Earnings Release
Owens & Minor Reports Second Quarter 2022 Financial Results
Continued strength in Patient Direct with strong organic growth and acquisition synergies on track
Delivered Q2 adjusted EBITDA of $156 million
Weaker economic conditions and hospital volumes lead to new FY22 Adj. EPS outlook of $2.85-$3.15
RICHMOND, Va.--(BUSINESS WIRE)--Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the second quarter ended June 30, 2022, as summarized in the table below.
"I am very pleased with our performance in the second quarter, where the strength of our business model and the O&M business system helped us in the face of external conditions that continued to deteriorate over the quarter,” said Edward A. Pesicka, President and Chief Executive Officer.
"Our Patient Direct segment again executed very well and continues to grow as a percentage of total company profitability, and quarterly results were driven by the consistent strength in our Byram business that once again saw growth outpace the market. Apria also delivered a strong quarter and integration synergies are on track. We are strategically positioned very well to continue capitalizing on shifting preferences toward the home. In the Products & Healthcare Services segment, our differentiated, vertically integrated business model has enabled us to provide industry leading customer service levels as we continue to achieve high quality wins," Pesicka added.
"Looking to the balance of the year, we have considered the accelerating macroeconomic headwinds, as well as the unique labor and product availability challenges within acute care resulting in lower overall hospital volume. In recognition of these factors, we have revised our full year 2022 outlook. However, in our view, the economic landscape and industry-specific challenges will eventually improve, returning hospital procedure volumes to normalized levels. Because we have the right strategy and operating model, as well as a proven business system, I am confident in our ability to successfully manage through these challenges over time," Pesicka concluded.
Financial Summary(1) | | | | | | | | | | | | |
($ in millions, except per share data) | | | | 2Q22 | | | | 2Q21 | | | | YTD 2022 | | | | YTD 2021 | | | | |
| | | | | | | | | | | | | | | | | | | | |
Revenue | | | | $2,500 | | | | $2,489 | | | | $4,907 | | | | $4,816 | | | | |
| | | | | | | | | | | | | | | | | | | | |
Operating income, GAAP | | | | $75.1 | | | | $96.9 | | | | $136.1 | | | | $243.6 | | | | |
Adj. Operating Income, Non-GAAP | | | | $113.6 | | | | $115.5 | | | | $218.5 | | | | $278.2 | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net income, GAAP | | | | $28.6 | | | | $65.9 | | | | $67.9 | | | | $135.5 | | | | |
Adj. Net Income, Non-GAAP | | | | $58.3 | | | | $80.1 | | | | $131.0 | | | | $191.5 | | | | |
| | | | | | | | | | | | | | | | | | | | |
Adj. EBITDA, Non-GAAP | | | | $155.6 | | | | $127.7 | | | | $274.1 | | | | $303.2 | | | | |
| | | | | | | | | | | | | | | | | | | | |
Net income per common share, GAAP | | | | $0.37 | | | | $0.87 | | | | $0.89 | | | | $1.80 | | | | |
Adj. Net Income per share, Non-GAAP(2) | | | | $0.76 | | | | $1.06 | | | | $1.72 | | | | $2.54 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(1) Reconciliations of the differences between the non-GAAP financial measures presented in this release and their most directly comparable GAAP financial measures are included in the tables below.
(2) Adjusted Net Income per share, Non-GAAP for Q2 2022 was unfavorably impacted as compared to prior year by foreign currency translation in the amount of $0.05 and $0.08 for the 2022 year-to-date period.
Q2 Results & Highlights
- Consolidated revenue of $2.5 billion
- Patient Direct revenue of $573 million, up 145%, with Byram revenue growth of 17% and Apria pro forma up 4.4%
- Products & Healthcare Services revenue of $1.9 billion, impacted by lower hospital procedure volume and the reduction of glove cost pass-through as expected
- Adjusted EBITDA of $156 million, up $28 million, with margin expansion of 110 basis to 6.2%
- Strong first full quarter contribution from Apria
- Productivity gains derived from the Owens & Minor business system
- Partially offset by headwinds created by macroeconomic and industry-specific conditions, and
- Unfavorable FX of $5 million
- Balance Sheet and Cash Flow
- Generated $90 million of cash from operations in the quarter and $170 million year-to-date
- Free cash flow (adjusted EBITDA less capital expenditures, net) of $107 million and $214 million year-to-date
- Reduced total debt by $67 million
- Business Highlights
- Received Premier Inc.’s 2022 Supplier Legacy Award in recognition of the value O&M provides to its members
- Broke ground on West Virginia center of excellence for medical supply logistics
- Hired Tammy Gomez as Executive Vice President and Chief Human Resources Officer
- Elected Rita Johnson-Mills, Terri Kline and Carissa Rollins to our Board of Directors
Financial Outlook
The Company’s outlook for 2022 is subject to the key assumptions below:
- Revenue for 2022 to be in a range of $9.8 billion to $10.1 billion, reflecting:
- Contribution in excess of $0.9 billion from Apria
- Now expect elective procedures for the full year to be below pre-pandemic levels due to the slow start experienced in the first half of 2022
- Continued expectation that PPE volumes will ease throughout the year
- Adjusted EBITDA for 2022 to be in a range of $570 million to $610 million, reflecting an increase related to Apria of approximately $180 million
- Adjusted EPS for 2022 to be in a range of $2.85 to $3.15, reflecting:
- Higher inflation and interest rates
- FX impact of $0.10, rates as of June 30, 2022
Investor Conference Call for Second Quarter 2022 Financial Results
Owens & Minor executives will host a conference call at 8:00 am. ET today, August 3, 2022, to discuss the results. The live webcast will be available on Owens & Minor’s Investor Relations website in the Events & Presentations section. Conference call participants are required to register in advance to obtain call-in information prior to the start of the call.
Safe Harbor
This release is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the SEC's Fair Disclosure Regulation. This release contains certain ''forward-looking'' statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the statements in this release regarding our expectations with respect to our 2022 financial performance, the Apria transaction, including related synergies and the expected performance of the Apria business, as well as statements related to the impact of COVID-19 on the Company’s results and operations and the Company’s expectations regarding the performance of its business including its ability to address macro and market conditions. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. Investors should refer to Owens & Minor’s
Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC including the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and subsequent quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC, for a discussion of certain known risk factors that could cause the Company’s actual results to differ materially from its current estimates. These filings are available at www.owens-minor.com. Given these risks and uncertainties, Owens & Minor can give no assurance that any forward-looking statements will, in fact, transpire and, therefore, cautions investors not to place undue reliance on them. Owens & Minor specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
About Owens & Minor
Owens & Minor, Inc. (NYSE: OMI) is a Fortune 500 global healthcare solutions company integrating product manufacturing and delivery, home health supply, and perioperative services to support care through the hospital and into the home. Owens & Minor drives visibility, control and efficiency for patients, providers and healthcare professionals across the supply chain with proprietary technology and solutions, an extensive product portfolio and an Americas-based manufacturing footprint for personal protective equipment (PPE) and surgical products, as well as a robust portfolio of products and services for patients managing chronic and acute conditions in the home setting. Operating continuously since 1882 from its headquarters in Richmond, Va., Owens & Minor is a 140-year-old company powered by more than 20,000 global teammates. Learn more at https://www.owens-minor.com, follow @Owens_Minor on Twitter and connect on LinkedIn at www.linkedin.com/company/owens-&-minor.
Owens & Minor, Inc.
Consolidated Statements of Operations (unaudited)
(dollars in thousands, except per share data)
| Three Months Ended June 30, |
| | 2022 | | | | 2021 |
Net revenue | $ | 2,500,015 | | | $ | 2,489,460 |
Cost of goods sold | | 1,967,510 | | | | 2,089,392 |
Gross margin | | 532,505 | | | | 400,068 |
Distribution, selling and administrative expenses | | 452,813 | | | | 294,096 |
Acquisition-related and exit and realignment charges | | 7,602 | | | | 8,624 |
Other operating (income) expense, net | | (2,995 | ) | | | 464 |
Operating income | | 75,085 | | | | 96,884 |
Interest expense, net | | 35,839 | | | | 11,540 |
Other expense, net | | 783 | | | | 1,028 |
Income before income taxes | | 38,463 | | | | 84,316 |
Income tax provision | | 9,859 | | | | 18,420 |
Net income | $ | 28,604 | | | $ | 65,896 |
| | | |
Net income per common share: | | | |
Basic | $ | 0.38 | | | $ | 0.90 |
Diluted | $ | 0.37 | | | $ | 0.87 |
Owens & Minor, Inc.
Consolidated Statements of Operations (unaudited)
(dollars in thousands, except per share data)
| Six Months Ended June 30, |
| | 2022 | | | | 2021 | |
Net revenue | $ | 4,906,967 | | | $ | 4,815,994 | |
Cost of goods sold | | 4,001,014 | | | | 3,973,175 | |
Gross margin | | 905,953 | | | | 842,819 | |
Distribution, selling and administrative expenses | | 732,553 | | | | 586,796 | |
Acquisition-related and exit and realignment charges | | 41,150 | | | | 14,587 | |
Other operating income, net | | (3,894 | ) | | | (2,141 | ) |
Operating income | | 136,144 | | | | 243,577 | |
Interest expense, net | | 47,858 | | | | 25,212 | |
Loss on extinguishment of debt | | — | | | | 40,433 | |
Other expense, net | | 1,565 | | | | 1,598 | |
Income before income taxes | | 86,721 | | | | 176,334 | |
Income tax provision | | 18,837 | | | | 40,848 | |
Net income | $ | 67,884 | | | $ | 135,486 | |
| | | |
Net income per common share: | | | |
Basic | $ | 0.92 | | | $ | 1.87 | |
Diluted | $ | 0.89 | | | $ | 1.80 | |
Owens & Minor, Inc.
Condensed Consolidated Balance Sheets (unaudited)
(dollars in thousands)
| June 30, | | December 31, |
| | 2022 | | | 2021 |
Assets | | | |
Current assets | | | |
Cash and cash equivalents | $ | 56,406 | | $ | 55,712 |
Accounts receivable, net of allowances of $14,922 and $18,003 | | 743,853 | | | 681,564 |
Merchandise inventories | | 1,525,331 | | | 1,495,972 |
Other current assets | | 108,612 | | | 88,564 |
Total current assets | | 2,434,202 | | | 2,321,812 |
Property and equipment, net of accumulated depreciation of $373,954 and $334,500 | | 595,888 | | | 317,235 |
Operating lease assets | | 278,291 | | | 194,006 |
Goodwill | | 1,656,308 | | | 390,185 |
Intangible assets, net | | 462,444 | | | 209,745 |
Other assets, net | | 128,145 | | | 103,568 |
Total assets | $ | 5,555,278 | | $ | 3,536,551 |
Liabilities and equity | | | |
Current liabilities | | | |
Accounts payable | $ | 1,137,337 | | $ | 1,001,959 |
Accrued payroll and related liabilities | | 97,829 | | | 115,858 |
Other current liabilities | | 334,198 | | | 226,204 |
Total current liabilities | | 1,569,364 | | | 1,344,021 |
Long-term debt, excluding current portion | | 2,565,613 | | | 947,540 |
Operating lease liabilities, excluding current portion | | 220,504 | | | 162,241 |
Deferred income taxes | | 107,181 | | | 35,310 |
Other liabilities | | 133,957 | | | 108,938 |
Total liabilities | | 4,596,619 | | | 2,598,050 |
Total equity | | 958,659 | | | 938,501 |
Total liabilities and equity | $ | 5,555,278 | | $ | 3,536,551 |
Owens & Minor, Inc.
Consolidated Statements of Cash Flows (unaudited)
(dollars in thousands)
| Six Months Ended June 30, |
(in thousands) | | 2022 | | | | 2021 | |
Operating activities: | | | |
Net income | $ | 67,884 | | | $ | 135,486 | |
Adjustments to reconcile net income to cash provided by operating activities: | | | |
Depreciation and amortization | | 97,286 | | | | 45,501 | |
Share-based compensation expense | | 11,210 | | | | 13,040 | |
Loss on extinguishment of debt | | — | | | | 40,433 | |
Provision for losses on accounts receivable | | 4,512 | | | | 15,777 | |
Deferred income tax expense (benefit) | | 1,601 | | | | (11,293 | ) |
Changes in operating lease right-of-use assets and lease liabilities | | 606 | | | | 826 | |
Loss on sale and dispositions of property and equipment | | 226 | | | | — | |
Changes in operating assets and liabilities: | | | |
Accounts receivable | | 16,275 | | | | (57,256 | ) |
Merchandise inventories | | (24,438 | ) | | | (298,294 | ) |
Accounts payable | | 12,349 | | | | 127,473 | |
Net change in other assets and liabilities | | (23,945 | ) | | | (3,363 | ) |
Other, net | | 5,958 | | | | 4,076 | |
Cash provided by operating activities | | 169,524 | | | | 12,406 | |
Investing activities: | | | |
Acquisition, net of cash acquired | | (1,684,607 | ) | | | — | |
Additions to property and equipment | | (62,236 | ) | | | (14,630 | ) |
Additions to computer software | | (3,463 | ) | | | (4,051 | ) |
Proceeds from sale of property and equipment | | 5,846 | | | | 22 | |
Other, net | | (839 | ) | | | — | |
Cash used for investing activities | | (1,745,299 | ) | | | (18,659 | ) |
Financing activities: | | | |
Proceeds from issuance of debt | | 1,691,000 | | | | 500,000 | |
Borrowings under revolving credit facility, net and accounts receivable securitization program | | 30,000 | | | | 5,000 | |
Repayments of debt | | (1,500 | ) | | | (523,140 | ) |
Borrowings under amended accounts receivable securitization program | | 347,800 | | | | — | |
Repayments under amended accounts receivable securitization program | | (402,800 | ) | | | — | |
Financing costs paid | | (41,479 | ) | | | (12,868 | ) |
Cash dividends paid | | — | | | | (364 | ) |
Payment for termination of interest rate swaps | | — | | | | (15,434 | ) |
Other, net | | (42,388 | ) | | | (17,982 | ) |
Cash provided by (used for) financing activities | | 1,580,633 | | | | (64,788 | ) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | | (3,864 | ) | | | (1,718 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | 994 | | | | (72,759 | ) |
Cash, cash equivalents and restricted cash at beginning of period | | 72,035 | | | | 134,506 | |
Cash, cash equivalents and restricted cash at end of period (1) | $ | 73,029 | | | $ | 61,747 | |
Supplemental disclosure of cash flow information: | | | |
Income taxes paid, net of refunds | $ | 25,782 | | | $ | 68,030 | |
Interest paid | $ | 32,417 | | | $ | 17,768 | |
Noncash investing activity: | | | |
Unpaid purchases of property and equipment at end of period | $ | 56,429 | | | $ | — | |
(1) Restricted cash included in Other assets, net as of June 30, 2022 and December 31, 2021 primarily represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) initiatives related to wind-down costs of Fusion5.
Owens & Minor, Inc.
Summary Segment Information (unaudited)
(dollars in thousands)
| Three Months Ended June 30, |
| 2022 | | | 2021 | |
| | | % of | | | | % of |
| | | consolidated | | | | consolidated |
| Amount | | net revenue | | Amount | | net revenue |
Net revenue: | | | | | | | |
Products & Healthcare Services | $ | 1,927,388 | | | 77.10 | % | | $ | 2,255,820 | | | 90.61 | % |
Patient Direct | | 572,627 | | | 22.90 | % | | | 233,640 | | | 9.39 | % |
Consolidated net revenue | $ | 2,500,015 | | | 100.00 | % | | $ | 2,489,460 | | | 100.00 | % |
| | | | | | | |
| | | % of segment | | | | % of segment |
Operating income: | | | net revenue | | | | net revenue |
Products & Healthcare Services | $ | 61,243 | | | 3.18 | % | | $ | 101,229 | | | 4.49 | % |
Patient Direct | | 52,332 | | | 9.14 | % | | | 14,305 | | | 6.12 | % |
Intangible amortization | | (30,888 | ) | | | | | (10,026 | ) | | |
Acquisition-related and exit and realignment charges | | (7,602 | ) | | | | | (8,624 | ) | | |
Consolidated operating income | $ | 75,085 | | | 3.00 | % | | $ | 96,884 | | | 3.89 | % |
| | | | | | | |
Depreciation and amortization: | | | | | | | |
Products & Healthcare Services | $ | 19,209 | | | | | $ | 18,847 | | | |
Patient Direct | | 53,952 | | | | | | 3,753 | | | |
Consolidated depreciation and amortization | $ | 73,161 | | | | | $ | 22,600 | | | |
| | | | | | | |
Capital expenditures: | | | | | | | |
Products & Healthcare Services | $ | 18,418 | | | | | $ | 11,806 | | | |
Patient Direct | | 36,320 | | | | | | 252 | | | |
Consolidated capital expenditures | $ | 54,738 | | | | | $ | 12,058 | | | |
Owens & Minor, Inc.
Summary Segment Information (unaudited)
(dollars in thousands)
| Six Months Ended June 30, |
| 2022 | | | 2021 | |
| | | % of | | | | % of |
| | | consolidated | | | | consolidated |
| Amount | | net revenue | | Amount | | net revenue |
Net revenue: | | | | | | | |
Products & Healthcare Services | $ | 4,061,429 | | | 82.77 | % | | $ | 4,365,265 | | | 90.64 | % |
Patient Direct | | 845,538 | | | 17.23 | % | | | 450,729 | | | 9.36 | % |
Consolidated net revenue | $ | 4,906,967 | | | 100.00 | % | | $ | 4,815,994 | | | 100.00 | % |
| | | | | | | |
| | | % of segment | | | | % of segment |
Operating income: | | | net revenue | | | | net revenue |
Products & Healthcare Services | $ | 150,325 | | | 3.70 | % | | $ | 251,647 | | | 5.76 | % |
Patient Direct | | 68,125 | | | 8.06 | % | | | 26,569 | | | 5.89 | % |
Intangible amortization | | (41,156 | ) | | | | | (20,052 | ) | | |
Acquisition-related and exit and realignment charges | | (41,150 | ) | | | | | (14,587 | ) | | |
Consolidated operating income | $ | 136,144 | | | 2.77 | % | | $ | 243,577 | | | 5.06 | % |
| | | | | | | |
Depreciation and amortization: | | | | | | | |
Products & Healthcare Services | $ | 38,203 | | | | | $ | 38,007 | | | |
Patient Direct | | 59,083 | | | | | | 7,494 | | | |
Consolidated depreciation and amortization | $ | 97,286 | | | | | $ | 45,501 | | | |
| | | | | | | |
Capital expenditures: | | | | | | | |
Products & Healthcare Services | $ | 29,061 | | | | | $ | 18,270 | | | |
Patient Direct | | 36,638 | | | | | | 411 | | | |
Consolidated capital expenditures | $ | 65,699 | | | | | $ | 18,681 | | | |
Owens & Minor, Inc.
Net Income per Common Share (unaudited)
(dollars in thousands, except per share data)
| Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | | 2021 | | | 2022 | | | 2021 |
Net income | $ | 28,604 | | $ | 65,896 | | $ | 67,884 | | $ | 135,486 |
| | | | | | | |
Weighted average shares outstanding - basic | | 74,710 | | | 72,818 | | | 74,158 | | | 72,474 |
Dilutive shares | | 1,587 | | | 2,987 | | | 2,011 | | | 2,791 |
Weighted average shares outstanding - diluted | | 76,297 | | | 75,805 | | | 76,169 | | | 75,265 |
| | | | | | | |
Net income per common share: | | | | | | | |
Basic | $ | 0.38 | | $ | 0.90 | | $ | 0.92 | | $ | 1.87 |
Diluted | $ | 0.37 | | $ | 0.87 | | $ | 0.89 | | $ | 1.80 |
Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited)
(dollars in thousands, except per share data)
The following table provides a reconciliation of reported operating income, net income and net income per share to non-GAAP measures used by management.
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2022 | | | | 2021 | | | | 2022 | | | | 2021 | |
Operating income, as reported (GAAP) | | $ | 75,085 | | | $ | 96,884 | | | $ | 136,144 | | | $ | 243,577 | |
Intangible amortization (1) | | | 30,888 | | | | 10,026 | | | | 41,156 | | | | 20,052 | |
Acquisition-related and exit and realignment charges(2) | | | 7,602 | | | | 8,624 | | | | 41,150 | | | | 14,587 | |
Operating income, adjusted (non-GAAP) (Adjusted Operating Income) | | $ | 113,575 | | | $ | 115,534 | | | $ | 218,450 | | | $ | 278,216 | |
Operating income as a percent of net revenue (GAAP) | | | 3.00 | % | | | 3.89 | % | | | 2.77 | % | | | 5.06 | % |
Adjusted operating income as a percent of net revenue (non-GAAP) | | | 4.54 | % | | | 4.64 | % | | | 4.45 | % | | | 5.78 | % |
| | | | | | | | |
Net income, as reported (GAAP) | | $ | 28,604 | | | $ | 65,896 | | | $ | 67,884 | | | $ | 135,486 | |
Intangible amortization (1) | | | 30,888 | | | | 10,026 | | | | 41,156 | | | | 20,052 | |
Income tax benefit (5) | | | (7,408 | ) | | | (2,411 | ) | | | (9,986 | ) | | | (5,197 | ) |
Acquisition-related and exit and realignment charges(2) | | | 7,602 | | | | 8,624 | | | | 41,150 | | | | 14,587 | |
Income tax benefit (5) | | | (1,823 | ) | | | (2,073 | ) | | | (9,985 | ) | | | (3,780 | ) |
Loss on extinguishment of debt (3) | | | — | | | | — | | | | — | | | | 40,433 | |
Income tax benefit (5) | | | — | | | | — | | | | — | | | | (10,477 | ) |
Other (4) | | | 525 | | | | 570 | | | | 1,049 | | | | 1,140 | |
Income tax benefit (5) | | | (127 | ) | | | (137 | ) | | | (254 | ) | | | (295 | ) |
Tax adjustment (7) | | | — | | | | (402 | ) | | | — | | | | (402 | ) |
Net income, adjusted (non-GAAP) (Adjusted Net Income) | | $ | 58,261 | | | $ | 80,093 | | | $ | 131,014 | | | $ | 191,547 | |
| | | | | | | | |
Net income per diluted common share, as reported (GAAP) | | $ | 0.37 | | | $ | 0.87 | | | $ | 0.89 | | | $ | 1.80 | |
Intangible amortization (1) | | | 0.30 | | | | 0.10 | | | | 0.41 | | | | 0.20 | |
Acquisition-related and exit and realignment charges(2) | | | 0.08 | | | | 0.09 | | | | 0.41 | | | | 0.14 | |
Loss on extinguishment of debt (3) | | | — | | | | — | | | | — | | | | 0.40 | |
Other (4) | | | 0.01 | | | | 0.01 | | | | 0.01 | | | | 0.01 | |
Tax adjustment (7) | | | — | | | | (0.01 | ) | | | — | | | | (0.01 | ) |
Net income per diluted common share, adjusted (non-GAAP) (Adjusted EPS) | | $ | 0.76 | | | $ | 1.06 | | | $ | 1.72 | | | $ | 2.54 | |
Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited), continued
(dollars in thousands)
The following tables provide reconciliations of net income and total debt to non-GAAP measures used by management.
| | Three Months Ended June 30, | | Six Months Ended June 30, | | Trailing Twelve Months Ended June 30, 2022 |
| | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
Net income, as reported (GAAP) | | $ | 28,604 | | $ | 65,896 | | $ | 67,884 | | $ | 135,486 | | $ | 153,988 |
Income tax provision | | | 9,859 | | | 18,420 | | | 18,837 | | | 40,848 | | | 33,154 |
Interest expense, net | | | 35,839 | | | 11,540 | | | 47,858 | | | 25,212 | | | 70,736 |
Intangible amortization (1) | | | 30,888 | | | 10,026 | | | 41,156 | | | 20,052 | | | 60,912 |
Other depreciation and amortization (6) | | | 42,273 | | | 12,575 | | | 56,131 | | | 25,448 | | | 81,494 |
EBITDA (non-GAAP) | | $ | 147,463 | | $ | 118,457 | | $ | 231,866 | | $ | 247,046 | | $ | 400,284 |
Acquisition-related and exit and realignment charges (2) | | | 7,602 | | | 8,624 | | | 41,150 | | | 14,587 | | | 60,639 |
Loss on extinguishment of debt (3) | | | — | | | — | | | — | | | 40,433 | | | — |
Other (4) | | | 525 | | | 570 | | | 1,049 | | | 1,140 | | | 2,188 |
EBITDA, adjusted (non-GAAP) (Adjusted EBITDA) | | $ | 155,590 | | $ | 127,651 | | $ | 274,065 | | $ | 303,206 | | $ | 463,111 |
| | Three Months Ended June 30, 2022 | | Six Months Ended June 30, 2022 |
EBITDA, adjusted (non-GAAP) (Adjusted EBITDA) | | $ | 155,590 | | | $ | 274,065 | |
Capital expenditures, net (8) | | | (48,666 | ) | | | (59,627 | ) |
Free Cash Flow (non-GAAP) | | $ | 106,924 | | | $ | 214,438 | |
| | June 30, |
| | | 2022 |
Total debt, as reported (GAAP) | | $ | 2,576,428 |
Cash and cash equivalents | | | 56,406 |
Net debt (non-GAAP) | | $ | 2,520,022 |
Owens & Minor, Inc.
GAAP/Non-GAAP Reconciliations (unaudited), continued
The following items have been excluded in our non-GAAP financial measures:
(1) Intangible amortization includes amortization of intangible assets established during purchase accounting for business combinations. These amounts are highly dependent on the size and frequency of acquisitions and are being excluded to allow for a more consistent comparison with forecasted, current and historical results and the results of our peers.
(2) Acquisition-related charges were $6.4 million and $38.3 million for the three and six months ended June 30, 2022 as compared to no acquisition-related charges for the three and six months ended June 30, 2021. Acquisition-related costs in 2022 consisted primarily of costs related to the Apria acquisition. Acquisition-related charges for the twelve months ended June 30, 2022 were $41.4 million and consisted primarily of costs related to the Apria acquisition. Exit and realignment charges were $1.2 million and $2.9 million for the three and six months ended June 30, 2022 and consisted primarily of severance and other charges associated with the reorganization of our segments. Exit and realignment charges were $8.6 million and $14.6 million for the three and six months ended June 30, 2021 and consisted primarily of an increase in reserves associated with certain retained assets of Fusion5, IT restructuring charges and other costs related to the reorganization of our U.S. operations. Exit and realignment charges for the twelve months ended June 30, 2022 were $19.2 million and consisted of costs associated with our strategic organizational realignment, wind-down costs related to Fusion5, IT restructuring charges and other items.
(3) Loss on extinguishment of debt for the six months ended June 30, 2021 includes the write-off of deferred financing costs and third party fees associated with the debt financing in March 2021 of $15.3 million and amounts reclassified from accumulated other comprehensive loss as a result of the termination of our interest rate swaps of $25.1 million.
(4) Other includes interest costs and net actuarial losses related to our retirement plans for the three and six months ended June 30, 2022 and 2021, as well as the twelve months ended June 30, 2022.
(5) These charges have been tax effected in the preceding table by determining the income tax rate depending on the amount of charges incurred in different tax jurisdictions and the deductibility of those charges for income tax purposes.
(6) Other depreciation and amortization includes depreciation expense for property and equipment and amortization for capitalized computer software.
(7) Includes tax adjustments associated with the estimated benefits under the Tax Cuts and Jobs Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
(8) Capital expenditures, net is defined as capital expenditures less the net book value of dispositions of property and equipment during the accounting period.
Use of Non-GAAP Measures
This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). In general, the measures exclude items and charges that (i) management does not believe reflect Owens & Minor, Inc.'s (the "Company") core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company's performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.
Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company's performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220803005240/en/
Alex Jost, CPA
Director, Investor Relations
Investor.Relations@owens-minor.com
Source: Owens & Minor, Inc.
