Financial Data and Key Metrics Changes - Revenue for the second quarter was $682 million, an increase of 3.3% compared to 2024, with a projected revenue for 2025 between $2.76 billion and $2.82 billion [14][22] - Adjusted EBITDA for the second quarter was $96.6 million, representing a 14.2% margin, compared to $91.1 million or 13.8% margin in 2024 [15][16] - Adjusted net income for the quarter was $20.5 million or $0.26 per share, compared to $19.3 million or $0.25 per share last year [18] Business Line Data and Key Metrics Changes - The Patient Direct business is projected to grow from approximately $450 million in annual revenue at acquisition in 2017 to between $2.76 billion and $2.82 billion in 2025 [9] - The sleep category, particularly sleep supplies, led overall growth, while diabetes supplies showed lower than planned performance [14][15] - Adjusted EBITDA for the year-to-date period was $192.7 million or 14.2% of revenue, compared to $160.3 million or 12.3% in the prior year [16] Market Data and Key Metrics Changes - Approximately 40% of American adults live with at least one chronic condition, driving demand for home-based health care [7] - The company expects to capitalize on strong sustainable tailwinds in the home-based care market due to demographic shifts and macroeconomic trends [6] Company Strategy and Development Direction - The company is in the final stages of divesting the Products and Healthcare Services segment, focusing exclusively on the higher-margin Patient Direct segment [5][6] - Future growth will be driven by disciplined growth through organic initiatives and strategic acquisitions, while also focusing on reducing stranded costs and improving profitability [10][11] - The company plans to evaluate selective acquisition opportunities that align with its strategic vision [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to lead in the evolving market, supported by favorable demographic trends [6] - The anticipated increase in stranded costs is expected as the company approaches the expected close of the divestiture [23] - Management expects limited impact from the loss of a contract with Kaiser in 2025, with the bulk of the transition occurring in 2026 [39] Other Important Information - The company reported $80 million in expenses related to the termination of the RoTEK acquisition, impacting financial results [12] - Net debt as of June 30 was $1.9 billion, an increase of $126 million since 2024, primarily due to the cash paid to terminate the RoTEK acquisition [19][20] Q&A Session Summary Question: Dynamics of the transaction and stranded costs - Management expects stranded costs to decrease by the second half of 2026 after the divestiture [25] Question: Medium-term trajectory of the diabetes business - Management noted a shift from DME to pharmacy and emphasized growth in their pharmacy capability [26][27] Question: Guidance on EBITDA and stranded costs - The expected increase in stranded costs is related to the anticipated divestiture of the PNHS business [70] Question: Impact of the one big beautiful bill on cash flow - The legislation is viewed as a net positive for the company financially, particularly regarding cash taxes [62] Question: Future acquisition considerations post-RoTEK - Future acquisitions will likely be smaller in scope, focusing on paying down debt and increasing free cash flow [66]

Financial Outlook for 2025 - Revenue is projected to be between $2.76 billion and $2.82 billion[7] - Adjusted EBITDA is expected to range from $376 million to $382 million[7] - Adjusted Net Income is forecasted to be between $81 million and $85 million[7] - Adjusted EPS is anticipated to be in the range of $1.02 to $1.07[7] Key Financial Metrics - Interest Expense is estimated to be $97 million to $100 million[7] - Gross Capital Expenditures are projected to be $205 million to $215 million[7] - Net Capital Expenditures are expected to be $135 million to $145 million[7] - The Adjusted Effective Tax Rate is projected to be between 29.5% and 30.5%[7] - Diluted Weighted Average Shares Outstanding are estimated to be approximately 80 million[7] Important Considerations - The company's outlook includes forward-looking statements subject to risks and uncertainties, as detailed in their SEC filings[2] - The presentation includes non-GAAP financial measures used by management to evaluate performance, but these should not be considered superior to GAAP measures[3, 5]

Executive Summary & Strategic Update [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Owens & Minor reported solid growth in its continuing operations, primarily the Patient Direct segment, for the second quarter of 2025, while reclassifying the Products & Healthcare Services segment as discontinued operations - The company has classified its Products & Healthcare Services segment as discontinued operations, anticipating its sale to focus on the Patient Direct business[1](index=1&type=chunk)[2](index=2&type=chunk) Second Quarter and Year-to-Date 2025 Financial Summary for Continuing Operations | Metric ($ in millions, except per share data) | 2Q25 | 2Q24 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue | $681.9 | $660.4 | $1,355.8 | $1,298.2 | | Loss from continuing operations, net of tax, GAAP | $(83.8) | $(6.7) | $(87.6) | $(20.1) | | Adj. net income from continuing operations, Non-GAAP | $20.5 | $19.3 | $43.7 | $21.9 | | Adj. EBITDA, Non-GAAP | $96.6 | $91.1 | $192.7 | $160.3 | | Loss from continuing operations, net of tax per common share, GAAP | $(1.09) | $(0.09) | $(1.14) | $(0.26) | | Adj. net income from continuing operations per share, Non-GAAP | $0.26 | $0.25 | $0.55 | $0.28 | [Strategic Business Transformation](index=1&type=section&id=Strategic%20Business%20Transformation) The company is in the final stages of divesting its Products & Healthcare Services segment, reclassifying it as discontinued operations to transform into a pure-play Patient Direct company, with management confident in future growth - The company is divesting its Products & Healthcare Services segment, reclassifying it as discontinued operations to partner with a buyer for enhanced customer support and long-term growth[1](index=1&type=chunk)[2](index=2&type=chunk) - The company will transform into a pure-play Patient Direct business, confident in its evolving leadership within this market, benefiting from favorable demographic trends and significant scale[3](index=3&type=chunk) [2025 Continuing Operations Financial Outlook](index=1&type=section&id=2025%20Continuing%20Operations%20Financial%20Outlook) The company will provide its 2025 financial outlook for continuing operations during its earnings conference call on August 11, 2025, at 8:30 AM EDT - The company will provide its 2025 financial outlook for continuing operations during the earnings conference call[4](index=4&type=chunk) [Investor Conference Call for Second Quarter 2025 Financial Results](index=1&type=section&id=Investor%20Conference%20Call%20for%20Second%20Quarter%202025%20Financial%20Results) Owens & Minor will host an investor and analyst conference call on Monday, August 11, 2025, at 8:30 AM EDT, providing dial-in numbers and a webcast link - The investor conference call will be held on Monday, August 11, 2025, at 8:30 AM EDT, accessible via toll-free dial-in or webcast[5](index=5&type=chunk) Financial Performance (Continuing Operations) [Consolidated Statements of Operations (Unaudited)](index=3&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)) Net revenue from continuing operations increased in Q2 and H1 2025, but the company reported a significantly expanded net loss due to substantial losses from discontinued operations and a transaction termination fee [Three Months Ended June 30. 2025](index=3&type=section&id=Three%20Months%20Ended%20June%2030.%202025) In Q2 2025, net revenue from continuing operations increased, but the net loss significantly expanded due to a transaction termination fee and substantial losses from discontinued operations Key Data from Consolidated Statements of Operations for Q2 2025 | Metric (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------- | :-------------------- | :-------------------- | | Net Revenue | $681,917 | $660,401 | | Operating (Loss) Income | $(39,710) | $16,922 | | Loss from Continuing Operations, Net of Tax | $(83,822) | $(6,742) | | Loss from Discontinued Operations, Net of Tax | $(785,236) | $(25,171) | | Net Loss | $(869,058) | $(31,913) | | Transaction Termination Fee | $80,000 | - | [Six Months Ended June 30. 2025](index=4&type=section&id=Six%20Months%20Ended%20June%2030.%202025) For the first half of 2025, net revenue from continuing operations increased, but the net loss significantly expanded due to losses from discontinued operations and a transaction termination fee Key Data from Consolidated Statements of Operations for H1 2025 | Metric (dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :-------------------- | :-------------------- | | Net Revenue | $1,355,801 | $1,298,244 | | Operating (Loss) Income | $(19,919) | $23,892 | | Loss from Continuing Operations, Net of Tax | $(87,632) | $(20,135) | | Loss from Discontinued Operations, Net of Tax | $(806,408) | $(33,664) | | Net Loss | $(894,040) | $(53,799) | | Transaction Termination Fee | $80,000 | - | [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) As of June 30, 2025, total assets and total shareholders' equity decreased, primarily due to the reclassification of assets and liabilities of discontinued operations, resulting in a deficit in shareholders' equity Key Data from Condensed Consolidated Balance Sheets | Metric (dollars in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------- | | Total Assets | $4,154,545 | $4,656,156 | | Current Assets of Discontinued Operations | $1,890,638 | $1,625,354 | | Non-Current Assets of Discontinued Operations | - | $731,193 | | Total Liabilities | $4,435,555 | $4,069,792 | | Current Liabilities of Discontinued Operations | $1,460,239 | $1,080,896 | | Non-Current Liabilities of Discontinued Operations | - | $237,894 | | Total (Deficit) Equity | $(281,010) | $586,364 | - As of June 30, 2025, total assets decreased by **10.77%** from December 31, 2024, while total liabilities increased by **9.00%**, leading to a shift from positive shareholders' equity to a deficit[12](index=12&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) In Q2 and H1 2025, operating cash flow significantly decreased, and investing cash outflows increased, while financing cash flow turned into a net inflow in Q2, primarily due to revolving credit facility financing [Three Months Ended June 30, 2025](index=6&type=section&id=Three%20Months%20Ended%20June%2030,%202025) In Q2 2025, cash flow from operating activities decreased to $37.6 million from $116.1 million in Q2 2024, investing cash outflows increased, and financing cash flow shifted from a net outflow to a net inflow of $31.7 million Key Data from Consolidated Statements of Cash Flows for Q2 2025 | Metric (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------- | :-------------------- | :-------------------- | | Net Loss | $(869,058) | $(31,913) | | Net Cash Provided by Operating Activities | $37,610 | $116,149 | | Net Cash Used in Investing Activities | $(52,917) | $(35,170) | | Net Cash Provided by (Used in) Financing Activities | $31,699 | $(78,240) | | Cash and Cash Equivalents, End of Period | $77,087 | $273,469 | - In Q2 2025, cash flow from operating activities decreased by **67.6%** year-over-year, primarily due to an expanded net loss and changes in inventory[13](index=13&type=chunk) [Six Months Ended June 30, 2025](index=7&type=section&id=Six%20Months%20Ended%20June%2030,%202025) For the first half of 2025, cash flow from operating activities significantly decreased to $2.5 million from $63.2 million in H1 2024, investing cash outflows substantially increased, and financing cash flow shifted from a net outflow to a net inflow of $124.5 million Key Data from Consolidated Statements of Cash Flows for H1 2025 | Metric (dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :-------------------- | :-------------------- | | Net Loss | $(894,040) | $(53,799) | | Net Cash Provided by Operating Activities | $2,544 | $63,187 | | Net Cash Used in Investing Activities | $(101,117) | $(37,040) | | Net Cash Provided by (Used in) Financing Activities | $124,477 | $(24,920) | | Cash and Cash Equivalents, End of Period | $77,087 | $273,469 | - For H1 2025, cash flow from operating activities decreased by **95.9%** year-over-year, primarily due to an expanded net loss and changes in accounts receivable and inventory[15](index=15&type=chunk) [Net Loss Per Common Share (Unaudited)](index=8&type=section&id=Net%20Loss%20Per%20Common%20Share%20(unaudited)) The company reported significant net losses per common share in Q2 and H1 2025, substantially higher than the prior year, primarily due to considerable losses from discontinued operations [Three Months Ended June 30, 2025](index=8&type=section&id=Three%20Months%20Ended%20June%2030,%202025) In Q2 2025, the loss from continuing operations per share was $1.09, and the loss from discontinued operations per share was $10.21, resulting in a total net loss per share of $11.30 Net Loss Per Common Share for Q2 2025 | Metric (except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--------------------------- | :-------------------- | :-------------------- | | Loss from Continuing Operations, Net of Tax, Per Share | $(1.09) | $(0.09) | | Loss from Discontinued Operations, Net of Tax, Per Share | $(10.21) | $(0.33) | | Net Loss Per Share | $(11.30) | $(0.42) | [Six Months Ended June 30, 2025](index=9&type=section&id=Six%20Months%20Ended%20June%2030,%202025) For the first half of 2025, the loss from continuing operations per share was $1.14, and the loss from discontinued operations per share was $10.46, resulting in a total net loss per share of $11.60 Net Loss Per Common Share for H1 2025 | Metric (except per share data) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :-------------------- | :-------------------- | | Loss from Continuing Operations, Net of Tax, Per Share | $(1.14) | $(0.26) | | Loss from Discontinued Operations, Net of Tax, Per Share | $(10.46) | $(0.44) | | Net Loss Per Share | $(11.60) | $(0.70) | Non-GAAP Financial Measures & Reconciliations [GAAP/Non-GAAP Reconciliations (Unaudited)](index=10&type=section&id=GAAP%2FNon-GAAP%20Reconciliations%20(unaudited)) The company provides GAAP to Non-GAAP reconciliations for adjusted operating income, net income, EPS, adjusted EBITDA, net debt, and net capital expenditures for continuing operations, excluding items not reflective of core business [Operating Income, Net Income, and EPS](index=10&type=section&id=Operating%20Income,%20Net%20Income,%20and%20EPS) Reconciliations show that adjusted operating income, adjusted net income, and adjusted EPS for continuing operations are significantly higher than GAAP reported values after excluding acquisition-related, transaction termination, exit, restructuring, litigation, and financing costs GAAP/Non-GAAP Reconciliation of Operating Income, Net Income, and EPS for Continuing Operations | Metric (dollars in thousands, except per share data) | 2Q25 | 2Q24 | H1 2025 | H1 2024 | | :----------------------------------------------- | :---------- | :---------- | :----------- | :----------- | | Reported Operating (Loss) Income (GAAP) | $(39,710) | $16,922 | $(19,919) | $23,892 | | Adjusted Operating Income (Non-GAAP) | $56,870 | $52,788 | $114,012 | $82,167 | | Reported Loss from Continuing Operations, Net of Tax (GAAP) | $(83,822) | $(6,742) | $(87,632) | $(20,135) | | Adjusted Income from Continuing Operations, Net of Tax (Non-GAAP) | $20,483 | $19,306 | $43,716 | $21,868 | | Reported Loss from Continuing Operations, Net of Tax, Per Share (GAAP) | $(1.09) | $(0.09) | $(1.14) | $(0.26) | | Adjusted Income from Continuing Operations, Net of Tax, Per Share (Non-GAAP) | $0.26 | $0.25 | $0.55 | $0.28 | [Adjusted EBITDA and Net Debt](index=11&type=section&id=Adjusted%20EBITDA%20and%20Net%20Debt) The company reported growth in adjusted EBITDA for Q2 and H1 2025, derived from multiple adjustments to loss from continuing operations, while net debt is calculated by subtracting cash and cash equivalents from total debt Reconciliation of Adjusted EBITDA and Net Debt | Metric (dollars in thousands) | 2Q25 | 2Q24 | H1 2025 | H1 2024 | | :-------------------------- | :---------- | :---------- | :----------- | :----------- | | Adjusted EBITDA (Non-GAAP) | $96,635 | $91,080 | $192,653 | $160,300 | | Metric (dollars in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------ | :------------- | | Total Debt (GAAP) | $1,977,745 | $1,938,429 | $1,841,259 | | Cash and Cash Equivalents | $(38,258) | $(29,710) | $(27,572) | | Net Debt (Non-GAAP) | $1,939,487 | $1,908,719 | $1,813,687 | [Net Capital Expenditures](index=12&type=section&id=Net%20Capital%20Expenditures) The company provides a reconciliation of net capital expenditures for continuing operations, calculated by deducting capital expenditures of discontinued operations and proceeds from the sale of patient service equipment and other fixed assets from GAAP capital expenditures Reconciliation of Net Capital Expenditures for Continuing Operations | Metric (dollars in thousands) | 2Q25 | 2Q24 | H1 2025 | H1 2024 | | :-------------------------- | :---------- | :---------- | :----------- | :----------- | | Reported Capital Expenditures (GAAP) | $69,537 | $45,800 | $134,211 | $95,208 | | Capital Expenditures from Continuing Operations | $59,171 | $42,344 | $107,293 | $84,058 | | Net Capital Expenditures from Continuing Operations (Non-GAAP) | $41,051 | $24,856 | $72,289 | $50,532 | [Use of Non-GAAP Measures](index=13&type=section&id=Use%20of%20Non-GAAP%20Measures) The company utilizes Non-GAAP financial measures for internal performance evaluation, financial planning, and incentive compensation, serving as supplementary metrics for investors, but these should not replace or supersede GAAP measures - Management uses Non-GAAP financial measures to evaluate company performance, balance sheet, conduct financial and operational planning, and determine incentive compensation[29](index=29&type=chunk) - Non-GAAP financial measures serve as supplementary indicators, assisting investors in evaluating the impact of items and events on financial and operating results, and for comparison with competitors[30](index=30&type=chunk) - Non-GAAP financial measures should not be considered substitutes for or superior to GAAP financial measures, and may differ from similarly titled measures used by other companies[31](index=31&type=chunk) Company Information & Disclosures [Safe Harbor Statement](index=1&type=section&id=Safe%20Harbor) This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995, addressing future prospects, performance, financial results, and the P&HS business sale, while cautioning investors about inherent risks and uncertainties - This press release contains forward-looking statements concerning future prospects, financial performance, the P&HS business sale, cost savings, growth, and industry trends[7](index=7&type=chunk) - Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from expectations[7](index=7&type=chunk) - Investors should refer to the risk factors discussed in the company's 10-K, 10-Q, and 8-K reports filed with the SEC[7](index=7&type=chunk) [About Owens & Minor](index=2&type=section&id=About%20Owens%20%26%20Minor) Owens & Minor, Inc. is a Fortune 500 global healthcare solutions company providing essential products and services from hospitals to homes, operating with brands like Apria®, Byram®, and HALYARD* and employing over 20,000 people worldwide - Owens & Minor is a Fortune 500 global healthcare solutions company, providing essential products and services from hospitals to homes[8](index=8&type=chunk) - The company operates with affiliated brands such as Apria®, Byram®, and HALYARD*, employing over **20,000** people globally[8](index=8&type=chunk) [Contact Information](index=13&type=section&id=CONTACT) This section provides detailed contact information for investor relations and media inquiries, including respective email addresses - Investor contacts: Jackie Marcus or Nick Teves of Alpha IR Group (OMI@alpha-ir.com)[32](index=32&type=chunk) - Media contact: Stacy Law (media@owens-minor.com)[33](index=33&type=chunk)

Group 1 - Owens & Minor, Inc. is set to release its second-quarter earnings results on August 11, with expected earnings of 28 cents per share, a decrease from 36 cents per share in the same period last year [1] - The company anticipates quarterly revenue of $2.73 billion, an increase from $2.67 billion a year earlier [1] - Owens & Minor announced the termination of its acquisition of Rotech Healthcare on June 5 [1] Group 2 - Owens & Minor shares increased by 12.4%, closing at $7.09 on Friday [2] - Analysts have provided various ratings for Owens & Minor, with Baird maintaining a Neutral rating and raising the price target from $9 to $10 [7] - JP Morgan has an Underweight rating with a reduced price target from $14 to $10, while UBS maintains a Buy rating but has cut the price target from $25 to $13 [7]

Core Insights - The termination of the acquisition deal between Owens & Minor and Rotech Healthcare Holdings highlights the challenges in the healthcare sector regarding regulatory approvals and strategic realignment [5][12][13] Group 1: Transaction Overview - Owens & Minor announced the termination of a $1.36 billion acquisition of Rotech due to difficulties in obtaining antitrust approval from the FTC [1][4] - The acquisition was initially aimed at enhancing Owens & Minor's Patient Direct business and expanding its home healthcare product offerings [2][5] - Rotech, a leading home medical equipment supplier, reported approximately $750 million in revenue for 2023, with an EBITDA margin close to 30% [2][9] Group 2: Strategic Adjustments - Owens & Minor is refocusing its resources on the Patient Direct segment, which has shown faster growth and higher profit margins, following the failed acquisition [5][7] - The company is also exploring the sale of its "Products and Healthcare Services" segment to strengthen its balance sheet [7][12] - As of Q1 2025, Owens & Minor reported revenues of $2.6 billion, with a net loss of $21.89 million and total debt of $1.95 billion [7] Group 3: Industry Dynamics - The home medical equipment sector remains attractive due to increasing demand driven by aging populations and chronic diseases, with home treatment being a cost-effective alternative [10][11] - Major players in the healthcare industry are entering the home medical equipment market, indicating a shift towards home-based care [11] - The regulatory environment, particularly the FTC's scrutiny of mergers, poses challenges for companies seeking growth through acquisitions [13] Group 4: Lessons from Rotech's Experience - Rotech's transition from an acquirer to a potential seller illustrates the risks associated with high leverage and reliance on acquisitions for growth [8][9] - The company's operational challenges highlight the need for strong integration capabilities and cash flow management in the healthcare sector [9][12] - The case of Owens & Minor and Rotech serves as a reminder that successful growth in the healthcare industry requires not only scale but also the ability to effectively manage and integrate acquired assets [12][13]

Part I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Q1 2025 saw a net loss of $25.0 million due to higher operating expenses, with total assets reaching $4.86 billion [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations (Q1 2025 vs. Q1 2024) | Financial Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Net revenue** | $2,632,048 | $2,612,680 | | **Gross profit** | $526,013 | $535,529 | | **Operating income** | $124 | $9,696 | | **Loss before income taxes** | $(35,074) | $(27,112) | | **Net loss** | $(24,982) | $(21,886) | | **Diluted net loss per share** | $(0.32) | $(0.29) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights | Balance Sheet Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total current assets** | $2,206,198 | $2,021,017 | | **Total assets** | $4,856,424 | $4,656,156 | | **Total current liabilities** | $1,960,215 | $1,852,052 | | **Long-term debt** | $1,897,515 | $1,808,047 | | **Total liabilities** | $4,285,445 | $4,069,792 | | **Total equity** | $570,979 | $586,364 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Summary (Q1 2025 vs. Q1 2024) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Cash used for operating activities** | $(35,066) | $(52,962) | | **Cash used for investing activities** | $(48,200) | $(1,870) | | **Cash provided by financing activities** | $92,778 | $53,320 | | **Net increase (decrease) in cash** | $10,054 | $(2,130) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail segment reporting, a $21 million retained earnings correction, and significant financing activities including the Rotech acquisition - The company operates under two segments: Products & Healthcare Services (U.S. distribution and Global Products) and Patient Direct (direct-to-patient medical supplies and home healthcare)[22](index=22&type=chunk)[75](index=75&type=chunk) - A prior period accounting error related to over-accrual of accounts payable was corrected, resulting in a **$21 million increase to retained earnings** as of the earliest balance sheet date presented[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company entered into a new Receivables Sale Program with a capacity of up to **$450 million**; in Q1 2025, **$343 million** of receivables were sold under this program[32](index=32&type=chunk)[33](index=33&type=chunk) - The company entered into an agreement to acquire Rotech Healthcare Holdings Inc. for **$1.36 billion** in cash, expected to close in the first half of 2025; a termination fee of **$70 million** would be payable by the company under certain conditions[86](index=86&type=chunk) - Subsequent to the quarter end, on April 4, 2025, the company completed a private offering of **$1.0 billion** in 10.000% Senior Secured Notes due 2030 to finance the Rotech acquisition[92](index=92&type=chunk) - On February 26, 2025, the Board authorized a new share repurchase program of up to **$100 million**; in Q1 2025, **0.2 million shares** were repurchased for **$1.5 million**[90](index=90&type=chunk)[91](index=91&type=chunk) [Management's Discussion and Analysis (MD&A)](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights Q1 2025 net loss due to acquisition and realignment costs, segment performance, and liquidity management [Overview and Strategic Developments](index=21&type=section&id=Overview%20and%20Strategic%20Developments) - Net loss per share was **$(0.32)** for Q1 2025, compared to **$(0.29)** in Q1 2024, impacted by **$16 million** in acquisition-related charges for the planned Rotech acquisition and a **$3.9 million** increase in exit and realignment charges[98](index=98&type=chunk) - The company announced on February 28, 2025, that it is in active discussions regarding the potential sale of its Products & Healthcare Services segment[102](index=102&type=chunk) - The company entered an agreement to acquire Rotech for **$1.36 billion** in cash, with an expected closing in the first half of 2025, pending regulatory review[103](index=103&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Net Revenue by Segment (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 Net Revenue (in thousands) | Q1 2024 Net Revenue (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Products & Healthcare Services | $1,958,164 | $1,974,837 | (0.8)% | | Patient Direct | $673,884 | $637,843 | 5.7% | | **Total Net Revenue** | **$2,632,048** | **$2,612,680** | **0.7%** | - Gross profit decreased by **1.8%** to **$526.0 million** in Q1 2025, with the gross profit margin declining to **19.98%** from **20.50%** in Q1 2024[109](index=109&type=chunk) - Distribution, selling and administrative (DS&A) expenses decreased by **3.2%** to **$462.4 million**, primarily due to a **$16 million** reduction in teammate benefit costs[112](index=112&type=chunk) - Exit and realignment charges were **$31 million** in Q1 2025, related to various initiatives including kitting, potential P&HS segment sale costs, and an accounts receivable provision for the Fusion 5 business[115](index=115&type=chunk) Adjusted EBITDA Reconciliation (Non-GAAP) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net loss, as reported (GAAP) | $(24,982) | $(21,886) | | **Adjusted EBITDA (non-GAAP)** | **$121,855** | **$116,270** | [Financial Condition, Liquidity and Capital Resources](index=25&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) - Cash used for operating activities improved to **$35.1 million** in Q1 2025 from **$53.0 million** in Q1 2024, benefiting from a **$130 million** impact from the Receivables Sale Program[131](index=131&type=chunk) - Primary sources of liquidity include cash on hand, the Receivables Sale Program (up to **$450 million**), and a Revolving Credit Agreement (**$450 million** capacity)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - As of March 31, 2025, there were **$98 million** in outstanding borrowings on the Revolving Credit Agreement, leaving **$318 million** available[137](index=137&type=chunk)[54](index=54&type=chunk) - The company was in compliance with all debt covenants as of March 31, 2025[138](index=138&type=chunk)[55](index=55&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risk disclosures since the 2024 year-end report - There have been no material changes in the quantitative and qualitative market risk disclosures since the 2024 year-end report[152](index=152&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[153](index=153&type=chunk) Part II [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) No material developments in legal proceedings occurred since the 2024 year-end report - There have been no material developments in legal proceedings since the 2024 year-end report[154](index=154&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) New risk factors include potential impacts from trade laws and uncertainties surrounding the Products & Healthcare Services segment sale - A new risk factor was added concerning significant developments in national laws or policies, such as tariffs, which could increase product costs, impact demand, and disrupt supply chains[156](index=156&type=chunk) - A new risk factor was added detailing the uncertainties and potential negative impacts of the potential sale of the Products & Healthcare Services segment[157](index=157&type=chunk) - Risks of the potential sale include failure to complete a transaction, becoming a smaller, less diversified company, not achieving expected financial benefits, and disruption to business relationships[158](index=158&type=chunk)[159](index=159&type=chunk)[161](index=161&type=chunk)[163](index=163&type=chunk) [Issuer Purchases of Equity Securities](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company initiated a new $100 million share repurchase program, repurchasing 173 thousand shares for $1.5 million in Q1 2025 Share Repurchase Activity (Q1 2025) | Period | Total Shares Purchased (thousands) | Average Price Paid Per Share | Approximate Dollar Value Remaining Under Program (thousands) | | :--- | :--- | :--- | :--- | | Feb 26-28, 2025 | — | $— | $100,000 | | Mar 1-31, 2025 | 173 | $8.66 | $98,500 | | **Total** | **173** | | |

Core Insights - Owens & Minor Inc. reported first-quarter 2025 adjusted EPS of 23 cents, an increase from 19 cents year-over-year, surpassing the consensus estimate of 20 cents [1] - The company generated sales of $2.63 billion, nearly flat year-over-year, falling short of the consensus of $2.66 billion [1] - The Products & Healthcare Services segment's revenue was $1.96 billion, down 1%, while Patient Direct revenue increased by 6% to $673.8 million [1] Financial Performance - Adjusted operating income rose to $61.3 million from $57.4 million, and adjusted EBITDA increased from $116.3 million to $121.9 million [3] - The company reaffirmed fiscal 2025 adjusted EPS guidance of $1.60-$1.85, compared to the consensus of $1.67 [4] - Owens & Minor forecasts 2025 sales between $10.85 billion and $11.15 billion, slightly above the consensus of $11.05 billion [5] Strategic Developments - Citi has been appointed as the exclusive financial advisor for the potential sale of the Products & Healthcare Services segment [2] - The CEO highlighted ongoing engagement in the sale process of the Products & Healthcare Services segment and expressed optimism about the Patient Direct segment and the strengthening of P&HS businesses [3][4] Market Reaction - Following the earnings report, Owens & Minor's stock experienced a decline of 7.86%, trading at $7.15 [5]

Financial Data and Key Metrics Changes - The company's revenue for Q1 2025 was $2.6 billion, up just under 1% as reported, but up 2.3% on a same-day basis compared to the prior year [16] - Adjusted net income for the quarter was $18 million or $0.23 per share, representing about 20% growth compared to $15 million or $0.19 per share last year [21] - Adjusted EBITDA grew 5% to $122 million versus $116 million reported during Q1 2024 [21] Business Line Data and Key Metrics Changes - Patient Direct revenue was $674 million, growing by 6% compared to Q1 2024, with a same-day growth of 7.3% [16] - The Products and Healthcare Services segment reported a decline of 0.8%, while on a same sales day basis, it grew 0.7% compared to the first quarter last year [18] - Operating income in the Patient Direct segment grew by 31%, contributing to a total operating income of $61 million, an improvement of about 7% versus Q1 2024 [20] Market Data and Key Metrics Changes - The company experienced continued growth in oxygen therapy, which began in Q4 2024, and expects growth throughout 2025 [17] - The Medical Distribution division saw good same-store sales, but lower glove prices and international sales offset this growth [18] Company Strategy and Development Direction - The company is actively engaged in discussions regarding the potential sale of its Products and Healthcare Services segment while continuing to run this segment with commitment [10] - Investments in revenue cycle management have led to record collection rates in Q1, with plans to extend these learnings to other divisions [9] - The company is implementing price increases in response to tariffs, effective in early June, while ensuring high-quality product delivery [13][14] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed guidance for the year, expecting improving results in each subsequent quarter, with at least 70% of earnings and cash flow generated in the second half of the year [24] - The company remains bullish on the outlook for earnings and cash flow for the remainder of 2025 [25] Other Important Information - The anticipated annual exposure of current tariffs on products is estimated to be in the range of $100 million to $150 million [13] - The company has opened new state-of-the-art distribution centers to enhance efficiency and service [11] Q&A Session Summary Question: Can you discuss the discussions with customers regarding tariffs? - Management indicated that they are working with customers to identify alternatives and have increased inventory to mitigate tariff impacts [26][29] Question: What is the impact of foreign exchange on the business? - Management noted that while there was volatility in the dollar, they are comfortable with the guidance for the rest of the year regarding FX [31][33] Question: What is the split of tariff exposure between segments? - The majority of tariff exposure is in the Products and Healthcare Services segment, with very little exposure in the Patient Direct segment [40] Question: How is the RoTEK acquisition being accounted for in guidance? - The debt from the RoTEK acquisition will not appear on the balance sheet until the deal closes, and guidance will be updated accordingly [47][49] Question: What is the expected free cash flow for the year? - Management confirmed that they still expect to generate good free cash flow and use it to pay down debt [52]

Financial Data and Key Metrics Changes - The company's revenue for Q1 2025 was $2.6 billion, up just under 1% as reported, but up 2.3% on a same-day basis compared to the prior year [15] - Adjusted net income for the quarter was $18 million or $0.23 per share, representing about 20% growth compared to $15 million or $0.19 per share last year [19] - Adjusted EBITDA grew 5% to $122 million versus $116 million reported during Q1 2024 [19] Business Line Data and Key Metrics Changes - Patient Direct segment revenue was $674 million, growing by 6% compared to Q1 2024, with a same-day growth of 7.3% [15] - The Products and Healthcare Services segment reported a decline of 0.8%, while on a same sales day basis, it grew 0.7% compared to the first quarter last year [16] - Operating income for the Patient Direct segment grew by 31%, resulting in a 173 basis point expansion [6] Market Data and Key Metrics Changes - The Medical Distribution division saw continued growth in same-store sales, but lower glove prices and international sales offset this growth [16] - The company experienced a significant increase in proprietary product sales running through its distribution channel, a key strategic initiative [16] Company Strategy and Development Direction - The company is actively engaged in discussions regarding the potential sale of its Products and Healthcare Services segment while continuing to run this segment with commitment [9] - Investments in revenue cycle management have led to record collection rates in Q1, with plans to extend these learnings to other divisions [8] - The company is implementing price increases in response to tariffs, effective in early June, while ensuring high-quality product delivery [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's performance and reaffirmed guidance for the year, expecting improving results in each subsequent quarter [22] - The anticipated annual exposure of current tariffs on products is estimated to be between $100 million to $150 million, primarily affecting the Products and Healthcare Services segment [12][27] - Management noted that the first quarter typically marks the payment of incentive compensation, impacting cash flow, but expects significant improvement in cash flow for the remainder of the year [20] Other Important Information - The company opened new state-of-the-art distribution centers in Morgantown, West Virginia, and Sioux Falls, South Dakota, to enhance its distribution network [10] - The company is awaiting a final decision from regulators regarding the planned acquisition of RoTEK, expecting to close in the first half of 2025 [8] Q&A Session Summary Question: Can you discuss the discussions with customers regarding tariffs? - Management indicated that the tariff exposure is estimated between $100 million to $150 million, primarily from China and Thailand, and emphasized the need to work collaboratively with customers to address pricing adjustments [27][28] Question: How should we think about the FX impact progressing through the year? - Management noted that while there was volatility in the dollar, particularly in March, the situation has calmed, and they are comfortable with the guidance for the rest of the year regarding FX [31][32] Question: What is the split between the tariff exposure in the PNHS and PD segments? - Management clarified that virtually all tariff exposure is in the Products and Healthcare Services segment, with minimal exposure in the Patient Direct segment [40] Question: How is the RoTEK financing accounted for in guidance? - Management explained that none of the debt will appear on the balance sheet until the deal closes, and they will update guidance accordingly [47] Question: What happens if customers refuse price increases due to tariffs? - Management stated that they cannot sell products at a loss and will work with customers to find alternative products that are lower in cost [61][64]

Company Performance - Owens & Minor reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.20 per share, and up from $0.19 per share a year ago, representing a 15% earnings surprise [1] - The company posted revenues of $2.63 billion for the quarter ended March 2025, slightly missing the Zacks Consensus Estimate by 1.43%, but up from $2.61 billion year-over-year [2] - Over the last four quarters, Owens & Minor has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Outlook - The stock has underperformed, losing about 40.6% since the beginning of the year, compared to the S&P 500's decline of 4.3% [3] - The current consensus EPS estimate for the coming quarter is $0.32 on revenues of $2.72 billion, and for the current fiscal year, it is $1.64 on revenues of $11.18 billion [7] - The estimate revisions trend for Owens & Minor is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Medical - Products industry, to which Owens & Minor belongs, is currently in the bottom 32% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Owens & Minor's stock performance [5]