Top Line Expansion Led by Healthy Demand in
Patient Direct and Medical Distribution
Operating Cash Flow Generation Supported $188
million in Total Debt Reduction
Owens & Minor, Inc. (NYSE: OMI) today reported financial
results for the third quarter ended September 30, 2023.
Third Quarter Key Highlights:
- Consolidated revenue of $2.59 billion
- Net loss per common share of $(0.08) and adjusted net income
per common share of $0.44
- $188 million in total debt pay down and $117 million reduction
in net debt
“Our performance in the third quarter is another strong
indication that our business strategy and execution are working,
and that we are beginning to realize the benefits of the Operating
Model Realignment Program. Patient Direct continues to outperform
the market, demonstrating the enduring strength of our go-to-market
strategies and service offerings. Our Medical Distribution division
again produced mid-single digit growth and continues to win new
business. While the volatility of demand and pricing for PPE
appears to be diminishing, we remain cautious on the long-term
trajectory. The Operating Model Realignment Program not only
continued to deliver economic benefits, but also enabled us to
reassess how we do business every day. We are well on our way to
achieving the objectives established when we launched this
initiative in the first quarter,” said Edward A. Pesicka, President
& Chief Executive Officer of Owens & Minor.
Pesicka continued, “Building on the progress we made in the
first half of the year, the work we’ve done in the third quarter
resulted in significant cash flow, enabling us to further reduce
debt and increase our financial flexibility. We continue to align
our balance sheet with our corporate strategy to support further
investment in high growth categories and technology.”
Financial
Summary (1)
($ in millions, except per share data)
3Q23
3Q22
YTD
2023
YTD
2022
Revenue
$2,592
$2,497
$7,678
$7,404
Operating income, GAAP
$23.8
$60.2
$44.5
$196.4
Adj. Operating Income, Non-GAAP
$84.2
$83.4
$193.9
$301.9
Net (loss) income, GAAP
$(6.4)
$12.5
$(59.1)
$80.4
Adj. Net Income, Non-GAAP
$34.1
$31.4
$51.9
$162.5
Adj. EBITDA, Non-GAAP
$134.7
$127.5
$356.2
$413.4
Net (loss) income per common share,
GAAP
$(0.08)
$0.16
$(0.78)
$1.05
Adj. Net Income per share, Non-GAAP
$0.44
$0.41
$0.67
$2.13
(1) Reconciliations of the differences
between the non-GAAP financial measures presented in this release
and their most directly comparable GAAP financial measures are
included in the tables below.
Results and Business
Highlights
- Consolidated revenue of $2.59 billion in the third quarter of
2023, an increase of 3.8% as compared to the third quarter of 2022
- Patient Direct revenue of $648 million, up 9.1% compared to the
third quarter of 2022
- Products & Healthcare Services revenue of $1.94 billion, up
2% versus the prior year period with growth in the Medical
Distribution division of 5% partially offset by a decline in Global
Products
- Third quarter 2023 operating income of $24 million and Adjusted
Operating Income of $84 million
- Adjusted Operating Income essentially flat with the third
quarter of 2022
- Both Patient Direct and Products & Healthcare Services
delivered increases in Segment Income sequentially from the second
quarter to the third quarter of 2023
- Generated $157 million of operating cash flow in the third
quarter, and $629 million year to date
- Driven by strong working capital improvement and
profitability
- Favorable resolution of the FDA review of facial protection
products, clearing the resumption of sales of Halyard face masks
and respirators
2023 Financial Outlook
The Company narrowed its outlook for 2023; summarized below:
- Revenue for 2023 to be in a range of $10.3 billion to $10.4
billion
- Adjusted EBITDA for 2023 to be in a range of $535 million to
$555 million
- Adjusted EPS for 2023 to be in a range of $1.30 to $1.40
The Company’s outlook for 2023 contains assumptions, including
current expectations regarding the impact of general economic
conditions, including inflation, and the continuation of pressure
on pricing and demand in our Products & Healthcare Services
segment. Key assumptions supporting the Company’s 2023 financial
guidance include:
- Adjusted operating income benefit of at least $30 million from
the Operating Model Realignment Program
- Gross margin rate of ~20.5%
- Interest expense of $157 to $160 million
- Adjusted effective tax rate of 27% to 28%
- Diluted weighted average shares of ~77.5 million
- Capital expenditures of $200 to $220 million
- Stable commodity prices
- FX rates as of 9/30/2023
Although the Company does provide guidance for adjusted EBITDA
and adjusted EPS (which are non-GAAP financial measures), it is not
able to forecast the most directly comparable measures calculated
and presented in accordance with GAAP without unreasonable effort.
Certain elements of the composition of the GAAP amounts are not
predictable, making it impracticable for the Company to forecast.
Such elements include, but are not limited to, restructuring and
acquisition charges, which could have a significant and
unpredictable impact on our GAAP results. As a result, no GAAP
guidance or reconciliation of the Company’s adjusted EBITDA
guidance or adjusted EPS guidance is provided. The outlook is based
on certain assumptions that are subject to the risk factors
discussed in the Company’s filings with the SEC.
Investor Conference Call for Third
Quarter 2023 Financial Results Owens & Minor
executives will host a conference call for investors and analysts
at 8:00 a.m. ET on the same day. Participants may access the call
via the toll-free dial-in number at 1-888-300-2035, or the toll
dial-in number at 1-646-517-7437. The conference ID access code is
1058917.
All interested stakeholders are encouraged to access the
simultaneous live webcast by visiting the investor relations page
of the Owens & Minor website available at
investors.owens-minor.com/events-and-presentations/. A replay of
the webcast can be accessed following the presentation at the link
provided above.
Safe Harbor This release is
intended to be disclosure through methods reasonably designed to
provide broad, non-exclusionary distribution to the public in
compliance with the SEC's Fair Disclosure Regulation. This release
contains certain ''forward-looking'' statements made pursuant to
the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. These statements include, but are not limited
to, the statements in this release regarding our future prospects
and performance, including our expectations with respect to our
2023 financial performance, our Operating Model Realignment Program
and other cost-saving initiatives, future indebtedness and growth,
industry trends, as well as statements related to our expectations
regarding the performance of its business, including the results of
our Operating Model Realignment Program and our ability to address
macro and market conditions. Forward-looking statements involve
known and unknown risks and uncertainties that may cause our actual
results in future periods to differ materially from those projected
or contemplated in the forward-looking statements. Investors should
refer to Owens & Minor’s Annual Report on Form 10-K for the
year ended December 31, 2022, filed with the SEC including the
sections captioned “Cautionary Note Regarding Forward-Looking
Statements” and “Item 1A. Risk Factors,” and subsequent quarterly
reports on Form 10-Q and current reports on Form 8-K filed with or
furnished to the SEC, for a discussion of certain known risk
factors that could cause the Company’s actual results to differ
materially from its current estimates. These filings are available
at www.owens-minor.com. Given these risks and uncertainties, Owens
& Minor can give no assurance that any forward-looking
statements will, in fact, transpire and, therefore, cautions
investors not to place undue reliance on them. Owens & Minor
specifically disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future developments or otherwise.
About Owens & Minor
Owens & Minor, Inc. (NYSE: OMI) is a Fortune 500 global
healthcare solutions company integrating product manufacturing and
delivery, home health supply and perioperative services to support
care through the hospital and into the home. Owens & Minor
drives visibility, control and efficiency for patients, providers
and healthcare professionals across the supply chain with
proprietary technology and solutions, an extensive product
portfolio, an Americas-based manufacturing footprint for personal
protective equipment and surgical products, as well as a robust
portfolio of products and services for patients managing chronic
and acute conditions in the home setting. Operating continuously
since 1882 from its headquarters in Richmond, Va., Owens &
Minor is a 140-year-old company powered by more than 20,000 global
teammates. Learn more at https://www.owens-minor.com, follow
@Owens_Minor on Twitter and connect on LinkedIn at
www.linkedin.com/company/owens-&-minor.
Owens & Minor, Inc.
Consolidated Statements of Operations
(unaudited)
(dollars in thousands, except per share
data)
Three Months Ended
September 30,
2023
2022
Net revenue
$
2,591,742
$
2,497,401
Cost of goods sold
2,053,244
1,984,122
Gross margin
538,498
513,279
Distribution, selling and administrative
expenses
452,583
430,957
Acquisition-related charges and intangible
amortization
30,217
21,217
Exit and realignment charges
30,180
1,983
Other operating expense (income), net
1,677
(1,125
)
Operating income
23,841
60,247
Interest expense, net
38,127
39,869
Other (income) expense, net
(3,302
)
783
(Loss) income before income taxes
(10,984
)
19,595
Income tax (benefit) provision
(4,558
)
7,098
Net (loss) income
$
(6,426
)
$
12,497
Net (loss) income per common share:
Basic
$
(0.08
)
$
0.17
Diluted
$
(0.08
)
$
0.16
Owens & Minor, Inc.
Consolidated Statements of Operations
(unaudited)
(dollars in thousands, except per share
data)
Nine Months Ended September
30,
2023
2022
Net revenue
$
7,677,817
$
7,404,368
Cost of goods sold
6,122,579
5,985,136
Gross margin
1,555,238
1,419,232
Distribution, selling and administrative
expenses
1,356,334
1,122,353
Acquisition-related charges and intangible
amortization
74,609
100,628
Exit and realignment charges
74,817
4,879
Other operating expense (income), net
4,991
(5,020
)
Operating income
44,487
196,392
Interest expense, net
121,053
87,727
Other (income) expense, net
(843
)
2,347
(Loss) income before income taxes
(75,723
)
106,318
Income tax (benefit) provision
(16,638
)
25,937
Net (loss) income
$
(59,085
)
$
80,381
Net (loss) income per common share:
Basic
$
(0.78
)
$
1.08
Diluted
$
(0.78
)
$
1.05
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(dollars in thousands)
September 30,
December 31,
2023
2022
Assets
Current assets
Cash and cash equivalents
$
215,191
$
69,467
Accounts receivable, net of allowances of
$9,196 and $9,063
682,682
763,497
Merchandise inventories
1,084,350
1,333,585
Other current assets
148,046
128,636
Total current assets
2,130,269
2,295,185
Property and equipment, net of accumulated
depreciation of $532,399 and $450,286
540,419
578,269
Operating lease assets
300,264
280,665
Goodwill
1,635,010
1,636,705
Intangible assets, net
381,557
445,042
Other assets, net
136,544
150,417
Total assets
$
5,124,063
$
5,386,283
Liabilities and equity
Current liabilities
Accounts payable
$
1,182,408
$
1,147,414
Accrued payroll and related
liabilities
106,194
93,296
Other current liabilities
443,579
325,756
Total current liabilities
1,732,181
1,566,466
Long-term debt, excluding current
portion
2,113,602
2,482,968
Operating lease liabilities, excluding
current portion of $85,149 and $76,805
225,208
215,469
Deferred income taxes
45,616
60,833
Other liabilities
120,596
114,943
Total liabilities
4,237,203
4,440,679
Total equity
886,860
945,604
Total liabilities and equity
$
5,124,063
$
5,386,283
Owens & Minor, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(dollars in thousands)
Three Months Ended
September 30,
2023
2022
Operating activities:
Net (loss) income
$
(6,426
)
$
12,497
Adjustments to reconcile net (loss) income
to cash provided by operating activities:
Depreciation and amortization
73,652
58,151
Share-based compensation expense
5,742
4,555
Provision for losses on accounts
receivable
413
777
Gain on extinguishment of debt
(5,222
)
—
Deferred income tax (benefit)
provision
(9,557
)
1,390
Changes in operating lease right-of-use
assets and lease liabilities
1,560
316
Gain on sale and dispositions of property
and equipment
(7,899
)
(17,228
)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(13,006
)
(8,858
)
Merchandise inventories
81,406
17,615
Accounts payable
(5,821
)
18,075
Net change in other assets and
liabilities
39,913
(21,478
)
Other, net
2,680
2,709
Cash provided by operating
activities
157,435
68,521
Investing activities:
Additions to property and equipment
(47,728
)
(47,039
)
Additions to computer software
(2,860
)
(2,410
)
Proceeds from sale of property and
equipment
17,916
23,874
Other, net
—
(831
)
Cash used for investing
activities
(32,672
)
(26,406
)
Financing activities:
Borrowings under amended Receivables
Financing Agreement
127,800
349,900
Repayments under amended Receivables
Financing Agreement
(127,800
)
(367,900
)
Repayments of debt
(191,888
)
(1,500
)
Financing costs paid
—
(1,123
)
Other, net
8,893
575
Cash used for financing
activities
(182,995
)
(20,048
)
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
(711
)
(1,888
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(58,943
)
20,179
Cash, cash equivalents and restricted
cash at beginning of period
309,103
73,029
Cash, cash equivalents and restricted
cash at end of period(1)
$
250,160
$
93,208
Supplemental disclosure of cash flow
information:
Income taxes paid, net
$
3,708
$
7,786
Interest paid
$
22,454
$
29,472
Noncash investing activity:
—
Unpaid purchases of property and equipment
and computer software at end of period
$
60,870
$
63,158
(1) Restricted cash, as of September 30,
2023 and June 30, 2023 was $35.0 million and $22.8 million,
includes amounts held in an escrow account as required by the
Centers for Medicare & Medicaid Services (CMS) in conjunction
with the Bundled Payments for Care Improvement (BPCI) initiatives
related to wind-down costs of Fusion5. Restricted cash as of
September 30, 2023 and June 30, 2023 also includes $18.6 million
and $6.4 million of restricted cash deposits received under the
Master Receivables Purchase Agreement to be remitted to a
third-party financial institution.
Owens & Minor, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(dollars in thousands)
Nine Months Ended September
30,
2023
2022
Operating activities:
Net (loss) income
$
(59,085
)
$
80,381
Adjustments to reconcile net (loss) income
to cash provided by operating activities:
Depreciation and amortization
216,640
155,438
Share-based compensation expense
17,417
15,765
(Benefit) provision for losses on accounts
receivable
(487
)
5,289
Gain on extinguishment of debt
(4,379
)
—
Deferred income tax (benefit)
provision
(16,315
)
2,991
Changes in operating lease right-of-use
assets and lease liabilities
(1,517
)
922
Gain on sale and dispositions of property
and equipment
(26,462
)
(17,002
)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
77,197
7,417
Merchandise inventories
247,057
(6,823
)
Accounts payable
46,338
30,424
Net change in other assets and
liabilities
122,867
(45,423
)
Other, net
9,674
8,666
Cash provided by operating
activities
628,945
238,045
Investing activities:
Acquisition, net of cash acquired
—
(1,684,607
)
Additions to property and equipment
(140,478
)
(109,275
)
Additions to computer software
(11,089
)
(5,873
)
Proceeds from sale of property and
equipment
53,645
29,720
Other, net
(418
)
(1,670
)
Cash used for investing
activities
(98,340
)
(1,771,705
)
Financing activities:
Borrowings under amended Receivables
Financing Agreement
476,000
697,700
Repayments under amended Receivables
Financing Agreement
(572,000
)
(770,700
)
Repayments of debt
(270,189
)
(3,000
)
Proceeds from issuance of debt
—
1,691,000
Borrowings under revolving credit
facility, net and Receivables Financing Agreement
—
30,000
Financing costs paid
—
(42,602
)
Other, net
74
(41,813
)
Cash (used for) provided by financing
activities
(366,115
)
1,560,585
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
(515
)
(5,752
)
Net increase in cash, cash equivalents
and restricted cash
163,975
21,173
Cash, cash equivalents and restricted
cash at beginning of period
86,185
72,035
Cash, cash equivalents and restricted
cash at end of period(1)
$
250,160
$
93,208
Supplemental disclosure of cash flow
information:
Income taxes (received) paid, net
$
(6,798
)
$
33,568
Interest paid
$
101,079
$
61,889
Noncash investing activity:
Unpaid purchases of property and equipment
and computer software at end of period
$
60,870
$
63,158
(1) Restricted cash, as of September 30,
2023 and December 31, 2022 was $35.0 million and $16.7 million,
includes amounts held in an escrow account as required by the CMS
in conjunction with the BPCI initiatives related to wind-down costs
of Fusion5. Restricted cash as of September 30, 2023 also includes
$18.6 million of restricted cash deposits received under the Master
Receivables Purchase Agreement to be remitted to a third-party
financial institution.
Owens & Minor, Inc.
Summary Segment Information
(unaudited)
(dollars in thousands)
Three Months Ended September
30,
2023
2022
% of
% of
consolidated
consolidated
Amount
net revenue
Amount
net revenue
Net revenue:
Products & Healthcare Services
$
1,943,467
74.99
%
$
1,903,356
76.21
%
Patient Direct
648,275
25.01
%
594,045
23.79
%
Consolidated net revenue
$
2,591,742
100.00
%
$
2,497,401
100.00
%
% of segment
% of segment
Operating income:
net revenue
net revenue
Products & Healthcare Services
$
19,803
1.02
%
$
23,781
1.25
%
Patient Direct
64,435
9.94
%
59,666
10.04
%
Acquisition-related charges and intangible
amortization
(30,217
)
(21,217
)
Exit and realignment charges
(30,180
)
(1,983
)
Consolidated operating income
$
23,841
0.92
%
$
60,247
2.41
%
Depreciation and amortization:
Products & Healthcare Services
$
20,021
$
19,121
Patient Direct
53,631
39,030
Consolidated depreciation and
amortization
$
73,652
$
58,151
Capital expenditures:
Products & Healthcare Services
$
5,023
$
9,743
Patient Direct
45,565
39,706
Consolidated capital expenditures
$
50,588
$
49,449
Owens & Minor, Inc.
Summary Segment Information
(unaudited)
(dollars in thousands)
Nine Months Ended September
30,
2023
2022
% of
% of
consolidated
consolidated
Amount
net revenue
Amount
net revenue
Net revenue:
Products & Healthcare Services
$
5,789,679
75.41
%
$
5,964,784
80.56
%
Patient Direct
1,888,138
24.59
%
1,439,584
19.44
%
Consolidated net revenue
$
7,677,817
100.00
%
$
7,404,368
100.00
%
% of segment
% of segment
Operating income:
net revenue
net revenue
Products & Healthcare Services
$
24,564
0.42
%
$
174,108
2.92
%
Patient Direct
169,349
8.97
%
127,791
8.88
%
Acquisition-related charges and intangible
amortization
(74,609
)
(100,628
)
Exit and realignment charges
(74,817
)
(4,879
)
Consolidated operating income
$
44,487
0.58
%
$
196,392
2.65
%
Depreciation and amortization:
Products & Healthcare Services
$
57,360
$
57,325
Patient Direct
159,280
98,113
Consolidated depreciation and
amortization
$
216,640
$
155,438
Capital expenditures:
Products & Healthcare Services
$
17,957
$
38,804
Patient Direct
133,610
76,344
Consolidated capital expenditures
$
151,567
$
115,148
Owens & Minor, Inc.
Net (Loss) Income Per Common Share
(unaudited)
(dollars in thousands, except per share
data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net (loss) income
$
(6,426
)
$
12,497
$
(59,085
)
$
80,381
Weighted average shares outstanding -
basic
76,203
74,905
75,691
74,376
Dilutive shares
—
1,510
—
1,835
Weighted average shares outstanding -
diluted
76,203
76,415
75,691
76,211
Net (loss) income per common share:
Basic
$
(0.08
)
$
0.17
$
(0.78
)
$
1.08
Diluted
$
(0.08
)
$
0.16
$
(0.78
)
$
1.05
Share-based awards for the three and nine
months ended September 30, 2023 of approximately 1.5 million and
1.6 million shares were excluded from the calculation of net loss
per diluted common share as the effect would be anti-dilutive.
Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations
(unaudited)
(dollars in thousands, except per share
data)
The following table provides a
reconciliation of reported operating income, net (loss) income and
net (loss) income per share to non-GAAP measures used by
management.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Operating income, as reported (GAAP)
$
23,841
$
60,247
$
44,487
$
196,392
Acquisition-related charges and intangible
amortization (1)
30,217
21,217
74,609
100,628
Exit and realignment charges (2)
30,180
1,983
74,817
4,879
Operating income, adjusted (non-GAAP)
(Adjusted Operating Income)
$
84,238
$
83,447
$
193,913
$
301,899
Operating income as a percent of net
revenue (GAAP)
0.92
%
2.41
%
0.58
%
2.65
%
Adjusted operating income as a percent of
net revenue (non-GAAP)
3.25
%
3.34
%
2.53
%
4.08
%
Net (loss) income, as reported (GAAP)
$
(6,426
)
$
12,497
$
(59,085
)
$
80,381
Pre-tax adjustments:
Acquisition-related charges and intangible
amortization (1)
30,217
21,217
74,609
100,628
Exit and realignment charges (2)
30,180
1,983
74,817
4,879
Other (3)
(4,657
)
525
(2,685
)
1,574
Income tax benefit on pre-tax adjustments
(4)
(15,180
)
(4,776
)
(35,711
)
(25,002
)
Net income, adjusted (non-GAAP) (Adjusted
Net Income)
$
34,134
$
31,446
$
51,945
$
162,460
Net (loss) income per common share, as
reported (GAAP)
$
(0.08
)
$
0.16
$
(0.78
)
$
1.05
After-tax adjustments:
Acquisition-related charges and intangible
amortization (1)
0.28
0.22
0.74
1.01
Exit and realignment charges (2)
0.28
0.02
0.74
0.05
Other (3)
(0.04
)
0.01
(0.03
)
0.02
Net income per common share, adjusted
(non-GAAP) (Adjusted EPS)
$
0.44
$
0.41
$
0.67
$
2.13
Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations
(unaudited), continued
(dollars in thousands)
The following tables provide
reconciliations of net (loss) income and total debt to non-GAAP
measures used by management.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Net (loss) income, as reported (GAAP)
$
(6,426
)
$
12,497
$
(59,085
)
$
80,381
Income tax (benefit) provision
(4,558
)
7,098
(16,638
)
25,937
Interest expense, net
38,127
39,869
121,053
87,727
Acquisition-related charges and intangible
amortization (1)
30,217
21,217
74,609
100,628
Exit and realignment charges (2)
30,180
1,983
74,817
4,879
Other depreciation and amortization
(5)
50,909
43,849
151,635
99,979
Stock compensation (6)
4,616
5,374
15,761
15,593
LIFO credits (7)
(3,660
)
(4,957
)
(3,253
)
(3,331
)
Other (3)
(4,657
)
525
(2,685
)
1,574
Adjusted EBITDA (non-GAAP)
$
134,748
$
127,455
$
356,214
$
413,367
September 30,
2023
Total debt, as reported (GAAP)
$
2,146,037
Cash and cash equivalents
(215,191
)
Net debt (non-GAAP)
$
1,930,846
Owens & Minor, Inc. GAAP/Non-GAAP Reconciliations
(unaudited), continued
The following items have been excluded in our non-GAAP financial
measures:
(1) Acquisition-related charges and intangible amortization
includes acquisition-related charges of $9.4 million and $6.9
million for the three months ended September 30, 2023 and 2022 and
$11.9 million and $45.2 million for the nine months ended September
30, 2023 and 2022, as well as amortization of intangible assets
established during acquisition method of accounting for business
combinations. Acquisition-related charges consist primarily of
one-time costs related to the Apria Acquisition, including
transaction costs necessary to consummate the acquisition, which
consisted of investment banking advisory fees and legal fees,
director and officer tail insurance expense, severance and
retention bonuses, and professional fees. These amounts are highly
dependent on the size and frequency of acquisitions and are being
excluded to allow for a more consistent comparison with forecasted,
current and historical results.
(2) During the three and nine months ended September 30, 2023
exit and realignment charges were $30.2 million and $74.8 million.
These charges primarily related to our (1) Operating Model
Realignment Program of $24.5 million and $63.9 million, including
professional fees, severance and other costs to streamline
functions and processes, (2) IT restructuring charges such as
converting to common IT systems of $3.3 million and $6.7 million
and, (3) other costs associated with strategic initiatives of $2.4
million and $4.1 million for the three and nine months ended
September 30, 2023. Exit and realignment charges were $2.0 million
and $4.9 million for the three and nine months ended September 30,
2022 and consisted primarily of severance and other charges
associated with the reorganization of our segments. These costs are
not normal recurring, cash operating expenses necessary for the
Company to operate its business on an ongoing basis.
(3) For the three and nine months ended September 30, 2023 other
includes gain on extinguishment of debt of $5.2 million and $4.4
million associated with the early retirement of indebtedness of
$195 million and $268 million. Additionally, for the three and nine
months ended September 30, 2023 and 2022, other includes interest
costs and net actuarial losses related to our frozen
noncontributory, unfunded retirement plan for certain retirees in
the United States (U.S.).
(4) These charges have been tax effected by determining the
income tax rate depending on the amount of charges incurred in
different tax jurisdictions and the deductibility of those charges
for income tax purposes.
(5) Other depreciation and amortization relates to property and
equipment and capitalized computer software, excluding such amounts
captured within exit and realignment charges or acquisition-related
charges.
(6) Stock compensation includes share-based compensation expense
related to our share-based compensation plans, excluding such
amounts captured within exit and realignment charges or
acquisition-related charges.
(7) LIFO credits includes non-cash adjustments to merchandise
inventories valued at the lower of cost or market, with the
approximate cost determined by the last-in, first-out (LIFO) method
for distribution inventories in the U.S. within our Products &
Healthcare Services segment.
Use of Non-GAAP
Measures
This earnings release contains financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles (GAAP). In general, the measures exclude items and
charges that (i) management does not believe reflect Owens &
Minor, Inc.'s (the Company) core business and relate more to
strategic, multi-year corporate activities; or (ii) relate to
activities or actions that may have occurred over multiple or in
prior periods without predictable trends. Management uses these
non-GAAP financial measures internally to evaluate the Company's
performance, evaluate the balance sheet, engage in financial and
operational planning and determine incentive compensation.
Management provides these non-GAAP financial measures to
investors as supplemental metrics to assist readers in assessing
the effects of items and events on its financial and operating
results and in comparing the Company's performance to that of its
competitors. However, the non-GAAP financial measures used by the
Company may be calculated differently from, and therefore may not
be comparable to, similarly titled measures used by other
companies.
The non-GAAP financial measures disclosed by the Company should
not be considered substitutes for, or superior to, financial
measures calculated in accordance with GAAP, and the financial
results calculated in accordance with GAAP and reconciliations to
those financial statements set forth above should be carefully
evaluated.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231103688616/en/
Investors Alpha IR Group
Jackie Marcus or Davis Snyder OMI@alpha-ir.com
Jonathan Leon SVP Finance & Treasurer
Investor.Relations@owens-minor.com
Media Stacy Law
media@owens-minor.com
Owens and Minor (NYSE:OMI)
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