8-K
ACCENDRA HEALTH INC/VA/ (ACH)
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): April 17, 2023
Owens & Minor, Inc.
(Exact name of registrant as specified in its charter)
| Virginia | 001-09810 | 54-1701843 | |
|---|---|---|---|
| (State or other jurisdiction of<br><br>incorporation or organization) | (Commission<br>File Number) | (I.R.S. Employer<br><br>Identification No.) | |
| 9120 Lockwood Boulevard, | Mechanicsville | Virginia | 23116 |
| (Address of principal executive offices) | (Zip Code) | ||
| Post Office Box 27626,<br><br>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 classTrading Symbol(s)Name of each exchange on which registeredCommon Stock, $2 par value per shareOMINew 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 7.01 | Regulation FD Disclosure. |
|---|
Owens & Minor, Inc. (we, our or the Company) is filing this Current Report on Form 8-K to furnish certain unaudited reclassified financial information and recast non-GAAP information for the year ended December 31, 2022 and for each of the quarters during the year ended December 31, 2022, to reflect the changes in the Company’s reporting that were effective during the first quarter of 2023. These changes will be reflected in the Company’s earnings release and Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 to be filed with the Securities and Exchange Commission.
We are changing the line-item presentation in our statements of operations to break out intangible amortization from our distribution, selling and administrative expenses, which will be combined in a separate line item, titled 'acquisition-related charges and intangible amortization' to provide a more comprehensive view of expenses associated with acquisitions. Additionally, our exit and realignment activities will be included in a separate line item titled 'exit and realignment charges.' These changes in presentation do not impact the Company’s historical consolidated balance sheets, consolidated statements of comprehensive income, consolidated statements of changes in shareholders' equity or consolidated statements of cash flows for any fiscal period.
To better assist investors and management in comparing the Company's performance to that of its competitors and in evaluating financial and operating results, we are also modifying our non-GAAP reporting to include stock compensation and inventory LIFO charges and credits as reconciling items to arrive at Adjusted EBITDA. These changes will be reflected in our revised Adjusted EBITDA guidance in the Company's earnings release for the quarter ended March 31, 2023, which is scheduled for the morning of May 5, 2023.
The Company is furnishing the financial information attached hereto as Exhibit 99.1 pursuant to Item 7.01 of Form 8-K. In accordance with General Instruction B.2 of Form 8-K, the information in this Item 7.01, 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. The reclassified and recasted financial information contained in Exhibit 99.1 does not represent a restatement or reissuance of previously issued financial statements.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| 99.1 | Unaudited reclassified summary financial information and recast non-GAAP information for Owens & Minor, Inc. and its subsidiaries for the fiscal year ended and quarters during the year ended December 31, 2022 (furnished pursuant to Item 7.01) |
|---|---|
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document) |
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: April 17, 2023 | By: | /s/ Nicholas J. Pace | |
| Name: | Nicholas J. Pace | ||
| Title: | Executive Vice President, General Counsel and Corporate Secretary |
Document
The unaudited reclassified financial information and recast non-GAAP information below is provided to reflect the changes in the Owens & Minor, Inc.'s (our or the Company) reporting effective during the first quarter of 2023. The Company will begin to report comparative results under this new presentation effective with the filing of its earnings release and Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
Owens & Minor, Inc.
Consolidated Statements of Operations (unaudited)
(dollars in thousands)
Reclassified statements of operations data on a quarterly and full year basis for the year ended December 31, 2022 is presented in the table below:
| Year Ended December 31, 2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||
| Net revenue | $ | 2,406,952 | $ | 2,500,015 | $ | 2,497,401 | $ | 2,551,107 | $ | 9,955,475 |
| Cost of goods sold | 2,033,504 | 1,967,510 | 1,984,122 | 2,143,987 | 8,129,124 | |||||
| Gross margin | 373,448 | 532,505 | 513,279 | 407,120 | 1,826,351 | |||||
| Distribution, selling and administrative expenses | 269,471 | 421,925 | 430,957 | 432,468 | 1,554,821 | |||||
| Acquisition-related charges and intangible amortization | 42,135 | 37,276 | 21,217 | 26,344 | 126,972 | |||||
| Exit and realignment charges | 1,682 | 1,214 | 1,983 | 2,018 | 6,897 | |||||
| Other operating income, net | (899) | (2,995) | (1,125) | (231) | (5,252) | |||||
| Operating income (loss) | 61,059 | 75,085 | 60,247 | (53,479) | 142,913 | |||||
| Interest expense, net | 12,019 | 35,839 | 39,869 | 41,164 | 128,891 | |||||
| Other expense, net | 783 | 783 | 783 | 783 | 3,131 | |||||
| Income (loss) before income taxes | 48,257 | 38,463 | 19,595 | (95,426) | 10,891 | |||||
| Income tax provision (benefit) | 8,978 | 9,859 | 7,098 | (37,435) | (11,498) | |||||
| Net income (loss) | $ | 39,279 | $ | 28,604 | $ | 12,497 | $ | (57,991) | $ | 22,389 |
| Net income (loss) per common share: | ||||||||||
| Basic | $ | 0.53 | $ | 0.38 | $ | 0.17 | $ | (0.77) | $ | 0.30 |
| Diluted | $ | 0.52 | $ | 0.37 | $ | 0.16 | $ | (0.77) | $ | 0.29 |
Amounts may not sum due to rounding.
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 (loss) and net income (loss) per share to non-GAAP measures used by management.
| Year Ended December 31, 2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||
| Operating income (loss), as reported (GAAP) | $ | 61,059 | $ | 75,085 | $ | 60,247 | $ | (53,479) | $ | 142,913 |
| Acquisition-related charges and intangible amortization (1) | 42,135 | 37,276 | 21,217 | 26,344 | 126,972 | |||||
| Exit and realignment charges (3) | 1,682 | 1,214 | 1,983 | 2,018 | 6,897 | |||||
| Inventory valuation adjustment (4) | — | — | — | 92,275 | 92,275 | |||||
| Operating income, adjusted (non-GAAP) (Adjusted Operating Income) | $ | 104,876 | $ | 113,575 | $ | 83,447 | $ | 67,159 | $ | 369,057 |
| Net income (loss), as reported (GAAP) | $ | 39,279 | $ | 28,604 | $ | 12,497 | $ | (57,991) | $ | 22,389 |
| Pre-tax adjustments: | ||||||||||
| Acquisition-related charges and intangible amortization (1) | 42,135 | 37,276 | 21,217 | 26,344 | 126,972 | |||||
| Exit and realignment charges (3) | 1,682 | 1,214 | 1,983 | 2,018 | 6,897 | |||||
| Inventory valuation adjustment (4) | — | — | — | 92,275 | 92,275 | |||||
| Other (7) | 525 | 525 | 525 | 525 | 2,099 | |||||
| Income tax benefit on pre-tax adjustments (8) | (10,869) | (9,358) | (4,776) | (30,974) | (55,975) | |||||
| Tax adjustments (9) | — | — | — | (10,492) | (10,492) | |||||
| Net income, adjusted (non-GAAP) (Adjusted Net Income) | $ | 72,752 | $ | 58,261 | $ | 31,446 | $ | 21,705 | $ | 184,165 |
| Net income (loss) per common share, as reported (GAAP) | $ | 0.52 | $ | 0.37 | $ | 0.16 | $ | (0.77) | $ | 0.29 |
| After-tax adjustments: | ||||||||||
| Acquisition-related charges and intangible amortization (1) | 0.41 | 0.37 | 0.22 | 0.26 | 1.27 | |||||
| Exit and realignment charges (3) | 0.02 | 0.01 | 0.02 | 0.02 | 0.07 | |||||
| Inventory valuation adjustment (4) | — | — | — | 0.90 | 0.91 | |||||
| Other (7) | 0.01 | 0.01 | 0.01 | 0.01 | 0.02 | |||||
| Tax adjustments (9) | — | — | — | (0.14) | (0.14) | |||||
| Net income per common share, adjusted (non-GAAP) (Adjusted EPS) | $ | 0.96 | $ | 0.76 | $ | 0.41 | $ | 0.28 | $ | 2.42 |
Amounts may not sum due to rounding.
Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited), continued
(dollars in thousands)
The following table provides reconciliations of net income (loss) to a non-GAAP measure used by management.
| Year Ended December 31, 2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | ||||||
| Net income (loss), as reported (GAAP) | $ | 39,279 | $ | 28,604 | $ | 12,497 | $ | (57,991) | $ | 22,389 |
| Income tax provision (benefit) | 8,978 | 9,859 | 7,098 | (37,435) | (11,498) | |||||
| Interest expense, net | 12,019 | 35,839 | 39,869 | 41,164 | 128,891 | |||||
| Acquisition-related charges and intangible amortization (1) | 42,135 | 37,276 | 21,217 | 26,344 | 126,972 | |||||
| Other depreciation and amortization (2) | 13,856 | 42,273 | 43,849 | 49,841 | 149,820 | |||||
| Exit and realignment charges (3) | 1,682 | 1,214 | 1,983 | 2,018 | 6,897 | |||||
| Inventory valuation adjustment (4) | — | — | — | 92,275 | 92,275 | |||||
| Stock compensation (5) | 4,596 | 5,624 | 5,374 | 4,907 | 20,501 | |||||
| LIFO (credits) and charges (6) | (509) | 2,136 | (4,957) | 8,725 | 5,396 | |||||
| Other (7) | 525 | 525 | 525 | 525 | 2,099 | |||||
| Adjusted EBITDA (non-GAAP) | $ | 122,561 | $ | 163,350 | $ | 127,455 | $ | 130,373 | $ | 543,742 |
Amounts may not sum due to rounding.
Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited), continued
The following items have been excluded in our non-GAAP financial measures:
(1) Acquisition-related charges and intangible amortization includes acquisition-related charges primarily related to the Apria acquisition and amortization of intangible assets established during acquisition method of 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.
(2) Other depreciation and amortization relates to property and equipment and capitalized computer software.
(3) Exit and realignment charges consisted of severance and other charges associated with the reorganization of our segments and an increase in reserves associated with certain retained assets of Fusion5.
(4) Relates to an inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with personal protective equipment inventory built up and a subsequent decline in demand as a result of the COVID-19 pandemic.
(5) Stock compensation includes share-based compensation expense related to our share-based compensation plans, excluding such amounts captured within exit and realignment charges or acquisition-related charges.
(6) LIFO (credits) and charges includes non-cash adjustments to merchandise inventories valued at the lower of cost or market, with the approximate cost determined by the last-in, first-out (LIFO) method for distribution inventories in the United States (U.S.) within our Products & Healthcare Services segment.
(7) Other includes interest costs and net actuarial losses related to our frozen noncontributory, unfunded retirement plan for certain retirees in the U.S.
(8) 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.
(9) Tax adjustments includes a change in our foreign repatriation plans related to the permanent reinvestment of earnings associated with a subsidiary in Thailand.
Use of Non-GAAP Measures
This release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). In general, the Company's non-GAAP 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 without predictable trends. Management uses 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 non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company's performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.
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