Source : investing, Tuesday, 2024/7/23
Owens & Minor (NYSE: OMI), a global healthcare solutions company, today announced that it has agreed to acquire Rotech Healthcare Holdings, Inc., a provider of home medical equipment, for $1.36 billion in cash. After accounting for the expected tax benefits, the net acquisition cost is estimated at $1.32 billion..
This transaction is in line with Owens & Minor’s strategy to expand its direct patient segment and strengthen its position in the burgeoning home care market. Headquartered in Orlando, Florida, Rotech operates in 46 states with approximately 325 locations and has a workforce of more than 4,200 employees. In 2023, the company reported revenue of approximately $750 million and a profit margin before interest, tax, depreciation, depreciation and amortization approaching 30%.
Edward A. Bessica, President and CEO of Owens & Mainure, expressed enthusiasm about the acquisition, highlighting that it is a rare opportunity to incorporate a high-caliber company like Rotech into their portfolio. Pesica also emphasized the company’s disciplined approach to growth and its commitment to providing improved services to patients, providers and payers.
The acquisition is poised to enhance Owens & Minor’s offerings in several areas, including respiratory, sleep apnea, diabetes, and wound care, while providing access to the durable medical equipment market. It also aims to serve a wider customer base more effectively and meet the needs of patients with chronic conditions in a fragmented market..
Owens & Minor expects to achieve nearly US$50 million in synergies by the third year after the acquisition..
The deal, which is expected to close by the end of 2024, will be financed by a combination of cash and additional borrowing. Owens & Minor plans to reduce its debt to less than 3.0x within 24 months after the transaction is completed..
The acquisition received unanimous approval from the boards of directors of both companies and is subject to normal closing conditions, including Hart’s Scott Rodino Act..
The announcement comes alongside Owens & Minor’s preliminary second-quarter results and reaffirmation of its guidance for the full year 2024 in a separate press release. The information in this article is based on a press release from Owens & Minor.
In other recent news, global healthcare solutions firm Owens & Minor released its preliminary financial results for the second quarter of 2024, expecting steady performance despite a one-time income tax of $17 million..
The company’s second-quarter revenue is estimated to be between $2.65 billion and $2.67 billion, with adjusted earnings before interest, tax, depreciation and amortization of $123 million to $127 million. Owens & Minor maintains its 2024 revenue forecast of $10.5 billion to $10.9 billion and adjusted earnings before interest, tax, depreciation and amortization of $550 million to $590 million. These projections exclude the potential impact of the Acquisition of Rotech.
In equity analysis, Citibank Citi upgraded Owens & Minor’s stock position from neutral to buy, despite lowering its price target of $19.00. The decision follows a 40% drop in the company’s shares since the first quarter earnings report..
Meanwhile, Baird revised the company’s price target and lowered it to $19.00 while maintaining a neutral rating, reflecting broader challenges within the sector..
In operational developments, Owens & Minor has promoted Snehachesh Sarkar to the position of Executive Vice President and Chief Information Officer, indicating its commitment to enhancing its technological capabilities..
As Owens & Minor (NYSE: OMI) strategically moves to strengthen its direct patient segment through the acquisition of Rotech Healthcare, the company’s financial health and market position are in focus. According to InvestingPro data, the market capitalization of Owens & Minor is about US$1.17 billion, indicating a significant presence in the healthcare solutions sector. Despite the difficult period the company is going through with a P/E ratio currently at -30.04, the company’s valuation indicates a strong return on free cash flow, which is a positive sign for potential investors looking for companies that can generate cash..
InvestingPro’s advice indicates that Owens & Minor is a prominent player in the healthcare services and provider sector, which is in line with its recent move to acquire Rotech Healthcare and expand its home care services. Analysts are optimistic about the company’s future and expect Owens & Minor to make a profit this year. This is also supported by the fact that Owens & Minor Trade at a low revenue valuation multiplier, which may indicate that the stock is undervalued compared to its sales.
Investors interested in deeper analysis and additional insights about Owens & Minor can explore more InvestingPro tips, which include 11 additional company tips, by visiting https://www.investing.com/pro/OMI. To get up to 10% off an annual pro subscription and an annual or semi-annual pro+ subscription, use the coupon code PRONEWS24.
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