CARDINAL HEALTH INC

Current report

Changes to the U.S. healthcare environment may not

Current report

be favorable to us.

Current report

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.

Current report

We expect the U.S. healthcare industry to continue to change significantly in the future. Possible changes include changes in legislation or regulations governing prescription pharmaceutical pricing (including recently proposed changes to the definition, implementation and documentation of the Bona Fide Services Fees excluded from the calculation of the Average Sales Price of Medicare Part B drugs), healthcare services, U.S.-based medical product manufacturing, mandated benefits, efforts to promote increased transparency in the pharmaceutical supply chain, drug shortages, further reduction of or limitations on governmental funding at the state or federal level, or efforts by healthcare insurance companies to further limit payments for products and services. Federal, state, and local governmental entities have also continued to increase their scrutiny of the U.S. healthcare market.

Current report

Uncertainty surrounding possible changes to the healthcare environment, including changes to regulatory enforcement

Current report

priorities, may directly or indirectly adversely affect us. The recently issued Executive Order titled "Delivering Most-Favored Nation Prescription Drug Pricing to American Patients" may impact the sales or profitability of branded pharmaceutical products; however, the extent of the impact may vary depending on the timeline for implementation and the number of pharmaceutical drugs that are impacted. Additionally, it is possible that the adoption of the One Big Beautiful Bill Act ("OBBBA") could reduce participation in Medicare and Medicaid programs, resulting in a change in utilization of the healthcare system. This may adversely affect demand for our products and services and could have an effect on our results of operations and financial condition.

Current report

Private challenges to government healthcare policy may also have an adverse impact on our business. 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.

Previous report

Our ability to manage and complete acquisitions could impact our strategic objectives and financial condition.

Previous report

From time to time, we look to acquire other businesses that expand or complement our existing businesses or enable our entry into new lines of business. Completion of such acquisitions, including our recently announced acquisitions, and the integration of acquired businesses involve a number of risks, including the following: we may overpay for a business or fail to realize the synergies, financial, strategic and other benefits we expect from the acquisition; our management’s attention may be diverted to integration efforts; we may fail to retain key personnel of the acquired business; future developments may impair the value of our purchased goodwill or intangible assets; we may face difficulties or delays establishing, integrating or combining operations and systems, including manufacturing facilities; we may assume liabilities related to legal proceedings involving the acquired business; we may face challenges retaining the customers of the acquired business; we may require financing that may not be available on favorable terms; we may not receive regulatory approval necessary to timely complete an acquisition; or we may encounter unforeseen internal control, regulatory or compliance issues. Additional debt or the use of a significant portion of our cash may have an adverse impact on our access to liquidity, limit our flexibility in responding to other business opportunities, and increase exposure to adverse economic and industry conditions. Any of the foregoing may impact our ability to achieve anticipated benefits of an acquisition, which might have an adverse impact on results of operations and financial conditions.

Previous report

Our results of operations and financial condition may be adversely affected by risks associated with entering new lines of business.

Previous report

As a result of our recently announced acquisitions, we are entering into new lines of business, including providing physician practice support and management services, that complement our pre-existing businesses. Such new lines of business involve numerous risks and uncertainties that may be different from or more significant than the risks and uncertainties facing our legacy businesses, including risks arising under or related to fraud, waste and abuse laws, direct or indirect ownership of provider practices and closer ties to the practice of medicine, litigation involving physicians, and risks from regulatory or legislative changes that may limit direct or indirect ownership of provider practices or our ability to provide physician practice support and management services. Additionally, our ability to successfully execute on providing physician practice support and management services, including through direct or indirect ownership of provider practices as permitted by applicable law, depends upon a number of factors, including: the ability to develop or acquire and integrate appropriate practice management and support expertise; the ability to support recruitment, integration, and retention of sufficient numbers of local providers and staff; the ability to successfully support negotiations with vendors, suppliers, and payors; the reimbursement environment; and competition from other healthcare organizations with greater depth of experience or market knowledge.

Previous report

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

Previous report

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

Previous report

For example, recent U.S. tariffs imposed or threatened to be imposed on China, Mexico, Canada, and other countries and any retaliatory actions taken by such countries could result in us incurring substantial additional costs to source materials, directly and indirectly, from affected countries, and may require us to raise prices on certain products and seek alternative sources of supply. If our competitors do not increase prices, or increase prices to a lesser extent than we do, or are able to offset the impact of tariffs through other actions, our competitive and financial position may be adversely affected. Additionally, if we are not able to find adequate alternate sources of supply, we may experience supply shortages or disruptions. Additionally, in certain circumstances, including in our Cardinal Health at-Home

Previous report

Solutions operating segment, we may not receive increased reimbursement commensurate with the increase in costs, which will negatively impact our results of operations.

Previous report

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