Cardinal Health (CAH) risk factors, FY2025 10-K

Other

1. 01Our principal executive offices are headquartered in an owned building located at 7000 Cardinal Place in Dublin, Ohio
2. 02At July 31, 2025, there were approximately 5,917 shareholders of record of our common shares
3. 03(1)Reflects 7, 6, and 7 common shares purchased in April, May, and June 2025, respectively, through a rabbi trust as investments of participants in our Deferred Compensation Plan
4. 04Five Year Performance Graph
5. 05Evaluation of Disclosure Controls and Procedures
6. 06Management’s Report on Internal Control Over Financial Reporting
7. 07Changes in Internal Control Over Financial Reporting
8. 08Opinion on Internal Control over Financial Reporting
9. 09We 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
10. 10Definition and Limitations of Internal Control Over Financial Reporting
11. 11Opinion on the Financial Statements
12. 12Description of the Matter
13. 13How We Addressed the Matter in Our Audit
14. 14Financial Statements and Supplementary Data
15. 15Gross margin 8,168 7,414 6,874
16. 16Liabilities and Shareholders’ Deficit
17. 17Authorized—500 thousand shares, Issued—none
18. 18(in millions) 2025 2024 2023
19. 19Provision for bad debts 53 36 55
20. 20Net cash provided by operating activities 2,397 3,762 2,844
21. 21Cash and equivalents at end of period $ 3,874 $ 5,133 $ 4,076
22. 221. Basis of Presentation and Summary of Significant Accounting Policies
23. 23Receivables and Allowance for Doubtful Accounts
24. 24We maintain cash depository accounts with major banks, and we invest in high quality, short-term liquid instruments, and in marketable securities. Our short-term liquid instruments mature within three months and we have not historically incurred any related losses
25. 25OptumRx — 17 % 16 % — 6 %
26. 26ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation
27. 27Purchased goodwill and intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually or when indicators of impairment exist
28. 28We concluded that there were no impairments of goodwill for the remaining reporting units, excluding GMPD, in fiscal 2025, 2024, and 2023 as the estimated fair value of each reporting unit exceeded its carrying amount
29. 29evidence and significance of all identified events and circumstances and most relevant drivers of fair value, both positive and negative, in determining whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount
30. 30We apply a practical expedient for short-term leases whereby we do not recognize a lease liability and right-of-use asset for leases with a term of less than 12 months. Short-term lease expense recognized in fiscal 2025, 2024, and 2023 was immaterial
31. 31Distribution Services Agreement and Other Vendor Fees
32. 32We accrue for contingencies related to disputes, litigation, and regulatory matters if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated
33. 33During fiscal 2024, we reached agreements to settle claims brought by classes of third-party payors and acute care hospitals, and the City of Baltimore
34. 34compensation. Self-insurance accruals include an estimate for expected settlements or pending claims, defense costs, administrative fees, claim adjustment costs, and an estimate for claims incurred but not reported
35. 35We operate in a complex multinational tax environment and are subject to tax treaty arrangements and transfer pricing guidelines for intercompany transactions that are subject to interpretation. Uncertainty in a tax position may arise as tax laws are subject to interpretation
36. 36Variable Interest Entities
37. 37We consolidate a VIE when we have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE and, as a result, are considered the primary beneficiary of the VIE
38. 38(3) Based on historical volatility and implied volatility indications
39. 39GIA Share-Based Compensation
40. 40with a future service requirement are recognized on a straight-line basis over the requisite service period
41. 41We recognize revenue in an amount that reflects the consideration to which we expect to be entitled in exchange for the transfer of goods or services to customers
42. 42Sales Returns and Allowances
43. 43Restructuring and Employee Severance
44. 44Amortization and Other Acquisition-Related Costs
45. 45Translation of Foreign Currencies
46. 46All derivative instruments are recognized at fair value on the consolidated balance sheets and all changes in fair value are recognized in net earnings or shareholders’ equity through AOCI, net of tax
47. 47Recently Issued Financial Accounting Standards and Disclosure Rules Not Yet Adopted
48. 48Advanced Diabetes Supply Group ("ADS")
49. 49We have accounted for the acquisition of the ownership interest in GIA as a business combination in accordance with ASC 805. We consolidate the results of GIA in our consolidated financial statements and report those consolidated results within our Pharma segment
50. 50Integrated Oncology Network ("ION")
51. 51Transaction and integration costs associated with the Specialty Network acquisition were $7 million and $16 million during fiscal 2025 and 2024, respectfully
52. 52Fair Value of Assets Acquired and Liabilities Assumed
53. 53(4) The weighted-average useful life of non-competition agreements is 4 years
54. 54The estimated fair value of ADS customer intangibles (payor contracts) were determined using a multi-period excess earnings method, which estimates an intangible asset's value based on the present value of the incremental after-tax cash flows (or “excess earnings”) attributable only to the intangible asset
55. 55The fair value of the non-compete intangibles acquired from GIA were determined by applying the differential cash flow method which compares the present value of cash flows with and without the non-compete agreements in place
56. 56The noncontrolling interest for ION was recognized at the acquisition-date fair value of $151 million
57. 574. Restructuring and Employee Severance
58. 58Total restructuring and employee severance $ 88 $ 175 $ 95
59. 59(3) Comprised of the remaining operating segments, Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight® Logistics
60. 60During fiscal 2025, we did not identify any indicators of impairment within our reporting units
61. 61(gain)/loss on disposal of assets, net in our consolidated statements of earnings
62. 62Total indefinite-life intangibles 13 — 13 N/A
63. 63Total indefinite-life intangibles 12 — 12
64. 64Total other intangible assets $ 5,248 $ 3,523 $ 1,725
65. 65Variable lease cost primarily includes payments for property taxes, maintenance, and insurance
66. 66Financing cash flows paid for finance leases 53 36 31
67. 67New finance leases 107 55 42
68. 687. Long-Term Obligations and Other Short-Term Borrowings
69. 69(1) Maturities are presented on a calendar year basis
70. 70November 15, 2034, and $650 million aggregate principal amount of 5.75% Notes that mature on November 15, 2054. The proceeds of the notes issued, net of discounts, premiums, and debt issuance costs, were $2.9 billion
71. 71Other Financing Arrangements
72. 72Our revolving credit and committed receivables sales facilities require us to maintain a consolidated net leverage ratio of no more than 3.75-to-1. As of June 30, 2025, we were in compliance with this financial covenant
73. 73During fiscal 2025, we had a daily maximum amount outstanding under our commercial paper and committed receivables programs of $633 million
74. 74Generic Sourcing Venture with CVS Health
75. 75New York Opioid Stewardship Act
76. 76We become involved from time to time in disputes, litigation, and regulatory matters
77. 77We recognize income from the favorable outcome of litigation when we receive the associated cash or assets
78. 78Opioid Lawsuits and Investigations
79. 79settlement agreements with the City of Baltimore and classes of third-party payors and acute care hospitals
80. 80States & Political Subdivisions
81. 81Department of Justice Civil Investigative Demand
82. 82Cordis IVC Filter Matters
83. 83Generic Pharmaceutical Pricing Antitrust Litigation
84. 84Antitrust Litigation Proceeds
85. 85Earnings before Income Taxes and Provision for Income Taxes
86. 86Total current $ 289 $ 452 $ 372
87. 87Tax Effects of Goodwill Impairment Charges
88. 88(1) Includes the tax impact of the Foreign-Derived Intangible Income ("FDII") deduction offset by Global Intangible Low-Taxed Income ("GILTI") tax, and other foreign income that is taxable under the U.S. tax code
89. 89Our effective tax rate has benefits from negotiated lower than statutory tax rates in select foreign jurisdictions which individually are not material to our effective tax rate but in aggregate had a favorable tax impact of approximately $17 million during fiscal 2025
90. 90Deferred income taxes arise from temporary differences between financial reporting and tax reporting bases of assets and liabilities and operating loss and tax credit carryforwards for tax purposes
91. 91Net deferred income tax assets $ 976 $ 1,191
92. 92(2)Included in deferred income taxes and other liabilities in the consolidated balance sheets
93. 93Unrecognized Tax Benefits
94. 9410. Fair Value Measurements
95. 95Other investments (1) 108 — — 108
96. 96Forward contracts (2) — (87) — (87)
97. 9711. Financial Instruments
98. 98Interest Rate Risk Management
99. 99Currency Exchange Risk Management
100. 100Commodity Price Risk Management
101. 101manage the price risk associated with certain forecasted purchases
102. 102Pay-floating interest rate swaps $ 1,600 Jun 2027 - Feb 2031
103. 103Gains currently included within accumulated other comprehensive loss associated with our cash flow hedges to be reclassified into net earnings within the next 12 months are $5 million
104. 104We enter into commodity contracts to manage the price risk associated with forecasted purchases of certain commodities used in our GMPD segment
105. 105Foreign currency contracts $ 401 Jul 2024 - Jun 2025
106. 106In February 2025, we terminated the €100 million ($107 million) cross-currency swaps entered into in March 2023 and received net settlement in cash of $2 million, recorded in proceeds from net investment hedge terminations in our consolidated statements of cash flows
107. 107In September 2023, we terminated the ¥38 billion ($300 million) cross-currency swaps entered into in January 2023 and received net settlement in cash of $28 million, recorded in proceeds from net investment hedge terminations in our consolidated statements of cash flows
108. 108Cross-currency swaps designated as net investment hedges are marked-to-market using the current spot exchange rate as of the
109. 109Economic (Non-Designated) Hedges
110. 110Foreign currency contracts $ 178 Jul 2024
111. 111Fair Value of Financial Instruments
112. 112The fair value of our long-term obligations and other short-term borrowings is estimated based on either the quoted market prices for the same or similar issues or other inputs derived from available market information, which represents a Level 2 measurement
113. 11312. Shareholders' Deficit
114. 114During fiscal 2025, we paid $15 million for excise taxes related to the completion of prior ASR programs and we retired 56 million of common stock shares without par value
115. 115Accumulated Other Comprehensive Loss
116. 11613. Earnings Per Share Attributable to Cardinal Health, Inc
117. 117Weighted-average common shares–basic 241 245 261
118. 118Weighted-average common shares–diluted 242 247 262
119. 119(1)Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments
120. 120Total additions to property and equipment $ 547 $ 511 $ 481
121. 121Total assets $ 53,122 $ 45,121
122. 12215. Share-Based Compensation
123. 123During fiscal 2024, we modified the equity incentive awards of four employees to amend provisions over involuntary termination. We recognized incremental share-based compensation expense of $9 million
124. 124Nonvested at June 30, 2025 1.4 $ 86.30
125. 125Nonvested at June 30, 2025 1.5 $ 99.45
126. 126Employee Retirement Savings Plans
127. 127The total fair value of GIA Units vested during fiscal 2025 was $82 million. During fiscal 2025, we recognized an increase in the fair value of the liability, resulting in expense of $41 million, related to the vested GIA Units, which is recognized in acquisition-related cash and share-based compensation costs
128. 128$ 832 $ 2,382 $ — $ (2,494) $ 720
129. 129Information About Our Executive Officers
130. 130The business experience summaries provided below for our executive officers describe positions held during the last five years (unless otherwise indicated)
131. 131Ms. Mayer has served as Chief Legal and Compliance Officer since March 2019
132. 132Directors and Corporate Governance
133. 133Exhibits, Financial Statement Schedules
134. 134Notes to Consolidated Financial Statements
135. 135Number Exhibit Description
136. 136104 Cover Page Interactive Data File - formatted in Inline XBRL (included as Exhibit 101)