In November, Cardinal Health acquired a majority stake in GI Alliance for $2.8 billion, one of the largest transactions in the gastroenterology space in recent years.
Here are five key takeaways from the deal:
1. The acquisition reflects a growing trend of pharmaceutical-focused healthcare companies entering the physician practice space, according to a blog post from VMG Health. Dublin, Ohio-based Cardinal Health, traditionally known for distributing pharmaceuticals and medical products, is now among a new wave of buyers that includes insurers, pharma companies and medical equipment distributors. These entities are increasingly pursuing physician group acquisitions to create vertically integrated care platforms.
2. Unlike traditional private equity models focused on short-term returns, these new acquirers are seeking long-term strategic fit and operational synergy. Their approach positions them to better weather regulatory pressures and economic headwinds, according to a blog post from VMG Health.
3. The acquisition is expected to lay the groundwork for a physician-led, national specialty platform. According to VMG Health, this platform will help Cardinal Health grow its reach across several specialties, particularly gastroenterology, oncology and rheumatology.
4. GI Alliance is among the nation’s largest gastroenterology groups, comprising more than 900 physicians across 345 practice locations in 20 states. The organization has built its strength through partnerships with independent GI practices.
5. When the deal was first announced, Massachusetts Senator Elizabeth Warren urged the FTC to scrutinize the deal. According to a Dec. 23 news release from Ms. Warren’s office, Cardinal Health controls 28% of the prescription drug wholesale market.
“This deal threatens to limit competition by expanding Cardinal Health’s control of physician practices, while giving Cardinal an incentive to restrict those practices from contracting with Cardinal’s rival wholesalers,” Ms. Warren wrote.
The post Cardinal Health’s acquisition of GI Alliance: What is means for the industry appeared first on Becker’s ASC.
