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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240802259992/en/
Investors Alpha IR Group
Jackie Marcus or Nick Teves OMI@alpha-ir.com
Jonathan Leon Senior Vice President, Corporate Treasurer &
Interim Chief Financial Officer
Investor.Relations@owens-minor.com
Media Stacy Law
media@owens-minor.com
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