AdaptHealth is selling its roughly $600 million diabetes business to Cardinal Health and exiting certain e-commerce and drop-ship operations to simplify the company and focus on sleep, respiratory and home medical equipment. CEO Suzanne Foster said the diabetes segment did not offer expected cross-selling opportunities and would have required further investment in pharmacy capabilities and distribution infrastructure. The transaction will leave about $60 million of overhead costs with continuing operations, with roughly half expected to be removed in the first year after closing. The company reported 16% second-quarter revenue growth, but its new West Coast capitated contract covering 13 million members is facing higher-than-expected service costs due to utilization and hospital-ordering issues. Management sees strong growth potential in sleep care through higher referrals, home testing and digital tools, and capital priorities include organic growth, reducing leverage to 2.5 times and pursuing targeted sleep and respiratory acquisitions.
Adapthealth CorpDivesting diabetes unit to focus on core sleep/respiratory growth, simplifying operations and reducing overhead.
Cardinal Health IncAcquiring AdaptHealth's diabetes business expands Cardinal Health's product portfolio and market presence.
