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Owens & Minor Reports Second Quarter 2024 Financial Results

Top Line Expansion Driven by Solid Growth in Both Segments

Second Quarter Operating Cash Flow of $116 Million Drove $71 million in Debt Reduction

Expanding Patient Direct Segment with Agreement to Acquire Rotech Healthcare Holdings

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

Key Highlights:

  • Consolidated revenue of $2.7 billion in the second quarter, representing year-over-year growth of 4%
  • Net loss of $(32) million or $(0.42) per share in the second quarter
  • Adjusted EBITDA of $127 million in the second quarter, representing year-over-year growth of 12%
  • Doubled second quarter year over year Adjusted earnings per share from $0.18 to $0.36

“Our second-quarter performance is consistent with our expectations, as we are in the early stages of implementing our long-term strategy discussed at Investor Day in December 2023. Our previous investments in our Products & Healthcare Services segment yielded positive results and generated top-line growth in our Medical Distribution division. Our Patient Direct segment performed in line with our expectations, and we expect the segment to benefit from seasonality and recent organic investments during the back half of the year,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor.

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Summary (1)

 

 

 

 

 

 

 

YTD

 

YTD

($ in millions, except per share data)

 

2Q24

 

2Q23

 

2024

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

2,671

 

 

$

2,563

 

 

$

5,284

 

 

$

5,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income, GAAP

 

$

20.3

 

 

$

10.8

 

 

$

30.0

 

 

$

20.6

 

Adj. Operating Income, Non-GAAP

 

$

76.3

 

 

$

62.0

 

 

$

133.6

 

 

$

109.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss, GAAP

 

$

(31.9

)

 

$

(28.2

)

 

$

(53.8

)

 

$

(52.7

)

Adj. Net Income, Non-GAAP

 

$

28.2

 

 

$

14.2

 

 

$

43.0

 

 

$

17.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adj. EBITDA, Non-GAAP

 

$

126.8

 

 

$

112.8

 

 

$

243.1

 

 

$

221.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share, GAAP

 

$

(0.42

)

 

$

(0.37

)

 

$

(0.70

)

 

$

(0.70

)

Adj. Net Income per share, Non-GAAP

 

$

0.36

 

 

$

0.18

 

 

$

0.55

 

 

$

0.23

 

(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 second quarter of 2024, an increase of 4% compared to the second quarter of 2023
    • Patient Direct revenue of $660 million, up 4% compared to the second quarter of 2023 driven by continued strong growth in diabetes and sleep supplies
    • Products & Healthcare Services revenue of $2.0 billion, up 4% compared to the second quarter of 2023 driven by strong same store sales and new wins in our Medical Distribution division
  • Second quarter 2024 operating income of $20.3 million and Adjusted Operating Income of $76.3 million
    • Operating income grew by 87% and Adjusted Operating Income grew by 23% compared to the prior year
  • Net loss of $(32) million and Adjusted Net Income of $28 million in the second quarter of 2024
    • Adjusted EBITDA of $127 million in the second quarter, representing year-over-year growth of 12%
  • Operating cash flow for the second quarter of 2024 was $116 million
    • Increased by $169 million as compared to the first quarter of 2024
    • Enabled $71 million debt reduction during the second quarter

Tax Matter

In the second quarter of 2024, the Company recorded a one-time income tax charge of $17 million (or $0.22 per share) related to a recent decision associated with Notices of Proposed Adjustments received in 2020 and 2021. This was communicated to the Company in late June 2024. Due to the nature of this charge, this item is included in our GAAP to Non-GAAP reconciliations. The matter at hand, as discussed in previously filed SEC documents, is related to past transfer pricing methodology, which is no longer employed. There is an expected related cash payment to be made in the second half of the year in the range of $30-$35 million. The Company believes the matter will be concluded without further impact to its financial results.

2024 Financial Outlook

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

  • Revenue for 2024 to be in a range of $10.5 billion to $10.9 billion
  • Adjusted EBITDA for 2024 to be in a range of $550 million to $590 million
  • Adjusted EPS for 2024 to be in a range of $1.40 to $1.70

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 21.0% to 21.5%
  • Interest expense of $141 to $146 million
  • Adjusted effective tax rate of 27.5% to 28.5%
  • Diluted weighted average shares of ~78.5 million
  • Capital expenditures of $220 to $240 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 Second Quarter 2024 Financial Results

Owens & Minor executives will host a conference call for investors and analysts on Friday, August 2, 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 June 30,

 

 

2024

 

2023

Net revenue

 

$

2,671,006

 

 

$

2,563,226

 

Cost of goods sold

 

 

2,126,853

 

 

 

2,043,794

 

Gross profit

 

 

544,153

 

 

 

519,432

 

Distribution, selling and administrative expenses

 

 

469,313

 

 

 

455,030

 

Acquisition-related charges and intangible amortization

 

 

19,985

 

 

 

22,203

 

Exit and realignment charges, net

 

 

29,293

 

 

 

28,963

 

Other operating expense, net

 

 

5,263

 

 

 

2,397

 

Operating income

 

 

20,299

 

 

 

10,839

 

Interest expense, net

 

 

35,899

 

 

 

40,728

 

Other expense, net

 

 

1,205

 

 

 

1,072

 

Loss before income taxes

 

 

(16,805

)

 

 

(30,961

)

Income tax provision (benefit)

 

 

15,108

 

 

 

(2,720

)

Net loss

 

$

(31,913

)

 

$

(28,241

)

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

Basic

 

$

(0.42

)

 

$

(0.37

)

Diluted

 

$

(0.42

)

 

$

(0.37

)

Owens & Minor, Inc.

Consolidated Statements of Operations (unaudited)

(i) (dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

2024

 

2023

Net revenue

 

$

5,283,686

 

 

$

5,086,075

 

Cost of goods sold

 

 

4,204,003

 

 

 

4,069,336

 

Gross profit

 

 

1,079,683

 

 

 

1,016,739

 

Distribution, selling and administrative expenses

 

 

946,926

 

 

 

903,752

 

Acquisition-related charges and intangible amortization

 

 

40,298

 

 

 

44,392

 

Exit and realignment charges, net

 

 

56,649

 

 

 

44,637

 

Other operating expense, net

 

 

5,815

 

 

 

3,312

 

Operating income

 

 

29,995

 

 

 

20,646

 

Interest expense, net

 

 

71,554

 

 

 

82,926

 

Other expense, net

 

 

2,358

 

 

 

2,458

 

Loss before income taxes

 

 

(43,917

)

 

 

(64,738

)

Income tax benefit (provision)

 

 

9,882

 

 

 

(12,079

)

Net loss

 

$

(53,799

)

 

$

(52,659

)

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

Basic

 

$

(0.70

)

 

$

(0.70

)

Diluted

 

$

(0.70

)

 

$

(0.70

)

Owens & Minor, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2024

 

2023

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

243,671

 

$

243,037

Accounts receivable, net

 

 

662,444

 

 

598,257

Merchandise inventories

 

 

1,231,413

 

 

1,110,606

Other current assets

 

 

189,542

 

 

150,890

Total current assets

 

 

2,327,070

 

 

2,102,790

Property and equipment, net

 

 

493,075

 

 

543,972

Operating lease assets

 

 

368,471

 

 

296,533

Goodwill

 

 

1,634,723

 

 

1,638,846

Intangible assets, net

 

 

326,173

 

 

361,835

Other assets, net

 

 

154,492

 

 

149,346

Total assets

 

$

5,304,004

 

$

5,093,322

Liabilities and equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

1,381,871

 

$

1,171,882

Accrued payroll and related liabilities

 

 

108,103

 

 

116,398

Current portion of long-term debt

 

 

210,913

 

 

206,904

Other current liabilities

 

 

430,298

 

 

396,701

Total current liabilities

 

 

2,131,185

 

 

1,891,885

Long-term debt, excluding current portion

 

 

1,871,800

 

 

1,890,598

Operating lease liabilities, excluding current portion

 

 

297,728

 

 

222,429

Deferred income taxes, net

 

 

28,900

 

 

41,652

Other liabilities

 

 

113,689

 

 

122,592

Total liabilities

 

 

4,443,302

 

 

4,169,156

Total equity

 

 

860,702

 

 

924,166

Total liabilities and equity

 

$

5,304,004

 

$

5,093,322

Owens & Minor, Inc.

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

2024

 

2023

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(31,913

)

 

$

(28,241

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

63,879

 

 

 

72,062

 

Share-based compensation expense

 

 

6,735

 

 

 

5,212

 

Provision (benefit) for losses on accounts receivable

 

 

143

 

 

 

(379

)

Loss on extinguishment of debt

 

 

 

 

 

279

 

Deferred income tax benefit

 

 

(5,370

)

 

 

(6,167

)

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

 

 

2,627

 

 

 

(2,852

)

Gain on sale and dispositions of property and equipment

 

 

(12,257

)

 

 

(10,294

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

6,702

 

 

 

84,963

 

Merchandise inventories

 

 

(87,665

)

 

 

119,819

 

Accounts payable

 

 

150,445

 

 

 

29,077

 

Net change in other assets and liabilities

 

 

20,100

 

 

 

46,471

 

Other, net

 

 

2,723

 

 

 

3,162

 

Cash provided by operating activities

 

 

116,149

 

 

 

313,112

 

Investing activities:

 

 

 

 

 

 

Additions to property and equipment

 

 

(44,382

)

 

 

(46,600

)

Additions to computer software

 

 

(1,418

)

 

 

(2,889

)

Proceeds from sale of property and equipment

 

 

17,488

 

 

 

18,423

 

Other, net

 

 

(6,858

)

 

 

(418

)

Cash used for investing activities

 

 

(35,170

)

 

 

(31,484

)

Financing activities:

 

 

 

 

 

 

Borrowings under amended Receivables Financing Agreement

 

 

462,300

 

 

 

116,100

 

Repayments under amended Receivables Financing Agreement

 

 

(528,000

)

 

 

(116,100

)

Repayments of term loans

 

 

(7,750

)

 

 

(51,801

)

Other, net

 

 

(4,790

)

 

 

(3,830

)

Cash used for financing activities

 

 

(78,240

)

 

 

(55,631

)

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

 

 

(64

)

 

 

(88

)

Net increase in cash, cash equivalents and restricted cash

 

 

2,675

 

 

 

225,909

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

270,794

 

 

 

83,194

 

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

 

$

273,469

 

 

$

309,103

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Income taxes paid (received), net

 

$

2,875

 

 

$

(12,911

)

Interest paid

 

$

52,608

 

 

$

46,089

 

Noncash investing activity:

 

 

 

 

 

 

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

 

$

76,373

 

 

$

65,808

 

(1) Restricted cash as of June 30, 2024 and March 31, 2024 was $29.8 million and $25.9 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.

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

2024

 

2023

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(53,799

)

 

$

(52,659

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

137,974

 

 

 

142,988

 

Share-based compensation expense

 

 

13,601

 

 

 

11,675

 

Provision (benefit) for losses on accounts receivable

 

 

324

 

 

 

(900

)

Loss on extinguishment of debt

 

 

 

 

 

843

 

Deferred income tax benefit

 

 

(9,029

)

 

 

(6,758

)

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

 

 

3,766

 

 

 

(3,077

)

Gain on sale and dispositions of property and equipment

 

 

(27,876

)

 

 

(18,563

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(68,442

)

 

 

90,203

 

Merchandise inventories

 

 

(123,077

)

 

 

165,651

 

Accounts payable

 

 

203,371

 

 

 

52,159

 

Net change in other assets and liabilities

 

 

(19,517

)

 

 

82,954

 

Other, net

 

 

5,891

 

 

 

6,994

 

Cash provided by operating activities

 

 

63,187

 

 

 

471,510

 

Investing activities:

 

 

 

 

 

 

Additions to property and equipment

 

 

(90,379

)

 

 

(92,750

)

Additions to computer software

 

 

(4,829

)

 

 

(8,229

)

Proceeds from sale of property and equipment

 

 

67,026

 

 

 

35,729

 

Other, net

 

 

(8,858

)

 

 

(418

)

Cash used for investing activities

 

 

(37,040

)

 

 

(65,668

)

Financing activities:

 

 

 

 

 

 

Borrowings under amended Receivables Financing Agreement

 

 

667,300

 

 

 

348,200

 

Repayments under amended Receivables Financing Agreement

 

 

(667,300

)

 

 

(444,200

)

Repayments of term loans

 

 

(12,375

)

 

 

(78,301

)

Other, net

 

 

(12,545

)

 

 

(8,819

)

Cash used for financing activities

 

 

(24,920

)

 

 

(183,120

)

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

 

 

(682

)

 

 

196

 

Net increase in cash, cash equivalents and restricted cash

 

 

545

 

 

 

222,918

 

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)

 

$

273,469

 

 

$

309,103

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Income taxes paid (received), net

 

$

5,240

 

 

$

(10,506

)

Interest paid

 

$

70,819

 

 

$

78,625

 

Noncash investing activity:

 

 

 

 

 

 

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

 

$

76,373

 

 

$

65,808

 

(1) Restricted cash as of June 30, 2024 and December 31, 2023 was $29.8 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 June 30,

 

 

 

2024

 

2023

 

 

 

 

 

 

% of

 

 

 

 

% of

 

 

 

 

 

 

consolidated

 

 

 

 

consolidated

 

 

 

Amount

 

net revenue

 

Amount

 

net revenue

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

2,010,605

 

 

75.28

%

$

1,930,723

 

 

75.32

%

Patient Direct

 

 

660,401

 

 

24.72

%

 

632,503

 

 

24.68

%

Consolidated net revenue

 

$

2,671,006

 

 

100.00

%

$

2,563,226

 

 

100.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of segment

 

 

 

 

% of segment

 

Operating income:

 

 

 

 

net revenue

 

 

 

 

net revenue

 

Products & Healthcare Services

 

$

11,468

 

 

0.57

%

$

2,940

 

 

0.15

%

Patient Direct

 

 

64,787

 

 

9.81

%

 

59,065

 

 

9.34

%

Acquisition-related charges and intangible amortization

 

 

(19,985

)

 

 

 

 

(22,203

)

 

 

 

Exit and realignment charges, net

 

 

(29,293

)

 

 

 

 

(28,963

)

 

 

 

Litigation and related charges (1)

 

 

(6,678

)

 

 

 

 

 

 

 

 

Consolidated operating income

 

$

20,299

 

 

 

 

$

10,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

19,084

 

 

 

 

$

18,772

 

 

 

 

Patient Direct

 

 

44,795

 

 

 

 

 

53,290

 

 

 

 

Consolidated depreciation and amortization

 

$

63,879

 

 

 

 

$

72,062

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

3,117

 

 

 

 

$

6,602

 

 

 

 

Patient Direct

 

 

42,683

 

 

 

 

 

42,887

 

 

 

 

Consolidated capital expenditures

 

$

45,800

 

 

 

 

$

49,489

 

 

 

 

(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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2024

 

2023

 

 

 

 

 

 

% of

 

 

 

 

% of

 

 

 

 

 

 

consolidated

 

 

 

 

consolidated

 

 

 

Amount

 

net revenue

 

Amount

 

net revenue

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

3,985,442

 

 

75.43

%

$

3,846,212

 

 

75.62

%

Patient Direct

 

 

1,298,244

 

 

24.57

%

 

1,239,863

 

 

24.38

%

Consolidated net revenue

 

$

5,283,686

 

 

100.00

%

$

5,086,075

 

 

100.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% of segment

 

 

 

 

% of segment

 

Operating income:

 

 

 

 

net revenue

 

 

 

 

net revenue

 

Products & Healthcare Services

 

$

22,954

 

 

0.58

%

$

4,761

 

 

0.12

%

Patient Direct

 

 

110,666

 

 

8.52

%

 

104,914

 

 

8.46

%

Acquisition-related charges and intangible amortization

 

 

(40,298

)

 

 

 

 

(44,392

)

 

 

 

Exit and realignment charges, net

 

 

(56,649

)

 

 

 

 

(44,637

)

 

 

 

Litigation and related charges (1)

 

 

(6,678

)

 

 

 

 

 

 

 

 

Consolidated operating income

 

$

29,995

 

 

 

 

$

20,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

42,450

 

 

 

 

$

37,338

 

 

 

 

Patient Direct

 

 

95,524

 

 

 

 

 

105,650

 

 

 

 

Consolidated depreciation and amortization

 

$

137,974

 

 

 

 

$

142,988

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Products & Healthcare Services

 

$

11,367

 

 

 

 

$

12,934

 

 

 

 

Patient Direct

 

 

83,841

 

 

 

 

 

88,045

 

 

 

 

Consolidated capital expenditures

 

$

95,208

 

 

 

 

$

100,979

 

 

 

 

(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 June 30,

 

Six Months Ended June 30,

 

 

2024

 

2023

 

2024

 

2023

Net loss

 

$

(31,913

)

 

$

(28,241

)

 

$

(53,799

)

 

$

(52,659

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

76,727

 

 

 

75,801

 

 

 

76,526

 

 

 

75,559

 

Dilutive shares

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

 

76,727

 

 

 

75,801

 

 

 

76,526

 

 

 

75,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.42

)

 

$

(0.37

)

 

$

(0.70

)

 

$

(0.70

)

Diluted

 

$

(0.42

)

 

$

(0.37

)

 

$

(0.70

)

 

$

(0.70

)

Share-based awards of approximately 1.6 million shares for the three and six months ended June 30, 2024 and approximately 1.8 million and 1.7 million shares for the three and six months ended June 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 June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

2023

 

2024

 

2023

 

Operating income, as reported (GAAP)

 

$

20,299

 

 

$

10,839

 

 

$

29,995

 

 

$

20,646

 

 

Acquisition-related charges and intangible amortization (1)

 

 

19,985

 

 

 

22,203

 

 

 

40,298

 

 

 

44,392

 

 

Exit and realignment charges, net (2)

 

 

29,293

 

 

 

28,963

 

 

 

56,649

 

 

 

44,637

 

 

Litigation and related charges (3)

 

 

6,678

 

 

 

 

 

 

6,678

 

 

 

 

 

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

 

$

76,255

 

 

$

62,005

 

 

$

133,620

 

 

$

109,675

 

 

Operating income as a percent of net revenue (GAAP)

 

 

0.76

 

%

 

0.42

 

%

 

0.57

 

%

 

0.41

 

%

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

 

 

2.85

 

%

 

2.42

 

%

 

2.53

 

%

 

2.16

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss, as reported (GAAP)

 

$

(31,913

)

 

$

(28,241

)

 

$

(53,799

)

 

$

(52,659

)

 

Pre-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related charges and intangible amortization (1)

 

 

19,985

 

 

 

22,203

 

 

 

40,298

 

 

 

44,392

 

 

Exit and realignment charges, net (2)

 

 

29,293

 

 

 

28,963

 

 

 

56,649

 

 

 

44,637

 

 

Litigation and related charges (3)

 

 

6,678

 

 

 

 

 

 

6,678

 

 

 

 

 

Other (4)

 

 

430

 

 

 

843

 

 

 

861

 

 

 

1,972

 

 

Income tax benefit on pre-tax adjustments (5)

 

 

(13,553

)

 

 

(9,551

)

 

 

(24,901

)

 

 

(20,530

)

 

One-time income tax charge (6)

 

 

17,233

 

 

 

 

 

 

17,233

 

 

 

 

 

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

 

$

28,153

 

 

$

14,217

 

 

$

43,019

 

 

$

17,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share, as reported (GAAP)

 

$

(0.42

)

 

$

(0.37

)

 

$

(0.70

)

 

$

(0.70

)

 

After-tax adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related charges and intangible amortization (1)

 

 

0.19

 

 

 

0.24

 

 

 

0.39

 

 

 

0.45

 

 

Exit and realignment charges, net (2)

 

 

0.29

 

 

 

0.30

 

 

 

0.55

 

 

 

0.46

 

 

Litigation and related charges (3)

 

 

0.08

 

 

 

 

 

 

0.08

 

 

 

 

 

Other (4)

 

 

 

 

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

One-time income tax charge (6)

 

 

0.22

 

 

 

 

 

 

0.22

 

 

 

 

 

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

 

$

0.36

 

 

$

0.18

 

 

$

0.55

 

 

$

0.23

 

 

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 June 30,

 

Six Months Ended June 30,

 

 

2024

 

2023

 

2024

 

2023

Net loss, as reported (GAAP)

 

$

(31,913

)

 

$

(28,241

)

 

$

(53,799

)

 

$

(52,659

)

Income tax provision (benefit)

 

 

15,108

 

 

 

(2,720

)

 

 

9,882

 

 

 

(12,079

)

Interest expense, net

 

 

35,899

 

 

 

40,728

 

 

 

71,554

 

 

 

82,926

 

Acquisition-related charges and intangible amortization (1)

 

 

19,985

 

 

 

22,203

 

 

 

40,298

 

 

 

44,392

 

Exit and realignment charges, net (2)

 

 

29,293

 

 

 

28,963

 

 

 

56,649

 

 

 

44,637

 

Other depreciation and amortization (7)

 

 

46,146

 

 

 

50,737

 

 

 

94,160

 

 

 

100,726

 

Litigation and related charges (3)

 

 

6,678

 

 

 

 

 

 

6,678

 

 

 

 

Stock compensation (8)

 

 

6,312

 

 

 

4,796

 

 

 

12,488

 

 

 

11,146

 

LIFO (credits) and charges (9)

 

 

(1,124

)

 

 

(4,534

)

 

 

4,314

 

 

 

406

 

Other (4)

 

 

430

 

 

 

843

 

 

 

861

 

 

 

1,972

 

Adjusted EBITDA (non-GAAP)

 

$

126,814

 

 

$

112,775

 

 

$

243,085

 

 

$

221,467

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

2024

 

2023

Total debt, as reported (GAAP)

$

2,082,713

 

 

$

2,097,502

 

Cash and cash equivalents

 

(243,671

)

 

 

(243,037

)

Net debt (non-GAAP)

$

1,839,042

 

 

$

1,854,465

 

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

(1) Acquisition-related charges and intangible amortization includes $3.7 million of acquisition-related charges for the three and six months ended June 30, 2024 consisting of costs related to the pending Rotech transaction and $1.3 million and $2.5 million for the three and six months ended June 30, 2023 consisting primarily of costs 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 the acquisition, which consist of investment banking advisory fees and legal fees and 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 six months ended June 30, 2024 exit and realignment charges, net were $29.3 million and $56.6 million. These charges primarily related to our (1) Operating Model Realignment Program of $22.9 million and $56.4 million, 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 $5.4 million and $6.7 million and (3) other costs associated with strategic initiatives of $1.0 million and $1.1 million for the three and six months ended June 30, 2024. Exit and realignment charges, net also included a $7.4 million gain on the sale of our corporate headquarters for the six months ended June 30, 2024. During the three and six months ended June 30, 2023 exit and realignment charges, net were $29.0 million and $44.6 million. These charges primarily related to our (1) Operating Model Realignment Program of $24.3 million and $39.3 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 $3.4 million and $3.5 million and, (3) other costs associated with strategic initiatives of $1.3 million and $1.8 million for the three and six months ended June 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 six months ended June 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, for the three and six months ended June 30, 2023 other includes loss on extinguishment of debt of $0.3 million and $0.8 million associated with the early retirement of indebtedness of $48.0 million and $73.0 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 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 (credits) and charges 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

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