What happened to physician equity in the Cardinal Health deal?

Public releases describe Cardinal Health purchasing its majority stake for about $2.8 billion in cash from physician owners and Apollo-managed funds, with physicians keeping the remaining equity, and Cardinal holding a call right beginning on the third anniversary to acquire up to 100%. Selling physicians realized gains; continuing holders kept a stake with a defined potential endpoint.

How does the call right affect my tax planning?

A call right means a future liquidity event can arrive on the buyer's schedule. The planning response is preparation: keep your basis schedule current, understand what character of gain an exercise would produce, and treat the exercise window years as ones where a projection and estimate plan should be ready before any announcement.

I am a gastroenterologist with practice income and an equity stake. How do the pieces fit?

Typically as separate streams: clinical compensation under your employment or practice arrangement, and the equity stake reporting annually based on its classification. Ancillary interests common in GI, like ambulatory surgery or endoscopy center ownership, add their own K-1s on top. Each stream has its own character, basis, and state footprint.

Are ASC and endoscopy center interests taxed like my platform equity?

They are usually separate partnership interests issuing separate K-1s, and as facility joint ventures they come with healthcare regulatory rules on top of tax rules. Income character can differ too: active facility income versus investment-type platform income. They belong on the same entity map but not in the same mental bucket.

What should I do in the year any of this equity is bought out?

Get ahead of the character and timing questions: how much is capital gain versus ordinary components, whether proceeds arrive in one year or installments, what your basis actually is, and what quarterly estimates the gain requires. Buyout years are also when charitable and retirement strategies do their best work, if planned before closing.

K-1 Employer Guide

GI Alliance and Gastroenterologist Equity Taxes

A physician-built network, a majority sale to a strategic buyer, retained minority equity, and a call right on the calendar. The tax map for everyone still holding a stake.

A guide by Taxstra Tax & Accounting · CPA-led tax strategy for business owners

Your Guide

01What the Cardinal Health Deal Left Physicians Holding 02The Annual Tax Picture 03The Call Right and the Buyout Year 04Frequently Asked Questions

K-1 & Partnership Taxes>GI Alliance

Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Last updated August 20, 2026.

Quick answer

When Cardinal Health acquired roughly 71% of The GI Alliance Management, LLC in 2024 for about $2.8 billion, GI Alliance physician owners retained the minority equity, held in an LLC structure that points to K-1 reporting for partnership-taxed interests. Add ASC and endoscopy center stakes, and many GI physicians manage several K-1s plus a future call-right liquidity event.

GI Alliance was one of the clearest physician-ownership stories in medicine: built physician-led and majority physician-owned, then partially monetized in 2024 when Cardinal Health bought roughly 71% of The GI Alliance Management, LLC for about $2.8 billion, from physician owners and Apollo-managed funds, with physicians retaining the rest and Cardinal holding a call right to acquire up to 100% beginning on the deal's third anniversary.

Individual holdings vary by practice, vintage, and role, and your equity documents govern. What follows is the tax picture the publicly described structure creates for a gastroenterologist still holding a stake.

What the Cardinal Health Deal Left Physicians Holding

A minority LLC interest with a defined potential endpoint.

Physicians who sold in the transaction realized their gains then. Physicians who continued hold minority interests in an LLC structure, and interests in an LLC taxed as a partnership report annually on K-1s: allocations of income whether or not distributed, a basis schedule that tracks the stake, and potentially multi-state schedules. Many GI physicians hold this alongside ambulatory surgery and endoscopy center interests, each its own K-1, covered in our surgery center ownership guide.

Two kinds of GI equity, two kinds of income

Platform equity is typically investment-type: no self-employment tax, quiet years, loud exit. ASC and endoscopy interests where you perform procedures sit closer to the active line. Same physician, different buckets, different rules; the netting happens on your 1040, not in the entities.

The Annual Tax Picture

Several K-1s, one calendar.

The working parts are the standard ones from our partnership hub: allocations taxed independently of cash, estimates in place of withholding for any year the equity produces income, and late K-1s making extensions routine. The multi-entity twist is coordination: state schedules from several pass-throughs, basis kept per entity, and estimates set against the combined picture rather than any single K-1.

Watch Out

Check for tax distribution clauses

A platform that allocates income while retaining cash creates the classic phantom income pattern. Whether your vehicle is obligated to distribute enough cash to cover holders' tax on allocations is written in its operating agreement. Knowing the answer changes how much slack your set-aside account needs.

The Call Right and the Buyout Year

A liquidity event with someone else's hand on the trigger.

A call right beginning at a defined anniversary means continuing holders should treat the years around it as a window in which a large capital event can arrive with limited notice. Preparation is concrete: a current basis schedule, an understanding of the character an exercise would produce, and a standing plan for the estimate and withholding response. The same buyout-year playbook, including installment features and charitable or retirement offsets, lives in our practice sale guide.

Taxstra CPA Tip

Do the buyout-year dry run now: have your CPA model the tax on a hypothetical exercise at a plausible valuation. The number will be imprecise and the exercise may be years away, but the modeling surfaces every missing document and every available offset while there is still time to fix them.

Holding Retained Equity With a Call Right Over It?

The buyout year rewards physicians whose basis, character, and estimate planning were done in advance. A Taxstra CPA can get you ready now. The initial consultation is free.

Frequently Asked Questions

Many do. GI Alliance grew as a physician-led, majority physician-owned network, and when Cardinal Health acquired roughly 71% to 73% of The GI Alliance Management, LLC in 2024, physician owners retained the minority stake. Interests in an LLC taxed as a partnership issue K-1s, though each physician's forms depend on their own holdings and the entity's classification.

Be Ready Before the Buyer Decides the Timing

When liquidity arrives on someone else's schedule, preparation is the only planning lever left. Book a free initial consultation with a Taxstra CPA.

Next Steps

Filing it yourself is fine. Optimizing it is where the money is.

Getting the form right keeps you out of trouble. The strategies below are what actually lower the bill.

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Authoritative Sources

Citations reflect U.S. federal tax law as of the article's last reviewed date.

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