0000075252-19-000127.txt : 20191106 0000075252-19-000127.hdr.sgml : 20191106 20191106070115 ACCESSION NUMBER: 0000075252-19-000127 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20191106 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20191106 DATE AS OF CHANGE: 20191106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OWENS & MINOR INC/VA/ CENTRAL INDEX KEY: 0000075252 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES [5047] IRS NUMBER: 541701843 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09810 FILM NUMBER: 191195036 BUSINESS ADDRESS: STREET 1: 9120 LOCKWOOD BLVD CITY: MECHANICSVILLE STATE: VA ZIP: 23116 BUSINESS PHONE: 8047237000 MAIL ADDRESS: STREET 1: 9120 LOCKWOOD BLVD CITY: MECHANICSVILLE STATE: VA ZIP: 23116 FORMER COMPANY: FORMER CONFORMED NAME: O&M HOLDING INC DATE OF NAME CHANGE: 19940504 FORMER COMPANY: FORMER CONFORMED NAME: OWENS & MINOR INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: OWENS MINOR & BODEKER INC DATE OF NAME CHANGE: 19811124 8-K 1 a3q2019earnings8-k.htm 8-K Document


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 
 
 
 FORM 8-K
 
 
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 6, 2019
 
 
 
Owens & Minor, Inc.
(Exact name of registrant as specified in its charter)
 
 
 

Virginia
 
 
54-1701843
(State or other jurisdiction of
incorporation or organization)
 
 
(I.R.S. Employer
Identification No.)
 
 
 
 
9120 Lockwood Boulevard,
 Mechanicsville
Virginia
23116
(Address of principal executive offices)
 
 
(Zip Code)
 
 
 
 
Post Office Box 27626,
Richmond, Virginia
 
 
23261-7626
(Mailing address of principal executive offices)
 
 
(Zip Code)
Registrant’s telephone number, including area code (804) 723-7000
    
Securities registered pursuant to Section 12(b) of the Act:




Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $2 par value per share
 
OMI
 
New York Stock Exchange
 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company    o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.             o
 
 
 
 
 

Item 2.02
Results of Operations and Financial Condition.
On November 6, 2019, Owens & Minor, Inc. (the “Company”) issued a press release regarding its financial results for the third quarter and nine months ended September 30, 2019. A copy of this press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference into this Item 2.02.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 6, 2019, the Company announced the following changes to its executive leadership team structure:

Appointment of Mark P. Zacur as Executive Vice President & Chief Commercial Officer

Mark P. Zacur, 57, the Company’s Senior Vice President & Chief Procurement Officer, assumed the role of Executive Vice President & Chief Commercial Officer of the Company effective November 1, 2019. In this role, Mr. Zacur will be responsible for the Company’s sales, procurement and supplier management functions and will continue to report to the Company’s Chief Executive Officer & President Edward A. Pesicka. Mr. Zacur joined the Company in June 2019 and has served as Senior Vice President & Chief Procurement Officer since that date. Prior to joining the Company, Mr. Zacur served as Vice President & General




Manager of Fisher Healthcare, a national diagnostics laboratory distributor and operating division of Thermo Fisher Scientific, from November 2014 to April 2019. Previously, he held a variety of marketing, product management, procurement and operations leadership roles at Fisher Safety, Bayer Corporation and Reichhold Chemicals. Mr. Zacur received his undergraduate degree from Indiana University of Pennsylvania and earned an MBA from Carnegie Mellon University.

In consideration of his service as Executive Vice President & Chief Commercial Officer, Mr. Zacur will be paid an annualized base salary at the rate of $500,000 and be eligible for a target annual cash bonus equal to 75% of his base salary. Beginning in 2020, he will also be eligible to receive an annual equity award in the amount of $700,000, comprised one-half of time-based vesting restricted stock and one-half of performance-based vesting restricted stock. Mr. Zacur will be covered by the Company’s previously filed Officer Severance Policy (see Exhibit 10.4 to the Company’s Current Report on Form 8-K dated and filed with the Securities & Exchange Commission (the “SEC”) on May 9, 2018) (the “Severance Policy”) and be party to an agreement substantially in the form of the previously filed Executive Change in Control Severance Agreement (see Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 dated and filed with the SEC on March 6, 2019)(the “CIC Severance Agreement”).

Appointment of Jeffrey T. Jochims as Executive Vice President & Chief Operating Officer

Jeffrey T. Jochims, 52, the Company’s Executive Vice President, Strategy & Solutions, assumed the role of Executive Vice President & Chief Operating Officer of the Company effective November 1, 2019. In this role, Mr. Jochims will be responsible for operations, including the Company’s supply chain, specialty solutions, IT, marketing and strategy and client engagement center functions and will continue to report to the Company’s Chief Executive Officer & President Edward A. Pesicka. Mr. Jochims joined the Company in April, 2019 and has served as Executive Vice President, Strategy & Solutions since that date. Prior to joining the Company, Mr. Jochims served from 2015 to 2019 as an executive consultant and board member to companies in the healthcare, pharmaceutical and life sciences industries. Additionally during that period, Mr. Jochims was a co-founder and principal of 4C Measures, a start-up technology business. Before that, from 2000 until 2014, Mr. Jochims served in positions of increasing authority at Thermo Fisher Scientific, including as President of the global Research & Safety Market division publicly known as Fisher Scientific. Mr. Jochims holds a Juris Doctorate from the University of Pittsburgh School of Law and a B.A. from the University of Illinois.

In consideration of his service as Chief Operating Officer, Mr. Jochims will continue to be paid an annualized base salary at the rate of $500,000 and be eligible for a target annual cash equal to 75% of his base salary. He will also continue to be eligible to receive an annual equity award of restricted stock in the amount of $700,000, comprised one-half of time-based vesting restricted stock and one-half of performance-based vesting restricted stock. Mr. Jochims will be covered by the Company’s Officer Severance Policy and is party to a CIC Severance Agreement.

Departure of Robert K. Snead, Executive Vice President & Chief Financial Officer

Robert K. Snead resigned his position of Executive Vice President & Chief Financial Officer of the Company effective November 1, 2019. Mr. Snead is leaving to pursue other opportunities and his resignation did not result from any disagreement with the Company or any matter regarding the Company’s accounting, strategy, management, operations, policies, regulatory matters, or practices (financial or otherwise). Mr. Snead will remain employed with the Company for a transition period expected to be through December 31, 2019 to help facilitate the transfer of work and duties to his successor. In connection with his departure from the Company, Mr. Snead will be eligible to receive the benefits provided by the Company upon a “Severance Event” pursuant to the Company’s Officer Severance Policy contingent upon Mr. Snead’s execution and delivery of a separation agreement and general release of claims, which includes certain restrictive covenants. Additionally, a portion of Mr. Snead’s unvested time-based restricted stock will vest in accordance with the “termination without cause” treatment under the applicable equity award agreements (the forms of which were included as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed with the SEC on May 4, 2016, Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on May 9, 2018 and Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 1, 2019).





Appointment of Andrew G. Long as Executive Vice President & Chief Financial Officer

Effective November 11, 2019, Andrew G. Long, 54, will assume the role of Executive Vice President & Chief Financial Officer of the Company.   Mr. Long has served as the Chief Executive Officer of Insys Therapeutics, Inc. (“Insys”) from April 14, 2019 and will serve in such position until his pending resignation date of November 8, 2019, as previously announced by Insys. Prior to becoming Chief Executive Officer, Mr. Long served as the Chief Financial Officer of Insys from August 2017.  Prior to joining Insys, Mr. Long served as Senior Vice President of Global Finance at Patheon, a pharmaceutical company, from 2015 to 2017, where he worked on a number of initiatives leading up to Patheon’s initial public offering.  Prior to working at Patheon, Mr. Long served as Vice President of Finance for multiple divisions at Thermo Fisher Scientific from 2006 until 2015. Mr. Long received his M.B.A. from the Kellogg School of Business at Northwestern University and earned his undergraduate degree in finance from Indiana University. Mr. Long has served as a Member of the Board of Directors of Insys, which filed for Chapter 11 bankruptcy protection in June 2019, from April 17, 2019 and will serve in such position until his pending resignation date of November 8, 2019.

In consideration of his service as Executive Vice President & Chief Financial Officer, Mr. Long will be paid an annualized base salary at the rate of $500,000 and be eligible for a prorated target annual cash bonus under the Company’s 2019 Annual Incentive Program equal to 75% of his base salary. Beginning in 2020, he will be eligible for an annual equity award in the amount of $700,000 comprised one-half of time-based vesting restricted stock and one-half of performance-based vesting restricted stock. Additionally, in consideration of his joining the Company, Mr. Long will receive 1) an award of 50,000 shares of time-based restricted stock pursuant to the Company’s 2018 Stock Incentive Plan, as amended, effective as of his first day of employment with the Company, that will vest in equal one-third increments on each of the first three anniversaries of the grant date, subject to continued service with the Company through the vesting date, and 2) cash payment of $350,000, $100,000 of which shall be payable on the Company’s first regular payroll following Mr. Long’s first date of employment with the Company and $250,000 of which shall be payable on the Company’s first regular payroll following Mr. Long’s 90th day of employment with the Company. Mr. Long will be covered by the Company’s Officer Severance Policy and will enter into a CIC Severance Agreement.

Appointment of Interim Chief Financial Officer

Michael W. Lowry, 57, the Company’s Senior Vice President, Corporate Controller and Chief Accounting Officer, will serve as the Company’s interim Chief Financial Officer from November 1, 2019 until Mr. Long’s first day of employment with the Company, which is expected to be November 11, 2019. Mr. Lowry joined the Company in 1988 and has served in various financial roles of increasing responsibility, including as Senior Vice President, Corporate Controller and Chief Accounting Officer since June 2018, Senior Vice President, Corporate Controller from June 2016 until June 2018, as Vice President, Corporate Controller from April 2013 to June 2016, interim Chief Financial Officer & interim Chief Accounting Officer from February 2013 until March 2013, and as Vice President, Treasurer from May 2009 until April 2013.

Except for the arrangements described in this Current Report on Form 8-K, there are no existing or currently proposed transactions to which the Company or any of its subsidiaries is a party and in which Messrs. Zacur, Jochims, Long and Lowry has a direct or indirect material interest. There are no family relationships between Messrs. Zacur, Jochims, Long and Lowry and any of the Company’s directors or executive officers.

Item 7.01.
Regulation FD Disclosure.

On November 6, 2019, the Company issued a press release announcing the matters contained in Item 5.02 of this Current Report on Form 8-K. A copy of this press release is furnished herewith as Exhibit 99.2 and is incorporated herein by reference into this Item 7.01.





In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 7.01 including the information set forth in Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01.
Financial Statements and Exhibits.

(c)Exhibits.








SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OWENS & MINOR, INC.
 
 
 
 
Date: November 6, 2019
 
 
 
By:
 
/s/ Nicholas J. Pace
 
 
 
 
 
 
Name:
 
Nicholas J. Pace
 
 
 
 
 
 
Title:
 
Executive Vice President, General Counsel and Corporate Secretary




 EX-99.1 2 a3q2019pressrelease.htm EXHIBIT 99.1 Document

Exhibit 99.1
FOR IMMEDIATE RELEASE                        
November 6, 2019

Owens & Minor Reports 3rd Quarter 2019 Financial Results


RICHMOND, VA - November 6, 2019 - Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the third quarter ended September 30, 2019, as summarized in the table below.

“I am excited to announce that we had another quarter with significant sequential improvement. Our third quarter results show back-to-back quarters of sequential growth in operating income and EPS, expansion of quarterly operating cash flow, additional reduction in working capital and an increased pace of debt pay down. This is a result of our teammates actively embracing our focus around serving our customers and driving productivity,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor.

“Additionally, we have improved our service metrics to levels that have not been achieved in years. The strong performance and consistency of our service gives us confidence that many of the past service issues have been resolved, however we will continue to drive additional initiatives to further improve and provide innovative services. We continue to focus on productivity and efficiency initiatives to drive operating improvements in our core businesses: distribution channel, product manufacturing, home healthcare, and acute care services. While we are ahead of the long-term recovery plan I envisioned when I joined in March, we recognize that there is still a significant amount of work ahead. We will not take our customers for granted and will continue to provide a high level of customer focus while maintaining industry-leading integrity.”


Financial Summary
 
 
YTD
YTD
($ in millions, except per share data)
3Q19
3Q18
2019
2018
    Revenue
$2,399
$2,465
$7,345
$7,296
Operating income, GAAP1,2
$25.3
$21.4
$56.2
($126)
Adj. Operating income, Non-GAAP1,2
$42.3
$48.8
$109
$143
Net income (loss), GAAP1,2
$1.2
($0.6)
($23.3)
($175)
Adj. Net income, Non-GAAP1,2
$12.2
$19.5
$19.3
$65.1
Net Income (loss) per share, GAAP1,2
$0.02
($0.01)
($0.39)
($2.92)
Adj. Net Income per share, Non-GAAP1,2
$0.20
$0.32
$0.32
$1.06
Adj. Net Income per share, Non-GAAP, constant currency1,2,3
$0.22
$0.32
$0.34
$1.06

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. Year-to-date 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.
3. Adjusted net income per share, non-GAAP at 2018 foreign currency exchange rates.






2019 Results
•
Foreign exchange negatively impacted net income per share and adjusted net income per share by $0.02 for both the quarter and year-to-date. On a constant currency basis, adjusted net income per share was $0.22 for the third quarter and $0.34 on a year-to-date basis.
•
Compared to prior year, quarterly revenues declined 2.7%, and year-to-date revenues grew 0.7% (2.4% decline and 1.0% increase, respectively, on a constant currency basis).
◦
The changes in quarterly and year-to-date revenues were driven by increased sales from Global Products and certain business lines within Global Solutions, offset by lower distribution sales.
•
Quarterly and year-to-date operating results reflect margin expansion from improved sales mix offset by expenses to support business growth and new customer solutions as well as delayed revenue associated with Fusion5. 
•
Interest expense increased $2.1 million for the quarter and $28.1 million year-to-date compared to prior year.


Highlights
•
On a sequential basis, during the third quarter of 2019 the Company achieved operating income growth of 57% and adjusted operating income growth of 15%.
•
On a sequential basis, net income and adjusted net income per share increased $0.20 and $0.10, respectively.
•
The Company generated $110 million of operating cash flow in the third quarter; total of $200 million in operating cash flow generated in the second and third quarters.
•
Reduced debt by $72 million in the third quarter; $130 million total reduction in debt over the second and third quarters.
•
On a sequential basis, interest expense for the quarter decreased $1.7 million.
•
Achieved historically strong service levels.
•
Byram continues strong top-line and bottom-line performance.
•
Successfully exited transition service agreements related to the Halyard S&IP acquisition.
•
Mark Beck, former President and Chief Executive Officer of JELD-WEN Holding, Inc. and Robert Henkel, former President and Chief Executive Officer of Ascension Health, Inc. were elected to Board of Directors in the third quarter.


Financial Outlook
For 2019, the Company is adjusting its previously issued guidance range for the timing and amount of anticipated revenue from its early stage value-based care management business (Fusion5) as follows:

 
Adjusted net income per share range, excluding foreign currency impact
Narrowed guidance range
$0.60
$0.65
Impact of Fusion5 revenue amount and timing
(0.06)
(0.06)
 
$0.54
$0.59

Excluding the impact of Fusion5 and foreign currency, the company now expects 2019 adjusted net income per share to be in a range of $0.60 to $0.65.

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 fourth quarter dividend payment of $0.0025 per share, payable on December 31, 2019, to shareholders of record as of December 16, 2019.

Investor Conference Call for 3Q 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. EST on Wednesday, November 6, 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 #2309649. 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.

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.


Contact
Chuck Graves, Director, Finance & Investor Relations, 804-723-7556, Chuck.Graves@owens-minor.com

SOURCE: Owens & Minor






Owens & Minor, Inc.
Consolidated Statements of Income (Loss) (unaudited)
(dollars in thousands, except per share data)
 
 
Three Months Ended September 30,
 
 
2019
 
2018
Net revenue
 
$
2,399,017

 
$
2,464,877

Cost of goods sold
 
2,036,530

 
2,112,303

Gross margin
 
362,487

 
352,574

Distribution, selling and administrative expenses
 
332,369

 
325,012

Acquisition-related and exit and realignment charges
 
4,905

 
7,727

Other operating income, net
 
(101
)
 
(1,522
)
Operating income
 
25,314

 
21,357

Interest expense, net
 
25,938

 
23,826

Other income, net
 
(185
)
 
—

Loss before income taxes
 
(439
)
 
(2,469
)
Income tax benefit
 
(1,663
)
 
(1,904
)
Net income (loss)
 
$
1,224

 
$
(565
)
 
 
 
 
 
Net income (loss) per common share:
 
 
 
 
Basic and diluted
 
$
0.02

 
$
(0.01
)

 
 
Nine Months Ended September 30,
 
 
2019
 
2018
Net revenue
 
$
7,344,605

 
$
7,295,727

Cost of goods sold
 
6,255,266

 
6,293,474

Gross margin
 
1,089,339

 
1,002,253

Distribution, selling and administrative expenses
 
1,016,965

 
918,147

Goodwill and intangible asset impairment charges
 
—

 
165,447

Acquisition-related and exit and realignment charges
 
15,550

 
47,416

Other operating expense (income), net
 
674

 
(2,281
)
Operating income (loss)
 
56,150

 
(126,476
)
Interest expense, net
 
80,718

 
52,651

Other expense, net
 
1,818

 
—

Loss before income taxes
 
(26,386
)
 
(179,127
)
Income tax benefit
 
(3,038
)
 
(3,936
)
Net loss
 
$
(23,348
)
 
$
(175,191
)
 
 
 
 
 
Net loss per common share:
 
 
 
 
Basic and diluted
 
$
(0.39
)
 
$
(2.92
)





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

 
 
September 30, 2019
 
December 31, 2018
 
 
 
 
 
Assets
 
 
 
 
Current assets
 
 
 
 
   Cash and cash equivalents
 
$
96,803

 
$
103,367

   Accounts receivable, net
 
741,670

 
823,418

   Merchandise inventories
 
1,153,079

 
1,290,103

   Other current assets
 
259,708

 
321,690

   Total current assets
 
2,251,260

 
2,538,578

Property and equipment, net
 
383,825

 
386,723

Operating lease assets
 
234,853

 
—

Goodwill
 
398,065

 
414,122

Intangible assets, net
 
299,874

 
321,764

Other assets, net
 
120,542

 
112,601

Total assets
 
$
3,688,419

 
$
3,773,788

Liabilities and equity
 
 
 
 
Current liabilities
 
 
 
 
   Accounts payable
 
$
873,743

 
$
1,109,589

   Accrued payroll and related liabilities
 
62,081

 
48,203

   Other current liabilities
 
359,965

 
314,219

   Total current liabilities
 
1,295,789

 
1,472,011

Long-term debt, excluding current portion
 
1,553,991

 
1,650,582

Operating lease liabilities, excluding current portion
 
198,858

 
—

Deferred income taxes
 
50,553

 
50,852

Other liabilities
 
97,950

 
81,924

   Total liabilities
 
3,197,141

 
3,255,369

Total equity
 
491,278

 
518,419

Total liabilities and equity
 
$
3,688,419

 
$
3,773,788








Owens & Minor, Inc.
Consolidated Statements of Cash Flows (unaudited)
(dollars in thousands)
 
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
 
 
 
 
Operating activities:
 
 
 
 
Net loss
 
$
(23,348
)
 
$
(175,191
)
Adjustments to reconcile net loss to cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
88,204

 
73,596

Share-based compensation expense
 
12,057

 
10,499

Goodwill and intangible asset impairment charges
 
—

 
165,447

Provision for losses on accounts receivable
 
9,759

 
5,757

Deferred income tax benefit
 
(11,989
)
 
(6,754
)
Changes in operating lease right-of-use assets and lease liabilities
 
(1,280
)
 
—

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
73,986

 
(51,603
)
Merchandise inventories
 
136,021

 
21,244

Accounts payable
 
(221,381
)
 
88,198

Net change in other assets and liabilities
 
69,756

 
(11,522
)
Other, net
 
7,320

 
2,838

Cash provided by operating activities
 
139,105

 
122,509

 
 
 
 
 
Investing activities:
 
 
 
 
Acquisitions, net of cash acquired
 
—

 
(751,834
)
Additions to property and equipment
 
(31,224
)
 
(32,489
)
Additions to computer software
 
(6,928
)
 
(14,816
)
Proceeds from sale of property and equipment
 
220

 
258

Cash used for investing activities
 
(37,932
)
 
(798,881
)
 
 
 
 
 
Financing activities:
 
 
 
 
Proceeds from issuance of debt
 
—

 
695,750

(Repayments) borrowings under revolving credit facility
 
(36,100
)
 
74,762

Repayments of debt
 
(40,700
)
 
(9,375
)
Financing costs paid
 
(4,313
)
 
(28,512
)
Cash dividends paid
 
(5,072
)
 
(32,151
)
Other, net
 
(3,109
)
 
(5,308
)
Cash (used for) provided by financing activities
 
(89,294
)
 
695,166

 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
(2,243
)
 
1,574

 
 
 
 
 
Net increase in cash, cash equivalents and restricted cash
 
9,636

 
20,368

Cash, cash equivalents and restricted cash at beginning of period
 
103,367

 
104,522

Cash, cash equivalents and restricted cash at end of period (1)
 
$
113,003

 
$
124,890


(1) Restricted cash represents $16.2 million held in an escrow account as of September 30, 2019 as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program.





Owens & Minor, Inc.
Summary Segment Information (Unaudited)
(dollars in thousands)
 
Three Months Ended September 30,
 
2019
 
2018
 
 
 
% of
 
 
 
 % of
 
 
 
consolidated
 
 
 
consolidated
 
Amount
 
net revenue
 
Amount
 
 net revenue
Net revenue:
 
 
 
 
 
 
 
Segment net revenue
 
 
 
 
 
 
 
Global Solutions
$
2,153,644

 
89.77
 %
 
$
2,243,782

 
91.03
 %
Global Products
359,835

 
15.00
 %
 
349,895

 
14.20
 %
Total segment net revenue
2,513,479

 
 
 
2,593,677

 
 
Inter-segment revenue
 
 
 
 
 
 
 
Global Products
(114,462
)
 
(4.77
)%
 
(128,800
)
 
(5.23
)%
Total inter-segment revenue
(114,462
)
 
 
 
(128,800
)
 
 
Consolidated net revenue
$
2,399,017

 
100.00
 %
 
$
2,464,877

 
100.00
 %
 
 
 
 
 
 
 
 
 
 
 
% of segment
 
 
 
% of segment
Operating income:
 
 
net revenue
 
 
 
net revenue
Global Solutions
$
25,626

 
1.19
 %
 
$
24,150

 
1.08
 %
Global Products
16,897

 
4.70
 %
 
27,634

 
7.90
 %
Inter-segment eliminations
(242
)
 
 
 
(2,957
)
 
 
Intangible amortization
(10,949
)
 
 
 
(10,366
)
 
 
Acquisition-related and exit and realignment charges
(4,905
)
 
 
 
(7,727
)
 
 
Other (1)
(1,113
)
 
 
 
(9,377
)
 
 
Consolidated operating income
$
25,314

 
1.06
 %
 
$
21,357

 
0.87
 %
 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
Global Solutions
$
16,174

 
 
 
$
15,829

 
 
Global Products
13,128

 
 
 
13,953

 
 
Consolidated depreciation and amortization
$
29,302

 
 
 
$
29,782

 
 
 
 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
 
Global Solutions
$
5,830

 
 
 
$
12,006

 
 
Global Products
6,791

 
 
 
5,245

 
 
Consolidated capital expenditures
$
12,621

 
 
 
$
17,251

 
 





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

 
Nine Months Ended September 30,
 
2019
 
2018
 
 
 
% of
 
 
 
 % of
 
 
 
consolidated
 
 
 
consolidated
 
Amount
 
net revenue
 
Amount
 
 net revenue
Net revenue:
 
 
 
 
 
 
 
Segment net revenue
 
 
 
 
 
 
 
Global Solutions
$
6,629,756

 
90.27
 %
 
$
6,875,077

 
94.23
 %
Global Products
1,070,808

 
14.58
 %
 
750,770

 
10.29
 %
Total segment net revenue
7,700,564

 
 
 
7,625,847

 
 
Inter-segment revenue
 
 
 
 
 
 
 
Global Products
(355,959
)
 
(4.85
)%
 
(330,120
)
 
(4.52
)%
Total inter-segment revenue
(355,959
)
 
 
 
(330,120
)
 
 
Consolidated net revenue
$
7,344,605

 
100.00
 %
 
$
7,295,727

 
100.00
 %
 
 
 
 
 
 
 
 
 
 
 
% of segment
 
 
 
% of segment
Operating income (loss):
 
 
net revenue
 
 
 
net revenue
Global Solutions
$
66,152

 
1.00
 %
 
$
84,742

 
1.23
 %
Global Products
42,570

 
3.98
 %
 
61,351

 
8.17
 %
Inter-segment eliminations
774

 
 
 
(3,032
)
 
 
Goodwill and intangible asset impairment charges
—

 
 
 
(165,447
)
 
 
Intangible amortization
(34,415
)
 
 
 
(26,147
)
 
 
Acquisition-related and exit and realignment charges
(15,550
)
 
 
 
(47,416
)
 
 
Other (1)
(3,381
)
 
 
 
(30,527
)
 
 
Consolidated operating income (loss)
$
56,150

 
0.76
 %
 
$
(126,476
)
 
(1.73
)%
 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
Global Solutions
$
47,222

 
 
 
$
47,464

 
 
Global Products
40,982

 
 
 
26,132

 
 
Consolidated depreciation and amortization
$
88,204

 
 
 
$
73,596

 
 
 
 
 
 
 
 
 
 
Capital expenditures:
 
 
 
 
 
 
 
Global Solutions
$
24,578

 
 
 
$
40,152

 
 
Global Products
13,574

 
 
 
7,153

 
 
Consolidated capital expenditures
$
38,152

 
 
 
$
47,305

 
 

(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 an incremental charge in the prior year periods to cost of goods sold from purchase accounting impacts related to the sale of acquired inventory that was written up to fair value.





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


 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Numerator:
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders - basic and diluted
$
1,224

 
$
(565
)
 
$
(23,348
)
 
$
(175,191
)
Denominator:
 
 
 
 
 
 
 
Weighted average shares outstanding - basic and diluted
60,030

 
59,766

 
60,498

 
59,996

Net income (loss) per share attributable to common shareholders:
 
 
 
 
 
 
 
Basic and diluted
$
0.02

 
$
(0.01
)
 
$
(0.39
)
 
$
(2.92
)





Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(Dollars in thousands except per share data)
2019
 
2018
 
2019
 
2018
Operating income (loss), as reported (GAAP)
$
25,314

 
$
21,357

 
$
56,150

 
$
(126,476
)
Intangible amortization (1)
10,949

 
10,366

 
34,415

 
26,147

Goodwill and intangible asset impairment charges(4)
—

 
—

 
—

 
165,447

Acquisition-related and exit and realignment charges(2)
4,905

 
7,727

 
15,550

 
47,416

Fair value adjustments related to purchase accounting(5)
—

 
9,029

 
—

 
27,088

Other (3)
1,113

 
348

 
3,381

 
3,439

Operating income, adjusted (non-GAAP) (Adjusted Operated Income)
$
42,281

 
$
48,827

 
$
109,496

 
$
143,061

Operating income (loss) as a percent of revenue (GAAP)
1.06
%
 
0.87
%
 
0.76
%
 
(1.73
)%
Adjusted operating income as a percent of revenue (non-GAAP)
1.76
%
 
1.98
%
 
1.49
%
 
1.96
 %
 
 
 
 
 
 
 
 
Net income (loss), as reported (GAAP)
$
1,224

 
$
(565
)
 
$
(23,348
)
 
$
(175,191
)
Intangible amortization (1)
10,949

 
10,366

 
34,415

 
26,147

Income tax expense (benefit) (7)
(3,898
)
 
(2,209
)
 
(8,167
)
 
(6,284
)
Goodwill and intangible asset impairment charges(4)
—

 
—

 
—

 
165,447

Income tax expense (benefit) (7)
—

 
—

 
—

 
(2,060
)
Acquisition-related and exit and realignment charges(2)
4,905

 
7,727

 
15,550

 
47,416

Income tax expense (benefit) (7)
(1,639
)
 
(1,575
)
 
(3,394
)
 
(11,843
)
Fair value adjustments related to purchase accounting(5)
—

 
9,029

 
—

 
27,088

Income tax expense (benefit) (7)
—

 
(1,922
)
 
—

 
(6,872
)
Other (3)
928

 
348

 
5,199

 
3,439

Income tax expense (benefit) (7)
(317
)
 
(85
)
 
(967
)
 
(558
)
Tax adjustments (6)
—

 
(1,596
)
 
—

 
(1,596
)
Net income, adjusted (non-GAAP) (Adjusted Net Income)
$
12,152

 
$
19,518

 
$
19,288

 
$
65,133

Net income (loss) per diluted common share, as reported (GAAP)
$
0.02

 
$
(0.01
)
 
$
(0.39
)
 
$
(2.92
)
Intangible amortization (1)
0.12

 
0.14

 
0.44

 
0.32

Goodwill and intangible asset impairment charges(4)
—

 
—

 
—

 
2.73

Acquisition-related and exit and realignment charges(2)
0.05

 
0.10

 
0.20

 
0.58

Fair value adjustments related to purchase accounting(5)
—

 
0.11

 
—

 
0.33

Other (3)
0.01

 
—

 
0.07

 
0.04

Tax adjustments (6)
—

 
(0.02
)
 
—

 
(0.02
)
Net income per diluted common share, adjusted (non-GAAP)(Adjusted EPS)
$
0.20

 
$
0.32

 
$
0.32

 
$
1.06

Impact of currency at 2018 foreign currency exchange rates
0.02

 
—

 
0.02

 
—

Net income per diluted common share, on a constant currency basis (8)
$
0.22

 
$
0.32

 
$
0.34

 
$
1.06





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 $3.6 million and $11.4 million for the three and nine months ended September 30, 2019, compared to $5.7 million and $41.0 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 $1.4 million and $4.2 million for the three and nine months ended September 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 $2.0 million and $6.4 million for the three and nine months ended September 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 of $1.1 million and $3.4 million for the three and nine months ended September 30, 2019.
Other also consists of the write-off of deferred financing costs associated with the revolving credit facility as a result of the Fourth Amendment to the Credit Agreement in February 2019 of $2.0 million and gain on extinguishment of debt related to the partial repurchase of our 2021 Notes in September 2019 of $0.2 million.
(4) Goodwill and intangible assets impairment charges in 2018 included in our Global Products segment were $149 million and $16.5 million, respectively.
(5) The second and third quarters of 2018 include 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.
(6) Includes tax adjustments primarily associated with the estimated benefits under the Tax Cuts and Jobs Act.
(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.
(8) Excludes the impact of translational currency, which assumes 2019 results at 2018 rates.


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.


 EX-99.2 3 omorgupdatepressrelease_no.htm EXHIBIT 99.2 Document

Exhibit 99.2
FOR IMMEDIATE RELEASE        
November 6, 2019            

Owens & Minor Announces New Organizational Structure to Better Serve Customers

Mark Zacur Named to Position of Chief Commercial Officer; Jeff Jochims Named Chief Operating Officer;
Andy Long to Join as Chief Financial Officer, Effective November 11
RICHMOND, Va. – Nov. 6, 2019 – Owens & Minor, Inc. (NYSE: OMI), a global healthcare solutions company, today announced a new organizational structure and management appointments designed to strengthen its ability to meet the needs of customers. Effective immediately, the Company has named Mark Zacur, currently Senior Vice President & Chief Procurement Officer, to the newly-created position of Executive Vice President & Chief Commercial Officer; and Jeff Jochims, currently Executive Vice President, Strategy & Solutions, has been named Executive Vice President & Chief Operating Officer. The Company also named Andy Long as its next Chief Financial Officer, effective November 11, 2019.
“After spending significant time with our customers, partners and teammates since joining Owens & Minor earlier this year, it became clear we needed to make changes to strengthen the alignment of our organization with the needs and demands of our customers and the marketplace,” said Edward A. Pesicka, President and CEO. “Our new structure will speed our decision making, enabling us to more quickly and efficiently provide the best solutions in the industry and more closely integrate the needs of our customers with our external suppliers. Mark, Jeff and our entire team remain keenly focused on serving our customers and our ongoing productivity and efficiency initiatives to drive operating improvement for the benefit of all of our stakeholders.”
As Chief Commercial Officer, Zacur will be responsible for aligning Owens & Minor’s go-to-market strategy with external supplier partners, enhancing the Company’s ability to adapt to the changing healthcare landscape and offer the best and most relevant solutions in the industry. He will have responsibility for the Company’s sales, procurement and supplier management functions. As Chief Operating Officer, Jochims will oversee operations, including responsibility for the Company’s supply chain, specialty solutions, IT, marketing and strategy, as well as Owens & Minor’s Client Engagement Center. Under the new structure, Zacur, Jochims and Long will report directly to Ed Pesicka, along with Chris Lowery, President, Global Products; Perry Bernocchi, CEO of Byram Healthcare; Nicholas Pace, Executive Vice President, General Counsel & Corporate Secretary; and Shana Neal, Senior Vice President & Chief Human Resources Officer.
Zacur joined Owens & Minor in June 2019, bringing over 20 years of experience in developing and implementing commercial strategies enhanced with supplier partnerships which create best in class solutions and exceptional value for the customer. Jochims joined the Company in April 2019 with more than 20 years


of business strategy and operations experience focused on specialty distribution, manufacturing and services in the healthcare, biopharmaceutical and life sciences research industries.
CFO Appointment
Owens & Minor also announced that Andy Long, who has spent more than 25 years as a financial and operating executive in related industries, has been named Executive Vice President & Chief Financial Officer, effective November 11, 2019. Long succeeds Robert K. Snead, who is leaving the Company to pursue other opportunities following a transition period expected to be through December 31, 2019.
“I am pleased to welcome Andy Long to our team,” added Pesicka. “I have known Andy for many years – including working closely together at Thermo Fisher Scientific – and he is a dynamic leader with deep financial acumen and skilled in a wide range of business models including distribution, manufacturing and services with experience in the healthcare, life sciences, bio-pharma and industrial sectors. We appreciate Robert Snead’s long and unwavering commitment to Owens & Minor and his willingness to assist in this important transition. He has been a valuable partner and I wish him every success as he pursues the next phase of his career.”
Long, 54, most recently served as CEO of Insys Therapeutics, Inc., where he led the company’s transformation to focus on an innovative clinical pipeline of novel therapies and managing the company’s relationships with shareholders and other stakeholders. Prior to serving as CEO, Long was the company’s CFO for two years. Before joining Insys Therapeutics, Long spent two years as SVP of Global Finance for Patheon, a $2 billion private equity-backed provider of contract manufacturing services to the bio-pharma industry, where he held full financial responsibility for all global manufacturing sites and assisted in the company’s IPO process. Prior to that, Long served as VP of Global Finance for Thermo Fisher Scientific’s Customer Channels Group. In this role, he provided management and financial operation directions for global FP&A, controllership, M&A and strategic planning initiatives for the Fisher Scientific distribution business. In addition, he served as a financial business partner to the company’s Chief Commercial Officer and global accounts team. Long holds a Master’s of Business Administration degree in finance, marketing, international business and operations management from the Kellogg Graduate School of Business at Northwestern University and a Bachelor of Science in finance from Indiana University.
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

Media
Shana Neal, Chief Human Resources Officer
804-723-7720

SOURCE: Owens & Minor