AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Recurring generics profit contributions establish a functioning program, but neither relative cost superiority nor another structural barrier is demonstrated.
durability · — · Multi-year operating contributions do not establish durable competitive protection; sourcing, pricing and renewal economics remain exposed.
customer dependency · — · Existing-customer growth demonstrates repeat demand, while the substantial OptumRx expiration counters an assumption of lock-in. Material dependence cannot be established.
erosion resilience · — · Earnings growth shows operating resilience, but does not establish resistance to erosion of an identified structural advantage.
Pricing power38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · GMPD implemented price increases and surcharges but failed to recover all cost increases across fiscal 2024–2026. This is demonstrated weak pass-through; pharmaceutical manufacturer price changes do not establish Cardinal's own pricing power.
retention · 2/4 · Indirect operating evidence shows repeat demand and existing-customer volume growth, balanced against the expiration of contracts representing 17% of fiscal 2024 revenue. No retention rate or evidence isolating customer response to price increases is supplied.
margin resilience · 2/4 · GMPD profit grew 17% excluding tariff refunds and consolidated GAAP operating earnings increased, despite incomplete cost recovery. Acquisitions and product mix contribute to results, and GLP-1 revenue growth contributed little profit, limiting attribution to pricing.
contractual freedom · 1/4 · Explicit contractual limitations and competitive dynamics constrain cost pass-through. Actual price increases demonstrate some freedom, but the passages do not establish broad unilateral repricing rights.
Predictability93
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 6.41
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.32
Financial strength56
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 86.23
- netDebtEbitGrade
- 69.15
- interestCoverageGrade
- 59.17
- currentRatioGrade
- 10.61
- Debt / FCF (x)
- 1.96
- Net debt / operating income (x)
- 1.54
- Interest coverage (x)
- 7.51
- Current ratio (x)
- 0.88
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -3.28
- 3-year average SBC / revenue (%)
- 0.10
- cashConversionGrade
- 100.00
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual cash generation and disclosed spending provide a basis for assessment. Fiscal 2026 operating cash flow reached $5.2 billion, but substantial acquisition spending and debt financing coexist with recurring GMPD impairments and a fiscal 2026 oncology impairment. Acquisition returns and repurchase value creation remain unproven.
incentive alignment · 3/4 · Actual fiscal 2026 long-term grants comprised 60% PSUs and 40% RSUs, with a three-year relative TSR modifier and contractual forfeiture provisions. These demonstrate meaningful alignment mechanisms. Acquisition-related incentive adjustments weaken comparability, and ownership amounts and future vesting results are missing.
execution · 3/4 · Demonstrated GAAP earnings growth, existing-customer demand, generics contributions and GMPD profit improvement excluding tariff refunds support strong execution. This uses operating outcomes as indirect management evidence; acquisitions, impairments and incomplete cost recovery limit the conclusion.
governance · 3/4 · An independent non-executive chair, independent standing committees and an unqualified auditor opinion on internal controls demonstrate substantive oversight arrangements. The Corporate Integrity Agreement is a material compliance counterweight; these disclosures do not establish exceptional governance durability.
Evidence
Generics Program The performance of our Pharma segment generics program positively impacted the year-over-year comparison of Pharma segment profit during fiscal 2026.
MD&A / Generics Program · Filed 11/08/2026
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.
MD&A / Generics Program composition · Filed 11/08/2026
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.
MD&A / fiscal 2025 generics performance · Filed 12/08/2025
The performance of our Pharmaceutical and Specialty Solutions segment generics program positively impacted the year-over-year comparison of Pharmaceutical and Specialty Solutions segment profit.
MD&A / fiscal 2024 generics performance · Filed 14/08/2024
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.
MD&A / generics pricing and renewal uncertainties · Filed 05/02/2026
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.
Risk Factors / customer consolidation · Filed 11/08/2026
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.
Business / internal customer supply management competition · Filed 11/08/2026
Revenue for fiscal 2026 increased 14 percent to $254.2 billion from the prior year, primarily due to branded and specialty pharmaceutical sales growth from existing and new customers.
MD&A / fiscal 2026 revenue growth · Filed 11/08/2026
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.
MD&A / GMPD existing-customer volume growth · Filed 12/08/2025
Global Medical Products and Distribution GMPD segment revenue for the three and six months ended December 31, 2025 increased 3 percent to $3.3 billion and $6.4 billion from the comparative prior-year periods, respectively, primarily due to volume growth from existing customers.
MD&A / GMPD existing-customer volume growth · Filed 05/02/2026
Sales to OptumRx generated 17 percent of our consolidated revenue in fiscal 2024.
MD&A / OptumRx fiscal 2024 revenue contribution · Filed 12/08/2025
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.
MD&A / realized effects of OptumRx contract expiration · Filed 12/08/2025
Our ability to successfully provide physician practice support and management services, and to receive the value we expect to receive from our recent acquisitions 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; ensuring the alignment of interests between Cardinal Health and the physicians; the ability to successfully support negotiations with vendors, suppliers, and payors; the reimbursement and regulatory environment; and competition from other healthcare organizations.
MD&A / MSO integration and provider-retention dependencies · Filed 11/08/2026
This increase was partially offset by the $184 million pre-tax goodwill impairment charge recognized in fiscal 2026 related to the Navista & Integrated Oncology Network ("ION") reporting unit within our Pharma segment, higher cash and share-based compensation costs resulting from the timing of acquisitions within The Specialty Alliance, and $171 million of net recoveries in class action antitrust litigation recognized in fiscal 2025.
MD&A / fiscal 2026 impairment and acquisition compensation costs · Filed 11/08/2026
We did not offset the full impact of these cost increases in fiscal years 2024, 2025, and 2026; however, we implemented certain cost reductions, price increases, and surcharges to mitigate the impact.
Risk Factors / realized fiscal 2024–2026 cost recovery shortfall · Filed 11/08/2026
Due to competitive dynamics and contractual limitations, passing along cost increases is challenging.
Risk Factors / competitive and contractual limits on cost pass-through · Filed 11/08/2026
Our GMPD segment continues to take action to reduce the impact of these tariffs and other potential tariffs on our financial results, including through cost optimization initiatives and by increasing prices on impacted products to customers; however, these measures have not fully offset the adverse impact.
MD&A / GMPD tariff mitigation and price increases · Filed 11/08/2026
•GMPD: Segment profit increased 17% excluding the impact of the IEEPA tariff refunds (91% on a reported basis).
Proxy / GMPD profit growth excluding tariff refunds · Filed 21/09/2026
GAAP operating earnings for fiscal 2026 increased 15% to $2.6 billion from the prior year.
MD&A / fiscal 2026 GAAP operating earnings · Filed 11/08/2026
The increase in GAAP operating earnings was driven by the increased contribution from branded and specialty pharmaceuticals and the performance of our generics program in our Pharma segment, the impact of the acquisitions of MSO platforms and ADS, and growth from existing customers in our GMPD segment.
MD&A / operating earnings growth drivers · Filed 11/08/2026
Revenue GAAP Operating Earnings(1) Non-GAAP Operating Earnings Operating Cash Flow $254.2B +14% (YoY change) $2.6B +15% (YoY change) $3.6B +30% (YoY change) $5.2B +116% (YoY change) GAAP Diluted EPS Non-GAAP Diluted EPS Adjusted Non-GAAP Diluted EPS 1-Year Total Shareholder Return(2) 3-Year Total Shareholder Return(2) $7.23 +12% (YoY change) $11.26 +37% (YoY change) $10.95 +33% (YoY change) +45.7% +162.5% (1)GAAP refers to U.S.
Proxy / fiscal 2026 earnings and operating cash flow results · Filed 21/09/2026
During fiscal 2025, we deployed $5.3 billion for acquisitions, $765 million for share repurchases, $547 million for capital expenditures, $494 million for dividends,
Liquidity and Capital Resources / fiscal 2025 capital deployment · Filed 11/08/2026
In addition, we issued additional 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.
Liquidity and Capital Resources / acquisition debt financing · Filed 11/08/2026
Another portion of the consideration came from an $800 million term loan.
Liquidity and Capital Resources / acquisition term loan · Filed 11/08/2026
We had GAAP operating earnings of $1.2 billion and $752 million during fiscal 2024 and 2023, respectively, which included $675 million and $1.2 billion pre-tax non-cash goodwill impairment charges related to the GMPD segment.
MD&A / fiscal 2023–2024 GMPD goodwill impairments · Filed 14/08/2024
In fiscal 2026, long-term incentive awards were granted 60% in PSUs and 40% in RSUs.
Executive Compensation / actual fiscal 2026 PSU and RSU grant mix · Filed 21/09/2026
Relative TSR Modifier A relative TSR modifier measured over a three-year period continues to link this long-term incentive compensation directly to our relative shareholder returns and provide further alignment with shareholder interests while also recognizing factors that impact our industry and peers.
Executive Compensation / three-year relative TSR modifier · Filed 21/09/2026
Our MIP and 2021 LTIP also provide for forfeiture of outstanding awards and recovery of gains realized from vested awards if a plan participant breaches our Standards of Business Conduct, discloses confidential information, commits fraud, gross negligence, or willful misconduct, solicits business or our employees, disparages us, or engages in certain competitive actions while employed by Cardinal Health or for a set period of time after termination of employment.
Executive Compensation / forfeiture and recovery provisions · Filed 21/09/2026
Non-GAAP adjusted free cash flow (for the Fiscal 2026 Annual Cash Incentive and the Fiscal 26-28 PSUs) is non-GAAP adjusted free cash flow adjusted to exclude the operating cash flow of the Solaris Health business as well as the cash flow used for certain unbudgeted integration, financing, and transaction costs associated with this acquisition.
Annex A / acquisition-related adjustments to incentive cash flow · Filed 21/09/2026
8 CARDINAL HEALTH 2026 Proxy Statement PROXY SUMMARY Governance and Board Highlights Governance and Board Highlights Active Independent Oversight Commitment to Continuous Improvement Strong Corporate Governance Practices •Board-selected independent, non-executive Chair with robust duties.
Governance / independent non-executive chair · Filed 21/09/2026
See pages 20 and 21. •All members of the four standing committees of the Board are independent.
Governance / standing committee independence · Filed 21/09/2026
Ernst & Young LLP’s report appears following this "Management Reports" section and expresses an unqualified opinion on the effectiveness of our internal control over financial reporting.
Management Reports / auditor opinion on internal controls · Filed 11/08/2026
In fiscal 2022, our Specialty Pharmaceutical Distribution business entered into a five-year 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.
Business / Specialty Pharmaceutical Distribution Corporate Integrity Agreement · Filed 11/08/2026
The Inflation Reduction Act has and will continue to adversely impact our revenue by capping prices for certain drugs; however, our profitability has not been negatively impacted.
MD&A / observed Inflation Reduction Act revenue and profitability effects · Filed 11/08/2026
With respect to GLP-1 medications, during fiscal 2026, we experienced increased demand, which positively impacted our Pharma segment revenue and consolidated revenue; however, increased GLP-1 sales did not meaningfully contribute to segment profit.
MD&A / GLP-1 revenue growth and limited profit contribution · Filed 11/08/2026
