Owens & Minor(OMI) - 2025 Q1 - Quarterly Results

Financial & Operational Highlights Q1 2025 Key Financial Results Owens & Minor reported Q1 2025 total revenue of $2.632 billion, a GAAP net loss, but increased non-GAAP adjusted net income and Adjusted EBITDA Q1 2025 Financial Summary vs. Q1 2024 | Financial Metric | 1Q25 | 1Q24 | | :--- | :--- | :--- | | Revenue | $2,632 million | $2,613 million | | Operating income, GAAP | $0.1 million | $9.7 million | | Adj. Operating Income, Non-GAAP | $61.3 million | $57.4 million | | Net loss, GAAP | $(25.0) million | $(21.9) million | | Adj. Net Income, Non-GAAP | $18.1 million | $14.9 million | | Adj. EBITDA, Non-GAAP | $121.9 million | $116.3 million | | Net loss per share, GAAP | $(0.32) | $(0.29) | | Adj. Net Income per share, Non-GAAP | $0.23 | $0.19 | Business Segment Performance Patient Direct segment drove growth with expanded operating margin, while Products & Healthcare Services experienced revenue decline and a significant operating income drop - The Patient Direct segment delivered mid-single digit top-line growth and a mid-teen expansion in EBITDA, with strong performance in Diabetes and Sleep Supplies[2] - The Patient Direct operating margin expanded by 173 basis points year-over-year[1] - The Products & Healthcare Services segment saw top-line growth in its Medical Distribution division[2] Segment Operating Performance (Q1 2025 vs Q1 2024) | Segment | Net Revenue (1Q25) | Net Revenue (1Q24) | Operating Income (1Q25) | Operating Income (1Q24) | | :--- | :--- | :--- | :--- | :--- | | Products & Healthcare Services | $1,958.2 M | $1,974.8 M | $1.2 M | $11.5 M | | Patient Direct | $673.9 M | $637.8 M | $60.1 M | $45.9 M | Strategic Developments The company is actively pursuing the potential sale of its Products & Healthcare Services segment, with key strategic priorities including disciplined capital management, leverage reduction, and integrating the planned Rotech acquisition - The company remains actively engaged in the process for a potential sale of its Products & Healthcare Services segment[1][2] - Future strategic focus is on disciplined capital deployment, achieving leverage targets, navigating potential tariffs, and integrating the planned Rotech acquisition[3] 2025 Financial Outlook Owens & Minor reaffirmed its 2025 financial guidance for revenue, Adjusted EBITDA, and Adjusted EPS, notably excluding impacts from the Rotech acquisition, P&HS segment sale, or future tariffs Full-Year 2025 Financial Guidance | Metric | 2025 Guidance Range | | :--- | :--- | | Revenue | $10.85 billion to $11.15 billion | | Adjusted EBITDA | $560 million to $590 million | | Adjusted EPS | $1.60 to $1.85 | - The 2025 outlook excludes any impact from the planned Rotech acquisition, the potential sale of the Products & Healthcare Services segment, and potential tariffs[5] - The company does not provide guidance for the comparable GAAP measures because certain elements, such as exit and realignment charges, are unpredictable and cannot be forecasted without unreasonable effort[6] Consolidated Financial Statements Consolidated Statements of Operations Q1 2025 net revenue slightly increased, but decreased gross profit and higher operating expenses led to a significant drop in operating income and a GAAP net loss Q1 2025 Consolidated Statement of Operations (in thousands) | Line Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net revenue | $2,632,048 | $2,612,680 | | Gross profit | $526,013 | $535,529 | | Operating income | $124 | $9,696 | | Interest expense, net | $33,959 | $35,655 | | Net loss | $(24,982) | $(21,886) | | Net loss per share (Basic & Diluted) | $(0.32) | $(0.29) | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased due to higher inventories, total liabilities rose from increased payables and debt, leading to a slight decrease in total equity Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 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 | | Total liabilities | $4,285,445 | $4,069,792 | | Total equity | $570,979 | $586,364 | Consolidated Statements of Cash Flows In Q1 2025, cash used for operating activities improved, offset by increased accounts payable and inventories, while financing activities provided cash, resulting in a net cash increase Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | 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) | | Cash at end of period | $59,436 | $270,794 | Segment Information In Q1 2025, Patient Direct segment revenue and operating income grew significantly, contrasting with Products & Healthcare Services' revenue decline and sharp operating income plummet Segment Performance Summary (Q1 2025 vs Q1 2024, in thousands) | Segment | Net Revenue | Operating Income | Adjusted EBITDA | | :--- | :--- | :--- | :--- | | Products & Healthcare Services | | | | | 1Q25 | $1,958,164 | $1,153 | $24,218 | | 1Q24 | $1,974,837 | $11,486 | $32,972 | | Patient Direct | | | | | 1Q25 | $673,884 | $60,141 | $97,637 | | 1Q24 | $637,843 | $45,879 | $83,298 | Non-GAAP Financial Measures & Reconciliations Reconciliation of GAAP to Non-GAAP Measures For Q1 2025, GAAP operating income and net loss were adjusted to non-GAAP figures, reflecting core performance by excluding specific charges Q1 2025 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | As Reported (GAAP) | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating income | $124 | $61,170 | $61,294 | | Net loss / income | $(24,982) | $43,055 | $18,073 | | Net loss / income per share | $(0.32) | $0.55 | $0.23 | Q1 2025 Net Loss to Adjusted EBITDA Reconciliation (in thousands) | Metric | Amount | | :--- | :--- | | Net loss, as reported (GAAP) | $(24,982) | | Income tax benefit | $(10,092) | | Interest expense, net | $33,959 | | Key Adjustments (Acquisition, Exit, D&A, etc.) | $122,970 | | Adjusted EBITDA (non-GAAP) | $121,855 | Explanation of Non-GAAP Adjustments Key non-GAAP adjustments for Q1 2025 primarily included acquisition-related charges, intangible amortization, and significant exit and realignment costs - Acquisition-related charges for Q1 2025 totaled $16 million, primarily consisting of legal and professional fees for the planned acquisition of Rotech[24] - Exit and realignment charges of $31 million in Q1 2025 included $10 million for kitting/manufacturing initiatives, $7.1 million in fees for the potential P&HS sale, and a $6.8 million accounts receivable provision for a non-operating customer[25] - Non-cash LIFO charges of $8.6 million for U.S. distribution inventories were excluded from Adjusted EBITDA[24][29]