Executive Summary

Q1 2025 results were mixed: revenue rose 0.7% y/y to $2.632B but was slightly below S&P Global consensus ($2.662B), while Adj. EPS of $0.23 beat the $0.201 Street mean; Adj. EBITDA of $121.9M also exceeded the $116.7M* consensus . Values with asterisk are from S&P Global.
Patient Direct (PD) drove the quarter with 6% y/y revenue growth, 173 bps operating margin expansion, and broad-based category strength (Sleep, Diabetes, Wound, Ostomy, Urology); P&HS saw same-store gains in Medical Distribution but faced FX and commodity headwinds .
Management reaffirmed full-year 2025 outlook (Revenue $10.85–$11.15B; Adj. EBITDA $560–$590M; Adj. EPS $1.60–$1.85) and kept modeling assumptions intact (gross margin 20.75–21.25%, interest $138–$142M, capex $250–$270M) .
Tariffs are the key swing factor: annual exposure estimated at $100–$150M, concentrated in P&HS; SKU-level price increases begin in early June to pass through higher costs; potential working-capital timing impact flagged .

What Went Well and What Went Wrong

What Went Well
- Patient Direct strength and margin expansion: “operating income grew by 31% or $14 million, resulting in a 173 basis point expansion,” with Sleep starts higher and high-single-digit growth in Sleep Supplies; record collections in Byram from enhanced revenue cycle efforts .
- Cost controls and leverage: DS&A down to 17.6% of sales vs 18.3% y/y; interest expense declined ~$1.7M y/y on lower average borrowings .
- Execution and network capabilities: Opened new state-of-the-art distribution centers (Morgantown, WV; Sioux Falls, SD) and increased proprietary product penetration in distribution .
What Went Wrong
- Consolidated margin pressure: despite PD gross margin +40 bps, consolidated gross margin fell ~50 bps y/y on nitrile cost inflation and an “abnormally large” FX move within P&HS (about $3M negative impact to adjusted operating income) .
- Cash flow usage in Q1: Cash used in operations of $(35.1)M driven by inventory build ahead of DC openings and tariffs, incentive comp timing, and ~$23M of Rotech/P&HS sale process costs .
- P&HS profitability is thin: operating income of $1.153M (0.06% margin) despite top-line stability; PD remains the earnings engine .

Financial Results

Consolidated performance vs prior quarters

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$2.721	$2.696	$2.632
Gross Profit ($USD Millions)	$559.706	$579.766	$526.013
Gross Margin %	20.6% (calc. from )	21.5%	20.0% (calc. from )
DS&A ($USD Millions)	$469.798	$493.066	$462.352
Adjusted EBITDA ($USD Millions)	$141.821	$138.212	$121.855
Net (Loss) GAAP ($USD Millions)	$(12.770)	$(296.117)	$(24.982)
Adjusted EPS ($)	$0.42	$0.55	$0.23

Results vs S&P Global consensus (Q1 2025)

Metric	Actual	Consensus	Surprise
Revenue ($USD Billions)	$2.632	$2.662*	(1.1%)
Adjusted EBITDA ($USD Millions)	$121.855	$116.691*	+$5.2M
Adjusted/Normalized EPS ($)	$0.23	$0.20096*	+$0.03

Values marked with * are from S&P Global; “Adjusted” uses company non-GAAP definitions; consensus methodologies may differ.

Segment breakdown

Segment	Q3 2024 Revenue ($M)	Q4 2024 Revenue ($M)	Q1 2025 Revenue ($M)
Products & Healthcare Services (P&HS)	2,034.279	2,001.050	1,958.164
Patient Direct (PD)	686.846	695.023	673.884
Total	2,721.125	2,696.073	2,632.048

Segment	Q3 2024 Op Inc ($M)	Q4 2024 Op Inc ($M)	Q1 2025 Op Inc ($M)
P&HS	4.233	25.825	1.153
PD	79.932	69.558	60.141

KPIs and balance sheet/cash flow

KPI	Q3 2024	Q4 2024	Q1 2025
Capex ($M)	$61.518	$71.436	$64.674
Cash from Operations ($M)	$27.307	$71.001	$(35.066)
Net Debt ($M)	$1,839.520	$1,804.214	$1,888.026
PD Operating Margin (%)	11.64%	10.01%	8.92%

Guidance Changes

Metric	Period	Previous Guidance (Feb 28, 2025)	Current (May 8, 2025)	Change
Revenue	FY 2025	$10.85B–$11.15B	$10.85B–$11.15B	Maintained
Adjusted EBITDA	FY 2025	$560M–$590M	$560M–$590M	Maintained
Adjusted EPS	FY 2025	$1.60–$1.85	$1.60–$1.85	Maintained
Gross Margin	FY 2025	20.75%–21.25%	20.75%–21.25%	Maintained
Interest Expense	FY 2025	$138M–$142M	$138M–$142M	Maintained
Gross Capex	FY 2025	$250M–$270M	$250M–$270M	Maintained
Net Capex	FY 2025	$180M–$205M	$180M–$205M	Maintained
Adj. Effective Tax Rate	FY 2025	29%–30%	29%–30%	Maintained
Diluted Shares	FY 2025	~80M	~80M	Maintained

Notes: Guidance excludes any impact from the planned Rotech acquisition, any P&HS segment transaction, future repurchases, or policy shifts (e.g., tariffs) .

Earnings Call Themes & Trends

Topic	Q3 2024 (Nov 4)	Q4 2024 (Feb 28)	Q1 2025 (May 8)	Trend
Patient Direct performance	PD revenue +6% y/y; strong Diabetes/Sleep; PD op margin ~11.6%	PD mid-single-digit growth; NIV/Oxygen lagging but improving late Q4	PD revenue +6% y/y; Sleep starts up; record collections; PD op margin +173 bps y/y	Improving mix and execution
P&HS optimization/sale	Operating model realignment, proprietary expansion	Sale process publicly underway, strong inbound interest	“Actively engaged” with buyers; continuing execution in MD; DC openings	Ongoing; execution while marketing asset
Tariffs/cost pass-through	Not a key focus	Limited China/Mexico exposure quantified; pass-through required	$100–$150M exposure; SKU-level pricing in early June; mitigate via sourcing and US mfg	Significant 2025 focus; execution risk manageable
FX/commodities	Normalizing	LIFO credit Q4; expect small 2025 LIFO charge	FX volatility in March hurt P&HS (~$3M); nitrile costs up	Monitoring; net headwind in Q1
Rotech acquisition	Financing prep ongoing	Expect H1’25 close; cost synergies likely >$50M by year 3, faster timeline; buyback auth. $100M	Financing in place; notes priced 10.0% due 2030 (Apr 2) ; guidance excludes Rotech	Advancing toward potential close; accretion timing to update post-close
Supply chain/operations	MD same-store growth; proprietary push	Continued network/automation investments	Opens Morgantown & Sioux Falls DCs; automation initiatives	Capacity and service upgrades

Management Commentary

“Our top line grew in the mid-single digits in [Patient Direct]… operating income grew by 31%… resulting in a 173 basis point expansion.”
“We anticipate the annual exposure of current tariffs on our products to be in the range of $100 million to $150 million… we are… implementing price increases… effective in early June.”
“Gross profit… $526 million… although gross margin expanded by 40 bps in Patient Direct… consolidated gross margin… down by about 50 basis points” due to nitrile costs and FX .
“We reaffirmed guidance for the year and continue to expect improving results in each subsequent quarter… at least 70% of earnings and cash flow generated in the second half.”
“We remain actively engaged in the sale process of our Products & Healthcare Services segment.”

Q&A Highlights

Tariffs pass-through and customer dynamics: Pricing increases will be SKU-level (not blended) to align with tariff policy; alternatives offered via diversified sourcing and US manufacturing; most exposure in P&HS, minimal in PD .
FX outlook: March volatility has “subsided quite a bit”; guidance assumes calmer FX; FX impact largely in P&HS .
Rotech financing/impact: Term B accrues interest before end of May; guidance unchanged until close; debt came ~50 bps higher than initial expectation; base case still neutral year 1, accretive year 2, with larger/faster synergies than prior $50M yr-3 view .
Free cash flow: Despite Q1 working-capital build and ~$23M deal costs, full-year cash flow outlook unchanged; management still targets meaningful FCF for debt reduction .
Phasing: June pricing aligns with when higher-tariff inventory hits COGS; temporary working-capital timing risk as tariffs are paid before AR collection .

Estimates Context

Q1 2025 comparison to S&P Global consensus: Revenue $2.632B vs $2.662B*; Adj/Normalized EPS $0.23 vs $0.201*; EBITDA $121.9M vs $116.7M* .
FY 2025 Street EPS mean is $1.020*, below company guidance ($1.60–$1.85), suggesting potential upward revisions if execution on pricing/FX/PD momentum persists; both revenue and EPS had six estimates for Q1 and FY 2025* (coverage depth modest). Values with asterisk are from S&P Global.

Key Takeaways for Investors

Patient Direct remains the growth and profit engine; execution on Sleep/Diabetes and improving NIV/Oxygen should support margin resilience even amid macro/fx volatility .
Tariff pass-through is the pivotal 2025 catalyst: smooth implementation of SKU-level pricing in June, customer acceptance, and alternative sourcing will determine P&HS margin trajectory and working-capital cadence .
Guidance credibility strengthened by reaffirmation; 2H-weighted earnings/FCF profile intact; monitor FX and nitrile cost trends for potential variance .
Strategic optionality: active P&HS sale process and (pre-close) Rotech financing at 10% notes set the stage for a more PD-centric portfolio; valuation could re-rate on portfolio simplification and deleveraging progress .
Near-term trading setup: modest top-line miss vs. beat on EPS/EBITDA and reiterated guidance frames a “show-me” quarter; June pricing update and any P&HS sale/Rotech regulatory developments are key stock catalysts over the next 1–2 months .
Balance sheet focus continues: after Q1 working-capital use and deal costs, management still targets meaningful FCF to reduce debt; monitor net debt trend and interest expense vs. guidance .

Values retrieved from S&P Global: consensus estimates marked with *.

OWENS & MINOR INC/VA/ (OMI)·Q1 2025 Earnings Summary