ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations About Cardinal Health Cardinal Health, Inc., an Ohio corporation formed in 1979, is a global healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. We provide pharmaceuticals and medical products and cost-effective services and solutions that enhance the healthcare system and supply chain efficiency. We connect patients, providers, payers, pharmacists, and manufacturers for integrated care coordination. We report our financial results in two reportable segments: Pharmaceutical and Specialty Solutions ("Pharma") segment and Global Medical Products and Distribution ("GMPD") segment. All remaining operating segments that are not significant enough to require separate reportable segment disclosures are included in Other, which is comprised of Nuclear and Precision Health Solutions, at-Home Solutions, and OptiFreight ® Logistics. Pharmaceutical and Specialty Solutions Segment Our Pharma segment distributes branded and generic pharmaceutical, specialty pharmaceutical, and over-the-counter healthcare and consumer products in the United States. This segment also provides services to pharmaceutical manufacturers and healthcare providers for specialty pharmaceutical products; provides pharmacy management services to hospitals and operates a limited number of pharmacies, including pharmacies in community health centers; repackages generic pharmaceuticals and over the counter healthcare products; and includes our managed services organization platforms for specialty physician offices. Global Medical Products and Distribution Segment Our GMPD segment manufactures, sources, and distributes Cardinal Health brand medical, surgical, and laboratory products, which are sold in the United States, Canada, Europe, Asia, and other markets. This segment also distributes a broad range of medical, surgical, and laboratory products known as national brand products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers in the United States and Canada. Other Operating Segments Our Nuclear and Precision Health Solutions operating segment operates nuclear pharmacies and manufacturing facilities, which manufacture, prepare, and deliver radiopharmaceuticals for use in nuclear imaging, theranostics, and other procedures in hospitals and physician offices. This segment also contract manufactures a radiopharmaceutical treatment (Xofigo ® ) and holds the North American rights to manufacture and distribute Lymphoseek ® , a radiopharmaceutical diagnostic imaging agent. Our at-Home Solutions operating segment has two main businesses: Edgepark, including ADS, directly providing medical supplies to patients with chronic conditions in the home; and at-Home, a business-to-business distribution service that delivers medical supplies and over-the-counter products to home medical equipment providers, home health and hospice agencies, and e-commerce providers. Our OptiFreight ® Logistics operating segment supports the shipping and logistics needs of healthcare providers by optimizing direct shipments through integrated technology solutions. This segment serves hospitals, pharmacies, labs, and surgery centers. 3 Cardinal Health | Fiscal 2025 Form 10-K MD&A Overview Consolidated Results Fiscal 2025 Overview Revenue Revenue decreased 2 percent to $222.6 billion for fiscal 2025 from the prior year, primarily due to the expiration of the Pharma segment OptumRx contracts, partially offset by branded and specialty pharmaceutical sales growth from existing and new customers. GAAP and Non-GAAP Operating Earnings (in millions) 2025 2024 Change GAAP operating earnings $ 2,275   $ 1,243  83   % Shareholder cooperation agreement costs —   1 Restructuring and employee severance 88   175 Amortization and other acquisition-related costs 464   284 Acquisition-related cash and share-based compensation costs 126   — Impairments and (gain)/loss on disposal of assets, net 18   634 Litigation (recoveries)/charges, net (185) 78 Non-GAAP operating earnings $ 2,786   $ 2,414  15   % The sum of the components and certain computations may reflect rounding adjustments. During fiscal 2025, GAAP operating earnings increased 83% to $2.3 billion and non-GAAP operating earnings increased 15% to $2.8 billion from the prior year. The increases in both GAAP and non-GAAP operating earnings were driven by the increased contribution from branded and specialty pharmaceutical products and the acquisitions of MSO platforms and ADS, partially offset by the expiration of the OptumRx contracts. The increase to GAAP operating earnings was primarily driven by the favorable comparison to the prior year, which included pre-tax non-cash goodwill impairment charges of $675 million related to the GMPD segment. The increase to GAAP operating earnings was also favorably impacted by net recoveries in class action antitrust litigation in which we were a class member or plaintiff, for which we recognized $171 million during fiscal 2025. In fiscal 2025, GAAP operating earnings included $161 million of transaction and integration costs associated with acquisitions. 4 Cardinal Health | Fiscal 2025 Form 10-K MD&A Overview GAAP and Non-GAAP Diluted EPS ($ per share) 2025 (2) 2024 (2) Change GAAP diluted EPS (1) $ 6.45   $ 3.45  87   % Restructuring and employee severance 0.28   0.54 Amortization and other acquisition-related costs 1.49   0.85 Acquisition-related cash and share-based compensation costs 0.51   — Impairments and (gain)/loss on disposal of assets, net (3) 0.05   2.38 Litigation (recoveries)/charges, net (0.54) 0.30 Non-GAAP diluted EPS (1) $ 8.24   $ 7.53  9   % The sum of the components and certain computations may reflect rounding adjustments. (1) Diluted earnings per share attributable to Cardinal Health, Inc. ("diluted EPS"). (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 Reconciliations in the section titled "Explanation and Reconciliation of Non-GAAP Financial Measures." (3) For fiscal 2024, impairments and (gain)/loss on disposals of assets, net included pre-tax goodwill impairment charges of $675 million related to the GMPD segment. This had an adverse impact of $(2.50) per share to GAAP diluted EPS. During fiscal 2025, GAAP and non-GAAP diluted EPS increased 87 percent to $6.45 and 9 percent to $8.24, respectively, from the prior year due to the factors impacting operating earnings discussed in the preceding section, partially offset by increased interest expense. Cash and Equivalents Our cash and equivalents balance was $3.9 billion at June 30, 2025 compared to $5.1 billion at June 30, 2024. During fiscal 2025, net cash provided by operating activities was $2.4 billion, which includes the impact of unwinding the negative net working capital associated with the expiration of our OptumRx contracts and the normal timing of payments to vendors, partially offset by the benefit of onboarding new customers. Cash provided by operating activities also includes the impact of payments totaling $798 million related to opioid litigation. During fiscal 2025, we deployed $5.3 billion for acquisitions, $765 million for share repurchases, $400 million for debt repayment, $547 million for capital expenditures, and $494 million for dividends. In addition, we issued new long-term debt and received net proceeds of $2.9 billion to fund a portion of the consideration paid for acquisitions and for general purposes. Another portion of the consideration paid for the acquisitions came from an $800 million term loan. Cardinal Health | Fiscal 2025 Form 10-K 5 MD&A Overview Significant Developments in Fiscal 2025 and Trends Acquisitions Advanced Diabetes Supply Group ("ADS") On April 1, 2025, we completed the acquisition of ADS, a diabetic medical supplies provider to patients in the home, for a purchase price of $1.1 billion in cash, subject to certain adjustments. ADS serves approximately 500,000 patients annually providing diabetes therapies from leading manufacturers. ADS is part of our at-Home Solutions operating segment and its results are reported in Other. The Specialty Alliance On January 30, 2025, we completed the acquisition of a 73 percent ownership interest in GI Alliance ("GIA"), a management services organization ("MSO") primarily serving gastroenterologists, for a purchase price of approximately $2.8 billion in cash, subject to certain adjustments. Beginning on the third anniversary of the closing, we have the ability to exercise a call right to purchase up to 100 percent of the remaining outstanding equity. GIA's MSO provides services to over 900 physicians across 345 practice locations in 20 states. Additionally, on May 30, 2025, we, through GIA, completed the acquisition of Urology America, a urology management services organization, for a purchase price of $360 million in cash, subject to certain adjustments. In connection with this transaction, we issued common units in GIA to certain physicians and management. See Note 1 of the “Notes to Consolidated Financial Statements” for further information on the GIA share-based compensation plans. In recognition of the expansion into new practice areas, in June 2025, we announced that these businesses would be called The Specialty Alliance. We consolidate the results of The Specialty Alliance in our consolidated financial statements and report those consolidated results within our Pharma segment. We financed the acquisitions of GIA, Urology America, and ADS with a combination of cash on hand and cash proceeds from the new debt financing as described in Note 7 of the "Notes to Consolidated Financial Statements". Integrated Oncology Network ("ION") On December 2, 2024, we completed the acquisition of ION, a physician-led independent community oncology network, for a purchase price of $1.1 billion in cash, subject to certain adjustments. ION is a management services organization that supports more than 50 practice sites in 10 states representing more than 100 providers. ION supports a continuum of care across its member sites including medical oncology, radiation oncology, urology, and other ancillary services. As part of the transaction, ION has been integrated into Navista, our managed services organization intended to enhance efficiency for providers and patients, enable additional capabilities, and increase practice profitability of independent community oncologists. We report ION results within our Pharma segment. We funded the acquisition with available cash on hand. These acquisitions have positively impacted their respective segment revenue and segment profit while increasing amortization and acquisition-related costs and acquisition-related cash and share-based compensation costs during fiscal 2025. Those impacts are expected to continue in fiscal 2026 and beyond. See Note 2 of the "Notes to Consolidated Financial Statements" for additional information on these acquisitions. Tariffs Recent U.S. tariffs imposed or threatened to be imposed on goods, materials, and products from countries where we do business and any retaliatory or responsive actions taken by such countries could result in us incurring substantial additional costs to source materials, directly and indirectly, from affected countries, and may require us to raise prices on certain products and seek alternative sources of supply. It is also possible that we could experience supply disruptions or shortages as a result of tariffs or other protective measures. We have taken action to reduce the potential impact of tariffs on our costs; however, at this time, the countries which will be subject to tariffs and the tariff rate that may be imposed on each country is uncertain and dynamic and we do not expect to be able to establish alternative sources of supply or otherwise mitigate the potential impact of tariffs on all of the products that we source, manufacture, or distribute. If we are not able to offset the impact of tariffs through price increases or otherwise mitigate the impacts, our financial results could be negatively impacted. Additionally, if tariffs are modified in the future, or our preliminary information is incorrect regarding their impact, we may not be able to respond to such changes appropriately or in a timely manner and our financial results could be negatively impacted. Furthermore, if our competitors do not increase prices, or increase prices to a lesser extent than we do, or are able to offset the impact of tariffs through other actions, our competitive and financial position may be adversely affected. 6 Cardinal Health | Fiscal 2025 Form 10-K MD&A Overview Pharmaceutical and Specialty Solutions Segment OptumRx Contracts In April 2024, we announced that our pharmaceutical distribution contracts with OptumRx would expire at the end of June 2024. Sales to OptumRx generated 17 percent of our consolidated revenue in fiscal 2024. The expiration of the OptumRx contracts and unwinding of the negative net working capital associated with the contracts adversely impacted our results of operations, including segment profit, financial condition, and cash flows, during fiscal 2025. Branded Pharmaceuticals During fiscal 2025 and 2024, we saw increased demand for GLP-1 pharmaceuticals and our sales increased significantly, despite periodic supply shortages. These increased sales positively impacted our Pharma segment and consolidated revenue for the fiscal 2025 and 2024; however, increased GLP-1 sales did not meaningfully contribute to segment profit. Future demand and reimbursement for these medications is unpredictable and our ability to meet demand may be impacted by supply constraints. Additionally, the recently issued Executive Order titled “Delivering Most-Favored Nation Prescription Drug Pricing to American Patients” may impact sales or profitability of branded pharmaceutical products, including GLP-1 products; however, the extent of the impact is uncertain and may vary depending on the timeline for implementation and the extent of any price reductions. Generics Program During fiscal 2025, the performance of our Pharma segment generics program positively impacted the year-over-year comparison of Pharma segment profit, excluding the impact of the OptumRx contracts expiration. The Pharma segment generics program includes, among other things, the impact of generic pharmaceutical product launches, customer volumes, pricing changes, the Red Oak Sourcing, LLC venture ("Red Oak Sourcing") with CVS Health Corporation ("CVS Health"), and generic pharmaceutical contract manufacturing and sourcing costs. The frequency, timing, magnitude, and profit impact of generic pharmaceutical customer volumes, pricing changes, customer contract renewals, generic pharmaceutical manufacturer pricing changes, and generic pharmaceutical contract manufacturing and sourcing costs all impact Pharma segment profit and are subject to risks and uncertainties. BioPharma Solutions The performance of BioPharma Solutions positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2025. BioPharma Solutions consists of services to biopharmaceutical manufacturers and healthcare providers including, among other things, Specialty Networks, third-party logistics ("3PL"), group purchasing organizations ("GPOs"), our Sonexus patient access and support programs, regulatory and clinical consulting, and real world data and evidence. The frequency, timing, magnitude, and profit impact of customer demand, new product launches, and our ongoing investments are subject to risks and uncertainties. These risks and uncertainties may impact Pharma segment profit and consolidated operating earnings during fiscal 2026 and beyond. Management Service Organization Platforms The performance of our MSO platforms positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2025 due to the acquisitions of GIA and ION. Our ability to successfully provide physician practice support and management services, and to receive the value we expect to receive from our recent acquisition of MSO platforms, depends upon a number of factors, including: the ability to develop or acquire and integrate appropriate practice management and support expertise; the ability to support recruitment, integration, and retention of sufficient numbers of local providers and staff; the ability to successfully support negotiations with vendors, suppliers, and payors; the reimbursement environment; and competition from other healthcare organizations. Global Medical Products and Distribution Segment Volumes Cardinal Health brand medical products sales grew during fiscal 2025 and we expect further growth in fiscal 2026 and beyond. The timing, magnitude, and profit impact of this anticipated sales growth is subject to risks and uncertainties, including the signing of new customers or the expiration of customer contracts, and it is possible that sales volume may differ from our expectations and impact GMPD segment profit to a greater or lesser extent than we currently expect. Cardinal Health | Fiscal 2025 Form 10-K 7 MD&A Results of Operations Results of Operations Revenue Revenue (in millions) 2025 2024 Change Pharmaceutical and Specialty Solutions $ 204,644   $ 210,019  (3) % Global Medical Products and Distribution 12,636   12,381  2   % Other 5,382   4,512  19   % Total segment revenue 222,662   226,912  (2) % Corporate (1) (84) (85) N.M. Total revenue $ 222,578   $ 226,827  (2) % (1) Corporate revenue consists of the elimination of inter-segment revenue and other revenue not allocated to the segments. Pharmaceutical and Specialty Solutions Pharma segment revenue for fiscal 2025 decreased 3 percent to $204.6 billion from the prior year, primarily due to the expiration of the OptumRx contracts, partially offset by branded and specialty pharmaceutical sales growth from existing and new customers. Global Medical Products and Distribution GMPD segment revenue for fiscal 2025 increased 2 percent to $12.6 billion from the prior year, primarily due to higher volumes from existing customers. Other Other segment revenue for fiscal 2025 increased 19 percent to $5.4 billion from the prior year due to growth across at-Home Solutions, Nuclear and Precision Health Solutions, and OptiFreight ® Logistics. 8 Cardinal Health | Fiscal 2025 Form 10-K MD&A Results of Operations Cost of Products Sold Cost of products sold for fiscal 2025 decreased 2 percent to $214.4 billion from the prior year, primarily due to the factors affecting the changes in revenue and gross margin. Gross Margin Gross Margin (in millions) 2025 2024 Change Gross margin $ 8,168   $ 7,414  10   % Gross margin for fiscal 2025 increased 10 percent to $8.2 billion from the prior year, primarily due to the acquisitions of MSO platforms and ADS, increased contribution from branded and specialty pharmaceutical products, and BioPharma Solutions, partially offset by the expiration of the OptumRx contracts. Gross margin rate for fiscal 2025 grew 40 basis points from the prior year, primarily due to favorable changes in overall product and customer mix, primarily related to branded and specialty pharmaceutical products and the expiration of the OptumRx contracts, and MSO platforms acquisitions. Distribution, Selling, General, and Administrative ("SG&A") Expenses SG&A Expenses (in millions) 2025 2024 Change SG&A expenses $ 5,382   $ 5,000  8   % SG&A expenses for fiscal 2025 increased 8 percent to $5.4 billion from the prior year, primarily due to the acquisitions of MSO platforms and ADS, higher costs to support sales growth for existing customers, and higher health and welfare costs, partially offset by the beneficial impact of enterprise-wide cost savings measures. Cardinal Health | Fiscal 2025 Form 10-K 9 MD&A Results of Operations Segment Profit We evaluate segment performance based on segment profit, among other measures. See Note 14 of the "Notes to Consolidated Financial Statements" for additional information on segment profit. Segment Profit and Operating Earnings (in millions) 2025 2024 Change Pharmaceutical and Specialty Solutions $ 2,258   $ 2,015  12   % Global Medical Products and Distribution 135   92  47   % Other 516   423  22   % Total segment profit 2,909   2,530  15   % Corporate (634) (1,287) N.M. Total consolidated operating earnings $ 2,275   $ 1,243  83   % Pharmaceutical and Specialty Solutions Pharma segment profit for fiscal 2025 increased 12 percent to $2.3 billion from the prior year, primarily due to increased contribution from branded and specialty pharmaceutical products, BioPharma Solutions, and MSO platforms acquisitions, partially offset by the expiration of the OptumRx contracts. Global Medical Products and Distribution GMPD segment profit for fiscal 2025 increased 47 percent to $135 million from the prior year, primarily due to volume growth from existing customers. This increase also reflects the beneficial impact of cost optimization initiatives, mostly offset by higher manufacturing costs. Other Other segment profit for fiscal 2025 increased 22 percent to $516 million from the prior year, primarily due to the performance of at-Home Solutions, which includes the acquisition of ADS, and OptiFreight ® Logistics. Corporate The changes in Corporate during fiscal 2025 are due to the factors discussed in the "Other Components of Consolidated Operating Earnings" section that follows. 10 Cardinal Health | Fiscal 2025 Form 10-K MD&A Results of Operations Other Components of Consolidated Operating Earnings In addition to revenue, gross margin, and SG&A expenses discussed previously, consolidated operating earnings were impacted by the following: (in millions) 2025 2024 Restructuring and employee severance $ 88   $ 175 Amortization and other acquisition-related costs 464   284 Acquisition-related cash and share-based compensation costs 126   — Impairments and (gain)/loss on disposal of assets, net 18   634 Litigation (recoveries)/charges, net (185) 78 Restructuring and Employee Severance Restructuring and employee severance costs in fiscal 2025 and 2024 were primarily related to certain initiatives to rationalize our manufacturing operations and the implementation of certain enterprise-wide cost-savings measures. In fiscal 2024, restructuring costs were higher primarily due to certain projects resulting from the reviews of our strategy, portfolio, capital-allocation framework, and operations. Amortization and Other Acquisition-Related Costs Amortization of acquisition-related intangible assets was $303 million and $264 million for fiscal 2025 and 2024, respectively. Transaction and integration costs associated with acquisitions were $161 million and $20 million for fiscal 2025 and 2024, respectively. Acquisition-related Cash and Share-based Compensation Costs Acquisition-related cash and share-based compensation costs were $126 million for fiscal 2025, primarily resulting from the acquisition of GIA. Impairments and (Gain)/Loss on Disposal of Assets, Net During fiscal 2024, we recognized $675 million of pre-tax non-cash goodwill impairment charges related to our GMPD segment, as discussed further in the "Critical Accounting Policies and Sensitive Accounting Estimates" section of this MD&A and Note 5 of the "Notes to Consolidated Financial Statements." Litigation (Recoveries)/Charges, Net During fiscal 2025, we recognized income of $171 million for net recoveries in class action lawsuits in which we were a class member or plaintiff. We also recognized $13 million in opioid-related insurance recoveries. During fiscal 2024, we recognized expense of $340 million in connection with opioid-related matters, including agreements to settle claims brought by classes of third-party payors and acute care hospitals, the case brought by the City of Baltimore, and a settlement with the State of Alabama. This expense was partially offset by a benefit of $105 million related to certain prepayments and $34 million in opioid-related insurance recoveries. We also recognized income of $117 million for net recoveries in class action lawsuits in which we were a class member or plaintiff. See  Note 8  of the "Notes to Consolidated Financial Statements" for additional information. Cardinal Health | Fiscal 2025 Form 10-K 11 MD&A Results of Operations Other Components of Earnings Before Income Taxes In addition to the items discussed above, earnings before income taxes was impacted by the following: Earnings Before Income Taxes (in millions) 2025 2024 Change Other (income)/expense, net $ (41) $ (9) N.M. Interest expense, net 215   51  N.M. Interest Expense, Net Interest expense, net for fiscal 2025 increased to $215 million from the prior year, primarily due to the new debt financing and decreased interest income from cash and equivalents. See Note 7 of the "Notes to Consolidated Financial Statements" for additional information on the new debt financing. Provision for Income Taxes A reconciliation of the provision based on the federal statutory income tax rate to our effective income tax rate from continuing operations is as follows (see Note 9 of the "Notes to Consolidated Financial Statements" for additional information): 2025 2024 Provision at Federal statutory rate 21.0   % 21.0  % State and local income taxes, net of federal benefit 4.0   3.1 Tax effect of foreign operations 0.2   (1.6) Nondeductible/nontaxable items 0.7   (0.1) Withholding Taxes 0.3   1.0 Change in Valuation Allowances 0.1   (1.1) US Taxes on International Income (1) (1.3) (2.1) Impact of Resolutions with IRS and other related matters (0.1) 0.4 Opioid litigation 0.2   1.0 Goodwill Impairment —   8.7 Specialty Alliance Share-based Compensation 1.4   — Other (1.2) (1.4) Effective income tax rate 25.3   % 28.9  % (1) Includes the tax impact of the Foreign-Derived Intangible Income ("FDII") deduction offset by Global Intangible Low-Taxed Income ("GILTI") tax, and other foreign income that is taxable under the U.S. tax code. During fiscal 2025 and 2024, the effective tax rate was 25.3 percent and 28.9 percent, respectively. Included in the effective tax rate for fiscal 2025 were non-deductible share based compensation costs for The Specialty Alliance and non-deductible transaction costs. Included in the effective tax rate for fiscal 2024 was $58 million of benefit related to goodwill impairment charges related to our GMPD segment. Ongoing Audits We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various foreign jurisdictions. With few exceptions, we are subject to audit by taxing authorities for fiscal 2015 through the current fiscal year. Tax laws are complex and subject to varying interpretations. New challenges related to future audits may adversely affect our effective tax rate or tax payments. 12 Cardinal Health | Fiscal 2025 Form 10-K MD&A Liquidity and Capital Resources Liquidity and Capital Resources We currently believe that, based on available capital resources and projected operating cash flow, we have adequate capital resources to fund our operations and expected future cash needs as described below. If we decide to engage in one or more acquisitions, depending on the size and timing of such transactions, we may need to access capital markets for additional financing. Cash and Equivalents Our cash and equivalents balance was $3.9 billion at June 30, 2025 compared to $5.1 billion at June 30, 2024. During fiscal 2025, net cash provided by operating activities was $2.4 billion, which includes the impact of unwinding the negative net working capital associated with the OptumRx contracts and the normal timing of payments to vendors, partially offset by the benefit of onboarding new customers. Cash provided by operating activities also includes the impact of payments totaling $798 million related to the opioid litigation. During fiscal 2025, we deployed $5.3 billion for acquisitions, $765 million for share repurchases, $400 million for debt repayment, $547 million for capital expenditures, and $494 million for dividends. In addition, we issued new long-term debt and received net proceeds of $2.9 billion to fund a portion of the consideration paid for acquisitions and for general purposes. Another portion of the consideration paid for the acquisitions came from an $800 million term loan. At June 30, 2025, our cash and equivalents were held in cash depository accounts with major banks or invested in high quality, short-term liquid investments. During fiscal 2024, net cash provided by operating activities was $3.8 billion, which includes the impact of our annual payment of $378 million and prepayments of $239 million primarily related to the National Opioid Settlement Agreement (the "NOSA"). During fiscal 2024, we deployed $750 million for share repurchases, $783 million for debt repayments, $511 million for capital expenditures, and $499 million for dividends. In addition, we issued additional long-term debt and received net proceeds of $1.14 billion, of which $200 million is invested in short-term time deposits with initial effective maturities of more than three months and classified as prepaid expenses and other in our consolidated balance sheet as of June 30, 2024. Changes in working capital, which impact operating cash flow, can vary significantly depending on factors such as the timing of customer payments, inventory purchases, payments to vendors, and tax payments in the regular course of business, as well as fluctuating working capital needs driven by customer and product mix. In fiscal 2025, the unwinding of the negative net working capital associated with the OptumRx contract negatively impacted operating cash flow. In fiscal 2025, we returned $393 million of cash held by foreign subsidiaries to the United States. The cash and equivalents balance at June 30, 2025 includes $436 million of cash and equivalents held by subsidiaries outside of the United States. At June 30, 2025, foreign earnings of approximately $1.0 billion are considered indefinitely reinvested for working capital and other offshore investment needs. The computation of tax required if those earnings are repatriated is not practicable. For amounts not considered indefinitely reinvested, we have recorded an immaterial amount of income tax expense in our consolidated financial statements in fiscal 2025. Other Financing Arrangements and Financial Instruments Credit Facilities and Commercial Paper In addition to cash and equivalents and operating cash flow, other sources of liquidity at June 30, 2025 include a $3.0 billion commercial paper program, backed by a $2.0 billion revolving credit facility that expires in February 2028, and a $1.0 billion 364-Day revolving credit facility that expires in October 2025. We also have a $1.0 billion committed receivables sales facility through September 2025. At June 30, 2025, we had no amounts outstanding under our commercial paper program, revolving credit facilities, or our committed receivables sales facility. During fiscal 2025, under our commercial paper program and our committed receivables program, we had maximum combined total daily amounts outstanding of $633 million. On December 5, 2024, we entered into a term loan credit agreement that, among other things, provides commitments for a term loan facility in an aggregate amount of up to $1.0 billion. On April 1, 2025, we closed on our acquisition of ADS and borrowed $800 million under this term loan facility. The loan provided under this term loan credit agreement will mature in April 2028 and allows for prepayment, which may be accelerated pursuant to certain conditions specified in the credit agreement. Interest rates on borrowings will be based on prevailing interest rates, benchmarked based on Term SOFR and subject to our credit ratings. In February 2023, we extended our revolving credit facility through February 25, 2028. In September 2022, we renewed our committed receivables sales facility program through Cardinal Health Funding, LLC ("CHF") through September 30, 2025. In Cardinal Health | Fiscal 2025 Form 10-K 13 MD&A Liquidity and Capital Resources September 2023, Cardinal Health 23 Funding, LLC was added as a seller under our committed receivables sales facility. Our revolving credit and committed receivables sales facilities require us to maintain a consolidated net leverage ratio of no more than 3.75-to-1. As of June 30, 2025, we were in compliance with this financial covenant. Long-Term Debt and Other Short-Term Borrowings At June 30, 2025, we had total long-term obligations, including the current portion and other short-term borrowings, of $8.5 billion. In November 2024, we issued additional debt with the aggregate principal amount of $2.9 billion to fund a portion of the consideration payable in connection with the GIA and ADS acquisitions, and for general purposes. The notes issued are $500 million aggregate principal amount of 4.7% Notes that mature on November 15, 2026, $750 million aggregate principal amount of 5.0% Notes that mature on November 15, 2029, $1.0 billion aggregate principal amount of 5.35% Notes that mature on November 15, 2034, and $650 million aggregate principal amount of 5.75% Notes that mature on November 15, 2054. The proceeds of the notes issued, net of discounts, premiums, and debt issuance costs, were $2.9 billion. We also obtained a commitment letter on November 11, 2024 from a financial institution for a $2.9 billion unsecured bridge term loan facility that could have been used to complete the acquisition of GIA. We incurred fees related to the facility, which are included in interest expense, net. The unsecured bridge term loan facility was never entered into and we terminated the commitment letter on November 22, 2024. During fiscal 2025, we repaid the full principal of $400 million of the 3.5% Notes due 2024 at maturity with proceeds from the debt issuance in fiscal 2024, $200 million of which were invested in short-term time deposits and classified as prepaid expenses and other in our consolidated balance sheets at June 30, 2024. All short-term time deposits related to the debt issuance in fiscal 2024 have matured. Capital Deployment Opioid Litigation Settlement Agreement We have $4.9 billion accrued at June 30, 2025 related to certain national opioid litigation settlements, as further described within Note 8 of the "Notes to Consolidated Financial Statements." We expect the majority of the remaining payment amounts to occur through 2038. During fiscal 2025, we made payments totaling $798 million, which included our fourth annual payment under the agreement to settle the vast majority of the opioid lawsuits filed by states and local governmental entities and payments related to the settlement agreements with the City of Baltimore and classes of third-party payors and acute care hospitals. In July 2025, we made our fifth annual payment of $366 million under the NOSA. The amounts of future annual payments under the NOSA may differ from the payments that we have already made. Capital Expenditures Capital expenditures during fiscal 2025 and 2024 were $547 million and $511 million, respectively. We expect capital expenditures in fiscal 2026 to be approximately $600 million and primarily related to manufacturing and distribution infrastructure projects and technology investments. Dividends During fiscal 2025, we paid quarterly dividends totaling $2.02 per share, an increase of 1 percent from fiscal 2024. On May 5, 2025, our Board of Directors approved a quarterly dividend of $0.5107 per share, or $2.04 per share on an annualized basis, which was paid on July 15, 2025, to shareholders of record on July 1, 2025. Share Repurchases During both fiscal 2025 and 2024, we deployed $750 million for repurchases of our common shares in the aggregate under accelerated share repurchase ("ASR") programs. We funded the ASR programs with available cash. See Note 12 of the "Notes to Consolidated Financial Statements" for additional information. During fiscal 2025, we paid $15 million for excise taxes related to the completion of prior ASR programs. As of June 30, 2025, we had $2.7 billion remaining under our existing share repurchase authorization. Acquisitions During fiscal 2025, we deployed $5.3 billion for acquisitions. See Note 2 of the "Notes to Consolidated Financial Statements" for additional information on these acquisitions. 14 Cardinal Health | Fiscal 2025 Form 10-K MD&A Other Contractual Obligations and Cash Requirements At June 30, 2025, our contractual obligations and future cash requirements, including estimated payments due by period, were as follows: (in millions) 2026 2027 to 2028 2029 to 2030 There-after Total Long-term debt and short-term borrowings (1) $ 501  $ 2,627  $ 1,390  $ 3,796  $ 8,314 Interest on long-term debt 416  678  480  2,458  4,032 Finance lease obligations (2) 52  80  44  57  233 Operating lease obligations (3) 197  320  208  199  924 Purchase obligations and other payments (4) 602  514  308  86  1,510 Opioid litigation settlement agreements (5) 628  523  769  2,909  4,829 Total contractual obligations and cash requirements (6) $ 2,396   $ 4,742   $ 3,199   $ 9,505   $ 19,842 (1) Represents maturities of our long-term debt obligations and other short-term borrowings excluding finance lease obligations described below. See Note 7 of the “Notes to Consolidated Financial Statements” for further information. (2) Represents minimum finance lease obligations included within current portion of long-term obligations and other short-term borrowings and long-term obligations, less current portion in our consolidated balance sheets and further described in Note 6 of the “Notes to Consolidated Financial Statements.” (3) Represents minimum operating lease obligations included within other accrued liabilities and deferred income taxes and other liabilities in our consolidated balance sheets and further described in Note 6 of the “Notes to Consolidated Financial Statements.” (4) A purchase obligation is defined as an agreement to purchase goods or services that is legally enforceable and specifies all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and approximate timing of the transaction. The purchase obligation amounts disclosed above represent estimates of the minimum for which we are obligated and the time period in which cash outflows will occur. Purchase orders and authorizations to purchase that involve no firm commitment from either party are excluded from the above table. In addition, contracts that can be unilaterally canceled with no termination fee or with proper notice are excluded from our total purchase obligations except for the amount of the termination fee or the minimum amount of goods that must be purchased during the requisite notice period. Purchase obligations and other payments also includes quarterly payments to CVS Health in connection with Red Oak Sourcing. See Note 8 of the “Notes to Consolidated Financial Statements” for additional information. (5) Represents future cash obligations under the NOSA as well as future cash obligations under separate settlement agreements. See Note 8 of the “Notes to Consolidated Financial Statements” for additional information. (6) Long-term liabilities, such as unrecognized tax benefits, deferred taxes, and other tax liabilities, have been excluded from the above table due to the inherent uncertainty of the underlying tax positions or because of the inability to reasonably estimate the timing of any cash outflows. See Note 9 of the "Notes to Consolidated Financial Statements" for further discussion of income taxes. Recent Financial Accounting Standards See Note 1 of the “Notes to Consolidated Financial Statements” for further information. Cardinal Health | Fiscal 2025 Form 10-K 15 MD&A Critical Accounting Policies and Sensitive Accounting Estimates Critical Accounting Policies and Sensitive Accounting Estimates Critical accounting policies are those accounting policies that (i) can have a significant impact on our financial condition and results of operations and (ii) require the use of complex and subjective estimates based upon past experience and management’s judgment. Other people applying reasonable judgment to the same facts and circumstances could develop different estimates. Because estimates are inherently uncertain, actual results may differ. In this section, we describe the significant policies applied in preparing our consolidated financial statements that management believes are the most dependent on estimates and assumptions. Allowance for Doubtful Accounts The allowance for doubtful accounts includes general and specific reserves. We determine our allowance for doubtful accounts by reviewing accounts receivable aging, historical write-off trends, payment history, pricing discrepancies, industry trends, customer financial strength, customer credit ratings, or bankruptcies. We regularly evaluate how changes in economic conditions may affect credit risks. A hypothetical 0.1 percent increase or decrease in the reserve as a percentage of trade receivables at June 30, 2025, would result in an increase or decrease in operating earnings of $13 million. We believe the reserve maintained and expenses recorded in fiscal 2025 are appropriate. At this time, we are not aware of any analytical findings or customer issues that are likely to lead to a significant future increase in the allowance for doubtful accounts as a percentage of revenue. The following table presents information regarding our allowance for doubtful accounts over the past three fiscal years. (in millions, except percentages) 2025 2024 2023 Allowance for doubtful accounts at beginning of period $ 233   $ 240  $ 207 Charged to costs and expenses 89   108  165 Reduction to allowance for customer deductions and write-offs (109) (115) (132) Allowance for doubtful accounts at end of period $ 213   $ 233  $ 240 Allowance as a percentage of customer receivables 1.6   % 1.9  % 2.2  % Allowance as a percentage of revenue 0.10   % 0.10  % 0.12  % Inventories LIFO Inventory A portion of our inventories (52 percent and 50 percent at June 30, 2025 and 2024, respectively) are valued at the lower of cost, using the last-in, first-out ("LIFO") method, or market. These are primarily merchandise inventories at the core pharmaceutical distribution facilities within our Pharma segment (“distribution facilities”). The LIFO impact on the consolidated statements of earnings depends on pharmaceutical manufacturer price appreciation or deflation and our fiscal year-end inventory levels, which can be meaningfully influenced by customer buying behavior immediately preceding our fiscal year-end. Historically, prices for branded pharmaceuticals have generally tended to rise, resulting in an increase in cost of products sold, whereas prices for generic pharmaceuticals generally tend to decline, resulting in a decrease in cost of products sold. Using LIFO, if there is a decrease in inventory levels that have experienced pharmaceutical price appreciation, the result generally will be a decrease in future cost of products sold as our older inventory is held at a lower cost. Conversely, if there is a decrease in inventory levels that have experienced a pharmaceutical price decline, the result generally will be an increase in future cost of products sold as our older inventory is held at a higher cost. We believe that the average cost method of inventory valuation provides a reasonable approximation of the current cost of replacing inventory within these distribution facilities. As such, the LIFO reserve is the difference between (a) inventory at the lower of LIFO cost or market and (b) inventory at replacement cost determined using the average cost method of inventory valuation. At June 30, 2025 and 2024, respectively, inventories valued at LIFO cost were significantly in excess of the average cost value. We do not record inventories in excess of replacement cost. As such, we did not write-up the value of our inventory from average cost to LIFO cost at June 30, 2025 or 2024. FIFO Inventory Our remaining inventory, including inventory in our GMPD segment and certain inventory in our Pharma segment, that is not valued at the lower of LIFO cost or market is stated at the lower of cost, using the first-in, first-out ("FIFO") method, or net realizable value. We reserve for the lower of cost or net realizable value using the estimated selling prices and estimated sales demand in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Our estimates for selling prices and demand are inherently uncertain and if our assumptions decline in the future, additional inventory reserves may be required. 16 Cardinal Health | Fiscal 2025 Form 10-K MD&A Critical Accounting Policies and Sensitive Accounting Estimates Excess and Obsolete Inventory We reserve for inventory obsolescence using estimates based on historical experience, historical and projected sales trends, specific categories of inventory, age and expiration dates of on-hand inventory, and manufacturer return policies. Inventories presented in the consolidated balance sheets are net of reserves for excess and obsolete inventory which were $132 million and $149 million at June 30, 2025 and 2024, respectively. If actual conditions are less favorable than our assumptions, additional inventory reserves may be required. Goodwill and Other Indefinite-Lived Intangible Assets Purchased goodwill and intangible assets with indefinite lives are tested for impairment annually or when indicators of impairment exist. Goodwill impairment testing involves a comparison of the estimated fair value of reporting units to the respective carrying amount, which may be performed utilizing either a qualitative or quantitative assessment. Qualitative factors are first assessed to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There is an option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. We have elected to bypass the qualitative assessment for the annual goodwill impairment test in the current year. The quantitative goodwill impairment test involves a comparison of the estimated fair value of the reporting unit to the respective carrying amount. A reporting unit is defined as an operating segment or one level below an operating segment (also known as a component). As of June 30, 2025, our reporting units are: Pharma (excluding Navista & ION and GIA), Navista & ION, GIA, GMPD, Nuclear and Precision Health Solutions, OptiFreight ® Logistics, at-Home Solutions, and ADS. We anticipate at-Home Solutions and ADS will be combined as a single reporting unit as the businesses are integrated in the future. Goodwill impairment testing involves judgment, including the identification of reporting units, qualitative evaluation of events and circumstances to determine if it is more likely than not that an impairment exists, and, if necessary, the estimation of the fair value of the applicable reporting unit. Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. The use of alternate estimates and assumptions, changes in the industry or peer groups, or changes in weightings assigned to the discounted cash flow method, guideline public company method, or guideline transaction method could materially affect the determination of fair value for each reporting unit and potentially result in goodwill impairment. If a reporting unit fails to achieve expected earnings or operating cash flow, or otherwise fails to meet current financial plans, or if there were changes to any other key assumptions used in the tests, the reporting unit could incur a goodwill impairment in a future period. We performed annual impairment testing in fiscal 2025, 2024, and 2023 for our reporting units, which included Navista & ION in fiscal 2025. Due to the recent timing of the acquisitions, GIA and ADS were not included in our annual impairment testing in fiscal 2025 as no indicators of impairment were present. During fiscal 2024 and 2023, we recognized goodwill impairment charges related to GMPD of $675 million and $1.2 billion, respectively, which were included in impairments and (gain)/loss on disposal of assets, net in our consolidated statements of earnings. GMPD had no goodwill balance remaining as of March 31, 2024. We concluded that there were no impairments of goodwill for the remaining reporting units, excluding GMPD, in fiscal 2025, 2024, and 2023, as the estimated fair value of each reporting unit exceeded its carrying amount. Other indefinite-lived intangibles The impairment test for indefinite-lived intangibles other than goodwill (primarily trademarks) involves first assessing qualitative factors to determine if it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If so, then a quantitative test is performed to compare the estimated fair value of the indefinite-lived intangible asset to the respective asset's carrying amount. Our qualitative evaluation requires the use of estimates and significant judgments and considers the weight of evidence and significance of all identified events and circumstances and most relevant drivers of fair value, both positive and negative, in determining whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. See Note 1 of "Notes to Consolidated Financial Statements" for additional information regarding goodwill and other intangible assets. Cardinal Health | Fiscal 2025 Form 10-K 17 MD&A Critical Accounting Policies and Sensitive Accounting Estimates Loss Contingencies and Self-Insurance We regularly review contingencies and self-insurance accruals to determine whether our accruals and related disclosures are adequate. Any adjustments for changes in reserves are recorded in the period in which the change in estimate occurs. Loss Contingencies We accrue for contingencies related to disputes, litigation, and regulatory matters if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because these matters are inherently unpredictable and unfavorable developments or outcomes can occur, assessing contingencies is highly subjective and requires judgments about future events. In connection with the opioid litigation as described further in Note 8 of the “Notes to Consolidated Financial Statements," during fiscal 2024, we reached agreements to settle claims brought by classes of third-party payors and acute care hospitals, and the City of Baltimore. We develop and periodically update reserve estimates for inferior vena cava ("IVC") claims received to date and expected to be received in the future and related costs. In April 2023, we executed a settlement agreement that, if certain conditions are satisfied, will resolve approximately 4,375 IVC filter product liability claims for $275 million. These settlements will not resolve all IVC filter product liability claims and we intend to continue to vigorously defend ourselves in the remaining lawsuits. To project future IVC claim costs, we use a methodology based largely on recent experience, including claim filing rates, blended average payout influenced by claim severity, historical sales data, implant and injury to report lag patterns, and estimated defense costs. At June 30, 2025, we have a total of $56 million accrued for losses and legal defense costs, related to the IVC filter product liability lawsuits in our consolidated balance sheets, which includes the $49 million in the qualified settlement fund. Self-Insurance We self-insure through a wholly-owned insurance subsidiary for employee healthcare, certain product liability matters, auto liability, property and workers' compensation, and maintain insurance for losses exceeding certain limits. Self-insurance accruals include an estimate for expected settlements on pending claims, defense costs, administrative fees, claims adjustment costs, and an estimate for claims incurred but not reported. For certain types of exposures, we develop the estimate of expected ultimate costs to settle each claim based on specific information related to each claim if available. Other estimates are based on an assessment of outstanding claims, historical analysis, and current payment trends. For claims incurred but not reported, the liabilities are calculated and derived in accordance with generally accepted actuarial practices or using an estimated lag period. The amount of loss may differ materially from these estimates. See Note 8 of the “Notes to Consolidated Financial Statements” for additional information regarding loss contingencies and product liability lawsuits. Provision for Income Taxes We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are measured using enacted tax rates in the respective jurisdictions in which we operate. Our income tax expense, deferred income tax assets and liabilities, and unrecognized tax benefits reflect management’s assessment of estimated future taxes to be paid on items in the consolidated financial statements. The following table presents information about our tax position at June 30: (in millions) 2025 2024 Total deferred income tax assets (1) $ 1,230   $ 1,491 Valuation allowance for deferred income tax assets (2) (254) (300) Net deferred income tax assets 976   1,191 Total deferred income tax liabilities (3,276) (3,163) Net deferred income tax liability $ (2,300) $ (1,972) (1)    Total deferred income tax assets included $386 million and $512 million of loss and tax credit carryforwards at June 30, 2025 and 2024, respectively. (2)    The valuation allowance primarily relates to federal, state, and international loss and credit carryforwards for which the ultimate realization of future benefits is uncertain. Expiring or unusable loss and credit carryforwards and the required valuation allowances are adjusted quarterly when it is more likely than not that at least a portion of the respective deferred tax assets will not be realized. After applying the valuation allowances, we do not anticipate any limitations on our use of any of the other net deferred income tax assets described previously. 18 Cardinal Health | Fiscal 2025 Form 10-K MD&A Critical Accounting Policies and Sensitive Accounting Estimates Tax benefits from uncertain tax positions are recognized when it is more likely than not that the position will be sustained upon examination of the technical merits of the position, including resolutions of any related appeals or litigation. The amount recognized is measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement. For tax benefits that do not qualify for recognition, we recognize a liability for unrecognized tax benefits. We operate in a complex multinational tax environment and are subject to tax treaty arrangements and transfer pricing guidelines for intercompany transactions that are subject to interpretation. Uncertainty in a tax position may arise as tax laws are subject to interpretation. Tax Effects of Goodwill Impairment Charges During fiscal 2024 and 2023, we recognized cumulative pre-tax goodwill impairment charges of $675 million and $1.2 billion, respectively, related to the GMPD segment. The net tax benefits related to these charges were $58 million and $92 million, respectively. We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and various foreign jurisdictions. With few exceptions, we are subject to audit by taxing authorities for fiscal years 2015 through the current fiscal year. Tax laws are complex and subject to varying interpretations. New challenges related to future audits may adversely affect our effective tax rate or tax payments. Our assumptions and estimates around uncertain tax positions require significant judgment; the actual amount of tax benefit related to uncertain tax positions may differ from these estimates. See Note 9 of the “Notes to Consolidated Financial Statements” for additional information regarding unrecognized tax benefits. We believe that our estimates for the valuation allowances against deferred tax assets and unrecognized tax benefits are appropriate based on current facts and circumstances. The amount we ultimately pay when matters are resolved may differ from the amounts accrued. Changes in our current estimates due to unanticipated market conditions, tax law changes, or other factors could have a material effect on our ability to utilize deferred tax assets. For a further discussion on Provision for Income Taxes, see Note 9 of the “Notes to the Consolidated Financial Statements.” New Tax Legislation On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law, which includes a broad range of tax reform provisions. The OBBBA includes changes to existing tax law, including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act ("Tax Act"). We are in the process of evaluating the impact of the OBBBA on our consolidated financial statements and will reflect any impact in the period of enactment. Cardinal Health | Fiscal 2025 Form 10-K 19 Explanation and Reconciliation of Non-GAAP Financial Measures Explanation and Reconciliation of Non-GAAP Financial Measures This report, including the "Fiscal 2025 Overview" section within MD&A, contains financial measures that are not calculated in accordance with GAAP. In addition to analyzing our business based on financial information prepared in accordance with GAAP, we use these non-GAAP financial measures internally to evaluate our performance, engage in financial and operational planning, and determine incentive compensation because we believe that these measures provide additional perspective on and, in some circumstances are more closely correlated to, the performance of our underlying, ongoing business. We provide these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on our financial and operating results on a year-over-year basis and in comparing our performance to that of our competitors. However, the non-GAAP financial measures that we use may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The non-GAAP financial measures disclosed by us should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth below should be carefully evaluated. Exclusions from Non-GAAP Financial Measures Management believes it is useful to exclude the following items from the non-GAAP measures presented in this report for its own and for investors’ 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 charges or credits, such as pharmaceutical manufacturer price appreciation or deflation and year-end inventory levels (which can be meaningfully influenced by customer buying behavior immediately preceding our fiscal year-end), are largely out of our control and cannot be accurately predicted. The exclusion of LIFO charges and credits from non-GAAP metrics facilitates comparison of our current financial results to our historical financial results and to our peer group companies’ financial results. We did not recognize any LIFO charges or credits during the periods presented. • State opioid assessments related to prior fiscal years is the portion of state assessments for prescription opioid medications that were sold or distributed in periods prior to the period in which the expense is incurred. This portion is excluded from non-GAAP financial measures because it is retrospectively applied to sales in prior fiscal years and inclusion would obscure analysis of the current fiscal year results of our underlying, ongoing business. Additionally, while states' laws may require us to make payments on 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 prior fiscal years represents reversals of accruals due to changes 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 the agreement (the "Cooperation Agreement") entered into among Elliott Associates, L.P., Elliott International, L.P. (together, "Elliott"), and Cardinal Health. These include costs incurred to negotiate and finalize the Cooperation Agreement and costs incurred by the Business Review Committee of the Board of Directors, formed under this Cooperation Agreement, tasked with undertaking a comprehensive review of our strategy, portfolio, capital allocation framework, and operations. We have excluded these costs from our non-GAAP metrics because they do not occur in or reflect the ordinary course of our ongoing business operations and may obscure analysis of trends and financial performance. The Cooperation Agreement expired in the second quarter of fiscal 2025. • Restructuring and employee severance costs are excluded because they are not part of the ongoing operations of our underlying business and include, but are not limited to, costs related to divestitures, closing and consolidating facilities, changing the way we manufacture or distribute our products, moving manufacturing of a product to another location, changes in production or business 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 value of contingent consideration obligations, are excluded because they are not part of the ongoing operations of our underlying business and to facilitate comparison of our current financial results to our historical financial results and to our peer group companies' financial results. Additionally, costs for amortization of acquisition-related intangible assets and amortization as a result of basis differences in equity method investments are non-cash amounts, which are variable in amount and frequency and are significantly impacted by the timing and size of acquisitions, so their exclusion facilitates comparison of historical, current, and forecasted financial results. We also exclude other acquisition-related costs, which are directly related to an acquisition but do not meet the criteria to be recognized on the acquired entity’s initial balance sheet as part of the purchase price allocation. These costs are also significantly impacted by the timing, complexity, and size of acquisitions. 20 Cardinal Health | Fiscal 2025 Form 10-K Explanation and Reconciliation of Non-GAAP Financial Measures • Acquisition-related cash and share-based compensation costs are incurred in connection with contingent cash payments or the issuance of share-based payment awards, which include service requirements, as a part of certain physician practice acquisitions. These costs include fair value adjustments for liability-classified awards. These costs are excluded because they are unrelated to the underlying operating results of our business and to facilitate comparison of our current financial results to our historical financial results and to our peer group companies’ financial results. In addition, the magnitude of these expenses is significantly impacted by the timing and size of the acquisitions of physician practices. • Impairments and gain or loss on disposal of assets, net  are excluded because they do not occur in or reflect the ordinary course of our ongoing business operations and are inherently unpredictable in timing and amount, and in the case of impairments, are non-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 multiple periods, do not occur in or reflect the ordinary course of our business, and are inherently unpredictable in timing and amount. • Loss on early extinguishment of debt is excluded because it does not typically occur in the normal course of business and may obscure analysis of trends and financial performance. Additionally, the amount and frequency of this type of charge is not consistent and is significantly impacted by the timing and size of debt extinguishment transactions. 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 the jurisdiction(s) in which the item is recorded. The gross, tax, and net impact of each item are presented with our GAAP to non-GAAP reconciliations. Definitions Growth rate calculation: growth rates in this report are determined by dividing the difference between current period results and prior period results by prior period results. Non-GAAP operating earnings: operating earnings excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, and (8) litigation (recoveries)/charges, net. Non-GAAP earnings before income taxes: earnings before income taxes excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt. Non-GAAP net earnings attributable to non-controlling interests: net earnings attributable to non-controlling interests excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt, each net of tax. Non-GAAP net earnings attributable to Cardinal Health, Inc.: ne t earnings attributable to Cardinal Health, Inc. excluding (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt, each net of tax. Non-GAAP effective tax rate: provision for income taxes adjusted for the tax impacts of (1) LIFO charges/(credits), (2) state opioid assessment related to prior fiscal years, (3) shareholder cooperation agreement costs, (4) restructuring and employee severance, (5) amortization and other acquisition-related costs, (6) acquisition-related cash and share-based compensation costs, (7) impairments and (gain)/loss on disposal of assets, net, (8) litigation (recoveries)/charges, net, and (9) loss on early extinguishment of debt divided by (earnings before income taxes adjusted for the 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 | Fiscal 2025 Form 10-K 21 Explanation and Reconciliation of Non-GAAP Financial Measures GAAP to Non-GAAP Reconciliations (in millions, except per common share amounts) Operating Earnings Operating Earnings Growth Rate Earnings Before Income Taxes Provision for Income Taxes Net Earnings Attributable to Non-controlling Interests Net Earnings 1 Net Earnings 1 Growth Rate Effective Tax Rate Diluted EPS 1 Diluted EPS 1 Growth Rate Fiscal Year 2025 GAAP $ 2,275   83   % $ 2,101   $ 532   $ (8) $ 1,561   83   % 25.3   % $ 6.45   87   % Restructuring and employee severance 88   88   21   67   0.28 Amortization and other acquisition-related costs 464   464   104   360   1.49 Acquisition-related cash and share-based compensation costs 126   126   1   125   0.51 Impairments and (gain)/loss on disposal of assets, net 18   18   5   13   0.05 Litigation (recoveries)/charges, net (185) (185) (54) (131) (0.54) Non-GAAP $ 2,786   15   % $ 2,612   $ 609   $ (8) $ 1,995   7   % 23.3   % $ 8.24   9   % Fiscal Year 2024 GAAP $ 1,243  65  % $ 1,201  $ 348  $ (1) $ 852  N.M. 28.9  % $ 3.45  N.M. Shareholder cooperation agreement costs 1  1  —  1  — Restructuring and employee severance 175  175  41  134  0.54 Amortization and other acquisition-related costs 284  284  74  210  0.85 Impairments and (gain)/loss on disposal of assets, net 2 634  634  47  587  2.38 Litigation (recoveries)/charges, net 78  78  5  73  0.30 Non-GAAP $ 2,414  16  % $ 2,372  $ 515  $ (1) $ 1,856  21  % 21.7  % $ 7.53  29  % Fiscal Year 2023 GAAP $ 752  N.M. $ 663  $ 332  $ (1) $ 330  N.M. 50.0  % $ 1.26  N.M. State opioid assessment related to prior fiscal years (6) (6) (2) (4) (0.02) Shareholder cooperation agreement costs 8  8  2  6  0.02 Restructuring and employee severance 95  95  21  74  0.28 Amortization and other acquisition-related costs 285  285  74  211  0.80 Impairments and (gain)/loss on disposal of assets, net 2 1,246  1,246  108  1,138  4.35 Litigation (recoveries)/charges, net (304) (304) (83) (221) (0.84) Non-GAAP $ 2,076  5  % $ 1,987  $ 452  $ (1) $ 1,534 8% 22.8  % $ 5.85  15  % 1      Attributable to Cardinal Health, Inc. 2     For fiscal 2024 and 2023, impairments and (gain)/loss on disposals of assets, net included pre-tax goodwill impairment charges of $675 million and $1.2 billion related to the GMPD segment, respectively. For fiscal 2024 and 2023, the net tax benefit related to these charges was $58 million and $92 million, respectively, and were included in the annual effective tax rate. The sum of the components and certain computations may reflect rounding adjustments. We apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred. 22 Cardinal Health | Fiscal 2025 Form 10-K Disclosures about Market Risk Quantitative and Qualitative Disclosures About Market Risk We are exposed to cash flow and earnings fluctuations as a result of certain market risks. These market risks primarily relate to foreign exchange, interest rate, and commodity price-related changes. We maintain a hedging program to manage volatility related to some of these market exposures which employs operational, economic, and derivative financial instruments in order to mitigate risk. See Note 1 and Note 11 of the “Notes to Consolidated Financial Statements” for further discussion regarding our use of derivative instruments. Foreign Exchange Rate Sensitivity By the nature of our global operations, we are exposed to cash flow and earnings fluctuations resulting from foreign exchange rate variation. These exposures are transactional and translational in nature. The following foreign currencies represent the principal drivers of our foreign exchange exposure: Canadian dollar, euro, Thai baht, Mexican peso, Chinese renminbi, Australian dollar, British pound, Japanese yen, Philippine peso, Brazilian real, South Korean won, Costa Rican colon, Singapore dollar, Dominican peso, and Indian rupee. We apply a Value-At-Risk ("VAR") methodology to our transactional and translational exposures. The VAR model is a risk estimation tool and is not intended to represent actual losses in fair value that could be incurred. Transactional Exposure Transactional exposure arises from the purchase and sale of goods and services in currencies other than our functional currency or the functional currency of our subsidiaries. At the end of each fiscal year, we perform sensitivity analyses on our forecasted transactional exposure for the upcoming fiscal year. These analyses include the estimated impact of our hedging program, which is designed to mitigate transactional exposure. Applying a VAR methodology to our transactional exposure and including the impact of our hedging program, the potential maximum loss in earnings for the upcoming fiscal year is estimated to be $13 million, which is based on a one-year horizon and a 95 percent confidence level. Translational Exposure We have exposure related to the translation of financial statements of our foreign operations into U.S. dollars, our functional currency. Applying a VAR methodology to our translational exposure, the potential maximum loss in earnings for the upcoming fiscal year is estimated to be $3 million, which is based on a one-year horizon and a 95 percent confidence level. Interest Rate Sensitivity We are exposed to changes in interest rates primarily as a result of our borrowing and investing activities to maintain liquidity and fund operations. The nature and amount of our long-term and short-term debt can be expected to fluctuate as a result of business requirements, market conditions, and other factors. Our policy is to manage exposures to interest rates using a mix of fixed and floating rate debt as deemed appropriate by management. We utilize interest rate swap instruments to mitigate our exposure to interest rate movements. As part of our risk management program related to our debt, we perform an annual sensitivity analysis on our forecasted exposure to interest rates for the upcoming fiscal year. At June 30, 2025, a hypothetical increase or decrease of 50 basis points in interest rates would result in an increase or decrease in interest expense of $12 million, respectively. We are also exposed to market risk from changes in interest rates related to our cash and cash equivalents, which includes marketable securities that are carried at fair value in the consolidated balance sheets. The fair value of our cash and cash equivalents is subject to change primarily as a result of changes in market interest rates and investment risk related to the issuers' credit worthiness. At June 30, 2025, a hypothetical increase or decrease of 50 basis points in interest rates would result in an increase or decrease in interest income of $14 million, respectively. Cardinal Health | Fiscal 2025 Form 10-K 23 Disclosures about Market Risk Commodity Price Sensitivity We are directly exposed to market price changes for certain commodities, including oil-based resins, nitrile, cotton, diesel fuel, and latex. We typically purchase raw materials at either market prices or prices tied to a commodity index and some finished goods at prices based in part on a commodity price index. During fiscal 2025, the prices of certain commodities continued to experience fluctuation due to inflationary impacts. As part of our risk management program, we perform sensitivity analysis on our forecasted direct commodity exposure for the upcoming fiscal year. Our forecasted direct commodity exposure at June 30, 2025 decreased approximately $86 million from June 30, 2024. There were no outstanding commodity contracts in our hedging program at June 30, 2025. Our forecasted direct commodity exposures for the upcoming fiscal year is $491 million. The potential gain/loss for fiscal year 2026, given a hypothetical 10 percent fluctuation in commodity prices, assuming pricing collectively shifts in the same direction and there is no change in customer pricing is $49 million at June 30, 2025. 24 Cardinal Health | Fiscal 2025 Form 10-K Business Business General Cardinal Health, Inc. is a global healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. We provide medical products and pharmaceuticals and cost-effective solutions that enhance the healthcare system and supply chain efficiency. Pharmaceutical and Specialty Solutions Segment In the United States, our Pharmaceutical and Specialty Solutions segment: ▪ through its Pharmaceutical Distribution businesses: • distributes branded and generic pharmaceutical and over-the-counter healthcare and consumer products to retailers (including chain and independent drug stores and pharmacy departments of supermarkets and mass merchandisers), hospitals, and other healthcare providers; ▪ maintains prime vendor relationships that streamline the purchasing process, resulting in greater efficiency and lower costs for our retail, hospital, and other healthcare provider customers; ▪ provides services to pharmaceutical manufacturers, including distribution, inventory management, data reporting, new product launch support, and chargeback administration; ▪ distributes specialty pharmaceutical products to hospitals and other healthcare providers and provides consulting, patient support, and other services for specialty pharmaceutical products to pharmaceutical manufacturers and healthcare providers; ▪ provides pharmacy management services to hospitals and operates a limited number of pharmacies, including in community health centers; and ▪ repackages generic pharmaceuticals and over-the-counter healthcare products. ▪ through its Specialty businesses: ▪ distributes specialty pharmaceutical products to hospitals, specialty pharmacies, and other healthcare providers and provides consulting, patient support, and other services for specialty pharmaceutical products to pharmaceutical manufacturers and healthcare providers; ▪ provides services to pharmaceutical manufacturers, including distribution, inventory management, data reporting, new product launch support, and chargeback administration; ▪ provides support and management services to physician practices through our MSO platforms; and ▪ through Biopharma Solutions, we provide data analytics and insight services to biopharmaceutical manufacturers and healthcare providers. See Note 14 of the “Notes to Consolidated Financial Statements” for Pharma segment revenue, profit, and assets for fiscal 2025, 2024, and 2023. Pharmaceutical and Specialty Pharmaceutical Distribution and Services Our Pharmaceutical Distribution businesses' gross margin includes margin from our generic pharmaceutical program, from distribution services agreements with branded pharmaceutical manufacturers, including manufacturers of Specialty pharmaceutical products, and from over-the-counter healthcare and consumer products. It also includes manufacturer cash discounts. Margin from our generic pharmaceutical program includes price discounts, rebates, and service fees from manufacturers and may, in limited instances, include price appreciation. Our earnings on generic pharmaceuticals are generally highest during the period immediately following the initial launch of a product, because generic pharmaceutical selling prices are generally highest during that period and tend to decline over time. Margin from distribution services agreements with branded pharmaceutical manufacturers is derived from compensation we receive for providing a range of distribution and related services to manufacturers. Our compensation typically is a percentage of the wholesale acquisition cost that is set by manufacturers. In addition, under a limited number of agreements, branded pharmaceutical price appreciation, which is determined by the manufacturers, also serves as part of our compensation. Specialty pharmaceutical products include oncology, rheumatology, urology, nephrology, and other pharmaceutical products. Through our Specialty businesses', we also distribute human-derived plasma products to hospitals, dialysis clinics, physician offices, and other healthcare providers. Our use of the term “specialty pharmaceutical products” may not be comparable to the terminology used by other industry participants. We also provide consulting, patient support, logistics, group purchasing, and other services to pharmaceutical manufacturers, healthcare providers, and physician practices. Cardinal Health | Fiscal 2025 Form 10-K 25 Business Sourcing Venture with CVS Health Corporation Red Oak Sourcing, LLC ("Red Oak Sourcing"), a U.S.-based generic pharmaceutical sourcing venture with CVS Health, negotiates generic pharmaceutical supply contracts on behalf of both companies. The term of Red Oak Sourcing extends through June 2029. Global Medical Products and Distribution Segment Our GMPD segment manufactures and sources Cardinal Health branded general and specialty medical, surgical, and laboratory products and devices. These products include exam and surgical gloves; needle, syringe, and sharps disposal; compression; incontinence; nutritional delivery; wound care; single-use surgical drapes, gowns, and apparel; fluid suction and collection systems; urology; operating room supply; and electrode product lines. Our Cardinal Health brand products are sold directly or through third-party distributors in the United States, Canada, Europe, Asia, and other markets. These Cardinal Health brand products are generally higher-margin products. The GMPD segment also distributes a broad range of medical, surgical, and laboratory products known as national brand products. In addition, this segment provides supply chain services and solutions to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers in the United States and Canada. This segment also assembles and sells sterile and non-sterile procedure kits. The GMPD segment, through its Wavemark division, also provides an automated technology platform for inventory management. Other Operating Segments Our Nuclear and Precision Health Solutions operating segment operates nuclear pharmacies and manufacturing facilities, which manufacture, prepare, and deliver radiopharmaceuticals for use in nuclear imaging, theranostics, and other procedures in hospitals and physician offices. This segment also contract manufactures a radiopharmaceutical treatment (Xofigo ® ) and holds the North American rights to manufacture and distribute Lymphoseek ® , a radiopharmaceutical diagnostic imaging agent. Our at-Home Solutions operating segment has two main businesses: Edgepark, including ADS, directly providing medical supplies to patients with chronic conditions in the home; and at-Home, a business-to-business distribution service that delivers medical supplies and over-the-counter products to home medical equipment providers, home health and hospice agencies, and e-commerce providers. Our OptiFreight ® Logistics operating segment supports the shipping and logistics needs of healthcare providers by optimizing direct shipments through integrated technology solutions. This segment serves hospitals, pharmacies, labs, and surgery centers. 26 Cardinal Health | Fiscal 2025 Form 10-K Business Acquisitions and Divestitures Acquisitions We have recently made a number of acquisitions in key strategic areas, including our specialty offerings and managed service organizations. We expect to continue to explore acquisitions and strategic investments in the future. In April 2025, we completed the acquisition of ADS, a diabetes medical supplies provider to patients in the home, for a purchase price of approximately $1.1 billion in cash, subject to certain adjustments. In January 2025, we completed the acquisition of an approximately 73 percent ownership interest in GIA, a gastroenterology management services organization, for a purchase price of approximately $2.8 billion in cash, subject to certain adjustments. Additionally, in May 2025, we, through GIA, completed the acquisition of Urology America, a urology management services organization, for a purchase price of $360 million in cash and GIA equity, subject to certain adjustments. In December 2024, we completed the acquisition of ION, a physician-led independent community oncology network, for a purchase price of $1.1 billion in cash, subject to certain adjustments. In March 2024, we completed the acquisition of Specialty Networks, a technology-enabled multi-specialty group purchasing and practice enhancement organization, for $1.2 billion in cash. We have also completed several smaller acquisitions during this timeframe. Date Company Location Lines of Business Acquisition Price (in billions) 05/30/25 Urology America MSO, LLC TX, CO, LA, TN Urology management services organization (MSO) $0.4 04/01/25 Advanced Diabetes Supply Group ("ADS") Carlsbad, CA Diabetic medical supplies providers $1.1 01/30/25 GI Alliance ("GIA") TX Gastroenterology management services organization (MSO) $2.8 12/02/24 Integrated Oncology Network ("ION") Nashville, TN Medical oncology, radiation oncology, urology diagnostic testing, and other ancillary services (MSO) $1.1 03/18/24 Specialty Networks Cleveland, OH UroGPO, Gastrologix, GastroGPO, and United Rheumatology. $1.2 Divestitures We also complete divestitures from time to time, and we may explore additional divestitures in the future. In June 2023, we signed a definitive agreement to contribute our Outcomes™ business to Transaction Data Systems ("TDS"), a portfolio company of BlackRock Long Term Private Capital and GTCR, in exchange for a minority stake in the combined entity. The transaction closed in July 2023. Cardinal Health | Fiscal 2025 Form 10-K 27 Business Customers Our largest customer, CVS Health, accounted for 30 percent of our fiscal 2025 revenue. In the aggregate, our five largest customers, including CVS Health, accounted for 43 percent of our fiscal 2025 revenue. We have agreements with group purchasing organizations (“GPOs”) that act as agents to negotiate vendor contracts on behalf of their members. Our two largest GPO relationships in terms of revenue are with Vizient, Inc. and Premier, Inc. Sales to members of these two GPOs, under numerous contracts across our businesses, collectively accounted for 27 percent of our revenue in fiscal 2025. The loss of any significant customer or GPO agreement could adversely affect our business. For more information, please see Item 1A "Risk Factors" for the risk factor entitled "Our sales and credit concentration is significant." Suppliers We rely on many different suppliers. During fiscal 2025, revenue resulting from sales of products obtained from our five largest suppliers accounted for an aggregate of 37 percent of our revenue and our largest supplier’s products accounted for approximately 9 percent of revenue. Competition We operate in a highly competitive environment in the distribution of pharmaceuticals and consumer healthcare products. We also operate in a highly competitive environment in the manufacturing and distribution of medical devices and surgical products. We compete on many levels, including price, service offerings, support services, customer service, breadth of product lines, and product quality and efficacy. In the Pharma segment, we compete with wholesale distributors with national reach, including McKesson Corporation and Cencora, Inc., regional wholesale distributors, self-warehousing chains, specialty distributors, third-party logistics companies, and companies that provide specialty pharmaceutical services and managed services to specialty physicians, among others. In addition, the Pharma segment has experienced competition from a number of organizations offering generic pharmaceuticals, including telemarketers. We also compete with manufacturers that distribute their products directly to customers. In the GMPD segment, we compete with many diversified healthcare companies and national medical product distributors, such as Medline Industries, Inc. and Owens & Minor, Inc., as well as regional medical product distributors and companies that are focused on specific product categories. Our other operating segments compete with companies that operate nuclear radiopharmacies and manufacturing facilities, distribute medical products to patients' homes, and third-party logistics companies. Additionally, we compete with other service providers, customers, and potential customers of our businesses, which may from time to time develop, for their own internal needs, supply management capabilities that may otherwise be provided by us. Across all areas, key competitive factors include price, quality of service, and breadth of product lines. Human Capital Management Employees Through our employees, we improve the lives of people every day by solving complex healthcare problems. As of June 30, 2025, we had approximately 57,700 employees globally, of which approximately: • 18,500 are based outside the United States; • 92% are full time employees; • 35,000 worked in our distribution centers, manufacturing facilities, pharmacies, or were non-provider employees of our MSO platforms; • 21,000 worked in other functions, including finance, information technology, human resources, and sales; • 1,900 are healthcare providers, including physicians, nurse anesthetists, and Advance Level Providers; and • 6% are covered by collective bargaining agreements or similar representation. The majority of these employees are based outside the United States. Additionally, we have engaged global professional services firms to perform certain business processes on our behalf, including within finance, information technology, and human resources. Board Oversight Our Board of Directors assesses and monitors our corporate culture and how it promotes our business strategies. To inform the Board about human capital and cultural health, we have developed and annually share with the Board a culture scorecard. 28 Cardinal Health | Fiscal 2025 Form 10-K Business Additionally, the Human Resources and Compensation Committee of the Board of Directors (the “HRCC”) is tasked with, among other things, overseeing and advising the Board about our human capital management strategies and policies, including with respect to attracting, developing, retaining, and motivating management and other employees; employee relations and engagement; and workplace safety and culture. The HRCC is also responsible for overseeing the management succession planning process for senior executives. Culture & Talent Focus Culture Cardinal Health’s culture is rooted in our values and behaviors and aligned to the company’s strategic framework. Providing a positive work environment supports our ability to attract, retain, and develop our employees and helps to promote our business performance. We reinforce, monitor, and assess our culture through a variety of programs and processes which include performance management, talent and succession planning, as well as employee engagement surveys and other listening strategies. Talent Management and Learning Cardinal Health’s talent management strategy has a multi-pronged approach to build capabilities, skills, and competencies of leaders and employees throughout the enterprise, ensuring employees capabilities connect to business needs and outcomes. This approach includes broad based employee skill development and learning and manager development. We monitor our turnover data on a monthly and rolling 12-month basis and benchmark against Bureau of Labor Statistics and competitor data. Although turnover levels vary by site and region, we primarily look at the connection between key operational metrics and employee turnover. Compensation and Benefits Our employees are essential to our success and we strive to offer comprehensive and competitive wages and benefits. The benefits we offer include annual bonuses and stock awards for eligible employees, 401(k) plans, health care and insurance benefits, paid time off, flexible work schedules, family leave, dependent care resources, employee assistance programs, and many others. Employee Feedback Cardinal Health solicits feedback from employees through various mechanisms, including our full employee engagement survey, which provides insight into the employee experience. The results of this survey are reviewed with the Board of Directors and at all levels throughout the organization. Worker Health & Safety The health, safety, and security of our employees and contractors is a priority for us. We employ systems designed to continually monitor our facilities and work environment to promote worker safety and identify and prevent or mitigate any potential risks. This includes procedures and equipment for security. We routinely assess facilities to closely monitor adherence to established security and safety standards. Our workers receive specialized training related to their role, work setting, and equipment used in their work environment. As our processes evolve, we update relevant safety training modules, which may include new training programs. More Information For more information on our approach to human capital management, please refer to our annual Environmental, Social & Governance Report, which is available on our website. Intellectual Property We rely on a combination of trade secret, patent, copyright and trademark laws, nondisclosure, and other contractual provisions and technical measures to protect our products, services, and intangible assets. We hold patents, and continue to pursue patent protection throughout the world, relating to the manufacture, operation, and use of various medical and surgical products, to certain distribution and logistics systems, to the production and distribution of our nuclear pharmacy products, and to other service offerings. We also operate under licenses for certain proprietary technologies, and in certain instances we license our technologies to third parties. We believe that we have taken necessary steps to protect our proprietary rights, but no assurance can be given that we will be able to successfully enforce or protect our rights in the event that they are infringed upon by a third party. While these proprietary rights are important to our operations, we do not consider any particular patent, trademark, license, franchise, or concession to be material to our overall business. Cardinal Health | Fiscal 2025 Form 10-K 29 Business Regulatory Matters Our business is highly regulated in the United States, at both the federal and state level, and in foreign countries. Depending upon the specific business, we may be subject to regulation by government entities including: • the U.S. Drug Enforcement Administration (the “DEA”); • certain agencies within the U.S. Department of Health and Human Services, including the U.S. Food and Drug Administration (the “FDA”), the Centers for Medicare and Medicaid Services, the Office of Inspector General, and the Office for Civil Rights; • state and local health departments, insurance departments, Medicaid departments, or other comparable state agencies; • state and local boards of pharmacy and other controlled substance authorities; • the U.S. Nuclear Regulatory Commission (the “NRC”); • the U.S. Environmental Protection Agency and state environmental authorities; • the U.S. Federal Trade Commission (the "FTC"); • U.S. Customs and Border Protection; and • agencies comparable to those listed above in markets outside the United States. These regulatory agencies have a variety of civil, administrative, and criminal sanctions at their disposal for failure to comply with applicable legal or regulatory requirements. They can suspend our ability to manufacture and distribute products, restrict our ability to import products, require us to initiate product recalls, seize products, or impose criminal, civil, and administrative sanctions. Distribution State Boards of Pharmacy, FDA, DEA, and various other state authorities regulate the marketing, purchase, storage, and distribution of pharmaceutical and medical products under various federal and state statutes including the federal Prescription Drug Marketing Act of 1987, Drug Quality and Security Act of 2013 (the “DQSA”) and Controlled Substances Act (the "CSA"). The CSA governs the sale, packaging, storage, and distribution of controlled substances. Wholesale distributors of controlled substances must hold valid DEA registrations and state-level licenses, meet various security and operating standards including effective anti-diversion programs and comply with the CSA. They must also comply with state requirements relating to controlled substances that differ from state to state. The NOSA, as described in Note 8 of the "Notes to Consolidated Financial Statements" includes injunctive relief terms related to settling distributors' controlled substance anti-diversion programs, including with respect to: (1) governance; (2) independence and training of the personnel operating our controlled substances monitoring program; (3) due diligence for new and existing customers; (4) ordering limits for certain products; and (5) suspicious order monitoring. A monitor will oversee compliance with these provisions for five years from entry into the NOSA, until 2027. In addition, the settling distributors have engaged a third-party vendor to act as a clearinghouse for data aggregation and reporting and will fund the clearinghouse, until 2032. See Note 8 of the "Notes to Consolidated Financial Statements" for more information about the NOSA and other opioid-related matters. Manufacturing, Sourcing, and Marketing We sell our manufactured products in the United States, Canada, Europe, Asia, Latin America, and other markets. The FDA and other governmental agencies in the United States, as well as foreign governmental agencies, administer requirements that cover the design, testing, safety, effectiveness, manufacturing (including good manufacturing practices), quality systems, labeling, promotion and advertising (including restrictions on promoting or advertising a product other than for the product's cleared or approved uses), distribution, importation, and post-market surveillance for most of our manufactured products. We are also subject to these requirements when we source certain GMPD segment products from third-party manufacturers. We need specific approval or clearance from, and registrations with, regulatory authorities before we can market and sell some products in the United States and certain other countries, including countries in the European Union ("EU"). In the United States, authorization to commercially market a medical device is generally received in one of two ways. The first, known as pre-market notification or the 510(k) process, requires us to demonstrate that a medical device is substantially equivalent to a legally marketed medical device. The second more rigorous process, known as pre-market approval (“PMA”), requires us to independently demonstrate that a medical device is safe and effective. Many of our Medical segment branded products are cleared through the 510(k) process and certain products must be approved through the PMA process. In the EU, we are required to obtain CE Mark Certification in order to market medical devices. In 2017, EU regulatory bodies finalized a new Medical Device Regulation ("MDR") became effective in May 2021. Under the MDR, medical devices marketed in the EU require significant pre-market and post-market requirements. It can be costly and time-consuming to obtain regulatory approvals, clearances, and registrations of medical devices, and they might not be granted on a timely basis, if at all. For additional information, please see our Risk Factor entitled "Our business is subject to rigorous regulatory and licensing requirements." Privacy and Data Protection We are subject to various and evolving privacy laws and regulations in many jurisdictions. Because we collect, handle, and maintain patient-identifiable health information, we are subject to laws that require specified privacy and security measures and that regulate the use and disclosure of such information, including the U.S. Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), as augmented by the Health Information Technology for 30 Cardinal Health | Fiscal 2025 Form 10-K Business Economic and Clinical Health Act as well as state laws, in the United States. We also collect, handle, and maintain other personal and financial information. Within the U.S., these activities are regulated by certain federal and state laws. Certain states have recently enacted privacy laws that grant specified rights to consumers over the use of their personal information, including increased transparency. Other states are considering adopting similar or different comprehensive privacy laws and comprehensive privacy legislation has been proposed at the U.S. federal level. Internationally, we are also subject to privacy and data protection laws that require significant compliance efforts, including the EU's General Data Protection Regulation (GDPR), Canada's Personal Information Protection and Electronic Documents Act, Japan's Act on the Protection of Personal Information, and China's Personal Information Protection Law, among many others. Nuclear Pharmacies and Related Businesses Our nuclear pharmacies and radiopharmaceutical manufacturing facilities (including for Xofigo ® ) require licenses or permits and must abide by regulations issued by the NRC, applicable state boards of pharmacy and the radiologic health agency or department of health of each state in which we operate, including pharmacy sterile compounding standards and practices. In addition, our radiopharmaceutical manufacturing facilities also must comply with FDA regulations, including good manufacturing practices. Product Tracing and Supply Chain Integrity Title II of the DQSA, known as the Drug Supply Chain Security Act ("DSCSA") or "Track and Trace" established a national system for tracing prescription drug products through the pharmaceutical distribution supply chain to detect, prevent, and rapidly respond to the introduction of drugs that may be counterfeit, diverted, stolen, adulterated, subject of a fraudulent transaction, or otherwise unfit for distribution. The DSCSA requires standardized, unit-level traceability of pharmaceutical products and requires all trading partners to cooperate in a secure, electronic, interoperable prescription drug traceability system. In October, 2024, the FDA extended the compliance deadlines for the DSCSA sterilization traceability requirements to May 27, 2025, for manufacturers, August 27, 2025, for distributors, and November 27, 2025, for dispensers. In addition, the FDA has also has issued regulations requiring most medical device labeling to include a unique device identifier that can be used to identify and track medical devices throughout their lifecycles, improving traceability and facilitating improved post-market surveillance through the Medical Device Reporting Program. Government Healthcare Programs We are subject to U.S. federal healthcare fraud and abuse laws. These laws generally prohibit persons from soliciting, offering, receiving, or paying any compensation in order to induce someone to order, recommend, or purchase products or services that are in any way paid for by Medicare, Medicaid, or other federally-funded healthcare programs. They also prohibit submitting any fraudulent claim for payment by the federal government. There are similar state healthcare fraud and abuse laws that apply to Medicaid and other state-funded healthcare programs. Violations of these laws may result in criminal or civil penalties, as well as breach of contract claims and qui tam actions (false claims cases initiated by private parties purporting to act on behalf of federal or state governments). Some of our businesses and entities that are managed by our MSO businesses are Medicare-certified suppliers or participate in other federal and state healthcare programs, such as state Medicaid programs and the federal 340B drug pricing program. These businesses are subject to accreditation and quality standards and other rules and regulations, including applicable reporting, billing, payment, and record-keeping requirements. Other businesses within each segment manufacture pharmaceutical or medical products or repackage pharmaceuticals that are purchased or reimbursed through, or are otherwise governed by, federal or state healthcare programs. Failure to comply with applicable eligibility requirements, standards, and regulations could result in civil or criminal sanctions, including the loss of our ability to participate in Medicare, Medicaid, and other federal and state healthcare programs. In fiscal year 2022, our Specialty Pharmaceutical Distribution business entered into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services in connection with an investigation into discounts and rebates offered or provided to certain Specialty customers. Our U.S. federal and state government contracts are subject to specific procurement requirements. Failure to comply with applicable rules or regulations or with contractual or other requirements may result in monetary damages and criminal or civil penalties as well as termination of our government contracts or our suspension or debarment from government contract work. Environmental, Health, and Safety Laws In the United States and other countries, we are subject to various federal, state, and local environmental laws, including laws regulating the production or use of hazardous substances, as well as laws relating to safe working conditions and laboratory practices. Additionally, industry participants, including us, rely on ethylene oxide ("EtO") and other compounds to sterilize certain medical products that we manufacture or distribute. Regulatory actions have been taken by certain environmental regulatory authorities to reduce EtO emissions during the sterilization and distribution process, including actions intended to regulate facilities that sterilize medical products. Antitrust Laws The U.S. federal government, most U.S. states and many foreign countries have laws that prohibit certain types of conduct deemed to be anti-competitive. Violations of these laws can result in various sanctions, including criminal and civil penalties. Private plaintiffs also could bring civil lawsuits against us in the United States for alleged antitrust law violations, including claims for treble damages. Cardinal Health | Fiscal 2025 Form 10-K 31 Business Laws Relating to Foreign Trade and Operations U.S. and foreign laws require us to abide by standards relating to the import and export of finished goods, raw materials and supplies, and the handling of information. We also must comply with various export control and trade embargo laws, which may require licenses or other authorizations for transactions within some countries or with some counterparties. Similarly, we are subject to U.S. and foreign laws concerning the conduct of our foreign operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and other foreign anti-bribery laws. Among other things, these laws generally prohibit companies and their intermediaries from offering, promising, or making payments to officials of foreign governments for the purpose of obtaining or retaining business. Other Information Certain Commercial Practices Although our agreements with manufacturers sometimes require us to maintain inventory levels within specified ranges, our distribution businesses are generally not required by our customers to maintain particular inventory levels other than as needed to meet service level requirements. Certain customer contracts require us to maintain sufficient inventory to meet emergency demands, but we do not believe those requirements materially affect inventory levels. Our customer return policies generally require that the product be physically returned, subject to restocking fees. We only allow customers to return product for credit that can be added back to inventory and resold at full value, or that can be returned to vendors for credit. We offer market payment terms to our customers. Rule 10b5-1 Plan Adoptions and Modifications During the quarter ended June 30, 2025, no director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule10b5-1 trading arrangement" as each term is defined in Section 408(a) of Regulation S-K under the Exchange Act. 32 Cardinal Health | Fiscal 2025 Form 10-K Risk Factors Risk Factors The risks described below could materially and adversely affect our results of operations, financial condition, liquidity, or cash flows. These are not the only risks we face. Our businesses also could be affected by risks we do not currently consider material to our operations or of which we are not presently aware. Legal, Regulatory, & Compliance Risks Our business is subject to rigorous regulatory and licensing requirements. As described in the "Business" section, products that we manufacture, source, distribute, or market must comply with U.S. federal, state, and foreign and regulatory requirements. Noncompliance or concerns over noncompliance, including noncompliance by suppliers, has in the past, and may in the future result in suspension of our ability to distribute, import, manufacture, or source products, recalls, safety alerts or seizures, or criminal or civil sanctions, which, in turn, could result in product liability claims and lawsuits, including class actions. If we fail to comply with regulatory requirements, or if allegations are made that we fail to comply, our results of operations and financial condition could be adversely affected. To lawfully operate our businesses, we are required to obtain and hold permits, product registrations, licenses and other regulatory approvals from, and to comply with operating and security standards of, numerous governmental bodies. Failure to maintain or renew necessary permits, product registrations, licenses, or approvals, or to comply with required standards, could have an adverse effect on our results of operations and financial condition. We are required to comply with laws relating to healthcare fraud and abuse. The requirements of these laws are complex and subject to varying interpretations. From time to time, regulatory authorities investigate our policies or practices, and may challenge them. For example, in November 2023, we received a Civil Investigative Demand ("CID") from the Department of Justice focused on potential violations of the Anti-Kickback Statute and False Claims Act in connection with a 2022 transaction in which we purchased a group purchasing organization and a minority ownership interest in a rheumatology managed services organization. We are cooperating with this investigation. We are also periodically subject to federal or state government investigations or qui tam actions (false claims cases initiated by private parties purporting to act on behalf of federal or state governments), which could result in civil or criminal sanctions, including the loss of licenses or the ability to participate in Medicare, Medicaid, and other federal and state healthcare programs or other remedial measures. Some of our businesses are Medicare-certified suppliers or participate in other federal and state healthcare programs, such as state Medicaid programs and the federal 340B drug pricing program. In addition, some businesses manufacture pharmaceutical or medical products or repackage pharmaceuticals that are purchased or reimbursed through, or are otherwise governed by, federal or state healthcare programs. Failure to comply with applicable eligibility requirements, standards, and regulations could result in civil or criminal sanctions, including the loss of our ability to participate in Medicare, Medicaid, and other federal and state healthcare programs. We, and third parties acting on our behalf, collect, handle, and maintain patient-identifiable health information and other sensitive personal and financial information which are subject to federal, state, and foreign laws that regulate the use and disclosure of such information. Regulations currently in place continue to evolve, and they are extensive and complex. Compliance with these laws is difficult and costly. New laws in this area could further restrict our ability to collect, handle, and maintain personal or patient information, or could require us to incur additional compliance costs, either of which could have an adverse impact on our results of operations. From time to time, we have become aware of certain isolated alleged violations of federal, state, or foreign laws concerning privacy and data protection. When we become aware of such allegations, we investigate and, if warranted, notify affected people, entities, and regulatory bodies. As a result of these violations, we are, and may in the future be, subject to civil or criminal penalties, breach of contract claims, lawsuits, costs for remediation, and harm to our reputation. Industry participants, including us, rely on ethylene oxide (“EtO”) and per- and polyfluoroalkyl (“PFA”) compounds to sterilize certain medical products, including products that we manufacture or distribute. Regulatory enforcement actions have been taken by certain environmental regulatory authorities to reduce emissions of these compounds during the sterilization and distribution process. If such measures become more widespread, we could experience increased costs to comply with reduced emissions standards and it is possible that we and other industry participants may be unable to effectively sterilize medical products, possibly resulting in supply shortages or an industry-wide reduction in surgical or medical procedures, which would negatively impact demand for our products. Such increased costs or industry-wide reductions in surgical and medical procedures would have a negative impact on our profit. Additionally, we have been named as a defendant in several lawsuits alleging personal injury as a result of EtO emissions. Additionally, we have incurred, and may incur additional costs associated with modifying certain manufacturing, distribution, or replenishment facilities in accordance with state environmental regulators' actions or requirements. It is possible that these or future regulatory actions or lawsuits could adversely impact our ability to procure products to distribute, resulting in increased costs or industry supply disruptions. Our government contracts are subject to specific procurement requirements. Failure to comply with applicable rules or regulations or with contractual or other requirements may result in monetary damages and criminal or civil penalties as well as termination of Cardinal Health | Fiscal 2025 Form 10-K 33 Risk Factors our government contracts or our suspension or debarment from government contract work. Our global operations (including transition services in connection with divestitures) are subject to the U.S. Foreign Corrupt Practices Act ("FCPA"), the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions, and U.S. and foreign export control, trade embargo, and customs laws. If we fail to comply, or are alleged to fail to comply, with any of these laws, we could be subject to investigations or suffer civil or criminal sanctions. Product quality issues could adversely affect operations, profitability, cash flows, and our financial condition. As described in the "Business" section, products that we manufacture, source, distribute, or market must comply with rigorous quality requirements. These requirements include, among others, regulations regarding manufacturing practices, labeling, advertising, and post marketing reporting, including adverse event reports and field alerts and actions. Several of our facilities and procedures and those of our suppliers are subject to ongoing regulation and periodic inspection by the FDA and other authorities. Our products may not remain in compliance with applicable FDA and other regulatory requirements. Actions resulting from non-compliance with FDA and other regulations include fines, warning letters, injunctions, civil penalties, damages, recalls, consent decrees, seizures of products, and civil litigation and/or criminal prosecution. For example, following a facility inspection in December 2023, the FDA issued a warning letter to Cardinal Health in April 2024 related to plastic syringes sourced from a third party manufacturer in China asserting these products did not have appropriate 510(k) clearance and restating some of the observations from the December 2023 inspection. We promptly took action on these products and submitted a timely and comprehensive response to the warning letter describing our investigation and corrective actions, and we continue to cooperate with the FDA on this matter. Noncompliance or concerns over noncompliance, including by suppliers, as a result of use of third party manufactures, or planned shifts in production sites, has in the past, and may in the future result in substantial modifications to our business practices and operations. These modifications can include suspension of our ability to import and distribute, refunds, or recalls, total or partial shutdown of production in one or more facilities while we or our suppliers remedy any actual or potential issues, the inability to obtain future pre-market approvals or marketing authorizations, and withdrawals or suspensions of current products from the market. In addition, it can be costly and time-consuming to obtain regulatory approvals or product registrations to market a medical device or other product, and such approvals or registrations might not be granted on a timely basis, if at all. Any of these supply chain and quality-related events could be disruptive to our business and have a material adverse effect on operations, profitability, cash flows, and our financial condition. We could be subject to adverse changes in the tax laws or challenges to our tax positions. We are a large multinational corporation with operations in the United States and many foreign countries. As a result, we are subject to the tax laws of many jurisdictions. From time to time, proposals are made in the United States and other jurisdictions in which we operate that could adversely affect our tax positions, effective tax rate, or tax payments. Additionally, changes in tax laws or regulatory enforcement priorities may impact our tax position. For example, in July 2025, the OBBBA was signed into law and includes a broad range of tax reform provisions, which, among other things, extend or make permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act ("Tax Act"), which were set to expire, and reinstates 100% bonus depreciation. Specific initiatives that may impact us include possible increases in U.S. or foreign corporate income tax rates or other changes in tax law to raise revenue, the repeal of the LIFO (last-in, first-out) method of inventory accounting for income tax purposes, the establishment or increase in taxation at the U.S. state level on the basis of gross revenues, recommendations of the base erosion and profit shifting project undertaken by the Organization for Economic Cooperation, and Development and the European Commission’s investigation into illegal state aid. Additionally, in connection with the accruals taken in connection with opioid-related lawsuits in fiscal year 2021, we recorded a net tax benefit, reflecting our then-current assessment of the estimated future deductibility of the amount that may be paid. We have made reasonable estimates and recorded amounts based on management's judgment and our current understanding of the Tax Act; however, the tax law governing deductibility was changed by the Tax Act, and these estimates require significant judgment and it is possible that they could be subject to challenges by the U.S. Internal Revenue Service ("IRS"). We also regularly review these estimates and assumptions from time to time and adjust our accruals based on our review, resulting in changes in our tax provisions/(benefit). The actual amount of tax benefit related to uncertain tax positions may differ materially from these estimates. See Note 9 of the "Notes to Consolidated Financial Statements" for more information regarding these matters. In fiscal year 2021, our provision for income taxes reflected a $424 million benefit from the tax benefits of a self-insurance pre-tax net operating loss carryback under the Coronavirus Aid, Relief and Economic Security ("CARES") Act. Also, as a result of this net operating loss carryback, we received a U.S. federal income tax refund of $966 million. This fiscal year is being audited by the IRS, and it is possible that the IRS could challenge our tax position with respect to this self-insurance loss. If they do, our effective tax rate or cash flows could be adversely impacted. Additionally, laws governing insurance coverage vary by state and some state courts have interpreted laws and insurance policies in ways that may impact our self-insurance loss, which could negatively impact our financial position. 34 Cardinal Health | Fiscal 2025 Form 10-K Risk Factors We file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, and various foreign jurisdictions. Tax laws are complex and subject to varying interpretations. With few exceptions, we are subject to audit by taxing authorities for fiscal years 2015 through the current fiscal year, including specific inquiries into a restructuring in connection with integrating the July 2017 acquisition of the Patient Recovery business and the net operating loss carryback described above. Proposed adjustments in ongoing audits may adversely affect our effective tax rate or tax payments. Changes to the U.S. healthcare environment may not be favorable to us. Over a number of years, the U.S. healthcare industry has undergone significant changes designed to increase access to medical care, improve safety and patient outcomes, contain costs, and increase efficiencies. These changes include a general decline in Medicare and Medicaid reimbursement levels, efforts by healthcare insurance companies to limit or reduce payments to pharmacies and providers, the basis for payments beginning to transition from a fee-for-service model to value-based payments and risk-sharing models, and the industry shifting away from traditional healthcare venues like hospitals and into clinics, physician offices, and patients’ homes. We expect the U.S. healthcare industry to continue to change significantly in the future. Possible changes include changes in legislation or regulations governing prescription pharmaceutical pricing, healthcare services, U.S.-based medical product manufacturing, mandated benefits, efforts to promote increased transparency in the pharmaceutical supply chain, drug shortages, further reduction of or limitations on governmental funding at the state or federal level, or efforts by healthcare insurance companies to further limit payments for products and services. Federal, state, and local governmental entities have also continued to increase their scrutiny of the U.S. healthcare market. Uncertainty surrounding possible changes to the healthcare environment, including changes to regulatory enforcement priorities, may directly or indirectly adversely affect us. The recently issued Executive Order titled "Delivering Most-Favored Nation Prescription Drug Pricing to American Patients" may impact the sales or profitability of branded pharmaceutical products; however, the extent of the impact may vary depending on the timeline for implementation and the number of pharmaceutical drugs that are impacted. Additionally, it is possible that the adoption of the OBBBA could reduce participation in Medicare and Medicaid programs, resulting in a change in utilization of the healthcare system. This may adversely affect demand for our products and services and could have an effect on our results of operations and financial condition. Private challenges to government healthcare policy may also have an adverse impact on our business. For example, the federal 340B drug pricing program requires pharmaceutical manufacturers to offer discounts on certain drugs purchased by covered entities, and some of our Pharma segment customers are covered entities or contract pharmacies for covered entities. Over a dozen pharmaceutical manufacturers have unilaterally restricted sales under the 340B drug pricing program to contract pharmacies. These practices are the subject of ongoing litigation; however, if manufacturers continue this practice and if courts uphold this practice, our customers may be adversely impacted, which could adversely impact our business. Opioid-related legal proceedings and the NOSA we have entered into could have additional or unexpected negative effects on our results of operations or business . Cardinal Health, along with other pharmaceutical wholesalers and other participants in the pharmaceutical supply chain, was named as a defendant in lawsuits related to the distribution of opioid pain medications. Plaintiffs in these lawsuits included state attorneys general, counties, and municipalities. In April 2022, an agreement settling the vast majority of opioid-related lawsuits filed against us by state and local governmental entities became effective. It includes injunctive relief terms relating to distributors' controlled substance anti-diversion programs, with which we must comply. It is possible that the maintenance of the required changes to distributors' controlled substance anti-diversion programs may result in unforeseen costs or operational challenges which could have an adverse impact on our results of operations or performance. If we are unable to comply with these requirements, or are alleged to have failed to comply with these requirements, we could incur unforeseen costs or penalties, and our financial results may be negatively impacted. We are also being sued by private plaintiffs, such as unions, other health and welfare funds, other healthcare providers, and individuals alleging personal injury for the same activities, and could be named as a defendant in additional lawsuits. We intend to vigorously defend ourselves against these lawsuits; however, legal proceedings are inherently unpredictable and it is possible that these lawsuits, either individually or in the aggregate, could have a negative impact on our results of operations. We are involved in legal proceedings with insurers related to the availability of insurance coverage for some matters described above and our ability to recover losses from our insurers is uncertain. Additionally, laws governing insurance coverage vary by state and some state courts have interpreted laws and insurance policies in ways that may negatively impact our ability to receive indemnification under our insurance policies. Ongoing unfavorable publicity regarding the abuse or misuse of prescription opioid pain medications and the role of wholesale distributors in the supply chain of such prescription medications could continue to have an adverse effect on our reputation or results of operations. The outcome or resolution of certain legal proceedings could adversely impact our cash flows or results of operations. Due to the nature of our business, which includes the distribution of controlled substances and other pharmaceutical products and the sourcing, marketing, and manufacturing of medical products, we regularly become involved in disputes, litigation, and regulatory matters. Litigation is inherently unpredictable, disruptive, and time consuming and the unfavorable outcome of legal proceedings Cardinal Health | Fiscal 2025 Form 10-K 35 Risk Factors could adversely affect our results of operations or financial condition. Additionally, some of the products that we distribute or manufacture have been and may in the future be alleged to cause personal injury, subjecting us to product liability claims. For example, since July 2021, we have entered into settlement agreements to settle the vast majority of product liability claims alleging personal injuries associated with the use of Cordis OptEase and TrapEase IVC filter products. Future settlements of or judgments for product liability claims may not be covered by insurance or exceed available insurance recoveries. If this happens, our results of operations and financial condition could be adversely affected. In connection with legal proceedings, we occasionally enter into settlement agreements or become subject to consent decrees containing ongoing financial or operational obligations, including the injunctive relief provisions of the NOSA and the Corporate Integrity Agreement that our Specialty business entered into with the Office of Inspector General of the Department of Health and Human Services in connection with the rebates offered or provided to certain Specialty Solutions customers. Failure to comply with obligations under these agreements or decrees could lead to monetary or other penalties. We might infringe intellectual property rights or our own intellectual property protections might be insufficient to protect our commercial interests. Third parties have in the past and may in the future assert infringement claims against us. Litigation and proceedings related to intellectual property are unpredictable, and we might be required to pay significant damages, develop non-infringing products or services, obtain a license, cease selling or using allegedly infringing products or services, or incur other restrictions on our operations. Trade secret, patent, copyright, and trademark laws, nondisclosure obligations, and other contractual provisions are critical to our business. Our efforts to protect our intellectual property might be insufficient, and non-infringing products or services equivalent or superior to ours might be developed by competitors. Industry & Economic Risks Changes or uncertainty in U.S. or international trade policies and exposure to economic, political and currency, and other risks could disrupt our global operations or negatively impact our financial results. We conduct our operations in various regions of the world outside of the United States, including Europe, Asia, and Latin America. Global developments can affect our business in many ways. Our global operations are affected by local economic environments, including inflation, recession, and competition. Additionally, divergent or unfamiliar regulatory systems and labor markets can increase the risks and burdens of operating in numerous countries. For example, recent U.S. tariffs imposed or threatened to be imposed on goods, materials, and products from countries where we do business, and any retaliatory actions taken by such countries could result in us incurring substantial additional costs to source materials, directly and indirectly, from affected countries, and may require us to raise prices on certain products and seek alternative sources of supply. If our competitors do not increase prices, or increase prices to a lesser extent than we do, or are able to offset the impact of tariffs through other actions, our competitive and financial position may be adversely affected. Additionally, if we are not able to find adequate alternate sources of supply, we may experience supply shortages or disruptions. Additionally, in certain circumstances, including in our Other operating segment, we may not receive increased reimbursement commensurate with the increase in costs, which may negatively impact our results of operations. In addition, we conduct our business in U.S. dollars and various functional currencies of our foreign subsidiaries. Changes in foreign currency exchange rates could adversely affect our financial results, which are reported in U.S. dollars. We may not be able to hedge to protect us against these exposures, and any hedges may not successfully mitigate these exposures. We are also subject to government import and export controls and regulations, including the requirement that we make a determination as to the country of origin of products that we source or manufacture outside the United States. From time to time, Customs and Border protection agencies, whether in the U.S. or other jurisdictions, have challenged these determinations. These and other actions by border protection have resulted in products being detained or delayed and supply disruptions and could result in the imposition of fines and penalties. In addition, the Uyghur Forced Labor Prevention Act, which went into effect in June 2022, prohibits the importation of any goods grown, produced, manufactured, or mined, wholly or in part, in the Xinjiang Uyghur Autonomous Region of China unless importers can provide clear and convincing evidence that goods were not made using forced labor. We have experienced supply constraints as a result of these and similar regulations, and it is possible that our business or results of operations could be further negatively impacted by future determinations and disruptions. Our Pharmaceutical and Specialty Solutions segment’s profit margin could be adversely affected by changes in industry or market dynamics that we are not able to accurately predict. The frequency, timing, magnitude, and profit impact of generic pharmaceutical customer purchase volumes, pricing changes, customer contract renewals, generic pharmaceutical launches, and generic pharmaceutical manufacturer pricing changes, which contribute to the performance of our generic pharmaceutical program, remain uncertain. These factors have contributed to declines in some prior years and have more than offset the benefits from sourcing generic pharmaceuticals through our Red Oak Sourcing venture with CVS Health. If performance of our generic pharmaceutical program declines in future fiscal years and we are unable to offset the decline, our Pharma segment profit and consolidated operating earnings will be adversely affected. Additionally, almost all of our distribution services agreements with branded pharmaceutical manufacturers provide that we receive 36 Cardinal Health | Fiscal 2025 Form 10-K Risk Factors fees from the manufacturers to compensate us for services we provide them. However, under certain agreements, branded pharmaceutical price appreciation, which is determined by the manufacturers, also serves as a part of our compensation. If manufacturers change their historical approach to setting and increasing wholesale acquisition cost, decide to reduce prices, not to increase prices, or to implement only small increases, and we are unable to negotiate alternative ways to be compensated by manufacturers or customers for the value of our services, our margins could be adversely affected. We depend on direct and indirect suppliers to make their products and raw materials available to us and are subject to fluctuations in costs, availability, and regulatory risk associated with these products and raw materials. Our manufacturing businesses use oil-based resins, pulp, cotton, latex, and other commodities as raw materials in many products. Prices of oil and gas also affect our distribution and transportation costs. Prices of these commodities are volatile and can fluctuate significantly, causing our costs to produce and distribute our products to fluctuate. Beginning in the fourth quarter of fiscal year 2021, we experienced higher supply chain costs, which had a negative impact on our GMPD (former Medical) segment profit in fiscal 2021, 2022, 2023, 2024, and 2025. Supply chain constraints also had a negative impact on sales within our GMPD (former Medical) segment. W e did not offset the full impact of these cost increases in fiscal year 2023, 2024, and 2025; however, we implemented certain cost reductions, price increases, and surcharges to mitigate the impact. Due to competitive dynamics and contractual limitations, passing along cost increases is challenging. If we are not able to mitigate future cost increases through increased prices where necessary or if supply chain cost significantly increase or become subject to additional variability, GMPD segment profit could be negatively impacted. We depend on others to manufacture some products, including pharmaceuticals, that we market and distribute. Our operations are also dependent on various components, compounds, raw materials, and energy supplied by others. We purchase many of these components, raw materials, and energy, and source certain products from numerous suppliers in various countries. In some instances, for reasons of quality assurance, cost effectiveness, or availability, we procure certain components and raw materials from a sole supplier. Our supplier relationships could be interrupted, become less favorable to us or be terminated and the supply of these components, compounds, raw materials, or products could be interrupted or become insufficient. These supply interruptions or other disruptions in manufacturing processes could be caused by events beyond our control, including natural disasters, labor disputes, supplier facility shutdowns, defective raw materials, the impact of epidemics or pandemics, such as COVID-19, and actions by U.S. or international governments, including import or export restrictions or tariffs. Any material interruption in our supply chain or inability to obtain key products from third parties in a timely and cost-effective manner, including as a result of trade or other restrictions, could adversely affect our business operations and results of operations, financial condition and cash flows. In addition, due to the stringent regulatory requirements regarding the manufacture and sourcing of our products, we may not be able to quickly establish additional or replacement sources for certain components, materials, or products. A sustained supply reduction or interruption, and an inability to develop alternative and additional sources for such supply, could result in lost sales, increased cost, damage to our reputation, and may have an adverse effect on our business. We could continue to suffer the adverse effects of competitive pressures, and changes in our relationships with significant customers could adversely affect us. As described in greater detail in the "Business" section, we operate in markets that are highly competitive and dynamic. In addition, competitive pressures in each of our businesses may be increased by new business models, new entrants, new regulations, or changes in enforcement priorities, changes in consumer demand, or general competitive dynamics. Additionally, we may not be able to onboard new customers as efficiently as expected due to customer service issues or competitive service level offerings. We have also experienced delays in onboarding new customers due to factors outside of our control. Our businesses face continued pricing pressure from these factors, which adversely affects our margins. If we are unable to offset margin reductions caused by these pressures through steps such as sourcing or cost control measures, additional service offerings and sales of higher margin products, our results of operations could continue to be adversely affected. Employee attrition may have an adverse impact on our business, results of operations, or internal controls. Our ability to attract, retain, and develop qualified and experienced employees, including key executives, key employees at companies that we acquire, and other talent, is critical for us to meet our business objectives. We compete with many other businesses to attract and retain employees. It is possible that we could experience loss of key personnel for a variety of causes. If we do not adequately plan for succession of key roles or if we are not successful in attracting or retaining new talent, our operations, financial performance or internal control over financial reporting could be adversely impacted. Consolidation in the U.S. healthcare industry may negatively impact our results of operations. In recent years, U.S. healthcare industry participants, including distributors, manufacturers, suppliers, healthcare providers, insurers, and pharmacy chains, among others, have consolidated or formed strategic alliances. Consolidations create larger enterprises with greater negotiating power and could result in the possible loss of a customer in the situation where the combined enterprise selects one distributor from two incumbents or a reduction in our ability to market our products and services to new customers. Consolidations also impact other objectives, including Cardinal Health | Fiscal 2025 Form 10-K 37 Risk Factors our ability to use acquisitions to expand or complement our existing businesses. If this consolidation trend continues, it could adversely affect our results of operations. Business & Operational Risks Our business and operations depend on the proper functioning of information systems, critical facilities, and distribution networks and could be negatively impacted by events outside of our control. We rely on our and third-party service providers' information systems for a wide variety of critical operations, including to obtain, rapidly process, analyze, and manage data to: • facilitate the purchase and distribution of inventory items from numerous distribution centers; • receive, process, and ship orders on a timely basis; • manage accurate billing and collections for thousands of customers; • process payments to suppliers; • facilitate manufacturing and assembly of medical products; and • generate financial information. Our business also depends on the proper functioning and security of our and our suppliers' business processes, critical facilities, including our national logistics center, and our distribution networks. Our results of operations could be adversely affected if our or a service provider's business processes, information systems, critical facilities, or distribution networks are disrupted (including disruption of access), are damaged or fail, whether due to physical disruptions, such as extreme weather events, including wildfires, hurricanes, extreme temperatures, or other natural disasters, pandemics (as they were by the COVID-19 pandemic), supply chain disruptions, or power outages, systems updates, or due to cybersecurity incidents, ransomware, or other actions of third parties, including labor strikes or shortages, political unrest, and terrorist attacks. In addition, hardware, software, and other applications and updates procured from third parties may contain defects that have and may in the future unexpectedly restrict or prevent access to or interfere with the proper operation of our information systems and hardware. Manufacturing disruptions also can occur due to regulatory action, production quality deviations, safety issues, or raw material shortages or defects, planned shifts in production sites, or because we need to transition manufacturing facilities for any key products or components that is manufactured at a single manufacturing facility where there are limited alternate facilities. Additionally, we incur costs to remediate these disruptions, and it is possible that these costs could be significant. Our ability to compete effectively is increasingly dependent on access to and interpretation of data, and we may provide services that involve hosting customer data and operating software on third-party or our own systems. Data quality impacts customer ordering, order fulfillment, and higher order processing. If we fail to effectively implement and maintain data governance structures across our businesses, to effectively interpret and utilize such data, or protect the integrity of such data, including systems powered by or incorporating artificial intelligence and machine learning, our operations could be impacted, and we may be at a competitive disadvantage. Our business and results of operations could be adversely affected if we experience a material cyber-attack or other systems breach. Cybersecurity incidents and attacks resulting in unauthorized access to our systems and those of third parties we use in our business could have a material impact on our business operations as a result of loss or misuse of our information, including personal data and sensitive data, and disruption to normal business operations. Our business relies on the secure transmission, storage, and hosting of patient-identifiable health information, financial information, and other sensitive protected information relating to our customers, company, workforce, and individuals with whom we and our customers conduct business. We have programs in place to detect, contain, and respond to information security incidents. However, because the techniques used to obtain unauthorized access, disable, or degrade service or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, hardware, software, or applications developed internally or procured from third parties may contain defects in design or manufacture or other problems beyond our control that could unexpectedly compromise information security. Unauthorized parties have gained access in the past, and will continue to attempt to gain access, to our (including our recently acquired entities) or a service provider's systems or facilities through fraud, social engineering, or other forms of deception. The sophistication of cybersecurity threats and AI-powered cyber-attacks such as deep fakes and force attacks continues to increase. Additionally, our recently acquired MSO businesses are subject to cybersecurity-related risks which are, while similar in many respects, incremental to the cybersecurity risks experienced by our legacy businesses. If we are not able to adapt our systems and processes to mitigate these risks, we could experience additional financial losses, including as a result of class action lawsuits. We and our service providers have been the target of cyber attacks. Although we do not believe these incidents had a material impact on us, either individually or in the aggregate, similar incidents or events in the future may negatively impact our business, reputation, or financial results. Any compromise of our or a service provider's information systems, including unauthorized access to or use or disclosure of sensitive information, could result in the loss or misuse of our information, including personal data and sensitive data and adversely impact our operations, results of operations, or our ability to satisfy legal or regulatory requirements, including the EU general data protection regulation (GDPR) and those related to patient-identifiable health information and other sensitive personal and financial information at the state and U.S. federal level as further described in the Risk Factor titled “Our business is subject to other rigorous regulatory and licensing requirements,” above. A 38 Cardinal Health | Fiscal 2025 Form 10-K Risk Factors cybersecurity incident could result in a violation of these and other applicable laws and result in a loss of customers and revenues, remediation and other costs, increased insurance premiums, litigation, monetary fines and penalties, and damage to our competitiveness and reputation, any of which could adversely affect our financial condition and business. In addition, insurance for losses arising from cyber-attacks or other breaches is becoming more costly and limited and may not be available to us at amounts that we historically have obtained or that we would like to obtain. It is possible that we could incur losses that may not be covered by insurance or that would exceed available insurance recoveries. If this happens, our results of operations and financial condition could be adversely affected. Our sales and credit concentration is significant. In fiscal year 2025, CVS Health was our largest customer. CVS Health accounted for 30 percent of our fiscal 2025 revenue and 26 percent of our gross trade receivable balance at June 30, 2025. If CVS or another significant customer reduces their purchases from us, defaults in payment to us, does not renew or terminates their agreements, whether due to an alleged default by us or otherwise, our results of operations and financial condition could be adversely affected. Our ability to complete, integrate, and manage acquisitions could impact our strategic objectives and financial condition. From time to time, we acquire or look to acquire other businesses that expand or complement our existing businesses or enable entry into new lines of business. For example, in fiscal year 2025, we completed several significant acquisitions in disparate businesses: the acquisition of Integrated Oncology Network and GI Alliance, which are part of our Specialty business, and the acquisition of Advanced Diabetes Supply Group, which is part of our Cardinal Health At-Home businesses. Completion of acquisitions involves a number of risks, including the risk that required financing may not be available on favorable terms and the risk that we may not receive regulatory approvals necessary to timely complete an acquisition or otherwise satisfy closing conditions. Additionally, we are subject to risks associated with the integration and operation of acquired businesses, including the risk that our management’s attention may be diverted to integration efforts at the expense of the legacy businesses, we may fail to retain key personnel of the acquired business, we may experience difficulties or delays establishing, integrating, or combining operations and systems, including manufacturing facilities and cybersecurity-related systems and processes, we may become subject to unforeseen liabilities arising from legal proceedings involving the acquired business, we may face challenges retaining the customers of the acquired business and we may encounter unforeseen internal control, regulatory, or compliance issues. Additionally, future developments may impair the value of our purchased goodwill or intangible assets or may otherwise negatively affect our ability to achieve the financial, strategic, or other benefits we expect from the acquisitions. For example, certain states have proposed legislation, and Oregon adopted legislation, that would limit, restrict or prohibit corporate entities from owning or managing physician practices, directly, or indirectly, through a managed services organization. If these regulations proliferate, our ability to continue to own certain of our recently acquired businesses in certain jurisdictions and our ability to execute on our strategy may be impacted. Our results of operations and financial condition may be adversely affected by risks associated with entering new lines of business, and our ability to execute our strategy. As a result of our recently announced acquisitions, we are entering into new lines of business, including providing physician practice support and management services, that complement our pre-existing businesses. Such new lines of business involve numerous risks and uncertainties that may be different from or more significant than the risks and uncertainties facing our legacy businesses, including risks arising under or related to fraud, waste, and abuse laws, direct or indirect ownership of provider practices, litigation involving physicians, and risks from regulatory or legislative changes that may limit direct or indirect ownership of provider practices or our ability to provide physician practice support and management services. Additionally, these businesses are subject to cybersecurity risks that are, while similar in many respects, incremental to the cybersecurity risks experienced by our legacy businesses. If we are not able to adapt our systems and processes to mitigate these risks, we could experience additional financial losses, including as a result of class action lawsuits. Additionally, our ability to successfully execute on providing physician practice support and management services, including through direct or indirect ownership of provider practices as permitted by applicable law, depends upon a number of factors, including: the ability to develop or acquire and integrate appropriate practice management and support expertise; the ability to support recruitment, integration, and retention of sufficient numbers of local providers and staff; the ability to successfully support negotiations with vendors, suppliers, and payors; the reimbursement environment; and competition from other healthcare organizations with greater depth of experience or market knowledge. Failure to effectively or efficiently complete or manage critical business processes could have unforeseen consequences. From time to time, our businesses perform business process improvements or infrastructure modernization or use service providers for key systems and processes, such as receiving and processing customer orders, customer service, and accounts payable. These initiatives, transitions, and improvements require an ongoing commitment of resources. If any of these initiatives, including those related to the ongoing implementation of new Enterprise Resource Planning technologies and supply chain optimization initiatives, and initiatives related to artificial intelligence and machine learning, are not successfully or efficiently implemented or maintained, or if our relationship with critical third-party service providers deteriorates, we could experience negative impacts on our business, financial results, and our internal control over financial reporting. Cardinal Health | Fiscal 2025 Form 10-K 39 Risk Factors Our business is affected by events outside of our control including public health crises, extreme weather-related events and natural disasters, geopolitical, and other catastrophic events. We have experienced and expect to continue to experience weather-related impacts to the business, primarily driven by risks to certain physical components of our operations and risks related to the transition to a lower-carbon economy. For example, our properties have experienced physical damage resulting from adverse or extreme weather resulting in increased costs for repairs and may cause disruptions in operations. Additional risks associated with extreme weather may cause social and human effects such as shifts in populations, increased costs for critical services such as transportation, and other adverse effects. These factors may negatively impact cost or availability of certain products, commodities, or energy, and could impair our ability to secure goods and services required for the operation of our business at quantities and levels we require. Environmental and other climate-related laws and regulations may impose costs, including increased spend associated with carbon pricing mechanisms, data gathering and reporting, third-party attestations, capital expenditures to implement lower greenhouse gas emissions technology, and other measures to reduce emissions. We cannot predict the potential impact on our competitive position, results of operations, or financial condition. A shift in customer or consumer preference towards low-carbon products and services may also place us at a competitive disadvantage if we fail to effectively adjust for these shifts. Our supply chain is subject to these same physical and transitional risks. Events outside of our control also have, and will continue to, adversely impact our operations and financial results. These events include those related to public health crises, including epidemics or pandemics; geopolitical events or tensions, including civil unrest, trade sanctions, tariffs and other trade restrictions, armed conflicts, or terrorism; or unstable international governments and legal systems. Among other potential affects, these events may have a disruptive and unpredictable impact on our operations and those of our suppliers and vendors, or customers, hinder manufacturing and transportation, result in significant excess costs, lead to shifts in customer demand, or have a negative impact on capital markets. Such events are inherently unpredictable, and our responses may involve the implementation of measures which may not be as successful as intended in mitigating adverse impacts. Our results of operations or strategic objectives could be adversely impacted if we fail to manage and complete divestitures. We regularly evaluate our portfolio of businesses to determine whether an asset or business may no longer help us meet our objectives or whether there may be a more advantaged owner for that business. For example, in July 2023, we contributed our Outcomes™ business to Transaction Data Systems in exchange for a minority stake in the combined entity, and in fiscal year 2022, we completed the divestiture of the Cordis business. When we decide to sell assets or a business, we may encounter difficulty finding buyers or alternative exit strategies, which could impact the achievement of our strategic objectives. We could also fail to obtain necessary regulatory approval or incur higher costs or charges than planned or incur unexpected charges and could experience greater dis-synergies than expected, which could have a negative impact on our results of operations. Our goodwill or other long-lived assets may be further impaired, which could require us to record additional significant charges to earnings in accordance with generally accepted accounting principles. U.S. GAAP requires us to test our goodwill for impairment on an annual basis, or more frequently if indicators for potential impairment exist. In addition, we review intangible assets with finite lives and other long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. In fiscal 2025, we performed annual impairment testing and concluded there were no impairments of goodwill for our reporting units as the estimated fair value of each reporting unit exceeded its carrying amount. Impairment testing involves estimates and significant judgments by management. We believe our assumptions and estimates are reasonable and appropriate; however, additional adverse changes in key assumptions, a failure to meet expected earnings or other financial plans, or unanticipated events and circumstances, an increase in the discount rate, a decrease in the terminal growth rate, increases in tax rates, or a significant change in industry or economic trends could affect the accuracy or validity of such estimates and may result in goodwill impairment. It is possible that we may record significant charges from impairment to our goodwill reporting units, intangibles, and other long-lived assets in the future. Any charge or charges could adversely affect our results of operations. During fiscal 2024 and 2023, we recorded aggregate goodwill impairment charges of $675 million, and $1.2 billion, respectively, related to GMPD (our former Medical unit) primarily driven by the performance and long-term financial plan assumptions. GMPD had no goodwill balance remaining at June 30, 2024. See "Critical Accounting Policies and Sensitive Accounting Estimates" in MD&A above for more information regarding goodwill impairment testing. 40 Cardinal Health | Fiscal 2025 Form 10-K