Cardinal Health adds home-care assets in $360 million deal spree

Cardinal Health agreed to spend $360 million in cash on two acquisitions tied to home-based medical supplies, a small deal package for the company but a useful signal for investors tracking where its growth is coming from. The purchases add more patients and products to a part of Cardinal’s business that carries stronger profitability than its core distribution operations.

The health-care services company announced deals to buy AdaptHealth’s diabetes health business and Strive Medical, according to CNBC. Both businesses fit Cardinal’s push into at-home care, where patients receive medical supplies directly rather than through a hospital or other facility.

AdaptHealth’s diabetes unit is the larger of the two. CNBC reported that it serves more than 225,000 patients a year through a direct-to-patient model, supplying continuous glucose monitors, insulin pumps and other diabetes products. Continuous glucose monitors are wearable devices that track blood sugar levels, while insulin pumps deliver insulin for people managing diabetes.

Strive Medical serves more than 20,000 patients annually, according to CNBC. Its focus areas include urology, wound care, ostomy and incontinence products. An ostomy is a surgically created opening that allows waste to leave the body, often requiring ongoing supplies and patient support.

Why Cardinal is buying smaller assets

The two deals follow larger transactions Cardinal made in late 2024. CNBC reported that Cardinal bought a majority stake in GI Alliance, one of the country’s largest physician practice management organizations, for about $2.8 billion. The company also bought Advanced Diabetes Supply Group for $1.1 billion.

GI Alliance is tied to Cardinal’s effort to own more of the business services behind medical practices, while Advanced Diabetes Supply Group fits the same home-care strategy as the newly announced AdaptHealth diabetes deal. Together, the moves show Cardinal adding businesses around its long-running role in health-care distribution.

That distinction matters for investors because distribution can be a high-volume, low-margin business. Operating margin, a measure of how much operating profit a company keeps from each dollar of sales, is much higher in Cardinal’s smaller “other” segment than in its biggest units.

In Cardinal’s fiscal third quarter, CNBC reported that the “other” segment, which includes at-home solutions, nuclear and precision health solutions, and OptiFreight Logistics, produced an operating margin of about 10.5%. That compared with roughly 1.4% in pharmaceutical and specialty solutions and less than 1% in global medical products and distribution.

Leerink analysts described the new acquisitions as “logical strategic tuck-ins” in a Monday note cited by CNBC, saying the diabetes expansion looked “logical and value accretive” for a platform that has grown recently. A tuck-in acquisition is a smaller purchase added to an existing business line rather than a company-changing merger.

CNBC also cited portfolio director Jeff Marks, who said Cardinal has built a strong acquisition record and that the latest deals continue that strategy. CNBC disclosed that Jim Cramer’s Charitable Trust owns Cardinal Health shares.

This story draws on original reporting from CNBC.