Elliott Management has large position in Cardinal Health

Elliott nominated five directors to the 11-person board roughly two weeks ago, before Cardinal abruptly replaced its chief executive last week, the people said. The Wall Street Journal reported last week that activists have been circling Cardinal this year with an eye toward whether management change could help boost the company’s share price.

Elliott’s exact intentions couldn’t be learned. The deadline to nominate directors for election at its annual meeting to be held this fall was Aug. 7.

“We maintain a regular dialogue with all our investors as part of our robust shareholder engagement program,” said a Cardinal spokesman. “We do not, however, comment on the holdings of individual shareholders.”

Cardinal had a market value of over $18 billion Monday morning after its shares rose 5% both Thursday and Friday following the CEO change.

The company plays a key role in the healthcare system as a major distributor of drugs to pharmacies and medical supplies to hospitals. Its shares are little changed over the past 20 years when compared with a more than 800% rise in those of its peers McKesson Corp. and AmerisourceBergen Corp., which have more aggressively expanded into selling high-price specialty medications. Cardinal’s profit has also been weighed down by its medical-supplies business, which has been hurt by rising inflation and supply-chain disruptions.

Dublin, Ohio-based Cardinal said last week that CEO Mike Kaufmann was stepping down Sept. 1 and would be succeeded by Chief Financial Officer Jason Hollar.

That move was met with some skepticism. An analyst asked on its earnings call why the company hadn’t run a full search for a new CEO. Mr. Hollar joined Cardinal in May 2020 and previously worked as CFO of automotive-products company Tenneco Inc.

Analysts have also suggested that investors could push the company to consider strategic changes such as breaking up or selling its medical business. In its fiscal fourth quarter results reported last week, revenue from the pharmaceuticals-distribution business rose about 13% while it fell 11% in the medical-supplies unit.

Elliott, one of the busiest activists, has roughly $56 billion under management. In recent months it has agitated at companies including Pinterest Inc. and PayPal Holdings Inc.

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