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1、CardinalHealth lfi,A r,art,rJr a a A I I rr g 11/I a ir II gI I ti5 Y I,g gA I I Jr A r,a I,5 Y ,a u a rr I u a4 ,OfY aX P 11 a I I v a I,/l f 1 xlaauA t:IJason HollarChief Executive Officer Consistent with what you heard at our June 2023 Investor Day,these results were achieved through our teams co
2、mmitment to prioritize the core of our business and to better serve our customers so they,in turn,can focus on caring for their patients.Cardinal Health is a crucial link between these clinical and operational sides of healthcare,delivering end-to-end solutions our customers rely on each day,and we
3、are intent on moving healthcare forward.Today,as a result of our actions and work in fscal 2023,we are operating as a more focused and more resilient company.We are proud of the fact that in fscal 2023,we:Our management team and Board of Directors,with support from the Business Review Committee,cont
4、inue to work through the comprehensive review of the companys strategy,portfolio,capital allocation framework and operations.Given the importance of the work in maximizing our potential for the beneft of all stakeholders,the Board has extended the term of the Business Review Committee for an additio
5、nal year.As I conclude my frst year as CEO,I am energized by the progress we achieved in fscal 2023 and optimistic about our year ahead.Delivered non-GAAP diluted earnings per share1 of$5.79,growth of 14%Generated both operating cash fow and non-GAAP adjusted free cash fow of$2.8 billionReturned mor
6、e than$2.5 billion to shareholders,through dividends and share repurchasesGrew Pharmaceutical Segment proft by13%to$2 billionAchieved sequential improvement in Medical Segment proft,with$82 millionin the fourth quarter,driven by progress on our Medical Improvement PlanDear shareholders,1 GAAP dilute
7、d earnings per share was$1.00.GAAP refers to U.S.generally accepted accounting principles.This publication includes GAAP fnancial measures as well as non-GAAP fnancial measures,which are fnancial measures not calculated in accordance with GAAP.See Use of Non-GAAP Measures in our fscal 2023 10-K Repo
8、rt for defnitions of the non-GAAP fnancial measures included in this publication and reconciliations of the diferences between the non-GAAP fnancial measures and their most directly comparable GAAP fnancial measures.Fiscal 2023 was an infection point for our company,a year in which we delivered reco
9、rd fnancial performance thanks to strong execution,notable progress against both our short-and long-term plans and work toward three key strategic priorities:Building on the growth and resiliency of our Pharmaceutical Segment Executing our Medical Improvement Plan initiatives Maintaining a relentles
10、s focus on shareholder value creation,as demonstrated through the predictable,responsible return of capital back to our shareholders420249_5PR23-2542999_FY23 Annual Report Cover Wrap_FINAL_UPDATE_R2.indd 59/19/23 1:11 PMDear shareholders,As I conclude my first year as CEO,I am energized by the progr
11、ess we achievedin fiscal 2023 and optimistic about our year ahead.Fiscal 2023 was an inflection point for our company,a year in which we deliveredrecord financial performance thanks to strong execution,notable progress againstboth our short-and long-term plans and work toward three key strategic pri
12、orities:Building on the growth and resiliency of our Pharmaceutical Segment Executing our Medical Improvement Plan initiatives Maintaining a relentless focus on shareholder value creation,as demonstrated throughthe predictable,responsible return of capital back to our shareholdersConsistent with wha
13、t you heard at our June 2023 Investor Day,these results were achieved through ourteams commitment to prioritize the core of our business-and to better serve our customers so they,in turn,can focus on caring for their patients.Cardinal Health is a crucial link between these clinical and operationalsi
14、des of healthcare,delivering end-to-end solutions our customers rely on each day,and we are intent onmoving healthcare forward.Today,as a result of our actions and work in fiscal 2023,we are operating as a more focused and moreresilient company.We are proud of the fact that in fiscal 2023,we:Deliver
15、ednon-GAAP dilutedearnings pershare of$5.79,growth of 14%GrewPharmaceuticalSegment profitby 13%to$2 billionAchieved sequentialimprovement in MedicalSegment profit,with$82 million in thefourth quarter,driven byprogress on our MedicalImprovement PlanGenerated bothoperating cashflow and non-GAAP adjust
16、edfree cash flow of$2.8 billionReturned morethan$2.5 billionto shareholders,through dividendsand sharerepurchasesOur management team and Board of Directors,with support from the Business Review Committee,continue to work through the comprehensive review of the companys strategy,portfolio,capital all
17、ocationframework and operations.Given the importance of the work in maximizing our potential for the benefit ofall stakeholders,the Board has extended the term of the Business Review Committee for an additional year.GAAP diluted earnings per share was$1.00.GAAP refers to U.S.generally accepted accou
18、nting principles.This publication includes GAAP financial measures as well asnon-GAAP financial measures,which are financial measures not calculated in accordance with GAAP.See Use of Non-GAAP Measures in our fiscal 2023 10-K Reportfor definitions of the non-GAAP financial measures included in this
19、publication and reconciliations of the differences between the non-GAAP financial measures andtheir most directly comparable GAAP financial measures.Pharmaceutical Segment highlightsOur Pharmaceutical Segment is the most signifcant part of our business,comprising three key areas:distribution(includi
20、ng Specialty Distribution),sourcing and manufacturing services,and Nuclear&Precision Health Solutions(NPHS).In fscal 2023,our team demonstrated its expertise,hard work and customer-focused solutions,and was able to capitalize on certain favorable industry trends to deliver strong performance.For sev
21、eral years,we have been investing in our Specialty Pharmaceutical business,a long-term growth driver for the enterprise.We expect our growth will be enabled by our downstream Specialty Pharmaceutical Distribution Services,our upstream manufacturer services,and investments in the business.This includ
22、es the launch of our Navista Network,a fexible model that helps community oncologists remain independent by allowing them to align to the services their practices need most.At our 2023 Investor Day,we shared that we are pleased to further invest in our NPHS business to create long-term value for sha
23、reholders.To date,we have announced a phase two investment for NPHS Center for Theranostics Advancement in support of continued product development over the next several years.We are excited about what NPHS has done and will continue to do to advance health outcomes.Finally,the transaction merging o
24、ur Outcomes business into Transaction Data Systems(TDS)was completed in July 2023.Operating as a single entity,in which Cardinal Health holds a minority stake and a board of directors seat,the combined oferings of Outcomes and TDS will empower pharmacies to ofer better care,operate more efectively a
25、nd achieve better clinical and fnancial results.Medical Segment highlightsThrough our Medical Segment,we manufacture,source and distribute Cardinal Health Brand and national brand products to global healthcare providers across the care continuum.We are focused on driving the operational performance
26、of this business primarily through the execution of our Medical Improvement Plan,which was introduced in August 2022,and remains the most critical priority for this Segment.As we highlighted at our Investor Day and throughout fscal 2023,the Medical Improvement Plan features four strategic priorities
27、 with stated targets,and our progress in these areas has us on a clear path to achieve at least$650 million of segment proft by fscal 2026:Mitigate infation and global supply chain constraints Optimize and grow the Cardinal Health Brand portfolio Accelerate growth businesses,primarily at-Home Soluti
28、ons Drive simplifcation and continued cost optimization90%U.S.hospitals served20Kspecialty physician ofces and clinics5K+sourcing/manufacturer partners across the healthcare supply chainMoving healthcare forward420249_5PR23-2542999_FY23 Annual Report Cover Wrap_FINAL_UPDATE_R2.indd 69/19/23 1:11 PMI
29、 Iyovingealthcare90%20K Me)forward U.S.hospitals served s p e c i a l t y physicianoffices and clinicssourcing/manufacturerpartners across thehealthcare supply chainPharmaceutical Segment highlightsOur Pharmaceutical Segment is the most significant part ofour business,comprising three key areas:dist
30、ribution(includingSpecialty Distribution),sourcing and manufacturing services,and Nuclear&Precision Health Solutions(NPHS).In fiscal 2023,our team demonstrated its expertise,hard work and customer-focused solutions,and was able to capitalize on certain favorableindustry trends to deliver strong perf
31、ormance.For several years,we have been investing in our SpecialtyPharmaceutical business,a long-term growth driver for theenterprise.We expect our growth will be enabled by ourdownstream Specialty Pharmaceutical Distribution Services,our upstream manufacturer services,and investments in thebusiness.
32、This includes the launch of our Navistar Network,a flexible model that helps community oncologists remainindependent by allowing them to align to the services theirpractices need most.At our 2023 Investor Day,we shared that we are pleased tofurther invest in our NPHS business to create long-term val
33、uefor shareholders.To date,we have announced a phase twoinvestment for NPHS Center for Theranostics Advancementin support of continued product development over the nextseveral years.We are excited about what NPHS has done andwill continue to do to advance health outcomes.Finally,the transaction merg
34、ing our Outcomes business intoTransaction Data Systems(TDS)was completed in July 2023.Operating as a single entity,in which Cardinal Health holdsa minority stake and a board of directors seat,the combinedofferings of Outcomes and TDS will empower pharmacies tooffer better care,operate more effective
35、ly and achieve betterclinical and financial results.Medical Segment highlightsThrough our Medical Segment,we manufacture,source anddistribute Cardinal Health Brand and national brand productsto global healthcare providers across the care continuum.We arefocused on driving the operational performance
36、 of this businessprimarily through the execution of our Medical ImprovementPlan,which was introduced in August 2022,and remains themost critical priority for this Segment.As we highlighted at our Investor Day and throughout fiscal2023,the Medical Improvement Plan features four strategicpriorities wi
37、th stated targets,and our progress in these areashas us on a clear path to achieve at least$650 million ofsegment profit by fiscal 2026:Mitigate inflation and global supply chain constraints Optimize and grow the Cardinal Health Brand portfolio Accelerate growth businesses,primarily at-Home Solution
38、s Drive simplification and continued cost optimizationIn closingImportant Information Regarding Forward-Looking Statements:This Report contains forward-looking statements addressing expectations,prospects,estimates and other matters that are dependent upon future events or developments.These stateme
39、nts may be identifed by words such as expect,anticipate,intend,plan,believe,“will,should,could,would,project,continue,”likely,and similar expressions,and include statements refecting future results or guidance,statements of outlook and various accruals and estimates.These matters are subject to risk
40、s and uncertainties that could cause actual results to difer materially from those projected,anticipated or implied.These matters are subject to risks and uncertainties that could cause actual results to difer materially from those projected,anticipated or implied.For more information about these ri
41、sks and uncertainties,please review our Forms 10-K,10-Q and 8-K and Exhibits to those Reports,which are available at .Except to the extent required by applicable law,we undertake no obligation to update or revise any forward-looking statement.As we look ahead,I am confdent that we have the right tea
42、m and right plan in place.Id like to extend my deep thanks and appreciation to our Board,our Cardinal Health senior leadership team and our 48,000 employees around the globe.I remain humbled by the opportunity to lead and serve,grateful for the support from our shareholders and appreciative of the t
43、eams dedication and good work.I am looking forward to the value well create in fscal 2024 driven by our ongoing strong momentum and continued focus on our key strategic priorities.Sincerely,Jason HollarChief Executive OfcerOur Environmental,Social and Governance workGiven our important role within t
44、he healthcare industry,we know our Environmental,Social and Governance(ESG)work is closely aligned with our business success.Our ESG priorities outlined in our fscal 2022 ESG Report,capturing full reporting data for fscal 2022 and published in January 2023 are key to helping us achieve our business
45、goals while enabling us to create a better future for our employees,our customers and their patients,and our communities.Sincerely,FY23 fnancial summaryGAAP basis fscal 2023Non-GAAP basis fscal 2023Operating earnings/(loss)1%change$727 millionN.M.$2.1 billion3%Revenue%change$205 billion13%N/ADiluted
46、 EPS1,2%change$1.00N.M.$5.7914%1 GAAP results include cumulative non-cash,pre-tax goodwill impairment charges of$1.2 billion in the Medical Segment in fscal 2023.2 Attributable to Cardinal Health,Inc.Please see“Explanation and Reconciliation of Non-GAAP Financial Measures”in our fscal 2023 Form 10-K
47、 for GAAP to Non-GAAP reconciliations.4Mpatients served in the home by direct to patient business20+product categories as integrated medical manufacturer40Kpharmaceutical deliveries a day30PET cyclotron facilities 130nuclear pharmacies420249_5PR23-2542999_FY23 Annual Report Cover Wrap_FINAL_UPDATE_R
48、2.indd 79/19/23 1:11 PM-4Mpatients served inthe home by directto patient business20+30product categoriesas integrated medicalmanufacturer40Kpharmaceuticaldeliveries a dayPET cyclotronfacilities-130nuclearpharmaciesOur Environmental,Social and Governance workGiven our important role within the health
49、care industry,we know our Environmental,Social and Governance(ESG)work is closely aligned with our business success.Our ESGpriorities-outlined in our fiscal 2022 ESG Report,capturingFY23 financial summaryGAAP basis N o n-G A A Pfiscal 2023 b a s i s fiscal 2023Operating$7 2 7 million$2.1 billionearn
50、ings/(loss)%changeN.M.3%Revenue$2 0 5 billion N/A%change 1 3%Diluted EPS12$1.00$5.79%change N.M.14%GAAP results include cumulative non-cash,pre-tax goodwill impairment charges of$1.2billion in the Medical Segment in fiscal 2023.Attributable to Cardinal Health,Inc.Please see Explanation and Reconcili
51、ation of Non-GAAP Financial Measures in our fiscal2023 Form 10-K for GAAP to Non-GAAP reconciliations.full reporting data for fiscal 2022 and published in January2023-are key to helping us achieve our business goalswhile enabling us to create a better future for our employees,our customers and their
52、 patients,and our communities.In closingAs we look ahead,I am confident that we havethe right team and right plan in place.Id liketo extend my deep thanks and appreciation toour Board,our Cardinal Health senior leadershipteam and our 48,000 employees around theglobe.I remain humbled by the opportuni
53、ty tolead and serve,grateful for the support fromour shareholders and appreciative of the teamsdedication and good work.I am looking forwardto the value well create in fiscal 2024-driven byour ongoing strong momentum and continuedfocus on our key strategic priorities.Sincerely,Jason HollarChief Exec
54、utive OfficerImportant Information Regarding Forward-Looking Statements:This Report contains forward-looking statements addressing expectations,prospects,estimates and other matters that aredependent upon future events or developments.These statements may be identified by words such as expect,antici
55、pate,intend,plan,believe,will,should,could,would,project,continue,likely,and similar expressions,and include statements reflecting future results or guidance,statements of outlook and various accruals and estimates.These matters are subject to risks anduncertainties that could cause actual results t
56、o differ materially from those projected,anticipated or implied.These matters are subject to risks and uncertainties that could cause actual results to differmaterially from those projected,anticipated or implied.For more information about these risks and uncertainties,please review our Forms 10-K,1
57、0-Q and 8-K and Exhibits to those Reports,which areavailable at .Except to the extent required by applicable law,we undertake no obligation to update or revise any forward-looking statement.Gregory B.Kenny Independent Chairman of the Board Retired President and Chief Executive Ofcer of General Cable
58、 Corporation Committee:Governance and SustainabilitySteven K.Barg Global Head of Engagement of Elliott Management Corporation Committees:Business Review,Governance and SustainabilityMichelle M.Brennan Retired Value Creation Leader of Johnson&Johnson Committees:Audit,Human Resources and CompensationS
59、ujatha Chandrasekaran Former Senior Executive Vice President and Chief Digital and Information Ofcer of CommonSpirit Health Committees:Audit,Risk OversightCarrie S.Cox1 Retired Executive Vice President and President of Global Pharmaceuticals of Schering-Plough Corporation and former Chairman and Chi
60、ef Executive Ofcer of Humacyte,Inc.Committees:Governance and Sustainability,Human Resources and CompensationBruce L.Downey2 Retired Chairman and Chief Executive Ofcer of Barr Pharmaceuticals,Inc.;Partner of NewSpring Health Capital II,L.P.Committees:Governance and Sustainability,Risk OversightJason
61、M.Hollar Chief Executive OfcerAaron E.Alt Chief Financial OfcerMichelle D.Greene Chief Information OfcerStephen M.Mason Chief Executive Ofcer,Medical SegmentJessica L.Mayer Chief Legal and Compliance Ofcer Ola M.Snow Chief Human Resources OfcerDeborah L.Weitzman Chief Executive Ofcer,Pharmaceutical
62、SegmentExecutive teamSheri H.Edison Retired Executive Vice President and General Counsel of Amcor plc Committees:Audit,Risk OversightDavid C.Evans Retired Executive Vice President and Chief Financial Ofcer of The Scotts Miracle-Gro Company and former Executive Vice President and Chief Financial Ofce
63、r of Battelle Memorial Institute Committees:Audit,Risk OversightPatricia A.Hemingway Hall Retired President and Chief Executive Ofcer of Health Care Service Corporation Committees:Governance and Sustainability,Human Resources and CompensationJason M.Hollar Chief Executive Ofcer of Cardinal Health,In
64、c.Committee:Business Review Akhil Johri Operating Advisor to Clayton,Dubilier&Rice Retired Executive Vice President and Chief Financial Ofcer of United Technologies Corporation Committees:Audit,Business ReviewNancy Killefer Retired Senior Partner,Public Sector Practice of McKinsey&Company,Inc.Commit
65、tees:Governance and Sustainability,Human Resources and CompensationChristine M.Mundkur Retired Chief Executive Ofcer of Impopharma,Inc.Committees:Human Resources and Compensation,Risk Oversight All Board members,with the exception of CEO Jason Hollar,are independent.The Business Review Committee was
66、 formed in September 2022 pursuant to a cooperation agreement with Elliott Management to conduct a review of the companys strategy,portfolio,capital allocation framework and operations.In May 2023,the term of the Business Review Committee was extended to July 15,2024.1 Carrie S.Cox has decided not t
67、o stand for re-election at the 2023 Annual Meeting of Shareholders.2 Bruce L.Downey will not be nominated for re-election at the 2023 Annual Meeting of Shareholders because he has reached the director retirement age of 75.Board of directors420249_5PR23-2542999_FY23 Annual Report Cover Wrap_FINAL_UPD
68、ATE_R2.indd 89/19/23 1:11 PMBoard of directorsGregory B.KennyIndependent Chairman of the BoardRetired President and Chief Executive Officerof General Cable CorporationCommittee:Governance and SustainabilitySteven K.BargGlobal Head of Engagement of ElliottManagement CorporationCommittees:Business Rev
69、iew,Governanceand SustainabilityMichelle M.BrennanRetired Value Creation Leader of Johnson&JohnsonCommittees:Audit,Human Resources andCompensationSujatha ChandrasekaranFormer Senior Executive Vice President and ChiefDigital and Information Officer of CommonSpirit HealthCommittees:Audit,Risk Oversigh
70、tCarrie S.Cox1Retired Executive Vice President and Presidentof Global Pharmaceuticals of Schering-PloughCorporation and former Chairman and ChiefExecutive Officer of Humacyte,Inc.Committees:Governance and Sustainability,Human Resources and CompensationBruce L.Downey2Retired Chairman and Chief Execut
71、ive Officer of BarrPharmaceuticals,Inc.;Partner of NewSpring HealthCapital II,L.P.Committees:Governance and Sustainability,Risk OversightExecutive teamJason M.HollarChief Executive OfficerAaron E.AltChief Financial OfficerMichelle D.GreeneChief Information OfficerSheri H.EdisonRetired Executive Vice
72、 President and General Counselof Amcor plcCommittees:Audit,Risk OversightDavid C.EvansRetired Executive Vice President and Chief Financial Officerof The Scotts Miracle-Gro Company and former ExecutiveVice President and Chief Financial Officer of BattelleMemorial InstituteCommittees:Audit,Risk Oversi
73、ghtPatricia A.Hemingway HallRetired President and Chief Executive Officer of HealthCare Service CorporationCommittees:Governance and Sustainability,Human Resources and CompensationJason M.HollarChief Executive Officer of Cardinal Health,Inc.Committee:Business ReviewAkhil JohriOperating Advisor to Cl
74、ayton,Dubilier&RiceRetired Executive Vice President and Chief FinancialOfficer of United Technologies CorporationCommittees:Audit,Business ReviewNancy KilleferRetired Senior Partner,Public Sector Practice ofMcKinsey&Company,Inc.Committees:Governance and Sustainability,Human Resources and Compensatio
75、nChristine M.MundkurRetired Chief Executive Officer of Impopharma,Inc.Committees:Human Resources and Compensation,Risk OversightStephen M.MasonChief Executive Officer,Medical SegmentJessica L.MayerChief Legal and Compliance OfficerOla M.SnowChief Human Resources OfficerDeborah L.WeitzmanChief Execut
76、ive Officer,Pharmaceutical SegmentAll Board members,with the exception of CEO Jason Hollar,are independent.The Business Review Committee was formed in September 2022 pursuant to a cooperation agreement with Elliott Management to conduct areview of the companys strategy,portfolio,capital allocation f
77、ramework and operations.In May 2023,the term of the Business Review Committeewas extended to July 15,2024.Carrie S.Cox has decided not to stand for re-election at the 2023 Annual Meeting of Shareholders.Bruce L.Downey will not be nominated for re-election at the 2023 Annual Meeting of Shareholders b
78、ecause he has reached the director retirement age of 75.?UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549Form 10-Ko A N N U A L REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended June 30,2023or T R A N S I T I O N REPORT PURSUANT
79、TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period fromtoCommission File Number:1-11373CardinalHealthFcsentio/core-Cardinal Health,Inc.(Exact name of registrant as specified in its charter)Ohio 31-0958666(State or other jurisdiction of(IRS Employerincorporation or
80、organization)Identification N o.)7000 Cardinal Place Dublin,Ohio 43017(Address of principal executive offices)(Zip Code)(614)757-5000(Registrants telephone number,including area code)Title of each classCommon shares(without par value)Securities registered pursuant to Section 12(b)of the Act:Trading
81、Symbol(s)Name of each exchange on which registeredCAH New York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes 2 No Indicate by check mark if the regi
82、strant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No 2Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding12 months(or for such shorter p
83、eriod that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past90 days.Yes 2 No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulat
84、ion S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes 2 No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting company,
85、or an emerging growthcompany.See the definitions of large accelerated filer,accelerated filer,smaller reporting company,and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filer p Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If
86、 an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed
87、 a report on and attestation to its managements assessment of the effectiveness of its internal control overfinancial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered
88、 pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filing reflect thecorrection of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that requir
89、ed a recovery analysis of incentive-based compensation received by any ofthe registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No 2The aggregat
90、e market value of voting stock held by non-affiliates on December 31,2022,was the following:$19,775,475,828.The number of the registrants common shares,without par value,outstanding as of July 31,2023,was the following:250,681,620.Documents Incorporated by Reference:Portions of the registrants Defin
91、itive Proxy Statement to be filed for its 2023 Annual Meeting of Shareholders are incorporated by reference into the sections of this Form 10-K addressing the requirements of Part III of Form 10-K.?Cardinal HealthFiscal 2023 Form 10-KTable of ContentsPageIntroduction 2Managements Discussion and Anal
92、ysis of Financial Condition and Results of Operations 3Explanation and Reconciliation of Non-GAAP Financial Measures 21Quantitative and Qualitative Disclosures about Market Risk 26Business 28Risk Factors 36Properties 43Legal Proceedings 44Market for Registrants Common Equity 45Reports 47Financial St
93、atements and Supplementary Data 51Directors,Executive Officers and Corporate Governance 82Exhibits 84Form 10-K Cross Reference Index 89Signatures 901 Cardinal Health Fiscal 2023 Form 10-K?IntroductionIntroductionReferences to Cardinal Health and Fiscal YearsAs used in this report,we,our,us,Cardinal
94、Health and similar pronouns refer to Cardinal Health,Inc.and its majority-owned andconsolidated subsidiaries,unless the context requires otherwise.Our fiscal year ends on June 30.References to fiscal 2024,2023,2022,2021,2020 and 2019 are to the fiscal years ended June 30,2024,2023,2022,2021,2020 and
95、 2019,respectively.Except as otherwisespecified,information in this report is provided as of June 30,2023.Non-GAAP Financial MeasuresIn this report,we use financial measures that are derived from consolidated financial data but are not presented in our financial statementsthat are prepared in accord
96、ance with U.S.generally accepted accounting principles(GAAP).These measures are considered non-GAAPfinancial measures under the Securities and Exchange Commission(SEC)rules.The reasons we use these non-GAAP financialmeasures and the reconciliations to their most directly comparable GAAP financial me
97、asures are included in the Explanation andReconciliation of Non-GAAP Financial Measures section following MD&A in this report.Managements Discussion and Analysis of Financial Condition and Results of OperationsOur MD&A within this Form 10-K generally discusses fiscal 2023 and fiscal 2022 items and y
98、ear-over-year comparisons between fiscal2023 and fiscal 2022.Fiscal 2021 items and discussions of year-over-year comparisons between fiscal 2022 and fiscal 2021 that are notincluded in this Form 10-K can be found in Managements Discussion and Analysis of Financial Condition and Results of Operations
99、 in ourAnnual Report on Form 10-K for the fiscal year ended June 30,2022(the Fiscal 2022 Form 10-K).Important Information Regarding Forward-Looking StatementsThis report(including information incorporated by reference)includes forward-looking statements addressing expectations,prospects,estimates an
100、d other matters that are dependent upon future events or developments.Many forward-looking statements appear in MD&Aand Risk Factors,but there are others throughout this report,which may be identified by words such as expect,anticipate,intend,plan,believe,will,should,could,would,project,continue,lik
101、ely,and similar expressions,and include statements reflectingfuture results or guidance,statements of outlook and expense accruals.These matters are subject to risks and uncertainties that couldcause actual results to differ materially from those projected,anticipated or implied.The most significant
102、 of these risks and uncertaintiesare described in Risk Factors in this report and in Exhibit 99.1 to the Form 10-K included in this report.Forward-looking statements in thisreport speak only as of the date of this document.Except to the extent required by applicable law,we undertake no obligation to
103、 update orrevise any forward-looking statement.Available InformationOur Annual Report on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K and amendments to those reports areavailable free of charge on our website(),under the Investor Relations Financial Reporting SEC Filingscapti
104、on,as soon as reasonably practicable after we electronically file them with,or furnish them to,the SEC.The SEC also maintains awebsite(www.sec.gov)where you can search for annual,quarterly and current reports,proxy and information statements and otherinformation regarding us and other public compani
105、es.Cardinal Health Fiscal 2023 Form 10-K 2?MD&AAbout Cardinal HealthManagements Discussion and Analysis of Financial Conditionand Results of OperationsAbout Cardinal HealthCardinal Health,Inc.,an Ohio corporation formed in 1979,is a global healthcare services and products company providing customize
106、dsolutions for hospitals,healthcare systems,pharmacies,ambulatory surgery centers,clinical laboratories,physician offices and patients inthe home.We provide pharmaceuticals and medical products and cost-effective solutions that enhance supply chain efficiency.Weconnect patients,providers,payers,phar
107、macists and manufacturers for integrated care coordination and better patient management.Wemanage our business and report our financial results in two segments:Pharmaceutical and Medical.Pharmaceutical Segment Medical SegmentOur Pharmaceutical segment distributes branded and genericpharmaceutical,sp
108、ecialty pharmaceutical and over-the-counterhealthcare and consumer products in the United States.Thissegment also provides services to pharmaceutical manufacturersand healthcare providers for specialty pharmaceutical products;provides pharmacy management services to hospitals andoperates a limited n
109、umber of pharmacies,including pharmacies incommunity health centers;operates nuclear pharmacies andradiopharmaceutical manufacturing facilities;and repackagesgeneric pharmaceuticals and over-the-counter healthcareproducts.Our Medical segment manufactures,sources and distributesCardinal Health brande
110、d medical,surgical and laboratory products,which are sold in the United States,Canada,Europe,Asia andother markets.This segment also distributes a broad range ofmedical,surgical and laboratory products known as national brandproducts and provides supply chain services and solutions tohospitals,ambul
111、atory surgery centers,clinical laboratories andother healthcare providers in the United States and Canada.Thissegment also distributes medical products to patients homes inthe United States through our Cardinal Health at-Home Solutionsdivision.Cardinal Health Fiscal 2023 Form 10-K 3?MD&A(in millions
112、)20232022ChangeGAAP operating earnings/(loss)$7 2 7$(5 9 6)N.M.Surgical gown recall costs/(income)1State opioid assessment related to prior fiscal years(6)Shareholder cooperation agreement costs8Restructuring and employee severance95101Amortization and other acquisition-related costs285324Impairment
113、s and(gain)/loss on disposal of assets,net1,2502,050Litigation(recoveries)/charges,net(302)109Non-GAAP operating earnings2,057$1,9 9 03%($per share)2023(2)2022(2)(3)ChangeGAAP diluted EPS(1)$1.0 0$(3.3 5)N.M.State opioid assessment related to prior fiscal years(0.02)Shareholder cooperation agreement
114、 costs0.02Restructuring and employee severance0.280.27Amortization and other acquisition-related costs0.800.87Impairments and(gain)/loss on disposal of assets,net(4)4.446.93Litigation(recoveries)/charges,net(0.73)0.31Loss on early extinguishment of debt0.03Non-GAAP diluted EPS(I)5.79$5.0 614%Overvie
115、wConsolidated ResultsFiscal 2023 OverviewRevenueRevenue for fiscal 2023 was$205.0 billion,a 13 percent increase from the prior year,primarily driven by Pharmaceutical segment salesgrowth.GAAP and Non-GAAP Operating Earnings/(Loss)The sum of the components and certain computations may reflect roundin
116、g adjustments.We had GAAP operating earnings of$727 million and a GAAP operating loss of$596 million during fiscal 2023 and 2022,respectively,which included$1.2 billion and$2.1 billion pre-tax non-cash goodwill impairment charges related to the Medical segment,respectively.See Critical Accounting Po
117、licies and Sensitive Accounting Estimates section of this MD&A and Note 4 of the Notes to ConsolidatedFinancial Statements for additional detail.GAAP operating earnings during fiscal 2023 were favorably impacted by litigation recoveries asdescribed further in Note 7 of the Notes to Consolidated Fina
118、ncial Statements.Non-GAAP operating earnings during fiscal 2023 increased 3 percent to$2.1 billion,primarily driven by an increase in Pharmaceuticalsegment profit,partially offset by a decrease in Medical segment profit.GAAP and Non-GAAP Diluted EPSThe sum of the components and certain computations
119、may reflect rounding adjustments.(1)Diluted earnings/(loss)per share attributable to Cardinal Health,Inc.(diluted EPS or diluted loss per share).(2)The reconciling items are presented within this table net of tax.See quantification of tax effect of each reconciling item in our GAAP to Non-GAAP Recon
120、ciliations in thesection titled Explanation and Reconciliation of Non-GAAP Financial Measures.For fiscal 2022,GAAP diluted loss per share attributable to Cardinal Health,Inc.and the EPS impact from the GAAP to non-GAAP per share reconciling items arecalculated using a weighted average of 279 million
121、 common shares,which excludes potentially dilutive securities from the denominator due to their anti-dilutive effectsresulting from our GAAP net loss for the period.Fiscal 2022 non-GAAP diluted EPS is calculated using a weighted average of 280 million common shares,whichincludes potentially dilutive
122、 shares.(4)Impairments and(gain)/loss on disposals of assets,net includes pre-tax goodwill impairment charges of$1.2 billion and$2.1 billion,respectively,related to the Medicalsegment recorded during fiscal 2023 and 2022.The net tax benefits related to these charges were$82 million and$150 million,r
123、espectively.(3)During fiscal 2023 and 2022,GAAP diluted EPS was adversely impacted by the goodwill impairment charges related to the Medicalsegment,which had a$(4.38)and$(6.94)per share after-tax impact,respectively.See Critical Accounting Policies and Sensitive4 Cardinal Health I Fiscal 2023 Form 1
124、0-K?MD&AOverviewAccounting Estimates section of this MD&A,and Note 4 and Note 8 of the Notes to Consolidated Financial Statements for additionaldetail.During fiscal 2023,GAAP diluted EPS was favorably impacted by litigation recoveries.See Note 7 of the Notes to Consolidated FinancialStatements.Durin
125、g fiscal 2023,non-GAAP diluted EPS increased 14 percent to$5.79 due to a lower share count,the factors impacting non-GAAPoperating earnings described above and lower interest expense,net.Cash and EquivalentsOur cash and equivalents balance was$4.0 billion at June 30,2023 compared to$4.7 billion at J
126、une 30,2022.During fiscal 2023,netcash provided by operating activities was$2.8 billion,which was offset by$2.0 billion in share repurchases,$579 million in debtrepayments,$525 million of dividends and$481 million of capital expenditures.Cardinal Health Fiscal 2023 Form 10-K 5?MD&AOverviewSignifican
127、t Developments in Fiscal 2023 and TrendsPharmaceutical SegmentGenerics ProgramThe performance of our Pharmaceutical segment generics program positively impacted the year-over-year comparison of Pharmaceuticalsegment profit in fiscal 2023.The Pharmaceutical segment generics program includes,among oth
128、er things,the impact of genericpharmaceutical product launches,customer volumes,pricing changes,the Red Oak Sourcing,LLC venture(Red Oak Sourcing)withCVS Health Corporation(CVS Health)and generic pharmaceutical contract manufacturing and sourcing costs.The frequency,timing,magnitude and profit impac
129、t of generic pharmaceutical customer volumes,pricing changes,customer contractrenewals,generic pharmaceutical manufacturer pricing changes and generic pharmaceutical contract manufacturing and sourcing costs allimpact Pharmaceutical segment profit and are subject to risks and uncertainties.These ris
130、ks and uncertainties may impact Pharmaceuticalsegment profit and consolidated operating earnings in fiscal 2024.Medical SegmentInflationary ImpactsBeginning in fiscal 2022,Medical segment profit was negatively affected by inflationary impacts,primarily related to transportation(including ocean and d
131、omestic freight),commodities,labor and global supply chain constraints.Since that time,we have taken actions topartially mitigate these impacts,including implementing certain price increases and evolving our pricing and commercial contractingprocesses to provide us with greater pricing flexibility.I
132、n addition,decreases in some product-related costs have been recognized as thehigher-cost inventory moved through our supply chain and was replaced by lower cost inventory.These net inflationary impacts negativelyaffected Medical segment profit during fiscal 2023.We expect these net inflationary imp
133、acts to continue to affect Medical segment profit in fiscal 2024 and beyond,but to a significantly lesserextent than in fiscal 2023 and prior periods,due to our mitigation actions,together with continued decreases in certain product-relatedcosts.However,these inflationary costs are difficult to pred
134、ict and may be greater than we expect or continue longer than our currentexpectations.Our actions to increase prices and evolve our contracting strategies are subject to contingencies and uncertainties and it ispossible that our results of operations will be adversely impacted to a greater extent th
135、an we currently anticipate or that we may not beable to mitigate the negative impact to the extent or on the timeline we anticipate.Volumes within Products and DistributionMedical segment profit was adversely impacted during fiscal 2023 on a year-over-year basis in part due to lower volumes within p
136、roductsand distribution,which includes our Cardinal Health branded medical products.We expect Cardinal Health branded medical products salesgrowth in fiscal 2024 and beyond.The timing,magnitude and profit impact of this anticipated sales growth is subject to risks anduncertainties,which may impact M
137、edical segment profit.Medical Unit GoodwillDue to previously communicated changes in our long-term financial plan assumptions,including those related to Cardinal Health brandedmedical products sales growth,and increases in the risk-free interest rate,we performed goodwill impairment testing for the
138、Medicaloperating segment(excluding our Cardinal Health at-Home Solutions division)(Medical Unit)during fiscal 2023.This testing resulted incumulative pre-tax charges of$1.2 billion which were included in impairments and(gain)/loss on disposal of assets,net in our consolidatedstatements of earnings/(
139、loss).See Critical Accounting Policies and Sensitive Accounting Estimates section of this MD&A and Note 4 ofthe Notes to Consolidated Financial Statements for additional detail.Adverse changes in key assumptions or a significant change inindustry or economic trends during fiscal 2024 could result in
140、 additional goodwill impairment.Shareholder Cooperation AgreementIn September 2022,we entered into a Cooperation Agreement(the Cooperation Agreement)with Elliott Associates,L.P.and ElliottInternational,L.P.(together,Elliott)under which our Board of Directors(the Board),among other things,(1)appointe
141、d four newindependent directors,including a representative from Elliott,and(2)formed an advisory Business Review Committee of the Board,whichis tasked with undertaking a comprehensive review of our strategy,portfolio,capital-allocation framework and operations.In May 2023,weextended the term of the
142、Cooperation Agreement until the later of July 15,2024 or until Elliotts representative ceases to serve on,or6 Cardinal Health I Fiscal 2023 Form 10-K?MD&AOverviewresigns from,the Board.In connection with this extension,the Board has extended the term of the Business Review Committee until July15,202
143、4.The evaluation and implementation of any actions recommended by the Business Review Committee and the Board have impacted andmay continue to impact our business,financial position and results of operations during fiscal 2024 and beyond.During fiscal 2023,weincurred$8 million of expenses related to
144、 the negotiation and finalization of the Cooperation Agreement and other consulting expenses.W e have incurred,and expect to continue to incur additional legal,consulting and other expenses related to the Cooperation Agreementand the activities of the Business Review Committee.See Risk Factors secti
145、on for additional detail related to risks associated with theCooperation Agreement.Cardinal Health Fiscal 2023 Form 10-K 7?MD&A(in millions)Revenue20232022ChangePharmaceutical$190,009$165,49115%Medical15,01415,887(5)%Total segment revenue205,023181,37813%Corporate(1)(11)(14)N.M.Total revenue$205,012
146、$181,36413%Results of OperationsResults of OperationsRevenuePharmaceutical Medical SegmentSegment Revenue Revenue(in billions)(in billions)$190.0$165.5$15.0$15.9FY23 F Y 2 2 FY23 F Y 2 2(1)Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the s
147、egments.Pharmaceutical SegmentFiscal 2023 Pharmaceutical segment revenue grew by 15 percent primarily due to branded and specialty pharmaceutical sales growthlargely from existing and net new customers,which increased revenue by$24.2 billion.Medical SegmentFiscal 2023 Medical segment revenue decreas
148、e was driven by products and distribution,which decreased revenue by$1.1 billion,primarilyrelated to lower sales,largely due to an adverse impact from personal protective equipment(PPE)pricing and volumes.This decreasewas partially offset by sales growth in at-Home Solutions,which increased revenue
149、by$215 million.Cost of Products SoldCost of products sold for fiscal 2023 increased$23.3 billion(13 percent)due to the factors affecting the changes in revenue and grossmargin.8 Cardinal Health I Fiscal 2023 Form 10-K?MD&A(in millions)20232022ChangeGross margin$6,889$6,5455%SG&A Expenses(in millions
150、)20232022ChangeSG&A expenses$4,834$4,5576%Results of OperationsGross MarginGross Margin Gross Margin(in billions)Rate(Gross Marginas a Percentof Revenue)$6.9$6.5FY23 F Y 2 23.36%3.61%FY23 F Y 2 2Consolidated GrossMarginFiscal 2023 consolidated gross margin increased primarily due to the Pharmaceutic
151、al segment,which reflected the positive performance ofour generics program and a higher contribution from branded and specialty pharmaceutical products.This increase was partially offset bythe performance of products and distribution within the Medical segment,primarily driven by lower volumes and u
152、nfavorable product salesmix,partially offset by a net positive contribution from PPE.Gross margin rate declined 25 basis points during fiscal 2023 mainly due to changes in overall product mix,primarily driven by increasedpharmaceutical distribution branded sales,which have a dilutive impact on our o
153、verall gross margin rate.This decline in gross margin ratewas partially offset by a net positive contribution from PPE.Distribution,Selling,General and Administrative(SG&A)ExpensesFiscal 2023 SG&A expenses increased primarily due to inflationary impacts,primarily related to increased transportation
154、and labor costs,higher operating expenses,including higher costs to support sales growth,and enterprise-wide incentive compensation.These increaseswere partially offset by the beneficial impact of enterprise-wide cost-savings measures.Cardinal Health Fiscal 2023 Form 10-K 9?MD&A(in millions)Segment
155、Profit andOperating Earnings20232022ChangePharmaceutical$1,999$1,77013%Medical111216(49)%Total segment profit2,1101,9866%Corporate(1,383)(2,582)N.M.Total consolidated operating earningsl(loss)$7 2 7$(596)N.M.Results of OperationsSegment ProfitWe evaluate segment performance based on segment profit,a
156、mong other measures.See Note 13 of the Notes to Consolidated FinancialStatements for additional information on segment profit.Pharmaceutical Medical SegmentSegment Profit Profit(in billions)(in millions)$2.0$1.8FY23 F Y 2 2$216FY23 F Y 2 2Pharmaceutical Segment ProfitFiscal 2023 Pharmaceutical segme
157、nt profit increased primarily due to the positive performance of our generics program and an increasedcontribution from branded and specialty pharmaceutical products,partially offset by inflationary impacts,primarily related to increasedtransportation and labor costs.Medical Segment ProfitFiscal 202
158、3 Medical segment profit decreased primarily due to the performance of products and distribution,largely driven by net inflationaryimpacts,lower volumes and unfavorable product sales mix,partially offset by a net positive contribution from PPE.CorporateThe changes in Corporate during fiscal 2023 are
159、 due to the factors discussed in the Other Components of Consolidated OperatingEarnings/(Loss)section that follows.10 Cardinal Health I Fiscal 2023 Form 10-K?MD&A(in millions)2023 2022Restructuring and employee severance95$101Amortization and other acquisition-related costs285324Impairments and(gain
160、)/loss on disposal of assets,net1,2502,050Litigation(recoveries)/charges,net(302)109(in millions)20232022ChangeOther(income)/expense,net(4)$1 6N.M.Interest expense,net93149(38)%Loss on early extinguishment of debt10N.M.(Gain)/Loss on sale of equity interest in naviHealth(2)N.M.Results of OperationsO
161、ther Components of Consolidated Operating Earnings/(Loss)In addition to revenue,gross margin and SG&A expenses discussed previously,consolidated operating earnings/(loss)were impacted bythe following:Restructuring and Employee SeveranceRestructuring and employee severance costs during fiscal 2023 an
162、d 2022 were primarily related to the implementation of certain enterprise-wide cost-savings measures and the divestiture of the Cordis business.During fiscal 2023,we also incurred restructuring costs related tocertain projects resulting from reviews of our strategy,portfolio,capital-allocation frame
163、work and operations.During fiscal 2022,restructuring costs also included facility exit costs related to decreasing our overall office space.Amortization and Other Acquisition-Related CostsAmortization of acquisition-related intangible assets was$281 million and$311 million for fiscal 2023 and 2022,r
164、espectively.Impairments and(Gain)/Loss on Disposal of Assets,NetDuring fiscal 2023 and 2022,we recognized$1.2 billion and$2.1 billion of pre-tax non-cash goodwill impairment charges,respectively,related to our Medical segment,as discussed further in the Critical Accounting Policies and Sensitive Acc
165、ounting Estimates section of thisMD&A and Note 4 of the Notes to Consolidated Financial Statements.Litigation(Recoveries)/Charges,NetDuring fiscal 2023,we recognized income of$103 million,primarily related to a reduction of the reserve for the estimated settlement anddefense costs for the Cordis Opt
166、Ease and TrapEase inferior vena cava(IVC)product liability due to the execution of certain settlementagreements.During fiscal 2022,we recognized estimated losses and legal defense costs associated with the IVC filter product liabilityclaims of$87 million.See Note 7 of the Notes to Consolidated Finan
167、cial Statements for additional information.During fiscal 2023,we recognized income of$93 million due to net proceeds from the settlement of a shareholder derivative litigation matteras described further in the Legal Proceedings section.During fiscal 2023 and 2022,we recognized income of$130 million
168、and$18 million,respectively,for net recoveries in class action antitrustlawsuits in which we were a class member or plaintiff.Other Components of Earnings/(Loss)Before Income TaxesIn addition to the items discussed above,earnings/(loss)before income taxes was impacted by the following:Interest Expen
169、se,NetFiscal 2023 interest expense decreased from fiscal 2022 primarily due to increased interest income from cash and equivalents.Loss On Early Extinguishment of DebtDuring fiscal 2022,we recognized a loss of$10 million connection with the debt redemption as described further in Note 6 of the Notes
170、 toConsolidated Financial Statements.Cardinal Health I Fiscal 2023 Form 10-K 11?MD&A2023(1)2022(1)Provision at Federal statutory rate21.0%21.0%State and local income taxes,net of federal benefit6.62.2Tax effect of foreign operations(4.2)3.5Nondeductible/nontaxable items(1.1)1.2Impact of Divestitures
171、(4.9)Withholding Taxes1.0(1.1)Change in Valuation Allowances(5.3)3.5US Taxes on International Income(2)(0.7)3.2Impact of Resolutions with IRS and other related matters5.8(0.6)Opioid litigation0.1(0.5)Goodwill Impairment36.9(49.5)Other(1.2)0.8Effective income tax rate58.9%(21.2)%Results of Operations
172、Provision for Income TaxesFluctuations in the effective tax rates are primarily due to the impact of the goodwill impairment charges recognized in fiscal 2023 and 2022related to the Medical segment.A reconciliation of the provision based on the federal statutory income tax rate to our effective inco
173、me tax rate from continuing operations isas follows(see Note 8 of the Notes to Consolidated Financial Statements for additional information):(1)This table reflects fiscal 2023 pretax income with tax expense and fiscal 2022 pretax loss with tax expense.(2)Includes the tax impact of Global Intangible
174、Low-T axed Income(GILTI)tax,the Foreign-Derived Intangible Income deduction and other foreign income that is taxableunder the U.S.tax code.During fiscal 2023 and 2022,the effective tax rate was 58.9 percent and(21.2)percent,respectively.Included in the effective tax rate forfiscal 2023 and 2022 was$
175、82 million and$150 million,respectively,of benefit related to the goodwill impairment charges related to theMedical Unit.Ongoing AuditsWe file income tax returns in the U.S.federal jurisdiction,various U.S.state jurisdictions and various foreign jurisdictions.With fewexceptions,we are subject to aud
176、it by taxing authorities for fiscal 2015 through the current fiscal year.Tax laws are complex and subject tovarying interpretations.New challenges related to future audits may adversely affect our effective tax rate or tax payments.12 Cardinal Health I Fiscal 2023 Form 10-K?MD&ALiquidity and Capital
177、 ResourcesLiquidity and Capital ResourcesWe currently believe that,based on available capital resources and projected operating cash flow,we have adequate capital resources tofund our operations and expected future cash needs as described below.If we decide to engage in one or more acquisitions,depe
178、nding onthe size and timing of such transactions,we may need to access capital markets for additional financing.Cash and EquivalentsOur cash and equivalents balance was$4.0 billion at June 30,2023 compared to$4.7 billion at June 30,2022.Net cash providedby operating activities was$2.8 billion,which
179、includes the impactof our second annual payment of$372 million related to the April2022 agreement to settle the vast majority of the opioid lawsuitsfiled by states and local governmental entities(the NationalOpioid Settlement Agreement).In addition,we deployed$2.0billion for share repurchases,$579 m
180、illion for debt repayments,$525 million for dividends and$481 million for capitalexpenditures.At June 30,2023,our cash and equivalents wereheld in cash depository accounts with major banks or invested inhigh quality,short-term liquid investments.At June 30,2022,our cash and equivalents were$4.7 bill
181、ion.During fiscal 2022,net cash provided by operating activities of$3.1 billion included a refund of$966 million for the tax benefitfrom the net operating loss carryback related to a self-insurancepre-tax loss.We also received proceeds of$923 million,net ofcash transferred,from the divestiture of th
182、e Cordis business andwe deployed$1.0 billion for share repurchases,$885 million fordebt repayments,$559 million for dividends and$387 million forcapital expenditures.Changes in working capital,which impact operating cash flow,canvary significantly depending on factors such as the timing ofcustomer p
183、ayments,inventory purchases,payments to vendorsand tax payments in the regular course of business,as well asfluctuating working capital needs driven by customer and productmix.The cash and equivalents balance at June 30,2023 included$533million of cash and equivalents held by subsidiaries outside of
184、 theUnited States.In fiscal 2023,we returned$189 million of cash held by foreignsubsidiaries to the U.S.At June 30,2023,foreign earnings of approximately$976 millionare considered indefinitely reinvested for working capital and otheroffshore investment needs.The computation of tax required ifthose e
185、arnings are repatriated is not practicable.For amounts notconsidered indefinitely reinvested,we have recorded an immaterialamount of income tax expense in our consolidated financialstatements in fiscal 2023.Other Financing Arrangements and Financial InstrumentsCredit Facilities and Commercial PaperI
186、n addition to cash and equivalents and operating cash flow,othersources of liquidity at June 30,2023 include a$2.0 billioncommercial paper program,backed by a$2.0 billion revolvingcredit facility.We also have a$1.0 billion committed receivablessales facility.At June 30,2023,we had no amounts outstan
187、dingunder our commercial paper program,revolving credit facility orour committed receivables sales facility.During fiscal 2023,underour commercial paper program and our committed receivablesprogram,we had maximum combined total daily amountsoutstanding of$445 million.In February 2023,we extended our
188、 revolving credit facility throughFebruary 25,2028.In September 2022,we renewed ourcommitted receivables sales facility program through CardinalHealth Funding,LLC(CHF)through September 30,2025.Our revolving credit and committed receivables sales facilitiesrequire us to maintain a consolidated net le
189、verage ratio of no morethan 3.75-to-1.As of June 30,2023,we were in compliance withthis financial covenant.Long-Term ObligationsAt June 30,2023,we had total long-term obligations,including thecurrent portion and other short-term borrowings of$4.7 billion.During fiscal 2023,we repaid the full princip
190、al of$550 million of the3.2%Notes due 2023.During fiscal 2022,we redeemed all outstanding$572 millionprincipal amount of 2.616%Notes due 2022 and recorded a$10 million loss on early extinguishment of debt.We also repaidthe full principal of the$282 million Floating Rate Notes due 2022as they became
191、due.The early redemption and repayments were funded with availablecash.Cardinal Health Fiscal 2023 Form 10-K 13?MD&ALiquidity and Capital ResourcesCapital DeploymentOpioid Litigation Settlement AgreementW e had$5.87 billion accrued at June 30,2023 related to certainopioid litigation,as further descr
192、ibed within Note 7 of the Notes toConsolidated Financial Statements.We expect the majority ofpayments to occur through 2038.During fiscal 2023,we paid oursecond annual payment of$372 million under the National OpioidSettlement Agreement.In July 2023,we made our third annualpayment of$378 million und
193、er the National Opioid SettlementAgreement.The amounts of these future payments may differ fromthe payments that we have already made.Capital ExpendituresCapital expenditures during fiscal 2023 and 2022 were$481million and$387 million,respectively.W e expect capital expenditures in fiscal 2024 to be
194、 approximately$500 million and primarily related to manufacturing and distributioninfrastructure projects and technology investments.DividendsDuring fiscal 2023,we paid quarterly dividends totaling$1.98 pershare,an increase of 1 percent from fiscal 2022.On May 11,2023,our Board of Directors approved
195、 a quarterlydividend of$0.5006 per share,or$2.00 per share on anannualized basis,which was paid on July 15,2023,toshareholders of record on July 3,2023.On August 9,2023,our Board of Directors approved a quarterlydividend of$0.5006 per share,or$2.00 per share on anannualized basis,which will be paid
196、on October 15,2023,toshareholders of record on October 3,2023.Share RepurchasesDuring fiscal 2023 and 2022,we deployed$2.0 billion and$1.0billion,respectively,for repurchases of our common shares.Wefunded the repurchases with available cash.See Note 11 of theNotes to Consolidated Financial Statement
197、s for additionalinformation.On November 4,2021,our Board of Directors approved a$3.0billion share repurchase program,which will expire on December31,2024.On June 7,2023,our Board of Directors approved a$3.5 billion share repurchase program,which will expire onDecember 31,2027.At June 30,2023,we had$
198、4.3 billionremaining authorized for share repurchases under theseprograms.14Cardinal Health Fiscal 2023 Form 10-K?MD&A(in millions)20242025 to20262027 to2028There-afterTotalLong-term debt and short-term borrowings(1)$764$917$1,308$1,626$4,615Interest on long-term debt2183262151,3362,095Finance lease
199、 obligations(2)284116792Operating lease obligations(3)522Purchase obligations andother payments(4)6453111881051,249Opioid litigation settlementagreements(5)4268378323,7155,810Total contractualobligations and cashrequirements(6)$2,194$2,621$2,682$6,886$14,383OtherContractual Obligations an
200、d Cash RequirementsAt June 30,2023,our contractual obligations and future cashrequirements,including estimated payments due by period,wereas follows:(1)Represents maturities of our long-term debt obligations and other short-termborrowings excluding finance lease obligations described below.See Note
201、6of the Notes to Consolidated Financial Statements for further information.(2)Represents minimum finance lease obligations included within current portionof long-term obligations and other short-term borrowings and long-termobligations,less current portion in our consolidated balance sheets andfurth
202、er described in Note 5 of the Notes to Consolidated FinancialStatements.(3)Represents minimum operating lease obligations included within otheraccrued liabilities and deferred income taxes and other liabilities in ourconsolidated balance sheets and further described in Note 5 of the Notes toConsolid
203、ated Financial Statements.(4)A purchase obligation is defined as an agreement to purchase goods orservices that is legally enforceable and specifies all significant terms,including fixed or minimum quantities to be purchased;fixed,minimum orvariable price provisions;and approximate timing of the tra
204、nsaction.Thepurchase obligation amounts disclosed above represent estimates of theminimum for which we are obligated and the time period in which cashoutflows will occur.Purchase orders and authorizations to purchase thatinvolve no firm commitment from either party are excluded from the abovetable.I
205、n addition,contracts that can be unilaterally canceled with notermination fee or with proper notice are excluded from our total purchaseobligations except for the amount of the termination fee or the minimumamount of goods that must be purchased during the requisite notice period.Purchase obligation
206、s and other payments also includes quarterly payments toCVS Health in connection with Red Oak Sourcing.See Note 7 of the Notesto Consolidated Financial Statements for additional information.Represents future cash obligations under the National Opioid SettlementAgreement as well as future cash obliga
207、tions under separate settlementagreements with the States of Oklahoma,Washington and West Virginia andthe Cherokee Nation.We have$5.87 billion accrued at June 30,2023,ofwhich$426 million is included in other accrued liabilities,and the remainder isincluded in deferred income taxes and other liabilit
208、ies in our consolidatedbalance sheets.See Note 7 of the Notes to Consolidated FinancialStatements for additional information.(6)Long-term liabilities,such as unrecognized tax benefits,deferred taxes andother tax liabilities,have been excluded from the above table due to theinherent uncertainty of th
209、e underlying tax positions or because of the inabilityto reasonably estimate the timing of any cash outflows.See Note 8 of theNotes to Consolidated Financial Statements for further discussion of incometaxes.(5)Recent Financial Accounting StandardsSee Note 1 of the Notes to Consolidated Financial Sta
210、tements for further information.Cardinal Health I Fiscal 2023 Form 10-K 15?MD&A(in millions,except percentages)202320222021Allowance for doubtful accounts at beginning ofperiod$273$243$207Charged to costs and expenses197155130Reduction to allowance for customerdeductions and write-offs(171)(125)(94)
211、Allowance for doubtful accounts at end of period$299$273$243Allowance as a percentage of customer receivables 2.6%2.6%2.7Allowance as a percentage of revenue0.15%0.15%0.15%Critical Accounting Policies and Sensitive Accounting EstimatesCritical Accounting Policies and Sensitive Accounting EstimatesCr
212、itical accounting policies are those accounting policies that(i)can have a significant impact on our financial condition and results ofoperations and(ii)require the use of complex and subjective estimates based upon past experience and managements judgment.Otherpeople applying reasonable judgment to
213、 the same facts and circumstances could develop different estimates.Because estimates areinherently uncertain,actual results may differ.In this section,we describe the significant policies applied in preparing our consolidatedfinancial statements that management believes are the most dependent on es
214、timates and assumptions.See Note 1 of the Notes toConsolidated Financial Statements for further discussion.Allowance for Doubtful AccountsThe allowance for doubtful accounts includes general and specificreserves.We determine our allowance for doubtful accounts byreviewing accounts receivable aging,h
215、istorical write-off trends,payment history,pricing discrepancies,industry trends,customerfinancial strength,customer credit ratings or bankruptcies.Weregularly evaluate how changes in economic conditions may affectcredit risks.A hypothetical 0.1 percent increase or decrease in the reserve asa percen
216、tage of trade receivables at June 30,2023,would result inan increase or decrease in bad debt expense of$11 million.Webelieve the reserve maintained and expenses recorded in fiscal2023 are appropriate.At this time,we are not aware of any analytical findings orcustomer issues that are likely to lead t
217、o a significant futureInventoriesincrease in the allowance for doubtful accounts as a percentage ofrevenue.The following table presents information regarding ourallowance for doubtful accounts over the past three fiscal years:LIFO InventoryA portion of our inventories(55 percent and 52 percent at Ju
218、ne 30,2023 and 2022,respectively)are valued at the lower of cost,usingthe last-in,first-out(LIFO)method,or market.These are primarilymerchandise inventories at the core pharmaceutical distributionfacilities within our Pharmaceutical segment(distributionfacilities).The LIFO impact on the consolidated
219、 statements ofearnings/(loss)depends on pharmaceutical manufacturer priceappreciation or deflation and our fiscal year-end inventory levels,which can be meaningfully influenced by customer buying behaviorimmediately preceding our fiscal year-end.Historically,prices forbranded pharmaceuticals have ge
220、nerally tended to rise,resultingin an increase in cost of products sold,whereas prices for genericpharmaceuticals generally tend to decline,resulting in a decreasein cost of products sold.Using LIFO,if there is a decrease in inventory levels that haveexperienced pharmaceutical price appreciation,the
221、 resultgenerally will be a decrease in future cost of products sold as ourolder inventory is held at a lower cost.Conversely,if there is adecrease in inventory levels that have experienced apharmaceutical price decline,the result generally will be anincrease in future cost of products sold as our ol
222、der inventory isheld at a higher cost.We believe that the average cost method of inventory valuationprovides a reasonable approximation of the current cost ofreplacing inventory within these distribution facilities.As such,theLIFO reserve is the difference between(a)inventory at the lower ofLIFO cos
223、t or market and(b)inventory at replacement costdetermined using the average cost method of inventory valuation.At June 30,2023 and 2022,respectively,inventories valued atLIFO cost were$476 million and$416 million higher than theaverage cost value.We do not record inventories in excess ofreplacement
224、cost.As such,we did not write-up the value of ourinventory from average cost to LIFO cost at June 30,2023 or2022.FIFO InventoryOur remaining inventory,including inventory in our Medicalsegment and certain inventory in our Pharmaceutical segment,that is not valued at the lower of LIFO cost or market
225、is stated atthe lower of cost,using the first-in,first-out(FIFO)method,or netrealizable value.We reserve for the lower of cost or net realizablevalue using the estimated selling prices and estimated salesdemand in the ordinary course of business,less reasonablypredictable costs of completion,disposa
226、l and transportation.Infiscal 2021,we recorded a reserve of$197 million,primarilyrelated to certain categories of gloves,to reduce the carrying valueof certain PPE to its net realizable value.Our estimates for sellingprices and demand are inherently uncertain and if our assumptionsdecline in the fut
227、ure,additional inventory reserves may berequired.16Cardinal Health I Fiscal 2023 Form 10-K?MD&ACritical Accounting Policies and Sensitive Accounting EstimatesExcess and Obsolete InventoryWe reserve for inventory obsolescence using estimates based onhistorical experience,historical and projected sale
228、s trends,specific categories of inventory,age and expiration dates of on-hand inventory and manufacturer return policies.Inventoriespresented in the consolidated balance sheets are net of reservesfor excess and obsolete inventory which were$139 million and$147 million at June 30,2023 and 2022,respec
229、tively.If actualconditions are less favorable than our assumptions,additionalinventory reserves may be required.Goodwill and Other Indefinite-Lived Intangible AssetsPurchased goodwill and intangible assets with indefinite lives aretested for impairment annually or when indicators of impairmentexist.
230、Goodwill impairment testing involves a comparison of theestimated fair value of reporting units to the respective carryingamount,which may be performed utilizing either a qualitative orquantitative assessment.Qualitative factors are first assessed todetermine if it is more likely than not that the f
231、air value of areporting unit is less than its carrying amount.There is an option tobypass the qualitative assessment for any reporting unit in anyperiod and proceed directly to performing the quantitative goodwillimpairment test.We have elected to bypass the qualitativeassessment for the annual good
232、will impairment test in the currentyear.The quantitative goodwill impairment test involves acomparison of the estimated fair value of the reporting unit to therespective carrying amount.A reporting unit is defined as anoperating segment or one level below an operating segment(alsoknown as a componen
233、t).We have two operating segments,which are the same as ourreportable segments:Pharmaceutical and Medical.Theseoperating segments are comprised of divisions(which arecomponents),for which discrete financial information is available.Components are aggregated into reporting units for purposes ofgoodwi
234、ll impairment testing to the extent that they share similareconomic characteristics.Our reporting units are:Pharmaceuticaloperating segment(excluding our Nuclear and Precision HealthSolutions division);Nuclear and Precision Health Solutionsdivision;Medical operating segment(excluding our Cardinal He
235、althat-Home Solutions division)(Medical Unit);and Cardinal Healthat-Home Solutions division.Goodwill impairment testing involves judgment,including theidentification of reporting units,qualitative evaluation of events andcircumstances to determine if it is more likely than not that animpairment exis
236、ts and,if necessary,the estimation of the fair valueof the applicable reporting unit.Our determination of estimated fair value of our reporting units infiscal 2023 was based on a combination of the income-based andmarket-based approaches(using discount rates ranging from 9.5to 11 percent).We use dis
237、count rates that are commensurate withthe risks and uncertainty inherent in the respective reporting unitsand in our internally-developed forecasts.Under the market-basedguideline public company method,we determine fair value bycomparing our reporting units to similar businesses or guidelinecompanie
238、s whose securities are actively traded in public markets.We also use the market-based guideline transaction method todetermine fair value based on pricing multiples derived from thesale of companies that are similar to our reporting units.Estimating the fair value of reporting units requires the use
239、 ofestimates and significant judgments that are based on a number offactors including actual operating results.The use of alternateestimates and assumptions,changes in the industry or peergroups,or changes in weightings assigned to the discounted cashflow method,guideline public company method or gu
240、idelinetransaction method could materially affect the determination of fairvalue for each reporting unit and potentially result in goodwillimpairment.If a reporting unit fails to achieve expected earnings oroperating cash flow,or otherwise fails to meet current financialplans,or if there were change
241、s to any other key assumptions usedin the tests,the reporting unit could incur a goodwill impairment ina future period.We performed annual impairment testing in fiscal 2023,2022 and2021 and concluded that there were no impairments of goodwill forPharmaceutical operating segment(excluding our Nuclear
242、 andPrecision Health Solutions division);Nuclear and Precision HealthSolutions division;and Cardinal Health at-Home Solutions divisionas the estimated fair value of each reporting unit exceeded itscarrying value.See additional detail on Medical Unit goodwillbelow.Medical Unit GoodwillDue to previous
243、ly communicated changes in our long-termfinancial plan assumptions made during fiscal 2023,includingthose related to Cardinal Health branded medical products salesgrowth and net inflationary impacts,we elected to bypass thequalitative assessment and perform quantitative goodwillimpairment testing fo
244、r the Medical Unit at June 30,2023.Thisquantitative testing resulted in the carrying amount of the MedicalUnit exceeding the fair value,resulting in a pre-tax impairmentcharge of$368 million in the fourth quarter and cumulative pre-taximpairment charges of$1.2 billion due to the impairment chargesre
245、cognized during the second and first quarters of fiscal 2023 asdescribed further below.The fourth quarter impairment charge wasprimarily driven by the impact of the reductions in our long-termfinancial plan assumptions.The impairment charges are includedin impairments and(gain)/loss on disposal of a
246、ssets,net in ourconsolidated statements of earnings/(loss).The carrying value ofthe Medical Unit at June 30,2023 after recognizing the impairmentcharges was$5.7 billion,of which$725 million was goodwill.SeeNote 4 of the Notes to Consolidated Financial Statements forfurther discussion.Cardinal Health
247、 I Fiscal 2023 Form 10-K 17?MD&ACritical Accounting Policies and Sensitive Accounting EstimatesWe performed interim quantitative goodwill impairment testing forthe Medical Unit at December 31,2022 and September 30,2022,which resulted in pre-tax impairment charges of$709 million and$154 million,respe
248、ctively.The impairment charge recognized inthe second quarter was driven by certain reductions in our long-term financial plan assumptions,and the impairment chargerecognized in the first quarter was driven by an increase in thediscount rate primarily due to an increase in the risk-free interestrate
249、.We also performed quantitative goodwill impairment testing atMarch 31,2023 and concluded that there was no impairment ofgoodwill at March 31,2023 as the estimated fair value of theMedical Unit exceeded its carrying value by approximately 4percent.Our determinations of the estimated fair value of th
250、e Medical Unitwere based on a combination of the income-based approach(using a terminal growth rate of 2 percent),and the market-basedapproaches.Additionally,we assigned a weighting of 80 percent tothe discounted cash flow method,10 percent to the guidelinepublic company method and 10 percent to the
251、 guidelinetransaction method.For the income-based approach,we useddiscount rates of 10 percent,10 percent,10.5 percent and 10.5percent for fourth,third,second and first quarters,respectively.The decrease in the discount rate for the testing performed atMarch 31,2023 and June 30,2023 was primarily du
252、e to adecrease in the risk-free interest rate.While we consider the assumptions used in our determination ofthe estimated fair value of the Medical Unit to be reasonable andappropriate,they are complex and subjective,and additionaladverse changes in one key assumption or a combination of keyassumpti
253、ons during fiscal 2024 may significantly affect futureestimates.These assumptions include,among other things,afailure to meet expected earnings or other financial plans,includingthe execution of key initiatives related to optimizing and growingsales of Cardinal Health branded medical products,increa
254、singgrowth in certain strategic divisions within our Medical segment,and driving simplification efforts and cost optimization projects,orunanticipated events and circumstances,such as changes inassumptions about the duration and magnitude of increasedLoss Contingencies and Self-Insurancesupply chain
255、 and commodities costs and our efforts to mitigatesuch impact,including price increases or surcharges;furtherdisruptions in the supply chain;manufacturing cost inefficienciesresulting from lower than anticipated sales volume;an increase inthe discount rate;a decrease in the terminal growth rate;incr
256、easesin tax rates;or a significant change in industry or economic trends.Adverse changes in key assumptions may result in a decline in fairvalue below the carrying value in the future and therefore,animpairment of our Medical Unit goodwill in future periods,whichcould adversely affect our results of
257、 operations.For example,if wewere to increase the discount rate by a hypothetical 0.5 percent to10.5 percent or decrease the terminal growth rate by ahypothetical 1.75 percent to 0.25 percent,the fair value for theMedical Unit would have further decreased by approximately$250million.Additionally,a h
258、ypothetical 25 basis point decrease in long-term gross margin rates,which could be impacted by changes inCardinal Health branded medical product sales growth rateassumptions,would have increased the impairment charge byapproximately$220 million.Other indefinite-lived intangiblesThe impairment test f
259、or indefinite-lived intangibles other thangoodwill(primarily trademarks)involves first assessing qualitativefactors to determine if it is more likely than not that the fair value ofthe indefinite-lived intangible asset is less than its carrying amount.If so,then a quantitative test is performed to c
260、ompare theestimated fair value of the indefinite-lived intangible asset to therespective assets carrying amount.Our qualitative evaluationrequires the use of estimates and significant judgments andconsiders the weight of evidence and significance of all identifiedevents and circumstances and most re
261、levant drivers of fair value,both positive and negative,in determining whether it is more likelythan not that the fair value of the indefinite-lived intangible asset isless than its carrying amount.See Note 1 of Notes to Consolidated Financial Statements foradditional information regarding goodwill
262、and other intangibleassets.We regularly review contingencies and self-insurance accruals todetermine whether our accruals and related disclosures areadequate.Any adjustments for changes in reserves are recordedin the period in which the change in estimate occurs.Loss ContingenciesWe accrue for conti
263、ngencies related to disputes,litigation andregulatory matters if it is probable that a liability has been incurredand the amount of the loss can be reasonably estimated.Becausethese matters are inherently unpredictable and unfavorabledevelopments or outcomes can occur,assessing contingencies ishighl
264、y subjective and requires judgments about future events.Examples of such contingencies include various lawsuits related tothe distribution of prescription opioid pain medications and the IVCfilter lawsuits.18Cardinal Health I Fiscal 2023 Form 10-K?MD&A(in millions)20232022Total deferred income tax a
265、ssets(1)$1,540(421)$1,584(468)Valuation allowance for deferred income tax assets(2)Net deferred income tax assets1,119(3,164)1,116(3,110)Total deferred income tax liabilitiesNet deferred income tax liability$(2,045)$(1,994)Critical Accounting Policies and Sensitive Accounting EstimatesWe develop and
266、 periodically update reserve estimates for alllitigation matters,including IVC claims,received to date andexpected to be received in the future and related costs.In April2023,we executed a settlement agreement that,if certainconditions are satisfied,will resolve approximately 4,376 IVC filterproduct
267、 liability claims for$275 million.These settlements will notresolve all IVC filter product liability claims and we intend tocontinue to vigorously defend ourselves in the remaining lawsuits.To project future IVC claim costs,we use a methodology basedlargely on recent experience,including claim filin
268、g rates,blendedaverage payout influenced by claim severity,historical sales data,implant and injury to report lag patterns and estimated defensecosts.Self-InsuranceWe self-insure through a wholly-owned insurance subsidiary foremployee healthcare,certain product liability matters,auto liability,prope
269、rty and workers compensation and maintain insurance forlosses exceeding certain limits.Provision for Income TaxesSelf-insurance accruals include an estimate for expectedsettlements on pending claims,defense costs,administrative fees,claims adjustment costs and an estimate for claims incurred butnot
270、reported.For certain types of exposures,we develop theestimate of expected ultimate costs to settle each claim based onspecific information related to each claim if available.Otherestimates are based on an assessment of outstanding claims,historical analysis and current payment trends.For claims inc
271、urredbut not reported,the liabilities are calculated and derived inaccordance with generally accepted actuarial practices or using anestimated lag period.The amount of loss may differ materially from these estimates.SeeNote 7 of the Notes to Consolidated Financial Statements foradditional informatio
272、n regarding loss contingencies and productliability lawsuits.We account for income taxes using the asset and liability method.Deferred tax assets and liabilities are measured using enacted taxrates in the respective jurisdictions in which we operate.Ourincome tax expense,deferred income tax assets a
273、nd liabilities andunrecognized tax benefits reflect managements assessment ofestimated future taxes to be paid on items in the consolidatedfinancial statements.The following table presents information about our tax position atJune 30:(1)Total deferred income tax assets included$671 million and$778 m
274、illion ofloss and tax credit carryforwards at June 30,2023 and 2022,respectively.(2)The valuation allowance primarily relates to federal,state and internationalloss and credit carryforwards for which the ultimate realization of futurebenefits is uncertain.Expiring or unusable loss and credit carryfo
275、rwards and therequired valuation allowances are adjusted quarterly when it ismore likely than not that at least a portion of the respectivedeferred tax assets will not be realized.After applying the valuationallowances,we do not anticipate any limitations on our use of anyof the other net deferred i
276、ncome tax assets described previously.Tax benefits from uncertain tax positions are recognized when it ismore likely than not that the position will be sustained uponexamination of the technical merits of the position,includingresolutions of any related appeals or litigation.The amountrecognized is
277、measured as the largest amount of tax benefit that isgreater than 50 percent likely of being realized upon settlement.For tax benefits that do not qualify for recognition,we recognize aliability for unrecognized tax benefits.We operate in a complex multinational tax environment and aresubject to tax
278、 treaty arrangements and transfer pricing guidelinesfor intercompany transactions that are subject to interpretation.Uncertainty in a tax position may arise as tax laws are subject tointerpretation.Tax Effects of Goodwill Impairment ChargesDuring fiscal 2023 and 2022,we recognized cumulative pre-tax
279、goodwill impairment charges of$1.2 billion and$2.1 billion,respectively,related to the Medical Unit.The net tax benefitsrelated to these charges were$82 million and$150 million,respectively.We file income tax returns in the U.S.federal jurisdiction,variousU.S.state jurisdictions and various foreign
280、jurisdictions.With fewexceptions,we are subject to audit by taxing authorities for fiscalyears 2015 through the current fiscal year.Tax laws are complexand subject to varying interpretations.During fiscal 2021,weresolved all open issues with respect to the Companys activitywithin fiscal years 2008 t
281、hrough 2014 with the U.S.InternalRevenue Service(IRS).This resolution resulted in an adjustmentto our provision for income taxes,including an impact to reservesfor later years.New challenges related to future audits mayadversely affect our effective tax rate or tax payments.Our assumptions and estim
282、ates around uncertain tax positionsrequire significant judgment;the actual amount of tax benefitrelated to uncertain tax positions may differ from these estimates.See Note 8 of the Notes to Consolidated Financial Statements foradditional information regarding unrecognized tax benefits.We believe tha
283、t our estimates for the valuation allowances againstdeferred tax assets and unrecognized tax benefits are appropriatebased on current facts and circumstances.The amount weCardinal Health I Fiscal 2023 Form 10-K 19?MD&ACritical Accounting Policies and Sensitive Accounting Estimatesultimately pay when
284、 matters are resolved may differ from theamounts accrued.Changes in our current estimates due tounanticipated market conditions,tax law changes or other factorscould have a material effect on our ability to utilize deferred taxassets.For a further discussion on Provision for Income Taxes,see Note 8
285、of the Notes to the Consolidated FinancialStatements.The calculation of our tax liabilities includes estimates foruncertainties in the application of broad and complex changes tothe U.S.tax code as per the Tax Act as enacted by the UnitedStates government on December 22,2017.We have madereasonable e
286、stimates and recorded amounts based onmanagement judgment and our current understanding of the TaxAct which is subject to further interpretation by the IRS.See Note 8of the Notes to Consolidated Financial Statements for additionalinformation.20 Cardinal Health I Fiscal 2023 Form 10-K?Explanation and
287、 Reconciliation of Non-GAAP Financial MeasuresExplanation and Reconciliation of Non-GAAP FinancialMeasuresThis report,including the Fiscal 2023 Overview section within MD&A,contains financial measures that are not calculated in accordancewith GAAP.In addition to analyzing our business based on finan
288、cial information prepared in accordance with GAAP,we use these non-GAAP financialmeasures internally to evaluate our performance,engage in financial and operational planning and determine incentive compensationbecause we believe that these measures provide additional perspective on and,in some circu
289、mstances are more closely correlated to,theperformance of our underlying,ongoing business.We provide these non-GAAP financial measures to investors as supplemental metrics toassist readers in assessing the effects of items and events on our financial and operating results on a year-over-year basis a
290、nd incomparing our performance to that of our competitors.However,the non-GAAP financial measures that we use may be calculateddifferently from,and therefore may not be comparable to,similarly titled measures used by other companies.The non-GAAP financialmeasures disclosed by us should not be consid
291、ered a substitute for,or superior to,financial measures calculated in accordance withGAAP,and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth belowshould be carefully evaluated.Exclusions from Non-GAAP Financial MeasuresManagement
292、believes it is useful to exclude the following items from the non-GAAP measures presented in this report for its own and forinvestors assessment of the business for the reasons identified below:LIFO charges and credits are excluded because the factors that drive last-in first-out(LIFO)inventory char
293、ges or credits,suchas pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels(which can be meaningfullyinfluenced by customer buying behavior immediately preceding our fiscal year-end),are largely out of our control and cannot beaccurately predicted.The exclusion of
294、 LIFO charges and credits from non-GAAP metrics facilitates comparison of our currentfinancial results to our historical financial results and to our peer group companies financial results.We did not recognize anyLIFO charges or credits during the periods presented.Surgical gown recall costs or inco
295、me includes inventory write-offs and certain remediation and supply disruption costs,net ofrelated insurance recoveries,arising from the January 2020 recall of select Association for the Advancement of MedicalInstrumentation(AAMI)Level 3 surgical gowns and voluntary field actions(a recall of some pa
296、cks and a corrective actionallowing overlabeling of other packs)for Presource Procedure Packs containing affected gowns.Income from surgical gownrecall costs represents insurance recoveries of these certain costs.We have excluded these costs from our non-GAAP metrics toallow investors to better unde
297、rstand the underlying operating results of the business and to facilitate comparison of our currentfinancial results to our historical financial results and to our peer group companies financial results.State opioid assessments related to prior fiscal years is the portion of state assessments for pr
298、escription opioid medications thatwere sold or distributed in periods prior to the period in which the expense is incurred.This portion is excluded from non-GAAPfinancial measures because it is retrospectively applied to sales in prior fiscal years and inclusion would obscure analysis of thecurrent
299、fiscal year results of our underlying,ongoing business.Additionally,while states laws may require us to make paymentson an ongoing basis,the portion of the assessment related to sales in prior periods are contemplated to be one-time,nonrecurring items.Income from state opioid assessments related to
300、prior fiscal years represents reversals of accruals due tochanges in estimates or when the underlying assessments were invalidated by a Court or reimbursed by manufacturers.Shareholder cooperation agreement costs includes costs such as legal,consulting and other expenses incurred in relation to thea
301、greement(the Cooperation Agreement)entered into among Elliott Associates,L.P.,Elliott International,L.P.(together,Elliott)and Cardinal Health,including costs incurred to negotiate and finalize the Cooperation Agreement and costs incurred bythe Business Review Committee of the Board of Directors,whic
302、h was formed under this Cooperation Agreement.We haveexcluded these costs from our non-GAAP metrics because they do not occur in or reflect the ordinary course of our ongoingbusiness operations and may obscure analysis of trends and financial performance.Restructuring and employee severance costs ar
303、e excluded because they are not part of the ongoing operations of our underlyingbusiness and include,but are not limited to,costs related to divestitures,closing and consolidating facilities,changing the waywe manufacture or distribute our products,moving manufacturing of a product to another locati
304、on,changes in production orbusiness process outsourcing or insourcing,employee severance and realigning operations.Amortization and other acquisition-related costs,which include transaction costs,integration costs and changes in the fair valueof contingent consideration obligations,are excluded beca
305、use they are not part of the ongoing operations of our underlyingbusiness and to facilitate comparison of our current financial results to our historical financial results and to our peer groupCardinal Health Fiscal 2023 Form 10-K 21?Explanation and Reconciliation of Non-GAAP Financial Measurescompa
306、nies financial results.Additionally,costs for amortization of acquisition-related intangible assets are non-cash amounts,which are variable in amount and frequency and are significantly impacted by the timing and size of acquisitions,so theirexclusion facilitates comparison of historical,current and
307、 forecasted financial results.We also exclude other acquisition-relatedcosts,which are directly related to an acquisition but do not meet the criteria to be recognized on the acquired entitys initialbalance sheet as part of the purchase price allocation.These costs are also significantly impacted by
308、 the timing,complexity andsize of acquisitions.Impairments and gain or loss on disposal of assets,net are excluded because they do not occur in or reflect the ordinary courseof our ongoing business operations and are inherently unpredictable in timing and amount,and in the case of impairments,arenon
309、-cash amounts,so their exclusion facilitates comparison of historical,current and forecasted financial results.Litigation recoveries or charges,net are excluded because they often relate to events that may have occurred in prior or multipleperiods,do not occur in or reflect the ordinary course of ou
310、r business and are inherently unpredictable in timing and amount.During fiscal 2022,we incurred a one-time contingent attorneys fee of$18 million related to the finalization of the settlementagreement(the National Opioid Settlement Agreement)resulting in the settlement of the vast majority of opioid
311、 lawsuits filed bystate and local governmental entities.Due to the unique nature and significance of the National Opioid Settlement Agreement,and the one-time,contingent nature of the fee,this fee was included in litigation recoveries or charges,net.Additionally,duringfiscal 2022 our Pharmaceutical
312、segment profit was positively impacted by a$16 million judgment for lost profits.This judgmentwas the result of an ordinary course intellectual property rights claim and,therefore,is not adjusted in calculating the litigationrecoveries or charges,net adjustment.During fiscal 2021,we incurred a tax b
313、enefit related to a carryback of a net operating loss.Some pre-tax amounts,which contributed to this loss,relate to litigation charges.As a result,we allocated substantially all of thetax benefit to litigation charges.Loss on early extinguishment of debt is excluded because it does not typically occ
314、ur in the normal course of business and mayobscure analysis of trends and financial performance.Additionally,the amount and frequency of this type of charge is notconsistent and is significantly impacted by the timing and size of debt extinguishment transactions.(Gain)/Loss on sale of equity interes
315、t in naviHealth was incurred in connection with the sale of our remaining equity interest innaviHealth in fiscal 2020.The equity interest was retained in connection with the initial sale of our majority interest in naviHealthduring fiscal 2019.We exclude this significant gain because gains or losses
316、 on investments of this magnitude do not typicallyoccur in the normal course of business and are similar in nature to a gain or loss from a divestiture of a majority interest,whichwe exclude from non-GAAP results.The gain on the initial sale of our majority interest in naviHealth in fiscal 2019 was
317、alsoexcluded from our non-GAAP measures.The tax effect for each of the items listed above is determined using the tax rate and other tax attributes applicable to the item and thejurisdiction(s)in which the item is recorded.The gross,tax and net impact of each item are presented with our GAAP to non-
318、GAAPreconciliations.DefinitionsGrowth rate calculation:growth rates in this report are determined by dividing the difference between current period results and priorperiod results by prior period results.Non-GAAP operating earnings:operating earnings/(loss)excluding(1)LIFO charges/(credits),(2)surgi
319、cal gown recall costs/(income),(3)state opioid assessment related to prior fiscal years,(4)shareholder cooperation agreement costs,(5)restructuring and employeeseverance,(6)amortization and other acquisition-related costs,(7)impairments and(gain)/loss on disposal of assets,net and(8)litigation(recov
320、eries)/charges,net.Non-GAAP earnings before income taxes:earnings/(loss)before income taxes excluding(1)LIFO charges/(credits),(2)surgical gownrecall costs/(income),(3)state opioid assessment related to prior fiscal years,(4)shareholder cooperation agreement costs,(5)restructuring and employee sever
321、ance,(6)amortization and other acquisition-related costs,(7)impairments and(gain)/loss on disposal ofassets,net,(8)litigation(recoveries)/charges,net,(9)loss on early extinguishment of debt and(10)(gain)/loss on sale of equity interest innaviHealth.Non-GAAP net earnings attributable to Cardinal Heal
322、th,Inc.:net earnings/(loss)attributable to Cardinal Health,Inc.excluding(1)LIFOcharges/(credits),(2)surgical gown recall costs/(income),(3)state opioid assessment related to prior fiscal years,(4)shareholdercooperation agreement costs,(5)restructuring and employee severance,(6)amortization and other
323、 acquisition-related costs,(7)impairments and(gain)/loss on disposal of assets,net,(8)litigation(recoveries)/charges,net,(9)loss on early extinguishment of debt and(10)(gain)/loss on sale of equity interest in naviHealth,each net of tax.22 Cardinal Health I Fiscal 2023 Form 10-K?Explanation and Reco
324、nciliation of Non-GAAP Financial MeasuresNon-GAAP effective tax rate:provision for/(benefit from)income taxes adjusted for the tax impacts of(1)LIFO charges/(credits),(2)surgical gown recall costs/(income),(3)state opioid assessment related to prior fiscal years,(4)shareholder cooperation agreement
325、costs,(5)restructuring and employee severance,(6)amortization and other acquisition-related costs,(7)impairments and(gain)/loss on disposalof assets,net,(8)litigation(recoveries)/charges,net,(9)loss on early extinguishment of debt and(10)(gain)/loss on sale of equity interestin naviHealth divided by
326、(earnings before income taxes adjusted for the ten items above).Non-GAAP diluted earnings per share attributable to Cardinal Health,Inc.:non-GAAP net earnings attributable to Cardinal Health,Inc.divided by diluted weighted-average shares outstanding.Cardinal Health I Fiscal 2023 Form 10-K 23?Explana
327、tion and Reconciliation of Non-GAAP Financial Measures(in millions,except per common share amounts)OperatingEarnings/(Loss)Operating Earnings/Earnings/(Loss)(Loss)BeforeGrowth IncomeRate T a x e sProvisionfor/(BenefitFrom)N e tIncome Earnings!Taxes(Loss)NetEarnings/(Loss)1GrowthRateEffective Diluted
328、Tax Rate E P S DilutedEPSGrowthRateFiscal Year 2023GAAP$7 2 7N.M.$6 3 8$3 7 6$2 6 1N.M.58.9%$1.00N.M.State opioid assessment related to prior fiscal years(6)(6)(2)(4)(0.02)Shareholder cooperation agreement costs882 60.02Restructuring and employee severance959521 740.28Amortization and other acquisit
329、ion-related costs28528574 2 1 10.80Impairments and(gain)/loss on disposal of assets,net31,2501,25086 1,1 6 44.44Litigation(recoveries)/charges,net(302)(302)(109)(1 9 3)(0.73)Non-GAAP$2,0573%$1,968$4 4 8$1,5197%22.8%$5.7914%Fiscal Year 2022GAAP$(5 9 6)N.M.$(769)$1 6 3$(933)N.M.(21.2)%$(3.35)N.M.Surgi
330、cal gown recall costs/(income)11-1Restructuring and employee severance10110126 750.27Amortization and other acquisition-related costs32432484 2 4 00.87Impairments and(gain)/loss on disposal of assets,net32,0502,050107 1,9 4 36.93Litigation(recoveries)/charges,net4510910921 880.31Loss on early exting
331、uishment of debt103 70.03Loss on sale of equity interest in naviHealth investment(2)(2)Non-GAAP$1,990(12)%$1,824$4 0 4$1,419(13)%22.1%$5.06(9)%Fiscal Year 2021GAAP$4 7 2N.M.$3 2 3$(289)$6 1 1N.M.(89.7)%$2.08N.M.Surgical gown recall costs/(income)(28)(28)(7)(2 1)(0.07)State opioid assessment related
332、to prior fiscal years38389 290.10Restructuring and employee severance11411427 870.29Amortization and other acquisition-related costs4514511 18 3 3 31.13Impairments and(gain)/loss on disposal of assets,net797915 640.21Litigation(recoveries)/charges,net671,1291,129606 5 2 31.78Loss on early extinguish
333、ment of debt143 110.04Loss on sale of equity interest in naviHealth investment21 10.01Non-GAAP$2,255(5)%$2,122$4 8 3$1,6372%22.8%$5.572 c/oGAAP to Non-GAAP Reconciliations234567Attributable to Cardinal Health,Inc.For fiscal 2022,GAAP diluted loss per share attributable to Cardinal Health,Inc.and the EPS impact from the GAAP to non-GAAP per share reconciling items arecalculated using a weighted ave