Cardinal Health, the second-largest distributor of prescription drugs, announced Thursday that it was buying a large medical supplier in a $2 billion deal aimed at expanding the business into the growing home health-care area.
The medical supplier, the privately held AssuraMed, supplies products to aid with diabetes treatment, wound care, incontinence and other conditions for use in the home and had annual sales in 2012 of $1 billion, Cardinal Health said.
AssuraMed, which has been owned by the private equity firms Clayton, Dubilier & Rice and Goldman Sachs‘ GS Capital Partners, serves more than 1 million patients nationwide and sells more than 30,000 products.
In an interview, Cardinal’s chief executive said the acquisition is aimed at taking advantage of a confluence of national trends: the aging population, which has led to an increase in patients with chronic conditions, and a trend toward treating more of those conditions at home or in non-hospital settings like doctor’s offices and outpatient clinics.
“One of the things that has become clear is we’re going to have to manage patients differently,†said George Barrett, Cardinal’s chairman and chief executive, said. “It very strategically aligns with where we think healthcare is moving, and it’s a natural extension of our skill set.â€
In a conference call with investors, Mr. Barrett said the home health care area was growing at nearly 7 percent and represented a market opportunity of about $16 billion.
The deal is expected to! close in April and will be financed with a combination of $1.3 billion in senior unsecured notes and cash. Cardinal estimated the acquisition would add 2 to 3 cents to its earnings per share in 2013, and 18 cents per share by 2014.
Cardinal, based in Dublin, Ohio, had revenue of $108 billion in 2012 and ranks second in the drug-distribution market behind McKesson, based in San Francisco.
Cardinal was up about 1.75 percent in mid-morning trading, to $46.24.
Cardinal was advised by Bank of America Merrill Lynch and the law firm Wachtell Lipton Rosen & Katz. Clayton Dubilier and GS Capital were advised by JPMorgan Chase, Goldman Sachs and the law firm Debevoise & Plimpton.
