Cardinal Health today announced plans to expand its presence in specialty pharmaceutical services with a definitive agreement to purchase Healthcare Solutions Holding, LLC in an upfront $517 million all-cash transaction. The agreement also includes the opportunity for earn-out payments of up to $150 million over the next three years.
Healthcare Solutions Holding is the parent company of a number of subsidiaries including P4 Pathways and P4 Healthcare. These businesses serve key participants across the chain of specialty care including physicians, pharmaceutical companies and payors by providing essential tools, services and data to help improve the quality of patient outcomes and increase efficiency in the delivery of health care services. The acquisition will expand Cardinal Health's current capabilities and reach in specialty pharmaceuticals, a segment of the market which IMS Health forecasts will grow at twice the rate of traditional pharmaceuticals for the next five years and exceed $100 billion in sales by 2013.
"This acquisition is an important building block in our strategy to create a differentiated set of services for oncology and specialty customers," said George Barrett, chairman and chief executive officer of Cardinal Health. "Healthcare Solutions Holding is a natural extension of Cardinal Health's businesses and will enable the growth of our specialty distribution operations."
Subject to the satisfaction of customary closing conditions and regulatory clearance, the transaction is expected to close early in Cardinal Health's 2011 fiscal year, which begins on July 1. After the acquisition is completed, Healthcare Solutions Holding's results will be reported within Cardinal Health's Pharmaceutical segment. Cardinal Health expects the transaction to be neutral to slightly accretive in fiscal 2011 and more meaningfully accretive in fiscal 2012 and beyond.
"Cardinal Health is our ideal partner as we look to grow our business in oncology and other specialty therapeutic areas, as well as increase the scale and scope of our offerings," said Jeffrey Scott, M.D., chief executive officer of Healthcare Solutions Holding. "We bring unique specialty care offerings and expertise to Cardinal Health, and we are excited to tap into their existing capabilities, which offer complementary services to help better serve our customers."
The acquisition of Healthcare Solutions Holding is consistent with Cardinal Health's balanced capital deployment strategy. The company recently increased its regular quarterly dividend by 11 percent and also expects to have completed share repurchases totaling $250 million by fiscal year-end.
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