Cardinal Health has acquired Advanced Diabetes Supply Group (ADSG), just days after reporting double-digit growth for its at-Home Solutions business unit.
In a Nov. 11 announcement, Cardinal Health said it purchased ADS for approximately $1.1 billion in cash, adding that ADSG “will merge with Cardinal Health’s at-Home Solutions business.”
The announcement noted that ADSG “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.”
“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 health-care industry,” said Bill Mixon, ADSG’s CEO. “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.”
The day of the ADSG acquisition announcement, Cardinal Health also said it was acquiring a majority stake in GI Alliance, “the country’s leading gastroenterology management services organization from a combination of GI Alliance physician owners and funds managed by affiliates of Apollo (NYSE: APO).”
Cardinal Health’s purchase of the majority stake in GI Alliance cost the company approximately $2.8 billion in cash, which gives Cardinal Health 71% ownership.
ADSG acquisition is ‘exactly where the future of health care is going’
In the news announcement, Cardinal Health CEO Jason Hollar said caring for patients in their homes is the future of the health-care industry.
“Last January, we elevated the priority of investing in our growth businesses like at-Home Solutions because this is exactly where the future of health care is going,” Hollar noted. “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.”
A few days earlier, during the company’s Nov. 1 earnings call for the first quarter of fiscal year 2025, Hollar mentioned continuous glucose monitors (CGM) as a significant growth segment.
“In at-Home Solutions, we’re also continuing to see double-digit revenue growth and deliver a leading
customer experience,” Hollar said. “We’ve seen strong growth across key categories such as CGM and urology, which supports our ongoing focus on driving positive operating leverage. The benefits of our
investments in additional distribution capacity and increased automation are beginning to take hold.
“In Q1, our primary operational metrics have achieved the highest levels on record for service, quality
and efficiency. We expect to continue investing in the growth and capability of this business.”
‘Terrific start’ to fiscal year
Hollar said during opening remarks for the earnings call that Cardinal Health “delivered a terrific start to fiscal ’25, with strong operational and financial performance led by Pharma and Specialty Solutions. … In summary, we’re pleased to be in a position to raise our enterprise guidance for fiscal ‘25 after the
first quarter. Our business is strong and we’re confident as we look ahead.”
Aaron Alt, Cardinal’s CFO, reported that total company revenue decreased 4% to $52.3 billion, which Alt characterized as “better than we expected.”
Cardinal Health said in an earnings call press release that first-quarter revenue “increased 15% excluding the impact of the previously communicated large customer contract expiration.”
First-quarter revenue for Cardinal Health’s “Other” business — which comprises at-Home Solutions; Nuclear and Precision Health Solutions; and OptiFreight Logistics — increased 13% to $1.2 billion.
“With the solid start to the year, I’m delighted to share the headline that we are raising our EPS [earnings per share] guidance to an EPS range of $7.75 to $7.90 and raising our adjusted free cash flow outlook for fiscal ‘25 to a range of $1 billion to $1.5 billion,” Alt added.
