07.20.23
Rank: #9 (Last year: #8)
$15.89 Billion
Prior Fiscal: $16.69 Billion
Percentage Change: -5%
Best FY22 Quarter: Q1 $4.15B
Latest Quarter: Q3 $3.68B
No. of Employees: 46,500
Global Headquarters: Dublin, Ohio
KEY EXECUTIVES:
Jason Hollar, CEO
Aaron Alt, CFO
Michelle Greene, EVP, Chief Information Officer
Steve Mason, CEO, Medical Segment
Robert Rajalingam, President U.S. Medical Products and Distribution
Jorge Sahlieh, President of International
Medical Products and Distribution
Rob Schlissberg, President, Cardinal Health at-Home Solutions
In 2015, there was a major announcement made with regard to Johnson & Johnson’s Cordis business. At that time, Cordis was a leading global manufacturer of cardiology and endovascular devices. The unit was being purchased by Cardinal Health for approximately $2 billion.
“We are extremely excited about the acquisition of Cordis. This is a significant step forward in our cardiovascular strategy. Cordis brings with it a long and proud legacy of cardiovascular innovation,” said George Barrett, chairman and CEO at the time.
Of course, strategies change. In early August 2021, just about a month into its 2022 fiscal year, Cardinal Health finalized the deal that would see the departure of the Cordis business. The company was sold to Hellman & Friedman, a global private equity firm, for half the original 2015 purchase price.
Several analysts explained the move as one of several poor decisions made by drug distributors. In a comment to Reuters, Morning Star analyst Soo Romanoff said, “These drug distributors have made really bad acquisitions, and this Cordis was one of them. [Cardinal] is just monetizing it because there are no synergies that they are getting from this business.”
Raymond James analyst Alex Ruscher essentially agreed. “This is the latest example of the drug wholesalers unwinding assets snatched up as the industry looked to consolidate over the past five years, with the common trend being buying high and selling lower.”
ANALYST INSIGHTS: Cardinal is a company that continues to work on improving its bottom line due to pressure from Wall Street. They seem to be making some progress with this through an increased emphasis on specialty pharma and precision medicine while streamlining and simplifying their medical product lines. While currently an unexciting company, expect Cardinal to continue to focus, focus, focus to grow its EPS (earnings per share).
The move would seem to reduce the company’s medical device manufacturer status as it returns its attention primarily on mitigating supply chain inflation and, more recently, the growth of its at-Home Solutions. In the firm’s annual report, current CEO Jason Hollar specifically called out the at-Home segment and alluded to it being a strategic focus.
Cardinal Health attributed the loss of the Cordis revenue during the 2022 fiscal as being the primary reason for its year-over-year decrease compared to the previous 12-month period. The firm saw a 5% decrease in its Medical segment, going from $16.69 billion in 2021’s fiscal to $15.89 billion. Meanwhile, its Pharmaceutical portion was responsible for a revenue total almost 10 times that amount, reporting $165.5 billion in the 2022 fiscal.
Perhaps addressing the depression of its Medical business from the divestiture, the company announced expansion plans with the building of a pair of medical distribution centers. Targeting the Columbus, Ohio, region for both facilities, the first declaration came at the end of March. A 574,670-square-foot medical distribution center would replace the company’s 235,000-square-foot facility in nearby Obetz, Ohio. The new center (located in Groveport) would not only house employees from the existing location, but would also create new job openings for the region.
In a release, the company stated, “The new building will integrate automation and technology to work alongside Cardinal Health employees; improve safety, service, and quality; deliver operational efficiencies; and better support fluctuations in volume and labor to provide customers with a predictable and stable customer experience.”
Then, just about two months later, the organization announced plans for a distribution facility that would support its aforementioned at-Home Solutions business. This segment of the company provides medical supplies intended to enable comfortable care within the home for patients with chronic and/or serious health conditions. The 208,144-square-foot building was reported as being the tenth distribution center for the firm’s at-Home Solutions unit in the United States. Located in Grove City, Ohio, the new facility would create approximately 100 new job opportunities for the region.
In addition to serving as a new distribution center, the building would also serve as a customer showcase center. It is also the first Cardinal Health warehouse to feature AutoStore, an automated fulfillment technology from Swisslog optimized by Swisslog’s SynQ software. The system has 31,844 storage bins providing 83,000 cubic feet of storage for 14,154 SKUs. According to Cardinal Health, since the robots bring products directly to employees for packing and shipping, they help decrease human error and bring more speed to order fulfillment.
Both locations celebrated openings in April 2023. Cardinal Health indicated they were part of a larger, multi-year strategy for the Medical Segment to modernize warehousing. The plan puts an emphasis on investments in infrastructure and technology. According to the company, the facilities will support business growth and expansion, help accelerate service for existing customers, and bring more jobs to the region. The buildings lie just about 15 miles apart and are south of Columbus.
Another announcement during its 2022 fiscal involved COVID-19 tests from Cue Health as Cardinal Health was called upon to serve as the distribution partner for the firm’s professional use and over-the-counter diagnostics. Specifically, the arrangement involves the Cue Health Monitoring System, the Cue COVID-19 Test for CLIA Certified Healthcare Providers and Laboratories (Professional), Cue COVID-19 Test Positive Control Swabs and Test Negative Control Swabs, and the Cue COVID-19 Test for Home and Over The Counter Use. According to a release, Cardinal was selected for its “demonstrated expertise in helping commercialize diagnostic technologies.” It was also noted the organization serves nearly 90% of U.S. hospitals and more than 60,000 pharmacies.
Cardinal Health also expanded its own product line in the form of a surgical drape featuring Avery Dennison’s patented BeneHold chlorhexidine gluconate (CHG) adhesive technology. The CHG product helps reduce the risk of surgical site contamination with organisms typically associated with surgical site infections. According to Cardinal Health, the incise film is strong, conformable, and breathable, and provides a sterile surface to create a barrier to contamination. The adhesive helps prevent edge lift of the drape, while still removing easily after surgery without harming fragile skin.
Following the close of the 2022 fiscal, about a month later, the firm announced a couple of changes within the organization’s leadership. Most notable, it was revealed that then CEO and board member Mike Kaufmann would step down, as the board had elected Hollar as the new CEO. Hollar had been the company’s CFO since May 2020. Previously, he served in the same position for Tenneco and Sears Holdings Corporation. Patricia English, who had served as chief accounting officer and senior vice president of Cardinal Health and previously served as vice president of accounting, stepped into the CFO role as an interim selection. The role was eventually filled by Aaron Alt.
$15.89 Billion
Prior Fiscal: $16.69 Billion
Percentage Change: -5%
Best FY22 Quarter: Q1 $4.15B
Latest Quarter: Q3 $3.68B
No. of Employees: 46,500
Global Headquarters: Dublin, Ohio
KEY EXECUTIVES:
Jason Hollar, CEO
Aaron Alt, CFO
Michelle Greene, EVP, Chief Information Officer
Steve Mason, CEO, Medical Segment
Robert Rajalingam, President U.S. Medical Products and Distribution
Jorge Sahlieh, President of International
Medical Products and Distribution
Rob Schlissberg, President, Cardinal Health at-Home Solutions
In 2015, there was a major announcement made with regard to Johnson & Johnson’s Cordis business. At that time, Cordis was a leading global manufacturer of cardiology and endovascular devices. The unit was being purchased by Cardinal Health for approximately $2 billion.
“We are extremely excited about the acquisition of Cordis. This is a significant step forward in our cardiovascular strategy. Cordis brings with it a long and proud legacy of cardiovascular innovation,” said George Barrett, chairman and CEO at the time.
Of course, strategies change. In early August 2021, just about a month into its 2022 fiscal year, Cardinal Health finalized the deal that would see the departure of the Cordis business. The company was sold to Hellman & Friedman, a global private equity firm, for half the original 2015 purchase price.
Several analysts explained the move as one of several poor decisions made by drug distributors. In a comment to Reuters, Morning Star analyst Soo Romanoff said, “These drug distributors have made really bad acquisitions, and this Cordis was one of them. [Cardinal] is just monetizing it because there are no synergies that they are getting from this business.”
Raymond James analyst Alex Ruscher essentially agreed. “This is the latest example of the drug wholesalers unwinding assets snatched up as the industry looked to consolidate over the past five years, with the common trend being buying high and selling lower.”
ANALYST INSIGHTS: Cardinal is a company that continues to work on improving its bottom line due to pressure from Wall Street. They seem to be making some progress with this through an increased emphasis on specialty pharma and precision medicine while streamlining and simplifying their medical product lines. While currently an unexciting company, expect Cardinal to continue to focus, focus, focus to grow its EPS (earnings per share).
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
The move would seem to reduce the company’s medical device manufacturer status as it returns its attention primarily on mitigating supply chain inflation and, more recently, the growth of its at-Home Solutions. In the firm’s annual report, current CEO Jason Hollar specifically called out the at-Home segment and alluded to it being a strategic focus.
Cardinal Health attributed the loss of the Cordis revenue during the 2022 fiscal as being the primary reason for its year-over-year decrease compared to the previous 12-month period. The firm saw a 5% decrease in its Medical segment, going from $16.69 billion in 2021’s fiscal to $15.89 billion. Meanwhile, its Pharmaceutical portion was responsible for a revenue total almost 10 times that amount, reporting $165.5 billion in the 2022 fiscal.
Perhaps addressing the depression of its Medical business from the divestiture, the company announced expansion plans with the building of a pair of medical distribution centers. Targeting the Columbus, Ohio, region for both facilities, the first declaration came at the end of March. A 574,670-square-foot medical distribution center would replace the company’s 235,000-square-foot facility in nearby Obetz, Ohio. The new center (located in Groveport) would not only house employees from the existing location, but would also create new job openings for the region.
In a release, the company stated, “The new building will integrate automation and technology to work alongside Cardinal Health employees; improve safety, service, and quality; deliver operational efficiencies; and better support fluctuations in volume and labor to provide customers with a predictable and stable customer experience.”
Then, just about two months later, the organization announced plans for a distribution facility that would support its aforementioned at-Home Solutions business. This segment of the company provides medical supplies intended to enable comfortable care within the home for patients with chronic and/or serious health conditions. The 208,144-square-foot building was reported as being the tenth distribution center for the firm’s at-Home Solutions unit in the United States. Located in Grove City, Ohio, the new facility would create approximately 100 new job opportunities for the region.
In addition to serving as a new distribution center, the building would also serve as a customer showcase center. It is also the first Cardinal Health warehouse to feature AutoStore, an automated fulfillment technology from Swisslog optimized by Swisslog’s SynQ software. The system has 31,844 storage bins providing 83,000 cubic feet of storage for 14,154 SKUs. According to Cardinal Health, since the robots bring products directly to employees for packing and shipping, they help decrease human error and bring more speed to order fulfillment.
Both locations celebrated openings in April 2023. Cardinal Health indicated they were part of a larger, multi-year strategy for the Medical Segment to modernize warehousing. The plan puts an emphasis on investments in infrastructure and technology. According to the company, the facilities will support business growth and expansion, help accelerate service for existing customers, and bring more jobs to the region. The buildings lie just about 15 miles apart and are south of Columbus.
Another announcement during its 2022 fiscal involved COVID-19 tests from Cue Health as Cardinal Health was called upon to serve as the distribution partner for the firm’s professional use and over-the-counter diagnostics. Specifically, the arrangement involves the Cue Health Monitoring System, the Cue COVID-19 Test for CLIA Certified Healthcare Providers and Laboratories (Professional), Cue COVID-19 Test Positive Control Swabs and Test Negative Control Swabs, and the Cue COVID-19 Test for Home and Over The Counter Use. According to a release, Cardinal was selected for its “demonstrated expertise in helping commercialize diagnostic technologies.” It was also noted the organization serves nearly 90% of U.S. hospitals and more than 60,000 pharmacies.
Cardinal Health also expanded its own product line in the form of a surgical drape featuring Avery Dennison’s patented BeneHold chlorhexidine gluconate (CHG) adhesive technology. The CHG product helps reduce the risk of surgical site contamination with organisms typically associated with surgical site infections. According to Cardinal Health, the incise film is strong, conformable, and breathable, and provides a sterile surface to create a barrier to contamination. The adhesive helps prevent edge lift of the drape, while still removing easily after surgery without harming fragile skin.
Following the close of the 2022 fiscal, about a month later, the firm announced a couple of changes within the organization’s leadership. Most notable, it was revealed that then CEO and board member Mike Kaufmann would step down, as the board had elected Hollar as the new CEO. Hollar had been the company’s CFO since May 2020. Previously, he served in the same position for Tenneco and Sears Holdings Corporation. Patricia English, who had served as chief accounting officer and senior vice president of Cardinal Health and previously served as vice president of accounting, stepped into the CFO role as an interim selection. The role was eventually filled by Aaron Alt.