OMI - Earnings call transcript Q2 2024

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Operator

Good day, and thank you for standing by. Welcome to the Owens & Minor Second Quarter 2024 Earnings Conference Call. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Jackie Marcus, Investor Relations. Jackie, you may begin.

Jacqueline Marcus

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

Our call XXXX on are on which press for of our comments release the section for the are the financial on outlook website. the press our second Investor results included the along in Relations quarter release. both with posted of XXXX, as today's as will well of be The focused slides supplemental

statements. section call, uncertainties, this refer these report on from of full to addressed Please we actual during reports filings SEC The that forward-looking subject Form and matters or description these make XX-K risks today. results note and risks which for Form are including statements implied of uncertainties, quarterly XX-Q. Please those projected a Factors our here materially and in will cause on to to annual our differ Risk the could

and non-GAAP Financial Executive today, discussion and GAAP are our In press Chief Senior the included Owens and most joined Ed Jon & in and of reconciliations the release. financial Leon, Pesicka, measures, we President these President Minor's comparable measures by our and reference Chief certain measures Finance and I'm to Today, Officer; financial Interim information will Vice about Officer Corporate Treasurer.

to now will Ed. call the I over turn

Edward Pesicka

Healthcare an The reach as thank Direct and of to everyone, of call us payers. to Tuesday, premier care. suppliers few our Holdings, and levels Rotech support joining of past our been our and Rotech and all shared allows expand aligns strengthen the ultimately for strategy Last improve with morning, here It's service our one providers to & addition improve our broaden organizations patients, existing Combining capabilities, home-based definitive Patient to with you our Good you at us Jackie. business to Inc. agreement you, exciting we Minor. Thank acquire today. weeks our the Owens on

by our And revenue our to demonstrating shareholder growth XXXX, sustainable our to Patient $X pace accelerates long-term it achieve long-term commitment value. Direct driving furthermore, billion target of and

was with progress and our for Minor, expectations our we evident quarter performance. as business and another internal as underlying to Investor second our improved & profitability. The line in growth strong of hit outlined of segments we Turning long-term strategic is our strength Day made quarter our December Owens our against during in business business with top goals XXXX. both It usual

expect outperform are of the back to We about excited of half of trends historical the this year, first second a half as we continuation strong XXXX half performances. with

Leon, of quarter. While our a Financial a second Chief would financial few like of achievements do briefly and from review Officer, thorough the Jon more to will highlight operational I financials, our our Interim

X% generated segment Services a reflecting Healthcare & billion Products over Our in this year. $X improvement time last revenue,

Our Medical sales exceptional our of the of on new onboarding wins. Distribution division's strong supplier same-store result programs growth, second the funding quarter business and was enhancements

and improvements Our at Global also experienced top growth Products further some in the profitability. line division

of manufacturing, the also P&HS efforts, this exactly optimize business that three, in the These reinvest financial while distribution efficiencies through: are adjacent with progress channels into overall a transportation reduced costs. two, combined our quarters we second first scale Owens expanding the gave particular profitability; segment. our these focus in on In our flexibility in branded with doing At the us inflation-mitigating we tactics and to of we XXXX, increasing the said segment would what X to quarter Minor driving do, channel our greater making and profitability areas our our already and portfolio; leveraging outlined we & Day, product one, Investor markets. plan the of growing

a X% driven quarter, posted $XXX segment diabetes by sleep Direct growth in strong Patient Our year-over-year in and the improvement, second million in supplies. revenue

given even this growth particularly quarter second strong year. time last we had Our the more is impressive

to continue key to oxygen By with we within respiratory, we our the to and deliver growth the quarter, end that in improve the the organization sleep focus Apria initiatives, on on During quarter, the along division alignment the our commercial improved growth. journey. see alignment of began

a As we in of see reminder, typically segment similar stronger year, performance second outcome this from the the XXXX. and a we half in expect

From From not a an our with XX% XXX and sleep multiple who yet suffering segment chronic from and adults particularly has diagnosed, suffer there supporting are of growth organic considerable Patient a Direct perspective, estimated many demographic million least chronic macro American longer-term Americans tailwinds our from conditions, in apnea. condition, perspective, at still X efforts. more diabetes

us make type despite requires GLP-Xs continuous X dependent, medications. on of our insulin our the seeing trends glucose serve or primarily support serve loss for groundswell use. are segment of not Direct which from of about excited currently population. impact GLP-X demographic These we we Moreover, Patient the monitoring an patients are The regardless diabetic weight use patient

XX% yet are sleep with respect apnea patients, of diagnosed. help GLP-Xs may to With sleep that patients, apnea population still the some while there are not

care, expertise levels announced I which medical service to equipment and Direct and in perfectly providers acquire respiratory Rotech, patients, As to we Patient for payers. our our solutions will Rotech top-notch a segment. expansion of innovative deliver brings intent wealth aligning and earlier, be exceptional noted an of home

Being progressing few segments. months long-term strategic as are our we expected just both a into in plan,

channels X organic since plan Investor tremendous done in just service has of all building on the Our Direct only our the proves Rotech and getting efficiencies, to at just plan and to Patient XXXX segments, path, right From Day. team our which the customer quarters are a Vision we driving started. improving add first strong launching growth job to

in commitment. objectives dedicated remain our that December set during We Day thus XXXX, forth to and reflects our performance achieving Investor far the

quarter discuss performance more now turn our Interim call financial second detail. I Leon, in Officer, Chief our to like Jon John? would the to over Financial to

Jonathan Leon

an and for drove overview of as year. Ed, be that and some the Thanks, everyone. our results financial well factors remainder will quarter second the performance key the in good of morning, our our providing I as outlook

quarter Our the year-over-year to Services growth was net and prior with customer drove $X.X with Healthcare in our in X% to line & wins as X% top revenue the up both year, X% solid overall billion, Distribution change. the compared prior sales grew same-store as segments. year Products growth for compared Medical division new the

last expectations. was again, such oxygen and therapy respiratory X% as of revenue and to Major therapies has the quarter although year. Direct like million second diabetes, certain categories of sleep Patient NIV wound supplies up performance, $XXX strong were below compared

verification to regain and eligibility patient momentum. Direct, continue Patient Within

basis half meaningful into of the should profit second issues backlog these extended customers to in million productivity through largely of decrease improvement second quarter. a of the last move of second as efficiency timing benefit or the However, in over We quarter several XX.X% the is compared months. the margin Gross the reflecting quarter year. of $XXX second of onboarding the XX points we expansion year. and was be last net of revenue, This as in clear investments

to were administrative in 'XX. million, increase from the primarily of DS&A million. sales XX% Our due growth second year-over-year. and this $XXX was below the XX% quarter Adjusted for and year-over-year up just expenses both year. The as was quarter adjusted for distribution, operating XX% million $XX.X was selling income income and year operating revenue up quarter the operating for was GAAP was income million, up last $XXX of $XX.X

XXXX. the to largely Interest was of due XX second last the higher expense per charge $XX XXXX. decision for share interest rates quarter reduction recorded associated $XX related of is offset or $X.XX in Notices back quarter XXXX Proposed last compared in second the that year. second to In we partially we This full impact down to of X by a XX% quarter, onetime versus the million, $XX turn million with million leverage of months, a tax in received Adjustments in of the the recent nearly and

related of at included communicated we've hand, to previously the XXXX. to item pricing documents This charge, SEC in in transfer June as past the in our We GAAP $XX non-GAAP our believe made of further year reconciliations. longer impact which the an million. discussed is $XX expected this concluded related Due just was matter in us to will to to this to matter methodology, financial payment The no of million employed. second of be half is to cash range nature late without in a the filed is results. There is be

for Our and negative the quarter. reflects this was rate effective XX.X% The adjusted was tax XX.X%. tax GAAP effective rate charge

million million loss of GAAP last share or the per net second Our loss quarter a to was when the year of or for share. was $XX.X quarter the per net $XX.X compared $X.XX $X.XX loss

quarter XX% or the million generated $X.XX $XX.X EBITDA net share operating million for to 'XX. a debt typical here of anticipate $XXX cash Also, remain per generation the us reduce share the second during year. million. to include good last generation. This quarter-to-quarter, cash versus million doubled quarter $XX lumpiness from net the Adjusted strong flow we per $XXX of was second improvement we focused $XX.X intensely flow and of million, flow in quarter, 'XX. quarter up allow on of versus this or reported QX income million that We Adjusted $XXX a by cash will $X.XX

year. notes, will our a which have to week, this and delivering in with is With we at outstanding notice redeem Earlier debt, remain hand. on of $XXX series so respect We due to we to those do December guidance. September our in this par current notes XXXX cash of committed of gave million

billion to EBITDA $X.XX in EPS be midpoint $X.XX the $X.XX. a range to expect million range We overall with and adjusted of in the to in $XX.X million adjusted $XXX of to share be per $XX.X an revenue of billion, of $XXX range to

quarter. Rotech quarters sequential from in again, want sequential that to to you as we see the greater remind this prior the expect modest the any third to third the growth I and the Now second years, guidance impact excludes And acquisition. fourth and of between growth

that, Q&A call operator for the turn Operator? over to With the session. the I'll

Operator

Cherny Partners. line Leerink comes [Operator Instructions] of Your question with from first the Michael

Michael Cherny

Can this time? you hear me

Edward Pesicka

Michael. can, We

Michael Cherny

on first. want Services Okay. put I to side. plans of Healthcare you That that & was made operational in you've had about Products talk the some the the place, particular progress a in

opportunities does to pieces the tariffs volume? unlocking you Is of the to go impact of about sourcing you customers? back that around in backlog impact flat relative think not kind As the expand or Is the the on of place dynamics half expected into of are are it biggest And year? it the margins, sequentially. side? how that the Where the to you moving were

Edward Pesicka

facilities, own -- reverse our the Let tariff Mexico, on us minimal in impact a have me Honduras, whether to that's and or products the in the somewhat going portion that's in take are so whether in orders. manufactured it's those our of on significant From aspect, Americas. in a U.S.

Our is not China. in glove footprint

gloves, as China. have, about we've half Asia, our our those talked and We not than factories, past, in we're own in making factories more in are the in Southeast of

So levers on down sourcing it's or about prices of continuing overall, prices think to and correspondingly to are a as down, within rates as we've category going to I that Services, If done with on them. the source lower come let's products. year, back main in materials our really have have really & down those it's the the our private costs the raw just make half minimal proprietary job Healthcare our PPE. sure impact take, come a execution coming label Products seen at the we continued good We've

is The drive in the our technology right level look the continue in of other in footprint, really advanced operational of to to operating look to segment. P&HS new automation it our efficiencies. Continue at warehouses effectiveness aspect at

term, along selling this then There's So back DS&A customers product the longer-term the to go continue takes line impact our to to of private our is product strategy, as the label improvement even as then or work adjacencies. we we the expenses. if some or that opportunities it show saw line. really of of to and Longer expansion the portfolio where and our distribution, the time continue proprietary administrative and portfolio, in you further value quarter with out build the in

operating of longer the the So about impact midterm opportunities. model improvement to to and we're of drive helps some about efficiencies and using hopefully, continue out how we're the and that really then talk how operating our term tariffs, thinking about thinking continuous

Michael Cherny

dynamics that of know If focal a on one customer I year was you in I the in, those ask could behind course just the the flow. second onboarding. the point when of the versus had? quarter that should in the the big reversal year, some guidance, normalizing factor you as over wins of about a cash Can you gave talk how think you of large especially through earlier onboarding of terms and customer use you your this some cash talked generation of

Jonathan Leon

Yes, Mike, it's Jon.

in in QX payables you slow end down which What obviously, did beneficial before to on talked about saw the when as was more and inventory also the and like payables. Like AR that kind actually was we that little distribution. our little by that inventory, bring need you to for had large of is So bit QX, customers could onboarding in lift you activity, nicely. a those we mentioned, offset add we Friday, quarter also offset pretty on and a payables a

with third we been And in pretty out driving appropriate successful where parties. terms have payment

in half year. the back the year, Direct, will to well. year particularly on, is combination the have should drop Patient half in and out we'll the year of in very on that in as as So flow Keep the back also mind, as goes us allowances their get to the help cash of contractual attractive seasonality the continue which going goes

look we'll last think is keeping time around payables, we we day point will mind capital looking efficiency see see at at more a what I of we And that as inventory. now see So you're working quarter. the lift in it's in with the the efficiency, in seasonal more then

end was of example, in than at actually we was very efficient we're than average quarter. -- So the inventory saw, more the we're it QX for lower

attractive were compared we to year business the capital get of seasonality debt. and pretty that first the think to cash the and flow as goes the efficiency the on, But reduce that cash able So year. working I half then will flow of drive

Michael Cherny

the meaningful know of the you conversion year? cash contention year. will point the I flow in over was course So the have that of earlier

Jonathan Leon

half bit do in I in half. done very -- if first the the yes, be than a will better we did second We would disappointed do quite we've

Operator

question next of Caliendo Your comes with the from Kevin line UBS.

Kevin Caliendo

-- ones First, the how can shipping thing, tariffs been track we going are and we little have with lot on it shipping can but there's bit costs of a impacts talk a anyways the channel, one have what's the that around the interest costs -- dramatically. you, trying the risen are make to you're impact trying your sure? guess industry? more How understand it it And impacts to I domestically channel. Does it how help understand it that And manufactured I'm impacts Just across the that you? does attractive? products the

Edward Pesicka

Yes.

Direct a impact So Patient level P&HS in it -- advantage segment, some create It's I we're factory on it's again, in in primarily the an those an not necessarily own products our Yes, for manufacturing different has about of Asia segment. that Southeast we're for earlier us impacted of But bringing gloves that it the nearshore, our us. at half them over. talked and couple ways. of making

the have inventory of the some investment the . But at coming a the level over. of offset But in those efficiently of have do in back marketplace. incremental business larger model to to shipments increases ultimately, of It's sourcing seeing different operating increases, continue year. of have a that to headwind that, the in those we start we As it to to continue in how half some that more to this over prior look going or of started do to also their create business. in overseas. it's to also the we all advanced those we those is to we're Look, impact it's of in to try rise, is on utilize our vast part that see ways but we bigger bring of headwind product whether the rates from made a some advance going some the sourcing know majority primarily

Kevin Caliendo

and in you trying know buy you're is in more before get much starts going saying Does will build as to you're possibly sooner, higher. what to likely to are general... as up to those maybe prices because affect can that So customers the be go to sooner inventory willing product that it they hope you're

Edward Pesicka

the even the not may landed necessarily then to than product not. on better it sooner and cost have a just And buy products

Kevin Caliendo

us Direct me. second deeper one that would normal a on little the you looks is you little bit more Jonathan. for of just give in it a bit -- go Patient half this like ramp comfort behind Can investments, it's little there is Maybe a know than great. or be I why seasonality, the The acceleration. there this rationale maybe were will if be can that, but to

Jonathan Leon

backlog frankly, we're I from dealing factor, Kevin. indicated the that because in my underestimated that in still remarks a change that, as Patient biggest Yes, with probably holdover The we Direct to we is the the for substantially queue it normally extent of QX. be. than waiting have The larger time, that a impact, all people QX of supplies this but is -- normal were would

sleep profit primarily are a little those And associated them. so with patients, more it's

So you into -- a we that to catching go clearing up, that manual are lot we're effort are factor catching if catch and There's of up. we that backlog. but up

take normal then seasonality second you half. with business, combination much stronger the the in we're in pretty that a So confident

Edward Pesicka

in it added understood one XX disruption, add commercial would but additional here for going we provide the impact. of, the it, expectation create level I'm resources, that things, positive when to some And about we some to I'll just months the call X year level a clearly takes other that is beginning with them of that of impact

progresses QX pretty QX that year, other was the in . And year. the at year-over-year, as look last our that strong. rate you see growth we'll So thing, if

the of year the are those and that factors the give half other comfort some So growth. the us in back

Operator

JPMorgan. from Your John of the Stansel next comes with line question

John Stansel

you a a visibility you this this around now into XQ? -- there think think quarter, Direct view now Direct. is how about something coming that Is Patient that kind of And will just month into Or you about of progress kind benefit? something that have be then is of the a change that is is given this to Patient line more XQ frame of the Just could in some into up backlog the third on impact the this way following rear kind top growth? plan on we're

Jonathan Leon

about John. We think you help can Yes, it.

of way what good to much help in very about time, So The clearing at has at and better on up process. customers supplies become doing new a getting to it -- XX,XXX waiting bringing very and a it, eligibility that call with verification think into providers quickly. I as for as process XX,XXX. of job that, And us happens we're any June the would manual to that and growth point queue back saw that that we there's very

getting that going continue third quarter, to now, is through year. that So better we're throughout better the the we'll get

order has predominantly lot that impacted get waiting certainly I a sleep growth. business it the So that's supplies, think And very attractive a to of and the margin we're is align. that

John Stansel

of Great. the about first stepped that sequentially gross down quarter. And just kind margins thinking then from

I I gross of kind saw, margins to year, that Direct, the stepping is of slight that that you guess, step as kind mix is throughout up shift? Patient Now kind this down think the more normally of attributable of -- that

kind drove a steeper back half right of other bit of just see about assume, into Is think would the there about for given you'd your then ramp I what to of reaffirmed a way is we gross that that? should Or margin. the guidance, it? And factors kind highlight

Jonathan Leon

that has it. about higher like sleep the us. respiratory and versus for which growing in right have be can think nicely and margin, Direct areas very is been shift to about Patient meaningful, before we've That diabetes, talked things way mix

Operator

Barclays. of Your comes line next from question with Stephanie Davis the

Stephanie Davis

the had acquisition have thinking bit digest hoping they're to announcement. tell that from a your Rotech you've payer some and customers time about of the Now just I initial was about the feedback provider how could and deal? you little market us

Edward Pesicka

little -- high I'll start maybe Yes. a level. I'll just at a talk

the in with early better the Direct Patient still clear line inorganically been that's continuing space, on. it's to that specifically solution, it's so think about get strategy about, process. We to invest been is the and I feedback in talked in still you a clearly continuing the patient provide the to payer has -- this feedback,

positive. overall, been extremely But it's

payers to we hopefully company think -- continue same to as from for get to experience be standpoint, to a them I And being with support to potentially then believe to this have better a ability able the focus overall, is provide products that their the well much single ultimately as more the able the us. on work patient, efficiently. going a with

So on. it's early

are we'll it information, where right now. continue but gather that I that's to on we think

Stephanie Davis

Direct, and And a the NIV a did out uses call if one-off or given oxygen. call more follow-up business, just that's the exposure you the you on trend on any in Patient some with Could quarter at owned Rotech? of

Jonathan Leon

tell plans call would us, doing now, remember -- I talked to be in should I confident of and now, we growing that quarters about you, to unique working and year. do of just place and we Steph, in what we've oxygen. unique not us. back of that's what the couple No. half terms when have expect a that we've in we're that NIV the and would on to I'm and to doing

Operator

line Your Citi. comes the from with Grosslight Daniel next question of

Daniel Grosslight

cash first meaningfully in you go half half. -- back meaningfully some made being That you comments be the versus thought you flow flow around this better expect be you I this to positive cash would that in want the and no to for solidly second to kind last put free your would cash year. territory had where free of flow or effectively quarter year you commentary flat versus that

commentary also your So confirm the changed of outperforming half that wanted year. this payment I million-plus cash that Where your curious what contemplates $XX back And you in are thinking? to I'm in just expectations? that, flow initial just

Jonathan Leon

Yes, does. it

all, Dan, of First it's Jon.

talked inventory now shipping getting a quarters in flow underway. being little focus about bit working curve. you higher purposes would currently some ramp the the Secondly, and the about capital for comes inventory visibility increased activities of confidence the and around cash that ahead tell couple talked last of Ed that I We've into about,

the moderated the QX, bit as AP of little But most getting we quarter, get smarter about about think to even saw from our I a AR and be inventory terms that, throughout and pretty a we But better think compared ramped quarter. second well we folks. late little in

think We're goes I collections as year seeing on on. the better Patient get that better a we're basis will cash pretty at regular a confident Direct.

Daniel Grosslight

there I expenses some to this Apria. were quarter, And think, legal the related

if Just after curious legal to what's of that? expenses year quarter? driving remainder this expect And the the you increased for see

Jonathan Leon

No, nothing going forward. That was a onetime bought settlement and action Apria. that began before we

settled So now that has been and us. behind

So look with that. nothing else forward to

Operator

question from Coldwell comes of Barrett. line with next Your the Eric

Eric Coldwell

I -- I had of couple reason, connection these apologize if missed a the some time hard here. with for a I've

XQ, to a that the combined to In get you give little growth difference the Distribution between did break somethings. growth Did you bit the... and Just out you Medical hard understand to Products X%.

Edward Pesicka

No, We not. we didn't. did

Eric Coldwell

you? Can

Jonathan Leon

I and said X%. net we Well, think distribution the grew segment X% grew overall

think... I So

Eric Coldwell

been Yes, today. didn't connection bad a hear that. It's I

still not business the was later XX call, up through just It expected? differently number like cash What things the a I you've why why that of now it it guidance different. flat the am but originally you on ago. -- was days was last then a turning it you I it's out than the and so than Or they're conversation managing much different seems know reasons very And sure XX Okay. just improved, given days flow. you're just expected to original QX fundamentally differently?

Edward Pesicka

fair, is I Eric. down it And think I focus. to, think one that's comes

now look the forecasting to some capital in think the got visibility think I initiatives opportunities drive execution continue improvement. we the better and into of you've to where where of have it's are working on lever forward, then we As we

it's where to ability execute major So the opportunities. and focus, X those some our forecasting is. factors are on of -- those it that's It's improved

Eric Coldwell

of of I'll capable Would X%. Same-store wins? was breaking And kind out Medical the Distribution market the just of you Great. go how growth to new versus new be back that wins? much versus of growth

Edward Pesicka

Yes.

and to it's mean, our consistent -- hard we our they're if if consistent up are we've then sales, there's are some rolling then -- with I consistent some still two in think same-store of what's other relatively X% And look them, the help that had losses about that I -- they're do further. of sales, to past move is out. our at the that so I same-store remnants wins think

the that's standpoint. it that think way I would So about from is

Operator

now to Ed That conference concludes I session. over our closing Pesicka comments. question-and-answer will for the turn

Edward Pesicka

excited So everyone, and join everyone the thankful today. that and thanks, call

think future if Owens of to we're in here. the about we & Now at what's Minor, extremely come excited yet

We our execute on continue to long-term strategy.

model. focus continue our We to on operating

continue & Services Direct which that into We in business. patients, . service with about approval we've progress providers the future rolling Products made our really well the our Rotech and Healthcare pleased payers, get to the and provide, as integration potential for and the our Patient with business, excited believe, to will we significant better as this point time in

the again you. time talking look forward next quarter. today appreciate Thank that, with to I and So

Operator

Thank participation, conference now your This call. may and concludes for you today's you disconnect.

Owens & Minor (OMI) 2 Aug 242024 Q2 Earnings call transcript