Leading distributor of pharmaceuticals and medical supplies
) recently revealed plans to acquire AssuraMed, a privately held
provider of medical supplies for patients in the residential
setting. The consideration is about $2.07 billion or $1.94
billion adjusted for tax issues. The deal is subject to standard
closing terms including regulatory approval.
Cardinal Health will fund the takeover through a mixture of
$1.3 billion in fresh unsecured senior notes and cash. The deal
is expected to culminate in early April 2013.
For fiscal 2013, Cardinal Health forecasts adjusted earnings
per share from continuing operations within a band of $3.42 and
$3.50. The company forecasts accretion of 2 cents to 3 cents to
its adjusted earnings per share forecast for fiscal 2013. For
fiscal 2014, Cardinal Health expects accretion to adjusted
earnings per share of a minimum of 18 cents. The company did not
divulge the impact of the deal on reported earnings per share for
fiscal 2013 and 2014 since the effect partly depends on the
timing of the closure.
AssuraMed provides over 30,000 items to over a million
individuals across the nation. It had sales of about $1 billion
in calendar 2012. The company functions through two major units,
Edgepark Medical Supplies and Independence Medical. The
acquisition of AssuraMed will increase Cardinal Health's
penetration in the home segment. It will also enable the company
to furnish a complete set of pharmacy and medical equipment
offerings to clients in the home setting.
Cardinal Health is ranked among Fortune 500 companies. With
about $100 billion in annual sales, the company remains one of
the largest distributors of pharmaceuticals and medical supplies
in the U.S., with a diversified product portfolio, which may
partly insulate it from the current economic uncertainty.
Cardinal Health stands to gain from the gradual shift in mix
from bulk to the higher margin non-bulk sector of the
Pharmaceutical segment. Its mainstay Pharmaceutical segment is
heavily influenced by the generic wave. Overall, Cardinal Health
is benefiting from a spate of tuck-in acquisitions and capital
deployment strategies. The company continues to deploy capital to
boost investor confidence via share repurchases and dividend
However, Cardinal Health faces tough competition across all
its business segments, which may continue to pressure pricing and
margins. The company recently suffered the loss of the major
Express Scripts Holding Company
Cardinal Health currently carries a Zacks Rank #3 (Hold).
Rite Aid Corporation
) carry Zacks Rank #1 (Strong Boy) and Zacks Rank #2 (Buy),
respectively, and are expected to do well.
AMERISOURCEBRGN (ABC): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
To read this article on Zacks.com click here.