Cardinal Health

“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.”

Annual report 2026A · The company itself

“Generics Program 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.”

Annual report 2026A · The company itself

“Gross Margin Gross Margin (in millions) 2026 2025 Change Gross margin $ 9,774 $ 8,168 20 % Gross margin for fiscal 2026 increased 20 percent to $9.8 billion from the prior year, primarily due to the acquisitions of MSO platforms and ADS, increased contribution from branded and specialty pharmaceutical products, and the performance of our generics program.”

Annual report 2026A · The company itself

“Total consolidated operating earnings Pharma segment profit for fiscal 2026 increased 23 percent to $2.8 billion from the prior year, primarily due to the increased contribution from branded and specialty pharmaceutical products, the performance of our generics program, and the acquisition of MSO platforms.”

Annual report 2026A · The company itself

“Pharmaceutical and Specialty Solutions Segment Our Pharma segment distributes branded and generic pharmaceutical, specialty pharmaceutical, and over-the-counter healthcare and consumer products in the United States.”

Annual report 2026A · The company itself

“Overview Consolidated Results Fiscal 2026 Overview Revenue Revenue for fiscal 2026 increased 14 percent to $254.2 billion from the prior year, primarily due to branded and specialty pharmaceutical sales growth from existing and new customers.”

Annual report 2026A · The company itself

“For example, in fiscal 2025, we completed several acquisitions in disparate businesses: the acquisition of Integrated Oncology Network and GI Alliance, which are part of our Specialty business, and the acquisition of Advanced Diabetes Supply Group, which is part of our Cardinal Health At-Home businesses.”

Annual report 2026A · The company itself

“Since fiscal 2025, we have completed a number of acquisitions to establish and grow our MSO businesses. Through our MSO businesses, we provide physician practice support and management services that complement our legacy businesses.”

Annual report 2026A · The company itself

“Introduction Management's Discussion and Analysis of Financial Condition and Results of Operations About Cardinal Health Cardinal Health, Inc., an Ohio corporation formed in 1979, is a global healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home.”

Annual report 2026A · The company itself

“This segment also provides services to pharmaceutical manufacturers and healthcare providers for specialty pharmaceutical products; provides pharmacy management services to hospitals and operates a limited number of pharmacies, including pharmacies in community health centers; repackages generic pharmaceuticals and over-the-counter healthcare products; and includes our managed services organization ("MSO") platforms for physician offices.”

Annual report 2026A · The company itself

“This segment also distributes a broad range of medical, surgical, and laboratory products known as national brand products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers in the United States and Canada.”

Annual report 2026A · The company itself

“Management Service Organization Platforms 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.”

Annual report 2026A · The company itself

“Global Medical Products and Distribution GMPD segment profit for fiscal 2026 increased 91 percent to $258 million from the prior year, primarily due to growth from existing customers.”

Annual report 2026A · The company itself

“This operating segment serves hospitals, pharmacies, labs, and surgery centers.”

Annual report 2026A · The company itself

“Our ability to compete effectively is increasingly dependent on access to and interpretation of data, and we may provide services that involve hosting customer data and operating software on third-party or our own systems.”

Annual report 2026A · The company itself

“For example, we are currently in the process of implementing a number of new Enterprise Resource Planning technologies across our organization.”

Annual report 2026A · The company itself

“Our ability to compete effectively is increasingly dependent on access to and interpretation of data, and we may provide services that involve hosting customer data and operating software on third-party or our own systems.”

Annual report 2026A · The company itself

“For example, we are currently in the process of implementing a number of new Enterprise Resource Planning technologies across our organization.”

Annual report 2026A · The company itself

“Our at-Home Solutions operating segment has two main businesses: Edgepark, including Advanced Diabetes Supply Group ("ADS"), directly providing medical supplies to patients with chronic conditions in the home; and at-Home, a business-to-business distribution service that delivers medical supplies and over-the-counter products to home medical equipment providers, home health and hospice agencies, and e-commerce providers.”

Annual report 2026A · The company itself

“Other Other segment revenue for fiscal 2026 increased 26 percent to $6.8 billion from the prior year due to growth across at-Home Solutions (including the acquisition of ADS), Nuclear and Precision Health Solutions, and OptiFreight® Logistics.”

Annual report 2026A · The company itself

“For example, in fiscal 2025, we completed several acquisitions in disparate businesses: the acquisition of Integrated Oncology Network and GI Alliance, which are part of our Specialty business, and the acquisition of Advanced Diabetes Supply Group, which is part of our Cardinal Health At-Home businesses.”

Annual report 2026A · The company itself

“Other Operating Segments Our Nuclear and Precision Health Solutions operating segment operates nuclear pharmacies and manufacturing facilities, which manufacture, prepare, and deliver radiopharmaceuticals for use in nuclear imaging, theranostics, and other procedures in hospitals and physician offices. This segment also contract manufactures a radiopharmaceutical treatment (Xofigo®) and holds the rights to manufacture and distribute Lymphoseek®, a radiopharmaceutical diagnostic imaging agent.”

Annual report 2026A · The company itself

“We provide pharmaceuticals and medical products and cost-effective services and solutions that enhance the healthcare system and supply chain efficiency.”

Annual report 2026A · The company itself

“These supply interruptions or other disruptions in manufacturing processes could be caused by events beyond our control, including natural disasters, labor disputes, supplier facility shutdowns, defective raw materials, the impact of epidemics or pandemics and actions by U.S. or international governments, including import or export restrictions or tariffs.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“As described in the "Business" section, products that we manufacture, source, distribute, or market must comply with U.S. federal, state, and foreign and regulatory requirements. Noncompliance or concerns over noncompliance, including noncompliance by suppliers, has in the past, and may in the future result in suspension of our licenses or ability to distribute, import, manufacture, or source products, recalls, safety alerts or seizures, or criminal or civil sanctions, which, in turn, could result in product liability claims and legal action, including government investigations and enforcement actions and class action lawsuits.”

Annual report 2026A · The company itself

“For example, in November 2023, we received a Civil Investigative Demand ("CID") from the Department of Justice focused on potential violations of the Anti-Kickback Statute and False Claims Act in connection with a 2022 transaction in which we purchased a group purchasing organization and a minority ownership interest in a rheumatology managed services organization.”

Annual report 2026A · The company itself

“During fiscal 2026, we received two Notices of Proposed Adjustment ("NOPA") from the IRS in connection with their audit of our fiscal years 2015-2020. Under one of these NOPAs, the IRS is challenging the tax deductibility of self-insurance pre-tax losses and related carryback claims taken under the Coronavirus Aid, Relief and Economic Security Act, which could result in approximately $400 million in additional tax expense (plus interest) and approximately $1.4 billion in additional tax liability (plus interest).”

Annual report 2026A · The company itself

“There have been increasing efforts in the United States by Congress, the Executive Branch and state and federal agencies, including state boards of pharmacy, departments of health, the FDA, DEA, FTC and others to regulate the pharmaceutical supply chain in an attempt to prevent diversion and the introduction of counterfeit, adulterated and mislabeled pharmaceutical products into the pharmaceutical distribution system and to ensure the integrity of products in the supply chain. Consequently, we are subject to the risk of changes in various laws, which may require changes to our operational, record keeping or security practices.”

Annual report 2026A · The company itself

“And any reduction in Medicare and Medicaid programs as a result of The One Big Beautiful Bill Act, could result in a change in utilization of the healthcare system that may adversely affect demand for our products and services and could have an effect on our results of operations and financial condition.”

Annual report 2026A · The company itself

“In April 2022, an agreement settling the vast majority of opioid-related lawsuits filed against us by state and local governmental entities became effective. It includes injunctive relief terms relating to distributors' controlled substance anti-diversion programs, with which we must comply. It is possible that the maintenance of the required changes to distributors' controlled substance anti-diversion programs may result in unforeseen costs or operational challenges which could have an adverse impact on our results of operations or performance.”

Annual report 2026A · The company itself

“For example, in April 2024, the FDA issued a warning letter to Cardinal Health asserting that plastic syringes sourced from a third party manufacturer in China did not have appropriate 510(k) clearance and restating some of the observations from a December 2023 inspection. We promptly took action on these products and submitted a timely and comprehensive response to the warning letter describing our investigation and corrective actions, and we continue to cooperate with the FDA on this matter.”

Annual report 2026A · The company itself

“Noncompliance or concerns over noncompliance, including by suppliers, as a result of use of third party manufactures, or planned shifts in production sites, has in the past, and may in the future result in substantial modifications to our business practices and operations. These modifications can include suspension of our ability to import and distribute, refunds, or recalls, total or partial shutdown of production in one or more facilities while we or our suppliers remedy any actual or potential issues, the inability to obtain future pre-market approvals or marketing authorizations, and withdrawals or suspensions of current products from the market.”

Annual report 2026A · The company itself

“Our results of operations could be adversely affected if our or a service provider's business processes, information systems, critical facilities, or distribution networks are disrupted (including disruption of access), are damaged or fail, whether due to physical disruptions, such as extreme weather events, including wildfires, hurricanes, extreme temperatures, or other natural disasters, pandemics (as they were by the COVID-19 pandemic), supply chain disruptions, or power outages, systems updates, or due to cybersecurity incidents, ransomware, or other actions of third parties, including labor strikes or shortages, political unrest, and terrorist attacks.”

Annual report 2026A · The company itself

“Our business and results of operations could be adversely affected if we experience a material cyber-attack or other systems breach. Cybersecurity incidents and attacks resulting in unauthorized access to our systems and those of third parties we use in our business could have a material impact on our business operations as a result of loss or misuse of our information, including personal data and sensitive data, and disruption to normal business operations.”

Annual report 2026A · The company itself

“However, companies in the healthcare industry are increasingly targeted for cyberattacks. The risk and efficacy of cyberattacks increases from time to time due to a variety of internal and external factors, including the use by threat actors of sophisticated and rapidly evolving techniques, such as adversarial artificial intelligence and social engineering attempts.”

Annual report 2026A · The company itself

“Additionally, our MSO businesses are subject to cybersecurity-related risks which are, while similar in many respects, incremental to the cybersecurity risks experienced by our legacy businesses.”

Annual report 2026A · The company itself

“Prices of these commodities are volatile and can fluctuate significantly, causing our costs to produce and distribute our products to fluctuate.”

Annual report 2026A · The company itself

“Elevated supply chain costs, whether due to general inflation or geopolitical issues, have had a negative impact on our GMPD segment profit in fiscal 2024 through 2026. Supply chain constraints also had a negative impact on sales within our GMPD segment.”

Annual report 2026A · The company itself

“Our global operations are affected by local economic environments, including inflation, recession, and competition.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“The Executive Order titled "Delivering Most-Favored Nation Prescription Drug Pricing to American Patients," may impact the sales or profitability of branded pharmaceutical products.”

Annual report 2026A · The company itself

“For example, the federal 340B drug pricing program requires pharmaceutical manufacturers to offer discounts on certain drugs purchased by covered entities, and some of our Pharma segment customers are covered entities or contract pharmacies for covered entities. Over a dozen pharmaceutical manufacturers have restricted sales under the 340B drug pricing program to a limited number of contract pharmacies. These practices are the subject of ongoing litigation; however, if manufacturers continue this practice and if courts uphold this practice, our customers may be adversely impacted, which could adversely impact our business.”

Annual report 2026A · The company itself

“Elevated supply chain costs, whether due to general inflation or geopolitical issues, have had a negative impact on our GMPD segment profit in fiscal 2024 through 2026. Supply chain constraints also had a negative impact on sales within our GMPD segment.”

Annual report 2026A · The company itself

“These supply interruptions or other disruptions in manufacturing processes could be caused by events beyond our control, including natural disasters, labor disputes, supplier facility shutdowns, defective raw materials, the impact of epidemics or pandemics and actions by U.S. or international governments, including import or export restrictions or tariffs.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“These supply interruptions or other disruptions in manufacturing processes could be caused by events beyond our control, including natural disasters, labor disputes, supplier facility shutdowns, defective raw materials, the impact of epidemics or pandemics and actions by U.S. or international governments, including import or export restrictions or tariffs.”

Annual report 2026A · The company itself

“Our results of operations could be adversely affected if our or a service provider's business processes, information systems, critical facilities, or distribution networks are disrupted (including disruption of access), are damaged or fail, whether due to physical disruptions, such as extreme weather events, including wildfires, hurricanes, extreme temperatures, or other natural disasters, pandemics (as they were by the COVID-19 pandemic), supply chain disruptions, or power outages, systems updates, or due to cybersecurity incidents, ransomware, or other actions of third parties, including labor strikes or shortages, political unrest, and terrorist attacks.”

Annual report 2026A · The company itself

“Our results of operations could be adversely affected if our or a service provider's business processes, information systems, critical facilities, or distribution networks are disrupted (including disruption of access), are damaged or fail, whether due to physical disruptions, such as extreme weather events, including wildfires, hurricanes, extreme temperatures, or other natural disasters, pandemics (as they were by the COVID-19 pandemic), supply chain disruptions, or power outages, systems updates, or due to cybersecurity incidents, ransomware, or other actions of third parties, including labor strikes or shortages, political unrest, and terrorist attacks.”

Annual report 2026A · The company itself

“We rely on our and third-party service providers' information systems for a wide variety of critical operations, including to obtain, rapidly process, analyze, and manage data to: •facilitate the purchase and distribution of inventory items from numerous distribution centers; •receive, process, and ship orders on a timely basis; •manage accurate billing and collections for thousands of customers; •process payments to suppliers; •facilitate manufacturing and assembly of medical products; and •generate financial information.”

Annual report 2026A · The company itself

“Over a number of years, the U.S. healthcare industry has undergone significant changes designed to increase access to medical care, improve safety and patient outcomes, contain costs, and increase 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 industry shifting away from traditional healthcare venues like hospitals and into clinics, physician offices, and patients’ homes.”

Annual report 2026A · The company itself

“Our global operations are affected by local economic environments, including inflation, recession, and competition.”

Annual report 2026A · The company itself

“For example, the recent conflict in Iran has resulted in 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.”

Annual report 2026A · The company itself

“Prices of oil and gas also affect our distribution and transportation costs.”

Annual report 2026A · The company itself

“For example, the recent conflict in Iran has resulted in 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.”

Annual report 2026A · The company itself

“Prices of oil and gas also affect our distribution and transportation costs.”

Annual report 2026A · The company itself

“Risk Factors We depend on others to manufacture some products, including pharmaceuticals, that we market and distribute.”

Annual report 2026A · The company itself

“Industry participants, including us, rely on ethylene oxide (“EtO”) and per- and polyfluoroalkyl (“PFA”) compounds to sterilize certain medical products, including products that we manufacture or distribute. Regulatory enforcement actions have been taken or are being considered by certain environmental regulatory authorities to reduce emissions of these compounds during the sterilization and distribution process. If such measures become more widespread, we could experience increased costs to comply with reduced emissions standards and it is possible that we and other industry participants may be unable to effectively sterilize medical products, possibly resulting in supply shortages or an industry-wide reduction in surgical or medical procedures, which would negatively impact demand for our products.”

Annual report 2026A · The company itself

“In recent years, U.S. healthcare industry participants, including distributors, manufacturers, suppliers, management services organizations, healthcare providers, insurers, and pharmacy chains, among others, have consolidated or formed strategic alliances. Consolidations create larger enterprises with greater negotiating power and could result in the possible loss of a customer in the situation where the combined enterprise selects one distributor from two incumbents or a reduction in our ability to market our products and services to new customers.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“Our Pharmaceutical and Specialty Solutions segment’s profit margin could be adversely affected by changes in industry or market dynamics that we are not able to accurately predict. The frequency, timing, magnitude, and profit impact of generic pharmaceutical customer purchase volumes, pricing changes, customer contract renewals, generic pharmaceutical launches, and generic pharmaceutical manufacturer pricing changes, which contribute to the performance of our generic pharmaceutical program, remain uncertain.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“Global Medical Products and Distribution Segment Our GMPD segment manufactures, sources, and distributes Cardinal Health brand medical, surgical, and laboratory products, which are sold in the United States, Canada, Europe, Asia, and other markets.”

Annual report 2026A · The company itself

“Pharmaceutical and Specialty Solutions Pharma segment revenue for fiscal 2026 increased 15 percent to $234.8 billion from the prior year, primarily due to branded and specialty pharmaceutical sales growth from existing and new customers.”

Annual report 2026A · The company itself

“Global Medical Products and Distribution GMPD segment revenue for fiscal 2026 was relatively flat at $12.7 billion due to Cardinal Health brand growth, offset by lower distribution volumes and the expected IEEPA tariff refund repayment to customers.”

Annual report 2026A · The company itself

“This segment also distributes a broad range of medical, surgical, and laboratory products known as national brand products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers in the United States and Canada.”

Annual report 2026A · The company itself

“Global Medical Products and Distribution Segment Our GMPD segment manufactures, sources, and distributes Cardinal Health brand medical, surgical, and laboratory products, which are sold in the United States, Canada, Europe, Asia, and other markets.”

Annual report 2026A · The company itself

“We conduct our operations in various regions of the world outside of the United States, including Europe, Asia, and Latin America.”

Annual report 2026A · The company itself

“Global Medical Products and Distribution Segment Our GMPD segment manufactures, sources, and distributes Cardinal Health brand medical, surgical, and laboratory products, which are sold in the United States, Canada, Europe, Asia, and other markets.”

Annual report 2026A · The company itself

“We conduct our operations in various regions of the world outside of the United States, including Europe, Asia, and Latin America.”

Annual report 2026A · The company itself

“Global Medical Products and Distribution GMPD segment revenue for fiscal 2026 was relatively flat at $12.7 billion due to Cardinal Health brand growth, offset by lower distribution volumes and the expected IEEPA tariff refund repayment to customers.”

Annual report 2026A · The company itself

“This segment also distributes a broad range of medical, surgical, and laboratory products known as national brand products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers in the United States and Canada.”

Annual report 2026A · The company itself

“We conduct our operations in various regions of the world outside of the United States, including Europe, Asia, and Latin America.”

Annual report 2026A · The company itself