Yahoo Finance

• Revenue: $2.6 billion, up 4% year-over-year.

• Gross Profit: $536 million, representing 20.5% of revenue.

• Gross Margin Expansion: Increased by 79 basis points.

• Operating Income (GAAP): $10 million.

• Adjusted Operating Income: $57 million, up more than 20% year-over-year.

• Adjusted EBITDA: $116 million, an increase of $8 million from Q1 2023.

• Net Loss (GAAP): $22 million, or a loss of $0.29 per common share.

• Adjusted Net Income: $15 million, or $0.19 per common share.

• Total Debt: $2.2 billion as of March 31.

• Net Debt: $1.9 billion, up about 3% from year-end.

• 2024 Revenue Guidance: Expected to be between $10.5 billion and $10.9 billion.

• 2024 Adjusted EBITDA Guidance: Anticipated to be between $550 million and $590 million.

• 2024 Adjusted EPS Guidance: Projected to be between $1.40 and $1.70.

• Warning! GuruFocus has detected 4 Warning Sign with OMI.

Release Date: May 03, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revenue for Q1 2024 was $2.6 billion, a 4% increase year-over-year, with growth in both business segments.

• Gross profit in Q1 2024 was $536 million or 20.5% of revenue, showing a gross margin expansion of 79 basis points year-over-year.

• Adjusted operating income was up more than 20% year-over-year, driven by overall improvements in the Products and Healthcare Services segment.

• Interest expenses decreased by 16% from the first quarter of last year, reflecting efforts to reduce total debt.

• Investments in inventory and commercial capabilities are being made to support onboarding new customers and maintaining high service levels.

Negative Points

• Net debt expected to remain roughly the same through the remainder of 2024 due to ongoing investments.

• The Patient Direct segment faced challenges due to the Change Healthcare cyber incident, impacting the ability to onboard new patients and renew eligibility for existing ones.

• Operating margins in the Patient Direct segment fell about 35-36 basis points year-over-year due to investments and operational disruptions.

• GAAP net loss for the quarter was $22 million, or a loss of $0.29 per common share.

• Free cash flow is expected to be minimal for the remainder of the year, reflecting significant ongoing investments.

Q & A Highlights

Q: Can you provide more details on the impact of the Change Health incident on the Patient Direct segment? A: Edward A. Pesicka, President, CEO & Director of Owens & Minor, mentioned that the Change Health incident had minimal impact on top-line revenue but affected collections. The incident required more manual labor, impacting operating expenses and cash flow. However, improvements were expected as the situation resolved into Q2.