About Cardinal Health Systems, Inc.

When your local pharmacy runs low on drugs or supplies, it probably calls 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 and generic prescription and OTC drug distribution. It also franchises Medicine Shoppe retail pharmacies. Its 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. International markets for Cardinal Health include China.


Pharmaceutical distribution accounts for almost 90% of Cardinal Health's sales, primarily to pharmacy customers across the US. The Cardinal Health Pharmaceutical division operates more than 20 distribution warehouses and 150 nuclear pharmacy labs (for the preparation and distribution of medical imaging agents) throughout the US and in Puerto Rico, as well as about a dozen distribution centers in China. The division also includes the Cardinal Health Pharmacy Solutions business, the Medicine Shoppe retail pharmacy subsidiary, and a Specialty Solutions unit that distributes specialty pharmaceuticals, such as cancer injectables, plasma products, and intensive care therapies that require special handling.

The smaller Cardinal Health Medical distribution division offers branded and private-label supplies, including scientific laboratory equipment and general hospital and physician practice supplies, primarily from some 50 warehouses in the US, as well as from a handful of facilities in Canada. Its private-label offerings, which include surgical gowns, exam gloves, and fluid collection equipment, are also distributed directly and through third parties in Europe, South America, and the Asia/Pacific region. Cardinal Health Medical also assembles medical procedure kits and provides consulting and logistics services.

The company works with more than 5,000 pharmaceutical and medical-surgical suppliers. It provides more than 40,000 home-care products to some 1.8 million patients.

Geographic Reach

In addition to the core US operations, which account for about 95% of sales, Cardinal Health has expanded its presence to include pharmaceutical distribution operations in China. The medical division also has manufacturing, assembly, and distribution locations in locations including Canada, the Dominican Republic, Malaysia, Malta, Mexico, and Thailand.

Cardinal Health's pharmaceutical segment operates 22 primary distribution facilities, six specialty distribution facilities, more than 150 nuclear pharmacy and cyclotron facilities, and one national logistics center. The medical segment operates about 80 manufacturing, assembly, and distribution facilities.

Sales and Marketing

Pharmacies account for the largest chunk of Cardinal's pharmaceutical distribution customer revenues: CVS Health is the company's largest customer, accounting for 27% of fiscal 2015 (ended June) revenue. Group purchasing organizations are also key to the company's business, with Novation and Premier together accounting for 18% of fiscal 2015 revenue. Other customers include hospitals, surgery centers, clinics, physician practices, and clinical laboratories. Together, the pharmaceutical and medical distribution segments serve more than 100,000 locations daily.

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 division.

Financial Performance

Cardinal Health's sales fell in fiscal 2013 and 2014 (ended June) due to the expiration of distribution contracts with Walgreen and Express Scripts. However, revenue rebounded 13% to $102.5 billion in fiscal 2015. That growth was largely due to higher sales to existing customers, assisted by branded-drug price inflation and newly launched drugs for the treatment of hepatitis C. The medical segment experienced gains through its acquisition of specialty pharmaceutical supplier Metro Medical.

Net income (which has been on the rise, with the exception of in fiscal 2013) rose 4% to $1.2 billion in 2015, thanks to the higher revenue. Cash flow from operations rose 1% to $2.5 billion that year.


Cardinal has grown through acquisitions of companies and products within all of its operating segments. Indeed, since 1980 it has acquired more than 50 companies, including a number of purchases to bolster its pharma and medical distribution operations in specific regions. In 2015 the company bought cardiology and endovascular device maker Cordis from Johnson & Johnson in a $1.94 billion transaction. It hopes to benefit from Cordis' products in the face of an aging population and a growing demand for less invasive medical treatments.

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.

In July 2014, Cardinal Health and CVS Health launched a 50:50 10-year joint venture, called Red Oak Sourcing (ROS), to source and negotiate generic supply contracts for both companies. ROS is the largest generic sourcing entity in the US and should enhance each company's leadership position in generic-drug distribution and sales, enabling them to negotiate better generic drug prices.

Cardinal Health is also expanding its product offerings in cardiology, wound care, trauma, and orthopedics. The company's Hospital Quality at Home initiative is designed to allow patients to increasingly buy products in retail settings. Additionally, in 2014 it launched a tool for pharmacists to quickly analyze antibiotic use trends, helping them identify opportunities to improve antibiotic stewardship efforts.

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. In 2013 it launched a restructuring program to streamline medical distribution operations, including the consolidation of procedure kit facilities and the sale of its sterilization unit in El Paso, Texas.

The company is also increasingly focused on ambulatory and post-acute settings. To that end, 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.

Mergers and Acquisitions

In 2015 Cardinal Health acquired Nashville-based Metro Medical Supply, a supplier of specialty pharmaceuticals. That deal expanded its oncology, rheumatology, and nephrology businesses. Later that year it bought Harvard Drug Group for $1.12 billion; that transaction increased its generic drugs distribution. And it yet another deal, it bought Johnson & Johnson's Cordis' heart-product business (which includes such products as stents and catheters) for $1.94 billion.

The company paid $320 million, all cash, in 2014 for medical closure manufacturer AccessClosure. The move is expected to strengthen Cardinal's medical distribution segment. Also in 2014, Cardinal Health purchased fast-growing Sonexus Health to expand its specialty biopharmaceuticals business.

In 2013 Cardinal Health paid some $2.1 billion to acquire AssuraMed. The purchase greatly expanded the company's home medical supply operations by broadening its product offerings and distribution network in the home health market.

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Cardinal Health Systems, Inc.

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


  • Employer Type: Public
  • Exec Asst: Carol Macivor
  • Senior Consultant Market Research: Lindsay McAllister
  • Contrl: Eric Slusser

Major Office Locations

  • Somerset, NJ

Other Locations

  • Muncie, IN
  • West Chester, OH