Cardinal Health is divesting itself from Cordis, its business focused on manufacturing cardiovascular devices. The company has struck an agreement with Hellman & Friedman, which is paying $1 billion, including the buyer’s assumption of certain liabilities and Cardinal Health’s retention of certain working capital accounts.
The companies said they expect the deal to close in the first half of Cardinal Health’s fiscal 2022, subject to customer closing conditions and regulatory clearances. Cardinal Health acquired Cordis from Johnson & Johnson in 2015.
“Cardinal Health and H&F have a shared passion for delivering high-quality medical products to customers and we are excited about the future for the Cordis business under H&F's ownership,” said Mike Kaufmann, CEO of Cardinal Health. "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. Looking forward, we remain committed to our medical distribution and global medical products businesses.”
Cardinal Health said it would be retaining full authority for lawsuits related to inferior vena cava filters in the United States and Canada, as well as associate liability. It estimated that divesting the business will decrease medical segment profit by roughly $60 million to $70 million on an annual run-rate basis.
Additionally, as part of entering the definitive agreement with H&F, Cardinal Health will classify Cordis as held for sale, which it expects to lead to a pre-tax loss of as much as $129 million in the third quarter of its fiscal 2021. The company also has been authorized to incur as much as $125 million in costs related to the divestiture, primarily in fiscal 2021 and 2022.
H&F has partnered with Ajax Health and Zeus Health in the transaction, and the company plans to create an independent research and development engine called the Cordis Accelerator, which will develop and commercialize new products for Cordis. Ajax Health and Zeus Health CEO Duke Rohlen has been named CEO-designate of the Cordis Accelerator.
"Cordis is an excellent fit with our philosophy of investing in great businesses as a market-leading cardiovascular device manufacturer known for high-quality products, strong physician satisfaction and superb patient outcomes," said Hunter Philbrick, partner at H&F. "We are excited to invest in the talented Cordis, Ajax and Zeus teams to drive industry leadership, therapeutic innovation and improved patient experiences."