Drug wholesaler Cardinal Health Inc. (CAH), Thursday said it plans to buy privately held AssuraMed for $2.07 billion, as it expands to a direct-to-home medical supplies distributor.
Chief Executive George Barrett said, "AssuraMed is a natural extension of the Cardinal Health businesses and of our mission to be essential to care. The acquisition of this industry leader allows us to serve the growing number of Americans treated in home settings - particularly those patients recovering from acute episodes and those suffering with chronic diseases."
The value of acquisition will be $1.94 billion after including the present value of tax benefits, the company said. Cardinal plans to fund the deal with $1.3 billion in senior unsecured notes and the remainder in cash. The transaction in is expected to close by early April 2013.
Cardinal expects the deal to be accretive by $0.02 to $0.03 per share to its existing adjusted earnings guidance for the full year 2013. The company, while reporting its second-quarter results, projected full-year 2013 adjusted earnings from continuing operations of $3.42 to $3.52 per share. Analysts polled by Thomson Reuters currently anticipate earnings of $3.48 per share for the quarter. Analysts' estimates typically exclude one-time items.
For fiscal year 2014, the company estimates adjusted earnings accretion of at least $0.18 per share, including the cost of an incremental $0.08 - $0.09 per share of interest expense related to the financing of the deal.
However, Cardinal anticipates amortization of acquisition-related assets to be a significant amount in 2013 and 2014. These expenses are usually excluded from adjusted figures.
Twinsburg, Ohio-based AssuraMed generated annual sales about $1 billion in 2012, and serves more than 1 million patients in US with more than 30,000 products.
"This acquisition further aligns us with key trends including demographic shifts and increased consumerism," Barrett noted.
CAH is currently trading at $46.22, up $0.78 or 1.71%, on the NYSE.
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