- Acquisition of a majority stake in GI Alliance, the
country's leading gastroenterology management services
organization, to accelerate Cardinal Health's multi-specialty
growth strategy
- Acquisition of the Advanced Diabetes Supply Group, a leading
national direct-to-patient provider of diabetes medical supplies,
to accelerate Cardinal Health's at-Home Solutions growth
strategy
- Company announces plan to hold Investor Day in June 2025
DUBLIN,
Ohio, Nov. 11, 2024 /PRNewswire/ -- Cardinal
Health (NYSE: CAH) announced today that it has entered into
definitive agreements to acquire two companies that accelerate
Cardinal Health's strategic growth areas and that will enhance
patient care. The company also provided confirmation of its capital
deployment plans.
Cardinal Health will acquire a majority stake in GI Alliance
(GIA), the country's leading gastroenterology (GI) management
services organization (MSO), from a combination of GIA physician
owners and funds managed by affiliates of Apollo (NYSE: APO).
Cardinal Health will purchase its majority stake for approximately
$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.
Cardinal Health will also acquire the Advanced Diabetes Supply
Group (ADSG), one of the country's leading diabetic medical
supplies providers, for approximately $1.1
billion in cash. ADSG will merge with Cardinal Health's
at-Home Solutions business.
"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 Jason
Hollar, Chief Executive Officer, Cardinal Health. "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."
GI Alliance: the leading GI management services organization
and a foundation of Cardinal Health's multi-specialty platform for
further growth
GI Alliance's leading national MSO platform includes over 900
physicians across 345 practice locations in 20 states, with
extensive reach into the local communities they serve. GIA
supports a complete continuum of gastroenterology care across its
member sites, with significant additional depth in anesthesiology,
pathology, infusion, radiology and clinical research.
GIA-affiliated doctors treat patients in 135 ambulatory surgical
centers and 165 hospital networks, supported by 95 infusion
centers.
GI Alliance operates a multi-specialty platform that will
further expand both nationally and in other key therapeutic areas,
while building upon the technology and specialty practice
capabilities acquired by Cardinal Health in the previously
announced acquisitions of Specialty Networks (urology, GI,
rheumatology) and Integrated Oncology Network (medical oncology,
radiation oncology, urology).
"Growing our Specialty business is our top priority," said
Hollar. "By partnering the GIA MSO platform and leadership in
gastroenterology with our own national presence and specialty
experience, GI Alliance and Cardinal Health together create a
meaningful platform that will deliver great results for patients
and providers. We are excited to welcome James Weber, M.D., and his team to the Cardinal
Health family."
"Cardinal Health and GI Alliance are aligned in our shared
vision to build a physician-led, national specialty healthcare
platform that will be the preferred choice for all patients seeking
dependable, high-quality care," said James
Weber, M.D., Chief Executive Officer, GI Alliance. "This
partnership brings together two like-minded organizations focused
on delivering exceptional care and enhanced clinical and
operational support for physicians that drives increased
value."
The Advanced Diabetes Supply Group: a leading national
direct-to-patient diabetes medical supplies provider that enhances
capabilities to service patients in their homes
Advanced Diabetes Supply Group delivers comprehensive diabetes
solutions that are tailored to support individual patients at-home,
consistent with Cardinal Health's at-Home Solutions strategy to
support this rapidly growing patient population. ADSG serves
approximately 500,000 patients annually by providing the latest
innovations in diabetes therapies from leading manufacturers.
"Last January, we elevated the priority of investing in our
growth businesses like at-Home Solutions because this is exactly
where the future of healthcare is going," said Hollar. "Like
at-Home Solutions, ADSG has a proven track record for leading this
industry with innovation, knowledge and unparalleled commitment to
patients. We're confident that the highly synergistic combination
will enhance our ability to take advantage of positive industry
trends and drive further growth, deliver on our promise of
exceptional service and solutions to customers, and create
shareholder value."
"We couldn't be more excited about joining Cardinal Health
at-Home Solutions to build on our mission of being a trusted
partner in this critical space of the healthcare industry," said
Bill Mixon, Chief Executive Officer,
Advanced Diabetes Supply Group. "It's clear that we both share the
same passion of making sure the patients we serve have the best
possible outcomes. Together, we can bring more simplicity, speed
and quality to patients living with diabetes and the providers who
care for them."
Capital Deployment
Cardinal Health reaffirmed its
disciplined capital allocation framework. The company expects both
the GIA and ADSG acquisitions to close in early calendar year 2025,
subject to customary closing conditions, including the receipt of
required regulatory approvals. 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.
Cardinal Health does not provide forward-looking guidance on a GAAP
basis as certain financial information, the probable significance
of which cannot be determined, is not available and cannot be
reasonably estimated.
Including the acquisition of Integrated Oncology Network, which
remains on track to close by the end of the calendar year, the
company intends to finance the announced transactions with a
combination of cash on hand and new debt financing. Cardinal Health
plans to take a focused approach to pay down debt over the next 18
to 24 months. The company does not expect its deleveraging plans to
change its previously outlined share repurchases for fiscal year
2025.
"Our priorities remain unchanged: investing in our business for
growth, while preserving our investment grade credit ratings,
returning capital to our shareholders and exploring strategic
M&A," said Aaron Alt, Chief
Financial Officer, Cardinal Health. "We are excited for the
new sources of anticipated profit growth that GI Alliance and ADSG
bring to Cardinal Health, along with additional opportunities for
value creation."
Beginning on the third anniversary of GIA's closing, Cardinal
Health has the ability to exercise a call right to purchase up to
100% of the remaining outstanding equity.
In connection with the acquisition agreements, the company
entered into a commitment letter with Bank of America, pursuant to
which Bank of America has committed to provide a 364-day senior
unsecured bridge term loan facility in an aggregate principal
amount of up to $2.9 billion to fund
these acquisitions.
2025 Investor Day
Cardinal Health plans to host an
Investor Day on June 12, 2025, in
New York City. The event will be
live-webcast and archived on the company's Investor Relations
website.
Webcast
Cardinal Health will host a webcast Tuesday at
8:45 AM ET to discuss the
transactions. To access the webcast and corresponding slide
presentation, go to the Investor Relations page at
ir.cardinalhealth.com. No access code is required. Presentation
slides and a webcast replay will be available on the Investor
Relations page for 12 months.
Advisors
Centerview Partners served as financial
advisor to Cardinal Health on the acquisition of GI Alliance.
Skadden, Arps, Slate, Meagher & Flom LLP and Ropes & Gray
LLP served as legal advisors. J.P. Morgan Securities LLC served as
financial advisor to Cardinal Health on the acquisition of ADSG.
Skadden, Arps, Slate, Meagher & Flom LLP and DLA Piper LLP
served as legal advisors. Bank of America Securities served as lead
advisor on financing matters. Citi served as financial advisor to
Cardinal Health on strategic portfolio composition, including as it
relates to the transactions.
About Cardinal Health
Cardinal Health is a distributor of pharmaceuticals and
specialty products; a global manufacturer and distributor of
medical and laboratory products; a supplier of home-health and
direct-to-patient products and services; an operator of
nuclear pharmacies and manufacturing facilities; and a provider of
performance and data solutions. Our company's customer-centric
focus drives continuous improvement and leads to innovative
solutions that improve people's lives every day. Learn more about
Cardinal Health at cardinalhealth.com and in
our Newsroom.
About GI Alliance
GI Alliance is the leading, physician-led, majority physician owned
network for gastrointestinal care in the
United States. GI Alliance supports practice management for
more than 900 independent gastroenterologists, delivering the
highest quality of GI care for patients in 345 practice locations
across the country. Partnering with the nation's premier GI
physician practices, GI Alliance supports operational management,
ancillary service development, and patient engagement, enabling
practices to focus on providing the highest quality patient care
while maintaining clinical autonomy. Offering a full spectrum of
services for the management of digestive health, GI Alliance is
committed to excellence and innovation in gastroenterology.
About the Advanced Diabetes Supply® Group
Founded in 2002, the Advanced Diabetes Supply® Group (ADSG) is a
leading national distributor of specialized diabetes supplies.
Owned by Court Square Capital Partners, ADSG is made up of the
Advanced Diabetes Supply (ADS) and United States Medical Supply (US
MED) brands, both of which share a vision to be one of the nation's
premier diabetes equipment suppliers. Visit www.northcoastmed.com
and www.usmed.com for more information.
Contacts
Media: Erich Timmerman,
Erich.Timmerman@cardinalhealth.com and (614) 553-3853
Investors: Matt Sims,
Matt.Sims@cardinalhealth.com and (614) 553-3661
Cautions Concerning Forward-Looking Statements
This
news release contains forward-looking statements addressing
expectations, prospects, estimates and other matters that are
dependent upon future events or developments. These statements may
be identified by words such as "expect," "anticipate," "intend,"
"plan," "believe," "will," "should," "could," "would," "project,"
"continue," "likely," and similar expressions, and include
statements reflecting future results or guidance, statements of
outlook, and various accruals and estimates. These matters are
subject to risks and uncertainties that could cause actual results
to differ materially from those projected, anticipated or implied.
These risks and uncertainties include risks associated with our
planned acquisitions of GIA and ADSG, including the risk that we
may not receive required regulatory approval or otherwise fail to
complete one or both of the acquisitions and the risk that we may
fail to realize the anticipated strategic and financial benefits of
the acquisitions. Cardinal Health is subject to additional risks
and uncertainties described in Cardinal Health's Form 10-K, Form
10-Q and Form 8-K reports and exhibits to those reports. This news
release reflects management's views as of November 11, 2024. Except to the extent required
by applicable law, Cardinal Health undertakes no obligation to
update or revise any forward-looking statement. Forward-looking
statements are aspirational and not guarantees or promises that
goals, targets or projections will be met, and no assurance can be
given that any commitment, expectation, initiative or plan in this
news release can or will be achieved or completed.
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SOURCE Cardinal Health