Owens & Minor's 2025 Q1: Unpacking Contradictions in Tariffs, Acquisitions, and Growth Strategies

Tariff exposure and pricing strategy, Rotech acquisition and financial impact, patient direct growth strategy, tariff exposure and impact, Rotech acquisition impact are the key contradictions discussed in Owens & Minor's latest 2025Q1 earnings call.



Patient Direct Segment Growth:
- Owens & Minor's Patient Direct segment revenue grew by 6% compared to the first quarter of 2024, with a same-day basis growth of 7.3%.
- This growth was supported by investments in the sleep journey, streamlining new start processes, and improved adherence for resupply, as well as expanded sales rep territories and additional commercial resources.

Tariff Impact and Pricing Strategy:
- The company anticipates an annual exposure of current tariffs on its products to be in the range of $100 million to $150 million, primarily impacting the PHS segment.
- This led to the implementation of price increases set to be effective in early June, with the goal of covering cost increases and maintaining profitability by affecting only products impacted by tariffs.

Products and Healthcare Services Segment Challenges:
- The Products and Healthcare Services segment reported a decline of 0.8% in reported revenue, though it grew 0.7% on a same-sales day basis compared to the first quarter last year.
- The decline was attributed to lower year-over-year glove prices and lower international sales, despite continued growth in same-store sales and increased proprietary product penetration.

Cash Flow and Debt Reduction Strategy:
- Owens & Minor expects weakest cash flow quarter of the year due to increase in PHS inventory, payments of incentive compensation, and acquisition-related expenses.
- The company aims to use seasonal profit growth and best-in-class collection rates to improve cash flow for debt reduction, targeting a leverage debt range of 2 to 3 times EBITDA.