* Deal is a bet on 'Obamacare' - CEO
* To add 2-3 cents a share to fiscal 2013 profit, at least
18 cents next year
* Expected to close by early April
* Cardinal shares up 2.2 percent
By Debra Sherman
Feb 14 Cardinal Health Inc plans to buy
direct-to-home medical supply distributor AssuraMed from private
equity group Clayton Dubilier & Rice for about $2.07 billion,
the U.S. drug wholesaler said on Thursday.
The acquisition will give Cardinal access to a new segment
of the healthcare market that it believes will grow with the
implementation of the Affordable Care Act, which is more
commonly known as Obamacare.
Cardinal Health plans to finance the deal with $1.3 billion
in new senior unsecured notes.
The company said the acquisition would add 2 cents to 3
cents per share to fiscal 2013 earnings before special items if
the deal closes in early April, as planned. It would add at
least 18 cents per share to adjusted earnings in fiscal 2014.
AssuraMed will give Cardinal access to the growing number of
Americans who are treated in home settings. The company expects
this trend to accelerate under the ACA, Chief Executive Officer
George Barrett said in a telephone interview.
An aging population, more prevalent chronic diseases, and
the need to keep treatment costs down are factors that will
necessitate more home care in years to come, he said.
"We see this as the natural direction of care that's moving
toward the home," Barrett said.
AssuraMed, with sales of about $1 billion in 2012, serves
more than 1 million patients nationally with more than 30,000
products. It helps patients manage insulin infusion, diabetes
testing, incontinence, tube feeding and wound care, and provides
a host of other healthcare services.
AssuraMed operates through two separate businesses,
Independence Medical and Edgepark Medical Supplies.
The market for direct-to-home medical supplies is currently
fragmented, and Cardinal is betting it can capitalize on it with
this acquisition and its expertise in supply chain, logistics
Cardinal operates two business segments. The pharmaceutical
unit, which generates the bulk of its revenue, delivers drugs to
retail pharmacies, hospitals, mail-order facilities, surgery
centers, physician offices and other healthcare facilities.
The slower-growing medical unit supplies medical-surgical
products, as well as replenishable items such as gowns, gloves
and surgical drapes, to hospitals.
"The fact that Cardinal has undertaken a transaction of this
size is evidence of increased confidence in (the company's)
Medical turnaround and improves prospects for the business going
forward, which should relieve some of the Street's fears related
to the Medical business," Ross Muken, senior managing director
and partner at ISI Group, wrote in a research note.
Cardinal shares were up 2.2 percent at $46.42 in midday New
York Stock Exchange trading.