In 2009, Cardinal Health, a multinational provider of healthcare products and services, completed the spin-off of its clinical and medical products businesses into a separate public company named CareFusion. As part of the process, a new board of directors was formed, with Greg Lucier appointed as Chair of the Compensation Committee. One of the Committee’s early orders of business was to conduct a search for a new Chief Executive Officer. With Lucier leading the effort, Kieran Gallahue—a superb executive who at the time was President of sleep medicine company ResMed—was successfully recruited into the role.
Over the next five years, Gallahue and his management team followed a proven playbook for transforming a spin-off company to increase shareholder value. The first phase of this process involved standing up the essential business units, corporate services, and business systems so that the company could function as an independent entity. Concurrently, nonstrategic businesses were divested to create a more cohesive and profitable portfolio of offerings. The latter resulted in a whopping $750 million reduction in revenue.