Owens & Minor refocuses on Patient Direct

RICHMOND, Va. – Owens & Minor is focused on paying down debt and rethinking how it builds momentum in its “pure-play” Patient Direct business, says CEO Edward Pesicka. 

Owens & Minor plans to use 100% of the net proceeds from the sale of its Products & Healthcare Services business to pay down debt, which currently stands at $1.9 billion. That’s an increase of $126 million, including $100 million in outlays to Rotech Healthcare in the wake of its failed merger deal, since the end of 2024. 

“While the outcome (of the merger) was disappointing, the path to obtain regulatory clearance proved unviable in term of time, expense and opportunity,” said Pesicka on a recent call to discuss the company’s second quarter earnings. “As we think through (acquisitions) going forward, it will be more focused on those smaller bolt-ons, as we focus on getting rid of our stranded costs, increasing our free cash flow (and) paying down debt, so that way, we can do more of those as we get into the future.” 

Diabetes slows but execs aren’t worried 

Owens & Minor reported revenue of $682 million for the second quarter, an increase of 3.3% year over year – lower than anticipated – partly due to modifications of customer order quantities and delivery frequency for diabetes supplies, as the company sought to meet customer needs during a period of supplier disruptions, said Pesicka. 

“Diabetes was lower than planned in the quarter, but we expect to see some rebound in the back half of the year, but it will remain below prior year due to the shift from DME to pharmacy,” he said. 

Nationally, there’s been a growing trend of payers limiting CGM access to pharmacy-only models. However, Owens & Minor could be less impacted because it has its own pharmacy, says Jonathan Leon, executive vice president, CFO and corporate treasurer. 

“That effect will continue, albeit we think potentially at a slower rate,” he said. “Keep in mind, we have a fully functioning pharmacy capability. We're seeing growth in that area, but it's a point of emphasis for us as we go forward to get more and more activity through our own pharmacy channel. So we're confident and that will happen over time.” 

Offsetting challenges in diabetes, Owens & Minor’s sleep business is doing “very well,” for both starts and supplies, and its ostomy and urology business is growing in double-digits, says Leon. 

Response to return of competitive bidding 

It’s too early to tell exactly what kind of an impact the return of Medicare’s competitive bidding program could have for Owens & Minor, but the company doesn’t have much exposure to Medicare rates, says Leon. 

“It’s less than 20% of our overall revenue,” he said. “But not everything about the competitive bidding proposal as its constructed today is a negative.” 

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