Cardinal Health’s latest deals won’t move the needle. They still matter.
Cardinal Health announced two acquisitions Monday that could supercharge one of the fastest-growing parts of its business: home care. The global healthcare services company agreed to buy AdaptHealth’s diabetes health business and Strive Medical for a combined $360 million in cash. While relatively small for a company of Cardinal Health’s size, the transactions are part of Cardinal’s larger plan to invest in faster-growing, higher-margin businesses to complement its legacy distribution operations. “Cardinal Health has built a strong track record of acquisitions, and these deals represent a continuation of that strategy,” portfolio director Jeff Marks said. The buys come on the heels of two larger deals made in late 2024: the roughly $2.8 billion acquisition of a majority stake in GI Alliance, one of the nation’s largest physician practice management organizations, and the $1.1 billion purchase of Advanced Diabetes Supply Group. GI Alliance is part of Cardinal’s strategic push to own the business side of medical practices. As a diabetes supplies provider, ADSG aligns with the home-care initiative. The larger of the two acquisitions announced Monday is AdaptHealth’s diabetes unit, which serves more than 225,000 patients annually through a direct-to-patient model providing continuous glucose monitors, insulin pumps, and other diabetes supplies. Strive Medical serves more than 20,000 patients annually and specializes in urology, wound care, ostomy, and incontinence products. “We view the diabetes expansion as logical and value accretive for a platform that has shown significant recent growth,” Leerink analysts wrote Monday, calling both acquisitions “logical strategic tuck-ins” that support Cardinal Health’s long-term growth profile. The financials underscore why management continues investing in these incremental businesses. In the fiscal third quarter, Cardinal Health’s “other” segment — which includes at-home solutions, nuclear, and precision health solutions, and OptiFreight Logistics — generated an operating margin of roughly 10.5%. That’s well above the approximately 1.4% margin in pharmaceutical and specialty solutions and less than 1% in global medical products and distribution. When we added Cardinal Health to the portfolio in March , we highlighted its recession-resistant business, favorable demographic tailwinds, and consistent double-digit earnings growth. Just as importantly, we appreciated management’s disciplined approach to deploying capital into businesses that can generate faster growth and stronger profitability than its legacy distribution operations. Monday’s announcement only strengthens that investment thesis. (Jim Cramer’s Charitable Trust is long CAH. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
