March 31, 2026, as discussed further in the "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 4 of the "Notes to the Condensed Consolidated Financial Statements".

Tax Effects of Goodwill Impairment Charges

During the three months ended March 31, 2026, we recognized a pre-tax goodwill impairment charge of $184 million related to the Navista & ION reporting unit within the Pharma segment. The net tax benefit related to this charge is $23 million for fiscal 2026.

The tax effect of the goodwill impairment charge recorded during the three months ended March 31, 2026 was included in our estimated annual effective tax rate because it was not considered unusual or infrequent, given that we have recorded other goodwill impairments in prior fiscal years. The impact of the non-deductible goodwill did not materially impact the annual effective tax rate for 2026.

During the nine months ended March 31, 2026, we repaid the full principal of $500 million of the 3.75% Notes due 2025 at maturity with available cash.