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Mar 31, 2020
Owens & Minor Q1 2020 Earnings Report
Financial results reported for the first quarter, confirming earnings guidance for the year.
Key Takeaways
Owens & Minor reported a decrease in revenue due to customer non-renewals and reduced surgical procedures, which was partially offset by increased PPE sales and growth in Home Healthcare. The company generated $93 million in operating cash flow and reduced total debt by $24 million. They also re-confirmed their full year adjusted EPS guidance of $0.50 to $0.60.
Adjusted net income per share increased by $0.02 to $0.08 compared to the prior year quarter, a 33% increase on a constant currency basis.
Gross margin expansion of 88 basis points compared to in the first quarter of 2019, reflecting favorable revenue mix combined with continued operating efficiencies.
Generated $93 million of operating cash flow in the first quarter, primarily from working capital improvements.
Total debt was reduced by $24 million in the first quarter, bringing the total for the last four quarters to $195 million.
Forward Guidance
The Company continues to expect adjusted net income for 2020 to be in a range of $0.50 to $0.60 per share, on a constant currency basis, despite being challenged in the 2nd quarter to achieve breakeven.
Positive Outlook
- Hospitals will increase surgical capacity in Q3 and Q4 to partially recover from elective procedures that were postponed during Q2, driving incremental demand in both our Global Solutions and Global Products segments in the second half of the year.
- Global Products production of PPE will continue to run at or near full capacity for the balance of the year to meet market demand and to satisfy federal government stockpiling commitments.
- Additional favorability in commodity pricing for the remainder of the year.
- Elective procedures will not return to normal levels until Q3, negatively impacting revenues in our Global Solutions segment during Q2.
- Continued foreign exchange headwinds assumed for the balance of the year.
Challenges Ahead
- Significant reduction in elective surgical procedures expected to continue through Q2 2020, negatively impacting revenue and profit.
- Elective procedures will not return to normal levels until Q3, negatively impacting revenues in our Global Solutions segment during Q2.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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