Owens & Minor(OMI) - 2024 Q3 - Quarterly Report

Financial Performance - Owens & Minor, Inc. reported a net revenue of $2.72 billion for the three months ended September 30, 2024, representing a 5.0$2.59 billion in the same period of 2023[98]. - The Products & Healthcare Services segment generated operating income of $4.2 million for the three months ended September 30, 2024, down from$19.8 million in the prior year, primarily due to a $10.3 million increase in LIFO charges[92]. - The Patient Direct segment achieved operating income of$79.9 million for the three months ended September 30, 2024, compared to $64.4 million in the same period of 2023, reflecting a revenue growth of 5.9$2.16 billion for the three months ended September 30, 2024, up 5.3% from $2.05 billion in the prior year, driven by revenue growth and increased LIFO charges[103]. - Gross profit for the three months ended September 30, 2024, was$559.7 million, a 3.9% increase from $538.5 million in the same period of 2023, with a gross profit margin of 20.57$(0.17), compared to $(0.08) for the same period in 2023[91]. - The company reported a decline in intangible amortization of$6.2 million for the three months ended September 30, 2024, contributing to the net loss per share[91]. Expenses and Charges - Distribution, selling and administrative (DS&A) expenses for the three months ended September 30, 2024 were $469,798,000, an increase of$17,215,000 or 3.8% compared to the same period in 2023[107]. - DS&A expenses as a percentage of net revenue decreased to 17.26% for the three months ended September 30, 2024 from 17.46% in 2023[107]. - Acquisition-related charges for the three months ended September 30, 2024 were $21,097,000, a decrease of$9,120,000 or 30.2% compared to the same period in 2023[107]. - Exit and realignment charges, net for the three months ended September 30, 2024 were $28,880,000, a decrease of$1,300,000 or 4.3% compared to the same period in 2023[107]. - Other operating expenses, net for the three months ended September 30, 2024 increased significantly to $15,727,000, an increase of$14,050,000 or 837.8% compared to the same period in 2023[107]. - Interest expense, net for the three months ended September 30, 2024 decreased to $36,554,000, a decrease of$1,573,000 or 4.1% compared to the same period in 2023[114]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $45,454,000 as of September 30, 2024, a decrease of$197,583,000 or 81.3% compared to December 31, 2023[124]. - Net cash provided by operating activities decreased to $90.5 million in the first nine months of 2024 from$628.9 million in 2023, primarily due to net losses and changes in working capital[125]. - Cash used for investing activities in the first nine months of 2024 included capital expenditures of $157 million, compared to$152 million in 2023, with proceeds from sales and dispositions totaling $84.8 million[126]. - Cash used for financing activities in the first nine months of 2024 was$224.5 million, down from $366.1 million in 2023, including$211 million in debt repayments[127]. - The company had no borrowings under its Receivables Financing Agreement as of September 30, 2024, with a maximum revolving borrowing capacity of $450 million[130]. - The Revolving Credit Agreement provides a revolving borrowing capacity of$450 million, with $870 million in outstanding term loans[131]. - Cash and cash equivalents held by foreign subsidiaries totaled$22.2 million as of September 30, 2024[140]. - The company believes cash generated from operating activities and available financing sources will be sufficient to fund working capital needs and long-term strategic growth[139]. - The company is in compliance with its debt covenants as of September 30, 2024[134]. Acquisitions and Agreements - 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[90]. - The company recognized a $5.1 million gain from an agreement with Philips Respironics for previously recalled equipment during the nine months ended September 30, 2024[94]. Risks and Challenges - The company faces risks related to restrictive covenants in credit facilities and existing notes[145]. - There is a potential risk of impairment to goodwill or other long-lived assets[145]. - The company may encounter challenges in responding to technological advances in a timely manner[145]. - There are concerns regarding the profitability of capitation arrangements if actual utilization rates exceed assumptions[145]. - The company is exposed to volatility in the price of its common stock and securities[145]. - Risks related to public health crises, such as the COVID-19 pandemic, continue to be a concern for the company[145]. - The company must adequately respond to performance targets specified by customer contracts[145]. - The outcome of outstanding and future litigation, including product and professional liability claims, remains uncertain[145]. Tax and Foreign Operations - The effective tax rate for the three months ended September 30, 2024 was 7.4$0.2 million for the three months ended September 30, 2024[102]. - The company is permanently reinvested in its foreign subsidiaries, indicating a long-term investment strategy[140]. - The company has not experienced material changes in quantitative and qualitative market risk disclosures since the last Annual Report[147].