Cardinal Health acquired Solaris Health as it continues to build out its multispecialty management services organization platform.
The pharmaceuticals and specialty products distributor announced Tuesday that its multispecialty MSO platform, called The Specialty Alliance, entered into a definitive agreement to acquire Solaris Health, a urology MSO, from Lee Equity Partners and Solaris Health physician owners.
Cardinal Health said it will provide about $1.9 billion in cash and new debt financing to The Specialty Alliance to support the acquisition.
Following the deal's close, which is expected by the end of the year, Cardinal will own about 75% of The Specialty Alliance. The company expects the acquisition to be slightly accretive to its non-GAAP earnings per share (EPS) in the first 12 months following close.
Solaris Health physicians and several members of management will join GI Alliance physician owners and management as equity holders and operators in The Specialty Alliance.
The deal will add more than 750 providers across more than 250 practice locations in 14 states to Cardinal Health's multispecialty MSO platform.
Executives said Solaris Health's resilient model and diverse revenue streams result from supporting a broad array of ancillary services, underpinned by a national MSO infrastructure.
The deal also accelerates Cardinal Health's multispecialty growth strategy by extending the reach of The Specialty Alliance. The Solaris Health acquisition follows recent deals to buy Urology America and Potomac Urology along with the just-completed acquisition of Academic Urology & Urogynecology,
Cardinal Health MSO platforms will reach about 3,000 providers in 32 states once the Solaris Health deal closes, according to the company.
"Accelerating Specialty growth remains our top priority," said Jason Hollar, CEO of Cardinal Health, in a statement. "As we previously highlighted, urology is an attractive specialty for us, and we are well-positioned to meet the comprehensive needs of community urologists through the robust combined capabilities of The Specialty Alliance, Specialty Networks and Cardinal Health."
Along with distributing pharmaceutical and specialty solutions, Cardinal Health also is a global manufacturer and distributor of medical and laboratory products. It supplies home health and direct-to-patient products and services, operates nuclear pharmacies and manufacturing facilities and offers performance and data solutions.
Last fall, Cardinal Health announced a deal to acquire the Integrated Oncology Network, a collection of more than 50 community oncology centers, for just over $1.1 billion. It also picked up two companies to expand its diabetes and gastroenterology businesses as part of an overall strategy to grow its footprint in specialty medicine. The company bought a majority stake in the GI Alliance for approximately $2.8 billion in cash. And, it bought the Advanced Diabetes Supply Group, a leading diabetic medical supplies provider, for approximately $1.1 billion in cash.
Growing the company's footprint in specialty medicine is central to Cardinal Health's long-term growth strategy, Hollar told investors and analysts during the company's fiscal fourth-quarter earnings call Tuesday.
"We continue to see outside opportunities to drive significant value with a long runway for future growth ahead. Today's announcement of the acquisition of Solaris Health and the recent momentum we've seen with The Specialty Alliance and Navista are clear indications that we are well positioned to grow the impact of our MSO platforms across three related high-priority areas: autoimmune, urology and oncology," Hollar said during the earnings call, according to a transcript.
"These therapeutic areas continue to benefit from robust product pipeline and ongoing innovation efforts but, importantly, in the areas of autoimmune and urology also provide diverse revenue streams for our MSO platform due to the breadth of ancillary services, such as pathology and laboratory testing, administering anesthesia and diagnostic imaging," he said.
Cardinal Health posted mixed results in its latest quarter. Fourth-quarter revenue was relatively flat at $60.16 billion, missing Wall Street analysts' expectations of revenue of $60.89 billion. The company also posted a profit of $239 million, or $1 a share, for the quarter. That compares to $235 million of profit during the same quarter a year ago, or 96 cents per share.
For the full fiscal year, Cardinal Health report $222.6 billion in revenue, down 2% from fiscal year 2024.
Fourth-quarter revenue for the pharmaceutical and specialty solutions segment was relatively flat at $55.4 billion. The company said the segment's fourth-quarter revenue would have increased 22% if not for the expiration of a contract with UnitedHealth Group's OptumRx last year. The Optum contracts, signed in 2015, contributed 16% of Cardinal's total revenue in fiscal year 2023, Reuters reported.
Profit in the pharmaceutical and specialty solutions segment grew 11% to $535 million in the fourth quarter, driven by the acquisition of MSO platforms and contributions from brand and specialty products and partially offset by the customer contract expiration, the company said.
Cardinal Health raised its 2026 outlook for non-GAAP diluted EPS to $9.30 to $9.50, a 20-cent increase from the preliminary outlook of $9.10 to $9.30 previously communicated during the company's 2025 investor day.