Cardinal to buy medical supplier AssuraMed for $2.07 Billion
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.
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 and technology.
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.
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Industry Segments and Selling
How MDS helps you to service that business
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export
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