Executive Summary

Q2 2025 continuing operations (Patient Direct) delivered revenue of $681.9M, Adjusted EPS of $0.26, and Adjusted EBITDA of $96.6M; despite YoY and sequential margin improvement, reported GAAP EPS was a loss of $(1.09) due to transaction breakage and financing costs tied to the terminated Rotech deal and classification impacts from the planned divestiture .
Consensus estimates appear to have assumed pre-reclassification consolidated reporting; relative to S&P Global consensus for Q2 2025, Adjusted EPS was slightly below ($0.26 vs 0.276), and revenue appears far below (continuing ops $0.682B vs consolidated $2.731B) due to scope change; EBITDA was below consensus (Actual $96.6M vs $127.1M) – these “misses” are largely non-comparable because of the discontinued operations classification. Bolded below for awareness.*
The company classified Products & Healthcare Services (P&HS) as discontinued operations and announced a focused shift to become a pure-play Patient Direct business; 2025 guidance was rebased to continuing operations: revenue $2.76–$2.82B, Adjusted EBITDA $376–$382M, Adjusted EPS $1.02–$1.07 .
Management reiterated all net proceeds from the P&HS sale will be applied to debt reduction and flagged higher H2 stranded costs ahead of the divestiture close; near-term catalysts include the sale announcement and execution on Patient Direct growth initiatives (Sleep Journey, category expansion, pharmacy shift in diabetes) .

What Went Well and What Went Wrong

What Went Well

Adjusted EBITDA grew to $96.6M with margin expansion, driven by volume growth, improved collections, favorable product mix, productivity gains, and lower benefit costs; CFO: “adjusted EBITDA was $96.6M or 14.2% margin rate… driven by volume growth and improved collection rate, [and] margin favorable product mix” .
Patient Direct categories performed well: “sleep supplies led overall growth,” with urology and ostomy “very strong growth,” and new Chest Wall Oscillation line performed very well .
Working capital improvements and cash flow inflection: “cash provided from operating activity in Q2 was $38M,” reversing Q1 use, including significant working capital reduction of nearly $94M, driven by lower PNHS inventory and improved collections .

What Went Wrong

Diabetes revenue headwind from supplier disruptions and DME-to-pharmacy channel shift; management modified ordering quantities and delivery frequencies to avoid customer disruption, suppressing Q2 top line (rebound expected in H2, but below prior year given pharmacy shift) .
Terminated Rotech acquisition incurred a $80M transaction breakage fee and $18.3M transaction financing costs; both excluded from non-GAAP results but weighed on GAAP EPS .
Discontinued operations classification drove large non-cash charges (loss on classification to held for sale $649.1M and goodwill impairment $106.4M in Q2), resulting in net loss of $(869.1)M for the quarter on a consolidated basis .

Financial Results

Revenue, EPS, Margins vs Prior Periods and Estimates

Metric	Q2 2024	Q1 2025	Q2 2025	Consensus Q2 2025
Revenue ($USD Billions)	$0.660	$0.674	$0.682	$2.731*
GAAP EPS – Continuing Ops ($)	$(0.09)	$(0.32) consolidated; N/A continuing ops	$(1.09)	N/A*
Adjusted EPS ($)	$0.25	$0.23	$0.26	0.276*
Adjusted EBITDA ($USD Millions)	$91.1	$97.6 Patient Direct; $121.9 consolidated	$96.6	$127.1*
Adjusted Operating Margin (%)	7.99%	8.92% Patient Direct	8.34%	N/A*

Notes:

Revenue is continuing operations (Patient Direct) in Q2 2024 and Q2 2025; Q1 2025 revenue shown is Patient Direct segment net revenue for comparability .
Consensus estimates were based on S&P Global. The revenue consensus likely reflects consolidated pre-reclassification scope, rendering comparisons not apples-to-apples.*

Selected GAAP Detail (Q2 2025)

Item	Q2 2025
Transaction breakage fee	$80.0M
Transaction financing fees, net	$18.3M
Loss on classification to held for sale	$649.1M
Goodwill impairment charge	$106.4M
Loss from discontinued operations (net of tax)	$(785.2)M
Net loss (consolidated)	$(869.1)M

Segment/Category Notes

Q2 2025 results reflect continuing operations (primarily Patient Direct); P&HS is reported as discontinued operations .
Patient Direct drivers: sleep supplies led growth; urology and ostomy saw strong growth; diabetes headwind from supplier disruptions and DME-to-pharmacy shift .

KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Adjusted EBITDA ($M)	$91.1	$97.6 Patient Direct; $121.9 consolidated	$96.6
Adjusted Operating Income ($M)	$52.8	$60.1 Patient Direct; $61.3 consolidated	$56.9
Adjusted Operating Margin (%)	7.99%	8.92% Patient Direct	8.34%
Net Capital Expenditures – Continuing Ops ($M)	$24.9	$47.8 consolidated	$41.1
Net Debt ($M)	N/A	$1,888.0 (Mar 31, 2025)	$1,939.5 (Jun 30, 2025)

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025 – Consolidated)	Current Guidance (Q2 2025 – Continuing Ops)	Change
Revenue	FY 2025	$10.85–$11.15B	$2.76–$2.82B	Rebased to continuing ops
Adjusted EBITDA	FY 2025	$560–$590M	$376–$382M	Rebased; scope reduced
Adjusted EPS	FY 2025	$1.60–$1.85	$1.02–$1.07	Rebased; scope reduced
Adjusted Net Income	FY 2025	N/A	$81–$85M	New metric disclosed
Interest Expense (P&L)	FY 2025	$138–$142M (consolidated)	$97–$100M continuing ops	Rebased
Net Capital Expenditures	FY 2025	$180–$205M (consolidated)	$135–$145M (continuing ops)	Rebased
Adj. Effective Tax Rate	FY 2025	29.0%–30.0%	29.5%–30.5%	Slightly higher

Management highlighted that H2 profit path will not reflect typical Patient Direct seasonality due to anticipated stranded cost increases ahead of the P&HS divestiture close .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
P&HS divestiture	Sale process underway; actively engaged with advisor (Citi)	Classified as discontinued ops; in final stages; expecting announcement; proceeds 100% to debt reduction	Intensifying
Rotech acquisition	Planned financing and integration focus	Terminated; $80M breakage + $18.3M financing costs; strategy pivot to bolt-ons	Terminated
Stranded costs	Corporate cost allocations in transition	~$11M in Q2 (annualized near term); expected to rise near close then decline in 2026	Near-term up, medium-term down
Diabetes channel/supply	Strength in Q1; category leading growth	Supplier disruptions and DME→pharmacy shift weighed on Q2; rebound expected H2 but below prior year	Near-term headwind
Sleep Journey & categories	Investment paying off; category growth	Sleep supplies lead growth; smaller categories (e.g., Chest Wall Oscillation) performing well	Positive execution
Leverage & FCF	Debt reduction $647M over two years; 2025 cash flow improvement	Sale proceeds earmarked for debt; FCF guide framework ~$60–$70M for Patient Direct including interest	Balance sheet focus
Regulatory/competitive bidding	Not highlighted	Competitive bidding impacts likely out in 2028–2029; limited Medicare exposure (<20%); scale could help	Monitored risk
Tax legislation (“one big beautiful bill”)	N/A	Net positive to cash taxes and interest deductibility (163(j))	Supportive

Management Commentary

CEO on strategic focus: “We are… transitioning into a focused pure-play Patient Direct business… supported by favorable demographic trends and meaningful scale” .
CFO on Q2 drivers: “Adjusted EBITDA was $96.6M… driven by volume growth and improved collection rate, a margin favorable product mix, productivity gains and lower benefit costs” .
CFO on sale proceeds: “When we sell the PNHS business, 100% of the net proceeds will be applied to debt reduction” .
CFO on stranded costs: “$11M is a pretty good near-term annualized run rate… expect numbers to start to come down by back half of 2026” .
CEO on M&A posture post-Rotech: “More focused on smaller bolt-ons as we… increase free cash flow [and] pay down debt” .

Q&A Highlights

Stranded costs trajectory: ~$11M Q2 run-rate; expected to rise near divestiture close, then decline starting H2 2026 .
Diabetes outlook: rebound expected in H2; pharmacy channel shift continues; less than 20% Medicare exposure reduces competitive bidding risk .
Kaiser capitated contract: limited 2025 impact; bulk of transition in 2026; potential for stronger bottom-line with redeployment of equipment .
Free cash flow framework: Adjusted EBITDA $376–$382M; net capex $135–$145M; interest $97–$100M in continuing ops plus ~$30–$35M discontinued; FCF ~$60–$70M .
H2 margin step-down: primarily due to stranded cost increases if PNHS divestiture is announced; otherwise H1 run-rate is a reasonable ballpark .

Estimates Context

Q2 2025 Adjusted EPS: Actual $0.26 vs consensus $0.2758 – slight miss.*
Q2 2025 revenue: Actual continuing ops $0.682B vs consensus $2.731B – apparent large miss driven by reclassification to discontinued operations (non-comparable scope).*
Q2 2025 EBITDA: Actual $96.6M vs consensus $127.1M – below consensus; note that adjustments and continued ops scope affect comparability.*

Where estimates may need to adjust:

Street models should pivot to continuing operations (Patient Direct) scope, incorporating higher stranded costs in H2, diabetes pharmacy channel dynamics, and updated 2025 guidance ranges for revenue, Adjusted EBITDA, and Adjusted EPS .

Key Takeaways for Investors

Patient Direct fundamentals remain intact with margin expansion and category strength (sleep, urology, ostomy), but diabetes headwinds from supply disruptions and channel mix will temper H2 top-line .
Expect near-term stranded cost inflation around divestiture milestones; read H2 margin step-down as timing of cost actions rather than deterioration in underlying Patient Direct unit economics .
Significant non-GAAP add-backs (Rotech breakage/financing, classification/impairment) obscured GAAP loss; focus on continuing ops Adjusted EBITDA/Adjusted EPS trajectory and cash conversion .
All net proceeds from P&HS sale targeted to deleveraging; leverage and interest burden improve materially post-transaction – a key stock catalyst on announcement and close .
Rebased FY 2025 guidance (continuing ops) narrows focus; traders should watch for execution vs $2.76–$2.82B revenue and $376–$382M Adjusted EBITDA, and stranded cost cadence .
Regulatory risk (competitive bidding) appears extended (2028–2029) and manageable given limited Medicare exposure and scale; monitor updates but not a near-term thesis breaker .
Optionality: network expansion in home-based care (e.g., Optum preferred DME network for Apria/Byram announced Sep 15) supports medium-term Patient Direct growth narrative .

Footnote: *Values retrieved from S&P Global (Capital IQ) consensus via tool.

OWENS & MINOR INC/VA/ (OMI)·Q2 2025 Earnings Summary