Benzinga  Nov 10  Comment 
Ocata Therapeutics Inc (NASDAQ: OCAT) shares touched a new 52-week high of $8.425 after the company agreed to be acquired by ASTELLAS PHARMA INC (OTC: ALPMY) for $8.50 per share. Owens & Minor, Inc. (NYSE: OMI) shares reached a new 52-week...
Market Intelligence Center  Nov 5  Comment 
After closing Wednesday at $36.26, Owens & Minor Inc. (OMI) presents an attractive opportunity to get a 3.67% return in just 134 days, which is an annualized return of 10% (for comparison purposes only). To enter this trade, sell one Mar. '16...
Forbes  Sep 15  Comment 
David Guzman has held the top IT role at a number of major companies including K-Mart, eBay Enterprise, Acxiom, and Owens & Minor. For the last four years, he has been the CIO of HD Smith, a multi-billion pharmaceutical products distribution and...
Forbes  Sep 9  Comment 
It’s official: OMI’s breakout hit “Cheerleader” has been named the Song of the Summer by Billboard—a sure sign that the season really is over. To do so, it beat out some pretty stiff competition from some of the biggest hits of the year.
Forbes  Sep 6  Comment 
Justin Bieber, Black Sab and Jason Derulo came up on the music-industry news radar as the hunt begins for music to sustain us for the rest of 2015 – and the search ended for songs of the summer. Here is some music to listen out for, and some to...
Forbes  Aug 28  Comment 
Whether or not the track gets a lot of airplay or streaming spins is immaterial at this point; surely, based on the names involved, it will. What?s more interesting?at least to me?is how song solidifies what OMI?s ?Cheerleader? signified: a...


Owens and Minor (NYSE: OMI) distributes disposable medical supplies such as gloves, needles, syringes to acute care units in hospitals. 95% of the company's $6.8 billion revenue in 2007 came from the sale of these products.[1] O&M differentiates itself from other medical supply distributors by offering complementary supply-chain management and consulting services for hospital customers. These services have successfully increased the number of customers O&M serves by 10% this past year, from approximately 4,100 hospitals in 2006 to approximately 4,500 hospitals in 2007.[1] The company's share of the US market for medical supplies distribution has also grown to 28% this past year.[2]

As part of its national plan for expansion, O&M entered the direct-to-consumer (DTC) supply business in January 2005, acquiring seven DTC distributors for a total of $22.7 million while also growing its private-label product line.[3] On September 30, 2006, O&M acquired the direct-to-consumer distributor McKesson Medical-Surgical Inc., a business unit of McKesson (MCK), for $152.1 million.[3] As a result of these acquisitions, O&M saw a 22.9% increase in revenue to $6.8 billion in 2007 from $5.5 billion in 2006.[1] However, profitability decreased seeing as how operating earnings were impacted by the $26 million cost of integrating the business of McKesson Medical-Surgical Inc.[4] On October 1, 2008, Owens and Minor also completed the acquisition of the Burrows Company, a privately held, Chicago-based DTC distributor of medical goods.[5]

Owens and Minor's greatest challenges come from its expansion into the DTC supply business as well as contractual limitations with its customers. O&M's expansion into the DTC supply business has led to an 11% increase in the company's expenses over the past three years.[6] The complexities and the binding nature of contracts in the medical distribution business, especially with large customers, forces Owens and Minor to incur greater costs on itself. This is exacerbated by the fact that Owens and Minor relies heavily on a limited number of customers. In 2007, the company's top three contracts accounted for approximately 70% of O&M's revenue.[6]

Business Overview

Approximately 95% of Owens and Minor's revenue comes from the distribution of consumable goods such as disposable gloves, needles, syringes, and other surgical and medical supplies.[1] O&M conducts its business with group purchasing organizations (GPOs) and integrated health networks (IHNs). GPOs and IHN's both act on behalf of groups of healthcare providers to obtain better pricing than is available to individual providers.

As of 2005, Owens and Minor has also expanded into the highly fragmented direct-to-consumer (DTC) diabetic supply market. O&M differentiates itself from other medical supply distributors by offering complementary supply-chain management and consulting services for hospital customers. [1]

Business Financials

In FY 2007, O&M increased revenue by 22.9% to $6.8 billion from $5.5 billion the previous year.[3] Similarly, net income increased by 50% to $72.7 million in 2007 from $48.8 million in 2006.[3] Operating earnings grew as well in 2007 to $143.2 million as compared to $102.8 million in 2006; however, earnings would have been greater if not for the $26 million costs incurred integrating McKesson Medical-Surgical Inc. [3]

Error creating thumbnail
This graph shows both revenue and net income for Owens and Minor over the past three years. Profit margin is superimposed to offer a visual of its trend over this time frame. [7]
Income Statement for FY 2005-2007 (Dollars in millions)
[7] 2007 2006 2005
Revenue $6,800 $5,533 $4,822
Gross Margin 714 596 516
Operating Income 143 102 117
Interest Expense, Net 22.9 13.3 11.9
Cost of revenue 6.085 4,936 4,306
Depreciation and amortization 31.8 25.7 18.4
Other operating income and expense, net (5.3) (3.7) (1.1)

As of 2007, 70% of Owens and Minor's revenue can be attributed to three GPO contracts with Novation, Broadlane, and Premier. These three GPO's represent over 4500 hospitals and approximately 2600 sub-acute care facilities.[6]

Business Segments

95% of Owens and Minor's revenue comes from its distribution of medical and surgical supplies.[8] O&M also provides its customers with a number of free management and consulting services that range from inventory management to logistics and clinical consulting.[8] Examples of these services include:

  • OMSolutions-- OMSolutions is O&M's supply-chain consulting and outsourcing business unit which provides supply-chain management consulting.
  • PANDAC-- PANDAC is O&M's operating-room inventory management program that helps hospitals maintain their inventory of surgical and medical tools.
  • SurgiTrack-- SurgiTrack is O&M's surgical supply service that assembles and delivers customized surgical kits to hospitals based on their operating room's schedule.
  • WISDOM Gold-- Wisdom Gold is O&M's Internet-based spending management service that helps clients gain control over their supplies and contracting efforts.
  • QSight-- QSight is a technological platform that helps clients track and manage physician-specific inventories.
  • O&M's Bone and Tissue Tracking System tracks implants so as to help clients meet regulatory standards and avoid expirations.

These services have successfully increased the number of customers O&M serves by 10% over the past year to approximately 4,500 hospitals from approximately 4,100 hospitals the previous year.[6]

Error creating thumbnail
This graph is a breakdown of Owens and Minor's largest customers. Owens and Minor's three largest customers are the GPO's Novation, Broadlane, and Premier.[6]

Trends and Forces

Contractual Limitations with GPOs Prevent Owens and Minor from Passing on Rising Costs to Customers

O&M's gross margin as a percentage of revenue for 2007 decreased to 10.51% from 10.78% in 2006 and 10.70% in 2005 as a result of contractual limitations with GPOs.[6] This decrease coincides with the end of Premier's contract in 2008 along with the maturation of Novation's and Broadlane's contracts.[6] After the pricing of a contract is determined between a supplier and a purchaser in the medical distribution business, the two parties settle on a cost-plus fee with the distributor. This fixed-percentage distribution fee normally remains constant over the designated term of a contract, limiting O&M's ability to pass up rising costs onto customers. [9] As contracts mature and costs rise, the supplier incurs a greater cost on itself and its gross margin decreases, as seen in the cases of Premier, Novation, and Broadlane.

Limited Number of Customers has led to High Dependence on O&M's Part

Owens and Minor relies heavily on a limited number of customers. In 2007, the company's top three GPOs contracts accounted for approximately 70% of O&M's revenue. O&M is a distributor for Novation, a GPO which represents the purchasing interests of more than 2,500 healthcare organizations and accounts for approximately 40% of the company's revenue in 2007.[6] O&M is also a distributor for Premier who represents more than 1,500 hospitals and accounts for 19% of the company's revenue in 2007.[6] O&M's third largest contract is with Broadlane, a GPO representing over 900 acute-care hospitals and more than 2,600 sub-acute-care facilities.[6] Broadlane accounted for 12% of O&M's revenue in both 2007 and 2006.[6] This dependence has limited Owens and Minor's bargaining options in regards to contracts for fear of losing a key customer.

Expansion into the Direct-to-Consumer Supply Business has led to rising costs

Since Owens and Minor's expansion into the DTC supply business in 2005, the company's expenses have grown by 11%, and its operating earnings have subsequently decreased by 14% through 2007.[10] These figures have not kept pace with the rate of revenue growth over the past three years.[10] With an increasing number of deliveries in the DTC business combined with increases in oil and gas prices, OMI saw its general and selling expenses increase by $73.3 million in 2007 -- a consistent trend since 2005.[10]


Owens & Minor differentiates itself by providing its clients with supply-chain management and consulting services. Also, with the development of its private-label product, Owens and Minor has been able to decrease dependence on large suppliers, like Covidien Ltd. (COV) and Johnson and Johnson. This past year, sales of products of Covidien Ltd. (COV) and JOHNSON & JOHNSON (JNJ) accounted for approximately 13% and 11%, respectively, of the company’s revenue.[8] Owens and Minor's private-label products range from diagnostic systems to nursing and patient equipment/apparel, products previously obtained from Covidien Ltd. (COV) and JOHNSON & JOHNSON (JNJ).

Owens and Minor's Primary Competitors

  • Baxter International (BAX)-- Baxter International is a global medical products and services company that specializes in medical devices, pharmaceuticals, and biotechnology.
  • Cardinal Health (CAH)-- Cardinal Health is a pharmaceutical distribution company that sells both branded and generic drugs.
  • MedLine Industries-- MedLine Industries is a manufacturer of medical supplies that serves hospitals, nursing homes, and home health agencies.

Primary Competitors
[11] 2007 Total Revenue (In millions) % Revenue Growth in 2007 2007 Net Profit Margin
Owens and Minor[11] $6,800 22.9% 1.07%
Cardinal Health [12] $86,800.00 12% 1.44%
MedLine Industries [13] $2,810 15% Not Available
Baxter International [14] $11,263.00 9% 15.16%


  1. 1.0 1.1 1.2 1.3 1.4 OMI 2007 10-K; Part 1: Business, Page 3
  2. Owens & Minor: "We've proven BI ROI"
  3. 3.0 3.1 3.2 3.3 3.4 OMI 2007 10-K; Part 1: Selected Financial Data, Pages13-14
  4. OMI 2008 INC/VA/ 10-K; Part 7: Management's Discussion and Analysis of Financial Condition and Results of Operations
  5. Owens & Minor Completes Acquisition of The Burrows Company, a Midwest-based Distributor
  6. 6.00 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 6.10 OMI 2007 10-K; Part 1: Business, Page 5
  7. 7.0 7.1 OMI 2007 10-K; Part 2: Consolidated Statements of Income, Page 25
  8. 8.0 8.1 8.2 OMI 2007 10-K; Part 1: Business, Page 4
  9. Stafford, Jeffrey. "Owens and Minor, Inc." in MorningStar. Updated on October 07, 2008.
  10. 10.0 10.1 10.2 OMI 2007 10-K; Part 1: Selected Financial Data, Page 15
  11. 11.0 11.1 stock:Owens_&_Minor_(OMI)/Filing/10-K/2008/F5413913#tx33496_8 OMI 2007 10-K; Part 1: Selected Financial Data, Page 13
  12. Cardinal Health Overview
  13. Medline Industries, Inc.
  14. Baxter International 2007 10-K Report
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki