Owens & Minor: ‘We’re not waiting’

RICHMOND, Va. – Owens & Minor has kicked off an ambitious, companywide program to “right size” the business in the face of new market conditions, said company execs on a call to discuss its fourth quarter and full year 2022 earnings. 

The move is expected to drive $30 million of adjusted operating income in 2023 and provide between $250 million and $400 million of working capital benefits by 2025, said Edward Pesicka, president and CEO. 

“Look, we're not waiting,” he said. “The program has already started and we are in process of evaluating and implementing cost reductions and profit improvements to support the four work streams. We will aggressively look across the entire company for efficiencies and savings with a heavy focus on the areas where the greatest opportunities exist.” 

The operating realignment model program will be led by Dan Starck, executive vice president of OM, president of the Patient Direct segment and CEO of Apria. Perry Bernocchi will be promoted to CEO of the Patient Direct segment effective March 1.  

The program will entail taking a more aggressive procurement approach; evaluating the manufacturing and sourcing process to eliminate waste and drive value; reducing SG&A headcount and overhead costs; streamlining back-office functions; and enhancing sales effectiveness for profitable growth through aligned compensation structures. 

“We expect that these work streams will provide benefit that they take hold and will position us as a stronger more profitable company going forward,” Pesicka said. 

While the program will be applied companywide, OM continues to see its Patient Direct segment as a bright spot, with net revenue of $617 million for the quarter, an increase of 135% year-over-year. The segment grew revenue by 10.3% in the fourth quarter of 2022 compared to the same period in 2021, with double-digit growth in most key product categories. 

"We have materially changed the profile of our overall business with the majority of our profit and EBITDA now coming from our Patient Direct segment even though this segment currently makes up less than 25% of total company revenue,” said Pesicka. “We are excited (at) the current and future trajectory of the Patient Direct segment.” 

• Read about how OM and Apria ‘complete each other.’