Like other companies, Cardinal Health hunkered downduring the recession, putting its merger and acquisitions plans onhold. Now the company is in the midst of a major shopping spree,having spent more than $2 billion on three acquisitions announcedover the past six months, including one in China.

But more than the recent upswing in the economy is fueling thehunt for strategic growth opportunities at the Columbus, Ohio-basedprovider of products, services and technology to the healthcareindustry, which had $96 billion in 2009 revenue.

Treasury & Risk asked CFO Jeff Henderson toelaborate.

T&R: More than the recession had put yourM&A strategy on the back burner. What heated it up?
Henderson: The big factor was the spinoff of ourmedical technology capital equipment business (CareFusion) toshareholders in August 2009. Completing the spinoff andrepositioning the company to get it focused on the core healthcareservice areas in which we compete took complete focus, and was thebigger determinant in our decision not to be active in M&A.Shortly thereafter, we identified key organic investment strategiesto accelerate our growth, M&A being chief among them.

T&R: Give us the lowdown on the threeacquisitions.
Henderson: They include Healthcare Solutions for$517 million, Kinray for $1.3 billion, and Zuellig Pharma China, ahealthcare distribution business, for $470 million. The last onemakes us the first company in our sector to be in China in ameaningful way. The Chinese healthcare industry is growing at arapid pace as they go through a period of healthcare reform.Expectations are for it to grow at a compound annual rate of 20%through 2014–hence we view the market as a pretty importantstrategic platform for growth.

T&R: We've had our own healthcare reformshere in the United States. Do these help explain the other twoacquisitions?
Henderson: The long-term fundamentals in oursector are very good, given the underlying demographic trends andexpectations of increased utilization driven by the healthcarereforms. It's a good position to be in for any company in anyindustry. On the flip side, utilization in the last nine to 12months has been sluggish because of the overall state of theeconomy. People are holding off on discretionary medicalprocedures, and long-term unemployment for some people has meantthe end of COBRA and other forms of insurance, causing them to bemore selective in the types of procedures they pursue. But, yes,the outlook for increased utilization is good.

T&R: How did you finance the variousdeals?
Henderson: Almost all of them were financed with100% cash on the balance sheet rather than extensive financing.When we spun off CareFusion, we initially retained 20% of theshares. We then sold those off over the course of the followingyear, giving us access to $1 billion in capital. We also weregenerating cash, as the business was performing very well and wewere managing the balance sheet. The capital provided theammunition to pursue these strategic deals when they becameavailable. Not that we wouldn't have been able to tap externalmarkets–that has improved markedly since the relatively dark daysof the crash of 2008.

T&R: Any other deals in the offing?
Henderson: Let me just say that when goodacquisition candidates become available and fit our strategicgrowth priorities, we are all ears.

To read Jeff Henderson's profile as one of T&R's 2009CFOs to Watch, see SteeringThrough Troubled Times.

For a description of Cardinal Health's wellness program,see The Financial Virtues of Wellness.