Cardinal Health deals majority stake in NaviHealth to PE shop CD&R

Cardinal Health (NYSE:CAH) said this week it divested itself of its majority stake in NaviHealth to private equity firm Clayton, Dubilier & Rice, with Cardinal Health retaining the call right to reacquire the business.

NaviHealth provides post-acute car programs to hospital systems, health planst, physician groups and healthcare providers as part of value-based care programs, Cardinal Health said.

Through the deal, CD&R will obtain a 55% ownership stake in NaviHealth, while Dublin, Ohio-based Cardinal Health will retain an approximate 45% stake in the post-acute care focused business.

“This new investment structure provides NaviHealth with the resources needed to support and accelerate its growth trajectory. NaviHealth’s leadership team, clinical expertise, and proprietary clinical decision support technology are key differentiators in a rapidly growing sector of the healthcare industry. CD&R’s understanding of NaviHealth’s business, and their relationships with current and potential customers, will help provide additional value to patients, health systems, and health plans while also allowing Cardinal Health to benefit from future success,” Cardinal Health CEO Mike Kaufmann said in a press release.

After the deal closes, which Cardinal Health is hopeful to see during the third quarter of this year, current NaviHealth CEO Clay Richards will retain his role and join NaviHealth’s board, joined by CD&R funds operating advisor and former Aetna CEO Ron Williams will take over as board chair. Both Cardinal Health and CD&R will appoint three additional directors to the board.

“NaviHealth is at the forefront of the shift from fee-for-service to value-based healthcare delivery. With an aging population, prevalence of chronic illness, and increased hospital readmission rates, payers and providers are seeking innovative ways to improve health outcomes while reducing cost, which is exactly what NaviHealth’s services deliver. The post-acute care segment of the market is especially attractive due to high levels of waste, wide variability in spend, and the complex mix of clinical, operational and technical resources required to address patient needs. For the past six years, NaviHealth has worked tirelessly to improve the way post-acute care is delivered in the U.S. CD&R’s investment enables us to invest in innovative solutions, expand our capabilities, and partner with health plans and health systems in more strategic ways – with the ultimate goal of providing better care to our patients. Our leadership team believes in the future of NaviHealth and we are excited about what we can create together with Cardinal Health and CD&R,” Williams said in a prepared statement.

Earlier this week, Cardinal Health said that the FDA Circulatory System Devices Panel of its Medical Devices Advisory Committee issued a favorable recommendation on the premarket approval application for the company’s Incraft abdominal aortic aneurysm stent graft system.

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