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CARDINAL HEALTH INC 8-K Report, Corporate Update (Jul 22, 2022)

Filed July 22, 2022For Securities:CAH

Summary

Cardinal Health, Inc. (CAH) has announced a significant development regarding a shareholder derivative lawsuit. The company has reached an agreement in principle to settle the consolidated action, In re Cardinal Health, Inc. Derivative Litigation, which alleged breaches of fiduciary duties related to the monitoring of controlled substance distribution and executive compensation. The settlement, which received preliminary court approval on July 22, 2022, involves a payment of $124 million from the company's director and officer liability insurance carriers, less attorneys' fees and expenses. Importantly, the settlement does not include any admission of liability by Cardinal Health or its directors and officers. This resolution, pending final court approval, marks a step towards concluding this litigation, which has been ongoing since June 2019.

Key Highlights

  • 1Cardinal Health has reached an agreement in principle to settle a shareholder derivative lawsuit.
  • 2The lawsuit alleged breach of fiduciary duties concerning the monitoring of controlled substance distribution and executive compensation.
  • 3The settlement payment is $124 million, to be paid by director and officer liability insurance carriers, less legal fees.
  • 4The settlement received preliminary court approval on July 22, 2022.
  • 5The settlement does not involve any admission of liability by the company or its directors and officers.
  • 6The company has notified stockholders of the settlement through a press release and this 8-K filing.

Frequently Asked Questions

The lawsuit, In re Cardinal Health, Inc. Derivative Litigation, was filed by purported shareholders alleging that current and former members of the Board of Directors breached their fiduciary duties by failing to effectively monitor the Company's distribution of controlled substances and approving certain executive compensation payments.

The settlement involves a payment of $124 million from the company's director and officer liability insurance carriers, less any attorneys' fees and expenses awarded by the court. This means the direct financial outlay from the company's operating funds is expected to be minimal, with the insurance carriers covering the settlement amount.

No, the settlement explicitly states that it does not include any admission of liability by Cardinal Health, its directors, or officers. This is a common feature of settlements aimed at resolving litigation without admitting fault.

The court granted preliminary approval of the settlement in July 2022. The resolution is subject to final approval by the court. The filing does not specify a date for the final hearing, but it indicates the process is moving towards conclusion.