Owens & Minor, Inc.
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General Company Info
Owens & Minor makes sure hospitals are prepared for major surgeries. A leading distributor of medical and surgical supplies, Owens & Minor carries some 180,000 products from about 1,200 manufacturers. Products distributed by the company include surgical dressings, endoscopic and intravenous products, needles, syringes, sterile procedure trays, gowns, and sutures. The firm also offers software, consulting, and other services to help customers manage their supplies. Owens & Minor's customers are primarily hospitals and health systems and the group purchasing organizations that serve them. It delivers products to roughly 4,000 health care providers from 50 distribution centers across the US.
The company's major suppliers include Johnson & Johnson and Covidien, whose products each account for 13% and 11%, respectively, of sales. The distributor sells some products under its own MediChoice label. To help bolster its core business, the company in 2006 acquired the acute-care medical and surgical supply distribution business of McKesson Medical-Surgical, a subsidiary of McKesson Corporation.
Group purchasing organization Novation accounts for more than 40% of the company's sales. Another GPO, Broadlane, accounts for more than 10%. Other customers include Premier (which represents some 1,500 hospitals, 15% of sales) and the U.S. Department of Defense.
As the health care industry has consolidated, so have the industries that serve it. To remain competitive, Owens & Minor has focused on providing supply chain management tools and services in addition to supplies. For example, it offers WISDOM, which provides online access to sales and other data and allows customers and suppliers to track inventory, usage, and other information to keep costs down. Its PANDAC offering helps operating rooms track and control their inventory.
More than 90% of Owens & Minor's sales come from acute-care hospitals and integrated healthcare networks (IHNs). The company also has an ongoing exclusive supplier agreement with the US Department of Defense.
Financial Information
Company Type / Public –NYSE: OMIHeadquarters
Fiscal Year-End / December
2006 Sales (mil.) / $5,533.7
1-Year Sales Growth / 14.8%
2007 Net Income (mil.) / $3,496.0
1-Year Net Income Growth / $48.8
2006 Employees / 4,600
1-Year Employee Growth / 24.3%
Operating Segments
Products and Services
OMSolutionsSM: supply chain consulting, implementation and outsourcing solutions
CostTrackSM: activity-based management program for hospitals and integrated healthcare systems
MediChoice®: high-quality economical medical and surgical products, and medical capital equipment
PANDAC®: wound closure inventory management program for the operating room in hospitals and integrated healthcare systems
SurgiTrackSM: procedural delivery program for the operating room in hospitals and surgery centers
eBusiness Solutions
OMDIRECTSM: online order entry and product information tool for hospitals and health systems.
WISDOM GOLDSM: Web-based decision support tool for healthcare customers and supplier partners
In the News
Department of Defense Renews Existing Prime Vendor Contracts with Owens & Minor for Medical & Surgical Supply Distribution Services - Jun 15, 2007 (BUSINESS WIRE)
Owens & Minor is pleased to announce the renewal of its existing multi-year, prime vendor contract for medical and surgical supply distribution services to the U.S. Department of Defense (DoD). Under terms of the agreement, Owens & Minor will serve the Army, Navy, Air Force, Marine Corps, federal civilian agencies, Coast Guard, and other non-DoD agencies. The award is effective until April 30, 2009. "We are pleased that Owens & Minor continues its excellent relationship with the Department of Defense," said Craig R. Smith, president and chief executive officer of Owens & Minor. "While this award represents a continuation of existing agreements, we are always seeking ways to expand our relations with the U.S. military."
Owens & Minor Completes Transition of Acquired Acute-Care Distribution Business - March 28, 2007 (BUSINESS WIRE)
Owens & Minor today announced that it has completed the transition of the acute-care distribution business acquired from McKesson Medical-Surgical Inc., a business unit of McKesson Corporation, on September 30, 2006. Immediately after the close of the transaction, Owens & Minor and McKesson launched a cooperative, six-month transition effort designed to achieve an orderly and rapid conversion of the customer base and transfer of inventory to Owens & Minor by the end of March 2007. In the approximately $169 million transaction, Owens & Minor acquired certain assets, including net inventory valued as of the closing date at approximately $122 million, customer contracts, and 10 leased warehouse facilities. "We are very proud of our teammates, especially those assigned to the transition team, for achieving our aggressive timetable for this large-scale conversion," said Craig R. Smith, president & chief executive officer of Owens & Minor. "Our teams are working to fine tune this new business so that we achieve additional benefits from greater productivity and efficiency in our distribution network this year. The cooperative conversion effort with McKesson proved to be a win-win for all concerned." As previously disclosed, the company continues to expect that the net dilutive effect of the McKesson transition in the first quarter of 2007 will be in a range $9 million to $12 million. Owens & Minor continues to expect that the transaction will be accretive in 2007, with acceleration of earnings growth in the second half of the year. The company will provide additional information concerning the impact of the acquired business when it releases first quarter 2007 financial results on April 18, 2007.
Top Competitors
Cardinal Health
McKesson Medical-Surgical
PSS World Medical
Sources: Company website, Hoovers.com, Yahoo! Finance, CNNMoney.com and Morningstar.com