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
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