Cardinal Health has announced the acquisition of majority holdings in GI Alliance (GIA) and Advanced Diabetes Supply Group (ADSG) in an effort to boost its speciality healthcare and at-home solutions businesses. Cardinal Health's acquisition of GIA, a leading gastrointestinal management services organization, and ADSG, a diabetic medical supplies provider, marks a critical step in the company's efforts to expand its healthcare offerings.

We project the acquisition agreements, valued at about $2.8 billion for GIA and $1.1 billion for ADSG, to finalize in early 2025, subject to regulatory approval. According to Cardinal Health CEO Jason Hollar, the acquisitions underline the company's continuous commitment to improving patient care through expanded capabilities and a broader speciality care portfolio.

GI Alliance, with over 900 physicians across 345 practice locations in 20 states, is one of the nation's largest gastroenterology MSOs. This acquisition allows Cardinal Health to include a highly specialized MSO platform in its pharmaceutical and specialty solutions sector, broadening its reach and improving its knowledge of gastrointestinal services. The GI Alliance Network includes 135 ambulatory surgery centers, 165 hospital networks, and 95 infusion centers, offering a complete continuum of treatment for gastrointestinal patients. Cardinal Health's partnership with GIA intends to strengthen its footprint in speciality services and lay the groundwork for future expansion in gastroenterology and other therapeutic areas.

Dr. James Weber, CEO of GI Alliance, expressed excitement about the collaboration with Cardinal Health, stating that both organizations have a vision of providing high-quality, physician-led specialty healthcare. He hopes that this relationship will help the organization achieve its goal of providing trustworthy, specialized treatment to patients across the country.

The purchase of ADSG strengthens Cardinal Health's commitment to home healthcare by expanding its ability to offer specialized diabetes supplies directly to patients. Cardinal Health's plan to meet the growing demand for accessible, patient-centred care closely aligns with ADSG, which serves roughly 500,000 patients annually. Cardinal Health will be better positioned to fulfill the growing demand for diabetes treatment at home by incorporating ADSG's direct-to-patient strategy into its current Home Solutions business.

ADSG CEO Bill Mixon emphasized the company and Cardinal Health's shared goal of providing high-quality healthcare that simplifies and improves the lives of diabetic patients.

Cardinal Health will fund these purchases using cash on hand and additional debt, backed by a $2.9 billion bridge loan agreement from Bank of America. To keep its investment-grade credit rating, the company aims to repay loans within 18 to 24 months. Furthermore, Cardinal Health anticipates the acquisitions to improve revenue and profit growth in the first year after completion.

The acquisitions also align with Cardinal Health's capital deployment strategy, which prioritizes long-term growth, company investments, and shareholder returns. CFO Aaron Alt emphasized the value-creation prospects that the acquisitions provide, positioning the company for increased earnings growth.

Cardinal Health's acquisitions aim to position it as a leader in specialty healthcare and at-home solutions, resulting in a holistic healthcare platform that provides patients with dependable, specialized care. Cardinal Health plans to capitalize on healthcare trends favoring specialization and direct-to-patient models by merging GIA and ADSG capabilities, ultimately producing long-term shareholder value and improving patient outcomes across the United States.