Cardinal Health Acquires Two Companies to Boost Strategic Growth

Leading healthcare services company, Cardinal Health (CAH) announced growth-driven acquisitions of two companies, aiming to enhance patient care and drive strategic growth objectives.

Acquisition of GI Alliance

Cardinal Health divulged plans to acquire a majority stake in the GI Alliance (GIA), a premier gastroenterology management services organization in the United States. The stake is being acquired from an amalgamation of GIA physician owners and funds supervised by Apollo affiliates (APO). Cardinal Health’s purchase of this stake, approximately $2.8 billion in cash, represents 71% ownership. The acquired GIA will function as a platform within Cardinal Health’s Pharmaceutical and Specialty Solutions segment.

Purchase of Advanced Diabetes Supply Group

In addition to GIA, Cardinal Health is set to acquire the Advanced Diabetes Supply Group (ADSG), a key supplier in the diabetic medical supplies domain, for an estimated $1.1 billion in cash. Post-acquisition, ADSG will be integrated with Cardinal Health’s at-Home Solutions business.

Impact on Cardinal Health’s Growth

The acquisitions of both GIA and ADSG are expected to come to fruition in the early calendar year of 2025. These strategic moves are predicted to contribute positively to Cardinal Health’s revenue and segment profit growth, as well as non-GAAP earnings per share in the first year following the closure of the deals.

Financing the Acquisitions

To finance these acquisitions, Cardinal Health plans to utilize a combination of available cash and fresh debt financing. The company intends to adopt a focused strategy to pay down debt over the subsequent 18 to 24 months. This debt reduction plan is not expected to alter the company’s previously stated plans for share repurchases for the fiscal year 2025.

Bank of America’s Role in the Acquisitions

Cardinal Health has entered into a commitment letter with Bank of America. Under this agreement, Bank of America has pledged to provide a 364-day senior unsecured bridge term loan facility, amounting to up to $2.9 billion, to finance these acquisitions.

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