Owens & Minor, Inc. OMI delivered an impressive fourth-quarter result, surpassing analyst expectations on both earnings and revenues. This resulted in a massive 39% surge in its share price on Friday. The company’s ongoing strategic transformation, including the potential sale of its Products and Healthcare Services (P&HS) segment and the pending acquisition of Rotech, has also boosted investor confidence, leading to the sharp rise in its share price.

OMI’s focus on high-margin businesses, expansion in home healthcare and financial discipline position it well for sustainable growth. As the company moves forward with the potential sale of P&HS and the integration of Rotech, it appears poised for long-term value creation, making it an attractive prospect for investors.

OMI’s shares have lost 39.9% in the past six months against the medical products industry’s growth of 6.9%. The S&P 500 Index has gained 8.3% in the period.

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Strong OMI Q4 Performance Drives Market Confidence

Owens & Minor’s fourth-quarter results highlighted its steady progress. The company reported revenues of $2.7 billion, reflecting a 1.5% year-over-year increase and beating estimates by 0.7%. Earnings per share were $0.55, which outpaced estimates by 3.8%. The Products and Healthcare Services segment grew 0.5%, supported by stable same-store medical distribution sales but partially offset by lower blood prices and the knock-on effects of the IV fluid shortages due to last year’s hurricane.

Meanwhile, the Patient Direct segment experienced a 5% revenue increase, driven by strong demand in diabetes and sleep therapy products. Although sales of home respiratory therapies such as NIV and Oxygen declined during the quarter, these are expected to return to growth in 2025 based on encouraging reversal-trends late in the fourth quarter.

Additionally, OMI has successfully reduced its debt by $647 million over the past two years, enhancing its financial flexibility and reinforcing investor confidence.

Strategic Shift: Potential Sale of P&HS Segment

As part of its ongoing transformation, Owens & Minor is actively exploring the sale of its P&HS segment, which has garnered strong interest from potential buyers. On its fourth-quarter earnings call, OMI stated that it has received multiple inbound interest for the P&HS segment, raising the prospect of its sales sooner.

The move aligns with the company’s strategy of reinvesting in high-growth, high-margin areas like Patient Direct. By shifting capital allocation, Owens & Minor aims to streamline operations and enhance profitability, providing a clear long-term vision for investors.

OMI Patient Direct: Capitalizing on Market Trends

The Patient Direct segment continues to be a significant growth driver, benefiting from favorable demographic trends, such as an aging population and the increasing prevalence of chronic diseases. The expansion of home treatment options, including remote and in-home medical care, is further fueling demand for respiratory, diabetes and sleep therapy products. Owens & Minor has also made notable technological investments, including the launch of ByramConnect, a digital health coach designed to assist in diabetes management. These efforts demonstrate the company’s commitment to innovation and customer-centric healthcare solutions.

Rotech Acquisition: A Growth Catalyst for OMI

OMI remains optimistic about its pending $1.4 billion acquisition of Rotech, a provider of home respiratory and durable medical equipment. The acquisition should drive long-term shareholder value as it aligns with the company’s goal of focusing on its Patient Direct segment.

Despite delays in regulatory approval, management sees the deal as a key catalyst for future growth. The acquisition is expected to generate at least $50 million in cost synergies by year three, with the potential for even faster realization. The integration with Owens & Minor’s existing Apria platform is anticipated to enhance service offerings and drive market share gains, further strengthening its foothold in the homecare sector. Financially, the deal is likely to be neutral in year one and accretive by 15 cents per share in year two.

Owens & Minor, Inc. Stock Price Price

Owens & Minor, Inc. price | Owens & Minor, Inc. Quote

OMI 2025 Outlook: Strong Guidance and Shareholder Returns

Owens & Minor has provided strong guidance for 2025. It projects revenues to be in the range of $10.85-$11.15 billion, with growth primarily fueled by the Patient Direct segment. Adjusted EBITDA is expected to be between $560 million and $590 million, representing a 10% increase over the previous year. The company also anticipates an adjusted EPS range of $1.60-$1.85 per share, suggesting 13% year-over-year growth. Additionally, Owens & Minor has announced a $100 million share repurchase program, underscoring management’s confidence in its valuation and prospects.

Zacks Rank & Other Stocks to Consider

Currently, OMI carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Masimo MASI, Alphatec ATEC and Avenna Healthcare AVAH.

Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 6.1% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.

MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 14.41%. Its shares have risen 63.5% against the industry’s 1.9% decline in the past six months.

Alphatec, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 40% for 2025. Its earnings missed estimates in each of the trailing four quarters, delivering an average negative surprise of 12.60%.

ATEC’s shares have gained 77% against the industry’s 1.9% decline in the past six months.

Avenna Healthcare, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 666.7% for 2025.

AVAH delivered a trailing four-quarter average earnings surprise of 135.00%. The company is expected to release fourth-quarter results in March. Its shares have lost 21.8% in the past six months compared with the industry’s 2.9% decline.

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