Leading distributor of pharmaceuticals and medical supplies Cardinal Health (CAH - Analyst Report) recently revealed that it has accomplished the takeover of AssuraMed, a privately held provider of medical supplies for patients in the residential setting, for $2.07 billion. Cardinal Health funded the takeover through a mixture of $1.3 billion in fresh unsecured senior notes and cash.
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 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 the 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 economic fluctuations.
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 hikes. However, Cardinal Health faces tough competition across all its business segments, which may continue to pressure pricing and margins.
Cardinal Health currently carries a Zacks Rank #3 (Hold). Rite Aid Corporation (RAD - Analyst Report) and PharMerica Corporation (PMC - Snapshot Report) both carry a Zacks Rank #1 (Strong Boy) and are expected to do well. In addition, CVS Caremark Corporation (CVS - Analyst Report) has a Zacks Rank #2 (Buy) and warrants a look.