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 · 19/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Joint sourcing and service integration are established capabilities, but comparative procurement economics and meaningful differentiation are unproven. Competitors disclose overlapping services.
durability · — · The June 2029 venture term establishes continuity of an arrangement, not durability of an economic advantage. Product rights lack sufficient competitive and duration detail.
customer dependency · — · Repeat demand and Kroger's renewal demonstrate usefulness, but material switching friction remains unestablished. OptumRx's departure demonstrates that major relationships are contestable.
erosion resilience · — · Improved earnings coexist with incomplete cost recovery and a major contract departure. These outcomes cannot establish resilience of an unidentified durable advantage.
Pricing power38
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · Implemented price increases and surcharges failed to offset all GMPD cost increases in fiscal 2024–2026. This is demonstrated weak pass-through, without establishing the same result in every business.
retention · 2/4 · Existing-customer growth provides indirect repeat-demand evidence and Kroger's renewal provides direct continuity evidence. The loss of OptumRx, responsible for 17% of fiscal 2024 revenue, materially offsets those positives. No retention rate is inferred.
margin resilience · 2/4 · GAAP operating earnings rose 15% and GMPD profit rose 17% excluding tariff refunds despite incomplete cost recovery. Acquisition-driven gross margin improvement and product mix limit attribution to organic pricing protection.
contractual freedom · 1/4 · Disclosed contractual limitations and competitive dynamics constrain cost pass-through. Branded distribution compensation typically references manufacturer-set wholesale acquisition costs; discretion over negotiated fees is not quantified.
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
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Fiscal 2026 operating cash flow of $5.174 billion supported investment and distributions, with a substantial accounts-payable contribution. Acquisition spending and financing are documented, while repeated GMPD impairments and the Navista & ION impairment demonstrate mixed investment outcomes. Repurchases alone do not establish value creation.
incentive alignment · 3/4 · Actual fiscal 2026 long-term grants comprised 60% PSUs and 40% RSUs, with a multi-year cash flow measure and hedging, pledging and clawback safeguards. These support strong alignment mechanisms. Acquisition exclusions and missing ownership-compliance and realized-payout detail limit the assessment.
execution · 2/4 · Earnings growth, existing-customer demand and GMPD growth excluding tariff refunds support execution indirectly through operating outcomes. Acquisitions complicate attribution, while persistent incomplete cost recovery and the Navista & ION impairment establish shortcomings.
governance · 3/4 · An independent non-executive Chair, independent standing committees, actual audit-service pre-approvals and the auditor's unqualified internal-control opinion support strong governance mechanisms. They do not establish exceptional board effectiveness or eliminate compliance risks.
Evidence
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.
Business / Sourcing Venture with CVS Health Corporation · Filed 11/08/2026
The term of Red Oak Sourcing extends through June 2029.
Business / sourcing venture term · Filed 11/08/2026
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 / fiscal 2026 Generics Program · 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 program contribution · Filed 12/08/2025
Generics Program
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 Program · Filed 14/08/2024
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.
Business / Pharma competition · Filed 11/08/2026
•McKesson SynerGx® – Generic pharmaceutical purchasing program and inventory management that helps pharmacies maximize their cost savings with a broad selection of generic drugs, competitive pricing, and one-stop shopping.
McKesson Business / generic purchasing and inventory management offering · Filed 08/05/2026
Additionally, we furnish healthcare providers and pharmaceutical manufacturers with an assortment of related services, including data analytics, outcomes research, reimbursement and pharmaceutical consulting services (including regulatory affairs, development consulting and scientific affairs, pharmacovigilance, and quality management and compliance) niche premium logistics services, inventory management, pharmacy automation, pharmacy management, and packaging solutions.
Cencora Business / related services offering · Filed 25/11/2025
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.
Business / generic pharmaceutical selling-price lifecycle · Filed 11/08/2026
Our largest customer, CVS Health, accounted for 28 percent of our fiscal 2026 revenue.
Business / largest customer concentration · Filed 11/08/2026
▪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;
Business / prime vendor relationships and claimed customer efficiencies · 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 drivers · 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
•Cardinal Health announces long-term renewal of wholesaler distribution contract with Kroger
Fiscal 2026 results release / Kroger contract renewal · Filed 11/08/2026
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
We also compete with manufacturers that distribute their products directly to customers.
Business / manufacturer direct distribution competition · 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 incomplete cost recovery in fiscal 2024–2026 · Filed 11/08/2026
Due to competitive dynamics and contractual limitations, passing along cost increases is challenging.
Risk Factors / competitive and contractual pass-through limitations · Filed 11/08/2026
Our compensation typically is a percentage of the wholesale acquisition cost that is set by manufacturers.
Business / branded distribution compensation pricing base · Filed 11/08/2026
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
Gross margin rate for fiscal 2026 grew 17 basis points from the prior year, primarily due to the acquisition of MSO platforms, partially offset by the impact of the unfavorable changes in product mix in the Pharma segment.
MD&A / gross margin rate and acquisition effects · 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
Depreciation and amortization
956
790
710
Impairments and (gain)/loss on sale of other investments, net
21
3
2
Impairment of equity interest in Outcomes
122
—
—
Impairments and (gain)/loss on disposal of assets, net
177
18
634
Share-based compensation
367
244
121
Provision for/(benefit from) deferred income taxes
91
243
(104)
Provision for bad debts
74
53
36
Change in operating assets and liabilities, net of effects from acquisitions and divestitures:
Increase in trade receivables
(408)
(833)
(996)
(Increase)/decrease in inventories
(488)
(1,816)
1,115
Increase in accounts payable
3,463
2,732
1,824
Repurchases of liability-classified Specialty Alliance Units
(45)
(19)
—
Other accrued liabilities and operating items, net
(861)
(587)
(433)
Net cash provided by operating activities
5,174
2,397
3,762
Cash flows from investing activities:
Consolidated Statements of Cash Flows / operating cash flow and working capital · Filed 11/08/2026
Acquisition of subsidiaries, net of cash acquired
(1,991)
(5,250)
(1,190)
Additions to property and equipment
(649)
(547)
(511)
Proceeds from disposal of property and equipment
31
3
12
Proceeds from investments
41
15
1
Proceeds from/(payments for) net investment hedge terminations
(13)
2
34
Purchase of short-term time deposits
—
—
(550)
Proceeds from short-term investment in time deposit
—
200
350
Other investing items, net
(3)
(16)
5
Net cash used in investing activities
(2,584)
(5,593)
(1,849)
Cash flows from financing activities:
Consolidated Statements of Cash Flows / acquisition and capital spending · Filed 11/08/2026
Proceeds from long-term obligations, net of issuance costs
990
3,669
1,139
Reduction of long-term obligations
(653)
(445)
(783)
Payments to noncontrolling interests, net
(11)
(12)
—
Net tax proceeds/(withholding) from share-based compensation
(79)
(13)
46
Dividends on common shares
(491)
(494)
(499)
Purchase of treasury shares
(1,358)
(765)
(750)
Net cash provided by/(used in) financing activities
(1,602)
1,940
(847)
Effect of exchange rates changes on cash and equivalents
(6)
(3)
(9)
Net increase/(decrease) in cash and equivalents
982
(1,259)
1,057
Cash and equivalents at beginning of period
3,874
5,133
4,076
Cash and equivalents at end of period
$
4,856
$
3,874
$
5,133
Supplemental Information:
Cash payments for interest
$
406
$
315
$
214
Net cash payments for income taxes
338
444
191
The accompanying notes are an integral part of these consolidated statements.
Consolidated Statements of Cash Flows / financing and shareholder distributions · 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 and 2024 GMPD goodwill impairments · Filed 14/08/2024
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 / Navista & ION impairment and earnings offsets · Filed 11/08/2026
In fiscal 2026, long-term incentive awards were granted 60% in PSUs and 40% in RSUs.
Compensation Discussion and Analysis / actual fiscal 2026 long-term grants · Filed 21/09/2026
The cash flow measure used for the Fiscal 26-28 PSUs was non-GAAP adjusted free cash flow, which shows cash generated after deducting the purchase of assets such as property and equipment, and other major investments from operating cash flow.
Compensation Discussion and Analysis / Fiscal 26–28 PSU cash flow measure · Filed 21/09/2026
No hedging or pledging of company stock by directors and executive officers
Compensation clawback policies
No “single trigger” change of control arrangements
Longstanding, proactive shareholder engagement program and history of responsiveness
Executive Compensation / hedging, pledging and clawback safeguards · 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 exclusions from incentive cash flow calculations · Filed 21/09/2026
•Board-selected independent, non-executive Chair with robust duties.
Governance highlights / independent non-executive Chair · Filed 21/09/2026
•All members of the four standing committees of the Board are independent.
Governance highlights / independent standing committees · Filed 21/09/2026
All audit and non-audit services provided for us by Ernst & Young LLP for fiscal 2026 and 2025 were pre-approved by the Audit Committee.
Audit Committee Matters / actual service pre-approvals · Filed 21/09/2026
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August 11, 2026 expressed an unqualified opinion thereon.
Independent auditor report / internal-control opinion dated August 11, 2026 · Filed 11/08/2026
This segment also contract manufactures a radiopharmaceutical treatment (Xofigo®) and holds the rights to manufacture and distribute Lymphoseek®, a radiopharmaceutical diagnostic imaging agent.
Business / radiopharmaceutical manufacturing and distribution rights · Filed 11/08/2026
•New distribution center in Indianapolis set to open in 2027 featuring advanced robotics and automation, adding capacity and enabling operational flexibility
Recent highlights / planned 2027 distribution center · Filed 11/08/2026
In the GMPD segment, we compete with many diversified healthcare companies and national medical product distributors, such as Medline Industries, Inc.
Business / GMPD named competitor · Filed 11/08/2026
and Owens & Minor, Inc., as well as regional medical product distributors and companies that are focused on specific product categories.
Business / additional GMPD competitor and generic categories · Filed 11/08/2026
