• Revenue: $2.7 billion for the fourth quarter, up 1.5% year-over-year.
• Patient Direct Revenue Growth: 5% increase compared to the fourth quarter of 2023.
• Gross Profit: $580 million, representing 21.5% of net revenue.
• Distribution, Selling, and Administrative Expenses: $493 million, 18.3% of revenue.
• Adjusted Operating Income: $95 million for the fourth quarter.
• Interest Expense: Just under $36 million for the fourth quarter.
• Adjusted Net Income: $43 million or $0.55 per share.
• Adjusted EBITDA: $138 million for the fourth quarter.
• Operating Cash Flow: $71 million generated in the fourth quarter.
• Debt Reduction: $31 million reduced in the fourth quarter; $244 million for the full year.
• 2025 Revenue Guidance: $10.85 billion to $11.15 billion.
• 2025 Adjusted EBITDA Guidance: $560 million to $590 million.
• 2025 Adjusted EPS Guidance: $1.60 to $1.85 per share.
• Share Repurchase Program: Authorized up to $100 million.

• Warning! GuruFocus has detected 2 Warning Sign with OMI.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Owens & Minor Inc (NYSE:OMI) achieved mid-single-digit top line growth and 13% growth in adjusted EPS for 2024.
• The company repaid $647 million of debt over the last two years, enhancing financial flexibility.
• Patient Direct business outpaced market growth with mid-single-digit growth and delivered over $13 million of incremental operating income year-over-year.
• The company launched ByramConnect, a digital health coach to help manage diabetes, showcasing continued investment in technology.
• Owens & Minor Inc (NYSE:OMI) authorized a share repurchase program of up to $100 million, indicating confidence in the company's valuation.

Negative Points

• The Products & Healthcare Services segment experienced lower glove pricing, impacting overall sales growth.
• Distribution, selling, and administrative expenses increased, primarily due to higher teammate benefit expenses and workers' compensation costs.
• The company recorded a $305 million net of tax goodwill impairment charge in the fourth quarter, affecting financial results.
• Interest expense remains a concern, although it decreased slightly due to debt reduction.
• The company faces uncertainties related to the potential sale of its Product & Healthcare Services segment and the pending acquisition of Rotech.

Q & A Highlights

Q: Can you provide insights on the Rotech acquisition and any surprises in its performance? A: Jonathan Leon, Executive Vice President, Chief Financial Officer, stated that there were no surprises in Rotech's performance. The impact of the 75-25 legislation affected everyone, with Rotech having more exposure to government reimbursement. However, the results were consistent with the deal model, and cost synergies could exceed the $50 million initially projected.

Q: How do you plan to deploy the expected $200 million in free cash flow and the $100 million share repurchase program? A: Edward Pesicka, President, Chief Executive Officer, Director, emphasized that the primary objective is to continue paying down debt. However, if the stock remains undervalued, they will be opportunistic with share repurchases throughout the year.

Q: What are the growth expectations for the Patient Direct segment in 2025? A: Edward Pesicka highlighted that the Patient Direct segment had mid-single-digit growth in 2024, with significant success in diabetes and supply categories. The focus for 2025 will be on improving home respiratory and NIV and oxygen spaces, which are currently underperforming.

Q: Why is now the right time to consider selling the Products & Healthcare Services (P&HS) segment? A: Edward Pesicka explained that there was significant inbound interest in the P&HS segment, prompting a broader process with advisors and the Board. The decision allows for open dialogue with stakeholders and aims to reach a decision quickly.

Q: What is the impact of tariffs on Owens & Minor's business? A: Edward Pesicka noted that tariffs are not as significant for Owens & Minor compared to others in the industry. Most products are not made in China, and the Mexican footprint is minimal. Any increased costs due to tariffs will be passed on to customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.