Owens & Minor Reports Third Quarter 2022 Financial Results

Adjusted EBITDA of $127 million, margin up 140 basis points

Patient Direct Revenue Growth of 142%, or 11.4% on a Pro Forma Basis for the Apria Acquisition

Generated $69 million of cash from operations in the quarter

Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the third quarter ended September 30, 2022, as summarized in the table below.

“In the third quarter we saw greater than expected macro-economic and industry-related forces that continue to challenge our Products & Healthcare Services segment and as the quarter progressed, we saw more of our acute care customers delay reorders utilizing their stockpiled items,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor. “To better address these challenges and capitalize on opportunities, we are accelerating execution of key initiatives to improve the segment’s performance.”

Pesicka added, “I am very pleased with the performance and operational execution throughout all aspects of the Patient Direct Segment, including the capture of increased CPAP opportunities, and overachievement of acquisition synergies. This exceptional performance was supported by deep adoption of the Owens & Minor Business System and led to nearly 100 basis point margin expansion sequentially and year-over-year revenue growth of 11.4% on a pro forma basis for the Apria acquisition.”

“Overall, our core business fundamentals remain strong, we have the right strategy, and our portfolio is well positioned to capitalize on opportunities as our execution and market conditions improve,” Pesicka concluded.

Financial Summary (1)

 

 

 

 

 

 

 

($ in millions, except per share data)

3Q22

 

3Q21

 

YTD

2022

 

YTD

2021

 

 

 

 

 

 

 

 

Revenue

$2,497

$2,502

$7,404

$7,318

 

 

 

 

 

 

 

 

Operating income, GAAP

$60.2

 

$62.9

 

$196.4

 

$306.5

Adj. Operating Income, Non-GAAP

$83.4

 

$79.3

 

$301.9

 

$357.5

 

 

 

 

Net income, GAAP

$12.5

 

$44.1

 

$80.4

 

$179.6

Adj. Net Income, Non-GAAP

$31.4

 

$56.5

 

$162.5

 

$248.0

 

 

 

 

 

 

 

 

Adj. EBITDA, Non-GAAP

$127.0

 

$91.7

 

$401.1

 

$394.9

 

 

 

 

 

 

 

 

Net income per common share, GAAP

$0.16

 

$0.58

 

$1.05

 

$2.38

Adj. Net Income per share, Non-GAAP(2)

$0.41

$0.74

$2.13

$3.29

(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 Q3 2022 was unfavorably impacted as compared to prior year by foreign currency translation in the amount of $0.04 and $0.13 for the 2022 year-to-date period.

Q3 Results & Highlights

  • Consolidated revenue of $2.5 billion
    • Patient Direct revenue of $594 million, up 142%, or 11.4% on a pro forma basis for the Apria acquisition
    • Unfavorable FX of $12 million
  • Adjusted EBITDA of $127 million, up $35 million, with margin expansion of 140 basis points to 5.1%
    • Unfavorable FX of $5 million
  • Balance Sheet and Cash Flow
    • Generated $69 million of cash from operations in the quarter and $238 million year-to-date
    • Free cash flow (adjusted EBITDA less capital expenditures, net) of $84 million and $299 million year-to-date
  • Business Highlights
    • Awarded Vizient’s Medical/Surgical Supplier Excellence Award and its Committed Program Excellence Award
    • Expanded partnership and strategic collaboration with Allina Health to strengthen supply chain resiliency
    • Hired Snehashish Sarkar as our new Chief Information Officer. Snehashish was formerly SVP, CIO & Chief Transformation Officer of Varian, a Siemens Healthcare company.

Financial Outlook

The Company’s outlook for 2022 is summarized below:

  • Revenue for 2022 to be in a range of $9.8 billion to $10.0 billion, reflecting:
    • Contribution in excess of $0.9 billion from Apria
  • Adjusted EBITDA for 2022 to be in a range of $527 million to $537 million
  • Adjusted EPS for 2022 to be in a range of $2.50 to $2.60

Investor Conference Call for Third Quarter 2022 Financial Results

Owens & Minor executives will host a conference call at 8:30 am. ET today, November 2, 2022, to discuss the results. The live webcast will be available on Owens & Minor’s Investor Relations website in the Events & Presentations section. Conference call participants are required to register in advance to obtain call-in information prior to the start of the call.

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 future prospects and performance, including our expectations with respect to our 2022 financial performance, the Apria transaction, including related synergies and the expected performance of the Apria business, as well as statements related to the Company’s expectations regarding the performance of its business including its ability to address macro and market conditions. 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, 2021, 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.

About Owens & Minor

Owens & Minor, Inc. (NYSE: OMI) is a Fortune 500 global healthcare solutions company integrating product manufacturing and delivery, home health supply, and perioperative services to support care through the hospital and into the home. Owens & Minor drives visibility, control and efficiency for patients, providers and healthcare professionals across the supply chain with proprietary technology and solutions, an extensive product portfolio and an Americas-based manufacturing footprint for personal protective equipment (PPE) and surgical products, as well as a robust portfolio of products and services for patients managing chronic and acute conditions in the home setting. Operating continuously since 1882 from its headquarters in Richmond, Va., Owens & Minor is a 140-year-old company powered by more than 20,000 global teammates. Learn more at https://www.owens-minor.com, follow @Owens_Minor on Twitter and connect on LinkedIn at www.linkedin.com/company/owens-&-minor.

Owens & Minor, Inc.

Consolidated Statements of Operations (unaudited)

(dollars in thousands, except per share data)

 

Three Months Ended

September 30,

 

2022

 

2021

Net revenue

$

2,497,401

 

 

$

2,502,175

 

Cost of goods sold

 

1,984,122

 

 

 

2,173,336

 

Gross margin

 

513,279

 

 

 

328,839

 

Distribution, selling and administrative expenses

 

445,259

 

 

 

262,457

 

Acquisition-related and exit and realignment charges

 

8,898

 

 

 

6,380

 

Other operating income, net

 

(1,125

)

 

 

(2,873

)

Operating income

 

60,247

 

 

 

62,875

 

Interest expense, net

 

39,869

 

 

 

11,572

 

Other expense, net

 

783

 

 

 

799

 

Income before income taxes

 

19,595

 

 

 

50,504

 

Income tax provision

 

7,098

 

 

 

6,375

 

Net income

$

12,497

 

 

$

44,129

 

 

 

 

 

Net income per common share:

 

 

 

Basic

$

0.17

 

 

$

0.60

 

Diluted

$

0.16

 

 

$

0.58

 

Owens & Minor, Inc.

Consolidated Statements of Operations (unaudited)

(dollars in thousands, except per share data)

 

Nine Months Ended

September 30,

 

2022

 

2021

Net revenue

$

7,404,368

 

 

$

7,318,169

 

Cost of goods sold

 

5,985,136

 

 

 

6,146,511

 

Gross margin

 

1,419,232

 

 

 

1,171,658

 

Distribution, selling and administrative expenses

 

1,177,812

 

 

 

849,255

 

Acquisition-related and exit and realignment charges

 

50,048

 

 

 

20,967

 

Other operating income, net

 

(5,020

)

 

 

(5,016

)

Operating income

 

196,392

 

 

 

306,452

 

Interest expense, net

 

87,727

 

 

 

36,784

 

Loss on extinguishment of debt

 

 

 

 

40,433

 

Other expense, net

 

2,347

 

 

 

2,397

 

Income before income tax

 

106,318

 

 

 

226,838

 

Income tax provision

 

25,937

 

 

 

47,224

 

Net income

$

80,381

 

 

$

179,614

 

 

 

 

 

Net income per common share:

 

 

 

Basic

$

1.08

 

 

$

2.47

 

Diluted

$

1.05

 

 

$

2.38

 

Owens & Minor, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(dollars in thousands)

 

September 30,

 

December 31,

 

2022

 

2021

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

76,770

 

$

55,712

Accounts receivable, net of allowances of $11,016 and $18,003

 

751,970

 

 

681,564

Merchandise inventories

 

1,508,443

 

 

1,495,972

Other current assets

 

104,734

 

 

88,564

Total current assets

 

2,441,917

 

 

2,321,812

Property and equipment, net of accumulated depreciation of $414,920 and $334,500

 

575,799

 

 

317,235

Operating lease assets

 

275,833

 

 

194,006

Goodwill

 

1,631,336

 

 

390,185

Intangible assets, net

 

464,077

 

 

209,745

Other assets, net

 

149,620

 

 

103,568

Total assets

$

5,538,582

 

$

3,536,551

Liabilities and equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

1,156,230

 

$

1,001,959

Accrued payroll and related liabilities

 

106,618

 

 

115,858

Other current liabilities

 

339,526

 

 

226,204

Total current liabilities

 

1,602,374

 

 

1,344,021

Long-term debt, excluding current portion

 

2,547,059

 

 

947,540

Operating lease liabilities, excluding current portion

 

215,022

 

 

162,241

Deferred income taxes

 

83,473

 

 

35,310

Other liabilities

 

123,817

 

 

108,938

Total liabilities

 

4,571,745

 

 

2,598,050

Total equity

 

966,837

 

 

938,501

Total liabilities and equity

$

5,538,582

 

$

3,536,551

Owens & Minor, Inc.

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)

 

Nine Months Ended September 30,

 

2022

 

2021

Operating activities:

 

 

 

Net income

$

80,381

 

 

$

179,614

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

Depreciation and amortization

 

155,438

 

 

 

68,142

 

Share-based compensation expense

 

15,765

 

 

 

19,078

 

Loss on extinguishment of debt

 

 

 

 

40,433

 

Provision for losses on accounts receivable

 

5,289

 

 

 

19,270

 

Deferred income tax expense (benefit)

 

2,991

 

 

 

(18,286

)

Changes in operating lease right-of-use assets and lease liabilities

 

922

 

 

 

1,190

 

Gain on sale and dispositions of property and equipment

 

(17,002

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

7,417

 

 

 

(84,381

)

Merchandise inventories

 

(6,823

)

 

 

(284,188

)

Accounts payable

 

30,424

 

 

 

120,821

 

Net change in other assets and liabilities

 

(45,423

)

 

 

(8,341

)

Other, net

 

8,666

 

 

 

20,484

 

Cash provided by operating activities

 

238,045

 

 

 

73,836

 

Investing activities:

 

 

 

Acquisition, net of cash acquired

 

(1,684,607

)

 

 

 

Additions to property and equipment

 

(109,275

)

 

 

(26,446

)

Additions to computer software

 

(5,873

)

 

 

(6,179

)

Proceeds from sale of property and equipment

 

29,720

 

 

 

41

 

Other, net

 

(1,670

)

 

 

 

Cash used for investing activities

 

(1,771,705

)

 

 

(32,584

)

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

 

 

 

(90,900

)

Repayments of debt

 

(3,000

)

 

 

(553,140

)

Borrowings under amended accounts receivable securitization program

 

697,700

 

 

 

 

Repayments under amended accounts receivable securitization program

 

(770,700

)

 

 

 

Financing costs paid

 

(42,602

)

 

 

(13,912

)

Cash dividends paid

 

 

 

 

(548

)

Payment for termination of interest rate swaps

 

 

 

 

(15,434

)

Other, net

 

(41,813

)

 

 

(18,188

)

Cash provided by (used for) financing activities

 

1,560,585

 

 

 

(117,222

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

(5,752

)

 

 

(2,454

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

21,173

 

 

 

(78,424

)

Cash, cash equivalents and restricted cash at beginning of period

 

72,035

 

 

 

134,506

 

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

$

93,208

 

 

$

56,082

 

Supplemental disclosure of cash flow information:

 

 

 

Income taxes paid, net of refunds

$

33,568

 

 

$

83,606

 

Interest paid

$

61,889

 

 

$

32,035

 

Noncash investing activity:

 

 

 

Unpaid purchases of property and equipment and software at end of period

$

63,158

 

 

$

 

 

(1) Restricted cash included in Other assets, net as of September 30, 2022 and December 31, 2021 primarily represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) initiatives related to wind-down costs of Fusion5.

Owens & Minor, Inc.

Summary Segment Information (unaudited)

(dollars in thousands)

 

Three Months Ended September 30,

 

2022

 

2021

 

 

 

% of

 

 

 

% of

 

 

 

consolidated

 

 

 

consolidated

 

Amount

 

net revenue

 

Amount

 

net revenue

Net revenue:

 

 

 

 

 

 

 

Products & Healthcare Services

$

1,903,356

 

 

76.21

%

 

$

2,256,295

 

 

90.17

%

Patient Direct

 

594,045

 

 

23.79

%

 

 

245,880

 

 

9.83

%

Consolidated net revenue

$

2,497,401

 

 

100.00

%

 

$

2,502,175

 

 

100.00

%

 

 

 

 

 

 

 

 

 

 

 

% of segment

 

 

 

% of segment

Operating income:

 

 

net revenue

 

 

 

net revenue

Products & Healthcare Services

$

23,781

 

 

1.25

%

 

$

64,415

 

 

2.85

%

Patient Direct

 

59,666

 

 

10.04

%

 

 

14,865

 

 

6.05

%

Intangible amortization

 

(14,302

)

 

 

 

 

(10,025

)

 

 

Acquisition-related and exit and realignment charges

 

(8,898

)

 

 

 

 

(6,380

)

 

 

Consolidated operating income

$

60,247

 

 

2.41

%

 

$

62,875

 

 

2.51

%

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

Products & Healthcare Services

$

19,121

 

 

 

 

$

18,868

 

 

 

Patient Direct

 

39,030

 

 

 

 

 

3,774

 

 

 

Consolidated depreciation and amortization

$

58,151

 

 

 

 

$

22,642

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

Products & Healthcare Services

$

9,743

 

 

 

 

$

13,498

 

 

 

Patient Direct

 

39,706

 

 

 

 

 

446

 

 

 

Consolidated capital expenditures

$

49,449

 

 

 

 

$

13,944

 

 

 

Owens & Minor, Inc.

Summary Segment Information (unaudited)

(dollars in thousands)

 

Nine Months Ended September 30,

 

2022

 

2021

 

 

 

% of

 

 

 

% of

 

 

 

consolidated

 

 

 

consolidated

 

Amount

 

net revenue

 

Amount

 

net revenue

Net revenue:

 

 

 

 

 

 

 

Products & Healthcare Services

$

5,964,784

 

 

80.56

%

 

$

6,621,560

 

 

90.48

%

Patient Direct

 

1,439,584

 

 

19.44

%

 

 

696,609

 

 

9.52

%

Consolidated net revenue

$

7,404,368

 

 

100.00

%

 

$

7,318,169

 

 

100.00

%

 

 

 

 

 

 

 

 

 

 

 

% of segment

 

 

 

% of segment

Operating income:

 

 

net revenue

 

 

 

net revenue

Products & Healthcare Services

$

174,108

 

 

2.92

%

 

$

316,062

 

 

4.77

%

Patient Direct

 

127,791

 

 

8.88

%

 

 

41,434

 

 

5.95

%

Intangible amortization

 

(55,459

)

 

 

 

 

(30,077

)

 

 

Acquisition-related and exit and realignment charges

 

(50,048

)

 

 

 

 

(20,967

)

 

 

Consolidated operating income

$

196,392

 

 

2.65

%

 

$

306,452

 

 

4.19

%

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

Products & Healthcare Services

$

57,325

 

 

 

 

$

56,874

 

 

 

Patient Direct

 

98,113

 

 

 

 

 

11,268

 

 

 

Consolidated depreciation and amortization

$

155,438

 

 

 

 

$

68,142

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

Products & Healthcare Services

$

38,804

 

 

 

 

$

31,768

 

 

 

Patient Direct

 

76,344

 

 

 

 

 

857

 

 

 

Consolidated capital expenditures

$

115,148

 

 

 

 

$

32,625

 

 

 

Owens & Minor, Inc.

Net Income Per Common Share (unaudited)

(dollars in thousands, except per share data)

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Net income

$

12,497

 

$

44,129

 

$

80,381

 

$

179,614

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

74,905

 

 

73,215

 

 

74,376

 

 

72,649

Dilutive shares

 

1,510

 

 

2,743

 

 

1,835

 

 

2,754

Weighted average shares outstanding - diluted

 

76,415

 

 

75,958

 

 

76,211

 

 

75,403

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

Basic

$

0.17

 

$

0.60

 

$

1.08

 

$

2.47

Diluted

$

0.16

 

$

0.58

 

$

1.05

 

$

2.38

Owens & Minor, Inc.

GAAP/Non-GAAP Reconciliations (unaudited)

(dollars in thousands, except per share data)

The following table provides a reconciliation of reported operating income, net income and net income per share to non-GAAP measures used by management.

 

 

Three Months Ended

September 30,

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Operating income, as reported (GAAP)

 

$

60,247

 

 

$

62,875

 

 

$

196,392

 

 

$

306,452

 

Intangible amortization (1)

 

 

14,302

 

 

 

10,025

 

 

 

55,459

 

 

 

30,077

 

Acquisition-related and exit and realignment charges(2)

 

 

8,898

 

 

 

6,380

 

 

 

50,048

 

 

 

20,967

 

Operating income, adjusted (non-GAAP) (Adjusted Operating Income)

 

$

83,447

 

 

$

79,280

 

 

$

301,899

 

 

$

357,496

 

Operating income as a percent of net revenue (GAAP)

 

 

2.41

%

 

 

2.51

%

 

 

2.65

%

 

 

4.19

%

Adjusted operating income as a percent of net revenue (non-GAAP)

 

 

3.34

%

 

 

3.17

%

 

 

4.08

%

 

 

4.89

%

 

 

 

 

 

 

 

 

 

Net income, as reported (GAAP)

 

$

12,497

 

 

$

44,129

 

 

$

80,381

 

 

$

179,614

 

Intangible amortization (1)

 

 

14,302

 

 

 

10,025

 

 

 

55,459

 

 

 

30,077

 

Income tax benefit (5)

 

 

(2,878

)

 

 

(2,729

)

 

 

(12,948

)

 

 

(7,864

)

Acquisition-related and exit and realignment charges(2)

 

 

8,898

 

 

 

6,380

 

 

 

50,048

 

 

 

20,967

 

Income tax benefit (5)

 

 

(1,791

)

 

 

(1,736

)

 

 

(11,686

)

 

 

(5,483

)

Loss on extinguishment of debt (3)

 

 

 

 

 

 

 

 

 

 

 

40,433

 

Income tax benefit (5)

 

 

 

 

 

 

 

 

 

 

 

(10,574

)

Other (4)

 

 

525

 

 

 

570

 

 

 

1,574

 

 

 

1,709

 

Income tax benefit (5)

 

 

(107

)

 

 

(155

)

 

 

(368

)

 

 

(447

)

Tax adjustment (7)

 

 

 

 

 

 

 

 

 

 

 

(402

)

Net income, adjusted (non-GAAP) (Adjusted Net Income)

 

$

31,446

 

 

$

56,484

 

 

$

162,460

 

 

$

248,030

 

 

 

 

 

 

 

 

 

 

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

 

$

0.16

 

 

$

0.58

 

 

$

1.05

 

 

$

2.38

 

Intangible amortization (1)

 

 

0.15

 

 

 

0.09

 

 

 

0.56

 

 

 

0.29

 

Acquisition-related and exit and realignment charges(2)

 

 

0.09

 

 

 

0.06

 

 

 

0.50

 

 

 

0.21

 

Loss on extinguishment of debt (3)

 

 

 

 

 

 

 

 

 

 

 

0.40

 

Other (4)

 

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

 

0.02

 

Tax adjustment (7)

 

 

 

 

 

 

 

 

 

 

 

(0.01

)

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

 

$

0.41

 

 

$

0.74

 

 

$

2.13

 

 

$

3.29

 

Owens & Minor, Inc.

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

September 30,

 

Nine Months Ended September 30,

 

Trailing Twelve Months Ended

September 30, 2022

 

 

2022

 

2021

 

2022

 

2021

 

Net income, as reported (GAAP)

 

$

12,497

 

$

44,129

 

$

80,381

 

$

179,614

 

$

122,356

Income tax provision

 

 

7,098

 

 

6,375

 

 

25,937

 

 

47,224

 

 

33,877

Interest expense, net

 

 

39,869

 

 

11,572

 

 

87,727

 

 

36,784

 

 

99,033

Intangible amortization (1)

 

 

14,302

 

 

10,025

 

 

55,459

 

 

30,077

 

 

65,189

Other depreciation and amortization (6)

 

 

43,849

 

 

12,617

 

 

99,979

 

 

38,066

 

 

112,726

EBITDA (non-GAAP)

 

$

117,615

 

$

84,718

 

$

349,483

 

$

331,765

 

$

433,181

Acquisition-related and exit and realignment charges (2)

 

 

8,898

 

 

6,380

 

 

50,048

 

 

20,967

 

 

63,156

Loss on extinguishment of debt (3)

 

 

 

 

 

 

 

 

40,433

 

 

Other (4)

 

 

525

 

 

570

 

 

1,574

 

 

1,709

 

 

2,144

EBITDA, adjusted (non-GAAP) (Adjusted EBITDA)

 

$

127,038

 

$

91,668

 

$

401,105

 

$

394,874

 

$

498,481

 

 

Three Months Ended

September 30, 2022

 

Nine Months Ended September 30, 2022

EBITDA, adjusted (non-GAAP) (Adjusted EBITDA)

 

$

127,038

 

 

$

401,103

 

Capital expenditures, net (8)

 

 

(42,803

)

 

 

(102,430

)

Free Cash Flow (non-GAAP)

 

$

84,235

 

 

$

298,673

 

 

 

September 30,

 

 

2022

Total debt, as reported (GAAP)

 

$

2,561,779

Cash and cash equivalents

 

 

76,770

Net debt (non-GAAP)

 

$

2,485,009

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 $6.9 million and $45.2 million for the three and nine months ended September 30, 2022 as compared to no acquisition-related charges for the three and nine months ended September 30, 2021. Acquisition-related costs in 2022 consisted primarily of costs related to the Apria acquisition. Acquisition-related charges for the twelve months ended September 30, 2022 were $48.2 million and consisted primarily of costs related to the Apria acquisition. Exit and realignment charges were $2.0 million and $4.9 million for the three and nine months ended September 30, 2022 and consisted primarily of severance and other charges associated with the reorganization of our segments. Exit and realignment charges were $6.4 million and $21.0 million for the three and nine months ended September 30, 2021 and consisted primarily of an increase in reserves associated with certain retained assets of Fusion5, IT restructuring charges and other costs related to the reorganization of our U.S. operations. Exit and realignment charges for the twelve months ended September 30, 2022 were $15.0 million and consisted of costs associated with our strategic organizational realignment, wind-down costs related to Fusion5, IT restructuring charges and other items.

(3) Loss on extinguishment of debt for the nine months ended September 30, 2021 includes the write-off of deferred financing costs and third party fees associated with the debt financing in March 2021 of $15.3 million and amounts reclassified from accumulated other comprehensive loss as a result of the termination of our interest rate swaps of $25.1 million.

(4) Other includes interest costs and net actuarial losses related to our retirement plans for the three and nine months ended September 30, 2022 and 2021, as well as the twelve months ended September 30, 2022.

(5) These charges have been tax effected 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.

(6) Other depreciation and amortization includes depreciation expense for property and equipment and amortization for capitalized computer software.

(7) Includes tax adjustments associated with the estimated benefits under the Tax Cuts and Jobs Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

(8) Capital expenditures, net is defined as capital expenditures less the net book value of dispositions of property and equipment during the accounting period.

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.

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