Cardinal Health’s (CAH) New Takeover to Boost Medication Adherence

Cardinal Health, Inc. CAH recently announced that its digital health solutions company – Outcomes – has acquired ScalaMed. Following the acquisition, the latter’s technology and assets will be transferred to Outcomes.

ScalaMed is an intelligent platform that transfers prescriptions directly to patients via a secure mobile application.

This latest acquisition is likely to strengthen Cardinal Health’s digital connectivity, leading to greater patient satisfaction. This has the potential to bring more patients into the system, thereby increasing Cardinal Health’s revenue in the future.

Justification for redemption

ScalaMed pivots prescription management from provider to patient, allowing patients to send prescriptions given by their provider directly to any pharmacy for first fill. The platform provides patients with greater flexibility, easier access and price comparison, which helps in selecting the preferred pharmacy.

In addition to saving clinician hours by eliminating the administrative work of transferring prescriptions, it also helps improve health outcomes with better compliance and increased patient satisfaction. After the takeover, ScalaMed’s technology will be offered through Cardinal Health’s national pharmacy network, creating more opportunities for digital connectivity to a broader patient base.

According to management, with the continued evolution of healthcare towards patient preferences, the acquisition of ScalaMed should enable Cardinal Health to center its connected ecosystem around the patient from the start of their treatment journey. This will likely improve patient outcomes through unified communication and more informed information, removing barriers to access and adherence.

ScalaMed management believes this acquisition will lead to the delivery of an intelligent, patient-centric solution, transforming the way prescriptions are filled and helping to solve the enormous and costly challenge of medication non-adherence.

Industry Outlook

According to a report by P&S Intelligence, the Global Medication Adherence Market was estimated at $2,310.0 Million in 2019 and is projected to reach $11,226.3 Million by 2030 at a CAGR of 15.5% . Factors such as growing demand for advanced medication adherence systems, growing prevalence of chronic diseases, and increasing geriatric population are expected to drive the market.

Given the market’s growth potential, the new takeover seems to have been well chosen.

RECENT DEVELOPMENTS

This month, Cardinal Health acquired the Bendcare Group’s purchasing organization entity and made a minority investment in the Bendcare management services organization.

Last month, Cardinal Health partnered with Zipline and began long-range drone deliveries in North Carolina. The latest partnership between the two companies aims to transform the patient experience while improving the delivery of care.

That same month, Cardinal Health announced the addition of a new distribution center in the Columbus, OH area as part of a multi-year warehouse modernization and growth plan. The new distribution center will support the company’s home solutions business.

Price performance

Shares of the company have lost 7.2% over the past year compared to the sector’s 10.9% plunge and the S&P 500’s 12.1% decline.

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Zacks Ranking and Stocks to Consider

Currently, Cardinal Health carries a Zacks rank #4 (sell).

Some top-ranked actions in the broader medical field are AMN Healthcare Services, Inc. AMN, Patterson Companies, Inc. OFSP and Becton, Dickinson and company BDX, popularly known as BD.

AMN Healthcare, currently ranking Zacks #1 (Strong Buy), has an estimated long-term growth rate of 1.1%. AMN’s earnings have exceeded the Zacks consensus estimate for the past four quarters, averaging 15.6%.

You can see the full list of today’s Zacks #1 Rank stocks here.

AMN Healthcare gained 20% against the sector’s 33.3% drop last year.

The Patterson Companies, which currently carry the Zacks No. 2 (Buy) ranking, have an estimated long-term growth rate of 9.6%. PDCO’s earnings have exceeded estimates over the past four quarters, averaging 16.5%.

Patterson Companies lost 1.1% compared to the industry’s 10.9% plunge over the past year.

BD, currently carrying the No. 2 Zacks ranking, has an estimated long-term growth rate of 6.6%. BDX earnings have exceeded estimates over the past four quarters, averaging 12.9%.

BD lost 1.9% compared to the industry’s 10.9% drop over the past year.

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