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Why Owens & Minor's Shares Are Crashing 15.5% Today

By Todd Campbell - Feb 1, 2018 at 2:52PM

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Management's comments this morning did little to inspire investors.

What happened

After the company issued disappointing preliminary 2017 financials Thursday morning, shares in Owens & Minor (OMI -1.51%) are losing 15.5% of their value at 2:30 p.m. EST.

So what

Owens & Minor expects to report full-year revenue of between $9.2 billion and $9.32 billion and non-GAAP earnings per share (EPS) of between $1.58 and $1.61, excluding a $0.55 to $0.60 tailwind tax reform. Those figures are far south of the $9.41 billion in sales and $1.78 in non-GAAP EPS that Wall Street was expecting. The EPS figure was also below the company's previous guidance for non-GAAP EPS in the range of $1.75 to $1.85, which had been lowered from $1.90 to $2 after the third quarter of 2017 disappointed.

A man in a suit looks on as a giant red arrow crashes downward through a concrete floor.

IMAGE SOURCE: GETTY IMAGES.

Management's blaming the underperformance on weaker prices and margins in the fourth quarter, a longer than hoped sales cycle for its fee-for-service business, and supply issues with "certain larger manufacturers." It also indicated its healthcare and inventory expenses were higher than expected. 

CEO Cody Phipps said those "headwinds in our business" offset benefits from the progress the company's making on a restructuring it began last year. 

Now what

The healthcare supplies company plans to report its official 2017 results on Feb. 14 and until then, it wouldn't seem there's much reason to go bargain hunting and buy this stock. The company noted challenges in its domestic business, international business, and its proprietary products segment, and that's got me thinking this is a more widespread problem that may take a while for the company to get its arms around. Additionally, the company's knee deep integrating last year's acquisition of Byram Healthcare, and it has a planned acquisition of Halyard Health's surgical and infection business to deal with. Given the challenges in its business and the uncertainty associated with making these acquisitions a success, there are probably better stocks to buy. 

 

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Stocks Mentioned

Owens & Minor, Inc. Stock Quote
Owens & Minor, Inc.
OMI
$31.89 (-1.51%) $0.49

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