Cardinal Health set to acquire two companies for combined $3.9B
The two transactions are expected to be accretive to Cardinal Health's revenue and segment profit growth.
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Pharmaceutical distributor Cardinal Health is eyeing an expanded footprint in the specialty medicine space through the planned acquisitions of GI Alliance (GIA) and Advanced Diabetes Supply Group (DSG).
Cardinal will acquire a majority stake in GIA, a gastroenterology (GI) management services organization (MSO), from a combination of GIA physician owners and funds managed by affiliates of Apollo. The company will purchase its majority stake for about $2.8 billion in cash, which will represent 71% ownership.
GIA will operate as a platform within Cardinal Health's Pharmaceutical and Specialty Solutions segment.
At the same time, Cardinal will acquire ADSG, one of the country's leading diabetic medical supplies providers, for about $1.1 billion in cash. ADSG will merge with Cardinal Health's at-Home Solutions business.
WHAT'S THE IMPACT?
GI Alliance's national MSO platform includes more than 900 physicians across 345 practice locations in 20 states. GIA supports a continuum of gastroenterology care across its member sites, with additional depth in anesthesiology, pathology, infusion, radiology and clinical research.
GI Alliance operates a multispecialty platform that is expected to further expand both nationally and in other key therapeutic areas.
ADSG, meanwhile, delivers diabetes offerings that are tailored to support individual patients at-home. ADSG serves roughly 500,000 patients annually by providing innovations in diabetes therapies from manufacturers.
The two transactions are expected to be accretive to Cardinal Health's revenue and segment profit growth, and to non-GAAP earnings per share (EPS), in the first 12 months following close. The company expects to reflect the transactions in its fiscal year 2025 guidance upon closing.
THE LARGER TREND
The two acquisitions aren't the only ones Cardinal Health had planned this year. In September the company entered into a definitive agreement to acquire Integrated Oncology Network, a physician-led independent community oncology network, for more than $1.1 billion in cash.
ION includes more than 50 practice sites in 10 states representing more than 100 providers. Its continuum of care includes medical oncology, radiation oncology, urology, diagnostic testing and other ancillary services.
Cardinal Health said the transaction was part of its effort to help community healthcare providers maintain their independence.
Cardinal Health's Pharmaceutical and Specialty Solutions segment operates one of the largest pharmaceutical supply chains in the U.S. Through its Specialty business, Cardinal Health provides distribution and advanced technology solutions to community-based practices across the country.
ON THE RECORD
"Today is an exciting day at Cardinal Health as we announce two strategic and financially compelling transactions that build upon our progress in Specialty and accelerate growth in our at-Home Solutions business," said Cardinal Health CEO Jason Hollar. "Over the past two years, we have improved operating performance and financial flexibility by executing on our focused growth strategy. These transactions enhance Cardinal Health's ability to deliver a greater value proposition for providers and patients, while representing the next step in our ongoing focus to drive sustainable shareholder value creation."
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
