Executive Summary

Q3 2025 delivered a mixed print on continuing operations: Adjusted EPS of $0.25 modestly beat S&P Global consensus ($0.235)* while revenue of $697.3M came in below the $704.1M consensus*, as the company managed product cost inflation and higher health benefits while cutting delivery/outsourcing/occupancy costs .*
Adjusted EBITDA of $92.2M declined YoY due to a $6M one-time benefit in Q3’24 and cost inflation, but management emphasized improved “earnings quality” and reaffirmed FY25 guidance (Revenue $2.76–$2.82B; Adjusted EPS $1.02–$1.07; Adjusted EBITDA $376–$382M) .
Strategic pivot: OMI signed a definitive agreement to sell the Products & Healthcare Services (P&HS) segment to Platinum Equity and will retain a 5% stake, positioning the public company as a pure-play home-based care platform (Patient Direct); the “Owens & Minor” name will follow the divested business and the public entity will rebrand .
Key near-term catalysts: execution of the Optum preferred DME provider agreement (ramp underway), clarity on CMS competitive bidding proposals for DME, progress on stranded-cost takeout after the P&HS close, and interest expense sensitivity; management flagged a large customer loss in 2026 (Kaiser), but said the contract was low-margin/FCF-negative and expects easier replacement on a profit basis .

What Went Well and What Went Wrong

What Went Well
- Patient Direct-led growth: Sleep therapy, ostomy and urology posted “decent” YoY growth; diabetes improved vs Q2 with efforts to boost adherence and capture more customers across DME and pharmacy .
- Strategic repositioning: Signed definitive agreement to sell P&HS to Platinum Equity; public entity becomes pure-play home-based care with simpler model and unified capital allocation; company to rebrand as “Owens & Minor” name follows P&HS .
- Preferred provider momentum: New national Optum preferred DME network agreement gives Apria and Byram preferred positioning across ~136k aligned clinicians; management expects it won’t take much new revenue to backfill the 2026 Kaiser loss from an EBITDA/FCF standpoint .
  Quote: “We will be a simpler, stronger company... our capital deployment, strategic direction, and execution are unified to drive sustainable growth and long-term value creation” – CEO Ed Pesicka .
What Went Wrong
- Top-line shortfall vs the Street: Q3 revenue of $697.3M missed consensus ($704.1M)* amid higher product costs and elevated health benefit costs; Adjusted EBITDA fell to $92.2M from $107.7M YoY (Q3’24 had a $6M one-time benefit) .*
- Cash flow optics pressured by discontinued ops: More than 100% of operating cash usage in Q3 and YTD came from discontinued operations; PNHS kitting facility startup led to temporary inventory overbuy and working capital drag (expected sop), with net debt up to ~$2.08B; management expects only slightly lower net debt by year-end .
- EPS headwinds (GAAP): GAAP EPS from continuing operations was a loss of $(0.07) due to interest expense and non-GAAP exclusions; interest expense assumptions increased within guidance allocations for continuing vs discontinued operations (EPS unchanged) .

Financial Results

Performance vs prior periods (Continuing operations unless noted). Periods are ordered oldest → newest.

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($M)	$686.8	$681.9	$697.3
Adjusted EPS ($)	$0.36	$0.26	$0.25
Adjusted EBITDA ($M)	$107.7	$96.6	$92.2
GAAP EPS – Continuing Ops ($)	$0.02	$(1.09)	$(0.07)
Adjusted Operating Margin (%)	10.11%	8.34%	8.34%
GAAP Operating Margin (%)	4.52%	(5.82)%	3.80%

Q3 2025 actuals vs S&P Global consensus

Metric	Actual	Consensus	Result
Revenue ($M)	$697.3	$704.1*	Miss
Primary EPS ($)	$0.25	$0.235*	Beat

Notes: Q3’24 included a $6M one-time revenue benefit that also flowed into Adjusted EBITDA, impacting YoY comparisons . Values marked with * are from S&P Global.

KPI snapshot

KPI	Q4 2024	Q2 2025	Q3 2025
Net Debt ($M)	$1,813.7	$1,939.5	$2,082.4
Net Capex – Continuing Ops ($M)	—	$41.1 (Q2)	$27.2 (Q3)
Levered FCF (Mgmt view)	—	$50.0 YTD est. (implied by $78M through 9M less Q3 $28M)	$28.0 (Q3)

Guidance Changes

Metric	Period	Previous Guidance (Q2 2025)	Current Guidance (Q3 2025)	Change
Revenue	FY 2025	$2.76–$2.82B	$2.76–$2.82B	Maintained
Adjusted EBITDA	FY 2025	$376–$382M	$376–$382M	Maintained
Adjusted EPS	FY 2025	$1.02–$1.07	$1.02–$1.07	Maintained
Interest Expense (assumption)	FY 2025	$97–$100M	$104–$107M	Increased
Net Capex (assumption)	FY 2025	$135–$145M	$135–$145M	Maintained
Gross Capex (assumption)	FY 2025	$205–$215M	$205–$215M	Maintained
Diluted Wtd Avg Shares	FY 2025	~80M	~80M	Maintained

Management expects FY revenue toward the low end of the range given Q4 seasonality and trends; higher interest allocation to continuing ops is expected to be offset by lower stock comp, leaving EPS unchanged .

Earnings Call Themes & Trends

Topic	Q1 2025 (Prior-2)	Q2 2025 (Prior-1)	Q3 2025 (Current)	Trend
Portfolio strategy	Exploring P&HS sale; Rotech acquisition planning; reaffirmed FY25 guidance	P&HS classified as discontinued ops, active sale process	Definitive agreement to sell P&HS to Platinum; retain 5% stake; rebrand public entity	Decisive pivot to pure-play home-based care
Home-based care growth	Patient Direct growth led by diabetes and sleep; margin expansion	Patient Direct “solid performance and growth”	Sleep/ostomy/urology growing; diabetes improving vs Q2; invest in automation/tech to scale	Execution on PD growth, tech investments
Regulatory (CMS DME bidding)	Monitoring tariffs/policy changes	—	CMS competitive bidding proposals noted; confident scale/quality positions OMI well	Watching policy; positioning as partner
Large customer contract	—	—	2026 loss of a large customer (Kaiser) disclosed; low-margin/FCF-negative; easier to replace profit	2026 headwind; manageable on EBITDA/FCF
Capital allocation & leverage	Work toward leverage target; disciplined deployment	—	Prioritize debt paydown; expect net debt slightly lower by YE; covenant compliance solid	Deleveraging focus; covenants in compliance
Supply chain/operations	—	—	PNHS kitting facility startup overbought inventory; near-term WC drag; to normalize in coming months	Transitory WC headwind (discontinued ops)
Preferred DME network	—	—	Optum preferred provider agreement effective Sept 1; ramping across ~136k providers	Early ramp, strategic channel access

Management Commentary

Strategic focus: “We will be a simpler, stronger company that is better positioned to execute on our mission of serving patients with chronic conditions in the home… our capital deployment, strategic direction, and execution are unified to drive sustainable growth and long-term value creation.” – CEO Ed Pesicka .
Earnings quality: “The $92M earned is an appropriate representation of cash earnings before interest and taxes… a cleaner and simpler investment story as a result of the divestiture.” – CFO John Leon .
2026 outlook caveat: “There’ll be a large customer loss in continuing operations in 2026… absent that, we expect a fairly strong 2026.” – CFO .
Optum ramp: “We have 450 forward-facing salespeople… preferred position within the Optum closed network… it won’t take much to replace [the lost contract] from a margin and EBITDA perspective.” – EVP Perry Bernocchi .
Liquidity/compliance: “Very comfortable in compliance [with covenants]… expect to remain comfortable throughout.” – CFO .

Q&A Highlights

2026 customer loss and replaceability: Management reiterated the departing customer (Kaiser) is low-margin/FCF-negative and expects limited revenue needed to offset EBITDA/FCF; more detail in the forthcoming 10-Q .
Free cash flow cadence: On a continuing ops basis, Q4 expected to look like Q3 with “nice free cash flow”; Q3 levered FCF cited at $28M and $78M YTD, even as consolidated cash usage was driven by discontinued ops working capital .
Balance sheet: Net debt rose with Rotech break fee (~$80M paid June) and PNHS kitting inventory overbuy; net debt likely only slightly lower by year-end; covenant compliance confirmed .
Optum preferred network: Early days, but the preferred positioning provides access to a large referral base; sales activation underway across >100k referral sources .
CMS DME competitive bidding: OMI confident scale and quality position it well; active engagement with industry and advocacy groups .

Estimates Context

Q3 2025: Adjusted/Primary EPS of $0.25 beat the S&P Global consensus of $0.235*; Revenue of $697.3M missed the $704.1M consensus*. Management reaffirmed FY25 guidance but expects revenue toward the low end of the range .*
Forward quarters: Street models modest EPS in Q4 2025 ($0.227*), with EPS normalizing into 2026 amid portfolio simplification and stranded-cost actions; revenue consensus implies low single-digit sequential growth in Q4 and lower seasonality in early 2026*.
Values marked with * are from S&P Global.

Key Takeaways for Investors

The portfolio transformation to a pure-play home-based care platform is the core narrative; execution on the Optum preferred provider agreement and rebranding post-P&HS close are potential multiple catalysts .
Q3 showed an EPS beat but revenue miss; YoY EBITDA pressure was partly a comp effect from a $6M Q3’24 one-time benefit and inflationary costs; FY25 guide intact, with revenue biased to the low end .
Watch interest expense and stranded costs: interest allocation to continuing ops increased, offset by lower stock comp (EPS unchanged); stranded costs expected at ~$40M annualized post-close with planned actions thereafter .
Balance sheet discipline is a focus: management prioritizes debt paydown; net debt at $2.08B as of Q3; covenants in compliance; FCF generation in continuing ops is improving even as discontinued ops distort consolidated optics .
2026 “customer loss” creates a known headwind, but management frames it as margin/FCF-accretive to exit; watch for incremental preferred-provider wins to backfill mix profitably .
Regulatory backdrop (CMS DME bidding) is a risk to monitor, but OMI highlights scale/quality as competitive advantages; any clarity on bidding outcomes could reduce uncertainty .
Near-term stock drivers: transaction close timing for P&HS, evidence of Optum ramp in PD categories (sleep/diabetes), interest expense trajectory, and progress on stranded cost removal and deleveraging .

S&P Global estimates disclaimer: Values marked with * are retrieved from S&P Global and may reflect definitional differences versus company-reported non-GAAP metrics.

Sources: Press release and 8-K for Q3 2025 including exhibits and reconciliations ; Q2 2025 8-K/press release and reconciliations ; Q1 2025 8-K/press release and segment data ; Q3 2025 earnings call transcript (prepared remarks and Q&A) ; Optum preferred DME network press release ; Platinum Equity acquisition release .

OWENS & MINOR INC/VA/ (OMI)·Q3 2025 Earnings Summary