Strong Finish to a Year with Robust Growth and Record Setting Profitability

Company Reaffirms 2022 Guidance

Acquisition of Apria Remains on Track

RICHMOND, Va.--(BUSINESS WIRE)-- Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the fourth quarter and the year ended December 31, 2021, as summarized in the table below.

“I’m extremely proud of our strong finish to a record year and even more excited about our future. We delivered on our commitments to all stakeholders and took major steps to help ensure the future growth of Owens & Minor,” said Edward A. Pesicka, President & Chief Executive Officer.

Pesicka added, “In an ever-changing healthcare environment it is the strength of our business model that resonates well with our customers. Our model is focused on our Americas-owned manufacturing facilities, our flexibility and scalability of our healthcare services, and the strength of our Patient Direct business. Our performance in 2021 is an example of our execution both financially and strategically towards our long-term goals.

We enter 2022 with strong momentum and are reaffirming our financial guidance for the year. Further, last month’s announcement of our definitive agreement to acquire Apria is evidence of the strength of our commitment to deliver long-term profitable growth. Apria is a leader in the attractive home health market and will meaningfully enhance our Patient Direct offering, strengthening our ability to follow patients through the hospital and into the home,” Pesicka concluded.

Q4 Results & Highlights

• Adjusted Net Income of $61 million which reflects:
  • Year-over-year revenue growth
  • Our ability to manage accelerating inflationary pressures
  • $6.2 million, or 35% decrease in interest expense
• Total company fourth quarter revenue grew by approximately 5%:
  • Global Solutions segment revenue grew to $2.0 billion or 3% year-over-year due to strong performance in our Patient Direct business combined with increased PPE sales, partially offset by one fewer selling day and continued supplier shortages
  • Global Products segment revenue grew to $629 million or 9% year-over-year due to glove cost pass through, growth of non-PPE products, partially offset by one fewer selling day
• Balance Sheet and Cash Flow
  • Total net debt at the end of the year was $894 million
  • Net leverage ratio was 1.8 times trailing twelve months adjusted EBITDA
  • Generated $50 million of operating cash flow in the fourth quarter and $124 million for the full year
• Business Highlights
  • Announced definitive agreement to acquire Apria, Inc. (“Apria”)
  • Launched new consumer brand, SAFESKIN®, with SAFESKIN® Nitrile Gloves available in POP-N-GO® packs to provide task-focused, high-quality protection
  • Executed on our mission to impact and empower communities by financially supporting charitable organizations through our Owens & Minor Foundation

Financial Outlook

The Company’s outlook for 2022 reflects continued reinvestment across our business while enhancing operating efficiencies through the continued deployment of our O&M Business System. The Company believes these investments have created a solid foundation for continued strong performance in 2022. Subject to the key assumptions below, the Company expects the following (all ranges exclude any expected contribution from the proposed acquisition of Apria):

• Revenue for 2022 to be in a range of $9.2 billion to $9.6 billion, reflecting:
  • Year-over-year reduction in revenue in the range of $(400-450) million as glove costs continue to normalize
  • Elective procedures at pre-pandemic levels
  • Expecting PPE volumes to ease throughout the year
  • New glove manufacturing capacity expansion go-live in late Q1’22
• Adjusted net income for 2022 to be in a range of $3.00 to $3.50 per share
  • Assumes FX rates as of December 31, 2021
  • Expecting near-term unfavorable commodity prices
• Adjusted EBITDA for 2022 to be in a range of $400 million to $450 million

Apria Acquisition Update

The acquisition of Apria remains on track to close in the first half of 2022. The acquisition is subject to customary closing conditions, including the Hart Scott Rodino Act and other regulatory approvals and the approval of Apria’s stockholders.

Excluding synergies, we continue to expect Apria to generate:

• Annualized revenue of at least $1.2 billion
• Annualized adjusted EBITDA in excess of $230 million
• Modest adjusted EPS accretion in 2022

We will provide further updates after acquisition close, including final purchase price allocation, financing terms, synergies and potential tax benefits.

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”).

Investor Conference Call for Fourth Quarter and Full Year 2021 Financial Results

Owens & Minor executives will host a conference call at 8:30 a.m. EDT today, February 23, 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 2388913. 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 2022 financial performance, the Apria transaction, including closing the transaction and opportunities related thereto, and the expected performance of the Apria business post-closing, 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, including the occurrence of any event, change or other circumstances that could give rise to the termination of the agreement relating to the Apria transaction; the inability to complete the proposed transaction due to the failure to obtain approval of Apria’s stockholders for the proposed transaction or the failure to satisfy other conditions to completion of the proposed transaction, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed transaction; risks related to disruption of management’s attention from Owens & Minor’s or Apria’s ongoing business operations due to the proposed transaction; the effect of the announcement of the proposed transaction on Owens & Minor’s or Apria’s relationships with its customers, suppliers and other third parties, as well as it operating results and business generally; the risk that the proposed transaction will not be consummated in a timely manner; exceeding the expected costs of the transaction; and the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected and the risk that the combined company may be unable to achieve synergies or it may take longer than expected to achieve those synergies. 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, 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.

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, income from continuing operations and income from continuing operations per share to non-GAAP measures used by management.

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.

Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited), continued
The following items have been excluded in our non-GAAP financial measures:

(1) Intangible amortization in 2021 and 2020 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 $3.0 million for the three months and year ended December 31, 2021 as compared to $2.7 million and $11.8 million for the three months and year ended December 31, 2020. Amounts in 2021 consisted primarily of costs related to the pending Apria transaction. Amounts in 2020 consisted primarily of transition costs for the Halyard acquisition. Exit and realignment charges were $10.1 million and $31.1 million for the three months and year ended December 31, 2021 as compared to $16.6 million and $25.9 million for the three months and year ended December 31, 2020. Amounts in 2021 consisted of wind-down costs related to Fusion5, IT restructuring charges, costs associated with our strategic organizational realignment, and other items. Amounts in 2020 were associated with severance from reduction in workforce, IT restructuring charges, post closing costs associated with the Movianto divestiture, costs associated with the sale of certain assets of Fusion5 and other costs related to the reorganization of the U.S. commercial, operations and executive teams.

(3) Loss on extinguishment of debt for the year ended December 31, 2021 included 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. Loss on extinguishment and modification of debt for the three months and year ended December 31, 2020 includes a make-whole premium related to the extinguishment of our 2021 Notes of $5.0 million, the write-off of deferred financing costs of $2.7 million and $5.1 million, third party fees incurred of $1.0 million and $4.3 million, which were partially offset by a gain on extinguishment of debt related to the partial repurchase of our 2021 and 2024 Notes of $(3.1) million for the year ended December 31, 2020.

(4) Other includes interest costs and net actuarial losses related to the U.S. Retirement Plan of $0.6 million and $2.3 million for the three months and year ended December 31, 2021. Other includes interest costs and net actuarial losses related to the U.S. Retirement Plan of $0.6 million and $2.3 million for the three months and year ended December 31, 2020, and gain from the surrender of company-owned life insurance policies of $(3.5) million for the year ended December 31, 2020.

(5) Includes tax adjustments associated with a valuation allowance on the capital loss related to the divestiture of our Movianto business, partially offset by 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 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220223005377/en/

Alex Jost, CPA

Director, Investor Relations

[email protected]

Source: Owens & Minor, Inc.