About Cardinal Health Systems, Inc.

When your local pharmacy runs low on drugs or supplies, it might just call Cardinal Health. The company is a top distributor of pharmaceuticals and other medical supplies and equipment in the US. Its pharmaceutical division provides supply chain services including branded, generic, and specialty pharmaceutical and OTC drug distribution. It also franchises Medicine Shoppe retail pharmacies. Cardinal's medical division parcels out medical, laboratory, and surgical supplies and provides logistics, consulting, and data management. Customers include retail pharmacies, hospitals, nursing homes, doctor's offices, and other health care businesses.


Cardinal Health operates through two primary segments -- Pharmaceutical and Medical.

Pharmaceutical distribution, primarily to pharmacy customers across the US, accounts for around 90% of Cardinal Health's sales. It operates more than 20 distribution warehouses, six specialty distribution facilities, and more than 140 nuclear pharmacy labs (for the preparation and distribution of medical imaging agents) throughout the US and in Puerto Rico. The division also includes the Medicine Shoppe retail pharmacy subsidiary; the Specialty Solutions unit distributes specialty pharmaceuticals, such as cancer injectables, plasma products, and intensive care therapies that require special handling.

The smaller Medical segment offers branded and private-label supplies, including scientific laboratory equipment and general hospital and physician practice supplies, primarily from its more than 70 warehouses, manufacturing facilities, and other locations in the US. It also operates 20 manufacturing, research, or distribution facilities in Canada, the Dominican Republic, Malaysia, Malta, Mexico, and Thailand. The segment's private-label offerings, which include surgical gowns, exam gloves, and fluid collection equipment, are distributed directly and through third parties in the US, Canada, Europe, and Asia. Cardinal Health Medical also assembles medical procedure kits and provides consulting and logistics services.

Cardinal Health and CVS Health operate a 50:50 joint venture, Red Oak Sourcing (ROS), that sources and negotiates generic supply contracts for both companies. ROS is the largest generic sourcing entity in the US.

Geographic Reach

Cardinal Health's Pharmaceutical segment operates 24 primary distribution facilities, six specialty distribution facilities, more than 140 nuclear pharmacies and radiopharmaceutical manufacturing facilities, and a national logistics center; these facilities are all located in 45 US states and Puerto Rico.

The Medical segment has more than 70 manufacturing, assembly, and distribution locations in the US and Puerto Rico. It operates 20 international locations in Canada, the Dominican Republic, Malaysia, Malta, Mexico, and Thailand.

Altogether, the group owns more than 70 operating facilities and leases more than 230 facilities around the world.

Sales and Marketing

Cardinal Health sells to thousands of pharmacies and provides support to hospitals throughout the US. Its largest customers are CVS Health and OptumRx; its five largest customers combined account for about half of its total revenues. Group purchasing organizations are also key to the company's business, with Vizient and Premier together accounting for some 20% of total revenues. Other customers includesurgery centers, clinics, physician practices, and clinical laboratories.

Though the bulk of the company's operations consist of direct promotion, sales, and distribution of drugs and medical supplies, Cardinal Health does use some third-party distributors for the manufactured products from its Medical segment.

Financial Performance

Cardinal Health's net revenues have been trending upward for the last five years. In fiscal 2017 (ended June), growth slowed somewhat as revenue increased 7% to $130 billion (versus a 19% increase in fiscal 2016). Both the Pharmaceutical and Medical segments had higher sales in 2017, but the impact of generic pricing changes ultimately impacted overall income.

Net income fell that year, dropping 10% to $1.3 billion.That decline was driven by an increase in operating expenses including distribution, selling, general, and administrative expenses; amortization and other acquisition-related costs, and restructuring and employee severance expenses.

Operating cash flow fell from $3 billion in fiscal 2016 to $1.2 billion in fiscal 2017. Factors contributing to that fall included a decrease in accounts payable and an increase in net accrued liabilities and operating items.


Cardinal has grown through acquisitions of companies and products within all of its operating segments. Recent purchases have focused on medical supplies and devices. In 2017, the company acquired several medical supplies units from Medtronic for about $6.1 billion. That followed the 2015 purchase of cardiology and endovascular device maker Cordis from Johnson & Johnson in a $1.94 billion transaction. In fiscal 2016 (ended June), the company spent $3.6 billion on acquisitions, including $1.1 billion to acquire Harvard Drug.

In addition to acquisitions, the company aims to grow through new customer contracts, facility expansion efforts, and collaborations with other medical and drug firms. Growth efforts aim to expand operations in core pharma and medical distribution fields, as well as niche service areas such as the provision of data management and procurement services for specialty health providers.

Cardinal Health also aims to keep revenues and profits on the rise by keeping its operations lean and nimble, an important factor in thin-margin distribution industries. To that end, Cardinal Health has conducted some cost-cutting programs such as asset divestitures in recent years. For example, it sold its physician office business to Henry Schein in 2015. As part of that strategic agreement, Henry Schein has committed to buying Cardinal Health-brand and other medical products. In response to upcoming drug distribution reforms in China, the company sold its Chinese pharmaceutical and medical distribution operations to Shanghai Pharmaceuticals for $1.2 billion in 2018 (although it retains certain businesses in the country, such as Cordis, its patient recovery business).

Mergers and Acquisitions

Cardinal Health in 2017 bought the medical supplies businesses of Medtronic for about $6.1 billion. The units acquired sell products for patient care, deep vein thrombosis, and nutritional insufficiency. They cover more than 20 product categories and include brands such as Curity, Kendall, Dover, Argyle, and Kangaroo. The units are complementary to Cardinal's medical supply offerings.

In 2015 Cardinal Health acquired Harvard Drug Group for $1.12 billion; that transaction increased its generic drugs distribution. In another deal, it bought Johnson & Johnson's Cordis' heart-product business (which includes such products as stents and catheters) for $1.94 billion. It was interested in Cordis' products in light of an aging population and a growing demand for less invasive medical treatments.

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Cardinal Health Systems, Inc.

14 Schoolhouse Rd
Somerset, NJ 08873-1213
Phone: 1 (732) 537-6544


  • Employer Type: Public
  • Director, HEOR Business Development: Christy Albertson
  • Supplier Relations Manager: Anja Lowman
  • Director, Pharmacy Operations and Account Management: Rodney O'Gorman
  • Employees: 5,000

Major Office Locations

  • Somerset, NJ

Other Locations

  • Muncie, IN
  • West Chester, OH