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BFD Expert Voices - Health Tech Deals

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Cardinal Health (NYSE: CAH) will pay nearly $4 billion for sponsor-backed health services providers GI Alliance and Advanced Diabetes Supply Group (ADSG).

Why it matters: Drug distributors have emerged as reliable buyers for private equity's physician businesses in particular, after Cencora acquired Webster Equity Partners' Retina Consultants of America last week.

Zoom in: Cardinal Health paid $2.8 billion to buy a 71% stake in GI Alliance from Apollo Global Management. Starting from the third anniversary of deal close, Cardinal can exercise a call right to purchase the rest of the equity.

Cardinal Health paid $1.1 billion in cash to acquire ADSG from Court Square Partners.

ADSG will merge with Cardinal's at-home solutions business, while GI Alliance will operate as a platform within Cardinal Health's pharmaceutical and specialty solutions segment.

Behind the scenes: ADSG was marketed off $100 million of 2023 EBITDA, Axios confirmed, implying an approximate 11x sale multiple. Court Square declined to comment.

How it works: Southlake, Texas-based GI Alliance a gastroenterology management services organization comprising 900 physicians and 345 practices.

The company has a presence across 20 states, treating patients in 135 ambulatory surgical centers and 165 hospital networks, supported by 95 infusion centers.

Based in Carlsbad, California, ADSG provides home and durable medical equipment for diabetes patients.

Flashback: Court Square, which acquired ADSG from HIG Capital in 2020, launched an auction process for the equipment maker in January, PE Hub reported.

Apollo acquired GI Alliance from Waud Capital in a 2022 deal that valued the business at $2.2 billion. The sponsor said at the time it planned to serve as a "long-term strategic partner" to GI Alliance.

Yes, but: That was before it became apparent that physician businesses weren't going to be as lucrative for PE as previously assumed.

Catch up quick: Cardinal has been a busy buyer of PE-backed businesses. In September, it bought cancer-care provider Integrated Oncology Network (ION) for about $1.12 billion in cash.

Cardinal Health to pay nearly $4B for GI Alliance, Advanced Diabetes Supply Group

Drug distributors have emerged as reliable buyers for private equity's physician businesses

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Cardinal Health <a class="gtmContentClick" data-vars-link-text="(NYSE: CAH)" data-vars-click-url="https://link.axios.com/click/37446543.52/aHR0cHM6Ly93d3cuYXhpb3MuY29tL3Byby9oZWFsdGgtdGVjaC1kZWFscy8yMDI0LzA5LzIwL2NhcmRpbmFsLWFjcXVpcmUtaW50ZWdyYXRlZC1vbmNvbG9neS1uZXR3b3JrLTFiP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1zZW5kdG9fcHJvbmV3c2xldHRlcnRlc3Qmc3RyZWFtPXRvcA/63d7efa24889932dcb08ba1cBdceb592c" data-vars-content-id="e4c9adb0-fd58-4dbe-8c5e-8499c5da86be" data-vars-headline="Cardinal Health to pay nearly $4B for GI Alliance, Advanced Diabetes Supply Group" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/37446543.52/aHR0cHM6Ly93d3cuYXhpb3MuY29tL3Byby9oZWFsdGgtdGVjaC1kZWFscy8yMDI0LzA5LzIwL2NhcmRpbmFsLWFjcXVpcmUtaW50ZWdyYXRlZC1vbmNvbG9neS1uZXR3b3JrLTFiP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1zZW5kdG9fcHJvbmV3c2xldHRlcnRlc3Qmc3RyZWFtPXRvcA/63d7efa24889932dcb08ba1cBdceb592c" target="_self">(NYSE: CAH)</a> will pay nearly $4 billion for sponsor-backed <a class="gtmContentClick" data-vars-link-text="health services providers" data-vars-click-url="https://link.axios.com/click/37446543.52/aHR0cHM6Ly93d3cucHJuZXdzd2lyZS5jb20vbmV3cy1yZWxlYXNlcy9jYXJkaW5hbC1oZWFsdGgtYW5ub3VuY2VzLXR3by1zdHJhdGVnaWMtYWRkaXRpb25zLXRvLWl0cy1wb3J0Zm9saW8tMzAyMzAxOTI4Lmh0bWw_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXNlbmR0b19wcm9uZXdzbGV0dGVydGVzdCZzdHJlYW09dG9w/63d7efa24889932dcb08ba1cBc65b424e" data-vars-content-id="e4c9adb0-fd58-4dbe-8c5e-8499c5da86be" data-vars-headline="Cardinal Health to pay nearly $4B for GI Alliance, Advanced Diabetes Supply Group" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/37446543.52/aHR0cHM6Ly93d3cucHJuZXdzd2lyZS5jb20vbmV3cy1yZWxlYXNlcy9jYXJkaW5hbC1oZWFsdGgtYW5ub3VuY2VzLXR3by1zdHJhdGVnaWMtYWRkaXRpb25zLXRvLWl0cy1wb3J0Zm9saW8tMzAyMzAxOTI4Lmh0bWw_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXNlbmR0b19wcm9uZXdzbGV0dGVydGVzdCZzdHJlYW09dG9w/63d7efa24889932dcb08ba1cBc65b424e" target="_self">health services providers</a> GI Alliance and Advanced Diabetes Supply Group (ADSG).Why it matters: Drug distributors have emerged as reliable buyers for private equity&#x27;s physician businesses in particular, after <a class="gtmContentClick" data-vars-link-text="Cencora acquired Webster Equity Partners&#x27; Retina Consultants of America" data-vars-click-url="https://link.axios.com/click/37446543.52/aHR0cHM6Ly93d3cuYXhpb3MuY29tL3Byby9oZWFsdGgtdGVjaC1kZWFscy8yMDI0LzExLzA2L2NlbmNvcmEtcGF5aW5nLTViLXJldGluYS1jb25zdWx0YW50cy1vZi1hbWVyaWNhLXdlYnN0ZXI_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXNlbmR0b19wcm9uZXdzbGV0dGVydGVzdCZzdHJlYW09dG9w/63d7efa24889932dcb08ba1cBdd716607" data-vars-content-id="e4c9adb0-fd58-4dbe-8c5e-8499c5da86be" data-vars-headline="Cardinal Health to pay nearly $4B for GI Alliance, Advanced Diabetes Supply Group" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/37446543.52/aHR0cHM6Ly93d3cuYXhpb3MuY29tL3Byby9oZWFsdGgtdGVjaC1kZWFscy8yMDI0LzExLzA2L2NlbmNvcmEtcGF5aW5nLTViLXJldGluYS1jb25zdWx0YW50cy1vZi1hbWVyaWNhLXdlYnN0ZXI_dXRtX3NvdXJjZT1uZXdzbGV0dGVyJnV0bV9tZWRpdW09ZW1haWwmdXRtX2NhbXBhaWduPXNlbmR0b19wcm9uZXdzbGV0dGVydGVzdCZzdHJlYW09dG9w/63d7efa24889932dcb08ba1cBdd716607" target="_self">Cencora acquired Webster Equity Partners&#x27; Retina Consultants of America</a> last week.

Cardinal Health to pay nearly $4B for GI Alliance, Advanced Diabetes Supply Group

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