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

Part I Financial Statements 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 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 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 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 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)2275 - 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 presented232425 - 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 program3233 - 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 conditions86 - 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 acquisition92 - 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 million9091 Management's Discussion and Analysis (MD&A) MD&A highlights Q1 2025 net loss due to acquisition and realignment costs, segment performance, and liquidity management Overview and Strategic Developments - 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 charges98 - The company announced on February 28, 2025, that it is in active discussions regarding the potential sale of its Products & Healthcare Services segment102 - 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 review103 Results of Operations 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 2024109 - 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 costs112 - 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 business115 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 - 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 Program131 - Primary sources of liquidity include cash on hand, the Receivables Sale Program (up to $450 million), and a Revolving Credit Agreement ($450 million capacity)134135136 - As of March 31, 2025, there were $98 million in outstanding borrowings on the Revolving Credit Agreement, leaving $318 million available13754 - The company was in compliance with all debt covenants as of March 31, 202513855 Quantitative and Qualitative Disclosures About Market Risk 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 report152 Controls and Procedures 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, 2025153 Part II Legal Proceedings 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 report154 Risk Factors 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 chains156 - A new risk factor was added detailing the uncertainties and potential negative impacts of the potential sale of the Products & Healthcare Services segment157 - 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 relationships158159161163 Issuer Purchases of Equity Securities 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 | | |