Owens & Minor Reports Fourth Quarter and Full Year 2023 Financial Results

Owens & Minor, Inc. reported financial results for the fourth quarter and year ended December 31, 2023.

  • Business Delivered Strong Operating Margin Improvement in Fourth Quarter
  • Robust Full Year Operating Cash Flow Generation Enabled Significant Debt Reduction

RICHMOND, Va.--(BUSINESS WIRE)-- Owens & Minor, Inc. (NYSE: OMI) today reported financial results for the fourth quarter and year ended December 31, 2023.

Full Year 2023 Key Highlights:

  • Consolidated revenue of $10.3 billion
  • Delivered $741 million of operating cash flow
  • Reduced total debt by $403 million and reduced net debt by $577 million
  • Net loss per common share of $(0.54) and adjusted net income per common share of $1.36

“We once again delivered on our commitments and had a strong finish to 2023, demonstrated by our top-line growth across both business segments, robust profit growth and exceptional operating cash flow which allowed us to further strengthen our balance sheet,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor. “Our Patient Direct segment continued to outperform the market, showcasing the ongoing effectiveness of our go-to-market strategies on top of the healthy demand for home-based care. Our Products and Healthcare Services segment displayed meaningful sequential revenue and profit improvements resulting from our intense focus and execution of our strategic initiatives."

Financial Summary (1)

             

($ in millions, except per share data)

4Q23

 

4Q22

 

FYE

2023

 

FYE

2022

               

Revenue

$2,656

 

$2,551

 

$10,334

 

$9,955

               

Operating income (loss), GAAP

$60.0

 

$(53.5)

 

$104.5

 

$142.9

Adj. Operating Income, Non-GAAP

$110.8

 

$67.2

 

$304.7

 

$369.1

               

Net income (loss), GAAP

$17.8

 

$(58.0)

 

$(41.3)

 

$22.4

Adj. Net Income, Non-GAAP

$53.6

 

$21.7

 

$105.5

 

$184.2

               

Adj. EBITDA, Non-GAAP

$169.6

 

$130.4

 

$525.8

 

$543.7

               

Net income (loss) per common share, GAAP

$0.23

 

$(0.77)

 

$(0.54)

 

$0.29

Adj. Net Income per share, Non-GAAP

$0.69

 

$0.28

 

$1.36

 

$2.42

(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.

Fourth Quarter Results and Business Highlights

  • Consolidated revenue of $2.7 billion in the fourth quarter of 2023, an increase of 4% as compared to the fourth quarter of 2022
    • Patient Direct revenue of $664 million, up 8% compared to the fourth quarter of 2022 from strong growth in a number of product categories
    • Products & Healthcare Services revenue of nearly $2 billion, up 3% compared to the fourth quarter of 2022, with growth in both the Medical Distribution and Global Products divisions
  • Fourth quarter 2023 operating income of $60 million and Adjusted Operating Income of $111 million
    • On a GAAP basis operating income margin expanded by 436 basis points while adjusted operating income margin expanded by 154 basis points. This expansion was primarily driven by a larger income contribution from the Patient Direct segment.
    • Both Patient Direct and Products & Healthcare Services delivered increases in Segment Income both year over year and sequentially from the third quarter to the fourth quarter of 2023
  • Generated $112 million of operating cash flow in the fourth quarter driven by strong working capital improvement and operating results
  • Reduced total debt by $49 million and net debt by $76 million for the fourth quarter

2024 Financial Outlook

The Company issued its outlook for 2024; 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 Fourth Quarter and Full Year 2023 Financial Results

Owens & Minor executives will host a conference call for investors and analysts on Tuesday, February 20, 2024, at 8:30 a.m. ET. 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 its 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, expected to be filed with the SEC on or around 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 December 31,

   

2023

 

2022

 

Net revenue

 

$

2,656,150

 

$

2,551,107

 

Cost of goods sold

   

2,086,227

   

2,143,987

 

Gross margin

   

569,923

   

407,120

 

Distribution, selling and administrative expenses

   

457,225

   

432,467

 

Acquisition-related charges and intangible amortization

   

26,427

   

26,345

 

Exit and realignment charges

   

24,310

   

2,018

 

Other operating expense (income), net

   

1,940

   

(231

)

Operating income (loss)

   

60,021

   

(53,479

)

Interest expense, net

   

36,863

   

41,164

 

Loss on extinguishment of debt

   

860

   

 

Other expense, net

   

1,301

   

783

 

Income (loss) before income taxes

   

20,997

   

(95,426

)

Income tax provision (benefit)

   

3,213

   

(37,435

)

Net income (loss)

 

$

17,784

 

$

(57,991

)

             

Net income (loss) per common share:

           

Basic

 

$

0.23

 

$

(0.77

)

Diluted

 

$

0.23

 

$

(0.77

)

Owens & Minor, Inc.

Consolidated Statements of Operations (unaudited)

(dollars in thousands, except per share data)

             
   

Year Ended December 31,

   

2023

   

2022

 

Net revenue

 

$

10,333,967

   

$

9,955,475

 

Cost of goods sold

   

8,208,806

     

8,129,124

 

Gross margin

   

2,125,161

     

1,826,351

 

Distribution, selling and administrative expenses

   

1,813,559

     

1,554,821

 

Acquisition-related charges and intangible amortization

   

101,037

     

126,972

 

Exit and realignment charges

   

99,127

     

6,897

 

Other operating expense (income), net

   

6,930

     

(5,252

)

Operating income

   

104,508

     

142,913

 

Interest expense, net

   

157,915

     

128,891

 

Gain on extinguishment of debt

   

(3,518

)

   

 

Other expense, net

   

4,837

     

3,131

 

(Loss) income before income taxes

   

(54,726

)

   

10,891

 

Income tax benefit

   

(13,425

)

   

(11,498

)

Net (loss) income

 

$

(41,301

)

 

$

22,389

 
             

Net (loss) income per common share:

           

Basic

 

$

(0.54

)

 

$

0.30

 

Diluted

 

$

(0.54

)

 

$

0.29

 

Owens & Minor, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(dollars in thousands)

           
             
   

December 31,

 

December 31,

   

2023

 

2022

Assets

           

Current assets

           

Cash and cash equivalents

 

$

243,037

 

$

69,467

Accounts receivable, net

   

598,257

   

763,497

Merchandise inventories

   

1,110,606

   

1,333,585

Other current assets

   

150,890

   

128,636

Total current assets

   

2,102,790

   

2,295,185

Property and equipment, net

   

543,972

   

578,269

Operating lease assets

   

296,533

   

280,665

Goodwill

   

1,638,846

   

1,636,705

Intangible assets, net

   

361,835

   

445,042

Other assets, net

   

149,346

   

150,417

Total assets

 

$

5,093,322

 

$

5,386,283

Liabilities and equity

           

Current liabilities

           

Accounts payable

 

$

1,171,882

 

$

1,147,414

Accrued payroll and related liabilities

   

116,398

   

93,296

Current portion of long-term debt

   

206,904

   

17,906

Other current liabilities

   

396,701

   

307,850

Total current liabilities

   

1,891,885

   

1,566,466

Long-term debt, excluding current portion

   

1,890,598

   

2,482,968

Operating lease liabilities, excluding current portion

   

222,429

   

215,469

Deferred income taxes, net

   

41,652

   

60,833

Other liabilities

   

122,592

   

114,943

Total liabilities

   

4,169,156

   

4,440,679

Total equity

   

924,166

   

945,604

Total liabilities and equity

 

$

5,093,322

 

$

5,386,283

Owens & Minor, Inc.

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)

             
   

Three Months Ended December 31,

   

2023

   

2022

 

Operating activities:

           

Net income (loss)

 

$

17,784

   

$

(57,991

)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

           

Depreciation and amortization

   

70,737

     

73,229

 

Share-based compensation expense

   

5,801

     

5,228

 

Loss on extinguishment of debt

   

860

     

 

Deferred income tax benefit

   

(7,333

)

   

(29,352

)

Benefit for losses on accounts receivable

   

(927

)

   

(1,974

)

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

   

1,470

     

(569

)

Gain on sale and dispositions of property and equipment

   

(8,420

)

   

(9,258

)

Changes in operating assets and liabilities:

           

Accounts receivable

   

89,384

     

(6,316

)

Merchandise inventories

   

(22,719

)

   

173,382

 

Accounts payable

   

(15,341

)

   

(16,772

)

Net change in other assets and liabilities

   

(22,497

)

   

(46,121

)

Other, net

   

2,966

     

3,475

 

Cash provided by operating activities

   

111,765

     

86,961

 

Investing activities:

           

Additions to property and equipment

   

(50,392

)

   

(48,815

)

Additions to computer software

   

(5,933

)

   

(2,619

)

Proceeds from sale of property and equipment

   

17,929

     

18,663

 

Other, net

   

(518

)

   

 

Cash used for investing activities

   

(38,914

)

   

(32,771

)

Financing activities:

           

Borrowings under amended Receivables Financing Agreement

   

     

324,600

 

Repayments under amended Receivables Financing Agreement

   

     

(385,600

)

Repayments of debt

   

(50,504

)

   

(1,500

)

Other, net

   

(711

)

   

(980

)

Cash used for financing activities

   

(51,215

)

   

(63,480

)

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

   

1,128

     

2,267

 

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

   

22,764

     

(7,023

)

Cash, cash equivalents and restricted cash at beginning of period

   

250,160

     

93,208

 

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

 

$

272,924

   

$

86,185

 

Supplemental disclosure of cash flow information:

           

Income taxes paid, net

 

$

515

   

$

405

 

Interest paid

 

$

52,168

   

$

45,133

 

Noncash investing activity:

           

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

 

$

77,279

   

$

67,852

 
________________________________
(1) Restricted cash as of December 31, 2023 and September 30, 2023 was $29.9 million and $35.0 million, 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. Restricted cash as of December 31, 2023 and September 30, 2023 also includes $13.5 million and $18.6 million of 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)

             
   

Years Ended December 31,

   

2023

   

2022

 

Operating activities:

           

Net (loss) income

 

$

(41,301

)

 

$

22,389

 

Adjustments to reconcile net (loss) income to cash provided by operating activities:

           

Depreciation and amortization

   

287,377

     

228,667

 

Share-based compensation expense

   

23,218

     

20,993

 

Gain on extinguishment of debt

   

(3,518

)

   

 

Deferred income tax benefit

   

(23,648

)

   

(26,361

)

(Benefit) provision for losses on accounts receivable

   

(1,414

)

   

3,315

 

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

   

(47

)

   

353

 

Gain on sale and dispositions of property and equipment

   

(34,882

)

   

(26,260

)

Changes in operating assets and liabilities, net of acquisitions:

           

Accounts receivable

   

166,581

     

1,101

 

Merchandise inventories

   

224,338

     

166,559

 

Accounts payable

   

30,997

     

13,652

 

Net change in other assets and liabilities

   

100,370

     

(91,544

)

Other, net

   

12,639

     

12,142

 

Cash provided by operating activities

   

740,710

     

325,006

 

Investing activities:

           

Acquisition, net of cash acquired

   

     

(1,684,607

)

Additions to property and equipment

   

(190,870

)

   

(158,090

)

Additions to computer software

   

(17,022

)

   

(8,492

)

Proceeds from sale of property and equipment

   

71,574

     

48,383

 

Other, net

   

(936

)

   

(1,670

)

Cash used for investing activities

   

(137,254

)

   

(1,804,476

)

Financing activities:

           

Borrowings under amended Receivables Financing Agreement

   

476,000

     

1,022,300

 

Repayments under amended Receivables Financing Agreement

   

(572,000

)

   

(1,156,300

)

Repayments of debt

   

(320,693

)

   

(4,500

)

Proceeds from issuance of debt

   

     

1,691,000

 

Borrowings under revolving credit facility, net and Receivables Financing Agreement

   

     

30,000

 

Financing costs paid

   

     

(42,602

)

Other, net

   

(637

)

   

(42,793

)

Cash (used for) provided by financing activities

   

(417,330

)

   

1,497,105

 

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

   

613

     

(3,485

)

Net increase in cash, cash equivalents and restricted cash

   

186,739

     

14,150

 

Cash, cash equivalents and restricted cash at beginning of period

   

86,185

     

72,035

 

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

 

$

272,924

   

$

86,185

 

Supplemental disclosure of cash flow information:

           

Income taxes (received) paid, net

 

$

(6,283

)

 

$

33,973

 

Interest paid

 

$

153,247

   

$

107,022

 

Noncash investing activity:

           

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

 

$

77,279

   

$

67,852

 
________________________________
(1) Restricted cash as of December 31, 2023 and 2022 was $29.9 million and $16.7 million, primarily held in an escrow account as required by the CMS in conjunction with the BPCI initiatives related to wind-down costs of Fusion5. Restricted cash as of December 31, 2023 also includes $13.5 million of 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 December 31,

 
   

2023

 

2022

 
         

% of

       

% of

 
         

consolidated

       

consolidated

 
   

Amount

 

net revenue

 

Amount

 

net revenue

 

Net revenue:

                     

Products & Healthcare Services

 

$

1,991,716

   

74.99

%

$

1,933,612

   

75.80

%

Patient Direct

   

664,434

   

25.01

%

 

617,495

   

24.20

%

Consolidated net revenue

 

$

2,656,150

   

100.00

%

$

2,551,107

   

100.00

%

                       
         

% of segment

       

% of segment

 

Operating income:

       

net revenue

       

net revenue

 

Products & Healthcare Services

 

$

33,244

   

1.67

%

$

1,202

   

0.06

%

Patient Direct

   

77,514

   

11.67

%

 

65,957

   

10.68

%

Acquisition-related charges and intangible amortization

   

(26,427

)

       

(26,345

)

     

Exit and realignment charges

   

(24,310

)

       

(2,018

)

     

Inventory valuation adjustment(1)

   

         

(92,275

)

     

Consolidated operating income

 

$

60,021

       

$

(53,479

)

     
                       

Depreciation and amortization:

                     

Products & Healthcare Services

 

$

19,647

       

$

20,214

       

Patient Direct

   

51,090

         

53,015

       

Consolidated depreciation and amortization

 

$

70,737

       

$

73,229

       
                       

Capital expenditures:

                     

Products & Healthcare Services

 

$

11,405

       

$

11,020

       

Patient Direct

   

44,920

         

40,414

       

Consolidated capital expenditures

 

$

56,325

       

$

51,434

       

(1)

  Relates to an inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with PPE inventory built up and a subsequent decline in demand as a result of the COVID‑19 pandemic.

Owens & Minor, Inc.

Summary Segment Information (unaudited)

(dollars in thousands)

                     
                       
   

Year Ended December 31,

 
   

2023

 

2022

 
         

% of

       

% of

 
         

consolidated

       

consolidated

 
   

Amount

 

net revenue

 

Amount

 

net revenue

 

Net revenue:

                     

Products & Healthcare Services

 

$

7,781,395

   

75.30

%

$

7,898,397

   

79.34

%

Patient Direct

   

2,552,572

   

24.70

%

 

2,057,078

   

20.66

%

Consolidated net revenue

 

$

10,333,967

   

100.00

%

$

9,955,475

   

100.00

%

                       
         

% of segment

       

% of segment

 

Operating income:

       

net revenue

       

net revenue

 

Products & Healthcare Services

 

$

57,809

   

0.74

%

$

175,309

   

2.22

%

Patient Direct

   

246,863

   

9.67

%

 

193,748

   

9.42

%

Acquisition-related charges and intangible amortization

   

(101,037

)

       

(126,972

)

     

Exit and realignment charges

   

(99,127

)

       

(6,897

)

     

Inventory valuation adjustment(1)

   

         

(92,275

)

     

Consolidated operating income

 

$

104,508

       

$

142,913

       
                       

Depreciation and amortization:

                     

Products & Healthcare Services

 

$

77,006

       

$

77,539

       

Patient Direct

   

210,371

         

151,128

       

Consolidated depreciation and amortization

 

$

287,377

       

$

228,667

       
                       

Capital expenditures:

                     

Products & Healthcare Services

 

$

29,361

       

$

49,824

       

Patient Direct

   

178,531

         

116,758

       

Consolidated capital expenditures

 

$

207,892

       

$

166,582

       

(1)

  Relates to an inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with PPE inventory built up and a subsequent decline in demand as a result of the COVID‑19 pandemic.

Owens & Minor, Inc.

Net (Loss) Income Per Common Share (unaudited)

(dollars in thousands, except per share data)

                         
   

Three Months Ended December 31,

 

Year Ended December 31,

   

2023

 

2022

   

2023

   

2022

Net income (loss)

 

$

17,784

 

$

(57,991

)

 

$

(41,301

)

 

$

22,389

                         

Weighted average shares outstanding - basic

   

76,284

   

74,991

     

75,785

     

74,496

Dilutive shares

   

1,491

   

     

     

1,721

Weighted average shares outstanding - diluted

   

77,775

   

74,991

     

75,785

     

76,217

                         

Net income (loss) per common share:

                       

Basic

 

$

0.23

 

$

(0.77

)

 

$

(0.54

)

 

$

0.30

Diluted

 

$

0.23

 

$

(0.77

)

 

$

(0.54

)

 

$

0.29

Share-based awards for the year ended December 31, 2023 and the three months ended December 31, 2022 of approximately 1.6 million and 1.4 million shares 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) income and net (loss) income per share to non-GAAP measures used by management.

   

Three Months Ended December 31,

 

Years Ended December 31,

 
   

2023

   

2022

   

2023

   

2022

   

Operating income (loss), as reported (GAAP)

 

$

60,021

   

$

(53,479

)

 

$

104,508

   

$

142,913

   

Acquisition-related charges and intangible amortization (1)

   

26,427

     

26,345

     

101,037

     

126,972

   

Exit and realignment charges (2)

   

24,310

     

2,018

     

99,127

     

6,897

   

Inventory valuation adjustment (3)

   

     

92,275

     

     

92,275

   

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

 

$

110,758

   

$

67,159

   

$

304,672

   

$

369,057

   

Operating income (loss) as a percent of net revenue (GAAP)

   

2.26

 

%

 

(2.10

)

%

 

1.01

 

%

 

1.44

 

%

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

   

4.17

 

%

 

2.63

 

%

 

2.95

 

%

 

3.71

 

%

                           

Net income (loss), as reported (GAAP)

 

$

17,784

   

$

(57,991

)

 

$

(41,301

)

 

$

22,389

   

Pre-tax adjustments:

                         

Acquisition-related charges and intangible amortization (1)

   

26,427

     

26,345

     

101,037

     

126,972

   

Exit and realignment charges (2)

   

24,310

     

2,018

     

99,127

     

6,897

   

Inventory valuation adjustment (3)

   

     

92,275

     

     

92,275

   

Other (4)

   

1,425

     

525

     

(1,260

)

   

2,099

   

Tax adjustments (5)

   

     

(10,492

)

   

     

(10,492

)

 

Income tax benefit on pre-tax adjustments (6)

   

(16,383

)

   

(30,975

)

   

(52,095

)

   

(55,975

)

 

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

 

$

53,563

   

$

21,705

   

$

105,508

   

$

184,165

   
                           

Net income (loss) per common share, as reported (GAAP)

 

$

0.23

   

$

(0.77

)

 

$

(0.54

)

 

$

0.29

   

After-tax adjustments:

                         

Acquisition-related charges and intangible amortization (1)

   

0.23

     

0.26

     

0.96

     

1.27

   

Exit and realignment charges (2)

   

0.22

     

0.02

     

0.95

     

0.07

   

Inventory valuation adjustment (3)

   

     

0.90

     

     

0.91

   

Other (4)

   

0.01

     

0.01

     

(0.01

)

   

0.02

   

Tax adjustments (5)

   

     

(0.14

)

   

     

(0.14

)

 

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

 

$

0.69

   

$

0.28

   

$

1.36

   

$

2.42

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

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

   

Three Months Ended December 31,

   

Year Ended December 31,

   

2023

 

2022

   

2023

   

2022

 

Net income (loss), as reported (GAAP)

 

$

17,784

 

$

(57,991

)

 

$

(41,301

)

 

$

22,389

 

Income tax provision (benefit)

   

3,213

   

(37,435

)

   

(13,425

)

   

(11,498

)

Interest expense, net

   

36,863

   

41,164

     

157,915

     

128,891

 

Acquisition-related charges and intangible amortization (1)

   

26,427

   

26,345

     

101,037

     

126,972

 

Exit and realignment charges (2)

   

24,310

   

2,018

     

99,127

     

6,897

 

Other depreciation and amortization (7)

   

48,704

   

49,841

     

200,339

     

149,820

 

Inventory valuation adjustment (3)

   

   

92,275

     

     

92,275

 

Stock compensation (8)

   

5,181

   

4,907

     

20,942

     

20,501

 

LIFO charges (9)

   

5,655

   

8,725

     

2,402

     

5,396

 

Other (4)

   

1,425

   

525

     

(1,260

)

   

2,099

 

Adjusted EBITDA (non-GAAP)

 

$

169,562

 

$

130,374

   

$

525,776

   

$

543,742

 
           
 

December 31,

 

December 31,

 

2023

 

2022

Total debt, as reported (GAAP)

$

2,097,502

 

$

2,500,874

Cash and cash equivalents

 

(243,037)

   

(69,467)

Net debt (non-GAAP)

$

1,854,465

 

$

2,431,407

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

(1) Acquisition-related charges and intangible amortization includes acquisition-related charges of $5.6 million and $17.5 million for the three months and year ended December 31, 2023, and $3.0 million and $48.1 million for the three months and year ended December 31, 2022, 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 the Apria Acquisition, including transaction costs necessary to consummate the acquisition, which consisted 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 months and year ended December 31, 2023 exit and realignment charges were $24.3 million and $99.1 million. These charges primarily related to our (1) Operating Model Realignment Program of $19.1 million and $82.9 million, including professional fees, severance and other costs to streamline functions and processes, (2) IT strategic initiatives such as converting to common IT systems of $2.5 million and $9.2 million and, (3) other costs associated with strategic initiatives of $2.7 million and $7.0 million for the three months and year ended December 31, 2023. During the three months and year ended December 31, 2022 exit and realignment charges consisted of wind-down costs related to the exit of the Fusion5 business, IT strategic initiatives such as converting our divisions to a common IT system, costs associated with our strategic organizational realignment including severance charges, and other costs associated with strategic initiatives. These costs are not normal recurring, cash operating expenses necessary for the Company to operate its business on an ongoing basis.

(3) Relates to an inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with personal protective equipment inventory built up and a subsequent decline in demand as a result of the COVID-19 pandemic.

(4) For the three months and year ended December 31, 2023 other includes loss on extinguishment of debt of $0.9 million and a (gain) on extinguishment of debt of ($3.5) million associated with the early retirement of indebtedness of $45.9 million and $314 million. Additionally, for the three months and years ended December 31, 2023 and 2022 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.).

(5) Tax adjustments in 2022 includes a change in our foreign repatriation plans related to the permanent reinvestment of earnings associated with a subsidiary in Thailand.

(6) 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.

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

(9) LIFO 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/20240220733257/en/

Contacts

Investors
Alpha IR Group
Jackie Marcus or Nick Teves
OMI@alpha-ir.com

Jonathan Leon
SVP Finance & Treasurer
Investor.Relations@owens-minor.com

Media
Stacy Law
media@owens-minor.com

Source: Owens & Minor, Inc.

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