Cardinal Health leans into CGMs, urology supplies

DUBLIN, Ohio – Cardinal Health's planned acquisitions of AdaptHealth's diabetes business and Strive Medical signal a larger strategy: Building scale in product categories where the company sees long-term growth opportunities, even as the next round of Medicare’s competitive bidding program looms.

Cardinal Health announced July 20 that it plans to acquire AdaptHealth's diabetes business, which serves 225,000 people annually, for $235 million. The announcement follows the company's acquisition of Advanced Diabetes Supply Group (ADSG) last year for about $1.1 billion. ADSG serves about 500,000 people annually.

Together, the acquisitions significantly expand Cardinal Health's footprint in the diabetes supplies market. Prior to acquiring ADSG, the company primarily provided diabetes supplies through Edgepark, whose legacy product categories are urology and ostomy supplies.

“This growth is so exponential,” said Rob Schlissberg, president of Cardinal Health at-Home Solutions. “It’s about continuing to add scale, capabilities and reach to deliver the right patient experience and care for these patients. No one asks for diabetes; no one wants to work with us. So, we need to make it frictionless.”

At the same time, Cardinal Health is growing its urology business. The company also announced July 20 that it plans to acquire Strive Medical, which specializes in urology supplies and serves more than 20,000 people annually, for $125 million.

“This is an intimate and often complicated product category, and they have delivered in a fantastic way,” Schlissberg said. “They’ve also been nimble. They’ve tested and tried and learned things with great success.”

While diabetes supplies and urology products are distinct categories, Schlissberg said both align with Cardinal Health's focus on improving the patient experience and delivering supplies efficiently.

“We want to help people with ongoing needs that fit our distribution model of small boxes,” he said.

The acquisitions are also notable because both CGMs and urology supplies are slated to be included in Medicare's next round of competitive bidding. With the AdaptHealth and Strive Medical acquisitions not yet closed, Schlissberg declined to comment on how they might affect Cardinal Health's bid strategy.

He acknowledged, however, that the company intends to participate in the program.

“These are product categories that we focus on and they’re being competitively bid,” he said. “This is who we are and what we do. We’re not shying away from that. We’re leaning in.”

Even as Cardinal Health competes in those categories, Schlissberg emphasized the company's role as a distributor serving providers across the industry. As a result, he said, the company continues to invest in infrastructure aimed at improving access and efficiency for all providers, including a new distribution center under construction in Sacramento, Calif., along with technology upgrades and retrofits at existing facilities throughout its network.

“I grew up in a small business and believe in small businesses,” he said. “I have a balanced view of, ‘What is the right thing for our industry?’ Our distribution network, size and scale give them access to have a larger footprint.