Dive Brief:
Cardinal Health has entered into definitive agreements to acquire two companies as the medical supply firm and drug distributor expands in specialty and home healthcare.
The company will acquire a 71% stake in gastroenterology practice management group GI Alliance for about $2.8 billion, Cardinal said Monday.
The distributor will also buy Advanced Diabetes Supply Group, a supplier for diabetes care products that serves about 500,000 patients each year, for about $1.1 billion. Both deals are expected to close early next year.
Dive Insight:
Cardinal will purchase its stake in GI Alliance — which provides administrative and management services to 345 gastroenterology practices across 20 states — from physician owners and private equity firm Apollo Global Management.
Three years after the acquisition closes, Cardinal will have the option to acquire the remaining interest in the practice management group, according to a press release.
Under the deal, Cardinal plans to expand GI Alliance’s platform for handling back-office tasks like revenue cycle management and physician recruiting to other therapeutic areas, executives said on a conference call Monday.
The purchase will also build upon the specialty practice management capabilities acquired in the drug distributor’s recent deals. In September, Cardinal said it would buy cancer care operator Integrated Oncology Network for $1.12 billion, and the company closed its acquisition of practice support firm Specialty Networks this spring.
“[Physicians] have a tough job. They’re trying to take care of patients, but they’re also trying to run a business,” Jason Hollar, Cardinal’s CEO, said on the call with investors. “We’re trying to take care of the business side of what they do.”
The second deal with ADSG will expand Cardinal’s in-home health unit, a segment that’s poised for growth as the population ages and manages more chronic diseases like diabetes, Hollar said. The purchase also gives them access to more government payers, he added during the call.
The company raised its adjusted profit outlook for 2025 when it reported its first quarter earnings earlier this month on strength in its pharmaceutical and specialty segment, including demand for GLP-1 drugs for weight loss and diabetes.
The Cardinal acquisitions come as its drug distribution competitors expand their own offerings through M&A.
Last week, Cencora, formerly AmerisourceBergen, entered into a definitive agreement to buy a management services organization geared toward retina specialists called Retina Consultants of America. The company also acquired cancer care network OneOncology with private equity firm TPG last year.
Meanwhile, another rival, McKesson, signed a deal to buy a controlling interest in administrative services provider Community Oncology Revitalization Enterprise Ventures this summer.
