Cardinal Health

History

Founded in 1971 as Cardinal Foods by Robert D. Walter, the company was initially a food wholesaler. After acquiring the Bailey Drug Company in 1979, it began wholesaling drugs as Cardinal Distribution, Incorporated. The company went public on the NASDAQ stock exchange in 1983 and subsequently began a long string of acquisitions and mergers. In 1988, Walter sold Cardinal Health's food operations to Roundy's. From 1991 to 1996, the company’s sales grew from $1.2 billion to $8.9 billion. In a case study for Harvard Business Review, Mary Teagarden describes Cardinal Health in this period as "one of a handful of large U.S. companies that had achieved earnings-per-share growth in excess of 20 percent for 15 years straight."The company changed its name to Cardinal Health in 1994 and became the third-largest pharmaceutical wholesaler in the United States.

R. Kerry Clark, a former executive and vice chairman at Procter & Gamble, was appointed president and CEO in April 2006, with Robert D. Walter retaining Chairmanship of the board. In September 2008, the company announced Clark and Walter would retire and George S. Barrett would become the chairman and CEO.

Cardinal Health completed the spin-off of its clinical and medical products and nuclear businesses into an independent medical technology company called CareFusion in 2009 with David Schlotterbeck as CEO. Cardinal Health is now traded on the NYSE under symbol CAH. As of July 2016, it is ranked 21 on the Fortune 500 list with FY2016 annual revenue of $102.5 billion. The firm employs 34,000 people worldwide.

Acquisitions

In 1995, Medicine Shoppe International (St. Louis, est. 1970), the country's largest franchise of retail pharmacies, was acquired. The merger represented the first non-distribution acquisition by Cardinal Health. The following year, the company acquired Pyxis Corporation, a company that developed automated pill dispensers for hospitals, for $867 million.

In a 1997 competition between Cardinal Health and McKesson Corporation, Cardinal Health planned to purchase Bergen, to which McKesson responded with a bid to purchase Amerisource. Instead, Amerisource and Bergen merged into AmerisourceBergen. Later that year, Cardinal Health completed the acquisition of Owen Healthcare, the second-largest provider of pharmacy management services in the U.S. at the time.

In 1999, the firm acquired the Chicago-based medical products manufacturer and distributor, Allegiance Healthcare (formerly a division of Baxter Healthcare). Allegiance made surgical drapes, gloves, and gowns, and distributed customized arrangements of medical supplies (called "custom sterile packs" and "procedure-based delivery systems"). During 2001, the company spent approximately $30 billion on acquisitions, including Bindley Western Industries, wholesale distributor of pharmaceuticals based in Indianapolis.

In April 2006, Cardinal Health purchased Niagara Falls-based ParMed Pharmaceuticals for $40.1 million. ParMed's focus of selling medicine in smaller quantities complements Cardinal Health's distribution to bigger hospital and drug store chains. In June 2007, the firm announced the completion of a tender offer for VIASYS Healthcare.

In June 2010, Cardinal Health announced plans to expand its presence in specialty pharmaceutical services with an agreement to purchase Healthcare Solutions Holding for $517 million. In December 2010, the company acquired Kinray, one of the last independent pharmaceutical wholesalers in the United States, increasing Cardinal Health's presence in the independent pharmacy market by 40 percent. Kinray had annual revenue of over $3.5 billion, and served about 2,000 independent retail pharmacy customers. From 2010 to 2014, Cardinal Health acquired 18 companies including Yong Yu, a Chinese drug distributor. Cardinal Health teamed up with CVS to form Red Oak Sourcing, the largest generic drug sourcing operation in the United States, in July 2014, when the companies started buying generic drugs around the world to sell in U.S. markets.

In March 2015, Cardinal Health signed an agreement to acquire Johnson & Johnson's Cordis (medical) division, a cardiology and endovascular device manufacturer, for $1.94 billion. Cordis' largest market is in the United States, but the manufacturer employs approximately 3,000 people around the world and 70 percent of its sales are international. The acquisition was completed on October 4, 2015.

Restatements

In September 2004, Cardinal Health announced to restate past results for fiscal 2001, 2002, 2003 and the first three quarters of 2004 downward, after an accounting review and an ongoing federal investigation. In 2005, in connection with the Audit Committee's conclusions reached in September and October 2004, the company made certain reclassification and restatement adjustments to its fiscal 2004 and prior historical consolidated financial statements. According to the Wall Street Journal, "Analysts called the restatement decision troubling, yet limited in scope."

DEA investigation into Oxycodone diversion

In 2008, Cardinal Health agreed to pay $34 million in civil penalties to settle DEA allegations that it failed to report suspicious orders of hydrocodone. The fine followed a 10-month DEA suspension of a Lakeland, Florida distribution facility and two others in New Jersey and Washington. On February 2, 2012, the Drug Enforcement Administration again suspended the license of the firm's Lakeland distribution center to distribute controlled substances on charges that it had allowed four Florida pharmacies to purchase excessive amounts of controlled substances, in particular oxycodone. Cardinal Health obtained a restraining order against the suspension, but the suspension was upheld on February 29 by a Federal district court because the court agreed with the DEA that Cardinal Health's activities represented an "imminent danger to the public." The company stated that it blocked two of the pharmacies, (Brooks Pharmacy in Bonita Springs, Florida, and Gulf Coast Medical in Panama City, Florida), and notified the corporate owners of the two pharmacies that were part of national chains, two CVS stores in Sanford, Florida.

Cardinal Health Foundation

The Cardinal Health Foundation is the charitable arm of Cardinal Health. The company makes annual product donations of over $9 million through international relief organizations and provides up to $1,000 in matching funds for every Cardinal Health employee that makes a charitable donation. In 2008, the foundation established its E3 Grant Program. Over the past seven years, the Foundation has invested more than $7.15 million in funding to 241 hospitals, health systems or other health-related organizations.

Cardinal Health also supports organizations such as Ronald McDonald House Charities, and was named Benefactor of the Year at the 2011 Corporate Caring Awards. In 2015, the foundation contributed $3 million to the Solutions for Patient Safety project, which has raised over $11 million nationally for efforts to improve safety initiatives in children’s hospitals.