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Cardinal Health (CAH) Inks Deal to Divest Cordis Business

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Cardinal Health, Inc. (CAH - Free Report) recently inked a deal to divest its Cordis business to Hellman & Friedman (H&F) for an amount of around $1 billion. Notably, the transaction is anticipated to be completed in the first half of Cardinal Health’s fiscal year 2022, subject to regulatory clearances and mandatory closing conditions.

It is worth mentioning that Cordis has an excellent track record when it comes to innovation in minimally-invasive cardiovascular technology. Being a renowned cardiovascular device manufacturer, Cordis provides superior quality products, solid physician satisfaction and excellent patient outcomes.

From the standpoint of H&F, the transaction is in line with the company’s philosophy of investing in great businesses.

Post completion of the deal, Cardinal Health projects that the divestiture will lower its Medical segment profit by around $60-$70 million on an annual run-rate basis.

Deal Rationale

Cardinal Health and H&F share the same passion of providing excellent quality medical products to customers and the former is optimistic about the future of Cordis business under the able leadership of H&F.



The divestiture will enable Cardinal Health to evaluate portfolio and focus resources on strategic growth areas where it remains in an advantageous position. Going forward, the company remains committed toward its medical distribution and global medical products business lines.

Notably, Cardinal Health will classify the Cordis business as held for sale, which it estimates to result in a pre-tax loss of up to $120 million in third-quarter fiscal 2021. Further, the company has been authorized to incur costs related to the planned divestiture of up to $125 million, primarily in fiscal years of 2021 and 2022.

Recent Developments

In February 2021, Cardinal Health WaveMark Supply Management & Workflow Solutions inked a deal with HIMSS Analytics as a Certified Organization of the Clinically Integrated Supply Outcomes Model (CISOM). This collaboration will aid health systems to enhance outcomes on the back of clinically integrated supply chain model.

In January, Cardinal Health’s company, OptiFreight Logistics, recently introduced TotalVue Analytics, which is a tool that will enable healthcare supply chain leaders to use predictive technology and data to detect logistics savings and benchmarking. Notably, this solution will help customers by offering them actionable data.

Price Performance

Shares of this Zacks Rank #3 (Hold) company have gained 7.1% in a year’s time, compared with the industry’s growth of 3.7%.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Hologic, Inc. (HOLX - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Abbott Laboratories (ABT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic’s long-term earnings growth rate is estimated at 15.4%.

IDEXX’s long-term earnings growth rate is estimated at 15.8%.

Abbott’s long-term earnings growth rate is estimated at 14.1%.

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