Cardinal Health (CAH) is acquiring privately-held specialty pharmaceutical service company Healthcare Solutions Holding under a deal worth $667 million. This represents a part of the company’s efforts to expand its foothold in the fast-growing specialty pharmaceutical services segment.
Per the deal, Cardinal will acquire Healthcare Solutions for $517 million in cash. Moreover, the company will pay up to $150 million to Healthcare Solutions over the next three years based on the future earnings. The transaction, which is subject to regulatory approval and other closing conditions, is slated to close early in Cardinal’s 2011 fiscal year (beginning July 1).
Following the deal closure, Healthcare Solutions will report under Cardinal’s Pharmaceutical segment. Cardinal expects the acquisition to be neutral to marginally accretive in fiscal 2011 and to contribute more meaningfully to earnings in fiscal 2012 and beyond.
Healthcare Solutions, together with its subsidiaries, provides necessary tools, services and data that are aimed at improving patient outcomes and increase efficiency in delivery of healthcare services. Its primary customers include specialist physicians, pharmaceutical companies and managed-care firms.
Cardinal Health is one of the largest global healthcare companies that help pharmacies, hospitals and ambulatory care sites to focus on low-cost patient care. The company is also a leading manufacturer of medical and surgical products. Cardinal Health faces tough competition across all of its business segments. Its major competitors include McKesson Corp. (MCK) and AmerisourceBergen Corp. (ABC).
Specialty pharmaceuticals targets diseases with significant unmet medical needs. Specialty medicines usually carry high price tags, requires special handling and storage and are typically administered (infused or injected) by a specialist.
Acquisition of Healthcare Solutions will boost Cardinal’s presence and capabilities in specialty pharmaceuticals, a market segment which is forecasted to grow faster than the legacy pharmaceuticals market over the next five years and cross $100 billion by 2013.
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