Cardinal Health to pass part of tariff refunds to customers

The news

Cardinal Health expects to pass along to customers the portion of its IEEPA tariff refunds tied to tariff-driven price increases they paid, according to its latest quarterly filing. Since February 2025, Cardinal has paid about $200 million in IEEPA tariffs, mostly in its medical products segment.

Cardinal recorded a receivable for the expected refund in the quarter ended June 30, according to its annual report.
The company also recorded an expense for payments to customers, reducing the refund's net benefit to operating earnings to about $100 million.

The details

Cardinal will make the customer payments after receiving its IEEPA refunds in full. By Sept 30, it had recovered most of the refunds claimed in the first two phases of the refund process. It expects to receive the remainder through later phases.

Most of Cardinal’s claims fell under Phase 2, which opened in June.
US Customs and Border Protection had certified about $122 billion in IEEPA refunds, including interest, by mid-September, according to C.H. Robinson.
Phase 3, covering entries that had already been finally liquidated, opened Oct 6.

Cardinal expects to direct about half its refund to customers. That is a larger share than other companies have earmarked for vendors or charitable giving.

Ralph Lauren committed $33.2 million of its $82.3 million refund to charity, or about 40%. VF set aside 25% for vendors, Williams-Sonoma 24% and Gap about 19%. Gap's allocation was roughly $95 million of its $512 million refund.

Other tariffs are still weighing on Cardinal’s medical products business. The IEEPA refund largely offset tariff costs in the segment during fiscal 2026, but other costs have outpaced the benefits of price increases and cost reductions.

Medical segment profit fell 28% to $33 million in the quarter ended Sept 30, mainly because of weaker distribution results and foreign exchange rates.
The segment serves hospitals, surgery centers, clinical labs and other providers in the US and Canada.

Drug tariffs pose another risk to Cardinal’s pharmaceutical business. An April 2026 proclamation covers imports of branded drugs. Generic drugs currently face no tariff, but a July presidential statement proposed tariffs of 100% from 2028 and 200% from 2029.