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 and generic prescription 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 has put its China operations up for sale.


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

Pharmaceutical distribution, primarily to pharmacy customers across the US, accounts for almost 90% of Cardinal Health's sales. The Cardinal Health Pharmaceutical division operates more than 20 distribution warehouses and 140 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 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 its more than 70 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 nearly 40,000 home-care products to some 2 million patients.

Geographic Reach

The company has US facilities in 45 states and in Puerto Rico. 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 (more than 20 facilities), the Dominican Republic, Malaysia, Malta, Mexico, and Thailand.

Cardinal Health's pharmaceutical segment operates 24 primary distribution facilities, six specialty distribution facilities, 140 nuclear pharmacy and cyclotron facilities, and one national logistics center. The medical segment operates more than 70 manufacturing, assembly, and distribution facilities in more than 50 countries.

Altogether, the group owns more than 70 operating facilities and leases more than 240 facilities around the world.

Sales and Marketing

Cardinal Health serves a total of more than 25,000 pharmacies, supports 70% of the US' hospitals, and manufactures or sources nearly 2.8 billion products each year.

Pharmacies account for the largest portion of Cardinal's pharmaceutical distribution customer revenues: CVS Health is the company's largest customer, accounting for 25% of fiscal 2016 (ended June) revenue. Group purchasing organizations are also key to the company's business, with Vizient and Premier together accounting for 17% of fiscal 2016 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 net revenues have been trending upward for the last five years. In fiscal 2016 (ended June), it increased 19% to $121.5 billion as both operating segments saw growth. The pharmaceutical segment's sales rose $16.9 billion from existing and new customers as well as from its acquisition activities. Meanwhile, the medical segment saw growth from existing customers and from its own acquisition activity.

With the exception of fiscal 2013, net income has also been on the rise for the past few years. Increased revenue in 2016 led to a 17% increase in net income, which reached $1.4 billion that year. Cash flow from operations rose 17% to $2.97 billion.


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. Recent purchases have focused on medical supplies and devices. In 2017, the company agreed to acquire 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 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.

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. 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 2016, Cardinal's net divestitures contributed $645 million.) In response to upcoming drug distribution reforms in China, the company now plans to sell Cardinal Health China; it hopes to bring in some $1.5 billion with that divestiture.

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 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. It stands to benefit from Cordis' products in the face of an aging population and a growing demand for less invasive medical treatments.

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

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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
  • Director, Pharmacy Operations and Account Management: Rodney O'Gorman
  • Regional Business Manager Southern UK: Bhupinder Thomas
  • Employees: 5,000

Major Office Locations

  • Somerset, NJ

Other Locations

  • Muncie, IN
  • West Chester, OH