San Diego’s Medical Technology Startups Get Reborn in CareFusion Spinoff

San Diego has long been known as an incubator for new technology companies. But as the hometown for established Fortune 500 companies, San Diego is barely on the map. You can count San Diego’s Fortune 500 companies on three fingers: Qualcomm (at No. 244), Sempra Energy (No. 252), and SAIC (No. 266).

This is because San Diego operates like a botanical nursery. Technology startups seeded here are typically sold and often transplanted. Sometimes part of a company’s operations remain in San Diego while corporate finance and other executive functions are consolidated elsewhere. That’s the way it was in 1996 when Dublin, OH-based Cardinal Health paid $920 million to acquire San Diego-based Pyxis, a medical technology startup that pioneered the development of computerized drug dispensing systems for hospitals. And again in 2004, when Cardinal paid $2 billion to acquire San Diego’s Alaris Medical Systems, a leading maker of intravenous drug pumps.

But now we’re watching a complete turn of the great corporate circle of life. Cardinal decided more than a year ago it was time to spin off its medical technology business—which includes Pyxis and Alaris—as CareFusion, a full-blown publicly traded company with 15,000 employees and roughly $3.7 billion in annual sales. David Schlotterbeck, who was a vice chairman at Cardinal and the CEO of Alaris, is heading CareFusion—which is headquartered in San Diego.

“I am very happy to see San Diego regain a large publicly traded company headquarters,” Pyxis CEO Ron Taylor said in an e-mail last week. “Over the years we have sold many local companies to bigger out-of-town buyers and lost the HQ.”

The spinoff becomes official tomorrow (September 1), when trading in CareFusion shares begins on the New York Stock Exchange under the symbol CFN. CareFusion shares began trading provisionally under the symbol CFN-WI just over a week ago, on Aug. 21, to establish a market for the stock, according to CareFusion spokesman Jim Mazzola. At noon today,  they were trading at $19.02 a share, giving the new San Diego company a market valuation of more than $4.3 billion.

The split leaves Cardinal Health, the country’s No. 2 drug distribution company, with a more centralized focus on its core business. It also enables CareFusion to focus

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.