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): May 5, 2021
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 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):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | 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 May 5, 2021, Owens & Minor, Inc. (the “Company”) issued a press release regarding its financial results for the quarter ended March 31, 2021. The Company is furnishing the press release attached hereto as Exhibit 99.1 pursuant to Item 2.02 of Form 8-K. 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 7.01. | Regulation FD Disclosure. |
|---|
On May 5, 2021, the Company posted an earnings presentation on the Investor Relations section of its website. The Company is furnishing the earnings presentation attached hereto as Exhibit 99.2 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 99.2, 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 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| 99.1 | Press Release issued by the Company on May 5, 2021 announcing first quarter results (furnished pursuant to Item 2.02) |
|---|---|
| 99.2 | Earnings Presentation dated May 5, 2021 (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: May 5, 2021 | By: | /s/ Nicholas J. Pace | |
| Name: | Nicholas J. Pace | ||
| Title: | Executive Vice President, General Counsel and Corporate Secretary |
Document
Owens & Minor Reports 1st Quarter Financial Results
• Q1 year-over-year revenue growth of 10%
• Record Q1 GAAP EPS of $0.98 and Adjusted EPS of $1.57
• Raises 2021 Adjusted Net Income per share guidance to $3.75 - $4.25
RICHMOND, VA – May 5, 2021 – Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the first quarter of 2021, as summarized in the table below.
“We're pleased to deliver another quarter of excellent growth on the top and bottom line as we continue to execute on the Owens & Minor business blueprint. Our first quarter results reflect strong operational execution across the company, powered by continued strength in global products and favorable market dynamics including an uptick in elective procedures in March,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor. “We also recapitalized our debt structure, thereby improving our strategic and operational flexibility.”
Pesicka added, “We have raised our full-year guidance range for adjusted net income to $3.75 to $4.25 per share. The increased guidance is in light of the strong first quarter performance, our favorable outlook around elective procedures, and improved line of sight toward PPE demand into the third quarter.”
| Financial Summary* | |
|---|---|
| ( in millions, except per share data) | 1Q20 |
| Revenue | $2,123 |
| Operating Income, GAAP** | $10.8 |
| Adj. Operating Income, Non-GAAP** | $27.4 |
| Income (Loss) from continuing operations, GAAP** | ($8.9) |
| Adj. Net Income, Non-GAAP** | $2.4 |
| Adj. EBITDA, Non-GAAP** | $40.6 |
| Income (Loss) from continuing operations per share, GAAP** | ($0.15) |
| Adj. Net income per share, Non-GAAP** | $0.04 |
| * Adjusted net income and Adjusted net income per share relate to continuing operations.** 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.** 1Q21 Adjusted EPS favorably impacted by 0.06 of foreign currency translation compared to prior year. |
All values are in US Dollars.
1st Quarter 2021 Highlights
• Significant increase in year-over-year first quarter earnings was driven by sales growth, market dynamics, product mix, and operating efficiencies
o 638 basis point gross margin expansion
o $135 million increase in adjusted operating income
o $9.7 million or 41% decrease in interest expense
o Almost 40x increase in adjusted net income per share
• Revenue growth when compared to prior year was driven by increased demand for PPE, cost pass-through in gloves, along with strong performance in our Byram Patient Direct business, which was partially offset by fewer elective procedures and one less selling day
• Balance Sheet and Cash Flow
o Total debt dropped below $1 billion for the first time since 2018, and represented a sequential reduction of $44 million in the first quarter
o Successfully issued $500 million senior unsecured notes due in 2029, extending debt maturities and improving liquidity. Proceeds of the issue were used to retire higher-cost and shorter-dated debt.
o Entered into a new 5-year, $300 million revolving credit facility, and a newly amended three-year $450 million accounts receivable securitization facility
o Generated $25 million of operating cash flow in the first quarter, as a result of increased earnings, partially offset by working capital investments
Financial Outlook
The Company expects adjusted net income for 2021 to be in a range of $3.75 to $4.25 per share and Adjusted EBITDA in the range of $450 million to $500 million, based on the key assumptions below:
• Continued favorable outlook around elective procedures for the remainder of the year
• Improved line of sight for PPE sales into the third quarter
• Reduction in interest expense as a result of recapitalized debt structure with lower base rates
Although the Company does provide guidance for adjusted net income per share and Adjusted EBITDA (which are non-GAAP financial measures), it is not able to forecast the most directly comparable measures 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 or reconciliation of the Company’s adjusted net income per share guidance or Adjusted EBITDA 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 second quarter 2021 dividend payment of $0.0025 per share, payable on June 30, 2021, to shareholders of record as of June 15, 2021.
Investor Day
The Company will hold an Investor Day on Wednesday, May 26, 2021 from 10:00 a.m. EDT to 1:00 p.m. EDT via live webcast. The Owens & Minor leadership team will provide an in-depth review of the Company’s strategy and future growth targets. Investors and analysts will have the opportunity to participate in the live Q&A session with the leadership team. Participants are advised to register in advance to access the live webcast at https://owens-minor-investorday.com/
The event will be webcast live and archived on the Company’s website. For questions, please contact investor.relations@owens-minor.com.
Investor Conference Call for 1st Quarter Financial Results
Owens & Minor executives will host a conference call at 8:00 a.m. EDT today, May 5, 2021, to discuss the results. 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 1692522. A webcast of the event will be available at 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 2021 financial performance and related assumptions, as well as other statements related to the impact of COVID-19 on the Company’s results and operations and the Company’s expectations regarding the performance of its business 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, 2020, filed with the SEC including the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and subsequent annual reports on Form 10-K, 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 global healthcare solutions company that incorporates product manufacturing, distribution support and innovative technology services to deliver significant and sustained value across the breadth of the industry – from acute care to patients in their home. Aligned to its Mission of Empowering Our Customers to Advance HealthcareTM, more than 15,000 global teammates serve over 4,000 healthcare industry customers. A vertically-integrated, predominantly Americas-based footprint enables Owens & Minor to reliably supply its self-manufactured surgical and PPE products. This seamless value chain integrates with a portfolio of products representing 1,200 branded suppliers. Operating continuously since 1882 from its headquarters in Richmond, Virginia, Owens & Minor has grown into a FORTUNE 500 company with operations located across North America, Asia, Europe and Latin 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
Chandrika Nigam, Director, Investor Relations, Investor.Relations@owens-minor.com, 804-723-7556
SOURCE: Owens & Minor
Owens & Minor, Inc.
Consolidated Statements of Operations (unaudited)
(dollars in thousands, except per share data)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Net revenue | $ | 2,326,534 | $ | 2,122,693 |
| Cost of goods sold | 1,883,783 | 1,854,134 | ||
| Gross margin | 442,751 | 268,559 | ||
| Distribution, selling and administrative expenses | 292,701 | 254,048 | ||
| Acquisition-related and exit and realignment charges | 5,963 | 6,064 | ||
| Other operating income, net | (2,605) | (2,309) | ||
| Operating income | 146,692 | 10,756 | ||
| Interest expense, net | 13,672 | 23,342 | ||
| Loss on extinguishment of debt | 40,433 | 4,127 | ||
| Other expense, net | 569 | 719 | ||
| Income (loss) from continuing operations before income taxes | 92,018 | (17,432) | ||
| Income tax provision (benefit) | 22,429 | (8,523) | ||
| Income (loss) from continuing operations, net of tax | 69,589 | (8,909) | ||
| Loss from discontinued operations, net of tax | — | (2,415) | ||
| Net income (loss) | $ | 69,589 | $ | (11,324) |
| Income (loss) from continuing operations per common share: basic and diluted | $ | 0.98 | $ | (0.15) |
| Loss from discontinued operations per common share: basic and diluted | — | (0.04) | ||
| Net income (loss) per common share: basic and diluted | $ | 0.98 | $ | (0.19) |
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(dollars in thousands)
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 54,455 | $ | 83,058 |
| Accounts receivable, net of allowances of $21,231 and $19,087 | 736,176 | 700,792 | ||
| Merchandise inventories | 1,322,897 | 1,233,751 | ||
| Other current assets | 93,208 | 118,264 | ||
| Total current assets | 2,206,736 | 2,135,865 | ||
| Property and equipment, net of accumulated depreciation of $292,568 and $284,126 | 307,852 | 315,662 | ||
| Operating lease assets | 155,152 | 144,755 | ||
| Goodwill | 391,349 | 394,086 | ||
| Intangible assets, net | 232,009 | 243,351 | ||
| Other assets, net | 97,723 | 101,920 | ||
| Total assets | $ | 3,390,821 | $ | 3,335,639 |
| Liabilities and equity | ||||
| Current liabilities | ||||
| Accounts payable | $ | 1,021,761 | $ | 1,000,186 |
| Accrued payroll and related liabilities | 64,661 | 109,447 | ||
| Other current liabilities | 250,875 | 236,094 | ||
| Total current liabilities | 1,337,297 | 1,345,727 | ||
| Long-term debt, excluding current portion | 981,342 | 986,018 | ||
| Operating lease liabilities, excluding current portion | 130,565 | 119,932 | ||
| Deferred income taxes | 51,476 | 50,641 | ||
| Other liabilities | 103,880 | 121,267 | ||
| Total liabilities | 2,604,560 | 2,623,585 | ||
| Total equity | 786,261 | 712,054 | ||
| Total liabilities and equity | $ | 3,390,821 | $ | 3,335,639 |
Owens & Minor, Inc.
Consolidated Statements of Cash Flows (unaudited)
(dollars in thousands)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Operating activities: | ||||
| Net income (loss) | $ | 69,589 | $ | (11,324) |
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | ||||
| Depreciation and amortization | 22,900 | 23,913 | ||
| Share-based compensation expense | 5,182 | 3,941 | ||
| Impairment charges | — | 9,080 | ||
| Loss on extinguishment of debt | 40,433 | 4,127 | ||
| Provision for losses on accounts receivable | 8,462 | 5,213 | ||
| Deferred income tax (benefit) expense | (5,865) | 6,348 | ||
| Changes in operating lease right-of-use assets and lease liabilities | 448 | (714) | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (45,919) | (7,942) | ||
| Merchandise inventories | (89,393) | 39,340 | ||
| Accounts payable | 18,742 | 98,743 | ||
| Net change in other assets and liabilities | (1,666) | (77,178) | ||
| Other, net | 2,510 | (93) | ||
| Cash provided by operating activities | 25,423 | 93,454 | ||
| Investing activities: | ||||
| Additions to property and equipment | (5,048) | (4,771) | ||
| Additions to computer software | (1,575) | (942) | ||
| Proceeds from sale of property and equipment | 4 | 33 | ||
| Cash used for investing activities | (6,619) | (5,680) | ||
| Financing activities: | ||||
| Proceeds from issuance of debt | 574,900 | 150,000 | ||
| Repayments under revolving credit facility | (96,500) | (6,200) | ||
| Repayments of debt | (523,140) | (166,798) | ||
| Financing costs paid | (11,700) | (5,785) | ||
| Cash dividends paid | (181) | (155) | ||
| Payment for termination of interest rate swaps | (15,434) | — | ||
| Other, net | (8,339) | (2,468) | ||
| Cash used for financing activities | (80,394) | (31,406) | ||
| Effect of exchange rate changes on cash and cash equivalents | (2,139) | (62) | ||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (63,729) | 56,306 | ||
| Cash, cash equivalents and restricted cash at beginning of period | 134,506 | 84,687 | ||
| Cash, cash equivalents and restricted cash at end of period (1) | $ | 70,777 | $ | 140,993 |
| Supplemental disclosure of cash flow information: | ||||
| Income taxes paid, net of refunds | $ | 898 | $ | 2,695 |
| Interest paid | $ | 10,255 | $ | 21,431 |
(1) Restricted cash as of March 31, 2021 represents $16.3 million 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) Advanced Program.
Owens & Minor, Inc.
Summary Segment Information (unaudited)
(dollars in thousands)
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||||
| % of | % of | |||||||
| consolidated | consolidated | |||||||
| Amount | net revenue | Amount | net revenue | |||||
| Net revenue: | ||||||||
| Segment net revenue | ||||||||
| Global Solutions | $ | 1,849,509 | 79.49 | % | $ | 1,847,593 | 87.04 | % |
| Global Products | 658,750 | 28.31 | % | 391,192 | 18.43 | % | ||
| Total segment net revenue | 2,508,259 | 2,238,785 | ||||||
| Inter-segment revenue | ||||||||
| Global Products | (181,725) | (7.80) | % | (116,092) | (5.47) | % | ||
| Total inter-segment revenue | (181,725) | (116,092) | ||||||
| Consolidated net revenue | $ | 2,326,534 | 100.00 | % | $ | 2,122,693 | 100.00 | % |
| % of segment | % of segment | |||||||
| Operating income: | net revenue | net revenue | ||||||
| Global Solutions | $ | 8,892 | 0.48 | % | $ | 7,691 | 0.42 | % |
| Global Products | 163,587 | 24.83 | % | 18,571 | 4.75 | % | ||
| Inter-segment eliminations | (9,798) | 1,169 | ||||||
| Intangible amortization | (10,026) | (10,611) | ||||||
| Acquisition-related and exit and realignment charges | (5,963) | (6,064) | ||||||
| Consolidated operating income | $ | 146,692 | 6.31 | % | $ | 10,756 | 0.51 | % |
| Depreciation and amortization: | ||||||||
| Global Solutions | $ | 9,839 | $ | 10,636 | ||||
| Global Products | 13,061 | 13,277 | ||||||
| Consolidated depreciation and amortization | $ | 22,900 | $ | 23,913 | ||||
| Capital expenditures: | ||||||||
| Global Solutions | $ | 3,000 | $ | 1,032 | ||||
| Global Products | 3,623 | 3,017 | ||||||
| Discontinued operations | — | 1,664 | ||||||
| Consolidated capital expenditures | $ | 6,623 | $ | 5,713 |
Owens & Minor, Inc.
Net Income (Loss) per Common Share (unaudited)
(dollars in thousands, except per share data)
| Three Months Ended<br> March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Weighted average shares outstanding - basic | 70,834 | 60,571 | ||
| Dilutive shares | 104 | — | ||
| Weighted average shares outstanding - diluted | 70,938 | 60,571 | ||
| Income (loss) from continuing operations | $ | 69,589 | $ | (8,909) |
| Basic and diluted per share | $ | 0.98 | $ | (0.15) |
| Loss from discontinued operations | $ | — | $ | (2,415) |
| Basic and diluted per share | $ | — | $ | (0.04) |
| Net income (loss) | $ | 69,589 | $ | (11,324) |
| Basic and diluted per share | $ | 0.98 | $ | (0.19) |
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 and income (loss) from continuing operations to non-GAAP measures used by management.
| Three Months Ended <br>March 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Operating income, as reported (GAAP) | $ | 146,692 | $ | 10,756 | ||
| Intangible amortization (1) | 10,026 | 10,611 | ||||
| Acquisition-related and exit and realignment charges(2) | 5,963 | 6,064 | ||||
| Operating income, adjusted (non-GAAP) (Adjusted Operating Income) | $ | 162,681 | $ | 27,431 | ||
| Operating income as a percent of net revenue (GAAP) | 6.31 | % | 0.51 | % | ||
| Adjusted operating income as a percent of net revenue (non-GAAP) | 6.99 | % | 1.29 | % | ||
| Income (loss) from continuing operations, as reported (GAAP) | $ | 69,589 | $ | (8,909) | ||
| Intangible amortization (1) | 10,026 | 10,611 | ||||
| Income tax benefit (6) | (2,661) | (2,544) | ||||
| Acquisition-related and exit and realignment charges(2) | 5,963 | 6,064 | ||||
| Income tax benefit (6) | (1,583) | (1,250) | ||||
| Loss on extinguishment of debt (3) | 40,433 | 4,127 | ||||
| Income tax benefit (6) | (10,732) | (989) | ||||
| Other (4) | 569 | 577 | ||||
| Income tax benefit (6) | (151) | (138) | ||||
| Tax adjustment (5) | — | (5,187) | ||||
| Income from continuing operations, adjusted (non-GAAP) (Adjusted Net Income) | $ | 111,453 | $ | 2,362 | ||
| Income (loss) from continuing operations per diluted common share, as reported (GAAP) | $ | 0.98 | $ | (0.15) | ||
| Intangible amortization (1) | 0.10 | 0.14 | ||||
| Acquisition-related and exit and realignment charges(2) | 0.06 | 0.08 | ||||
| Loss on extinguishment of debt (3) | 0.42 | 0.05 | ||||
| Other (4) | 0.01 | 0.01 | ||||
| Tax adjustment (5) | — | (0.09) | ||||
| Income from continuing operations per diluted common share, adjusted (non-GAAP) (Adjusted EPS) | $ | 1.57 | $ | 0.04 |
Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited), continued
(dollars in thousands, except per share data)
The following table provides a reconciliation of net income (loss) to a non-GAAP measure used by management.
| Three Months Ended <br>March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Net income (loss), as reported (GAAP) | $ | 69,589 | $ | (11,324) |
| Loss from discontinued operations, net of tax | — | 2,415 | ||
| Income tax provision (benefit) | 22,429 | (8,523) | ||
| Interest expense, net | 13,672 | 23,342 | ||
| Intangible amortization (1) | 10,026 | 10,611 | ||
| Other depreciation and amortization (7) | 12,874 | 13,301 | ||
| EBITDA (non-GAAP) | 128,590 | 29,822 | ||
| Acquisition-related and exit and realignment charges (2) | 5,963 | 6,064 | ||
| Loss on extinguishment of debt (3) | 40,433 | 4,127 | ||
| Other expense, net (4) | 569 | 577 | ||
| EBITDA, adjusted (non-GAAP) (Adjusted EBITDA) | $ | 175,555 | $ | 40,590 |
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) There were no acquisition-related charges for the three months ended March 31, 2021 compared to $4.2 million for the same period of 2020, which consisted primarily of transition costs for the Halyard acquisition. Exit and realignment charges were $6.0 million for the three months ended March 31, 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 the U.S. commercial, operations and executive teams. Exit and realignment charges were $1.8 million for the three months ended March 31, 2020 and consisted primarily of IT restructuring charges and other costs related to the reorganization of the U.S. commercial, operations and executive teams.
(3) Loss on extinguishment of debt for the three months ended March 31, 2021 includes the write-off of deferred financing costs and third party fees associated with the debt refinancing 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. Loss on extinguishment of debt for the three months ended March 31, 2020 primarily includes the write-off of deferred financing costs and third party fees.
(4) Other includes interest costs and net actuarial losses related to our retirement plans.
(5) Includes a tax adjustment associated with the estimated benefits under the Tax Cuts and Jobs Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
(6) 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.
(7) Other depreciation and amortization includes depreciation expense for property and equipment and amortization for capitalized computer software.
Use of Non-GAAP Measures
This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). In general, the measures exclude items and charges that (i) management does not believe reflect Owens & Minor, Inc.'s (the "Company") core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company's performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.
Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company's performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.
11
a1q21supplementalslidesf
1st Quarter 2021 Earnings Supplemental Slides May 5, 2021
1st Quarter 2021 Earnings – May 5, 20212 This presentation 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 presentation 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 presentation regarding our expectations with respect to our 2021 financial performance and our modeling assumptions, as well as other statements related to the Company’s expectations regarding the performance of its business 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, 2020, filed with the SEC including the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and subsequent annual reports on Form 10-K, 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. Safe Harbor
1st Quarter 2021 Earnings – May 5, 20213 Subject to the key assumptions below, the Company expects adjusted net income for 2021 to be in a range of $3.75 to $4.25 per share and adjusted EBITDA for 2021 in the range of $450 million to $500 million: • Continued favorable outlook around elective procedures for the remainder of the year • Improved line of sight for PPE sales into the third quarter • Reduction in interest expense as a result of recapitalized debt structure with lower base rates • Pass through of exam glove cost increases will contribute $700-$800 million to top line, with minimal impact to profitability 2021 Guidance
4 1st Quarter 2021 Earnings – May 5, 2021 2021 Modeling Assumptions Modeling Assumptions* Full Year 2021 Revenue $9.6 - $10.0 billion Nitrile Glove Cost Pass-Through Revenue Impact $700 - $800 million Gross Margin 15.4% - 15.7% Adjusted EBITDA $450 - $500 million Interest Expense $45 - $50 million Capital Expenditures $80 - $90 million Adjusted Effective Tax Rate 27% Commodity Prices Unfavorable Trend * Modeling parameters are assumptions used for adjusted EPS guidance for 2021, and the Company undertakes no obligation to update such assumptions/modeling parameters subsequent to the date of this presentation (May 5, 2021).