OMI - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to the Owens & Minor First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker for today, Jackie Marcus, Investor Relations. ahead. go Please

Jacqueline Marcus

Hello, Minor operator. welcome the to Thank Quarter everyone, XXXX & First Earnings Owens you, and Call.

website. Please well quarter refer matters Our and posted today, our the section comments Risk these filings and President full for note today. our measures, financial financial report about XXXX included reports make Officer. and on are XXXX, first the in The that Factors from XX-K most which press are this XX-Q. In to reference are release Bruni, quarterly here GAAP SEC on and the comparable including focused be and a Pesicka, I'm outlook discussion Executive on risks uncertainties, included as both of Please of we the in implied of description to Investor subject will The will Relations Form differ or call, on the certain and non-GAAP annual uncertainties, of cause to Vice our are Financial slides forward-looking by results statements our of statements. reconciliations and measures along President Chief Officer; measures release. call Executive Ed which our financial joined addressed and for press in Chief with will section supplemental these Today, these Alex Form information as for our we materially release. today's on risks press actual projected the during to the those could results

call now turn the will Ed. I to over

Edward Pesicka

us for on everyone, morning, Good and you, Thank you thank joining the today. call Jackie.

evolving our with am and I QX, continued by model XX XXXX. the performance on financial first our for progress of encouraged we've weeks reflect both pleased the I with made operating As

of able of to to investments and introduced plan strategic we were our in In ahead schedule. related investments long-term XXXX, make December these we addition, are

our customers service and bring operational serve. We higher ultimately, investments making levels patients to are the to of also

in our Distribution in new we met our seasonality the of direct QX, patient and expectations. onboarded overall Medical Finally, internal customers segments division, navigated our

will our the Alex expectations our of operational While of for review financial achievements few a do dive performance quarter. XXXX, financial and and let a from the into first me remainder deeper

sales Services First, year-over-year a our U.S. saw our pleased to focus channel a launches. sales and the our product Global our volumes Overall, Products product as settle we our pre-COVID increase in unit & enhanced the as to back with result delivering growth prices flattening posted of in in curve same-store continue product sales, Distribution in levels. attractive revenue by result of of driven new addition the mid-single-digit of X% with Healthcare division, division onboarding segment new to a improvement Medical to as growth I'm improving customers Products proprietary to sales. In continuing see of

Direct X% a Patient year-over-year revenue. improvement posted in segment Our

commercial resources We adjustments to along our in very invested territories in in to plan. consistent anticipated of digits strategic result XXXX with the sales as mid-single additional first growth of QX as a growth with be the strong we the long-term quarter

from marginal some the cyber topline business. Health were impact which our impact we immune the in did late Additionally, at not February, have incident to Change of

Change I'm responsiveness this to capture all services also to products our currently of to very revenue payment receive are we to and company. impact And for associated full with mitigate However, issue the working ensure and we proud our the rendered.

of the More every ability potential receive even to life-saving day. ability and our disruption successfully I'm limit more our products pleased need importantly, supplies customers' to with they

continuity efficiently of regardless it and of process our to make essential and as takes responsibility when and care, felt matters possible was life & deliveries orders care the to continue it quickly At Owens Minor, most. obstacles we provide the believe we to as

Turning the our Direct and us our of profitability emphasis beginning already in XXXX with to operating back to will realignment model This segment. on next take make an business. enable at Patient of broader improving well-run Direct focus the and phase meaningful actions our the year, in growth added to entered identifying our We segment. related and capturing assessments Patient

At We areas are and time, and profitability the improve opportunities realignment Services identified our such Product & in operating recently supply utilizing initiatives business bring Healthcare model to as our grow continuing while segment, transformational gain we daily to activity opportunities the to our reimbursement and into embedded in our to model to efficiencies sleep implement collection customers. have past same fruition.

remain for Our segment the our years optimizing and have on company, to we result will meaningful year, the investment will our rationalization and supply do in network. Throughout of they remainder chain manufacturing to greater excellence, focused leaders come. growth from footprint to so activities keenly continue network but I operational for these and everything profitable the believe taken

earnings with expectations. detail year-over-year key show Lastly, positive our and adjusted discuss many improvements financials these our improvement our line other I'm in will continued shortly. These were encouraged of indicators. and the Alex momentum by greater in

the many that today. on Our that our right constantly even all future, to and improve obstacles, will assist the these demonstrates we We path we of those working. business and know there mitigating be recent in is can't will strategy obstacles focus that we us are that success our the in believe see

as organization focused remain excellence. long-term on and future an on will built We our our strategy

to optimizing our X-year Day Investor XXXX, the profitability key our long-term At business. of is X strategic outlined which our December XXXX, plan business investing accelerating pillared by for vision in we drive in our and tenets: growth,

doing are early are we would in the what results. are the we and seeing exactly innings, we said we While we

to performance Alex in call turn discuss the to our would financial now like our Officer, detail. Financial I to Chief first Alex? more quarter over Bruni,

Alexander Bruni

quarter in XXXX. morning, Good by financial our I'll first of primary Ed. an drove providing of the our the results you, begin that overview Thank everyone. and factors performance

growth We in Global both up saw growth Our the to sales. U.S. prior Medical in quarter of revenue proprietary for $X.X year. segments mid-single business growth we topline our Products digits. & in our basis. product grew X%, was a in year-over-year Products And our Distribution billion, the the division, on generated Services with X% Healthcare compared

revenue Healthcare the for slowed or of revenue, Gross patients. was in of quarter first cyber incident XXXX. which up Direct $XXX $XXX the in first onboard the revenue by to was Patient of existing eligibility impacted ability Change million patients XX.X% that partially renew X%, or to our million compared was XX.X% new and profit quarter

Products First, program; to Services efforts direct in successful Our Healthcare realignment gross direct which margin by of expansion gains operating things: patient of the X of the and driven improved the expansion points can efficiency gross be & attributed Healthcare profitability XX model segment, basis patient sales higher growth, the collections margin third, than second, sales, a Services. & carries and Products

quarter million. segment. was the and income in up year-over-year making The improvements $XX our growth. than the distribution, was million, expenses Services an both quarter operating our of to were Our increase million, driven Healthcare benefits GAAP teammate million company decision $XXX up $XX and throughout and Adjusted for growth future revenue. operating expenses XX% investments income the XX% make for in more increase reflects the year-over-year higher variable was $XX income segments, and in administrative Products and was adjusted the operating selling for by profitable to support overall incremental the

our in was incident. expected first million was regulatory a growth, of million, first Patient the in year, to quarter reflecting cyber expense $XX million, Change impacted The Interest changes by lesser XXXX. our $X segment future quarter the XXXX. decrease XX% EBITDA was and, Direct reduce quarter for the investments versus $XXX total work first prior its to from extent, the reimbursement of Healthcare last debt a Adjusted up

effective and XX%. was tax rate the rate GAAP tax XX% Our effective adjusted was

Our income per to GAAP per million net was the million $X.XX or share. for amounted $X.XX quarter of Adjusted loss for common $XX a loss the net common share. $XX or quarter

The Medical the maintain outlined, to debt considering change continue investments adjusted capital in the service by company, income investments reflected the structure. and to Ed support Distribution, in customer inventory significant our make, driven the levels increase as mentioned to high-quality And cash in flow onboardings Shifting to net we especially generation and above. levels. factors across was

debt of committed and up was $X.X last the $X.X Through net about year-end. remainder we our long-term total to debt to reduction billion, as billion, net X% of XXXX investments March make We minimal our expect debt remain was drive from growth. XX, guidance. As we XXXX, profitable delivering

to billion to range $XXX a the of of to million $XX.X $XXX in of to be As halves second sequential to to lead $X.XX X/X EPS be range reminder, we'd the million the first perspective, expect and improvement X/X, $X.XX. be EBITDA $XX.X and range from of the Also, adjusted to billion, adjusted in a EPS to the expect split in we reminder, to revenue in we deliver the each as and expect a adjusted across roughly year seasonality quarter.

I'll the that, for call over part to the With of the call. operator Q&A the turn

Operator

Instructions] from from Partners. first [Operator Our comes Michael question Leerink Cherny

Michael Cherny

first jump on quarter. the Direct, the dynamics Maybe Patient in can if I in

and change You of of rates a change visibility surprise in to the into color seeing what improved outage, Can a give talked magnitude you payment of outage little more not about the that some and terms on flows? anyone. bit you're improved already

Edward Pesicka

Patient to many or QX I adjusting. thanks think is. mean of question. so as what changing for the is payers, of they're are all, On patients most year for Change I I quarter labor-intensive probably the Direct, the complicated, of Yes, Mike, Health, QX Sure. mean, got first you recognize the insurance

It work with did on there's on top line, collection. minimal in So of that. have a impact really, would lot -- associated I impact an had our but the say, it

make We've They this to have partner. recognized closely has change worked incredible with it. through been want also us. I'll that's an worked sure

As an its process. we're I and labor-intensive think system. a more important significant standpoint, through expense a of used do coming labor-intensive manually work that more the were to way instantaneously see standpoint. thing that system that's we're starting operating to more done But that -- that's it to process And from things from the was through April,

on So to system. of as and impact get way we receivables. through has I our But through the impact this think expect an an that that its most quarter QX, flow had on we cash work

Michael Cherny

time? data in relative the from could surmount can A developments their Anything the think, provide accepted these some Direct. this more potential to gaining both of an market incremental development as sleep data it. just at your see the we I across changed against of and us demand settlement and And to if franchise accrual the and on multiyear on that's you Patient terms things CPAP ask of one anything I backdrop or hopefully of targets market on update and normalization changes Philips number Lilly back Got devices. how all see points of over of CPAP the a in proposed for your least OSA you CPAP terms recent

Edward Pesicka

Philips Yes. over products for guess is, when obviously, on about got that's now. been we needs. publicly we've do with I here. it, one mean, there able it others look bring with customers' things to out issue way a the the continue That's can I Philips right in the been at partner that really of of to -- so to think the been have hold year you've inventory And we is hit amount

and an impact had increased other because up manufacturers stepped hasn't that production. on have So us

our with move in as be along the sleep That's probably I strong diabetes fastest-growing segment. that on are us. continue continue forward. see faster for that to we -- starts overall still demand categories one growing than think The X to you'll

anticipate specifically continue. realignment model some to talked of bit around doing sleep. work a little And the in about we that we're So operating we the

understand future. some sleep I think that's to that to in way, continue drive we so growth we better, sure the the journey can important make strong

Operator

from next UBS. Our question Caliendo comes from Kevin

Kevin Caliendo

margin margins how bit XX, continue margins little you Patient about I XX know in I the was investments -- to think in is just you quarter. anything margins there basis to mentioned any I'm any operating Is bit wondering how I want there The points. decline mix? just difficult of progress the any to on it Direct. about a talked fell one-timers a -- there I'm little year-over-year that if year-over-year? to is or should would about what way that? there Is there change prompt guess the specific

think improvement And improvement about sequential in about maybe business but how you business, I that we should we margins business, or in think expect we the what the how year-over-year know a quarter overall in the basis? on every expect margins should

Edward Pesicka

last even think, year, year we we of and of factors, -- think a at I is had last Day one this. there couple different an Investor to end I talked the QX is consider about

our So December, add We that and significant about when one, in resources. it are in investments talked Day of segment we commercial had we back Direct a making that, do Patient our with on shared you do adding as XXXX disruption X strategy. create territories One when you're recognize it level And expanding some things and that. happen we of out. is you Investor

that. to addition In

aspect XX about of those break it, other months we The that or assets or to for even. takes so said it investments

share find things able on So should or we those quicker a of pace add thought. best team. we the is find the to our We to to one best more assets to at of think schedule we're in those the adding than resources. it, actually teammates of we're about case, were market trying to the bring in our we much ahead And

associated extra of bit we with that. a So little had expense

in extreme segment. processing give at at to it. still we to bullish your first on the are some the and bullishness put the just around But the business could we it comment, it another how we sure short about long door. extra term. make we're ultimately, the our And in, looking product not we're the from Those kind That's From discussed that out in goes then to last positioning, from and get the it extremely run, the costs in things time market as space and investments Patient was of term, think if that I our around the aspect long looking get making, patients you in it it term, Direct is question, of question, well a also, had we're the us the excitement remain the that.

we in grew be X business the coming to at digits. I knew we're if at think that is the is tough QX one years little going because you over other a remember thing it, to QX, look double last

we're some and we growth doing X years. extremely need We're last to coming some what deliver we -- But about that strong, adding we're over target, [indiscernible] i'm the on sorry, strong again, So the over long-term sequentially annually to do remain space. resources. excited

Kevin Caliendo

just be If think year? helpful. through follow-up. quick up. a we are growth On I going sleep That's how between can I -- comp the a coming rental about you lapping tougher sleep, the ask as maybe versus to consumables mix progress should we

Edward Pesicka

Yes.

on sleep seeing true. consumables are not at still a you -- right, the level, and have But those. it's over law high that's you're But think I going to time, we're we're versus because yes, more of our starts, a slowdown numbers. more starts just

should you way about it. the that's So think

Kevin Caliendo

me, And apologize just the Or Does for what just impact we on... do time? mean that that that? ignorance progresses as gross I think you over is impact like margin? can remind how about higher my the on

Alexander Bruni

on what's difference I'm sorry, the what gross between... Kevin. is, impact margin? question of, The The

Kevin Caliendo

of to the As part. the becomes law start grow like numbers you as mix, the consumables bigger a said, consumables as large faster,

understood for that what is the the make just what that wanted and rental, the understand impact Just margin? sure versus operating like does the on consumables margin, I the mean and I -- gross to of

Alexander Bruni

Thank growth for margin. supplies Thank the Yes, so you Yes. favorable the growth in to outsized repeating gross sleep that. will be you. --

Operator

next Grosslight from comes question Our Daniel from Citi.

Daniel Grosslight

a on cash couple Just flow.

net you're basically of First, basis on to obviously, $XXX sales? CapEx, flat kept year. net, $XXX quarter, staying cash see is that's I basically flow pretty a a de step million as million of on if net if on or effectively which for going inventory flow up here? free basis, implies you minimis kind implying year? that cash the wanted it's confirm rebuild the of of at the to just gross And around to full your for free Because significant a you're the kind guidance on commentary same, this then remainder debt that

Alexander Bruni

Yes. Thank you questions. the for

that CapEx, and CapEx, through we the year. expect spending fact on So we as increased gross in head is the do

to onboarding expect net only inventory the reflecting we flat well our that investments of in again, but debt, year, So on service the then as guidance we've the levels new reiterating overall. in range. do as stay made relatively capabilities, commercial support to And driving as remainder customers also that not through

Daniel Grosslight

Got it.

follow-up, a the more know on a on large improvement. the I as had margin [ in you've that's of And got some But onboarding. questions I P&HS ] Okay. of the segment, cadence client process

get update hoping investments was I So to an then that? on too. also And that segment, across

and kind would you year? cadence just remainder thinking of about spend color the So those year able on items of be P&HS this a to for provide improvement you're little how of more the big the

Edward Pesicka

that let color Well, it. I'll part and Alex add of some on take

in investments about think P&HS. So

and areas in of different Day, investing So in. product proprietary in couple of there's outlined we process Investor One already expansion. the is a at we're portfolio

obviously resources board in to expansion new So brought are on of new additional assess to Those proprietary operating bring we in. products. and expenses continue

the wound own areas products proprietary is in that care, of One space. we've already launched some additional

to provide to that, to our as really our to support The to a closer about aspect as capital In next well to it's looking well chain. operations. and commercial is We around beef our the investment continuous investments supply the from of commercial footprint in both there. improvements, manufacturing presence able and it be the as right as optimizing more make external up and standpoint, addition customer get talked

with operating Some within a efficiency expenses. pick, drive drive of technology something pick higher to simple around that is as warehouses more of invested to accuracy going our be turn and vision to

on then capital there's also the the So expense that, but expense operating there's associated curve. with learning

year and start anticipate margin, year margin the as the those things to progress. business as future take -- years this drive to then within margin improvement hold And on really the as we

Alexander Bruni

Ed. Thanks, Yes.

transformational Direct, we've from OpEx P&HS invested color. line do a and driving back and of lot half a drive bit operating margin the as for that the got capabilities, into seasonality we a forward. top move margin those made we've that, leverage, instance, we we're maybe continue factored increased And as the parallel to where the improvement in normal we to add again, efforts of an investments So Similar number into to already head standpoint, in we've And run we'd more commercial in some as Patient of then expect rate. just to expect are drive to little the with so year. outlined

Edward Pesicka

that, little in behind margin, quarter this a about year me put you too, we XX of realignment, if our model think talked things key more facts gross last points So sourcing. you about -- improvement about basis some let bit operating one think if in is the was what the

I out we what extremely raw is and be hard to at go is the price So material and lower worked that continue a together ability organization put a world-class to now sourcing internally competitive. believe to providing find

other go So quarter the to out some it as on drive we of in ability the making coming drive back offset expansion expansion. why to margin in product prices order the our the basis I'll the work this call And on XX at and levels, to is really, that, PD. on down part of cash house, to then that the we're additional saw pre-pandemic which are of side continuing have reason collection cycle, points sourcing investments the you cash or to margin

work now is operating So business. into realignment of in I model that we sure a to did -- want the the embedded recognizes make lot but is program everyone the

to progresses. able anticipate around and drive expansion. is additional sourcing as that a margin Direct, to in we to and example sleep transformational margin around year And opportunities changes great year Patient order the the or see cash some expansion And of this then being of

Operator

Our question from is Coldwell Eric coming Baird. next from

Eric Coldwell

a mentioned some patient the collections. you improvements bad of and couple -- improvement? the ratio cash the in debt us give to order to wanted Could ratios on patient times you bad the debt or I collection or

Edward Pesicka

Yes.

the, anticipation as opportunity on. is is continue QX. the I pick in the there it, think to there's for Obviously, we'll I level, focus high to lot complexity that QX what tough right in mid-XXs, the But a continue to at call an a us a consider to now year is the And better of it low and up. that's that progresses. get was really quarter. would

Eric Coldwell

Ed, years year ago say, And has a few changed? how ratio where ago, was that or a that,

Edward Pesicka

when consistent, you I overall, we it's Byram stand-alone difficult, collection it division it gets and look If a go on the and was it integration. would say, back really at bringing doing within Eric, had from right? relatively and an a good segment, standpoint, Apria,

of the some continue We across practices to the within drive divisions both be segment. the able to best of

acquisition really are little several bit across both to take now -- believe availability years improvement we as opportunity as it And the an reimagine there after those drive later, of from that digested we X there's best to points a having practices well an standpoint. out

Eric Coldwell

-- were when all you about it the challenges On I the Patient think here call, was QX to in Direct. talking some there was -- related of

if year-over-year also was that little I'm if bit that You the sure dive regulatory into mention or obviously talked mention I but a but remarks regulatory just segment. a of profitability, prepared tough about changes. to there about to changes disruptions, sales was related I'm territory that? curious comparisons, of the I impacting sales thought related the could you in new Change not realignment heard and the Healthcare, a if was

Alexander Bruni

referring were we Yes. [indiscernible] to the funding. so Yes, Eric. there

as a as operating So as well our out either our for reminder on scenario had just playing within internal that, guidance. we plan incorporated

we levers about what So that's talking offset but to we're have that, there.

Eric Coldwell

a few million, right? us? But And I could magnitude? could you it you remind think just was if on remind us the

Alexander Bruni

It quantify exactly. was it did we not material, but not

Edward Pesicka

ability we've we're and think sure and move when we have that the I focused speed why on on talked the I our earlier that. those, can is which about things, in the like we on you're help of the order make business, which think contingency we has mitigate headwinds, those these other been in opportunities look it, contemplated comments plans those the cash and I have opportunities you the think to sleep you continue to availability potentially which and have running journey when you you're Alex's to think at going you place what know about

Eric Coldwell

Last obviously onboarding [ ] step-up the one customers. new for me. In inventory you've about talked P&HS, to handle

you large So future coming competitor have need health time, other your was customers their fiscal At later new the yesterday in it's that that 'XX. system onboarding. same wins clear public a online

starting that's large of So put to private, and that talking pretty competitor onboard also other quarters but constant amount the press over wind. the next of a is few stream about

overall So market majority I'm largest the the P&HS? the because that have all talking some make Do happening the future Who's you bottom traction? line, I'm ratio -- all looking curious business really X of at big of just about about players wins. talking up see is net leading? Are vast you gaining what's losing? win/loss I'm wins. in the I And players what

Edward Pesicka

Yes, ago, talked of right a we've is that financial I we a on too would this. wins. as There of on but bit say And the disciplined we business separated a year are [indiscernible], we're not now. both about because I net profile think not winning from was there it. time And we're guess, winning being some I of

going So about way sides and we that's, as think, continue to on it thought both of the the both about I it we're discipline way think to it.

Operator

from Davis Stephanie from Barclays. comes question Next

Stephanie Davis

about ramp-up the you've that back some minimal I a get to as just investments had a weighted? going a see because on wanted mention of of of of reacceleration one world, of but think a function may the side a Direct be more off did another to ask of change business be we the is a impact on did it tough bit it of deceleration. bit Patient that Or this your that which comp? half made, more Should little coming you sales

Edward Pesicka

think the making done really it latter last I when smaller a that to person in scale the we much is there. several here pay about better we're it We're push. or investments to know or X We've over X way a years. broader the is off. going This a adding think the is are

in way back they about take the you'll going to of think to latter the the traction, half I the this And think the that year. out so see is is lift start towards

Stephanie Davis

I office future upfront more go priority of makes then us we where always to one mind? what imagine mitigate can I is IT back to investment systems maybe see of when top And you Understood. investments, Change happened spend and as modernizing So like about the in that? risks your heavier think much try of had this with order something them.

Andrew Long

Yes. is Actually, that's our something -- in continuing right and our something absolutely at Direct. actually discussed, Stephanie, an to look we've we process acquisition. it's you're Patient that's do already, Again, in

the of had we was Apria. think confuse breakage. we customer the tenets We did job on -- acquisition of of One want don't one to an things out I exceptional don't the have that the with gate. the we right of And acquiring

Now you're it X years in, you've kind of got settled.

enable grow have sure solid more and those us foundation. You systems a know stronger exactly of to continue but is to what one we can to levers have you us want And that to pull. making enable

anticipate the we'll -- but the with which help make in they're and detail So CapEx, plan, well to can next drive. an CapEx more the year as -- as already can be growth example that, They drive is sure what's can that and as of up. that's to process there of exactly anticipation little looking is we all we one and leveraged and solid in our an the this scale the they at associated systems go Obviously, year. can into operating we investment are of some expenses on that, of not some a just continue

Stephanie Davis

pieces? the that on towards more these all you putting the of growth investments the guidance I for together, Could know and moving back year. all reiterated we heavier weighting So your half, given see a maybe

Edward Pesicka

They're then year, the last I year mean, Think I Yes, seasonality very pretty also think last you had to we that's a seasonality. the have too. to because assessment. about similar year, similar fair last in business.

we last operational we had think saw back of to the the drive investments year, year. you were upfront about making If We efficiency. half carry towards those

it'll think I be consistent. So relatively

Operator

Allen of Next from America. from Bank Lutz comes question

Allen Lutz

that collections a some little Ed, the and you about improved drove higher. of bit talked sourcing gross margin the

factors a timeline improvement? now can guess provide are nice of margin the the I course margin. And little think think where the year? how improvement of progression of seen about you've you in a the a a driving gross in of more I that's over maybe information in line gross an should where those we on we quarters few row bit the sort

Edward Pesicka

with start some Alex I quantitative. Maybe can and can a little bring qualitative more

anticipation embedded some margin to Obviously, look we the and year. is business. drive in of to the the throughout so sourcing And that the are the already things continue expansion other

of those end business at of last were some embedded And the the year. in

for So of and some of there within got to back was there. half that the in already last expansion year, think the we drive sourcing source example. time helped By margin QX

We're prices pre-pandemic, is but mitigate side cost don't to were the it come the same that. ready that's able margin going we see the for example want we're -- down sourcing call should we we're drive to within like again, projects on to of order-to-cash where anticipate drive other a I example is Continuing the equation the closer to starting that. in other sense, is expansion. of as neutralize the we and also process to that. other can that get where another some to is able start we're the business good we're margin overlap example. But within overlap So where expansion back continuing products to But effect another and getting the be -- to driving to out, that a but headwind,

as look to with work help to many savings for are our to of continue provide We our them to that. continuing customers customers

had we quarters anticipate we back level So would would a the improvement XX this the half quarter, think some the we point you think back as you or year. Alex, that add -- about drive we in continue improvement maybe comments? year-over-year little to of a in it, about basis of X more can

Alexander Bruni

Thanks, Yes. Ed. Yes.

by driven our and side. margin, mentioned, One, Products then there's year. driving cycle the gross the got on Direct, to X drivers that expect And on collections direct that's main products as improvement is services. improve patient in in driver improvement key we've drivers. between And favorable the just the talked in Ed sourcing we expansion our X revenue that There essentially are then So Services care sold. on we've margin health about savings investments continue & of Patient cost mix general. the throughout and goods here in within The do to Healthcare

so is in growing Patient drive Direct will Healthcare as company. & So Products the margin expansion for faster, far that the overall Services gross

with if just of as at the look back operating of into year. both towards we get end as also aid margin year, we the in with that expansion and the leverage, segments of half you growth the topline And business the get the normal seasonality will so

Allen Lutz

And quick commentary see then a just some on what Great. a model on $XX that you just provide I gain was? a sale. Can question. million

Edward Pesicka

but total Yes, [indiscernible]... it was a but $XX million of

Alexander Bruni

$X.X did on gain have here our million We of And of a the Virginia. E&R. Yes. sale in Mechanicsville, that home office hit

Operator

comes [Operator Partners. next from Leerink Michael question Cherny from Instructions] Our

Michael Cherny

the the And mentioned be I guide I would of there CapEx debt Is year. reason are reiterated of over little net just cash EBITDA. have the would a any you on build spelled ask steady of the the directional a I thought you don't know given course bit formally out. you investments can color cash flow? staying way the more given dynamic some is us give

middle some just in curious that give color any if there's can on? moving So us conversion, pieces the of you

Edward Pesicka

a I'll on I directional. start just think

one customer, think there clear that big service. is high on making us you them some they impactable. I continue a as new be as we to a want service to better, When and to drive there there's additional sure inventory little it's investments an down a And amount customers in year tweak opportunity I at to you significant learn bring inventory level, bit. opportunity bring have to progresses. make tendency add on want X a the is from we're of new learn because to day that you a

continue have opportunities standpoint, can there. may think from think timing I our opportunities -- we -- maybe we our today, some to continue efficiency. as we're on put areas be in the going some we what sooner continue to in going there's see But is, and that than to we There's expectation drive other the deployment growth as CapEx. like we disciplined work on how later. a as to capital I wanted there I be to And be take some on then to need also cash, year And to automation CapEx, think sleep, progresses. as receivable we may assessment to tweak the technology order those rather

we're where opportunities So is there and/or that's how about levers as as progresses. year the thinking as of qualitative well potential it more

Michael Cherny

Okay.

be inventory to there use positive free based we framework assume relative less flow cash even the though? build? will can for Is the I on any if it's year history, So

Alexander Bruni

Mike. Thanks, Yes.

I'll So more bit add color little here. just a

for year. So minimal free of we cash expect flows fairly remainder the the

an We transformation realignment. And our standpoint much well CapEx it we're debt exit expect well making to are as is. and this some hitting as net efforts reflects investments where OpEx our as obviously as from that remain of that pretty

and debt of leverage at is our So is EBITDA would is is where roughly the right where of we guidance year. that end obviously, our now the the then expectation net year adjusted our exit function a

Operator

As of now for over we questions. remarks. Pesicka Ed right now, I'd any hand back to to like have don't final

Edward Pesicka

thank Thank for the you, and you, joining call. everyone, on

days I about purpose, into I'll want comments, business a and Health. to than closing our make Less their some first grandchild. her brought takes Sentara our daughter son-in-law I first comment, world our shout care. Think out life X the Before delivered ago, daughter personal make and and

The to the we as team course, heard thank exceptional, to our did are about where and want I the there. staff, you experience of our With I, all going our a Sentara, customers, investments we're that, excited to and, long-term everybody partners to was thank Health, Sentara the today year teammates XXXX, call, also the -- continue you. across to as make to clinicians So our and drive the support growth. on globe. I thank so you want extremely hear shareholders.

our over a sharing leadership look are progress the with forward and going to earnings continue our you summer to really in execute organization strategy. I an to on as We next to, this -- call. the during

you, everyone. thank So

Operator

a conference you attending for you hope today's day. call. Thank have wonderful We

You all the call. to may now disconnect

Owens & Minor (OMI) 3 May 242024 Q1 Earnings call transcript