Owens & Minor's Q2 2025: Unraveling Key Contradictions in Financials and Growth Trajectories

Stranded costs and impact on financials, FX impact on financials, impact of stranded costs on EBITDA, free cash flow expectations, and diabetes business growth trajectory are the key contradictions discussed in Owens & Minor's latest 2025Q2 earnings call.



Divestiture and Strategic Focus:
- Owens & Minor announced the divestiture of the Products & Healthcare Services segment, classifying it as discontinued operations, and expects to conclude the sale soon.
- This move is part of the company's strategic focus on becoming a pure-play Patient Direct business, driven by favorable demographic trends and the potential for higher margins and growth in the home-based care market.

Revenue and Segment Performance:
- The company reported revenue of $682 million for Q2 2025, indicating a 3.3% increase year-over-year.
- Excluding temporary customer-centric adjustments, the growth rate would have been approximately 4%. Significant growth was seen in the sleep, ostomy, and urology categories, while diabetes experienced lower-than-planned sales due to channel shifts from DME to pharmacy.

Patient Direct Business Projections:
- Owens & Minor projects Patient Direct revenue between $2.76 billion and $2.82 billion and adjusted EBITDA between $376 million and $382 million for 2025.
- This growth is supported by favorable demographic trends and the company's strong culture of disciplined growth, with a focus on expanding revenue and EBITDA dollars.

Stranded Costs and Financial Impact:
- The company recognized $11 million in stranded costs in Q2 2025, compared to $17 million in the same quarter last year.
- These costs are expected to increase temporarily if a P&HS divestiture is announced, to later decrease as the business optimizes costs post-transaction.