Owens & Minor Reports Financial Results for 2nd Quarter 2018
RICHMOND, Va.--(BUSINESS WIRE)--Aug 7, 2018--Owens & Minor, Inc. (NYSE: OMI) today reported financial results for the second quarter ended June 30, 2018, including consolidated revenues of $2.46 billion, representing an increase of 8.5% when compared to revenues of $2.27 billion in the second quarter of 2017. Quarterly revenue growth included contributions from Byram Healthcare of $128 million and two months of revenue contribution from Halyard S&IP of $168 million (before eliminations of $31.1 million).
On a GAAP basis, the current quarter results were significantly affected by a non-cash asset impairment charge related to goodwill and intangibles of $165 million, or $2.73 per share, resulting in a consolidated operating income (loss) for the second quarter of 2018 of ($172) million compared to $32.8 million in last year’s second quarter. Quarterly net income (loss) was ($183) million, or ($3.07) per share, compared to $0.33 per share for the second quarter of last year.
Adjusted consolidated operating income (non-GAAP) for the second quarter was $46.6 million compared to $41.4 million for the same period last year. Adjusted net income (non-GAAP) was $19.4 million, or $0.32 per share, compared to $0.43 per share in last year’s second quarter. Adjusted results included $2.5 million in severance expense related to executive leadership transitions. A reconciliation of reported results to adjusted (non-GAAP) measures is included below.
“Our teams remain laser focused on improving our operating performance. Our new strategy and capabilities are resonating with our customers, helping us to retain and win new business,” said P. Cody Phipps, Chairman, President & Chief Executive Officer of Owens & Minor. “Additionally, we are pleased to report that the recent acquisitions of Byram and Halyard are achieving our expectations. We believe the strategic moves we have made across the continuum of care with Byram and in meaningfully building our own brand products portfolio with Halyard S&IP have strengthened and diversified our overall business and have positioned Owens & Minor for sustained profitable growth in 2019 and beyond.”
For the six months ended June 30, 2018, consolidated revenues were $4.83 billion, an increase of 5.1% when compared to revenues of $4.59 billion for the same period last year. On a GAAP basis, consolidated operating income (loss) for the first half of 2018 was ($148) million, compared to $68.4 million for the same period last year. Year-to-date net income (loss) was ($175) million, or ($2.92) per share, compared to $0.64 per share for the first half of last year. Operating results for the first half of 2018 were affected by the impairment charge mentioned in the quarterly results.
Adjusted consolidated operating income (non-GAAP) for the first six months of 2018 was $94.2 million compared to $89.1 million for the same period last year. Adjusted net income (non-GAAP) was $45.6 million, or $0.75 per share, compared to $0.86 per share for the first six months of 2017. A reconciliation of reported results to adjusted (non-GAAP) measures is included below.
Owens & Minor operates under two Strategic Business Units (SBUs)—Global Solutions and Global Products—reflecting the company’s focus areas. Beginning in the current quarter, the company is excluding acquisition-related intangible amortization from the measure of segment operating income. Prior year amounts have been recast on a consistent basis. Results for these two segments include the following:
The Global Solutions SBU is comprised of the former Domestic and International segments, which includes our U.S. and European distribution, logistics and value-added services business, as well as Byram Healthcare. Revenues for the second quarter of 2018 were $2.29 billion compared to $2.23 billion a year ago. Global Solutions’ operating income was $24.0 million compared to $31.2 million a year ago. The $7.2 million decline resulted primarily from continued margin pressure and warehouse inefficiencies in certain facilities. Byram Healthcare, acquired in August 2017, continued to make positive contributions to quarterly results, adding $128 million to revenues, which partially offset the aforementioned margin pressure and warehouse inefficiencies.
The Global Products SBU is comprised of the former Proprietary Products segment, which includes Global Sourcing, Clinical & Procedural Solutions (CPS), and the Halyard S&IP business. Revenues in the second quarter of 2018 were $280 million compared to $131 million for the same period last year. Global Products’ results reflect only two months of contributions from Halyard S&IP revenues, or $168 million, because the acquisition was completed on April 30, 2018. Global Products’ operating income increased by $12.3 million to $22.5 million, as a result of contributions from the S&IP business.
Based on year-to-date financial results, as well as expectations for the remainder of the year, Owens & Minor is issuing guidance for 2018 of adjusted net income per diluted share in a range of $1.40 to $1.50.
“As we look forward towards 2019, we have confidence in our ability to achieve a double digit, year-over-year adjusted earnings growth rate next year due to the expected contributions from our Halyard S&IP acquisition and realization of its associated synergies, continued strong Byram growth and our ability to realize operational improvements,” said Phipps.
Although the company does provide guidance for adjusted earnings 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 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 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.
Upcoming Investor Events
Owens & Minor plans to participate in the following investor conferences in the third quarter of 2018, and the company will post webcasts of formal presentations on its corporate website:Baird Global Healthcare Conference; New York; September 5 Wells Fargo Securities Healthcare Conference; Boston; September 6
Investors Conference Call & Supplemental Material
Conference Call: Owens & Minor’s management team will conduct a conference call for investors on Tuesday, August 7, 2018, at 8:30 a.m. EDT. The access code for the conference call, international dial-in and replay is #8677529. Participants may access the call at 866-393-1604. The international dial-in number is 224-357-2191. Replay: A replay of the call will be available for one week by dialing 855-859-2056. Webcast: A listen-only webcast of the call, along with supplemental information, will be available on www.owens-minor.com under the Investor Relations section.
Safe Harbor Statement
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, including financial guidance for 2018, earnings growth rate in 2019, and sustained profitable growth. These statements include, but are not limited to, the statements in the section of this release entitled “Financial Guidance” as well as other statements related to the company’s expectations regarding the performance of its business, growth, improvement of operational performance, and the performance of and synergies from the recently acquired Byram Healthcare and Halyard S&IP businesses. 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, 2017, filed with the SEC including in 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 other 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, caution 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.
Included with the press release financial tables are reconciliations of the differences between the non-GAAP financial measures presented in this news release, which exclude acquisition-related and exit and realignment charges, and their most directly comparable GAAP financial measures.
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 has annualized revenues of approximately $10 billion, including contributions from Halyard Health S&IP. Founded in 1882, Owens & Minor has operated continuously from its Richmond, Virginia, headquarters. Today, the company now has distribution, production, customer service and sales facilities located across Asia, Europe, Latin America, and the U.S. 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.
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