RICHMOND, Virginia
,
February 28, 2023
(press release)
–
“Our Patient Direct segment capped a fantastic year with another strong quarter, and I am pleased that our medical distribution division continues to perform well, retaining and winning new business. However, overall fourth-quarter results showed that we need to move quickly to offset volume decline, cost and pricing headwinds, particularly in our global products division. It is clear that our Company’s cost structure needs to be better aligned with the evolving market,” said
“We have initiated a company-wide Operating Model Realignment Program with a dedicated team to accelerate profit improvement and reduce costs. We expect this program to help us quickly and sustainably drive the performance and growth of the company by delivering approximately
“Leveraging his experience driving successful large-scale, profit-improvement programs at Apria,
Operating Model Realignment Program Includes: Financial Summary (1) ($ in millions, except per share data) 4Q22 4Q21 FYE 2022 FYE 2021 Revenue
Operating (loss) income, GAAP
Adj. Operating Income, Non-GAAP
Net (loss) income, GAAP
Adj. Net Income, Non-GAAP
Adj. EBITDA, Non-GAAP
Net (loss) income per common share, GAAP
Adj. Net Income per share, Non-GAAP(2)
(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. (2) Adjusted Net Income per share, Non-GAAP for Q4 2022 was unfavorably impacted as compared to prior year by foreign currency translation in the amount of
Results and Business Highlights 2023 Financial Outlook The Company’s outlook for 2023 is summarized below: 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: 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. 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
Investor Conference Call for Fourth Quarter and Full Year 2022 Financial Results Owens & Minor executives will host a conference call for investors and analysts at
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-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
About Owens & Minor
Consolidated Statements of Operations (unaudited) (dollars in thousands, except per share data) Three Months Ended
2022 2021 Net revenue $ 2,551,107 $ 2,467,146 Cost of goods sold 2,143,987 2,125,576 Gross margin 407,120 341,570 Distribution, selling and administrative expenses 455,856 267,616 Acquisition-related and exit and realignment charges 4,974 13,108 Other operating income, net (231 ) (1,175 ) Operating (loss) income (53,479 ) 62,021 Interest expense, net 41,164 11,306 Other expense, net 783 799 (Loss) income before income taxes (95,426 ) 49,916 Income tax (benefit) provision (37,435 ) 7,941 Net (loss) income $ (57,991 ) $ 41,975 Net (loss) income per common share Basic $ (0.77 ) $ 0.57 Diluted $ (0.77 ) $ 0.55
Consolidated Statements of Operations (unaudited) (dollars in thousands, except per share data) Years Ended
2022 2021 Net revenue $ 9,955,475 $ 9,785,315 Cost of goods sold 8,129,124 8,272,086 Gross margin 1,826,351 1,513,229 Distribution, selling and administrative expenses 1,633,668 1,116,871 Acquisition-related and exit and realignment charges 55,022 34,076 Other operating income, net (5,252 ) (6,191 ) Operating income 142,913 368,473 Interest expense, net 128,891 48,090 Loss on extinguishment of debt — 40,433 Other expense, net 3,131 3,196 Income before income taxes 10,891 276,754 Income tax (benefit) provision (11,498 ) 55,165 Net income $ 22,389 $ 221,589 Net income per common share Basic $ 0.30 $ 3.05 Diluted $ 0.29 $ 2.94
Condensed Consolidated Balance Sheets (unaudited) (dollars in thousands)
Assets Current assets Cash and cash equivalents $ 69,467 $ 55,712 Accounts receivable, net 763,497 681,564 Merchandise inventories 1,333,585 1,495,972 Other current assets 128,636 88,564 Total current assets 2,295,185 2,321,812 Property and equipment, net 578,269 317,235 Operating lease assets 280,665 194,006
1,636,705 390,185 Intangible assets, net 445,042 209,745 Other assets, net 150,417 103,568 Total assets $ 5,386,283 $ 3,536,551 Liabilities and equity Current liabilities Accounts payable $ 1,147,414 $ 1,001,959 Accrued payroll and related liabilities 93,296 115,858 Other current liabilities 325,756 226,204 Total current liabilities 1,566,466 1,344,021 Long-term debt, excluding current portion 2,482,968 947,540 Operating lease liabilities, excluding current portion 215,469 162,241 Deferred income taxes 60,833 35,310 Other liabilities 114,943 108,938 Total liabilities 4,440,679 2,598,050 Total equity 945,604 938,501 Total liabilities and equity $ 5,386,283 $ 3,536,551
Consolidated Statements of Cash Flows (unaudited) (dollars in thousands) Three Months Ended
2022 2021 Operating activities: Net (loss) income $ (57,991 ) $ 41,975 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 73,229 22,479 Share-based compensation expense 5,228 5,938 Deferred income tax benefit (29,352 ) (11,450 ) (Benefit) provision for losses on accounts receivable (1,974 ) 1,888 Changes in operating lease right-of-use assets and lease liabilities (569 ) 273 Gain on sale and dispositions of property and equipment (9,258 ) — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (6,316 ) 82,180 Merchandise inventories 173,382 20,749 Accounts payable (16,772 ) (117,273 ) Net change in other assets and liabilities (46,121 ) 9,033 Other, net 3,475 (5,451 ) Cash provided by operating activities 86,961 50,341 Investing activities: Additions to property and equipment (48,815 ) (14,539 ) Additions to computer software (2,619 ) (2,526 ) Proceeds from sale of property and equipment 18,663 (41 ) Other, net — (3,940 ) Cash used for investing activities (32,771 ) (21,046 ) Financing activities: Borrowings (repayments) under revolving credit facility, net and accounts receivable securitization program — (12,300 ) Repayments of debt (1,500 ) — Borrowings under amended accounts receivable securitization program 324,600 — Repayments under amended accounts receivable securitization program (385,600 ) — Cash dividends paid — (183 ) Other, net (980 ) 227 Cash used for financing activities (63,480 ) (12,256 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 2,267 (1,086 ) Net (decrease) increase in cash, cash equivalents and restricted cash (7,023 ) 15,953 Cash, cash equivalents and restricted cash at the beginning of the period 93,208 56,082 Cash, cash equivalents and restricted cash at end of the period(1) $ 86,185 $ 72,035 Supplemental disclosure of cash flow information: Income taxes paid, net of refunds $ 405 $ 15,974 Interest paid $ 45,133 $ 6,682 Noncash investing activity: Unpaid purchases of property and equipment and software at end of period $ 67,852 $ — (1) Restricted cash as of
Consolidated Statements of Cash Flows (unaudited) (dollars in thousands) Years Ended
2022 2021 Operating activities: Net income $ 22,389 $ 221,589 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 228,667 90,621 Share-based compensation expense 20,993 25,016 Loss on extinguishment of debt — 40,433 Deferred income tax benefit (26,361 ) (29,736 ) Provision for losses on accounts receivable 3,315 21,158 Changes in operating lease right-of-use assets and lease liabilities 353 1,463 Gain on sale and dispositions of property and equipment (26,260 ) — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 1,101 (2,201 ) Merchandise inventories 166,559 (263,439 ) Accounts payable 13,652 3,548 Net change in other assets and liabilities (91,544 ) 692 Other, net 12,142 15,033 Cash provided by operating activities 325,006 124,177 Investing activities: Acquisition, net of cash acquired (1,684,607 ) — Additions to property and equipment (158,090 ) (40,985 ) Additions to computer software (8,492 ) (8,705 ) Proceeds from sale of property and equipment 48,383 — Other, net (1,670 ) (3,940 ) Cash used for investing activities (1,804,476 ) (53,630 ) Financing activities: Proceeds from issuance of debt 1,691,000 574,900 Borrowings (repayments) under revolving credit facility, net and accounts receivable securitization program 30,000 (103,200 ) Repayments of debt (4,500 ) (553,140 ) Borrowings under amended accounts receivable securitization program 1,022,300 — Repayments under amended accounts receivable securitization program (1,156,300 ) — Financing costs paid (42,602 ) (13,912 ) Cash dividends paid — (731 ) Payment for termination of Interest rate swaps — (15,434 ) Other, net (42,793 ) (17,961 ) Cash provided by (used for) financing activities 1,497,105 (129,478 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (3,485 ) (3,540 ) Net increase (decrease) in cash, cash equivalents and restricted cash 14,150 (62,471 ) Cash, cash equivalents and restricted cash at beginning of year 72,035 134,506 Cash, cash equivalents and restricted cash at end of year (1) $ 86,185 $ 72,035 Supplemental disclosure of cash flow information: Income taxes paid, net of refunds $ 33,973 $ 99,400 Interest paid $ 107,022 $ 38,717 Noncash investing activity: Unpaid purchases of property and equipment and software at end of period $ 67,852 $ — (1) Restricted cash as of
Summary Segment Information (unaudited) (dollars in thousands) Three Months Ended
2022 2021 % of % of consolidated consolidated Amount net revenue Amount net revenue Net revenue: Products & Healthcare Services $ 1,933,612 75.80 % $ 2,204,086 89.34 % Patient Direct 617,495 24.20 % 263,060 10.66 % Consolidated Net Revenue 2,551,107 2,467,146 % of segment % of segment Operating (loss) income: net revenue net revenue Products & Healthcare Services $ 1,202 0.06 % $ 68,328 3.10 % Patient Direct 65,957 10.68 % 16,532 6.28 % Intangible amortization (23,389 ) (9,731 ) Acquisition-related and exit and realignment charges (4,974 ) (13,108 ) Inventory valuation adjustment(1) (92,275 ) — Consolidated operating (loss) income $ (53,479 ) (2.10 )% $ 62,021 2.51 % Depreciation and amortization: Products & Healthcare Services $ 20,214 $ 18,673 Patient Direct 53,015 3,805 Consolidated depreciation and amortization $ 73,229 $ 22,478 Capital expenditures: Products & Healthcare Services $ 11,020 $ 16,514 Patient Direct 40,414 551 Consolidated capital expenditures $ 51,434 $ 17,065 (1) Relates to an inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with personal protective equipment inventory built up as a result of the COVID-19 pandemic.
Summary Segment Information (unaudited) (dollars in thousands) For the Years Ended
2022 2021 % of % of consolidated consolidated Amount net revenue Amount net revenue Net revenue: Products & Healthcare Services $ 7,898,397 79.34 % $ 8,825,646 90.19 % Patient Direct 2,057,078 20.66 % 959,669 9.81 % Consolidated Net Revenue 9,955,475 9,785,315 % of segment % of segment Operating income: net revenue net revenue Products & Healthcare Services $ 175,309 2.22 % $ 384,390 4.36 % Patient Direct 193,748 9.42 % 57,966 6.04 % Intangible amortization (78,847 ) (39,807 ) Acquisition-related and exit and realignment charges (55,022 ) (34,076 ) Inventory valuation adjustment(1) (92,275 ) — Consolidated operating income $ 142,913 1.44 % $ 368,473 3.77 % Depreciation and amortization: Products & Healthcare Services $ 77,539 $ 75,548 Patient Direct 151,128 15,073 Consolidated depreciation and amortization $ 228,667 $ 90,621 Capital expenditures: Products & Healthcare Services $ 49,824 $ 48,282 Patient Direct 116,758 1,408 Consolidated capital expenditures $ 166,582 $ 49,690 (1) Relates to an inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with personal protective equipment inventory built up as a result of the COVID-19 pandemic.
Net (Loss) Income Per Common Share (unaudited) (dollars in thousands, except per share data) Three Months Ended
Years Ended
2022 2021 2022 2021 Net (loss) income $ (57,991 ) $ 41,975 $ 22,389 $ 221,589 Weighted average shares outstanding - basic 74,991 73,286 74,496 72,744 Dilutive shares — 2,711 1,721 2,742 Weighted average shares outstanding - diluted 74,991 75,997 76,217 75,486 Net (loss) income per common share Basic $ (0.77 ) $ 0.57 $ 0.30 $ 3.05 Diluted $ (0.77 ) $ 0.55 $ 0.29 $ 2.94
GAAP/Non-GAAP Reconciliations (unaudited) (dollars in thousands, except per share data) The following table provides a reconciliation of reported operating income, income from continuing operations and income from continuing operations per share to non-GAAP measures used by management. Three Months Ended
Years Ended
2022 2021 2022 2021 Operating (loss) income, as reported (GAAP) $ (53,479 ) $ 62,021 $ 142,913 $ 368,473 Intangible amortization (1) 23,389 9,731 78,847 39,807 Acquisition-related and exit and realignment charges (2) 4,974 13,108 55,022 34,076 Inventory valuation adjustment (8) 92,275 — 92,275 — Operating income, adjusted (non-GAAP) (Adjusted Operating Income) $ 67,159 $ 84,860 $ 369,057 $ 442,356 Net (loss) income, as reported (GAAP) $ (57,991 ) $ 41,975 $ 22,389 $ 221,589 Intangible amortization (1) 23,389 9,731 78,847 39,807 Income tax benefit (6) (5,979 ) (2,509 ) (19,337 ) (10,354 ) Acquisition-related and exit and realignment charges (2) 4,974 13,108 55,022 34,076 Income tax benefit (6) (1,273 ) (3,380 ) (13,493 ) (8,863 ) Inventory valuation adjustment (8) 92,275 — 92,275 — Income tax benefit (6) (23,589 ) — (22,630 ) — Loss on extinguishment of debt (3) — — — 40,433 Income tax benefit (6) — — — (10,516 ) Other (4) 525 570 2,099 2,279 Income tax benefit (6) (134 ) (147 ) (515 ) (593 ) Tax adjustments (5) (10,492 ) 1,886 (10,492 ) 1,406 Net income, adjusted (non-GAAP) (Adjusted Net Income) $ 21,705 $ 61,234 $ 184,165 $ 309,264 Net (loss) income per common share, as reported (GAAP) $ (0.77 ) $ 0.55 $ 0.29 $ 2.94 Intangible amortization (1) 0.23 0.10 0.79 0.39 Acquisition-related and exit and realignment charges (2) 0.05 0.13 0.55 0.33 Inventory valuation adjustment (8) 0.90 — 0.91 — Loss on extinguishment of debt (3) — — — 0.40 Other (4) 0.01 0.01 0.02 0.02 Tax adjustments (5) (0.14 ) 0.02 (0.14 ) 0.02 Net income per common share, adjusted (non-GAAP) (Adjusted EPS) $ 0.28 $ 0.81 $ 2.42 $ 4.10
GAAP/Non-GAAP Reconciliations (unaudited), continued (dollars in thousands) The following tables provide reconciliations of net income and total debt to non-GAAP measures used by management. Three Months Ended
Years Ended
2022 2021 2022 2021 Net (loss) income, as reported (GAAP) $ (57,991 ) $ 41,975 $ 22,389 $ 221,589 Income tax (benefit) provision (37,435 ) 7,941 (11,498 ) 55,165 Interest expense, net 41,164 11,306 128,891 48,090 Intangible amortization (1) 23,389 9,731 78,847 39,807 Other depreciation and amortization (7) 49,841 12,747 149,820 50,813 EBITDA (non-GAAP) 18,968 83,700 368,449 415,464 Acquisition-related and exit and realignment charges (2) 4,974 13,108 55,022 34,076 Inventory valuation adjustment (8) 92,275 — 92,275 — Loss on extinguishment of debt (3) — — — 40,433 Other (4) 525 570 2,099 2,279 EBITDA, adjusted (non-GAAP) (Adjusted EBITDA) $ 116,742 $ 97,378 $ 517,845 $ 492,252
2022 Total debt, as reported (GAAP) $ 2,500,874 Cash and cash equivalents 69,467 Net debt (non-GAAP) $ 2,431,407 Three Months Ended Apria operating income (9) $ 25,067 Apria intangible amortization (1) 590 Apria acquisition-related, exit and realignment, and other charges (10) 1,800 Apria operating income, adjusted (non-GAAP) 27,457 Patient Direct operating income 16,532 Patient Direct operating income, as adjusted (non-GAAP) $ 43,989
GAAP/Non-GAAP Reconciliations (unaudited), continued The following items have been excluded in our non-GAAP financial measures: (1) Intangible amortization in 2022 and 2021 includes amortization of intangible assets established during purchase accounting for business combinations. 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 and the results of our peers. (2) Acquisition-related charges were
(3) Loss on extinguishment of debt for the year ended
(4) Other includes interest costs and net actuarial losses related to the
(5) Tax adjustments in 2022 includes a change in our foreign repatriation plans related to the permanent reinvestment of earnings associated with a subsidiary in
(6) These charges have been tax effected in the preceding table 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. (7) Other depreciation and amortization relates to property and equipment and capitalized computer software. (8) Relates to an inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with personal protective equipment inventory built up and a subsequent decline in demand as a result of the COVID-19 pandemic. (9) Reflects the GAAP operating income reported by
(10) Apria acquisition-related and exit and realignment charges include
Use of Non-GAAP Measures This earnings release contains financial measures that are not calculated in accordance with
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 a substitute 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/20230228005411/en/
Source:
Director, Investor Relations
Investor.Relations@owens-minor.com
* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.