Owens & Minor cuts net debt by $577 million; 3.5x debt ratio falling

By Devika Patel

Knoxville, Tenn., Feb. 20 – Owens & Minor, Inc. generated $741 million of operating cash flow in 2023, which helped to reduce net debt by $577 million in 2023, bringing the company’s net book leverage ratio down to 3.5x at the end of the year.

The company expects this ratio to continue declining to just above 3x by year-end 2024, with slower debt reduction due to operating cash flow normalizing in 2024.

“We continued to generate substantial operating cash flow of $112 million for the quarter and reached a full year total of $741 million, driven by robust working capital management and operating results,” executive vice president and chief financial officer Alex Bruni said on the company’s fourth quarter and year ended Dec. 31, 2023 earnings conference call on Tuesday.

“As a result of this significant cash flow, we reduced total debt by $49 million for the fourth quarter and by $403 million for the full year, bringing the balance to $2.1 billion at year-end.

“In addition, we reduced net debt by $76 million in the fourth quarter and by $577 million for the full year, bringing the balance to $1.9 billion.

“Net book leverage was 3.5x at the end of the fourth quarter.

“In 2024, we expect cash flow to normalize.

“We obviously had an extraordinary year in 2023.

“We expect to end the year with some debt paid down and just to be slightly north of the 3x leverage.”

The company’s top executive was pleased with the debt reduction and record operating cash flow.

“In fiscal 2023, we generated over $740 million of operating cash flow,” president and chief executive officer Ed Pesicka said on the call.

“That’s a tremendous number, which was an annual record for Owens & Minor.

“This cash flow performance helped to significantly strengthen our financial profile, as we reduced debt by nearly $600 million during the year.

“We’ve also had over $575 million in net debt reduction, another incredible milestone for our company,” Pesicka said.

Consolidated revenue for the full year was $10.3 billion.

Adjusted EBITDA was $170 million for the fourth quarter and $526 million for the full year.

Cash and cash equivalents were $243,037,000 as of Dec. 31, 2023, compared to $69,467,000 as of Dec. 31, 2022.

Long-term debt, excluding current portion, was $1,890,598,000 as of Dec. 31, 2023, compared to $2,482,968,000 as of Dec. 31, 2022.

Current portion of long-term debt was $206,904,000 as of Dec. 31, 2023, compared to $17,906,000 as of Dec. 31, 2022.

Owens & Minor is a Richmond, Va.-based health care technology company.

© 2015 Prospect News.
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