OMI Owens and Minor Inc

Top-Line Growth Driven by Continued Solid Demand in Patient Direct and Medical Distribution

Total Debt Reduction of Nearly $200 Million in the Third Quarter

Owens & Minor, Inc. (NYSE: OMI) today reported financial results for the third quarter ended September 30, 2024.

Key Highlights:

• Consolidated revenue of $2.7 billion in the third quarter, representing year-over-year growth of 5%
• GAAP Net loss of $(13) million or $(0.17) per share, and adjusted earnings per share of $0.42 in the third quarter
• Adjusted EBITDA of $142 million in the third quarter, representing year-over-year growth of 5%
• $198 million in total debt reduction in the third quarter

“Our third quarter results demonstrated our ability to deliver on our commitments both near-term as well as on our strategic initiatives. Our Patient Direct segment continues to perform well in the growing home-based care space while we continue investing to support long-term profitable growth. In our Products & Healthcare Services segment, we continue to see solid top-line results, especially within our Medical Distribution division supported by recent wins and deepened relationships with our existing customers,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor.

Pesicka concluded, “Looking ahead we are confident in our ability to show good sequential growth and cash flow from the third to fourth quarter which positions us well as we enter 2025. Each of the segments should benefit from seasonality and investments of the last several quarters as we finish 2024 and look to the future.”

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Summary (1)

 

 

 

 

 

 

 

YTD

 

YTD

($ in millions, except per share data)

 

3Q24

 

3Q23

 

2024

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

2,721

 

$

2,592

 

$

8,005

 

$

7,678

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income, GAAP

 

$

24.2

 

$

23.8

 

$

54.2

 

$

44.5

Adj. Operating Income, Non-GAAP

 

$

84.2

 

$

84.2

 

$

217.8

 

$

193.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss, GAAP

 

$

(12.8)

 

$

(6.4)

 

$

(66.6)

 

$

(59.1)

Adj. Net Income, Non-GAAP

 

$

33.2

 

$

34.1

 

$

76.2

 

$

51.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Adj. EBITDA, Non-GAAP

 

$

141.8

 

$

134.7

 

$

384.9

 

$

356.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share, GAAP

 

$

(0.17)

 

$

(0.08)

 

$

(0.87)

 

$

(0.78)

Adj. Net Income per share, Non-GAAP

 

$

0.42

 

$

0.44

 

$

0.97

 

$

0.67

(1) Reconciliations of the differences between the non-GAAP financial measures presented in this release and their most directly comparable GAAP financial measures are included in the tables below.

Results and Business Highlights

• Consolidated revenue of $2.7 billion in the third quarter of 2024, an increase of 5% compared to the third quarter of 2023
  • Patient Direct revenue of $687 million, up 6% compared to the third quarter of 2023, driven by strength in a number of categories led by diabetes and sleep supplies
  • Products & Healthcare Services revenue of $2.0 billion, up 5% compared to the third quarter of 2023, driven primarily by strong same store sales in the Medical Distribution division along with one additional sales day
• Third quarter 2024 operating income of $24 million and Adjusted Operating Income of $84 million
  • Sequentially, third quarter 2024 GAAP operating income improved by $4 million and Adjusted Operating Income increased by $8 million
• GAAP Net loss of $(13) million and Adjusted Net Income of $33 million in the third quarter of 2024
  • Adjusted EBITDA of $142 million in the third quarter, representing year-over-year growth of 5%
• Reduced total debt by $198 million including full redemption of the 2024 senior notes

2024 Financial Outlook

The Company’s recently revised financial guidance; summarized below:

• Revenue for 2024 to be in a range of $10.6 billion to $10.8 billion
• Adjusted EBITDA for 2024 to be in a range of $540 million to $550 million
• Adjusted EPS for 2024 to be in a range of $1.45 to $1.55

The Company’s outlook for 2024 contains assumptions, including current expectations regarding the impact of general economic conditions, including inflation, and the continuation of pressure on pricing and demand in our Products & Healthcare Services segment. Key assumptions supporting the Company’s 2024 financial guidance include:

• Gross margin rate of 20.5% to 21.0%
• Interest expense of $142 to $144 million
• Adjusted effective tax rate of 27.5% to 28.5%
• Diluted weighted average shares of ~78.5 million
• Capital expenditures of $225 to $235 million
• Stable commodity prices
• FX rates as of 12/31/2023

Although the Company does provide guidance for adjusted EBITDA and adjusted EPS (which are non-GAAP financial measures), it is not able to forecast the most directly comparable measures calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of the GAAP amounts are not predictable, making it impracticable for the Company to forecast. Such elements include, but are not limited to, restructuring and acquisition charges, which could have a significant and unpredictable impact on our GAAP results. As a result, no GAAP guidance or reconciliation of the Company’s adjusted EBITDA guidance or adjusted EPS guidance is provided. The outlook is based on certain assumptions that are subject to the risk factors discussed in the Company’s filings with the SEC.

Investor Conference Call for Third Quarter 2024 Financial Results

Owens & Minor executives will host a conference call for investors and analysts on Monday, November 4, 2024, at 8:30 a.m. EDT. Participants may access the call via the toll-free dial-in number at 1-888-300-2035, or the toll dial-in number at 1-646-517-7437. The conference ID access code is 1058917.

All interested stakeholders are encouraged to access the simultaneous live webcast by visiting the investor relations page of the Owens & Minor website available at investors.owens-minor.com/events-and-presentations/. A replay of the webcast can be accessed following the presentation at the link provided above.

Safe Harbor

This release is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the SEC's Fair Disclosure Regulation. This release contains certain ''forward-looking'' statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the statements in this release regarding our future prospects and performance, including our expectations with respect to our 2024 financial performance, our Operating Model Realignment Program and other cost-saving initiatives, future indebtedness and growth, industry trends, as well as statements related to our expectations regarding the performance of our business, including the results of our Operating Model Realignment Program and our ability to address macro and market conditions. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. Investors should refer to Owens & Minor’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 20, 2024, including the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC, for a discussion of certain known risk factors that could cause the Company’s actual results to differ materially from its current estimates. These filings are available at www.owens-minor.com. Given these risks and uncertainties, Owens & Minor can give no assurance that any forward-looking statements will, in fact, transpire and, therefore, cautions investors not to place undue reliance on them. Owens & Minor specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

About Owens & Minor

Owens & Minor, Inc. (NYSE: OMI) is a Fortune 500 global healthcare solutions company providing essential products and services that support care from the hospital to the home. For over 100 years, Owens & Minor and its affiliated brands, Apria®, Byram® and HALYARD*, have helped to make each day better for the patients, providers, and communities we serve. Powered by more than 20,000 teammates worldwide, Owens & Minor delivers comfort and confidence behind the scenes so healthcare stays at the forefront. Owens & Minor exists because every day, everywhere, Life Takes Care™. For more information about Owens & Minor and our affiliated brands, visit owens-minor.com or follow us on LinkedIn and Instagram.

*Registered Trademark or Trademark of O&M Halyard or its affiliates.

 

Owens & Minor, Inc. Consolidated Statements of Operations (unaudited) (dollars in thousands, except per share data)

   

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

2024

 

2023

Net revenue

 

$

2,721,125

 

$

2,591,742

Cost of goods sold

 

 

2,161,419

 

 

2,053,244

Gross profit

 

 

559,706

 

 

538,498

Distribution, selling and administrative expenses

 

 

469,798

 

 

452,583

Acquisition-related charges and intangible amortization

 

 

21,097

 

 

30,217

Exit and realignment charges, net

 

 

28,880

 

 

30,180

Other operating expense, net

 

 

15,727

 

 

1,677

Operating income

 

 

24,204

 

 

23,841

Interest expense, net

 

 

36,554

 

 

38,127

Other expense (income), net

 

 

1,438

 

 

(3,302)

Loss before income taxes

 

 

(13,788)

 

 

(10,984)

Income tax benefit

 

 

(1,018)

 

 

(4,558)

Net loss

 

$

(12,770)

 

$

(6,426)

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

Basic

 

$

(0.17)

 

$

(0.08)

Diluted

 

$

(0.17)

 

$

(0.08)

 

Owens & Minor, Inc. Consolidated Statements of Operations (unaudited) (dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2024

 

2023

Net revenue

 

$

8,004,810

 

$

7,677,817

Cost of goods sold

 

 

6,365,421

 

 

6,122,579

Gross profit

 

 

1,639,389

 

 

1,555,238

Distribution, selling and administrative expenses

 

 

1,416,724

 

 

1,356,334

Acquisition-related charges and intangible amortization

 

 

61,395

 

 

74,609

Exit and realignment charges, net

 

 

85,530

 

 

74,817

Other operating expense, net

 

 

21,542

 

 

4,991

Operating income

 

 

54,198

 

 

44,487

Interest expense, net

 

 

108,108

 

 

121,053

Other expense (income), net

 

 

3,796

 

 

(843)

Loss before income taxes

 

 

(57,706)

 

 

(75,723)

Income tax provision (benefit)

 

 

8,864

 

 

(16,638)

Net loss

 

$

(66,570)

 

$

(59,085)

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

Basic

 

$

(0.87)

 

$

(0.78)

Diluted

 

$

(0.87)

 

$

(0.78)

 

Owens & Minor, Inc. Condensed Consolidated Balance Sheets (unaudited) (dollars in thousands)

   

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2024

 

2023

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,454

 

$

243,037

Accounts receivable, net

 

 

661,664

 

 

598,257

Merchandise inventories

 

 

1,242,453

 

 

1,110,606

Other current assets

 

 

166,967

 

 

150,890

Total current assets

 

 

2,116,538

 

 

2,102,790

Property and equipment, net

 

 

498,746

 

 

543,972

Operating lease assets

 

 

357,264

 

 

296,533

Goodwill

 

 

1,642,196

 

 

1,638,846

Intangible assets, net

 

 

313,284

 

 

361,835

Other assets, net

 

 

153,254

 

 

149,346

Total assets

 

$

5,081,282

 

$

5,093,322

Liabilities and equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

1,338,021

 

$

1,171,882

Accrued payroll and related liabilities

 

 

100,002

 

 

116,398

Current portion of long-term debt

 

 

42,626

 

 

206,904

Other current liabilities

 

 

453,517

 

 

396,701

Total current liabilities

 

 

1,934,166

 

 

1,891,885

Long-term debt, excluding current portion

 

 

1,842,348

 

 

1,890,598

Operating lease liabilities, excluding current portion

 

 

288,043

 

 

222,429

Deferred income taxes, net

 

 

25,650

 

 

41,652

Other liabilities

 

 

116,483

 

 

122,592

Total liabilities

 

 

4,206,690

 

 

4,169,156

Total equity

 

 

874,592

 

 

924,166

Total liabilities and equity

 

$

5,081,282

 

$

5,093,322

 

Owens & Minor, Inc. Consolidated Statements of Cash Flows (unaudited) (dollars in thousands)

   

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

2024

 

2023

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(12,770)

 

$

(6,426)

Adjustments to reconcile net loss to cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

61,614

 

 

73,652

Share-based compensation expense

 

 

5,680

 

 

5,742

(Benefit) provision for losses on accounts receivable

 

 

(1,862)

 

 

413

Loss (gain) on extinguishment of debt

 

 

311

 

 

(5,222)

Deferred income tax benefit

 

 

(6,090)

 

 

(9,557)

Changes in operating lease right-of-use assets and lease liabilities

 

 

3,390

 

 

1,560

Gain from sales and dispositions of property and equipment

 

 

(9,806)

 

 

(7,899)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

9,093

 

 

(13,006)

Merchandise inventories

 

 

(9,356)

 

 

81,406

Accounts payable

 

 

(39,110)

 

 

(5,821)

Net change in other assets and liabilities

 

 

24,236

 

 

39,913

Other, net

 

 

1,977

 

 

2,680

Cash provided by operating activities

 

 

27,307

 

 

157,435

Investing activities:

 

 

 

 

 

 

Additions to property and equipment

 

 

(57,652)

 

 

(47,728)

Additions to computer software

 

 

(3,866)

 

 

(2,860)

Proceeds from sales of property and equipment

 

 

17,733

 

 

17,916

Other, net

 

 

16,596

 

 

—

Cash used for investing activities

 

 

(27,189)

 

 

(32,672)

Financing activities:

 

 

 

 

 

 

Borrowings under amended Receivables Financing Agreement

 

 

619,100

 

 

127,800

Repayments under amended Receivables Financing Agreement

 

 

(619,100)

 

 

(127,800)

Repayments of debt

 

 

(199,072)

 

 

(191,888)

Other, net

 

 

(515)

 

 

8,893

Cash used for financing activities

 

 

(199,587)

 

 

(182,995)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

1,090

 

 

(711)

Net decrease in cash, cash equivalents and restricted cash

 

 

(198,379)

 

 

(58,943)

Cash, cash equivalents and restricted cash at beginning of period

 

 

273,469

 

 

309,103

Cash, cash equivalents and restricted cash at end of period(1)

 

$

75,090

 

$

250,160

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Income taxes paid, net

 

$

2,370

 

$

3,708

Interest paid

 

$

33,459

 

$

22,454

Noncash investing activity:

 

 

 

 

 

 

Unpaid purchases of property and equipment and computer software at end of period

 

$

75,176

 

$

60,870

_____________________

(1) Restricted cash as of September 30, 2024 and June 30, 2024 was $29.6 million and $29.8 million and includes amounts held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) initiatives related to wind-down costs of Fusion5, as well as restricted cash deposits received under the Master Receivables Purchase Agreement to be remitted to a third-party financial institution.

 

Owens & Minor, Inc. Consolidated Statements of Cash Flows (unaudited) (dollars in thousands)

   

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2024

 

2023

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(66,570)

 

$

(59,085)

Adjustments to reconcile net loss to cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

199,588

 

 

216,640

Share-based compensation expense

 

 

19,281

 

 

17,417

Benefit for losses on accounts receivable

 

 

(1,538)

 

 

(487)

Loss (gain) on extinguishment of debt

 

 

311

 

 

(4,379)

Deferred income tax benefit

 

 

(15,119)

 

 

(16,315)

Changes in operating lease right-of-use assets and lease liabilities

 

 

7,156

 

 

(1,517)

Gain from sales and dispositions of property and equipment

 

 

(37,682)

 

 

(26,462)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(59,349)

 

 

77,197

Merchandise inventories

 

 

(132,433)

 

 

247,057

Accounts payable

 

 

164,261

 

 

46,338

Net change in other assets and liabilities

 

 

4,719

 

 

122,867

Other, net

 

 

7,869

 

 

9,674

Cash provided by operating activities

 

 

90,494

 

 

628,945

Investing activities:

 

 

 

 

 

 

Additions to property and equipment

 

 

(148,031)

 

 

(140,478)

Additions to computer software

 

 

(8,695)

 

 

(11,089)

Proceeds from sales of property and equipment

 

 

84,759

 

 

53,645

Other, net

 

 

7,738

 

 

(418)

Cash used for investing activities

 

 

(64,229)

 

 

(98,340)

Financing activities:

 

 

 

 

 

 

Borrowings under amended Receivables Financing Agreement

 

 

1,286,400

 

 

476,000

Repayments under amended Receivables Financing Agreement

 

 

(1,286,400)

 

 

(572,000)

Repayments of debt

 

 

(211,447)

 

 

(270,189)

Other, net

 

 

(13,060)

 

 

74

Cash used for financing activities

 

 

(224,507)

 

 

(366,115)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

408

 

 

(515)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(197,834)

 

 

163,975

Cash, cash equivalents and restricted cash at beginning of period

 

 

272,924

 

 

86,185

Cash, cash equivalents and restricted cash at end of period(1)

 

$

75,090

 

$

250,160

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Income taxes paid (received), net

 

$

7,610

 

$

(6,798)

Interest paid

 

$

104,278

 

$

101,079

Noncash investing activity:

 

 

 

 

 

 

Unpaid purchases of property and equipment and computer software at end of period

 

$

75,176

 

$

60,870

_____________________

(1) Restricted cash as of September 30, 2024 and December 31, 2023 was $29.6 million and $29.9 million and includes amounts held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) initiatives related to wind-down costs of Fusion5, as well as restricted cash deposits received under the Master Receivables Purchase Agreement to be remitted to a third-party financial institution.

 

Owens & Minor, Inc. Summary Segment Information (unaudited) (dollars in thousands)

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

2024

 

2023

 

 

 

 

 

 

% of

 

 

 

 

% of

 

 

 

 

 

 

consolidated

 

 

 

 

consolidated

 

 

 

Amount

 

net revenue

 

Amount

 

net revenue

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

2,034,279

 

74.76

%

$

1,943,467

 

74.99

%

Patient Direct

 

 

686,846

 

25.24

%

 

648,275

 

25.01

%

Consolidated net revenue

 

$

2,721,125

 

100.00

%

$

2,591,742

 

100.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of segment

 

 

 

 

% of segment

 

Operating income:

 

 

 

 

net revenue

 

 

 

 

net revenue

 

Products & Healthcare Services

 

$

4,233

 

0.21

%

$

19,803

 

1.02

%

Patient Direct

 

 

79,932

 

11.64

%

 

64,435

 

9.94

%

Acquisition-related charges and intangible amortization

 

 

(21,097)

 

 

 

 

(30,217)

 

 

 

Exit and realignment charges, net

 

 

(28,880)

 

 

 

 

(30,180)

 

 

 

Litigation and related charges (1)

 

 

(9,984)

 

 

 

 

—

 

 

 

Consolidated operating income

 

$

24,204

 

 

 

$

23,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

18,382

 

 

 

$

20,021

 

 

 

Patient Direct

 

 

43,232

 

 

 

 

53,631

 

 

 

Consolidated depreciation and amortization

 

$

61,614

 

 

 

$

73,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

17,763

 

 

 

$

5,023

 

 

 

Patient Direct

 

 

43,755

 

 

 

 

45,565

 

 

 

Consolidated capital expenditures

 

$

61,518

 

 

 

$

50,588

 

 

 

(1)

Litigation and related charges are reported within Other operating expense, net in our Statements of Operations. Refer to footnote 3 in the GAAP/Non-GAAP Reconciliations below.

 

Owens & Minor, Inc. Summary Segment Information (unaudited) (dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

2023

 

 

 

 

 

 

% of

 

 

 

 

% of

 

 

 

 

 

 

consolidated

 

 

 

 

consolidated

 

 

 

Amount

 

net revenue

 

Amount

 

net revenue

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

6,019,721

 

75.20

%

$

5,789,679

 

75.41

%

Patient Direct

 

 

1,985,089

 

24.80

%

 

1,888,138

 

24.59

%

Consolidated net revenue

 

$

8,004,810

 

100.00

%

$

7,677,817

 

100.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of segment

 

 

 

 

% of segment

 

Operating income:

 

 

 

 

net revenue

 

 

 

 

net revenue

 

Products & Healthcare Services

 

$

27,187

 

0.45

%

$

24,564

 

0.42

%

Patient Direct

 

 

190,598

 

9.60

%

 

169,349

 

8.97

%

Acquisition-related charges and intangible amortization

 

 

(61,395)

 

 

 

 

(74,609)

 

 

 

Exit and realignment charges, net

 

 

(85,530)

 

 

 

 

(74,817)

 

 

 

Litigation and related charges (1)

 

 

(16,662)

 

 

 

 

—

 

 

 

Consolidated operating income

 

$

54,198

 

 

 

$

44,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

60,832

 

 

 

$

57,360

 

 

 

Patient Direct

 

 

138,756

 

 

 

 

159,280

 

 

 

Consolidated depreciation and amortization

 

$

199,588

 

 

 

$

216,640

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

29,130

 

 

 

$

17,957

 

 

 

Patient Direct

 

 

127,596

 

 

 

 

133,610

 

 

 

Consolidated capital expenditures

 

$

156,726

 

 

 

$

151,567

 

 

 

(1)

Litigation and related charges are reported within Other operating expense, net in our Statements of Operations. Refer to footnote 3 in the GAAP/Non-GAAP Reconciliations below.

 

Owens & Minor, Inc. Net Loss Per Common Share (unaudited) (dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Net loss

 

$

(12,770)

 

$

(6,426)

 

$

(66,570)

 

$

(59,085)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

77,090

 

 

76,203

 

 

76,657

 

 

75,691

Dilutive shares

 

 

—

 

 

—

 

 

—

 

 

—

Weighted average shares outstanding - diluted

 

 

77,090

 

 

76,203

 

 

76,657

 

 

75,691

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.17)

 

$

(0.08)

 

$

(0.87)

 

$

(0.78)

Diluted

 

$

(0.17)

 

$

(0.08)

 

$

(0.87)

 

$

(0.78)

Share-based awards of approximately 1.4 million and 1.5 million shares for the three and nine months ended September 30, 2024 and approximately 1.5 million and 1.6 million shares for the three and nine months ended September 30, 2023 were excluded from the calculation of net loss per diluted common share as the effect would be anti-dilutive.

Owens & Minor, Inc. GAAP/Non-GAAP Reconciliations (unaudited) (dollars in thousands, except per share data)

The following table provides a reconciliation of reported operating income, net loss and net loss per share to non-GAAP measures used by management.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2024

 

2023

 

2024

 

2023

 

Operating income, as reported (GAAP)

 

$

24,204

 

$

23,841

 

$

54,198

 

$

44,487

 

Acquisition-related charges and intangible amortization (1)

 

 

21,097

 

 

30,217

 

 

61,395

 

 

74,609

 

Exit and realignment charges, net (2)

 

 

28,880

 

 

30,180

 

 

85,530

 

 

74,817

 

Litigation and related charges (3)

 

 

9,984

 

 

—

 

 

16,662

 

 

—

 

Operating income, adjusted (non-GAAP) (Adjusted Operating Income)

 

$

84,165

 

$

84,238

 

$

217,785

 

$

193,913

 

Operating income as a percent of net revenue (GAAP)

 

 

0.89

%

 

0.92

%

 

0.68

%

 

0.58

%

Adjusted operating income as a percent of net revenue (non-GAAP)

 

 

3.09

%

 

3.25

%

 

2.72

%

 

2.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss, as reported (GAAP)

 

$

(12,770)

 

$

(6,426)

 

$

(66,570)

 

$

(59,085)

 

Pre-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related charges and intangible amortization (1)

 

 

21,097

 

 

30,217

 

 

61,395

 

 

74,609

 

Exit and realignment charges, net (2)

 

 

28,880

 

 

30,180

 

 

85,530

 

 

74,817

 

Litigation and related charges (3)

 

 

9,984

 

 

—

 

 

16,662

 

 

—

 

Other (4)

 

 

741

 

 

(4,657)

 

 

1,602

 

 

(2,685)

 

Income tax benefit on pre-tax adjustments (5)

 

 

(14,763)

 

 

(15,180)

 

 

(39,665)

 

 

(35,711)

 

One-time income tax charge (6)

 

 

—

 

 

—

 

 

17,233

 

 

—

 

Net income, adjusted (non-GAAP) (Adjusted Net Income)

 

$

33,169

 

$

34,134

 

$

76,187

 

$

51,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share, as reported (GAAP)

 

$

(0.17)

 

$

(0.08)

 

$

(0.87)

 

$

(0.78)

 

After-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related charges and intangible amortization (1)

 

 

0.20

 

 

0.28

 

 

0.60

 

 

0.74

 

Exit and realignment charges, net (2)

 

 

0.28

 

 

0.28

 

 

0.83

 

 

0.74

 

Litigation and related charges (3)

 

 

0.10

 

 

—

 

 

0.17

 

 

—

 

Other (4)

 

 

0.01

 

 

(0.04)

 

 

0.02

 

 

(0.03)

 

One-time income tax charge (6)

 

 

—

 

 

—

 

 

0.22

 

 

—

 

Net income per common share, adjusted (non-GAAP) (Adjusted EPS)

 

$

0.42

 

$

0.44

 

$

0.97

 

$

0.67

 

 

Owens & Minor, Inc. GAAP/Non-GAAP Reconciliations (unaudited), continued (dollars in thousands)

The following tables provide reconciliations of net loss and total debt to non-GAAP measures used by management.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2024

 

2023

 

2024

 

2023

Net loss, as reported (GAAP)

 

$

(12,770)

 

$

(6,426)

 

$

(66,570)

 

$

(59,085)

Income tax (benefit) provision

 

 

(1,018)

 

 

(4,558)

 

 

8,864

 

 

(16,638)

Interest expense, net

 

 

36,554

 

 

38,127

 

 

108,108

 

 

121,053

Acquisition-related charges and intangible amortization (1)

 

 

21,097

 

 

30,217

 

 

61,395

 

 

74,609

Exit and realignment charges, net (2)

 

 

28,880

 

 

30,180

 

 

85,530

 

 

74,817

Other depreciation and amortization (7)

 

 

46,342

 

 

50,909

 

 

140,501

 

 

151,635

Litigation and related charges (3)

 

 

9,984

 

 

—

 

 

16,662

 

 

—

Stock compensation (8)

 

 

5,339

 

 

4,616

 

 

17,827

 

 

15,761

LIFO charges and (credits) (9)

 

 

6,672

 

 

(3,660)

 

 

10,985

 

 

(3,253)

Other (4)

 

 

741

 

 

(4,657)

 

 

1,602

 

 

(2,685)

Adjusted EBITDA (non-GAAP)

 

$

141,821

 

$

134,748

 

$

384,904

 

$

356,214

 

 

 

 

 

 

 

September 30,

 

December 31,

 

2024

 

2023

Total debt, as reported (GAAP)

$

1,884,974

 

$

2,097,502

Cash and cash equivalents

 

(45,454)

 

 

(243,037)

Net debt (non-GAAP)

$

1,839,520

 

$

1,854,465

The following items have been excluded in our non-GAAP financial measures:

(1) Acquisition-related charges and intangible amortization for the three and nine months ended September 30, 2024 includes $6.5 million and $10.2 million of acquisition-related costs related to the expected acquisition of Rotech, which consisted primarily of legal and professional fees. For the three and nine months ended September 30, 2023, we incurred $9.4 million and $11.9 million of acquisition-related costs, consisting of costs primarily related to the acquisition of Apria, Inc., as well as amortization of intangible assets established during acquisition method of accounting for business combinations. Acquisition-related charges consist primarily of one-time costs related to acquisitions, including transaction costs necessary to consummate acquisitions, which consist of investment banking advisory fees and legal fees, director and officer tail insurance expense, as well as transition costs, such as severance and retention bonuses, information technology (IT) integration costs and professional fees. These amounts are highly dependent on the size and frequency of acquisitions and are being excluded to allow for a more consistent comparison with forecasted, current and historical results.

(2) During the three and nine months ended September 30, 2024 exit and realignment charges, net were $28.9 million and $85.5 million. These charges primarily related to our (1) Operating Model Realignment Program of $19.5 million and $75.9 million, including professional fees, severance, and other costs to streamline functions and processes, (2) costs related to IT strategic initiatives such as converting certain divisions to common IT systems of $7.6 million and $14.3 million and (3) other costs associated with strategic initiatives of $1.8 million and $2.8 million for the three and nine months ended September 30, 2024. Exit and realignment charges, net also included a $7.4 million gain on the sale of our corporate headquarters for the nine months ended September 30, 2024. During the three and nine months ended September 30, 2023 exit and realignment charges, net were $30.2 million and $74.8 million. These charges primarily related to our (1) Operating Model Realignment Program of $24.5 million and $63.9 million, including professional fees, severance and other costs to streamline functions and processes, (2) IT restructuring charges such as converting to common IT systems of $3.3 million and $6.7 million and, (3) other costs associated with strategic initiatives of $2.4 million and $4.1 million for the three and nine months ended September 30, 2023. These costs are not normal recurring, cash operating expenses necessary for the Company to operate its business on an ongoing basis.

(3) Litigation and related charges includes settlement costs and related charges of legal matters within our Apria division. These costs do not occur in the ordinary course of our business, are non-recurring/infrequent and are inherently unpredictable in timing and amount.

(4) For the three and nine months ended September 30, 2024 and 2023, other includes interest costs and net actuarial losses related to our frozen noncontributory, unfunded retirement plan for certain retirees in the United States (U.S.). Additionally, other for the three and nine months ended September 30, 2024 includes a loss on extinguishment of debt of $0.3 million and for the three and nine months ended September 30, 2023, a gain on extinguishment of debt, of $5.2 million and $4.4 million associated with the early retirement of indebtedness of $195 million and $268 million.

(5) These charges have been tax effected by determining the income tax rate depending on the amount of charges incurred in different tax jurisdictions and the deductibility of those charges for income tax purposes.

(6) One-time income tax charge, recorded during the three months ended June 30, 2024, excluding the impact of incremental interest, relates to a recent decision associated with the Notice of Proposed Adjustments received in 2020 and 2021. The matter at hand, as discussed in previously filed SEC documents, is related to past transfer pricing methodology which is no longer employed. We believe the matter will be concluded without further impact to our financial results.

(7) Other depreciation and amortization relates to property and equipment and capitalized computer software, excluding such amounts captured within exit and realignment charges, net or acquisition-related charges.

(8) Stock compensation includes share-based compensation expense related to our share-based compensation plans, excluding such amounts captured within exit and realignment charges, net or acquisition-related charges.

(9) LIFO charges and (credits) includes non-cash adjustments to merchandise inventories valued at the lower of cost or market, with the approximate cost determined by the last-in, first-out (LIFO) method for distribution inventories in the U.S. within our Products & Healthcare Services segment.

Use of Non-GAAP Measures

This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). In general, the measures exclude items and charges that (i) management does not believe reflect Owens & Minor, Inc.’s (the Company) core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company’s performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company’s performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.

OMI-CORP OMI-IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20241104535251/en/

Investors Alpha IR Group Jackie Marcus or Nick Teves OMI@alpha-ir.com Jonathan Leon Executive Vice President & Chief Financial Officer Investor.Relations@owens-minor.com Media Stacy Law media@owens-minor.com