Owens & Minor(OMI) - 2024 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2024, net revenue increased by $107.8 million, or 4.2$2.67 billion compared to the same period in 2023[85]. - The Products & Healthcare Services segment operating income rose to $11.5 million for the three months ended June 30, 2024, compared to$2.9 million in the prior year, driven by a revenue growth of 4.1%[80]. - The Patient Direct segment reported operating income of $64.8 million for the three months ended June 30, 2024, reflecting a revenue growth of 4.4$544.2 million, representing a 4.8% increase from the prior year, with a gross profit margin of 20.37%[91]. - Operating expenses for the three months ended June 30, 2024, increased by $14.3 million, or 3.1$2.13 billion, reflecting an increase of $83.1 million, or 4.1$(0.42), compared to $(0.37) for the same period in 2023[79]. Acquisition and Investments - The company entered into an agreement to acquire Rotech Healthcare Holdings Inc. for$1.36 billion, with a net purchase price of approximately $1.32 billion after anticipated tax benefits[77]. - The company expects the acquisition of Rotech to close by the end of 2024, subject to customary closing conditions[77]. - Cash used for investing activities in the first six months of 2024 included capital expenditures of$95.2 million, compared to $101 million in 2023[107]. - The company has$48.4 million in legally binding lease commitments for a center of excellence for medical supplies and logistics[121]. Tax and Interest - The income tax provision for the three months ended June 30, 2024, was $15.1 million, a significant increase of 655.4$(2.7) million in 2023, primarily due to a one-time income tax charge of $17.2 million[102]. - Interest expense, net decreased to$35.9 million for the three months ended June 30, 2024, down 11.9% from $40.7 million in 2023, and for the six months, it decreased by 13.7$71.6 million from $82.9 million[100]. Cash Flow and Working Capital - Cash provided by operating activities for the six months ended June 30, 2024, was$63.2 million, a decrease from $471.5 million in the same period of 2023[105]. - The company believes cash generated from operating activities and available financing sources will be sufficient to meet its working capital needs[119]. Accounts Receivable and Inventory - Accounts receivable, net increased to$662.4 million as of June 30, 2024, from $598.3 million at the end of 2023, with DSO increasing to 22.1 days from 20.5 days[104]. - Merchandise inventories rose to$1.23 billion as of June 30, 2024, compared to $1.11 billion at the end of 2023, with inventory days increasing to 52.7 days from 49.0 days[104]. - Total accounts receivable sold under the Receivables Purchase Agreement (RPA) were$573 million and $1.1 billion for the three and six months ended June 30, 2024, with net cash proceeds of$569 million and $1.1 billion respectively[116]. Liabilities and Compliance - Total liabilities for the Guarantor Group rose from$4,243,230 thousand at December 31, 2023 to $4,521,706 thousand at June 30, 2024[124]. - The company maintained compliance with its debt covenants as of June 30, 2024[115]. Other Financial Metrics - The company experienced a foreign currency translation impact of$(1.9) million on net revenue for the three months ended June 30, 2024, compared to the prior year[86]. - Intangible amortization was $16.3 million and$36.5 million for the three and six months ended June 30, 2024, compared to $20.9 million and$41.8 million for the same periods in 2023, reflecting a reduction of $4.7 million and$5.3 million as certain intangible assets are fully amortized[96]. - Exit and realignment charges, net were $29.3 million and$56.6 million for the three and six months ended June 30, 2024, primarily related to the Operating Model Realignment Program, which incurred $22.9 million and$56.4 million in costs[97]. - Losses on the sale of accounts receivable were $3.9 million and$2.9 million for the three months ended June 30, 2024 and 2023 respectively[117]. - The Guarantor Group reported net revenue of $5,201,722 thousand and a net loss of$58,636 thousand for the six months ended June 30, 2024[123]. - Total current assets for the Collateral Group increased from $1,280,045 thousand at December 31, 2023 to$1,495,870 thousand at June 30, 2024[125]. - Cash and cash equivalents held by foreign subsidiaries totaled $21.8 million and$22.0 million at June 30, 2024 and December 31, 2023 respectively[120]. - The company is permanently reinvested in its foreign subsidiaries as of June 30, 2024[120].