It’s still very early in respect to the amount of time that has passed since Owens & Minor (NYSE: OMI) announced its $1.36 billion acquisition of Rotech Healthcare Holdings.
Already, though, Owens & Minor is hearing positive feedback – and the company’s leadership team is anticipating more moving forward. Broadly, Owens & Minor executives believe adding Rotech will create more of a one-stop shop for payers and a better customer experience.
“It’s still early on, so to get the patient and the payer feedback, that’s still in process,” Edward Pesicka, president and CEO of Owens & Minor, said Aug. 2 during the company’s Q2 2024 earnings call. “But overall, it’s been extremely positive.”
In one of the biggest home medical equipment (HME) deals in recent memory, Owens & Minor announced its purchase of Rotech on July 23.
The transaction made sense for Owens & Minor in light of the company’s goal to grow its patient-direct segment to $5 billion in revenue by 2028.
Rotech, with more than 4,200 employees and operations in 46 states, generated approximately $750 million in revenue in 2023.
“Rotech brings a wealth of expertise in respiratory and home medical equipment, aligning perfectly to deliver exceptional care, innovative solutions and top-notch service levels for patients, providers and payers,” Pesicka continued.
Owens & Minor reported second-quarter 2024 revenue of about $2.67 billion, up roughly 4% compared to $2.56 billion during the same period a year ago. The majority of that revenue came from Owens & Minor’s products and health-care services segment, though the company’s patient-direct business likewise saw strong growth in Q2.
Specifically, patient-direct revenue totaled $660 million, up 4% compared to the second quarter of 2023. The increase was driven by continued strong growth in diabetes and sleep supplies, according to Owens & Minor’s leadership team.
“Our growth is even more impressive given the particularly strong second quarter we had this time last year,” Pesicka noted.
Looking ahead, Owens & Minor is confident it’ll continue moving closer to its $5 billion goal for the segment.
Among the company’s reasons for feeling that way: The patient-direct segment is expected to benefit from demographic trends in the U.S., with an estimated 133 million Americans suffering from at least one chronic condition and many more undiagnosed. This growing demand for home-based care solutions positions Owens & Minor for sustained growth well into the future, according to Pesicka.
“From a longer-term macro perspective, our patient-direct segment has considerable tailwinds supporting our organic growth efforts,” the CEO continued.
During the second quarter, Owens & Minor also continued to focus on the alignment of the commercial organization within its Apria division, with the goal of improving growth in respiratory, oxygen and sleep products.
The company views these categories as important parts of its business outlook moving forward, and, at this point, executives aren’t overly concerned about the possible impact of GLP-1 medications.
Contextually, GLP-1s are becoming an increasingly popular topic of conversation during HME company earnings calls. Some analysts and investors are concerned the class of medications could lead to a decreased need for some home medical equipment.
If somebody using GLP-1s loses weight and sees his or her sleep apnea condition improve, that could mean they no longer need sleep therapy support, for example.
“We are not currently seeing an impact from the use of GLP-1s on our … patient population,” Pesicka said. “The diabetic patients we serve are primarily Type 1 or insulin dependent, which requires continuous glucose monitoring regardless of GLP-1 use. With respect to sleep apnea patients, while GLP-1s may help some patients, there are still 80% of the population with sleep apnea that are not yet diagnosed.”
