Owens & Minor (NYSE: OMI) is putting all its chips on its patient-direct segment, which includes its home medical equipment (HME) portfolio.
As part of that bet, the company is considering a sale of its products and health-care services segment, which mainly serves institutional providers, such as hospitals and clinics. Owens & Minor CEO Edward Pesicka spoke about that strategy shift during the company’s fourth-quarter and year-end earnings call Feb. 28.
“We have been actively engaged in robust discussions regarding the potential sale of our products and health-care services segment, and are already well along in the process,” Pesicka said. “Over the past 18 months, we have considered many strategic options while continuing to work to enhance the product and health-care services segment.”
The actions Owens & Minor has taken on realigning its product and health-care services segment have made it a stronger entity overall and well positioned for future growth, the CEO added.
But the company sees its best long-term prospects in the expanding home-care sector.
“Over the past few years, we have focused our capital reinvestment on the higher-growth, higher-margin patient-direct segment,” Pesicka said.
Richmond, Virginia-based Owens & Minor is a diversified health-care solutions company with brands including Apria, Byram and HALYARD.
Should a sale go through, the resulting structure would deepen the company’s focus on patient direct and HME, which has already been broadened by Owens & Minor’s acquisitions of Apria in 2022 and, pending regulatory approval, Rotech.
The company expects its $1.36 billion Rotech deal – announced in July 2024 – to close in the first half of 2025.
“We remain incredibly excited by the prospect of a united future together,” Pesicka said. “We plan to leverage the existing Apria platform we acquired nearly three years ago to improve service while delivering synergies through the optimization of our operations.”
Doubling down on patient direct
Since its Apria acquisition, Owens & Minor’s patient-direct segment has played a central role in the company’s growth, delivering a mid-single-digit top-line increase in 2024, Pesicka said.
The market forces behind at-home care, with shifting demographics and emerging remote-monitoring solutions, remain very favorable, he explained on the call.
Within patient direct, the company supplies a range of products and services for chronic conditions, including sleep therapy, diabetes management and respiratory care. While certain categories, such as noninvasive ventilation and oxygen, were softer during parts of 2024, those areas showed late-year improvement, Pesicka said.
“We continue to leverage our footprint and broad product offering to support home-based care for millions of patients with chronic conditions,” he said. “Those capabilities, combined with the positive demographic trends and expanding home treatment options, leaves us very bullish on the future of this business.”
Owens & Minor reported fourth-quarter 2024 revenue of about $2.70 billion, a roughly 3.6% increase compared to $2.66 billion during the same period in 2023.
For the year, Owens & Minor reported total revenue of about $10.70 billion, a 1.5% increase compared to $10.33 billion the prior year.
For 2025, Owens & Minor’s financial guidance included a revenue range of $10.85 billion to $11.15 billion, and adjusted earnings per share of $1.60 to $1.85.
“We expect to see marked improvement from last year,” CFO Jonathan Leon said during the call, adding that at least $200 million of free cash flow will be available for paying down debt or other uses.
It’s important to note that Owens & Minor’s larger business line is its products and health-care services segment, which brought in slightly more than 74% of its consolidated net revenue in 2024.
Still, patient direct is growing rapidly.
“Our patient-direct business outpaced market growth with mid-single-digit growth for the quarter and for the year,” Pesicka said. “In addition, it delivered over $30 million of incremental operating income year over year, while making significant progress with revenue cycle management and our Sleep Journey program, which helped deliver strong sleep supply growth for the year and the fourth quarter.”
