Yahoo Finance Cardinal Health Stock Likely to Gain From the Acquisition of ION
Cardinal Health, Inc. CAH recently announced an agreement to acquire Integrated Oncology Network (“ION”) for $1.115 billion in cash. ION operates over 50 practice sites across 10 states, representing more than 100 providers.
Cardinal Health is prioritizing growth in specialty care by investing in Navista and acquiring Specialty Networks. Management highlighted that the proven support model of Integrated Oncology Network will enhance CAH’s oncology strategy, adding value for providers and patients.The partnership aims to equip community practices with advanced tools and technology, along with expertise from Specialty Networks' PPS Analytics and SoNaR technology, enabling the company to deliver high-quality, patient-centered care close to home, ultimately improving patient outcomes and strengthening CAH's leadership in healthcare.
ION’s flexible business model, offering services like revenue cycle management, payor relations, physician recruitment and IT support, will help Cardinal Health enhance operational efficiency and financial performance. These services optimize payor negotiations, attract top oncology talent and streamline processes, enabling CAH to strengthen its community oncology efforts and expand its reach in the healthcare ecosystem, driving growth in its oncology strategy.
Likely Trend of CAH Stock Following the News
Following the news release, shares of CAH remained the same at $111.84 at yesterday’s close. The recent agreement is expected to enhance the company's healthcare providers to offer additional services,such as Radiation Oncology, Urology Services, Ancillary Services and Advanced Diagnostic Testingand technologies to their patients.
While its stock performance remains unchanged, the company's planned acquisition is expected to generate positive market sentiment, reinforcing its strategic growth and focus on enhancing patient care. Consequently, we anticipate the stock to gain from investors’ optimism around this development.
Significance of Cardinal Health’s Acquisition of ION
This planned acquisition underscores Cardinal Health’s strategic focus on expanding its presence in specialty care, particularly oncology. By integrating ION into its portfolio, Cardinal Health strengthens its support for independent community oncology practices, empowering CAH to remain autonomous while accessing advanced services and technology. This deal not only enhances Cardinal Health’s oncology service offerings but also accelerates its mission to drive value-based, patient-centered care and ancillary services.
With access to Navista’s AI-driven analytics,California Cancer Associates for Research & Excellence can access community oncology practices, such as Value-Based Care, Data-Driven Clinical Decision-Making and Care Coordination that can improve patient outcomes while providing high quality and maintaining lower costs, solidifying Cardinal Health's role as a leader in healthcare distribution and services. The transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals. This transaction is expected to boost Cardinal Health's earnings within a year of closing.
Market Prospects Favoring CAH
Per a report in Precedence Research, the global oncology marketsize is estimated to be $225 billion in 2024. It is anticipated to reach $668.3 billion by 2034 at a CAGR of 11.5%.
The robust growth is likely to be driven by the rising prevalence of cancer disease among the global population, which significantly fosters the demand for various oncology diagnostics and treatment products.
CAH’s Stock Price Performance
Shares of Cardinal Health have risen 11% year to date compared with the industry’s 0.3% growth. The S&P 500 has risen 19.6% in the same time frame.
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Favorable Earnings Surprise Trend for CAH
Cardinal Health has an estimated long-term growth rate of 19%. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 13.47%.
Zacks Rank & Other Key Picks
Currently, Cardinal Health carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space are Universal Health Services UHS, ATI Physical Therapy (ATIP) and Aveanna HealthcareAVAH. While Universal Health Services sports a Zacks Rank #1 (Strong Buy), ATI Physical Therapy and Aveanna Healthcarecarry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Services has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Services has gained 41.1% compared with the industry's 34.8% growth year to date.
ATI Physical Therapy's earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.25%.
ATIP's shares have gained 5.5% year to date compared with the industry’s 18.6% growth.
Aveanna Healthcare's earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 47.5%.
AVAH's shares have surged 104.5% year to date compared with the industry’s15.7% growth.
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