CARDINAL HEALTH INC

2. Acquisitions

Integrated Oncology Network ("ION")

On December 2, 2024, we completed the acquisition of ION, a physician-led independent community oncology network, for a purchase price of $1.1 billion in cash, subject to certain adjustments. ION is a management services organization that supports more than 50 practice sites in 10 states representing more than 100 providers. ION supports a continuum of care across its member sites including medical oncology, radiation oncology, urology diagnostic testing and other ancillary services. As part of the transaction, ION practices will be integrated into Navista, our managed services organization intended to enhance efficiency for providers and patients, enable additional capabilities, and increase practice profitability of independent community oncologists. We report ION results within our Pharma segment. The portion of ION net earnings attributable to noncontrolling interest holders is reported as a reduction to net earnings in the condensed consolidated statements of earnings. The acquisition was funded with available cash on hand.

Transaction and integration costs associated with the ION acquisition were $6 million and $25 million during the three and nine months ended March 31, 2025, respectively, and are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings.

GI Alliance ("GIA")

On January 30, 2025, we completed the acquisition of 73 percent ownership interest in GIA, a gastroenterology management services organization, for a purchase price of approximately $2.8 billion in cash, subject to certain adjustments. Beginning on the third anniversary of the closing, we have the ability to exercise a call right to purchase up to 100 percent of the remaining outstanding equity. GIA's management services organization platform includes over 900 physicians across 345 practice locations in 20 states and has the ability to further expand both geographically and in other key therapeutic areas.

We 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 condensed consolidated financial statements and report those consolidated results within our Pharma segment. The portion of GIA net earnings attributable to noncontrolling interest holders is reported as a reduction to net earnings in the condensed consolidated statements of earnings.

Notes to Financial Statements

Transaction and integration costs associated with the GIA acquisition were $59 million and $69 million during the three and nine months ended March 31, 2025, respectively, and are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings.

On April 14, 2025, we announced that we entered into a definitive agreement to acquire Urology America. This transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals.

Advanced Diabetes Supply Group ("ADSG")

On April 1, 2025, we completed the acquisition of ADSG, one of the country's leading diabetic medical supplies providers, for a purchase price of approximately $1.1 billion in cash, subject to certain adjustments. ADSG serves approximately 500,000 patients annually by providing the latest innovations in diabetes therapies from leading manufacturers. ADSG will become part of our at-Home Solutions operating segment and we will report ADSG results in Other.

We financed the acquisition of ADSG with a combination of cash on hand and cash proceeds from new debt financing as described in Note 6.

Specialty Networks

On March 18, 2024, we completed the acquisition of Specialty Networks for a purchase price of $1.2 billion in cash. Specialty Networks creates clinical and economic value for providers and partners across multiple specialty group purchasing organizations ("GPOs"): UroGPO, Gastrologix and GastroGPO, and United Rheumatology. Specialty Networks results are reflected within our Pharma segment.

Transaction and integration costs associated with the Specialty Network acquisition were $2 million and $6 million during the three and nine months ended March 31, 2025, respectively and transaction costs were $15 million during the three and nine months ended March 31, 2024. These are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings.

Fair Value of Assets Acquired and Liabilities Assumed

The allocation of the purchase price for the acquisitions of ION and GIA are not yet finalized and are subject to adjustment as we complete the valuation analysis of these acquisitions. The purchase prices are also subject to adjustment based on working capital requirements as set forth in the acquisition agreements. The pro forma results of operations and the results of operations for these acquisitions have not been separately disclosed because the effects were not significant compared to the consolidated financial statements.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for ION and GIA:

(1) The weighted-average useful life of customer contracts is 20 years.

(2) The weighted-average useful life of trademarks is 10 years.

(3) The weighted-average useful life of non-competition agreements is 4 years.

The valuation of identifiable intangible assets utilizes significant unobservable inputs and thus represents a Level 3 nonrecurring fair value measurement. The discount rates used to arrive at the present values of the identifiable intangible assets were 9.5 percent and 10.0 percent for ION and GIA, respectively, and reflect their internal rates of return and uncertainty in the cash flow projections, which is reflective of market participant assumptions.

The estimated fair value of ION customer contracts were determined using an income-based approach, which includes market participant expectations of the cash flows that an asset

Notes to Financial Statements

could generate over its remaining useful life, discounted back to present value using an appropriate rate of return.

The fair value of the ION and GIA trademark intangible assets were determined utilizing the relief from royalty method, an income-based approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the trademarks and discounted to present value using an appropriate discount rate.

The 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.

The noncontrolling interests were recognized at their acquisition-date fair values of $151 million and $884 million for ION and GIA, respectively. For GIA, the fair value was determined based on the fair value of GIA's common units.

The allocation of the fair value of assets acquired and liabilities assumed for the Specialty Networks acquisition was finalized during the nine months ended March 31, 2025, resulting in goodwill of $784 million. There were no significant adjustments to the allocation of the fair value of assets acquired and liabilities assumed for the Specialty Networks acquisition from those disclosed in our fiscal 2024 Form 10-K.

3. Divestitures

On June 5, 2023 we signed a definitive agreement to contribute the Outcomes TM business to TDS, a portfolio company of BlackRock Long Term Private Capital and GTCR, in exchange for a 16 percent equity interest in the combined entity. The transaction closed on July 10, 2023 and we recognized a pre-tax gain of $53 million during the three months ended September 30, 2023, which was included inimpairments and (gain)/loss on disposal of assets, net in our condensed consolidated statements of earnings/(loss). This gain includes our initial recognition of an equity method investment in the combined entity for $147 million, which was recorded in other assets in our condensed consolidated balance sheets.

We determined that the divestiture of the Outcomes TMbusiness did not meet the criteria to be classified as discontinued operations. The Outcomes TM business operated within our former Pharmaceutical segment and its results before the divestiture are reflected within the Pharma segment.

4. Restructuring and Employee Severance

The following tables summarize restructuring and employee severance costs:

Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated, duplicate payroll costs, and retention bonuses incurred during transition periods. Facility exit and other costs primarily consist of project consulting fees, accelerated depreciation, professional project management, and costs associated with vacant facilities.

Restructuring and employee severance costs during the three and nine months ended March 31, 2025 were primarily related to certain initiatives to rationalize our manufacturing operations and the implementation of certain enterprise-wide cost-savings measures.

Restructuring and employee severance costs during the three and nine months ended March 31, 2024 were primarily due to certain projects resulting from the review of our strategy portfolio, capital-allocation framework, and operations, and certain initiatives to rationalize our manufacturing operations.

The following table summarizes activity related to liabilities associated with restructuring and employee severance:

Notes to Financial Statements

5. Goodwill and Other Intangible Assets

Goodwill

The following table summarizes the changes in the carrying amount of goodwill by segment and in total:

(1) Comprised of the remaining operating segments, Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics.

The increase in the Pharma segment goodwill is due to the ION and GIA acquisitions that occurred during the nine months ended March 31, 2025. Goodwill recognized in connection with these acquisitions primarily represent the expected benefits from the expected growth from new customers, the assembled workforce of the acquired entities and synergies of integrating these businesses. Substantially all of the goodwill recorded is expected to be nondeductible for income tax purposes.

During the nine months ended March 31, 2025, we did not identify any indicators of impairment within our reporting units.

We performed interim quantitative goodwill impairment testing for GMPD at September 30, 2023 and March 31, 2024, which resulted in pre-tax goodwill impairment charges of $585 million and $90 million, respectively. GMPD goodwill was fully impaired during the third quarter of fiscal 2024.

Other Intangible Assets

The following tables summarize other intangible assets by class at:

Notes to Financial Statements

The increase in definite-life intangibles is due to the acquisitions of ION and GIA. See Note 2, for additional information on the acquisitions of ION and GIA. Total amortization of intangible assets was $77 million and $64 million for the three months ended March 31, 2025 and 2024, respectively, and $214 million and $191 million for the nine months ended March 31, 2025 and 2024, respectively. Estimated annual amortization of intangible assets for the remainder of fiscal 2025 through 2029 is as follows: $82 million, $308 million, $285 million, $256 million and $249 million.

6. Long-Term Obligations and Other Short-Term Borrowings

The following table summarizes long-term obligations and other short-term borrowings at:

(1) Maturities are presented on a calendar year basis.

Maturities of existing long-term obligations and other short-term borrowings for the remainder of fiscal 2025 through fiscal 2029 and thereafter are as follows: $12 million, $548 million, $1.9 billion, $27 million, $663 million and $4.6 billion.

Long-Term Debt

We had total long-term obligations, including the current portion and other short-term borrowings, of $7.7 billion and $5.1 billion at March 31, 2025 and June 30, 2024, respectively. All the notes represent unsecured obligations of Cardinal Health, Inc. and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. Interest is paid pursuant to the terms of the obligations. These notes are effectively subordinated to the liabilities of our subsidiaries, including trade payables of $32.8 billion and $31.8 billion at March 31, 2025 and June 30, 2024, respectively.

In November 2024, we issued additional debt, with the aggregate principal amount of $2.9 billion, to fund a portion of the consideration payable in connection with the GIA and ADSG acquisitions and for general purposes. The notes issued are $500 million aggregate principal amount of 4.7% Notes that mature on November 15, 2026, $750 million aggregate principal amount of 5.0% Notes that mature on November 15, 2029, $1.0 billion aggregate principal amount of 5.35% Notes that mature on November 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.

During the three months ended December 31, 2024, we repaid the full principal of $400 million of the 3.5% Notes due 2024 at maturity with proceeds from the debt issuance in fiscal 2024, $200 million of which were invested in short-term time deposits and classified as prepaid expenses and other in our condensed consolidated balance sheets at June 30, 2024. As of March 31, 2025, all short-term time deposits related to the debt issuance in fiscal 2024 have matured.

If we undergo a change of control, as defined in the notes, and if the notes receive specified ratings below investment grade by each of Standard & Poor's Ratings Services, Moody's Investors Services, and Fitch Ratings, any holder of the notes, excluding the debentures, can require with respect to the notes owned by such holder, or we can offer, to repurchase the notes at 101% of the principal amount plus accrued and unpaid interest.

Other Financing Arrangements

In addition to cash and equivalents and operating cash flow, other sources of liquidity include a $3.0 billion commercial paper program backed by a $2.0 billion revolving credit facility and a $1.0 billion 364-Day revolving credit facility that expires in October 2025. We also have a $1.0 billion committed receivables sales facility. At March 31, 2025, we hadno amounts outstanding under our commercial paper program, revolving credit facilities or our committed receivables sales facility.

Notes to Financial Statements

On December 5, 2024, we entered into a term loan credit agreement that, among other things, provides commitments for a term loan facility in an aggregate amount of up to $1.0 billion. No amounts were borrowed from this agreement as of March 31, 2025. However, on April 1, 2025, we closed on our acquisition of ADSG and borrowed $800 million under this term loan facility. The loan provided under this term loan credit agreement will mature three years from the date of borrowing and allows for prepayment, which may be accelerated pursuant to certain conditions specified in the credit agreement. Interest rates on borrowings will be based on prevailing interest rates, benchmarked based on Term SOFR and subject to our credit ratings.

In November 2024, we also obtained a commitment letter from a financial institution for a $2.9 billion unsecured bridge term loan facility that could have been used to complete the acquisition of GIA. We incurred fees related to the facility, which are included in interest expense, net. The unsecured bridge term loan facility was never entered into and we terminated the commitment letter on November 22, 2024.

Our term loan credit agreement, 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 March 31, 2025, we were in compliance with this financial covenant.

7. Commitments, Contingent Liabilities and Litigation

Commitments

Generic Sourcing Venture with CVS Health

In July 2014, we established Red Oak Sourcing, LLC ("Red Oak Sourcing"), a U.S.-based generic pharmaceutical sourcing venture with CVS Health for an initial term of 10 years. Red Oak Sourcing negotiates generic pharmaceutical supply contracts on behalf of its participants. In August 2021, we amended our agreement to extend the term through June 2029. We are required to make quarterly payments to CVS Health for the term of the arrangement.

Contingencies

New York Opioid Stewardship Act

In April 2018, the State of New York passed a budget which included the Opioid Stewardship Act (the "OSA"). The OSA created an aggregate $100 million annual assessment on all manufacturers and distributors that was assessed based on each manufacturer or distributor's share of the total morphine milligram equivalents sold or distributed in New York during the applicable calendar year, beginning in 2017. Subsequently, New York passed a new opioid excise tax and limited the OSA to two years (2017 and 2018).

We accrue contingencies if it is probable that a liability has been incurred and the amount can be estimated. Since fiscal 2021, we have made certain payments to New York State for our portion of the assessment in 2017 and 2018. However, we, and other distributors, challenged the OSA as unconstitutional. In May 2024, the New York Appellate Division held that the 2017 assessment

was unconstitutionally retroactive, directing a refund of assessments paid for calendar year 2017, but upheld the 2018 assessment. Both parties have appealed the decision of the New York Appellate Division to the New York Court of Appeals, the state's highest court, which remanded the case for calculation of interest. The parties subsequently agreed on terms of a potential settlement ending the litigation which could result in a refund of the portion we paid for calendar year 2017. We have not recorded a receivable for this recovery as the settlement remains subject to final approvals. The refund will be recognized upon receipt of the settlement.

Legal Proceedings

We become involved from time to time in disputes, litigation and regulatory matters.

From time to time, we determine that products we distribute, source, manufacture or market do not meet our specifications, regulatory requirements, or published standards. When we or a regulatory agency identify a potential quality or regulatory issue, we investigate and take appropriate corrective action. Such actions have led to product recalls, costs to repair or replace affected products, temporary interruptions in product sales, restrictions on importation, product liability claims and lawsuits and can lead to action by regulators. Even absent an identified regulatory or quality issue or product recall, we can become subject to product liability claims and lawsuits.

From time to time, we become aware through employees, internal audits or other parties of possible compliance matters, such as complaints or concerns relating to accounting, internal accounting controls, financial reporting, auditing, or other ethical matters or relating to compliance with laws such as healthcare fraud and abuse, anti-corruption or anti-bribery laws. When we become aware of such possible compliance matters, we investigate internally and take appropriate corrective action. In addition, from time to time, we receive subpoenas or requests for information from various federal or state agencies relating to our business or to the business of a customer, supplier or other industry participants. Internal investigations, subpoenas or requests for information could directly or indirectly lead to the assertion of claims or the commencement of legal proceedings against us or result in sanctions.

We have been named from time to time in qui tam actions initiated by private third parties. In such actions, the private parties purport to act on behalf of federal or state governments, allege that false claims have been submitted for payment by the government and may receive an award if their claims are successful. After a private party has filed a qui tam action, the government must investigate the private party's claim and determine whether to intervene in and take control over the litigation. These actions may remain under seal while the government makes this determination. If the government declines to intervene, the private party may nonetheless attempt to continue to pursue the litigation on his or her own purporting to act on behalf of the government.

Notes to Financial Statements

We 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. Because these matters are inherently unpredictable and unfavorable developments or resolutions can occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review contingencies to determine whether our accruals and related disclosures are adequate. The amount of ultimate loss may differ from these estimates.

We recognize income from the favorable outcome of litigation when we receive the associated cash or assets.

We recognize estimated loss contingencies for certain litigation and regulatory matters and income from favorable resolution of litigation in litigation (recoveries)/charges, net in our condensed consolidated statements of earnings; however, losses and recoveries of lost profits from disputes that occur in the ordinary course of business are included within segment profit.

Opioid Lawsuits and Investigations

Cardinal Health, other pharmaceutical distributors, and other participants in the pharmaceutical supply chain have been named as defendants in lawsuits related to the distribution of opioid pain medications. These lawsuits seek equitable relief and monetary damages based on a variety of legal theories, including various common law claims, such as public nuisance, negligence, unjust enrichment, personal injury, as well as violations of controlled substance laws, the Racketeer Influenced and Corrupt Organizations Act and various other statutes. Plaintiffs in these lawsuits include governmental entities as well as private parties, such as unions and other health and welfare funds, hospital systems and other healthcare providers, businesses and individuals.

Additionally, we have received federal grand jury subpoenas issued in connection with investigations being conducted by the U.S. Attorney's Office for the Eastern District of New York and the Fraud Section of the U.S. Department of Justice ("DOJ"). We have also received civil requests for information, subpoenas and other requests from other DOJ offices. These investigations concern operation of our anti-diversion program, our anti-diversion policies and procedures and distribution of certain controlled substances. We have and are cooperating with these investigations. We are unable to predict the outcomes of any of these investigations.

In total, as of March 31, 2025, we have $4.9 billion accrued for these matters, of which $636 million is included in other accrued liabilities and the remainder is included in deferred income taxes and other liabilities in our condensed consolidated balance sheets. During fiscal 2024, we recognized expense of $340 million in connection with opioid-related matters, including agreements in principle with counsel representing nationwide classes of third-party payors and acute care hospitals, and settlements with the City of Baltimore and the State of Alabama. This expense was partially offset by a benefit of $105 million related to prepayments

at a prenegotiated discount of certain future payments totaling $344 million.

Because loss contingencies are inherently unpredictable and unfavorable developments or resolutions can occur, the assessment is highly subjective and requires judgments about future events. 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, whether as a result of settlement discussions, a judicial decision or verdict or otherwise, but we are not able to estimate a range of reasonably possible additional losses for these matters. We continue to strongly dispute the allegations made in these lawsuits and none of the agreements described below is an admission of liability or wrongdoing. Please see below for additional description of these matters.

States & Political Subdivisions

In February 2022, we along with two other national distributors (collectively, the "Distributors") independently approved a settlement agreement (the "National Opioid Settlement Agreement") to settle the vast majority of opioid lawsuits and claims brought by states and political subdivisions. This National Opioid Settlement Agreement became effective on April 2, 2022. In addition to the Distributors, parties to the National Opioid Settlement Agreement include 48 states, the District of Columbia and 5 U.S. territories. Over 99 percent of political subdivisions in settling states (by population as calculated under the National Opioid Settlement Agreement) that had brought opioid-related suits against us have chosen to join the National Opioid Settlement Agreement or have had their claims addressed by state legislation (together with settling states and territories, the "Settling Governmental Entities").

During fiscal 2024, we recognized a $22 million charge in litigation (recoveries)/charge, net in the condensed consolidated statements of earnings related to an agreement with the Alabama Attorney General under which we agreed to pay approximately $123 million to the State of Alabama over a period of ten years to resolve opioid-related claims brought by the State and its political subdivisions (the "Alabama Settlement"). Including the National Opioid Settlement Agreement, the Alabama Settlement and a prior settlement with the State of West Virginia, we have now resolved the opioid-related claims of all 50 states and the District of Columbia. Additionally, in August 2024, we entered into a settlement agreement with the City of Baltimore to resolve its opioid-related claims. Under this agreement, we agreed to pay $153 million.

Under the National Opioid Settlement Agreement, through April 2025, we have paid the Settling Governmental Entities approximately $1.9 billion. We expect to pay Settling Governmental Entities additional amounts up to $4.4 billion through 2038. The National Opioid Settlement Agreement also includes injunctive relief terms related to Distributors' controlled substance anti-diversion programs. A monitor will oversee

Notes to Financial Statements

compliance with these provisions until 2027. In addition, the distributors have engaged a third-party vendor to act as a clearinghouse for data aggregation and reporting, which distributors will fund for 10 years. As a result of the National Opioid Settlement Agreement, the vast majority of lawsuits brought against us by political subdivisions have been dismissed. We intend to defend ourselves vigorously against all remaining lawsuits.

Other Settlements

West Virginia subdivisions and Native American tribes were not a part of the National Opioid Settlement Agreement. In July 2022, a judgment in favor of the Distributors was entered in a bench trial before a federal judge in West Virginia in a case brought by Cabell County and City of Huntington. Plaintiffs have appealed this decision to the Fourth Circuit Court of Appeals. In July 2022, we entered into separate agreements to settle the opioid-related claims of the majority of the remaining West Virginia subdivisions and Native American Tribes for approximately $124 million over eleven years and $136 million over five years, respectively.

Private Plaintiffs

The National Opioid Settlement Agreement does not address claims by private parties, which includes unions and other health and welfare funds, hospital systems and other healthcare providers, businesses, and individuals alleging personal injury. There were approximately 330 lawsuits brought by private plaintiffs pending as of April 2025. Of these, approximately 100 are purported class actions. The causes of action asserted by these plaintiffs are similar to those asserted by public plaintiffs. We are vigorously defending ourselves in all these matters.

Following resolution discussions with certain private plaintiffs, during the six months ended December 31, 2024, Distributors finalized agreements with classes of third-party payors and acute care hospitals. Our portion of these settlements totaled $213 million. The settlement with the class of third-party payors was approved by the court in January 2025. An appeal by an objector of the third-party payor settlement is currently pending. The settlement with the class of acute care hospitals was approved by the court in March 2025 and became final in April 2025.

Insurance Litigation

We are involved in ongoing legal proceedings with insurers related to their obligations to reimburse us for defense and indemnity costs in connection with the lawsuits described above. We received insurance recoveries related to these matters of $25 million during the nine months ended March 31, 2025. During fiscal 2024, we received $34 million in insurance recoveries related to these matters. We have not recorded a receivable for any additional recoveries related to these insurance litigation matters as of March 31, 2025. Certain recoveries from our insurers are recorded in the Pharmaceutical and Specialty Solutions segment.

Department of Justice Civil Investigative Demand

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 minority ownership interest in a rheumatology managed services organization and a group purchasing organization. We are cooperating with this investigation.

Cordis IVC Filter Matters

We have been named as a defendant in product liability lawsuits coordinated in Alameda County Superior Court in California involving claims by plaintiffs that allege personal injuries associated with the use of inferior vena cava ("IVC") filter products. These lawsuits sought a variety of remedies, including unspecified monetary damages. The divestiture of the Cordis business did not include product liability related to the IVC filters in the U.S. and Canada, which we retained.

In April 2023, we executed a settlement agreement that, if certain conditions are satisfied, will resolve 4,375 claims for $275 million. Between May and September 2023, we made settlement payments totaling $275 million into a qualified settlement fund. During the three months ended December 31, 2024, the minimum required sign-on threshold was met, and beginning in January 2025, payments to qualified implantees were being made out of the qualified settlement fund. We expect continued payments out of the qualified settlement fund as additional plaintiffs meet the procedural requirements.

In addition to the settlement discussed above, we also entered into other agreements to settle the vast majority of IVC filter product liability claims. These settlements will not resolve all IVC filter product liability claims, and we intend to continue to vigorously defend ourselves in the remaining lawsuits.

We recognized income of $103 million during fiscal 2023, primarily related to a reduction of the reserve for the estimated settlement and defense costs for these matters due to the execution of the settlements noted above. At March 31, 2025, we had a total of $85 million accrued for losses and legal defense costs, related to the IVC filter product liability lawsuits in our condensed consolidated balance sheets, which includes the $74 million in the qualified settlement fund.

Other Civil Litigation

Generic Pharmaceutical Pricing Antitrust Litigation

In December 2019, pharmaceutical distributors including us were added as defendants in a civil class action lawsuit filed by indirect purchasers of generic drugs, such as hospitals and retail pharmacies. The indirect purchaser case is part of a multidistrict litigation consisting of multiple individual class action matters consolidated in the Eastern District of Pennsylvania. The indirect purchaser plaintiffs allege that pharmaceutical distributors encouraged manufacturers to increase prices, provided anti-competitive pricing information to manufacturers and improperly

Notes to Financial Statements

engaged in customer allocation. In May 2020, the court granted our motion to dismiss. In July 2022, the indirect purchasers filed an amended complaint and, in August 2022, we filed a motion to dismiss the amended complaint. In February 2025, the court granted our motion to dismiss, with prejudice.

Antitrust Litigation Proceeds

We recognized income for net recoveries in class action antitrust lawsuits in which we were a class member or plaintiff of $106 million and $165 million during the three and nine months ended March 31, 2025, respectively, and $6 million and $77 million during the three and nine months ended March 31, 2024, respectively.

8. Income Taxes

Fluctuations in our provision for income taxes as a percentage of pre-tax earnings (“effective tax rate”) are due to changes in international and U.S. state effective tax rates resulting from our business mix and discrete items.

Effective Tax Rate

During the three and nine months ended March 31, 2025, the effective tax rate was 23.6 percent and 22.8 percent, respectively.

During the three and nine months ended March 31, 2024, the effective tax rate was 23.3 percent and 23.4 percent, respectively, and reflects the impact of the tax effect of the goodwill impairment charges recognized during the nine months ended March 31, 2024.

Tax Effects of Goodwill Impairment Charges

During the nine months ended March 31, 2024, we recognized pre-tax goodwill impairment charges of $675 million. The net tax benefit related to these charges was $56 million for fiscal 2024.

Unless an item is considered discrete because it is unusual or infrequent, the tax impact of the item is included in our estimated annual effective tax rate. When items are recognized through our estimated annual effective tax rate, we apply our estimated annual effective tax rate to the earnings before income taxes for the year-to-date period to compute our impact from income taxes for the current quarter and year-to-date period. The tax impacts of discrete items are recognized in their entirety in the period in which they occur.

The tax effect of the goodwill impairment charges during the nine months ended March 31, 2024 was included in our estimated annual effective tax rate because it was not considered unusual or infrequent, given that we recorded goodwill impairments in prior fiscal years. The impact of the non-deductible goodwill increased the estimated annual effective tax rate for fiscal 2024. Applying the higher tax rate to the pre-tax income for the nine months ended March 31, 2024 resulted in recognizing an incremental interim tax benefit of approximately $36 million, which impacted the provision for income taxes in the condensed consolidated statements of earnings during the nine months ended March 31, 2024 and

prepaid expenses and other assets in the condensed consolidated balance sheet at March 31, 2024. The incremental interim tax benefit reversed in the remainder of fiscal 2024.

Unrecognized Tax Benefits

We had $890 million and $981 million of unrecognized tax benefits, at March 31, 2025 and June 30, 2024, respectively. The March 31, 2025 and June 30, 2024 balances include $865 million and $882 million of unrecognized tax benefits, respectively, that if recognized, would have an impact on the effective tax rate.

At March 31, 2025 and June 30, 2024, we had $64 million and $65 million, respectively, accrued for the payment of interest and penalties related to unrecognized tax benefits, which we recognize in the benefit from income taxes in the condensed consolidated statements of earnings. These balances are gross amounts before any tax benefits and are included in deferred income taxes and other liabilities in the condensed consolidated balance sheets.

It is reasonably possible that there could be a change in the amount of unrecognized tax benefits within the next 12 months due to activities of the U.S. Internal Revenue Service ("IRS") or other taxing authorities, possible settlement of IRS and other audit issues, reassessment of existing unrecognized tax benefits or the expiration of statutes of limitations. We estimate there will be no material change to unrecognized tax benefits within the next 12 months.

Other Tax Matters

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 2015 through the current fiscal year.

9. Fair Value Measurements

Assets and Liabilities Measured on a Recurring Basis

The following tables present the fair values for assets and (liabilities) measured on a recurring basis at:

Notes to Financial Statements

(1)The other investments balance includes investments in mutual funds, which offset fluctuations in deferred compensation liabilities. These mutual funds invest in the equity securities of companies with both large and small market capitalization and high quality fixed income debt securities. The fair value of these investments is determined using quoted market prices.

(2)The fair value of interest rate swaps, foreign currency contracts, and net investment hedges is determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows. The fair value of these derivative contracts, which are subject to master netting arrangements under certain circumstances, is presented on a gross basis in prepaid expenses and other, other assets, other accrued liabilities, and deferred income taxes and other liabilities within the condensed consolidated balance sheets.

10. Financial Instruments

We utilize derivative financial instruments to manage exposure to certain risks related to our ongoing operations. The primary risks managed through the use of derivative instruments include interest rate risk, currency exchange risk and commodity price risk. We do not use derivative instruments for trading or speculative purposes. While the majority of our derivative instruments are designated as hedging instruments, we also enter into derivative instruments that are designed to hedge a risk but are not designated as hedging instruments. These derivative instruments are adjusted to current fair value through earnings at the end of each period. We are exposed to counterparty credit risk on all of our derivative instruments. Accordingly, we have established and maintain strict counterparty credit guidelines and only enter into derivative instruments with major financial institutions that are rated investment grade or better. We do not have significant exposure to any one counterparty and we believe the risk of loss is remote. Additionally, we do not require collateral under these agreements.

Interest Rate Risk Management

We are exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on cash flows and the market value of our borrowings. We utilize a mix of debt maturities on our fixed-rate debt to manage changes in interest rates. In addition, we enter into interest rate swaps to further manage our exposure to interest rate variations related to our borrowings and to lower our overall borrowing costs.

Currency Exchange Risk Management

We conduct business in several major international currencies and are subject to risks associated with changing foreign exchange rates. Our objective is to reduce earnings and cash flow volatility associated with foreign exchange rate changes to allow management to focus its attention on business operations. Accordingly, we enter into various contracts that change in value as foreign exchange rates change to protect the value of existing foreign currency assets and liabilities, commitments, and anticipated foreign currency revenue and expenses.

Commodity Price Risk Management

We are exposed to changes in the price of certain commodities. Our objective is to reduce earnings and cash flow volatility associated with forecasted purchases of these commodities to allow management to focus its attention on business operations. Accordingly, we enter into derivative contracts when possible to manage the price risk associated with certain forecasted purchases.

Fair Value Hedges

We enter into pay-floating interest rate swaps to hedge the changes in the fair value of fixed-rate debt resulting from fluctuations in interest rates. These contracts are designated and qualify as fair value hedges. Accordingly, the gain or loss recorded on the pay-floating interest rate swaps is directly offset by the change in fair value of the underlying debt. Both the derivative instrument and the underlying debt are adjusted to market value at the end of each period with any resulting gain or loss recorded in interest expense, net in the condensed consolidated statements of earnings. For the three and nine months ended March 31, 2025 and 2024, there wereno gains or losses recorded to interest expense as changes in the market value of our derivative instruments offset changes in the market value of the underlying debt.

During the nine months ended March 31, 2024, we entered into pay-floating interest rate swaps with total notional amounts of $500 million. These swaps have been designated as fair value hedges of our fixed rate debt and are included in deferred income taxes and other liabilities in our condensed consolidated balance sheets.

Cash Flow Hedges

We enter into derivative instruments to hedge our exposure to changes in cash flows attributable to interest rate, foreign currency and commodity price fluctuations associated with certain forecasted transactions. These derivative instruments are designated and qualify as cash flow hedges. Accordingly, the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period during which the hedged transaction affects earnings.

Pre-tax gains recognized in other comprehensive income/(loss) were $4 million and $1 million for the three months ended March 31, 2025 and 2024, respectively, and $5 million and $2 million for the nine months ended March 31, 2025 and 2024, respectively. Gains and losses recognized in accumulated other comprehensive loss and reclassified into earnings were an immaterial loss and a $2 million gain for the three months ended March 31, 2025 and 2024, respectively, and a $3 million loss and a $4 million gain for the nine months ended March 31, 2025 and 2024, respectively. Losses 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 $1 million.

Notes to Financial Statements

Net Investment Hedges

We hedge the foreign currency risk associated with certain net investment positions in foreign subsidiaries. To accomplish this, we enter into cross-currency swaps that are designated as hedges of net investments.

In February 2025, we entered into €100 million ($105 million) cross-currency swaps maturing in February 2027.

In 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 condensed consolidated statements of cash flows.

In September 2023, we entered into ¥18 billion ($120 million) cross-currency swaps maturing in September 2025 and ¥18 billion ($120 million) cross-currency swaps maturing in June 2027. In June 2024, we terminated the ¥18 billion ($120 million) cross-currency swaps with a maturity date of June 2027.

In 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 condensed consolidated statements of cash flows.

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 gains and losses from net investment hedges recorded in the foreign currency translation component of accumulated other comprehensive income/(loss) were a $16 million loss and a $19 million gain during the three months ended March 31, 2025 and 2024, respectively, and a $11 million loss and a $14 million gain during the nine months ended March 31, 2025 and 2024, respectively. Gains recognized in interest expense, net in the condensed consolidated statements of earnings for the portion of the net investment hedges excluded from the assessment of hedge effectiveness were $3 million during both the three months ended March 31, 2025 and 2024, and $7 million and $10 million during the nine months ended March 31, 2025 and 2024, respectively.

Economic (Non-Designated) Hedges

We enter into foreign currency contracts to manage our foreign exchange exposure related to sales transactions, intercompany financing transactions and other balance sheet items subject to revaluation that do not meet the requirements for hedge accounting treatment. Accordingly, these derivative instruments are adjusted to current market value at the end of each period through earnings. The gain or loss recorded on these instruments

is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability. The settlement of the derivative instrument and the remeasurement adjustment on the foreign currency denominated asset or liability are both recorded in other (income)/expense, net. We recorded a $3 million loss and an immaterial gain during the three months ended March 31, 2025 and 2024, respectively, and a $1 million gain and an immaterial loss during the nine months ended March 31, 2025 and 2024, respectively. The principal currencies managed through foreign currency contracts are euro, Canadian dollar, Chinese renminbi, Brazilian real and Indian rupee.

Fair Value of Financial Instruments

The carrying amounts of cash and equivalents, trade receivables, accounts payable and other accrued liabilities at March 31, 2025 and June 30, 2024 approximate fair value due to their short-term maturities.

The following table summarizes the estimated fair value of our long-term obligations and other short-term borrowings compared to the respective carrying amounts at:

The 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.

11. Shareholders' Deficit

We repurchased $750 million of our common shares, in the aggregate, through share repurchase programs during both the nine months ended March 31, 2025 and 2024. We funded the repurchases with available cash. The common shares repurchased are held in treasury to be used for general corporate purposes.

During the three months ended March 31, 2025, we entered into an accelerated share repurchase ("ASR") program to repurchase common shares for an aggregate purchase price of $375 million. We received an initial delivery of 2.4 million common shares using a reference price of $125.33. The program concluded on March 11, 2025 at a volume weighted average price per common share of $125.87 resulting in a final delivery of 0.6 million common shares.

During the nine months ended March 31, 2025, we paid $15 million for excise taxes related to the completion of prior ASR programs.

During the three months ended December 31, 2024, we retired 56 million of common stock shares without par value.

During the three months ended September 30, 2024, we entered into an ASR program to repurchase common shares for an aggregate purchase price of $375 million. We received an initial

Notes to Financial Statements

delivery of 2.7 million common shares using a reference price of $109.65. The program concluded on October 30, 2024 at a volume weighted average price per common share of $110.10 resulting in a final delivery of 0.7 million common shares.

During the three months ended December 31, 2023, we entered into an ASR program to repurchase common shares for an aggregate purchase price of $250 million. We received an initial delivery of 2.0 million common shares using a reference price of $101.66. The program concluded on December 13, 2023 at a volume weighted average price per common share of $103.67 resulting in a final delivery of 0.4 million common shares.

During the three months ended September 30, 2023, we entered into an ASR program to repurchase common shares for an aggregate purchase price of $500 million. We received an initial delivery of 4.4 million common shares using a reference price of $90.57. The program concluded on October 31, 2023 at a volume weighted average price per common share of $88.22 resulting in a final delivery of 1.3 million common shares.

Accumulated Other Comprehensive Loss

The following tables summarize the changes in the balance of accumulated other comprehensive loss by component and in total:

Notes to Financial Statements

12. Earnings Per Share Attributable to Cardinal Health, Inc.

The following tables reconcile the number of common shares used to compute basic and diluted earnings per share attributable to Cardinal Health, Inc. ("EPS"):

The potentially dilutive employee stock options, restricted share units, and performance share units that were antidilutive were immaterial for both the three and nine months ended March 31, 2025 and 2024.

13. Segment Information

We operate undertwo reportable segments: Pharmaceutical and Specialty Solutions ("Pharma") segment and Global Medical Products and Distribution ("GMPD") segment. All remaining operating segments that are not significant enough to require separate reportable segment disclosures are included in Other, which is comprised of Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight®. The factors for determining the reportable segments include the manner in which management evaluates performance for purposes of allocating resources and assessing performance combined with the nature of the individual business activities.

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

Our GMPD segment manufactures, sources and distributes Cardinal Health branded medical, surgical and laboratory products, 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 laboratory products known as national brand products to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers in the United States and Canada.

The remaining three operating segments included in Other are Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight® Logistics. These operating segments respectively operate nuclear pharmacies and radiopharmaceutical manufacturing facilities, distribute medical products to patients' homes in the United States, and provide supply chain services and solutions to our customers.

Revenue

The following tables present revenue for the two reportable segments and disaggregated revenue within the remaining operating segments, included in Other, and Corporate:

(1)Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments.

Notes to Financial Statements

The following tables present revenue by geographic area:

(1)Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments.

Segment Profit

We evaluate segment performance based on segment profit, among other measures. Segment profit is segment revenue, less segment cost of products sold, less segment distribution, selling, general and administrative ("SG&A") expenses. Segment SG&A expenses include share-based compensation expense as well as allocated corporate technology and shared function expenses, including corporate management, corporate finance, financial and customer care shared services, human resources, information technology and legal and compliance, including certain litigation defense costs. Corporate expenses are allocated to the segments based on headcount, level of benefit provided and other ratable allocation methodologies. The results attributable to noncontrolling interests are recorded within segment profit.

We do not allocate the following items to our segments:

•last-in first-out, or ("LIFO"), inventory charges/(credits);

•state opioid assessment related to prior fiscal years;

•shareholder cooperation agreement costs;

•restructuring and employee severance;

•amortization and other acquisition-related costs;

•acquisition-related cash and share-based compensation costs;

•impairments and (gain)/loss on disposal of assets, net; we recognized a pre-tax goodwill impairment charge of $90 million during the three months ended March 31, 2024 and $675 million during the nine months ended March 31, 2024;

•litigation (recoveries)/charges, net;

•other (income)/expense, net;

•interest expense, net;

•loss on early extinguishment of debt; or

•provision for/(benefit from) income taxes

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 the first-year spend for certain projects that require incremental investments in the form of additional operating expenses. Because approval for these projects is dependent on executive management, we retain these expenses at Corporate. Investment spending within Corporate was $15 million and $17 million for the three months ended March 31, 2025 and 2024, respectively, and $42 million and $37 million for the nine months ended March 31, 2025 and 2024, respectively.

The following tables present segment profit for the two reportable segments and the remaining operating segments, included in Other, and Corporate:

(1)Comprised of the remaining operating segments, Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight® Logistics.

Segment Assets

The following table presents total assets for the two reportable segments and the remaining operating segments, included in Other, and Corporate:

(1)Comprised of the remaining operating segments, Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight® Logistics.

Notes to Financial Statements

14. Share-Based Compensation

We maintain Cardinal Health Inc. corporate stock incentive plans (collectively, the “Plans”) for the benefit of certain of our officers, directors and employees. As of March 31, 2025, we have 15 million shares authorized for issuance under the Plans. Upon vesting these units convert to common shares without restrictions or future service requirements.

The following tables provide total share-based compensation expense by type of award:

The total tax benefit related to share-based compensation was $4 million for both the three months ended March 31, 2025 and 2024, and $11 million and $12 million for the nine months ended March 31, 2025 and 2024, respectively. Share-based compensation expense is included in selling, general and administrative expenses in the condensed consolidated statements of earnings. Our consolidated statements of cash flows present our share-based compensation expense as a reconciling adjustment between net income and net cash provided by operating activities for all periods presented.

Restricted Share Units

Restricted share units granted under the Plans generally vest in equal annual installments over three years. Restricted share units accrue cash dividend equivalents that are payable upon vesting of the awards.

The following table summarizes all transactions related to restricted share units under the Plans:

The total fair value of units vested during the three months ended March 31, 2025 and 2024 were $3 million and $4 million, respectively. The total fair value of units vested during the nine months ended March 31, 2025 and 2024, were $67 million and $66 million, respectively.

At March 31, 2025, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested restricted share units not yet recognized was $79 million, which is expected to be recognized over a weighted-average period oftwo years.

Performance Share Units

Performance share units vest over athree-year performance period based on achievement of specific performance goals. Based on the extent to which the targets are achieved and our total shareholder return relative to the S&P 500 Health Care Index, vested shares may range from zero to 240 percent of the target award amount. Performance share units accrue cash dividend equivalents that are payable upon vesting of the awards.

The following table summarizes all transactions related to performance share units under the Plans (based on target award amounts):

No performance share units vested during the three months ended March 31, 2025 and 2024. The total fair value of units vested during the nine months ended March 31, 2025 and 2024, were $41 million and $24 million, respectively.

At March 31, 2025, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested performance share units not yet recognized was $53 million, which is expected to be recognized over a weighted-average period oftwo years if performance goals are achieved.

GIA Share-Based Compensation

GIA, a majority-owned subsidiary of Cardinal Health, maintains standalone share-based compensation plans. The fair value was estimated using the implied enterprise value based on the purchase price paid for the 73 percent ownership interest. Share-based compensation expense associated with these awards was $17 million for the three and nine months ended March 31, 2025, of which $16 million is included in acquisition-related cash and share-based compensation costs and $1 million is included in selling, general and administrative expenses in the condensed consolidated statements of earnings

In connection with the acquisition of physician practices, GIA issues common units in GIA (collectively the “Units”), to physicians. The Units contain forfeiture provisions ranging from 36 to 60 months. These forfeiture provisions provide that the physicians forfeit all or a portion of the Units should they leave GIA, except in certain limited situations, effectively requiring the physicians to stay employed with the physician practice managed by GIA in order to retain the Units. As such, the fair value of the

Notes to Financial Statements

nonvested Units at the date of issuance is treated as equity compensation and recognized over the required service period. The Units were initially recognized by Cardinal Health as noncontrolling interests on the acquisition date at the fair value of the acquired shares in the amount of $168 million. As the Units vest, an increase to the carrying amount of the noncontrolling interests is recorded to reflect the change in ownership interest in GIA.

The following table summarizes the fair market value of GIA Units as of March 31, 2025:

The total fair value of units vested during the three and nine months ended March 31, 2025, was $17 million.

At March 31, 2025, the total pre-tax compensation cost, net of estimated forfeitures, related to nonvested Units not yet recognized was $174 million, which is expected to be recognized over a weighted-average period of approximately three years.