Cardinal Health buys home-care assets for $360m to lift margins
Cardinal Health is acquiring AdaptHealth's diabetes unit and Strive Medical for $360 million to expand its higher-margin home-care business and offset the thin profits of its legacy distribution operations.
Cardinal Health agreed on Monday to purchase AdaptHealth’s diabetes health business and Strive Medical for a combined $360 million in cash. The transactions mark the healthcare conglomerate's latest step to build out a higher-margin direct-to-patient business. Together, the targets serve more than 245,000 patients annually.
AdaptHealth's diabetes unit is the larger of the two acquisitions, providing continuous glucose monitors, insulin pumps, and other supplies to over 225,000 patients. Strive Medical adds roughly 20,000 patients, focusing on urology, wound care, ostomy, and incontinence products. Both companies operate in the home-care space.
The financial logic behind these deals rests on a stark margin disparity within Cardinal Health's portfolio. In the fiscal third quarter, the company's "other" segment—which encompasses at-home solutions, nuclear and precision health, and logistics—posted an operating margin of roughly 10.5%.
That profitability stands in sharp contrast to the company's legacy operations. The pharmaceutical and specialty solutions division returned an operating margin of about 1.4% over the same period, while global medical products and distribution generated less than 1%. Shifting capital toward home care directly addresses this structural gap.
Monday's announcement follows two significantly larger deals struck in late 2024. Cardinal Health paid roughly $2.8 billion for a majority stake in GI Alliance, a large physician practice management organization, and $1.1 billion for Advanced Diabetes Supply Group. The GI Alliance purchase demonstrated a push to own the commercial side of medical practices, while the diabetes acquisition aligned with the current home-care initiative.
Wall Street analysts characterized the latest purchases as a natural progression. "We view the diabetes expansion as logical and value accretive for a platform that has shown significant recent growth," Leerink analysts wrote, calling the deals "logical strategic tuck-ins" that support the company's long-term growth profile.
Portfolio director Jeff Marks also pointed to Cardinal Health's established acquisition history, noting that the AdaptHealth and Strive deals represent a continuation of that strategy. For investors, the overarching thesis relies on management deploying capital into businesses capable of generating stronger profitability than its core distribution network.
