Cardinal Health, the second-largest distributor of prescription drugs, announced on Thursday that it was buying a large medical supplier in a $2 billion deal aimed at expanding the business into the growing area of home health care.
The medical supplier, the privately held AssuraMed, supplies products for home use to aid treatment of diabetes, wounds, incontinence and other conditions. It had revenue of $1 billion in 2012, Cardinal Health said.
AssuraMed, which has been owned by the private equity firms Clayton, Dubilier & Rice and Goldman Sachs’s GS Capital Partners, serves more than one million patients nationwide and sells more than 30,000 products.
In an interview, George S. Barrett, Cardinal’s chairman and chief executive, said the acquisition was 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 more treatment of those conditions at home or in nonhospital settings like doctors’ offices and outpatient clinics.
“One of the things that has become clear is we’re going to have to manage patients differently,” Mr. Barrett said. “It very strategically aligns with where we think health care is moving, and it’s a natural extension of our skill set.”
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 a share in 2013, and 18 cents a share by 2014.
Cardinal, based in Dublin, Ohio, had revenue of $108 billion in 2012, and ranks second in the drug-distribution market behind the McKesson Corporation, based in San Francisco. AssuraMed is based in Twinsburg, Ohio.
Shares in Cardinal closed up 56 cents, or 1.2 percent, at $46 on Thursday.
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.
Cardinal Health Buys AssuraMed for $2 Billion
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Cardinal Health Buys AssuraMed for $2 Billion
