Summary
Cardinal Health, Inc. (CAH) announced on March 12, 2021, a definitive agreement to sell its Cordis business. This planned divestiture is expected to result in significant charges for the company. Specifically, Cardinal Health anticipates incurring up to $125 million in costs associated with exit or disposal activities, primarily in fiscal years 2021 and 2022. These costs include professional fees, employee-related expenses, and facility exit costs, with a majority expected to result in future cash expenditures. Furthermore, in connection with the sale, the Cordis business will be classified as held for sale, and the company expects to record a pre-tax loss not exceeding $120 million due to the write-down of net assets to fair value less costs to sell. This impairment charge is not anticipated to result in future cash outlays. Investors should note that these are estimates and are subject to change. The filing also disclosed that the company received a subpoena from the SEC on February 26, 2021, requesting documents related to Cordis inventory and goodwill analysis, to which the company is cooperating.
Key Highlights
- 1Cardinal Health has entered into a definitive agreement to sell its Cordis business.
- 2The company expects to incur up to $125 million in costs related to this divestiture, spread across fiscal years 2021 and 2022.
- 3A significant portion of the estimated exit costs ($83 million) are for professional and project management services.
- 4The majority of the estimated exit costs are expected to result in future cash expenditures.
- 5A pre-tax loss not exceeding $120 million is anticipated due to the write-down of Cordis assets to fair value less costs to sell.
- 6This impairment loss is not expected to involve future cash expenditures.
- 7Cardinal Health is cooperating with an SEC subpoena received on February 26, 2021, concerning Cordis inventory and goodwill.