EX-99.1 3 a2q2019earningsreleaseex991.htm EXHIBIT 99.1 Exhibit

 

FOR IMMEDIATE RELEASE                                
August 7, 2019


Owens & Minor Reports 2nd Quarter 2019 Financial Results


RICHMOND, VA - August 7, 2019 - Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the second quarter ended June 30, 2019, as summarized in the table below.

“Overall, I’m pleased that our financial results showed sequential quarterly revenue growth, operating income growth, and improvement in cash flow and working capital as compared to the first quarter. We continued to improve our service levels in the second quarter and are meeting or exceeding most customer expectations. Finally, we continue to focus on productivity and efficiency initiatives to drive operating improvement,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor. “After my first full quarter, we are making progress, but we cannot underestimate the significant amount of work ahead. We have no intention of letting up on our renewed customer focus.”

Financial Summary
 
 
 
 
YTD
 
YTD
 
($ in millions, except per share data)
2Q19
 
2Q18
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
Revenue
$2,484
 
$2,458
 
$4,946
 
$4,831
 
 
 
 
 
 
 
 
 
 
Operating income, GAAP1,2
$16.1
 
($172)
 
$30.8
 
($148)
 
Adj. Operating income, Non-GAAP1,2
$36.7
 
$46.6
 
$67.2
 
$94.2
 
 
 
 
 
 
 
 
 
 
Net income (loss), GAAP1,2
($10.5)
 
($183)
 
($24.6)
 
($175)
 
Adj. Net income, Non-GAAP1,2
$6.2
 
$19.4
 
$7.1
 
$45.6
 
 
 
 
 
 
 
 
 
 
Net Income (loss) per share, GAAP1,2
($0.18)
 
($3.07)
 
($0.41)
 
($2.92)
 
Adj. Net Income per share, Non-GAAP1,2
$0.10
 
$0.32
 
$0.12
 
$0.75
 
 
 
 
 
 
 
 
 
 
1. Reconciliations of the differences between the non-GAAP financial measures presented in this news release and their most
    directly comparable GAAP financial measures are included in the financial tables below.
 
 
2. Comparisons to prior year results are impacted by the second quarter 2018 goodwill and intangible asset impairment charge
    of $165 million, or $2.73 per share. This charge was classified as a non-GAAP item and, accordingly, did not affect results
    reported on an adjusted basis.
 
 
 
 
 
 
 
 

2019 Results
Compared to prior year, quarterly and year-to-date revenues grew 1.1% and 2.4%, respectively (1.4% and 2.7%, respectively, on a constant currency basis).
Revenue growth was driven primarily by Halyard sales and strong Byram sales, partially offset by lower distribution revenues.
The company acquired the Halyard S&IP business on April 30, 2018. Halyard sales from January through April 2019 were $255 million net of $71 million of intercompany sales.
Quarterly and year-to-date operating results also reflect pressure on gross margin, higher transportation costs, and increased expenses for the development of new solutions, primarily Fusion5.
Net income reflects increased interest expense of $9.1 million for the quarter and $28.0 million year-to-date.


1



 

Highlights
On a sequential basis, second quarter 2019 achieved operating income growth of 10% and adjusted operating income growth of 20%.
On a sequential basis, net income and adjusted net income per share increased $0.05 and $0.08, respectively.
Continued to exceed year-to-date internal operating plan
Generated $90 million of operating cash flow in the second quarter
Reduced debt by $60 million in the second quarter as compared to the end of the first quarter
Renewed the Vizient GPO contract for an additional year through August 2021
Continued intense customer focus along with improved service levels
Byram continues strong top and bottom-line performance.

Financial Outlook
For 2019, the company is narrowing its adjusted net income per share guidance range to $0.60 to $0.70, which excludes the impact of currency.  

Although the company does provide guidance for adjusted net income per share (which is a non-GAAP financial measure), it is not able to forecast the most directly comparable measure calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of the GAAP amount 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 net income per share guidance is provided. For the same reasons, the company is unable to assess the probable significance of the unavailable information, which could have a potentially significant impact on its future GAAP financial results. The outlook is based on certain assumptions that are subject to the risk factors discussed in the company’s filings with the Securities and Exchange Commission (“SEC”).

Dividend Information
The Board of Directors approved a third quarter dividend payment of $0.0025 per share, payable on September 30, 2019, to shareholders of record as of September 16, 2019.

Investor Conference Call for 2Q 2019 Financial Results
Owens & Minor executives will host a conference call, which will also be webcast, to discuss the results at 8:30 a.m. EDT on Wednesday, August 7, 2019. Participants may access the call at 866-393-1604. The international dial-in number is 224-357-2191. A replay of the call will be available for one week by dialing 855-859-2056. The access code for the conference call, international dial-in and replay is #1486739. A webcast of the event will be available on www.owens-minor.com under the Investor Relations section.

Safe Harbor
This release is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the SEC's Fair Disclosure Regulation. This release contains certain ''forward-looking'' statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the statements in this release regarding our expectations with respect to our 2019 financial performance, as well as other statements related to the company’s expectations regarding the performance of its business, growth, and improvement of operational performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. Investors should refer to Owens & Minor’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC including the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC, for a discussion of certain known risk factors that could cause the company’s actual results to differ materially from its current estimates. These filings are available at www.owens-minor.com. Given these risks and uncertainties, Owens & Minor can give no assurance that any forward-looking statements will, in fact, transpire and, therefore, cautions investors not to place undue reliance on them. Owens & Minor specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Owens & Minor uses its web site, www.owens-minor.com, as a channel of distribution for material company information, including news releases, investor presentations and financial information. This information is routinely posted and accessible under the Investor Relations section.

2



 


About Owens & Minor
Owens & Minor, Inc. (NYSE: OMI) is a global healthcare solutions company with integrated technologies, products, and services aligned to deliver significant and sustained value for healthcare providers and manufacturers across the continuum of care. With 17,000 dedicated teammates serving healthcare industry customers in 90 countries, Owens & Minor helps to reduce total costs across the supply chain by optimizing episode and point-of-care performance, freeing up capital and clinical resources, and managing contracts to optimize financial performance. A FORTUNE 500 company, Owens & Minor was founded in 1882 in Richmond, Virginia, where it remains headquartered today. The company has distribution, production, customer service and sales facilities located across the Asia Pacific region, Europe, Latin America, and North America. For more information about Owens & Minor, visit owens-minor.com, follow @Owens_Minor on Twitter, and connect on LinkedIn at www.linkedin.com/company/owens-&-minor.

Contacts
Investors: Chuck Graves, Director, Finance & Investor Relations, 804-723-7556, Chuck.Graves@owens-minor.com
Media: Shana Neal, Chief Human Resources Officer, 804-723-7720, Shana.Neal@owens-minor.com

SOURCE: Owens & Minor

3



 


Owens & Minor, Inc.
Consolidated Statements of Income (Loss) (unaudited)
(dollars in thousands, except per share data)

 
 
Three Months Ended June 30,
 
 
2019
 
2018
Net revenue
 
$
2,484,200

 
$
2,458,271

Cost of goods sold
 
2,115,773

 
2,133,277

Gross margin
 
368,427

 
324,994

Distribution, selling and administrative expenses
 
345,892

 
308,775

Goodwill and intangible asset impairment charges
 

 
165,447

Acquisition-related and exit and realignment charges
 
5,655

 
24,930

Other operating (income) expense, net
 
736

 
(2,107
)
Operating income (loss)
 
16,144

 
(172,051
)
Interest expense, net
 
27,682

 
18,571

Loss before income taxes
 
(11,538
)
 
(190,622
)
Income tax benefit
 
(1,062
)
 
(7,845
)
Net loss
 
$
(10,476
)
 
$
(182,777
)
 
 
 
 
 
Net loss per common share:
 
 
 
 
Basic and diluted
 
$
(0.18
)
 
$
(3.07
)

 
 
Six Months Ended June 30,
 
 
2019
 
2018
Net revenue
 
$
4,945,587

 
$
4,830,850

Cost of goods sold
 
4,218,736

 
4,181,170

Gross margin
 
726,851

 
649,680

Distribution, selling and administrative expenses
 
684,595

 
593,136

Goodwill and intangible asset impairment charges
 

 
165,447

Acquisition-related and exit and realignment charges
 
10,645

 
39,690

Other operating (income) expense, net
 
775

 
(759
)
Operating income (loss)
 
30,836

 
(147,834
)
Interest expense, net
 
56,783

 
28,824

Loss before income taxes
 
(25,947
)
 
(176,658
)
Income tax benefit
 
(1,375
)
 
(2,032
)
Net loss
 
$
(24,572
)
 
$
(174,626
)
 
 
 
 
 
Net loss per common share:
 
 
 
 
Basic and diluted
 
$
(0.41
)
 
$
(2.92
)

4



 

Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(dollars in thousands)

 
 
June 30, 2019
 
December 31, 2018
 
 
 
 
 
Assets
 
 
 
 
Current assets
 
 
 
 
   Cash and cash equivalents
 
$
91,339

 
$
103,367

   Accounts receivable, net
 
843,343

 
823,418

   Merchandise inventories
 
1,237,713

 
1,290,103

   Other current assets
 
302,234

 
321,690

   Total current assets
 
2,474,629

 
2,538,578

Property and equipment, net
 
389,933

 
386,723

Operating lease assets
 
206,199

 

Goodwill
 
407,651

 
414,122

Intangible assets, net
 
311,027

 
321,764

Other assets, net
 
106,632

 
112,601

Total assets
 
$
3,896,071

 
$
3,773,788

Liabilities and equity
 
 
 
 
Current liabilities
 
 
 
 
   Accounts payable
 
$
1,039,074

 
$
1,109,589

   Accrued payroll and related liabilities
 
47,284

 
48,203

   Other current liabilities
 
384,040

 
314,219

   Total current liabilities
 
1,470,398

 
1,472,011

Long-term debt, excluding current portion
 
1,624,692

 
1,650,582

Operating lease liabilities, excluding current portion
 
161,785

 

Deferred income taxes
 
49,507

 
50,852

Other liabilities
 
92,788

 
81,924

   Total liabilities
 
3,399,170

 
3,255,369

Total equity
 
496,901

 
518,419

Total liabilities and equity
 
$
3,896,071

 
$
3,773,788


5



 

Owens & Minor, Inc.
Consolidated Statements of Cash Flows (unaudited)
(dollars in thousands)

 
 
Six Months Ended June 30,
 
 
2019
 
2018
 
 
 
 
 
Operating activities:
 
 
 
 
Net loss
 
$
(24,572
)
 
$
(174,626
)
Adjustments to reconcile net loss to cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
58,902

 
43,813

Share-based compensation expense
 
8,093

 
6,140

Goodwill and intangible asset impairment charges
 

 
165,447

Provision for losses on accounts receivable
 
6,534

 
2,867

Deferred income tax benefit
 
(14,597
)
 
(6,172
)
Changes in operating lease right-of-use assets and lease liabilities
 
(616
)
 

Changes in operating assets and liabilities:
 
 
 


Accounts receivable
 
(23,346
)
 
(30,357
)
Merchandise inventories
 
52,346

 
5,211

Accounts payable
 
(71,704
)
 
47,260

Net change in other assets and liabilities
 
32,226

 
(14,629
)
Other, net
 
5,748

 
1,299

Cash provided by operating activities
 
29,014

 
46,253
 
 
 
 
 
Investing activities:
 
 
 
 
Acquisitions, net of cash acquired
 

 
(733,433
)
Additions to property and equipment
 
(21,020
)
 
(19,816
)
Additions to computer software
 
(4,511
)
 
(10,238
)
Proceeds from sale of property and equipment
 
339

 
12

Cash used for investing activities
 
(25,192
)
 
(763,475
)
 
 
 
 
 
Financing activities:
 
 
 
 
Proceeds from issuance of debt
 

 
695,750

Borrowings under revolving credit facility

 
19,900

 
101,000

Repayments of debt

 
(24,788
)
 
(6,250
)
Financing costs paid

 
(4,313
)
 
(27,697
)
Cash dividends paid
 
(4,918
)
 
(32,284
)
Other, net
 
(1,934
)
 
(3,670
)
Cash (used for) provided by financing activities
 
(16,053
)
 
726,849

 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
203

 
4,039

 
 
 
 
 
Net (decrease) increase in cash and cash equivalents
 
(12,028
)
 
13,666

Cash and cash equivalents at beginning of period
 
103,367

 
104,522

Cash and cash equivalents at end of period
 
$
91,339

 
$
118,188



6



 


Owens & Minor, Inc.
Summary Segment Information (unaudited)
(dollars in thousands)
 
Three Months Ended June 30,
 
2019
 
2018
 
 
 
% of
 
 
 
 % of
 
 
 
consolidated
 
 
 
consolidated
 
Amount
 
net revenue
 
Amount
 
 net revenue
Net revenue:
 
 
 
 
 
 
 
Segment net revenue
 
 
 
 
 
 
 
Global Solutions
$
2,241,965

 
90.25
 %
 
$
2,290,173

 
93.17
 %
Global Products
363,889

 
14.65
 %
 
279,588

 
11.37
 %
Total segment net revenue
2,605,854

 
 
 
2,569,761

 
 
Inter-segment revenue

 
 
 
 
 
 
Global Products
(121,654
)
 
(4.90
)%
 
(111,490
)
 
(4.54
)%
Total inter-segment revenue
(121,654
)
 
 
 
(111,490
)
 
 
Consolidated net revenue
$
2,484,200

 
100.00
 %
 
$
2,458,271

 
100.00
 %
 
 
 
 
 
 
 
 
 
 
 
% of segment
 
 
 
% of segment
Operating income (loss):
 
 
net revenue
 
 
 
net revenue
Global Solutions
$
19,454

 
0.87
 %
 
$
23,977

 
1.05
 %
Global Products
17,949

 
4.93
 %
 
22,489

 
8.04
 %
Inter-segment eliminations
(729
)
 
 
 
167

 
 
Goodwill and intangible asset impairment charges

 
 
 
(165,447
)
 
 
Intangible amortization
(13,106
)
 
 
 
(9,374
)
 
 
Acquisition-related and exit and realignment charges
(5,655
)
 
 
 
(24,930
)
 
 
Other (1)
(1,769
)
 
 
 
(18,933
)
 
 
Consolidated operating income (loss)
$
16,144

 
0.65
 %
 
$
(172,051
)
 
(7.00
)%
 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
Global Solutions
$
14,936

 
 
 
$
15,854

 
 
Global Products
15,246

 
 
 
10,048

 
 
Consolidated depreciation and amortization
$
30,182

 
 
 
$
25,902

 
 
 
 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
 
Global Solutions
$
7,372

 
 
 
$
14,544

 
 
Global Products
3,880

 
 
 
1,350

 
 
Consolidated capital expenditures
$
11,252

 
 
 
$
15,894

 
 







7



 


Owens & Minor, Inc.
Summary Segment Information (unaudited), continued
(dollars in thousands)

 
Six Months Ended June 30,
 
2019
 
2018
 
 
 
% of
 
 
 
 % of
 
 
 
consolidated
 
 
 
consolidated
 
Amount
 
net revenue
 
Amount
 
 net revenue
Net revenue:
 
 
 
 
 
 
 
Segment net revenue
 
 
 
 
 
 
 
Global Solutions
$
4,476,111

 
90.51
 %
 
$
4,631,295

 
95.87
 %
Global Products
710,974

 
14.37
 %
 
400,875

 
8.30
 %
Total segment net revenue
5,187,085

 
 
 
5,032,170

 
 
Inter-segment revenue
 
 
 
 

 
 
Global Products
(241,498
)
 
(4.88
)%
 
(201,320
)
 
(4.17
)%
Total inter-segment revenue
(241,498
)
 
 
 
(201,320
)
 
 
Consolidated net revenue
$
4,945,587

 
100.00
 %
 
$
4,830,850

 
100.00
 %
 
 
 
 
 
 
 
 
 
 
 
% of segment
 
 
 
% of segment
Operating income (loss):
 
 
net revenue
 
 
 
net revenue
Global Solutions
$
40,525

 
0.91
 %
 
$
60,593

 
1.31
 %
Global Products
25,673

 
3.61
 %
 
33,717

 
8.41
 %
Inter-segment eliminations
1,017

 
 
 
(75
)
 
 
Goodwill and intangible asset impairment charges

 
 
 
(165,447
)
 
 
Intangible amortization
(23,466
)
 
 
 
(15,781
)
 
 
Acquisition-related and exit and realignment charges
(10,645
)
 
 
 
(39,690
)
 
 
Other (1)
(2,268
)
 
 
 
(21,151
)
 
 
Consolidated operating income (loss)
$
30,836

 
0.62
 %
 
$
(147,834
)
 
(3.06
)%
 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
Global Solutions
$
31,049

 
 
 
$
31,635

 
 
Global Products
27,853

 
 
 
12,178

 
 
Consolidated depreciation and amortization
$
58,902

 
 
 
$
43,813

 
 
 
 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
 
Global Solutions
$
18,748

 
 
 
$
28,146

 
 
Global Products
6,783

 
 
 
1,908

 
 
Consolidated capital expenditures
$
25,531

 
 
 
$
30,054

 
 

(1) Other consists of Software as a Service (SaaS) implementation costs associated with significant global IT platforms in connection with the redesign of our global information system strategy and incremental charge to cost of goods sold from purchase accounting impacts related to the sale of acquired inventory that was written up to fair value.
.

8



 


Owens & Minor, Inc.
Net Loss Per Common Share (unaudited)
(dollars in thousands, except per share data)

 
Three Months Ended 
 June 30,
 
Six Months Ended
June 30,
 
2019
 
2018
 
2019
 
2018
Numerator:
 
 
 
 
 
 
 
Net loss attributable to common shareholders - basic and diluted
$
(10,476
)
 
$
(182,777
)
 
$
(24,572
)
 
$
(174,626
)
Denominator:
 
 
 
 
 
 
 
Weighted average shares outstanding - basic and diluted
59,805

 
59,750

 
60,403

 
60,022

Net loss per share attributable to common shareholders:
 
 
 
 
 
 
 
Basic and diluted
$
(0.18
)
 
$
(3.07
)
 
$
(0.41
)
 
$
(2.92
)
































9



 


Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
(Dollars in thousands except per share data)
2019
 
2018
 
2019
 
2018
Operating income (loss), as reported (GAAP)
$
16,144

 
$
(172,051
)
 
$
30,836

 
$
(147,834
)
Intangible amortization (1)
13,106

 
9,374

 
23,466

 
15,781

Goodwill and intangible asset impairment charges(5)

 
165,447

 

 
165,447

Acquisition-related and exit and realignment charges(2)
5,655

 
24,930

 
10,645

 
39,690

Fair value adjustments related to purchase accounting(6)

 
18,059

 

 
18,059

Other (3)
1,768

 
874

 
2,267

 
3,092

Operating income, adjusted (non-GAAP) (Adjusted Operated Income)
$
36,673

 
$
46,633

 
$
67,214

 
$
94,235

Operating income (loss) as a percent of revenue (GAAP)
0.65
%
 
(7.00
)%
 
0.62
%
 
(3.06
)%
Adjusted operating income as a percent of revenue (non-GAAP)
1.48
%
 
1.90
 %
 
1.36
%
 
1.95
 %
 
 
 
 
 
 
 
 
Net loss, as reported (GAAP)
$
(10,476
)
 
$
(182,777
)
 
$
(24,572
)
 
$
(174,626
)
Intangible amortization (1)
13,106

 
9,374

 
23,466

 
15,781

Income tax expense (benefit) (7)
(2,605
)
 
(2,519
)
 
(4,269
)
 
(4,075
)
Goodwill and intangible asset impairment charges(5)

 
165,447

 

 
165,447

Income tax expense (benefit) (7)

 
(2,060
)
 

 
(2,060
)
Acquisition-related and exit and realignment charges(2)
5,655

 
24,930

 
10,645

 
39,690

Income tax expense (benefit) (7)
(995
)
 
(6,693
)
 
(1,755
)
 
(10,268
)
Fair value adjustments related to purchase accounting(6)

 
18,059

 

 
18,059

Income tax expense (benefit) (7)

 
(4,950
)
 

 
(4,950
)
Write-off of deferred financing costs (4)

 

 
2,003

 

Income tax expense (benefit) (7)

 

 
(313
)
 

Other (3)
1,768

 
874

 
2,267

 
3,092

Income tax expense (benefit) (7)
(282
)
 
(242
)
 
(337
)
 
(474
)
Net income, adjusted (non-GAAP) (Adjusted Net Income)
$
6,171

 
$
19,443

 
$
7,135

 
$
45,616

 
 
 
 
 
 
 
 
Net loss per diluted common share, as reported (GAAP)
$
(0.18
)
 
$
(3.07
)
 
$
(0.41
)
 
$
(2.92
)
Intangible amortization (1)
0.18

 
0.12

 
0.32

 
0.19

Goodwill and intangible asset impairment charges(5)

 
2.73

 

 
2.73

Acquisition-related and exit and realignment charges(2)
0.08

 
0.31

 
0.15

 
0.49

Fair value adjustments related to purchase accounting(6)

 
0.22

 

 
0.22

Write-off of deferred financing costs (4)

 

 
0.03

 

Other (3)
0.02

 
0.01

 
0.03

 
0.04

Net income per diluted common share, adjusted (non-GAAP) (Adjusted EPS)
$
0.10

 
$
0.32

 
$
0.12

 
$
0.75


10



 


Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited), continued

The following items have been excluded in our non-GAAP financial measures:

(1) Intangible amortization 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 $3.7 million and $7.8 million for the three and six months ended June 30, 2019, compared to $23.2 million and $35.3 million for the same period of 2018. Acquisition-related charges in 2019 and 2018 consist primarily of transition and transaction costs for the Halyard transaction.
Exit and realignment charges were $2.0 million and $2.8 million for the three and six months ended June 30, 2019. Amounts in 2019 were associated with severance costs, the establishment of our client engagement centers, and IT restructuring charges. Exit and realignment charges were $1.7 million and $4.4 million for the three and six months ended June 30, 2018. Amounts in 2018 were associated with the establishment of our client engagement centers.
(3) Other consists of Software as a Service (SaaS) implementation costs associated with significant global IT platforms in connection with the redesign of our global information system strategy.
(4) Write-off of deferred financing costs associated with the revolving credit facility as a result of the Fourth Amendment to the Credit Agreement.
(5) Goodwill and intangible assets impairment charges in 2018 included in our Global Products segment were $149 million and $16.5 million, respectively.
(6) The second quarter of 2018 included an incremental charge to cost of goods sold from purchase accounting impacts related to the sale of acquired inventory that was written up to fair value in connection with the Halyard acquisition.
(7) 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.

Use of Non-GAAP Measures

This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  In general, the measures exclude items and charges that (i) management does not believe reflect Owens & Minor, Inc.'s (the "Company") core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends.  Management uses these non-GAAP financial measures internally to evaluate the Company's performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company's performance to that of its competitors.  However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.


11