Cardinal Health announced two acquisitions Monday that could supercharge one of the fastest-growing parts of its business: home care. The global healthcare services company agreed to buy AdaptHealth’s diabetes health business and Strive Medical for a combined $360 million in cash.
Expanding Home Care Services
While relatively small for a company of Cardinal Health’s size, the transactions are part of Cardinal’s larger plan to invest in faster-growing, higher-margin businesses to complement its legacy distribution operations.
“Cardinal Health has built a strong track record of acquisitions, and these deals represent a continuation of that strategy,” portfolio director Jeff Marks said.
Recent Acquisitions
The buys come on the heels of two larger deals made in late 2024: the roughly $2.8 billion acquisition of a majority stake in GI Alliance, one of the nation’s largest physician practice management organizations, and the $1.1 billion purchase of Advanced Diabetes Supply Group.
GI Alliance is part of Cardinal’s strategic push to own the business side of medical practices. As a diabetes supplies provider, ADSG aligns with the home-care initiative.
The larger of the two acquisitions announced Monday is AdaptHealth’s diabetes unit, which serves more than 225,000 patients annually through a direct-to-patient model providing continuous glucose monitors, insulin pumps, and other diabetes supplies.
Related: Cramer declares former COVID darling now investable
Financial Impact
Management continues investing in these incremental businesses because they are financially attractive. In the fiscal third quarter, Cardinal Health’s “other” segment — which includes at-home solutions, nuclear, and precision health solutions, and OptiFreight Logistics — generated an operating margin of roughly 10.5%.
This margin is well above the approximately 1.4% margin in pharmaceutical and specialty solutions and less than 1% in global medical products and distribution.
According to the report, the acquisitions are expected to support Cardinal Health’s long-term growth profile. The company’s disciplined approach to deploying capital into businesses that can generate faster growth and stronger profitability than its legacy distribution operations is a key factor in its investment thesis.
The announcement only strengthens the investment thesis, and the company’s focus on home care and other high-growth areas is a key factor in its long-term growth strategy.
Cardinal Health.
