Segment Information

9 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Segment Information

13. Segment Information

Our operations are principally managed on a products and services basis and are comprised of two operating segments, which are the same as our reportable segments: Pharmaceutical and Medical. The factors for determining the reportable segments include the manner in which management evaluates performance for purposes of allocating resources and assessing performance combined with the nature of the individual business activities.

Our Pharmaceutical 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; operates nuclear pharmacies and radiopharmaceutical manufacturing facilities; provides pharmacy management services to hospitals as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers; and repackages generic pharmaceuticals and over-the-counter healthcare products.

Our Medical segment manufactures, sources and distributes Cardinal Health branded medical, surgical and laboratory products, which are sold in the United States, Canada, Europe, Asia and other markets. In addition to distributing Cardinal Health branded products, this segment also distributes a broad range of national brand products and 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 distributes medical products to patients' homes in the United States through our Cardinal Health at-Home Solutions division.

Revenue

The following tables present revenue for each reportable segment and disaggregated revenue within our two reportable segments and Corporate:

	Three Months Ended March 31,
(in millions)	2020			2019
Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	34,899		$	31,146
Nuclear and Precision Health Solutions	213			215
Pharmaceutical segment revenue	35,112			31,361
Medical distribution and products (3)	3,539			3,431
Cardinal Health at-Home Solutions	512			440
Medical segment revenue	4,051			3,871
Total segment revenue	39,163			35,232
Corporate (4)	(6		)	(4		)
Total revenue	$	39,157		$	35,228

	Nine Months Ended March 31,
(in millions)	2020			2019
Pharmaceutical Distribution and Specialty Solutions (1) (2)	$	103,612		$	95,888
Nuclear and Precision Health Solutions	642			628
Pharmaceutical segment revenue	104,254			96,516
Medical distribution and products (3)	10,483			10,339
Cardinal Health at-Home Solutions	1,508			1,339
Medical segment revenue	11,991			11,678
Total segment revenue	116,245			108,194
Corporate (4)	(12		)	(13		)
Total revenue	$	116,233		$	108,181

(1) Products and services offered by our Specialty Solutions division are referred to as “specialty pharmaceutical products and services."

(2) Comprised of all Pharmaceutical segment businesses except for Nuclear and Precision Health Solutions division.

(3) Comprised of all Medical segment businesses except for Cardinal Health at-Home Solutions division.

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

The following tables present revenue by geographic area:

	Three Months Ended March 31,
(in millions)	2020			2019
United States	$	38,073		$	34,230
International	1,090			1,002
Total segment revenue	39,163			35,232
Corporate (1)	(6		)	(4		)
Total revenue	$	39,157		$	35,228

	Nine Months Ended March 31,
(in millions)	2020			2019
United States	$	113,053		$	105,190
International	3,192			3,004
Total segment revenue	116,245			108,194
Corporate (1)	(12		)	(13		)
Total revenue	$	116,233		$	108,181

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

Segment Profit

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

We do not allocate the following items to our segments: last-in first-out, or ("LIFO"), inventory charges/(credits); surgical gown recall costs; restructuring and employee severance; amortization and other acquisition-related costs; impairments and (gain)/loss on disposal of assets; litigation (recoveries)/charges, net; state opioid assessment related to prior fiscal years; other (income)/expense, net; interest expense, net; loss on extinguishment of debt; and provision for income taxes.

In addition, certain investment spending, certain portions of enterprise-wide incentive compensation and other spending are not allocated to the segments. Investment spending generally includes the first-year spend for certain projects that require incremental investments in the form of additional operating expenses. Because approval for these projects is dependent on executive management, we retain these expenses at Corporate. Investment spending within Corporate was $17 million for both the three months ended March 31, 2020 and 2019, and $37 million and $36 million for the nine months ended March 31, 2020 and 2019, respectively.

In connection with the opioid litigation as discussed further in Note 7, we recognized a pre-tax charge of $5.63 billion during the nine months ended March 31, 2020, which was retained at Corporate.

In connection with the surgical gown recall as discussed further in Note 7, we recognized a pre-tax charge of $95 million during the nine months ended March 31, 2020 which was retained at Corporate.

In connection with the naviHealth divestiture, we recognized a pre-tax gain of $508 million during the nine months ended March 31, 2019, which was retained at Corporate.

The following tables present segment profit by reportable segment and Corporate:

	Three Months Ended March 31,
(in millions)	2020			2019
Pharmaceutical	$	534		$	536
Medical	178			155
Total segment profit	712			691
Corporate	(150		)	(259		)
Total operating earnings	$	562		$	432

	Nine Months Ended March 31,
(in millions)	2020			2019
Pharmaceutical	$	1,394		$	1,388
Medical	543			479
Total segment profit	1,937			1,867
Corporate	(6,305		)	(115		)
Total operating earnings/(loss)	$	(4,368	)	$	1,752

The following table presents total assets for each reportable segment and Corporate at:

(in millions)	March 31, 2020		June 30, 2019
Pharmaceutical	$	22,508	$	22,446
Medical	15,445		15,284
Corporate	3,195		3,233
Total assets	$	41,148	$	40,963