Cardinal Health (NYSE: CAH) announced today that it will sell its Cordis business to private equity outfit Hellman & Friedman (H&F) for $1 billion.
News of the deal — expected to close in the second half of 2021 — comes nearly six years after Cardinal Health bought Cordis and its minimally-invasive cardiovascular technology from J&J for nearly $2 billion.
“Our decision to divest Cordis demonstrates our disciplined approach to evaluating our portfolio and focusing our resources in our strategic growth areas where we are an advantaged owner,” Cardinal Health CEO Mike Kaufmann said in a news release. “Looking forward, we remain committed to our medical distribution and global medical products businesses.”
H&F partner Hunter Philbrick described the deal as an “excellent fit with our philosophy of investing in great businesses.”
Serial entrepreneur Duke Rohlen — CEO of Ajax Health and Zeus Health — is partnering in the acquisition and is now the executive chairman designate of Cordis. He’ll also serve as CEO of a separate Cordis Accelerator.
“We at Ajax Health and Zeus Health are ecstatic about injecting growth into Cordis’ powerful platform and will do so through investments in the core business and an independent R&D engine — the ‘Cordis Accelerator’ — to develop and commercialize a new pipeline of products exclusively for Cordis,” Rohlen said.
“We see an unparalleled opportunity to partner with both existing Cordis leadership and H&F to combine a best-in-class innovation engine with a strong and robust commercial chassis. Together, we will establish Cordis as the standard-bearer for medical device innovation.”
H&F will assume certain Cordis liabilities in the deal, but Cardinal Health will retain full authority for Cordis’ inferior vena cava filters lawsuits and the liability associated with the filters.
Cardinal Health estimates the Cordis divesture will reduce Medical segment annual profits by roughly $60–70 million. Cardinal Health will classify the Cordis business as held for sale, with plans to record a pre-tax loss of up to $120 million in the present quarter. The company also expects to record costs associated with the planned divestiture of up to $125 million, mostly up through the fiscal year ended June 2022.