Cardinal Health Reports Third Quarter Fiscal Year 2024 Results and Raises Fiscal Year 2024 Non-GAAP EPS Guidance Revenue increased 9% to $54.9 billion GAAP 1 operating earnings were $367 million GAA

Cardinal Health Reports Third Quarter Fiscal Year 2024 Results

and Raises Fiscal Year 2024 Non-GAAP EPS Guidance

Revenue increased 9% to $54.9 billion

GAAP1 operating earnings were $367 million GAAP diluted EPS was $1.05

Non-GAAP operating earnings increased 10% to $666 million non-GAAP diluted EPS increased 20% to $2.08

Fiscal year 2024 non-GAAP EPS guidance2 raised and narrowed to $7.30 to $7.40, from $7.20 to $7.35

Company provides preliminary fiscal year 2025 non-GAAP EPS guidance of at least $7.50

DUBLIN, Ohio, May 2, 2024 - Cardinal Health (NYSE CAH) today reported third quarter fiscal year 2024 revenues of $54.9 billion, an increase of 9% from the third quarter of fiscal year 2023. Third quarter GAAP operating earnings were $367 million and GAAP diluted earnings per share (EPS) were $1.05, which included a non-cash, pre-tax goodwill impairment of $90 million related to the Global Medical Products and Distribution (GMPD) segment as a result of the reallocation of goodwill related to the reporting structure update. Third quarter non-GAAP operating earnings increased 10% to $666 million driven by growth in Global Medical Products and Distribution segment profit and Pharmaceutical and Specialty Solutions segment profit. Non-GAAP diluted EPS increased 20% to $2.08, primarily due to the growth in non-GAAP operating earnings and a lower share count.

In Q3, we delivered broad-based growth, including solid profit growth in Pharmaceutical and Specialty Solutions, on top of an exceptionally strong quarter from a year ago, said Jason Hollar, CEO of Cardinal Health. We were also pleased to see the ongoing acceleration in GMPD. With confidence in our outlook for the year, we are raising and narrowing our FY24 EPS guidance and providing preliminary guidance for FY25 that reflects the strength and resiliency of our company.

Pharmaceutical and Specialty Solutions segment

Third quarter revenue for the Pharmaceutical and Specialty Solutions segment increased 9% to $50.7 billion, driven by brand and specialty pharmaceutical sales growth from existing customers.

Pharmaceutical and Specialty Solutions segment profit increased 4% to $580 million in the third quarter, driven by positive generics program performance.

Global Medical Products and Distribution segment

Third quarter revenue for the Global Medical Products and Distribution segment increased 4% to $3.1 billion, driven by volume growth from existing customers.

Global Medical Products and Distribution segment profit increased $66 million to $20 million in the third quarter, driven by an improvement in net inflationary impacts, including mitigation initiatives.

Third quarter revenue for Other increased 14% to $1.2 billion, driven by growth across the three operating segments at-Home Solutions, Nuclear and Precision Health Solutions and OptiFreight Logistics.

Other segment profit increased 5% to $111 million in the third quarter, due to the performance of OptiFreight Logistics.

Fiscal year 2024 outlook2

The company raised and narrowed its fiscal year 2024 guidance range for non-GAAP diluted earnings per share attributable to Cardinal Health, Inc. to $7.30 to $7.40, from $7.20 to $7.35.

This guidance includes an update to the company's Pharmaceutical and Specialty Solutions segment profit outlook to 8.5% to 9.5% growth, from 7% to 9% growth.

Additionally, the company updated expectations for its non-GAAP effective tax rate to a range of 22% to 23%, from 23% to 24%.

Preliminary Fiscal Year 2025 outlook2

The company is also providing preliminary guidance for fiscal year 2025

Cardinal Health completed its acquisition of Specialty Networks. Specialty Networks is an integrated multi-specialty platform that creates clinical and economic value for independent specialty providers and partners across urology, gastroenterology and rheumatology.

Cardinal Health announced that its Board of Directors has elected Robert Bob Azelby as an independent director, effective March 1, 2024. Mr. Azelby joins the board with over 30 years of experience, including as a Chief Executive Officer and board member in the biopharmaceutical, oncology and other specialty industries.

Cardinal Health's U.S. Medical Products and Distribution business was recognized for high achievements in supply chain resiliency by HIRC's Resiliency Badge program, a healthcare industry benchmark.

Cardinal Health released its Fiscal 2023 Environmental, Social and Governance (ESG) Report, highlighting the company's work toward building a healthier, more equitable future. Additionally, the company received approval by the Science Based Targets initiative (SBTi) for its near-term science-based greenhouse gas (GHG) emissions reduction targets.

Debbie Weitzman, CEO of the Pharmaceutical and Specialty Solutions segment, and Michelle Greene, EVP, Chief Information Officer, were named to Reuters' Trailblazing Women lists for significant contributions to their fields. Additionally, Ola Snow, Chief Human Resources Officer, was selected as one of The HR Digest's top CHROs shaping the future of work.

Fortune has recognized Cardinal Health as one of America's Most Innovative Companies for the second year in a row.

Upcoming webcasted investor events

Bank of America Securities Health Care Conference at 11 00 a.m. EST, May 14, 2024

Leerink Partners Healthcare Crossroads Conference at 9 00 a.m. EST, May 29, 2024

Cardinal Health will host a webcast today at 8 30 a.m. Eastern Standard Time to discuss third-quarter results. To access the webcast and corresponding slide presentation, go to the Investor Relations page at ir.cardinalhealth.com. No access code is required.

Presentation slides and a webcast replay will be available on the Investor Relations page for 12 months.

About Cardinal Health

Cardinal Health is a distributor of pharmaceuticals, a global manufacturer and distributor of medical and laboratory products, and a provider of performance and data solutions for health care facilities. With more than 50 years in business, operations in more than 30 countries and approximately 48,000 employees globally, Cardinal Health is essential to care. Information about Cardinal Health is available at cardinalhealth.com.

Media Erich Timmerman, erich.timmerman cardinalhealth.com and 614.757.8231

Investors Matt Sims, matt.sims cardinalhealth.com and 614.553.3661

1GAAP refers to U.S. generally accepted accounting principles. This news release includes GAAP financial measures as well as non-GAAP financial measures, which are financial measures not calculated in accordance with GAAP. See Use of Non-GAAP Measures following the attached schedules for definitions of the non-GAAP financial measures presented in this news release and see the attached schedules for reconciliations of the differences between the non-GAAP financial measures and their most directly comparable GAAP financial measures.

2The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. See Use of Non-GAAP Measures following the attached schedules for additional explanation.

3Previously reported segment results have been recast to conform to the company's updated segment reporting structure.

4Other includes the following three operating segments Nuclear and Precision Health Solutions (NPHS), at-Home Solutions and OptiFreight Logistics, which are not significant enough individually to require reportable segment disclosure.

Cardinal Health uses its website as a channel of distribution for material company information. Important information, including news releases, financial information, earnings and analyst presentations, and information about upcoming presentations and events is routinely posted and accessible on the Investor Relations page at ir.cardinalhealth.com. In addition, the website allows investors and other interested persons to sign up automatically to receive email alerts when the company posts news releases, SEC filings and certain other information on its website.

Cautions Concerning Forward-Looking Statements

This news release contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These statements may be identified by words such as expect, anticipate, intend, plan, believe, "will, should, could, would, project, continue," likely, and similar expressions, and include statements reflecting future results or guidance, statements of outlook and various accruals and estimates. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties include risks arising from ongoing inflationary pressures, including the risk that our plans to mitigate such effects may not be as successful as we anticipate or that costs could remain elevated risks associated with our ongoing review of our operations, portfolio and businesses, including the risk that our management team could become distracted or that the outcome of such review may have unintended consequences competitive pressures in Cardinal Health's various lines of business, including the risk that customers may reduce purchases made under their contracts with us or terminate or not renew their contracts the risk that we may not be as successful as anticipated in mitigating the negative impacts from the recent loss of a significant Pharmaceutical and Specialty Solutions segment customer contract the performance of our generics program, including the amount or rate of generic deflation and our ability to offset generic deflation and maintain other financial and strategic benefits through our generic sourcing venture or other components of our generics programs ongoing risks associated with the distribution of opioids, including the financial impact associated with the settlements with governmental authorities and other parties and the risk that challenges to tax deductions for opioid-related losses could adversely impact our financial results risks arising from the Department of Justice investigation which concerns our anti-diversion program and risks associated with the injunctive relief requirements under the national settlement risks associated with the manufacture and sourcing of certain products, including risks related to our ability and the ability of third-party manufacturers to import or export certain products or component parts and to comply with applicable regulations, including the recent scrutiny on products manufactured in or sourced from China our ability to manage uncertainties associated with the pricing of branded pharmaceuticals risks associated with business process initiatives, such as the Global Medical Products and Distribution Improvement Plan, including the possibility that they could fail to achieve the intended results the risk that we may not realize the anticipated benefits related to our updated operating and segment reporting structure and risks associated with the acquisition of Specialty Networks, including the risk that we may fail to realize the anticipated strategic and financial benefits. Cardinal Health is subject to additional risks and uncertainties described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports and exhibits to those reports. This news release reflects management's views as of May 2, 2024. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement. Forward-looking statements are aspirational and not guarantees or promises that goals, targets or projections will be met, and no assurance can be given that any commitment, expectation, initiative or plan in this news release can or will be achieved or completed.

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

1 For the three and nine months ended March 31, 2024, impairments and (gain) loss on disposal of assets, net includes pre-tax goodwill impairment charges of $90 million and $671 million, respectively, related to the Global Medical Products and Distribution ( GMPD ) segment. During the nine months ended March 31, 2023, impairments and (gain) loss on disposal of assets, net included pre-tax impairment charges of $863 million related to the GMPD segment.

2 For fiscal 2024, the net tax benefit related to the impairment charge is $56 million and is included in the annual effective tax rate. As a result, the tax benefit recognized during the nine months ended March 31, 2024 increased approximately by an incremental $36 million which will reverse in the fourth quarter of the fiscal year. For fiscal 2023, the net tax benefit related to these impairment charges was $68 million and was included in the annual effective tax rate. As a result, the tax benefit recognized during the nine months ended March 31, 2023 increased approximately by an incremental $66 million which reversed in the fourth quarter of fiscal 2023.

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

Cardinal Health, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

Cardinal Health, Inc. and Subsidiaries

The sum of the components and certain computations may reflect rounding adjustments.

Our previously reported fiscal 2023 segment results have been recast to conform to our new reporting structure and reflect changes in the elimination of inter-segment revenue and allocated corporate expenses for shared functions, which are driven by the reporting structure change.

Cardinal Health, Inc. and Subsidiaries

GAAP Non-GAAP Reconciliation1

1 For more information on these measures, refer to the Use of Non-GAAP Measures and Definitions schedules.

2 Distribution, selling, general and administrative expenses.

3 Attributable to Cardinal Health, Inc.

4 For the three months ended March 31, 2024, impairments and (gain) loss on disposal of assets, net includes a pre-tax goodwill impairment charge of $90 million related to the GMPD segment. For fiscal 2024, the estimated net tax benefit related to the impairments is $56 million and is included in the annual effective tax rate. As a result, the amount of tax expense recognized increased approximately by an incremental $30 million during the three months ended March 31, 2024.

For the nine months ended March 31, 2023, impairments and (gain) loss on disposal of assets, net included pre-tax impairment charges of $863 million related to the Global Medical Products and Distribution segment. For fiscal 2023, the net tax benefit related to the impairment was $68 million and was included in the annual effective tax rate. As a result, the amount of tax expense recognized increased approximately by an incremental $74 million during the three months ended March 31, 2023.

The sum of the components and certain computations may reflect rounding adjustments.

We generally apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

Cardinal Health, Inc. and Subsidiaries

GAAP Non-GAAP Reconciliation1

1 For more information on these measures, refer to the Use of Non-GAAP Measures and Definitions schedules.

2 Distribution, selling, general and administrative expenses.

3 Attributable to Cardinal Health, Inc.

4 For the nine months ended March 31, 2024, impairments and (gain) loss on disposal of assets, net includes cumulative pre-tax goodwill impairment charges of $671 million related to the GMPD segment. For fiscal 2024, the estimated net tax benefit related to the impairments is $56 million and is included in the annual effective tax rate. As a result, the incremental interim tax benefit recognized during the nine months ended March 31, 2024 is $36 million and will reverse in the fourth quarter of the fiscal year.

For the nine months ended March 31, 2023, impairments and (gain) loss on disposal of assets, net included cumulative pre-tax goodwill impairment charges of $863 million related to the GMPD segment. For fiscal 2023, the net tax benefit related to the impairment was $68 million and was included in the annual effective tax rate. As a result, the incremental interim tax benefit recognized during the nine months ended March 31, 2023 was $66 million and reversed in the fourth quarter of fiscal 2023.

The sum of the components and certain computations may reflect rounding adjustments.

We generally apply varying tax rates depending on the item's nature and tax jurisdiction where it is incurred.

Cardinal Health, Inc. and Subsidiaries

GAAP Non-GAAP Reconciliation - GAAP Cash Flow to Non-GAAP Adjusted Free Cash Flow

For more information on these measures, refer to the Use of Non-GAAP Measures and Definitions schedules.

Cardinal Health, Inc. and Subsidiaries

Use of Non-GAAP Measures

This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("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, including costs incurred to negotiate and finalize the Cooperation Agreement and costs incurred by the Business Review Committee of the Board of Directors, which was formed under this Cooperation Agreement. 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.

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.