2015 Investor Meeting

Transcription

1 2015 Investor Meeting New York City December 4, 2015

2 Safe Harbor Except for historical information, the matters discussed in this presentation may constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risk factors are discussed in reports filed by the company with the Securities & Exchange Commission. All of this information is available at The company assumes no obligation, and expressly disclaims any such obligation, to update or alter information, whether as a result of new information, future events, or otherwise. 2

3 Introduction & Strategic Agenda 3

4 CEO First 100 Days Business Immersion Understand Changes We Need to Make Develop the Plan 4

5 Owens & Minor Overview A Global Healthcare Services Company $9+ billion Fortune 500 company Top two global healthcare markets 8,000 teammates Connecting the World of Medical Products to the Point of Care 60+ facility network across 15 countries Services support 5+ million procedures annually 4,400 provider and 2,000 manufacturer customers Unique Position Attacking complexity for both providers and manufacturers Enhancing the delivery of care 5

6 Change is Required Disruptive forces shaping our industry Manufacturer Margin Pressures Competitive Environment Provider Pricing Pressures Increasing Regulatory Pressures 6

7 We will Our Response to Industry Challenges Attack complexity in our business and with our customers Strengthen our role as the preferred channel partner Develop innovative, new solutions at the point of care Reposition & grow our business in exciting new areas 7

8 Strategy Repositioning to a global healthcare services company Drive operating leverage Grow global capabilities Expand solutions & services 3x Addressable Market 1x 8

9 Our Agenda IV I Build & align leadership II Strengthen domestic business III Execute our growth strategies Develop future strategies 9

10 Build & Align Leadership I Mix of internal and external talent Domestic to global orientation Alignment to strategic goals Purpose-driven culture Sustained results 10

11 Our Agenda IV I Build & align leadership II Strengthen domestic business III Execute our growth strategies Develop future strategies 11

12 Domestic Services II Market leader with long-standing relationships 90% of spend reachable in 4 hours Provider and manufacturer customers National network 43 facilities Buy/sell Fee-for-service Value added services Broad product selection Largest branded portfolio Value-oriented private label 12

13 Strengthen Domestic Services II Align the Organization for Effectiveness Strategic Supply Management Commercial Excellence Simplify organization Eliminate complexity & reduce costs Drive continuous improvement Quantify & deliver value Continuous Operations Improvement 13

14 Competing to Be Unique II Capabilities Approach Distributors / Wholesalers Logistics Providers Channel access Transaction processing Distributed network Final-mile delivery Point of care solutions Order aggregation Fee-for-service pricing Healthcare dedicated Transparent Services (vs. products) Partner with mfrs. 14

15 Case Studies - Domestic Services II Provider National system ~200 hospitals Manufacturer Clinical products 16 DCs across 4 continents Attack Complexity Solution Results JIT procedural solution 11 hospitals implemented ~$1m annual savings +66 targeted through 2016 Distributed network Direct-to-home solution Rationalized to 9 DCs $2m+ savings 15

16 Strategic Agenda IV I Build & align leadership II Strengthen domestic business III Execute our growth strategies Develop future strategies 16

17 Execute Growth Strategies III International Services Clinical & Procedural Solutions 17

18 International Services III 20+ service centers in 12 countries Recent expansion: Poland 90+ countries served Leader in cold chain distribution 500 temperature controlled vehicles Iceland Norway Sweden Finland Estonia Comprehensive value-added services 2,000 teammates serving 600 clients Ireland Latvia Denmark Lithuania UK Netherlands Poland Germany Czech Republic Slovakia France Switzerland Austria Hungary Portugal Spain Italy 18

19 Competing to Be Unique III Pan-European network Warehousing Transportation Order-to-Cash Value-Added Cold chain Air freight Customer service Labeling Frozen TL / LTL Order entry Packaging Controlled substances Security Package Ocean Cold chain Transportation management Accounts receivable Returns Chargebacks Postponement Kitting Analytics Regulatory Compliance and Quality Systems 19

20 International Services Case Studies III Trusted, valued partner Medical Device Manufacturer Expanding from 1 to 7 countries New relabeling and bundling services Growth partnership Value to Customer Streamlined operations Accelerated capital-light growth Aggregation & bundling Biopharmaceutical Manufacturer Expanding from 1 to 4 countries New cold chain, chain-of-custody services Partner in centralization efforts Value to Customer Cost savings Reduce complexity Security and control 20

21 Customers Capability Clinical & Procedural Solutions (CPS) III Establish global business platform Global Sourcing Custom kits Minor kits OR products Custom kits OR products Med/surg products Sourcing services Domestic Acute care providers Non-acute providers Europe Manufacturers Distributors Global OMI Manufacturers Distributors 21

22 CPS Competing to be Unique III Our approach Service vs. product orientation Transparency Choice Partnering with providers and manufacturers Reduce complexity Total procedural cost Our vision Enable better outcomes Improve clinical productivity 22

23 CPS Opportunities III Establish new global leadership Implement lean Consolidate global procurement Differentiate and expand services Domestic International Customers Provider Offering Manufacturer Offering Minor Kits Penetrate existing Execute pipeline Increase market share and expand margins 23

24 Strategic Agenda IV I Build & align leadership II Strengthen domestic business III Execute our growth strategies Develop future strategies 24

25 Develop Future Strategies IV Clinically Relevant Products International Bio-Pharma Diagnostics Devices Logistics Value Added Services Point of Care Solutions CPS Custom Kits Minor Kits OR Products Manufacturer Customers Commodity Distr. Domestic Medical-Surgical Provider Supply Chain Point of Care Services 25

26 Financial Outlook 26

27 $2.50 Earnings Expectations $ : Targeting $ EPS Ramp-up of strategic agenda 2015: Strong domestic performance Turnaround of Europe One time benefits $2.05, +5% Long-Term Goal: 8-10% Sustained Earnings Growth $2.00 ~$1.95, +11% $2.00, +3% $1.75 $ Series1 Series3 Note: Earnings and EPS based on adjusted earnings per diluted share, excluding acquisition-related and exit & realignment charges. 27

28 2016 Modeling Assumptions Targeting: $2.00 $2.05 adjusted EPS 1 Modeling GDP: US and European growth consistent with 2015 Utilization: positive bias, consistent with 2015 Inflation: minimal Commodity & fuel: consistent with 2015 FX: USD / EUR at parity Revenue growth: 1-3% Gross margin: % SG&A: % D&A: $55-60m Capital expenditures: $50-60m Adjusted effective tax rate: 35-37% Exit & realignment: $15m-20m 28 1.Excludes acquisition-related and exit & realignment charges.

29 Why OMI? Repositioning to a global healthcare services company Grow market share Drive operating leverage Grow global capabilities Expand solutions & services Expand margins Sustained 8-10% earnings growth 29

30 Questions? 30

31 GAAP Reconciliation In thousands, except per share amounts Three Months Ended, September 30 December 31 March 31 June 30 September 30 % of revenue % of revenue % of revenue % of revenue % of revenue Operating earnings, as reported (GAAP) $35, % $40, % $40, % $47, % $53, % Acquisition-related charges 4, % 7, % 2, % 1, % 1, % Exit and realignment charges 9, % 10, % 7, % 3, % 4, % Fair value adjustments related to purchase accounting % (3,706) -0.15% % % % Other % 3, % % % % Operating earnings, adjusted (Non-GAAP) $49, % $58, % $50, % $53, % $59, % Net income, as reported (GAAP) per diluted common share per diluted common share per diluted common share per diluted common share per diluted common share $7,155 $0.11 $13,987 $0.22 $18,940 $0.30 $24,226 $0.39 $28,176 $0.45 Acquisition-related charges, after-tax 3, , , , , Exit and realignment charges, after-tax 6, , , , , Fair value adjust. related to purchase accounting, after-tax - - (4,703) (0.07) Other, after-tax - - 3, Loss on early retirement of debt, after-tax 9, Net income, adjusted (Non-GAAP) $26,544 $0.42 $30,879 $0.49 $27,532 $0.44 $29,095 $0.46 $33,555 $0.54 Year Ended December 31, % of revenue % of revenue % of revenue % of revenue Operating earnings, as reported (GAAP) $203, % $196, % $198, % $159, % Acquisition-related charges % 10, % 3, % 16, % Exit and realignment charges 12, % (366) 0.00% 8, % 26, % Fair value adjustments related to purchase accounting % % % (3,706) -0.04% Other % % % 3, % Operating earnings, adjusted (Non-GAAP) $216, % $206, % $210, % $202, % Net income, as reported (GAAP) per diluted common share per diluted common share per diluted common share per diluted common share $115,198 $1.81 $109,003 $1.72 $110,882 $1.76 $66,503 $1.06 Acquis.-related and exit and realign. charges, after-tax 7, , , , Fair value adjust. related to purchase accounting, after-tax (4,703) (0.07) Other, after-tax , Loss on early retirement of debt, after-tax , Net income, adjusted (Non-GAAP) $123,191 $ 1.94 $117,203 $ 1.85 $119,738 $ 1.90 $110,101 $