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Why Owens & Minor Stock Just Dropped 22.5%

By Rich Smith - Mar 4, 2020 at 10:32AM

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An earnings beat, a sales miss, and future guidance all went awry.

What happened

Owens & Minor (OMI 1.21%) beat expectations in its Q4 earnings report this morning. Nonetheless, the stock is down for the global healthcare solutions company -- 22.5% as of 10:45 a.m. EST, and falling.

Heading into earnings, analysts had predicted Owens & Minor would earn $0.23 per share in adjusted (pro forma) profits on sales of $2.5 billion. Owens beat the earnings number, reporting a pro forma profit of $0.26 per share.  

A red arrow trending down, indicating a stock crash.

Image source: Getty Images.

So what

Unfortunately, it missed badly on sales, which came in below $2.2 billion.

CEO Edward Pesicka played up the "sequential improvement in adjusted operating income and adjusted earnings per share," adding that Owens & Minor is also "continuing to generate positive cash flow and reduce debt."

Under generally accepted accounting principles (GAAP), Owens & Minor's per-share quarterly loss improved from $4.37 a year ago to $0.65 in Q4 2019. For the year, GAAP losses improved from $7.28 lost in 2018, to $1.03 per share lost in 2019.

Free cash flow for the year improved 75% to $124 million as capital spending ebbed and cash from operations surged. And with the extra cash available, Owens & Minor was able to reduce its long-term debt load by about $139 million.

Now what

The earnings news wasn't all bad. Unfortunately, when matters turned to forward guidance, Owens & Minor disappointed investors again, promising adjusted net income for 2020 ranging from $0.50 to $0.60 per share. Analysts were looking for $0.76 per share -- and if you ask me, that, combined with the sales miss, is the real reason Owens & Minor shares are being punished so harshly today.

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Owens & Minor, Inc. Stock Quote
Owens & Minor, Inc.
$33.37 (1.21%) $0.40

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