Owens & Minor: A Distressed Turnaround With Attractive Recovery Potential

The story of Owens & Minor is one of strategic reinvention amid financial distress-a narrative that resonates deeply with value investors seeking opportunities in underappreciated industrial companies. Over the past two years, the healthcare services provider has embarked on a bold restructuring plan, reducing its total debt by $647 million, including $244 million in 2024 alone. This deleveraging, coupled with a decisive pivot toward the high-growth home-based care market, has positioned the company as a compelling case study in value creation through operational focus and capital discipline.

Strategic Repositioning: From Diversification to Specialization

Owens & Minor's decision to sell its Products & Healthcare Services (P&HS) segment to Platinum Equity for $375 million in cash marks a pivotal shift. By retaining only a 5% ownership stake and a preferred equity interest in the divested unit, the company has effectively transformed itself into a pure-play home-based care provider, centered on its Patient Direct platform. This move aligns with broader industry trends: the home healthcare market is expanding rapidly, driven by aging demographics and the increasing viability of treating chronic conditions such as diabetes and sleep apnea in non-institutional settings.

The proceeds from the P&HS sale will be used entirely to reduce Owens & Minor's $1.9 billion debt burden, a critical step in restoring balance sheet flexibility. For value investors, this restructuring exemplifies the classic playbook of distressed turnaround: shedding non-core assets to fund debt reduction while concentrating resources on high-margin, scalable operations.

Financial Performance: EBITDA Growth and Margin Expansion

Despite its debt challenges, Owens & Minor has demonstrated resilience in its core operations. In 2024, the company reported Adjusted EBITDA in the range of $540 million to $550 million, with guidance for 2025 projecting double-digit growth to $560 million to $590 million according to market analysis. This trajectory is underpinned by the Patient Direct segment, which achieved a remarkable 173 basis points of margin expansion in Q1 2025 according to recent reports, reflecting improved operational efficiency.

Revenue growth, while modest, has remained stable. The company expects 2024 revenue of $10.6 billion to $10.8 billion according to financial filings, with 2025 projections of $10.85 billion to $11.15 billion according to financial filings. Notably, the Patient Direct segment contributed $697.3 million in revenue during Q3 2025 according to Q3 results, underscoring its growing importance. These figures suggest that Owens & Minor is not merely surviving but laying the groundwork for sustainable profitability in its core business.

Industry Tailwinds and Competitive Positioning

The home-based care market is undergoing a transformation fueled by technological innovation and regulatory advocacy. AI-driven tools for scheduling, patient monitoring are streamlining operations, while industry players are lobbying to prevent reimbursement cuts that could undermine financial stability. Owens & Minor's focus on this sector positions it to benefit from these trends, particularly as demand for at-home care accelerates.

However, the company is not without challenges. A downgrade of its Long-Term Issuer Default Rating to 'B+' by Fitch Ratings in November 2025 highlights lingering credit risks. Additionally, Q3 2025 results included a net loss from continuing operations, a reminder that the path to profitability remains uneven. For value investors, these risks must be weighed against the company's strategic clarity and the long-term growth potential of its chosen market.

The Value Investor's Dilemma

Owens & Minor's journey embodies the tension inherent in value investing: the interplay between short-term distress and long-term potential. The company's debt reduction efforts and operational focus have already begun to yield results, but its credit profile and operational volatility remain concerns. The key question for investors is whether the company's strategic repositioning can generate sufficient returns to justify the risks.

For those willing to navigate the complexities of a distressed turnaround, Owens & Minor offers an intriguing opportunity. Its pivot to home-based care aligns with structural industry trends, and its financial discipline-evidenced by aggressive debt reduction and margin expansion-suggests a management team committed to long-term value creation. While the road ahead is uncertain, the combination of a resilient core business and favorable market dynamics makes Owens & Minor a compelling candidate for patient capital.