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 3, 2022
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 3, 2022, Owens & Minor, Inc. (the “Company”) issued a press release regarding its financial results for the quarter ended March 31, 2022. 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 3, 2022, 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 May3, 2022 announcingfirstquarter results (furnished pursuant to Item 2.02) |
|---|---|
| 99.2 | Earnings Presentation datedMayomi_earningsslidesx1q22x.htm3, 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: May 3, 2022 | By: | /s/ Nicholas J. Pace | |
| Name: | Nicholas J. Pace | ||
| Title: | Executive Vice President, General Counsel and Corporate Secretary |
Document
Owens & Minor Reports First Quarter 2022 Financial Results
•Continued revenue growth in both segments, highlighted by 26% growth in Patient Direct
•Q1 GAAP EPS of $0.52, Adjusted EPS of $0.96
•2022 Adjusted EPS outlook revised upward to a range of $3.05 - $3.55
RICHMOND, VA – May 3, 2022 – Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the first quarter ended March 31, 2022, as summarized in the table below.
"The first quarter of 2022 marked an important milestone - we completed the largest acquisition in the Company's history. With the acquisition of Apria, we have strengthened our position in the higher-growth direct-to-patient home market, enhancing our ability to serve patients through the hospital and into the home. I am excited to welcome the Apria team to Owens & Minor," said Edward A. Pesicka, President & Chief Executive Officer.
"I am also very pleased to report another strong quarter, as we saw the momentum from the record setting 2021 carry into the start of the year, largely as we had expected," Pesicka added. "The team has done a great job executing our strategy and managing through a number of macro-economic headwinds, including inflation, over the last several quarters. We will continue to use the Owens & Minor business system and our differentiated model to minimize the impact of these headwinds, deliver another strong year, and remain on-track to achieve our long-term objectives," Pesicka concluded.
| Financial Summary (1) | ||
|---|---|---|
| ($ in millions, except per share data) | 1Q22 | 1Q21 |
| Revenue | $2,407 | $2,327 |
| Operating income, GAAP | $61.1 | $146.7 |
| Adj. Operating Income, Non-GAAP | $104.9 | $162.7 |
| Net income, GAAP | $39.3 | $69.6 |
| Adj. Net Income, Non-GAAP | $72.8 | $111.5 |
| Adj. EBITDA, Non-GAAP | $118.5 | $175.6 |
| Net income per common share, GAAP | $0.52 | $0.98 |
| Adj. Net Income per share, Non-GAAP(2) | $0.96 | $1.57 |
(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 Q1 2022 was unfavorably impacted as compared to prior year by foreign currency translation in the amount of $0.03.
Q1 Results & Highlights
• Consolidated reported revenue grew by 3.5%
o Patient Direct segment revenue grew 25.7%, or 20.7% excluding Apria, marking Byram's strongest quarter of growth in the past two years
o Products & Healthcare Services segment revenue grew 1.2%
• Operating Income of $61 million and Adjusted Operating Income of $105 million which reflects:
o Strong performance despite the absence of favorable glove cost dynamics which benefitted the prior year
o Sequential quarterly adjusted operating margin improvement of over 90 basis points
• Balance Sheet and Cash Flow
o Generated $80 million of operating cash flow in the first quarter, a 3x improvement over Q1 2021
o Free Cash Flow (Adjusted EBITDA less capital expenditures) of $108 million
o Pro Forma (including Apria) trailing twelve months net leverage of 3.7x
• Business Highlights
o Completed the acquisition of Apria as of March 29th and successfully navigated volatile market conditions to raise $1.7 billion across a diverse portfolio of long-term debt instruments. Expect long-term Apria synergies of:
•$80-$100 million of revenue
•$40-$50 million of Adjusted EBITDA
o New glove manufacturing capacity expansion went live on schedule in late Q1
o Byram Healthcare ranked best overall diabetic supply company of 2022 by Verywell Health
Financial Outlook
The Company’s outlook for 2022 now reflects nine months of Apria’s expected contribution. Subject to the key assumptions below, the Company expects the following:
• Revenue for 2022 to be in a range of $9.9 billion to $10.3 billion, reflecting:
o Contribution in excess of $0.9 billion from Apria
o Now expect elective procedures for the full year to be slightly below pre-pandemic levels due to the slow start experienced in Q1
o Continued expectation that PPE volumes will ease throughout the year
• Adjusted EBITDA for 2022 to be in a range of $580 million to $630 million, reflecting an increase related to Apria of approximately $180 million
• Adjusted EPS for 2022 to be in a range of $3.05 to $3.55, reflecting:
o Current year accretion from Apria of $0.05
o Higher inflation and interest rates
o FX rates as of March 31, 2022
New Reporting Segments
Apria has been combined with Owens & Minor’s Byram Healthcare business to form the new Patient Direct segment. Additionally, the Company has created the Products & Healthcare Services segment to align financial reporting with its go to market approach to serving customers. This segment combines the former Global Products segment with the Medical Distribution and Services businesses. Please see Form 8-K filed by Owens & Minor, Inc. with the SEC on April 21, 2022 for additional financial information.
Investor Conference Call for First Quarter 2022 Financial Results
Owens & Minor executives will host a conference call at 4:30 p.m. ET today, May 3, 2022, 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 7829537. A webcast of the event will be available at https://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 2022 financial performance, the Apria transaction, including related synergies and the expected performance of the Apria business, as well as 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. 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.
Although the Company does provide guidance for Adjusted EPS 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 EPS 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”).
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.
CONTACT:
Alex Jost, CPA
Director, Investor Relations
Investor.Relations@owens-minor.com
SOURCE: Owens & Minor, Inc. (NYSE: OMI)
Owens & Minor, Inc.
Consolidated Statements of Operations (unaudited)
(dollars in thousands, except per share data)
| Three Months Ended<br> March 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Net revenue | $ | 2,406,952 | $ | 2,326,534 |
| Cost of goods sold | 2,033,504 | 1,883,783 | ||
| Gross margin | 373,448 | 442,751 | ||
| Distribution, selling and administrative expenses | 279,740 | 292,701 | ||
| Acquisition-related and exit and realignment charges | 33,548 | 5,963 | ||
| Other operating income, net | (899) | (2,605) | ||
| Operating income | 61,059 | 146,692 | ||
| Interest expense, net | 12,019 | 13,672 | ||
| Loss on extinguishment of debt | — | 40,433 | ||
| Other expense, net | 783 | 569 | ||
| Income before income taxes | 48,257 | 92,018 | ||
| Income tax provision | 8,978 | 22,429 | ||
| Net income | $ | 39,279 | $ | 69,589 |
| Net income per common share: | ||||
| Basic | $ | 0.53 | $ | 0.98 |
| Diluted | $ | 0.52 | $ | 0.98 |
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(dollars in thousands)
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 211,298 | $ | 55,712 |
| Accounts receivable, net of allowances of $20,714 and $18,003 | 775,779 | 681,564 | ||
| Merchandise inventories | 1,447,383 | 1,495,972 | ||
| Other current assets | 118,889 | 88,564 | ||
| Total current assets | 2,553,349 | 2,321,812 | ||
| Property and equipment, net of accumulated depreciation of $344,569 and $334,500 | 586,668 | 317,235 | ||
| Operating lease assets | 278,205 | 194,006 | ||
| Goodwill | 1,657,159 | 390,185 | ||
| Intangible assets, net | 494,888 | 209,745 | ||
| Other assets, net | 137,700 | 103,568 | ||
| Total assets | $ | 5,707,969 | $ | 3,536,551 |
| Liabilities and equity | ||||
| Current liabilities | ||||
| Accounts payable | $ | 1,115,400 | $ | 1,001,959 |
| Accrued payroll and related liabilities | 95,995 | 115,858 | ||
| Other current liabilities | 442,900 | 226,204 | ||
| Total current liabilities | 1,654,295 | 1,344,021 | ||
| Long-term debt, excluding current portion | 2,635,314 | 947,540 | ||
| Operating lease liabilities, excluding current portion | 221,612 | 162,241 | ||
| Deferred income taxes | 110,319 | 35,310 | ||
| Other liabilities | 138,807 | 108,938 | ||
| Total liabilities | 4,760,347 | 2,598,050 | ||
| Total equity | 947,622 | 938,501 | ||
| Total liabilities and equity | $ | 5,707,969 | $ | 3,536,551 |
Owens & Minor, Inc.
Consolidated Statements of Cash Flows (unaudited)
(dollars in thousands)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Operating activities: | ||||
| Net income | $ | 39,279 | $ | 69,589 |
| Adjustments to reconcile net income to cash provided by operating activities: | ||||
| Depreciation and amortization | 24,125 | 22,900 | ||
| Share-based compensation expense | 5,403 | 5,182 | ||
| Loss on extinguishment of debt | — | 40,433 | ||
| Provision for losses on accounts receivable | 5,628 | 8,462 | ||
| Deferred income tax benefit | (69) | (5,865) | ||
| Changes in operating lease right-of-use assets and lease liabilities | (462) | 448 | ||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable | (12,919) | (45,919) | ||
| Merchandise inventories | 58,098 | (89,393) | ||
| Accounts payable | (6,967) | 18,742 | ||
| Net change in other assets and liabilities | (33,165) | (1,666) | ||
| Other, net | 748 | 2,510 | ||
| Cash provided by operating activities | 79,699 | 25,423 | ||
| Investing activities: | ||||
| Acquisition, net of cash acquired | (1,576,278) | — | ||
| Additions to property and equipment | (9,609) | (5,048) | ||
| Additions to computer software | (1,352) | (1,575) | ||
| Other, net | 3 | 4 | ||
| Cash used for investing activities | (1,587,236) | (6,619) | ||
| Financing activities: | ||||
| Proceeds from issuance of debt | 1,691,000 | 500,000 | ||
| Borrowings (repayments) under revolving credit facility, net and accounts receivable securitization program | 41,700 | (21,600) | ||
| Repayments of debt | — | (523,140) | ||
| Financing costs paid | (33,744) | (11,700) | ||
| Cash dividends paid | — | (181) | ||
| Payment for termination of interest rate swaps | — | (15,434) | ||
| Other, net | (34,762) | (8,339) | ||
| Cash provided by (used for) financing activities | 1,664,194 | (80,394) | ||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (669) | (2,139) | ||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 155,988 | (63,729) | ||
| 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) | $ | 228,023 | $ | 70,777 |
| Supplemental disclosure of cash flow information: | ||||
| Income taxes paid, net of refunds | $ | 4,478 | $ | 898 |
| Interest paid | $ | 12,626 | $ | 10,255 |
(1) Restricted cash included in Other assets, net as of March 31, 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 March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||||
| % of | % of | |||||||
| consolidated | consolidated | |||||||
| Amount | net revenue | Amount | net revenue | |||||
| Net revenue: | ||||||||
| Products & Healthcare Services | $ | 2,134,041 | 88.66 | % | $ | 2,109,445 | 90.67 | % |
| Patient Direct | 272,911 | 11.34 | % | 217,089 | 9.33 | % | ||
| Consolidated net revenue | $ | 2,406,952 | 100.00 | % | $ | 2,326,534 | 100.00 | % |
| Operating income: | ||||||||
| Products & Healthcare Services | $ | 89,083 | 4.17 | % | $ | 150,418 | 7.13 | % |
| Patient Direct | 15,793 | 5.79 | % | 12,263 | 5.65 | % | ||
| Intangible amortization | (10,269) | (10,026) | ||||||
| Acquisition-related and exit and realignment charges | (33,548) | (5,963) | ||||||
| Consolidated operating income | $ | 61,059 | 2.54 | % | $ | 146,692 | 6.31 | % |
| Depreciation and amortization: | ||||||||
| Products & Healthcare Services | $ | 18,994 | $ | 19,160 | ||||
| Patient Direct | 5,131 | 3,740 | ||||||
| Consolidated depreciation and amortization | $ | 24,125 | $ | 22,900 | ||||
| Capital expenditures: | ||||||||
| Products & Healthcare Services | $ | 10,643 | $ | 6,464 | ||||
| Patient Direct | 318 | 159 | ||||||
| Consolidated capital expenditures | $ | 10,961 | $ | 6,623 |
Owens & Minor, Inc.
Net Income per Common Share (unaudited)
(dollars in thousands, except per share data)
| Three Months Ended<br> March 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Net income | $ | 39,279 | $ | 69,589 |
| Weighted average shares outstanding - basic | 73,643 | 70,834 | ||
| Dilutive shares | 2,376 | 104 | ||
| Weighted average shares outstanding - diluted | 76,019 | 70,938 | ||
| Net income per common share: | ||||
| Basic | $ | 0.53 | $ | 0.98 |
| Diluted | $ | 0.52 | $ | 0.98 |
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<br> March 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Operating income, as reported (GAAP) | $ | 61,059 | $ | 146,692 |
| Intangible amortization (1) | 10,269 | 10,026 | ||
| Acquisition-related and exit and realignment charges(2) | 33,548 | 5,963 | ||
| Operating income, adjusted (non-GAAP) (Adjusted Operating Income) | $ | 104,876 | $ | 162,681 |
| Operating income as a percent of net revenue (GAAP) | 2.54% | 6.31% | ||
| Adjusted operating income as a percent of net revenue (non-GAAP) | 4.36% | 6.99% | ||
| Net income, as reported (GAAP) | $ | 39,279 | $ | 69,589 |
| Intangible amortization (1) | 10,269 | 10,026 | ||
| Income tax benefit (5) | (2,517) | (2,661) | ||
| Acquisition-related and exit and realignment charges(2) | 33,548 | 5,963 | ||
| Income tax benefit (5) | (8,223) | (1,583) | ||
| Loss on extinguishment of debt (3) | — | 40,433 | ||
| Income tax benefit (5) | — | (10,732) | ||
| Other (4) | 525 | 569 | ||
| Income tax benefit (5) | (129) | (151) | ||
| Net income, adjusted (non-GAAP) (Adjusted Net Income) | $ | 72,752 | $ | 111,453 |
| Net income per diluted common share, as reported (GAAP) | $ | 0.52 | $ | 0.98 |
| Intangible amortization (1) | 0.10 | 0.10 | ||
| Acquisition-related and exit and realignment charges(2) | 0.33 | 0.06 | ||
| Loss on extinguishment of debt (3) | — | 0.42 | ||
| Other (4) | 0.01 | 0.01 | ||
| Net income per diluted common share, adjusted (non-GAAP) (Adjusted EPS) | $ | 0.96 | $ | 1.57 |
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 <br>March 31, | Trailing Twelve Months Ended <br>March 31, 2022 | |||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Net income, as reported (GAAP) | $ | 39,279 | $ | 69,589 | $ | 191,280 |
| Income tax provision | 8,978 | 22,429 | 41,715 | |||
| Interest expense, net | 12,019 | 13,672 | 46,437 | |||
| Intangible amortization (1) | 10,269 | 10,026 | 40,050 | |||
| Other depreciation and amortization (6) | 13,856 | 12,874 | 51,795 | |||
| EBITDA (non-GAAP) | $ | 84,401 | $ | 128,590 | $ | 371,277 |
| Acquisition-related and exit and realignment charges (2) | 33,548 | 5,963 | 61,661 | |||
| Loss on extinguishment of debt (3) | — | 40,433 | — | |||
| Other (4) | 525 | 569 | 2,233 | |||
| EBITDA, adjusted (non-GAAP) (Adjusted EBITDA) | $ | 118,474 | $ | 175,555 | $ | 435,171 |
| Apria adjusted EBITDA(7) | 218,971 | |||||
| Pro forma EBITDA, adjusted (non-GAAP) (Pro Forma Adjusted EBITDA) | $ | 654,142 | ||||
| Three Months Ended<br><br>March 31, 2022 | ||||||
| --- | --- | --- | ||||
| EBITDA, adjusted (non-GAAP) (Adjusted EBITDA) | $ | 118,474 | ||||
| Capital expenditures | (10,961) | |||||
| Free Cash Flow (non-GAAP) | $ | 107,513 | ||||
| March 31, | ||||||
| --- | --- | --- | ||||
| 2022 | ||||||
| Total debt, as reported (GAAP) | $ | 2,643,515 | ||||
| Cash and cash equivalents | 211,298 | |||||
| Net debt (non-GAAP) | 2,432,217 | |||||
| Trailing twelve-months pro forma EBITDA, adjusted (non-GAAP) (Pro Forma Adjusted EBITDA) | 654,142 | |||||
| Pro forma leverage ratio of net debt to trailing twelve-months adjusted EBITDA | 3.7 |
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 $31.9 million for the three months ended March 31, 2022 as compared to no acquisition-related charges for the three months ended March 31, 2021. Acquisition-related costs in 2022 consisted primarily of costs related to the Apria acquisition. Acquisition-related charges for the twelve months ended March 31, 2022 were $35.1 million and consisted primarily of costs related to the Apria acquisition. Exit and realignment charges were $1.7 million for the three months ended March 31, 2022 and consisted primarily of severance and other charges associated with the reorganization of our segments. 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 for the twelve months ended March 31, 2022 were $26.6 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 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.
(4) Other includes interest costs and net actuarial losses related to our retirement plans for the three months ended March 31, 2022 and 2021, as well as the twelve months ended March 31, 2022.
(5) 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.
(6) Other depreciation and amortization includes depreciation expense for property and equipment and amortization for capitalized computer software.
(7) Apria adjusted EBITDA is presented in order to calculate pro forma adjusted EBITDA and pro forma leverage ratio of net debt to adjusted EBITDA for the twelve months ended March 31, 2022 as if Apria was acquired on April 1, 2021. The pro forma results are not necessarily indicative of the results that would have been if the acquisition had occurred on April 1, 2021. We have not separately presented the components of Apria adjusted EBITDA, as we determined that such presentation would not be meaningful.
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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1 Confidential & Proprietary to Owens & Minor, Inc. First Quarter 2022 Supplemental Earnings Slides May 3, 2022
2 Confidential & Proprietary to Owens & Minor, Inc. Safe Harbor 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 2022 financial performance, the Apria transaction, including related synergies and the expected performance of the Apria business, as well as 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. 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. This presentation includes certain combined financial information which reflects the sum of the relevant financial information for the Company and Apria without any other adjustments and refer to such presentation as on a “combined” basis for the applicable period. This combination does not comply with U.S. GAAP or with the rules for pro forma presentation. As a result, the combined financial information included in this presentation may differ from pro forma financial information prepared in accordance with U.S. GAAP and the rules and regulations of the SEC, and any such differences could be material. Numerical figures included in this presentation have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. As such, the corresponding percentage aggregations may not sum to 100%. We present certain potential cost savings as an adjustment to Combined Adjusted EBITDA because we expect them to be a permitted addback pursuant to agreements that govern our indebtedness. These potential cost savings are based on assumptions and estimates that could be proved to be incorrect, and accordingly should not be viewed as a projection of future performance. Certain financial measures included herein are not made in accordance with U.S. GAAP and use of such terms varies from others in the same industry. Management uses these non-GAAP financial measures internally to evaluate our performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation. Non-GAAP financial measures should not be considered as alternatives to measures derived in accordance with U.S. GAAP. Non-GAAP financial measures have important limitations as analytical tools and you should not consider them in isolation or as substitutes for results as reported under U.S. GAAP. The appendix to this presentation includes a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with U.S. GAAP.
3 Confidential & Proprietary to Owens & Minor, Inc. 2022 Company Outlook & Modeling Assumptions Company Outlook & Modeling Assumptions* Full Year 2022 Revenue $9.9 - $10.3 billion Gross Margin ~20% Interest Expense $125 - $130 million Capital Expenditures $175 - $185 million Adj. Effective Tax Rate 24% - 26% Diluted Weighted Average Shares Outstanding ~77 million Adjusted EBITDA $580 - $630 million Adjusted EPS $3.05 - $3.55 Commodity Prices / Inflation / Interest Rates Unfavorable in near-term * Company outlook and modelling assumptions are assumptions used for 2022 adjusted EPS guidance, and the Company undertakes no obligation to update such assumptions subsequent to the date of this presentation (May 3, 2022). Assumes FX rates as of 3/31/2022. Please see Form 8-K filed by Owens & Minor, Inc. with the SEC on May 3, 2022 for additional financial information.