Cardinal Health teases upside from ADSG acquisition

DUBLIN, Ohio – Cardinal Health’s acquisition of Advanced Diabetes Supply Group hasn’t closed yet, but company officials said on a conference call to discuss second quarter financial results that they’re “looking forward to talking about the profit contributions from that business in future quarters.” 

Cardinal Health announced in November that it had entered into a definitive agreement to acquire ADSG, which serves about 500,000 patients annually with a specific focus on continuous glucose monitors (CGMs), for about $1.1 billion in cash, with plans to merge the company into its at-Home Solutions business.   

“Our investments in advanced distribution centers will enable synergies related to our acquisition of (ADSG),” said Jason Hollar, CEO. “Bringing together the scale and efficiency of our at-Home business with the patient acquisition and retention capabilities of ADSG will be highly complementary, create further diversification within our diabetes business and allow us to drive significant value for customer patients.” 

Already, Cardinal Health’s “other businesses,” which include at-Home, saw a 13% increase in revenue in the second quarter, driven by growth in urology- and diabetes-related categories, including CGMs. 

Cardinal Health’s latest investment in the at-Home business is a new distribution facility being constructed in Fort Worth, Texas, that will be equipped with leading robotics and automation technologies. The facility is expected to be fully operational by this summer. 

“We continue to make large investments in (the at-Home) business, even pre-closure of the (ADSG) acquisition,” said CFO Aaron Alt. “(That’s) really driven by seeing the return on investments we’ve been making in automation and efficiency, as they get to multi-year record levels of productivity, quality and safety over the course of the year. So, while we haven’t spent a lot of time talking about at-Home, we view it as a bright spot for the future of the business.” 

Also helping Cardinal Health to see the at-Home business, and particularly the diabetes product category, in a positive light: Continued CMS policies that are increasing access to CGMs. 

“We are well positioned to take advantage of future market growth, as CGM utilization continues to increase,” Hollar said. 

Company officials reiterated their expectations of 10% to 12% revenue growth and 10% profit for the “other” businesses in fiscal year 2025. 

“We expect stronger year-over-year profit growth in Q4 than in Q3, due to the timing of our growth-oriented technology investments and associated benefits,” Alt said. 

• Related: Rob Schlissberg, president of the at-Home business, told us Cardinal is “really keen” on the diabetes market. 
• Related: Industry analysts told us CGMs are spurring broader push from buyers. 
• Related: Stakeholders are pushing a two-channel option for CGMs to make them available through both the pharmacy and DME benefits.