Owens & Minor Reports Third Quarter 2024 Financial Results

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 RICHMOND, Va.--(BUSINESS WIRE)--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 Contacts 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 Read full story here