Dive Brief:
- Cardinal Health, a drug distributor and healthcare services company, has inked two acquisitions it says will advance the company’s home care business.
- On Monday, Cardinal said it agreed to acquire multi-specialty supply company Strive Medical, which focuses on urology, and the diabetes health business of AdaptHealth for a combined $360 million in cash.
- Cardinal said the deal should expand its at-home solutions business, which the company has targeted for growth through organic investment and acquisitions in recent years. The two acquisitions are expected to be accretive to its earnings within a year of the deal’s closing.
Dive Insight:
In a separate announcement, AdaptHealth said Cardinal would acquire its diabetes supply business for $235 million, implying an approximately $125 million price for Strive Medical. Cardinal did not disclose a projected closing date for the deals.
Cardinal has focused on investments in its at-home solutions business, which delivers medical supplies to patients’ doors. The business has benefited from recent trends in the industry that are seeing care being delivered increasingly in at-home settings.
The shift to home care has been a financial boon for Cardinal as well: The at-home unit contributed to $1.7 billion in revenue during Cardinal’s third quarter this year and helped grow profit by 34% year over year in its business unit. The outperformance prompted Cardinal to raise the profit guidance of its “other” segment, which includes its at-home business, for its fiscal year ending June 30.
Executives said that Monday’s acquisitions should further accelerate growth in its at-home solutions business and build upon other investments it’s made, including Cardinal’s recent purchase of direct-to-patient diabetes medical supplier Advanced Diabetes Supply.
The $1.1 billion acquisition of ADS, which closed in April last year, significantly expanded Cardinal’s at-home diabetes supply business. On Monday, executives said the acquisition had integrated into the overall business faster than expected, echoing Cardinal’s announcement in April that it had onboarded almost 500,000 new customers from the acquisition.
AdaptHealth’s diabetes unit serves more than 225,000 patients annually, Cardinal said in a press release. Its business primarily delivers supplies, like continuous glucose monitors, directly to patients. Strive serves more than 20,000 customers per year and specializes in urology, wound care, ostomy and incontinence supplies.
Founded in 1979, Cardinal has three business arms: pharmaceutical and specialty supplies, global medical products and distribution, and its “other” unit, which includes its at-home business, freight logistics arm and other smaller segments.
Other recent Cardinal acquisitions include its August buy of urology multi-specialty organization Solaris Health.
