omi-20210331
0000075252--12-312021Q1FALSE00000752522021-01-012021-03-31xbrli:shares00000752522021-04-29iso4217:USD00000752522020-01-012020-03-31iso4217:USDxbrli:shares00000752522021-03-3100000752522020-12-3100000752522019-12-3100000752522020-03-310000075252us-gaap:CommonStockMember2019-12-310000075252us-gaap:AdditionalPaidInCapitalMember2019-12-310000075252us-gaap:RetainedEarningsMember2019-12-310000075252us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000075252us-gaap:RetainedEarningsMember2020-01-012020-03-310000075252us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000075252us-gaap:CommonStockMember2020-01-012020-03-310000075252us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310000075252us-gaap:CommonStockMember2020-03-310000075252us-gaap:AdditionalPaidInCapitalMember2020-03-310000075252us-gaap:RetainedEarningsMember2020-03-310000075252us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000075252us-gaap:CommonStockMember2020-12-310000075252us-gaap:AdditionalPaidInCapitalMember2020-12-310000075252us-gaap:RetainedEarningsMember2020-12-310000075252us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000075252us-gaap:RetainedEarningsMember2021-01-012021-03-310000075252us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000075252us-gaap:CommonStockMember2021-01-012021-03-310000075252us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000075252us-gaap:CommonStockMember2021-03-310000075252us-gaap:AdditionalPaidInCapitalMember2021-03-310000075252us-gaap:RetainedEarningsMember2021-03-310000075252us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000075252us-gaap:DiscontinuedOperationsHeldforsaleMemberomi:MoviantoMember2020-06-180000075252us-gaap:DiscontinuedOperationsHeldforsaleMemberomi:MoviantoMember2020-01-012020-03-310000075252us-gaap:DiscontinuedOperationsHeldforsaleMemberomi:MoviantoMember2021-03-310000075252us-gaap:DiscontinuedOperationsHeldforsaleMemberomi:MoviantoMember2020-12-310000075252omi:GlobalSolutionsMember2020-12-310000075252omi:GlobalProductsMember2020-12-310000075252omi:GlobalSolutionsMember2021-01-012021-03-310000075252omi:GlobalProductsMember2021-01-012021-03-310000075252omi:GlobalSolutionsMember2021-03-310000075252omi:GlobalProductsMember2021-03-310000075252us-gaap:CustomerRelationshipsMember2021-03-310000075252us-gaap:TradeNamesMember2021-03-310000075252us-gaap:OtherIntangibleAssetsMember2021-03-310000075252us-gaap:CustomerRelationshipsMember2020-12-310000075252us-gaap:TradeNamesMember2020-12-310000075252us-gaap:OtherIntangibleAssetsMember2020-12-310000075252us-gaap:CustomerRelationshipsMember2021-01-012021-03-310000075252us-gaap:TradeNamesMember2021-01-012021-03-310000075252us-gaap:OtherIntangibleAssetsMember2021-01-012021-03-310000075252us-gaap:CustomerRelationshipsMember2020-01-012020-12-310000075252us-gaap:TradeNamesMember2020-01-012020-12-310000075252us-gaap:OtherIntangibleAssetsMember2020-01-012020-12-310000075252omi:GlobalSolutionsMember2020-01-012020-03-310000075252omi:GlobalProductsMember2020-01-012020-03-310000075252omi:InformationSystemCostsMember2021-01-012021-03-310000075252omi:LeaseObligationsMember2021-01-012021-03-310000075252us-gaap:OtherRestructuringMember2021-01-012021-03-310000075252omi:EmployeeSeveranceAndOtherCostMember2020-01-012020-03-310000075252omi:InformationSystemCostsMember2020-01-012020-03-310000075252omi:LeaseObligationsMember2020-01-012020-03-310000075252us-gaap:OtherRestructuringMember2020-01-012020-03-310000075252omi:Fusion5Member2021-01-012021-03-310000075252us-gaap:SpecialTerminationBenefitsMember2021-01-012021-03-310000075252us-gaap:SpecialTerminationBenefitsMember2020-01-012020-03-31xbrli:pure0000075252omi:A4.375SeniorNotesMemberus-gaap:SeniorNotesMember2021-03-310000075252us-gaap:CarryingReportedAmountFairValueDisclosureMemberomi:A4.375SeniorNotesMemberus-gaap:SeniorNotesMember2021-03-310000075252us-gaap:EstimateOfFairValueFairValueDisclosureMemberomi:A4.375SeniorNotesMemberus-gaap:SeniorNotesMember2021-03-310000075252us-gaap:CarryingReportedAmountFairValueDisclosureMemberomi:A4.375SeniorNotesMemberus-gaap:SeniorNotesMember2020-12-310000075252us-gaap:EstimateOfFairValueFairValueDisclosureMemberomi:A4.375SeniorNotesMemberus-gaap:SeniorNotesMember2020-12-310000075252omi:A4500SeniorNotesMemberus-gaap:SeniorNotesMember2021-03-310000075252us-gaap:CarryingReportedAmountFairValueDisclosureMemberomi:A4500SeniorNotesMemberus-gaap:SeniorNotesMember2021-03-310000075252omi:A4500SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2021-03-310000075252us-gaap:CarryingReportedAmountFairValueDisclosureMemberomi:A4500SeniorNotesMemberus-gaap:SeniorNotesMember2020-12-310000075252omi:A4500SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2020-12-310000075252omi:TermLoanMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberomi:TermLoanA2Member2021-03-310000075252omi:TermLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberomi:TermLoanA2Member2021-03-310000075252omi:TermLoanMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberomi:TermLoanA2Member2020-12-310000075252omi:TermLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberomi:TermLoanA2Member2020-12-310000075252omi:TermBLoansMemberomi:TermLoanMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-03-310000075252omi:TermBLoansMemberomi:TermLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310000075252omi:TermBLoansMemberomi:TermLoanMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000075252omi:TermBLoansMemberomi:TermLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310000075252us-gaap:RevolvingCreditFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:RevolvingCreditFacilityMember2021-03-310000075252us-gaap:RevolvingCreditFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:RevolvingCreditFacilityMember2021-03-310000075252us-gaap:RevolvingCreditFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:RevolvingCreditFacilityMember2020-12-310000075252us-gaap:RevolvingCreditFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:RevolvingCreditFacilityMember2020-12-310000075252omi:AccountsReceivableSecuritizationProgramMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SecuredDebtMember2021-03-310000075252omi:AccountsReceivableSecuritizationProgramMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMember2021-03-310000075252omi:AccountsReceivableSecuritizationProgramMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SecuredDebtMember2020-12-310000075252omi:AccountsReceivableSecuritizationProgramMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMember2020-12-310000075252omi:FinanceLeaseLiabilitiesAndOtherMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-03-310000075252omi:FinanceLeaseLiabilitiesAndOtherMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310000075252omi:FinanceLeaseLiabilitiesAndOtherMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000075252omi:FinanceLeaseLiabilitiesAndOtherMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310000075252us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-03-310000075252us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310000075252us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000075252us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310000075252omi:A2024NotesMemberus-gaap:SeniorNotesMember2021-03-310000075252omi:A4.375SeniorNotesMemberus-gaap:SeniorNotesMember2021-01-012021-03-310000075252omi:A4500SeniorNotesMemberus-gaap:SeniorNotesMember2021-03-012021-03-310000075252omi:A4500SeniorNotesMemberus-gaap:SeniorNotesMember2021-01-012021-03-310000075252omi:A4500SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:SeniorNotesMember2021-01-012021-03-310000075252us-gaap:RevolvingCreditFacilityMember2021-03-100000075252us-gaap:RevolvingCreditFacilityMember2020-12-310000075252us-gaap:LetterOfCreditMember2021-03-310000075252us-gaap:LetterOfCreditMember2020-12-310000075252us-gaap:RevolvingCreditFacilityMember2021-03-310000075252omi:ReplacedLineOfCreditMember2021-03-310000075252omi:EuropeanLeaseAgreementMemberomi:ReplacedLineOfCreditMember2020-12-310000075252omi:AccountsReceivableSecuritizationProgramMembersrt:MaximumMember2021-03-100000075252omi:EuropeanLeaseAgreementMemberomi:ReplacedLineOfCreditMember2021-03-310000075252country:US2021-01-012021-03-310000075252country:US2020-01-012020-03-310000075252us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMemberus-gaap:ForeignExchangeContractMember2021-03-310000075252us-gaap:OtherCurrentAssetsMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMemberus-gaap:ForeignExchangeContractMember2021-03-310000075252us-gaap:OtherCurrentLiabilitiesMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMemberus-gaap:ForeignExchangeContractMember2021-03-310000075252us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-03-310000075252us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-300000075252omi:LossOnExtinguishmentOfDebtMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-03-310000075252us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-310000075252us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMemberus-gaap:OtherAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-310000075252us-gaap:OtherLiabilitiesMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-310000075252us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMemberus-gaap:ForeignExchangeContractMember2020-12-310000075252us-gaap:OtherCurrentAssetsMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMemberus-gaap:ForeignExchangeContractMember2020-12-310000075252us-gaap:OtherCurrentLiabilitiesMemberus-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMemberus-gaap:ForeignExchangeContractMember2020-12-310000075252us-gaap:InterestRateSwapMember2021-01-012021-03-310000075252us-gaap:InterestRateSwapMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberomi:GainLossOnExtinguishmentOfDebtMember2021-01-012021-03-310000075252us-gaap:InterestRateSwapMember2020-01-012020-03-310000075252us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000075252omi:EquityDistributionAgreementMemberus-gaap:CommonStockMember2020-05-012020-05-310000075252omi:EquityDistributionAgreementMember2021-01-012021-03-310000075252omi:EquityDistributionAgreementMember2021-03-310000075252us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-310000075252us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310000075252us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310000075252us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-01-012021-03-310000075252us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-03-310000075252us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-03-310000075252us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-03-310000075252us-gaap:AccumulatedTranslationAdjustmentMember2021-03-310000075252us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-03-310000075252us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-12-310000075252us-gaap:AccumulatedTranslationAdjustmentMember2019-12-310000075252us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-12-310000075252us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-01-012020-03-310000075252us-gaap:AccumulatedTranslationAdjustmentMember2020-01-012020-03-310000075252us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-01-012020-03-310000075252us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-03-310000075252us-gaap:AccumulatedTranslationAdjustmentMember2020-03-310000075252us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-03-31omi:segment0000075252us-gaap:OperatingSegmentsMemberomi:GlobalSolutionsMember2021-01-012021-03-310000075252us-gaap:OperatingSegmentsMemberomi:GlobalSolutionsMember2020-01-012020-03-310000075252us-gaap:OperatingSegmentsMemberomi:GlobalProductsMember2021-01-012021-03-310000075252us-gaap:OperatingSegmentsMemberomi:GlobalProductsMember2020-01-012020-03-310000075252us-gaap:OperatingSegmentsMember2021-01-012021-03-310000075252us-gaap:OperatingSegmentsMember2020-01-012020-03-310000075252us-gaap:IntersegmentEliminationMemberomi:GlobalProductsMember2021-01-012021-03-310000075252us-gaap:IntersegmentEliminationMemberomi:GlobalProductsMember2020-01-012020-03-310000075252us-gaap:IntersegmentEliminationMember2021-01-012021-03-310000075252us-gaap:IntersegmentEliminationMember2020-01-012020-03-310000075252us-gaap:MaterialReconcilingItemsMember2021-01-012021-03-310000075252us-gaap:MaterialReconcilingItemsMember2020-01-012020-03-310000075252us-gaap:OperatingSegmentsMemberomi:GlobalSolutionsMember2021-03-310000075252us-gaap:OperatingSegmentsMemberomi:GlobalSolutionsMember2020-12-310000075252us-gaap:OperatingSegmentsMemberomi:GlobalProductsMember2021-03-310000075252us-gaap:OperatingSegmentsMemberomi:GlobalProductsMember2020-12-310000075252us-gaap:OperatingSegmentsMember2021-03-310000075252us-gaap:OperatingSegmentsMember2020-12-310000075252country:US2021-01-012021-03-310000075252country:US2020-01-012020-03-310000075252us-gaap:NonUsMember2021-01-012021-03-310000075252us-gaap:NonUsMember2020-01-012020-03-31
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________ 
FORM 10-Q
________________________________________________ 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-9810
_______________________________________________________
Owens & Minor, Inc.
(Exact name of Registrant as specified in its charter)
_______________________________________________________
Virginia54-1701843
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
9120 Lockwood BoulevardMechanicsvilleVirginia23116
(Address of principal executive offices)(Zip Code)
Post Office Box 27626,
Richmond, Virginia
23261-7626
(Mailing address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code (804723-7000
    Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $2 par value per shareOMINew York Stock Exchange
_________________________________________________________
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
  (Do not check if a smaller reporting company)
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  
The number of shares of Owens & Minor, Inc.’s common stock outstanding as of April 29, 2021, was 75,147,827 shares.



Table of Contents
Owens & Minor, Inc. and Subsidiaries
Index
 
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
2


Table of Contents
Part I. Financial Information
Item 1. Financial Statements
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
 
 Three Months Ended
 March 31,
(in thousands, except per share data)20212020
Net revenue$2,326,534 $2,122,693 
Cost of goods sold1,883,783 1,854,134 
Gross margin442,751 268,559 
Distribution, selling and administrative expenses292,701 254,048 
Acquisition-related and exit and realignment charges5,963 6,064 
Other operating income, net(2,605)(2,309)
Operating income146,692 10,756 
Interest expense, net13,672 23,342 
Loss on extinguishment of debt
40,433 4,127 
Other expense, net569 719 
Income (loss) from continuing operations before income taxes92,018 (17,432)
Income tax provision (benefit)22,429 (8,523)
Income (loss) from continuing operations, net of tax69,589 (8,909)
Loss from discontinued operations, net of tax (2,415)
Net income (loss)$69,589 $(11,324)
Income (loss) from continuing operations per common share: basic and diluted$0.98 $(0.15)
Loss from discontinued operations per common share: basic and diluted (0.04)
Net income (loss) per common share: basic and diluted$0.98 $(0.19)
See accompanying notes to consolidated financial statements.
3

Table of Contents
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
 
 Three Months Ended
 March 31,
(in thousands)20212020
Net income (loss)$69,589 $(11,324)
Other comprehensive income (loss), net of tax:
Currency translation adjustments(12,262)(28,178)
Change in unrecognized net periodic pension costs121 170 
Net gain (loss) on derivative instruments20,044 (11,397)
Total other comprehensive income (loss), net of tax7,903 (39,405)
Comprehensive income (loss)$77,492 $(50,729)
See accompanying notes to consolidated financial statements.
4

Table of Contents
Owens & Minor, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
 
March 31,December 31,
(in thousands, except per share data)20212020
Assets
Current assets
Cash and cash equivalents$54,455 $83,058 
Accounts receivable, net of allowances of $21,231 and $19,087
736,176 700,792 
Merchandise inventories1,322,897 1,233,751 
Other current assets93,208 118,264 
Total current assets2,206,736 2,135,865 
Property and equipment, net of accumulated depreciation of $292,568 and $284,126
307,852 315,662 
Operating lease assets155,152 144,755 
Goodwill391,349 394,086 
Intangible assets, net232,009 243,351 
Other assets, net97,723 101,920 
Total assets$3,390,821 $3,335,639 
Liabilities and equity
Current liabilities
Accounts payable$1,021,761 $1,000,186 
Accrued payroll and related liabilities64,661 109,447 
Other current liabilities250,875 236,094 
Total current liabilities1,337,297 1,345,727 
Long-term debt, excluding current portion981,342 986,018 
Operating lease liabilities, excluding current portion130,565 119,932 
Deferred income taxes51,476 50,641 
Other liabilities103,880 121,267 
Total liabilities2,604,560 2,623,585 
Commitments and contingencies
Equity
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 75,100 shares and 73,472 shares
150,200 146,944 
Paid-in capital430,490 436,597 
Retained earnings236,177 167,022 
Accumulated other comprehensive loss(30,606)(38,509)
Total equity786,261 712,054 
Total liabilities and equity$3,390,821 $3,335,639 
See accompanying notes to consolidated financial statements.
5

Table of Contents
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
 
Three Months Ended March 31,
(in thousands)20212020
Operating activities:
Net income (loss)$69,589 $(11,324)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization22,900 23,913 
Share-based compensation expense5,182 3,941 
Impairment charges 9,080 
Loss on extinguishment of debt
40,433 4,127 
Provision for losses on accounts receivable8,462 5,213 
Deferred income tax (benefit) expense(5,865)6,348 
Changes in operating lease right-of-use assets and lease liabilities448 (714)
Changes in operating assets and liabilities:
Accounts receivable(45,919)(7,942)
Merchandise inventories(89,393)39,340 
Accounts payable18,742 98,743 
Net change in other assets and liabilities(1,666)(77,178)
Other, net2,510 (93)
Cash provided by operating activities25,423 93,454 
Investing activities:
Additions to property and equipment(5,048)(4,771)
Additions to computer software(1,575)(942)
Proceeds from sale of property and equipment4 33 
Cash used for investing activities(6,619)(5,680)
Financing activities:
Proceeds from issuance of debt574,900 150,000 
Repayments under revolving credit facility(96,500)(6,200)
Repayments of debt(523,140)(166,798)
Financing costs paid(11,700)(5,785)
Cash dividends paid(181)(155)
Payment for termination of interest rate swaps
(15,434) 
Other, net(8,339)(2,468)
Cash used for financing activities(80,394)(31,406)
Effect of exchange rate changes on cash and cash equivalents(2,139)(62)
Net (decrease) increase in cash, cash equivalents and restricted cash(63,729)56,306 
Cash, cash equivalents and restricted cash at beginning of period134,506 84,687 
Cash, cash equivalents and restricted cash at end of period$70,777 $140,993 
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds$898 $2,695 
Interest paid$10,255 $21,431 

See accompanying notes to consolidated financial statements.
6

Table of Contents
Owens & Minor, Inc. and Subsidiaries
Consolidated Statements of Changes in Equity
(unaudited)
 
(in thousands, except per share data)Common
Shares
Outstanding
Common 
Stock
($2 par value )
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive Loss
Total
Equity
Balance, December 31, 201962,843 $125,686 $251,401 $137,774 $(52,707)$462,154 
Net loss(11,324)(11,324)
Other comprehensive loss(39,405)(39,405)
Dividends declared ($0.0025 per share)
(127)(127)
Share-based compensation expense, exercises and other42 84 4,956 5,040 
Balance, March 31, 202062,885 $125,770 $256,357 $126,323 $(92,112)$416,338 
Balance, December 31, 202073,472 $146,944 $436,597 $167,022 $(38,509)$712,054 
Net income69,589 69,589 
Other comprehensive income7,903 7,903 
Dividends declared ($0.0025 per share)
(434)(434)
Share-based compensation expense, exercises and other1,628 3,256 (6,107)(2,851)
Balance, March 31, 202175,100 $150,200 $430,490 $236,177 $(30,606)$786,261 
See accompanying notes to consolidated financial statements.
7

Table of Contents
Owens & Minor, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
(in thousands, unless otherwise indicated)
Note 1—Summary of Significant Accounting Policies

Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of Owens & Minor, Inc. and the subsidiaries it controls (we, us, or our) and contain all adjustments (which are comprised only of normal recurring accruals and use of estimates) necessary to conform with U.S. generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. The Movianto business represented a component that met accounting requirements to be classified as discontinued operations for the three months ended March 31, 2020. In accordance with GAAP, the results of operations of the Movianto business are presented as discontinued operations through June 18, 2020 (the Divestiture Date) and, as such, have been excluded from continuing operations for the three months ended March 31, 2020. With the exception of Note 3, the Notes to Consolidated Financial Statements reflect the continuing operations of Owens & Minor, Inc. and its subsidiaries. See Note 3 for additional information regarding discontinued operations. The results of operations for interim periods are not necessarily indicative of the results expected for the full year.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures. Actual results may differ from these estimates.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash includes cash and marketable securities with an original maturity or maturity at acquisition of three months or less. Cash, cash equivalents and restricted cash are stated at cost. Nearly all of our cash, cash equivalents and restricted cash are held in cash depository accounts in major banks in the United States, Europe, and Asia. Cash that is held by a major bank and has restrictions on its availability to us is classified as restricted cash. Restricted cash included in Other assets, net as of March 31, 2021 represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of those same amounts presented in the accompanying consolidated statements of cash flows.

March 31, 2021December 31, 2020
Cash and cash equivalents$54,455 $83,058 
Restricted cash included in Other current assets 35,126 
Restricted cash included in Other assets, net16,322 16,322 
Total cash, cash equivalents, and restricted cash$70,777 $134,506 


Note 2—Fair Value

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments. The carrying amount of restricted cash also approximates fair value due to its nature. The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2). See Note 6 for the fair value of debt. The fair value of foreign currency contracts is determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows. See Note 8 for the fair value of derivatives.

8


Table of Contents
Note 3—Discontinued Operations

On June 18, 2020, we completed the divestiture of our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $133 million. We concluded that the Movianto business met the criteria for discontinued operations through the Divestiture Date, as the intention to sell represented a strategic shift and the criteria for held-for-sale were met. Movianto was previously reported in the Global Solutions segment.
Accordingly, the results of operations from the Movianto business are reported in the accompanying consolidated statements of operations as Loss from discontinued operations, net of tax for the three months ended March 31, 2020.

The following table summarizes the financial results of our discontinued operations for the three months ended March 31, 2020:

Three Months Ended March 31, 2020
Net revenue$122,342 
Cost of goods sold32,106 
Gross margin90,236 
Distribution, selling, and administrative expenses80,953 
Asset impairment charges9,080 
Acquisition-related and exit and realignment charges271 
Other operating income, net(461)
Operating income393 
Interest expense, net1,720 
Loss from discontinued operations before income taxes(1,327)
Income tax provision from discontinued operations1,088 
Loss from discontinued operations, net of tax$(2,415)

We suspended depreciation and amortization on assets that are held-for-sale, including right-of-use assets recorded in accordance with ASU No. 2016-02, for three months ended March 31, 2020.
No revenue or expense have been recorded in discontinued operations related to the disposal group subsequent to the Divestiture Date.
We have entered into transition services agreements with a subsidiary of the Buyer, pursuant to which we and a subsidiary of the Buyer will provide to each other various transitional services. Certain transition service arrangement costs and reimbursements were recorded during the three months ended March 31, 2021 and were immaterial for the period presented.
We had no assets and liabilities of the discontinued Movianto business reflected on the consolidated balance sheets at March 31, 2021 and December 31, 2020.
The following table provides operating and investing cash flow information for our discontinued operations:

Three Months Ended March 31, 2020
Operating Activities:
Depreciation and amortization$ 
Impairment charges9,080
Investing Activities:
Capital expenditures1,664

9


Table of Contents
Note 4—Goodwill and Intangible Assets

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through March 31, 2021:

Global SolutionsGlobal ProductsConsolidated
Carrying amount of goodwill, December 31, 2020$283,905 $110,181 $394,086 
Currency translation adjustments (2,737)(2,737)
Carrying amount of goodwill, March 31, 2021$283,905 $107,444 $391,349 

Intangible assets at March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021December 31, 2020
Customer
Relationships
TradenamesOther
Intangibles
Customer
Relationships
TradenamesOther
Intangibles
Gross intangible assets$268,688 $90,000 $43,238 $270,505 $90,000 $43,245 
Accumulated amortization(127,344)(26,972)(15,601)(121,209)(24,881)(14,309)
Net intangible assets$141,344 $63,028 $27,637 $149,296 $65,119 $28,936 
Weighted average useful life10 years11 years8 years10 years11 years8 years

At March 31, 2021, $59.1 million in net intangible assets were held in the Global Solutions segment and $173 million were held in the Global Products segment. Amortization expense for intangible assets was $10.0 million and $10.6 million for the three months ended March 31, 2021 and 2020.
Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is $29.9 million for the remainder of 2021, $38.9 million for 2022, $38.7 million for 2023, $33.9 million for 2024, $28.2 million for 2025 and $26.8 million for 2026.

Note 5—Exit and Realignment Costs

We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain distribution and outsourced logistics centers, administrative offices and warehouses, our client engagement center and IT restructuring charges. These charges also include costs associated with our strategic organizational realignment which include management changes, certain professional fees, and costs to streamline administrative functions and processes and divestiture related costs.
Exit and realignment charges by segment for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended
 March 31,
20212020
Global Solutions segment$4,663 $1,829 
Global Products segment1,300  
Total exit and realignment charges$5,963 $1,829 

10


Table of Contents
The following table summarizes the activity related to exit and realignment cost accruals through March 31, 2021 and 2020:
`
Total
Accrued exit and realignment costs, December 31, 2020$3,146 
Provision for exit and realignment activities:
Information system restructuring costs1,029 
Lease obligations347 
Other781 
Cash payments(2,915)
Accrued exit and realignment costs, March 31, 2021$2,388 
Accrued exit and realignment costs, December 31, 2019$8,162 
Provision for exit and realignment activities:
Severance1,391 
Information system restructuring costs183 
Lease obligations202 
Other53 
Cash payments(5,799)
Accrued exit and realignment costs, March 31, 2020$4,192 
In addition to the exit and realignment accruals in the preceding table, we also incurred $3.8 million of costs that were expensed as incurred for the three months ended March 31, 2021, including $3.2 million related to an increase in reserves associated with certain retained assets of Fusion5, $0.5 million in impairment charges related to our client engagement center, and $0.1 million in other asset charges.
There were no acquisition-related charges included within acquisition-related and exit and realignment charges presented in our consolidated statements of operations for the three months ended March 31, 2021. Acquisition-related charges included within acquisition-related and exit and realignment charges presented in our consolidated statements of operations were $4.2 million for the three months ended March 31, 2020 and consisted primarily of transition costs for the Halyard acquisition.
We may incur additional costs in 2021 related to certain retained assets of Fusion5.

Note 6—Debt

Debt consists of the following:
March 31, 2021December 31, 2020
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
4.375% Senior Notes, due December 2024
$244,862 $254,183 $244,780 $253,241 
4.500% Senior Notes, due March 2029
491,299 503,475   
Term Loan A-2  33,865 34,390 
Term Loan B  477,525 486,614 
Revolver6,700 6,700 103,200 103,200 
Receivables Securitization Program226,004 230,000 152,929 155,100 
Finance leases and other13,543 13,543 13,668 13,668 
Total debt982,408 1,007,901 1,025,967 1,046,213 
Less current maturities(1,066)(1,066)(39,949)(40,453)
Long-term debt$981,342 $1,006,835 $986,018 $1,005,760 
11


Table of Contents
We have $246 million, excluding debt issuance costs and deferred fees, of 4.375% senior notes due in 2024 (the 2024 Notes), with interest payable semi-annually. The 2024 Notes were sold at 99.6% of the principal amount with an effective yield of 4.422%. We have the option to redeem the 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100% of the principal amount or the present value of the remaining scheduled payments discounted at the applicable Benchmark Treasury Rate plus 30 basis points.
In March 2021, we issued $500 million, excluding debt issuance costs and deferred fees, of 4.500% senior unsecured notes due in 2029 (the 2029 Unsecured Notes), with interest payable semi-annually (the Notes Offering). The 2029 Unsecured Notes were sold at 100% of the principal amount with an effective yield of 4.500%. We used a portion of the net proceeds from the Notes Offering to repay our Term B Loan and borrowings under our revolving credit facility. In connection with these repayments, we recorded $15.3 million in write-offs of deferred financing costs and third party fees within loss on extinguishment of debt for the three months ended March 31, 2021. We may redeem all or part of the 2029 Unsecured Notes prior to March 31, 2024, at a price equal to 100% of the principal amount of the 2029 Unsecured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make-whole” premium, as described in the Indenture dated March 10, 2021 (the Indenture). On or after March 31, 2024, we may redeem all or part of the 2029 Unsecured Notes at the applicable redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date. We may also redeem up to 40% of the aggregate principal amount of the 2029 Unsecured Notes at any time prior to March 31, 2024, at a redemption price equal to 104.5% with an amount equal to or less than the net cash proceeds from certain equity offerings, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
On March 10, 2021, we terminated our then existing credit agreement and all obligations thereunder were repaid. On that same date, we entered into a new credit agreement with Bank of America, N.A. and a syndicate of lenders (the Credit Agreement) with a $300 million revolving credit facility. The interest rate on our revolving credit facility is based on a spread over either the Eurocurrency Rate or the Base Rate (each as defined in the Credit Agreement). The Credit Agreement matures in March 2026.
At March 31, 2021 and December 31, 2020, we had borrowings of $6.7 million and $103 million and letters of credit of $11.4 million and $13.9 million outstanding under our revolving credit facilities. At March 31, 2021 and December 31, 2020, we had $282 million and $283 million available for borrowing. We also had letters of credit and bank guarantees outstanding for $1.9 million and $1.6 million as of March 31, 2021 and December 31, 2020, which supports certain leased facilities as well as other normal business activities in the United States and Europe. These letters of credit and guarantees were issued independent of the Credit Agreement.
We entered into a Security and Pledge Agreement (the Security Agreement), dated March 10, 2021, pursuant to which we granted collateral on behalf of the holders of the 2024 Notes, and the parties secured under the Credit Agreement (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions. The Credit Agreement included additional collateral requirements of the Credit Parties, including an obligation to pledge our owned U.S. real estate and the remaining equity interests in foreign subsidiaries.
On March 10, 2021, we entered into an amendment to our accounts receivable securitization program (the Receivables Securitization Program). Pursuant to the amended Receivables Securitization Program, the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed $450 million outstanding at any time. The interest rate under the Receivables Securitization Program is based on a spread over the London Interbank Offered Rate (LIBOR) or successor rate. Under the Receivables Securitization Program, certain of our subsidiaries sell substantially all of their accounts receivable balances to our wholly owned special purpose entity, O&M Funding LLC. The Receivables Securitization Program matures in March 2024.
The Credit Agreement, Receivables Securitization Program, 2024 Notes and 2029 Unsecured Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement. The terms of the Credit Agreement also require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition or divestiture. We were in compliance with our debt covenants at March 31, 2021.
As of March 31, 2021, scheduled future principal payments of debt, excluding finance leases and other, were $476 million in 2024, $6.7 million in 2026, and $500 million in 2029. Current maturities include $1.1 million in current portion of finance leases.

12


Table of Contents
Note 7—Retirement Plans

We have a noncontributory, unfunded retirement plan for certain retirees in the United States. Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective teammates.
The components of net periodic benefit cost for the three months ended March 31, 2021 and 2020 were as follows:
 Three Months Ended
 March 31,
20212020
Service cost$704 $351 
Interest cost446 494 
Recognized net actuarial loss353 214 
Net periodic benefit cost$1,503 $1,059 

Note 8—Derivatives

We are directly and indirectly affected by changes in foreign currency, which may adversely impact our financial performance and are referred to as “market risks.” When deemed appropriate, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks. We do not enter into derivative financial instruments for trading purposes.
We enter into foreign currency contracts to manage our foreign exchange exposure related to certain balance sheet items that do not meet the requirements for hedge accounting. These derivative instruments are adjusted to fair value at the end of each period through earnings. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.
We determine the fair value of our foreign currency derivatives based on observable market-based inputs or unobservable inputs that are corroborated by market data. We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure. All derivatives are carried at fair value in our consolidated balance sheets in other current assets and other current liabilities. We consider the risk of counterparty default to be minimal. We report cash flows from our hedging instruments in the same cash flow statement category as the hedged items.
The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of March 31, 2021:
Derivative AssetsDerivative Liabilities
Notional AmountMaturity DateClassificationFair ValueClassificationFair Value
Economic (non-designated) hedges
Foreign currency contracts$18,700 April 2021Other current assets$ Other current liabilities$110 
In March 2021, we terminated the remaining $300 million in notional value of interest rate swaps. In September 2020, we had previously terminated $150 million in notional value of interest rate swaps. The remaining balance of the fair value adjustments of $25.1 million, which related to these terminated interest rate swaps, within Accumulated other comprehensive loss was reclassified to Loss on extinguishment of debt within our Consolidated Statements of Operations for the three months ended March 31, 2021.
The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of December 31, 2020:
13


Table of Contents
Derivative AssetsDerivative Liabilities
Notional AmountMaturity DateClassificationFair ValueClassificationFair Value
Cash flow hedges
Interest rate swaps$300,000 May 2022 and May 2025Other assets, net$ Other liabilities$17,872 
Economic (non-designated) hedges
Foreign currency contracts$30,300 January 2021Other current assets$151 Other current liabilities$ 

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three months ended March 31, 2021:

Amount of Gain Recognized in Other Comprehensive IncomeLocation of Loss Reclassified from Accumulated Other Comprehensive Loss into IncomeTotal Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income
Interest rate swaps$2,426 Loss on extinguishment of debt$(40,433)$(25,518)

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three months ended March 31, 2020:
Amount of Loss Recognized in Other Comprehensive LossLocation of Loss Reclassified from Accumulated Other Comprehensive Loss into IncomeTotal Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are RecordedAmount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income
Interest rate swaps$(16,958)Interest expense, net$(23,342)$(1,259)
The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.

For the three months ended March 31, 2021 and 2020, we recognized losses of $1.0 million and $2.7 million associated with our economic (non-designated) foreign currency contracts.

We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating income, net for our foreign exchange contracts.

Note 9—Income Taxes

The effective tax rate was 24.4% for the three months ended March 31, 2021, compared to a tax benefit of 48.9% in the same quarter of 2020. The change in these rates resulted primarily from an income tax benefit recorded in the first quarter of 2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax benefit associated with the vesting of restricted stock recorded in the first quarter of 2021. The liability for unrecognized tax benefits was $21.0 million at March 31, 2021 and $20.8 million at December 31, 2020. Included in the liability at March 31, 2021 and December 31, 2020 were $2.7 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
On August 26, 2020, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Services (IRS) regarding our 2015 and 2016 consolidated income tax returns. Within the NOPA, the IRS has asserted that our taxable income for 2015 and 2016 should be higher based on their assessment of the appropriate amount of taxable income that we should
14


Table of Contents
report in the United States in connection with our sourcing of products by our foreign subsidiaries for sale in the United States by our domestic subsidiaries. Our amount of taxable income in the United States is based on our transfer pricing methodology, which has been consistently applied through the current date. We strongly disagree with the IRS position and will pursue all available administrative and judicial remedies, including those available under the U.S. - Ireland Income Tax Treaty to alleviate double taxation. We regularly assess the likelihood of adverse outcomes resulting from examinations such as this to determine the adequacy of our tax reserves. We believe that we have adequately reserved for this matter and that the final adjudication of this matter will not have a material impact on our consolidated financial position, results of operations or cash flows. However, the ultimate outcome of disputes of this nature is uncertain, and if the IRS were to prevail on its assertions, the additional tax, interest, and any potential penalties could have a material adverse impact on our financial position, results of operations or cash flows.

Note 10—Net Income (Loss) per Common Share

The following summarizes the calculation of net income (loss) per common share attributable to common shareholders for the three months ended March 31, 2021 and 2020:

 Three Months Ended
 March 31,
(in thousands, except per share data)20212020
Weighted average shares outstanding - basic70,834 60,571 
Dilutive shares104  
Weighted average shares outstanding - diluted70,938 60,571 
Income (loss) from continuing operations$69,589 $(8,909)
Basic and diluted per share$0.98 $(0.15)
Loss from discontinued operations$ $(2,415)
Basic and diluted per share$ $(0.04)
Net income (loss)$69,589 $(11,324)
Basic and diluted per share$0.98 $(0.19)

Note 11—Shareholders' Equity

In May 2020, we entered into an equity distribution agreement, pursuant to which we may offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $50.0 million. We intend to use the net proceeds from the sale of our securities offered by this program for the repayment of indebtedness and/or for general corporate and working capital purposes. As of March 31, 2021, no shares were issued and $50.0 million of common stock remained available under the at-the-market equity financing program.


15


Table of Contents
Note 12—Accumulated Other Comprehensive Loss

The following table shows the changes in accumulated other comprehensive loss by component for the three months ended March 31, 2021 and 2020:                                                 
Retirement PlansCurrency
Translation
Adjustments
DerivativesTotal
Accumulated other comprehensive loss, December 31, 2020$(18,447)$(18)$(20,044)$(38,509)
Other comprehensive income (loss) before reclassifications (12,262)2,426 (9,836)
Income tax  (611)(611)
Other comprehensive income (loss) before reclassifications, net of tax (12,262)1,815 (10,447)
Amounts reclassified from accumulated other comprehensive loss156  25,518 25,674 
Income tax(35) (7,289)(7,324)
Amounts reclassified from accumulated other comprehensive loss, net of tax121  18,229 18,350 
Other comprehensive income (loss)121 (12,262)20,044 7,903 
Accumulated other comprehensive loss, March 31, 2021$(18,326)$(12,280)$ $(30,606)
Retirement PlansCurrency Translation AdjustmentsDerivativesTotal
Accumulated other comprehensive loss, December 31, 2019$(14,691)$(25,301)$(12,715)$(52,707)
Other comprehensive loss before reclassifications (28,178)(16,958)(45,136)
Income tax  4,646 4,646 
Other comprehensive loss before reclassifications, net of tax (28,178)(12,312)(40,490)
Amounts reclassified from accumulated other comprehensive loss214  1,259 1,473 
Income tax(44) (344)(388)
Amounts reclassified from accumulated other comprehensive loss, net of tax170  915 1,085 
Other comprehensive income (loss)170 (28,178)(11,397)(39,405)
Accumulated other comprehensive loss, March 31, 2020$(14,521)$(53,479)$(24,112)$(92,112)

We include amounts reclassified out of accumulated other comprehensive loss related to defined benefit pension plans as a component of net periodic pension cost recorded in Other expense, net.

Note 13—Segment Information

We periodically evaluate our application of accounting guidance for reportable segments and disclose information about reportable segments based on the way management organizes the enterprise for making operating decisions and assessing performance. We report our business under two segments: Global Solutions and Global Products. The Global Solutions segment includes our United States distribution, outsourced logistics and value-added services business. Global Products manufactures and sources medical surgical products through our production and kitting operations.
We evaluate the performance of our segments based on their operating income excluding intangible amortization and acquisition-related and exit and realignment charges that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.
Segment assets exclude inter-segment account balances as we believe their inclusion would be misleading and not meaningful. We believe all inter-segment sales are at prices that approximate market.
The following tables present financial information by segment:
16


Table of Contents
Three Months Ended
 March 31,
20212020
Net revenue:
Global Solutions$1,849,509 $1,847,593 
Global Products658,750 391,192 
Total segment net revenue2,508,259 2,238,785 
Inter-segment revenue
Global Products(181,725)(116,092)
       Total inter-segment revenue(181,725)(116,092)
Consolidated net revenue$2,326,534 $2,122,693 
Operating income:
Global Solutions$8,892 $7,691 
Global Products163,587 18,571 
Inter-segment eliminations(9,798)1,169 
Intangible amortization(10,026)(10,611)
Acquisition-related and exit and realignment charges(5,963)(6,064)
Consolidated operating income$146,692 $10,756 
Depreciation and amortization:
Global Solutions$9,839 $10,636 
Global Products13,061 13,277 
Consolidated depreciation and amortization$22,900 $23,913 
Capital expenditures:
Global Solutions$3,000 $1,032 
Global Products3,623 3,017 
Discontinued operations 1,664 
Consolidated capital expenditures$6,623 $5,713 

March 31, 2021December 31, 2020
Total assets:
Global Solutions$2,072,642 $2,117,372 
Global Products1,263,724 1,135,209 
Segment assets3,336,366 3,252,581 
Cash and cash equivalents54,455 83,058 
Consolidated total assets$3,390,821 $3,335,639 

The following table presents net revenue by geographic area, which were attributed based on the location from which we ship products or provide services.
17


Table of Contents
Three Months Ended March 31,
20212020
Net revenue:
United States$2,182,755 $2,033,454 
International143,779 89,239 
Consolidated net revenue$2,326,534 $2,122,693 

Note 14—Recent Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We adopted ASU No. 2019-12 effective beginning January 1, 2021. Its adoption did not have a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. At the present time, none of our lenders have requested that we transition away from LIBOR for our borrowings that bear interest based on LIBOR and we will continue to evaluate the impact through transition.
In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements, to improve consistency by amending the FASB Accounting Standards Codification (the Codification) to include all disclosure guidance in the appropriate disclosure sections. This ASU also clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The amendments in this ASU do not change GAAP and, therefore, are not expected to result in a significant change in practice. We adopted ASU No. 2020-10 effective beginning January 1, 2021. Its adoption did not have a material impact on our consolidated financial statements.
There have been no further changes in our significant accounting policies from those contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis describes results of operations and material changes in the financial condition of Owens & Minor, Inc. and its subsidiaries since December 31, 2020. Trends of a material nature are discussed to the extent known and considered relevant. This discussion should be read in conjunction with the consolidated financial statements, related notes thereto, and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2020.

Overview

Owens & Minor, Inc., along with its subsidiaries, (we, us, or our) is a leading global healthcare solutions company. On June 18, 2020 (the Divestiture Date), we completed the divestiture of our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin, Ireland office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $133 million. The Divestiture provides us with a greater ability to focus on and invest in our differentiated products, services and U.S. distribution businesses.
As a result of the Divestiture, the results of operations from our Movianto business are reported as “Loss from discontinued operations, net of tax” for the three months ended March 31, 2020. See Note 3, “Discontinued Operations,” of the Notes to Consolidated Financial Statements for further information. Unless otherwise indicated, the following information relates to continuing operations.
Income (loss) from continuing operations per diluted share was $0.98 for the three months ended March 31, 2021 as compared to $(0.15) for the three months ended March 31, 2020. Global Solutions segment operating income was $8.9 million for the three months ended March 31, 2021, compared to $7.7 million for the three months ended March 31, 2020. Global Products segment operating income was $164 million for the three months ended March 31, 2021, compared to $18.6 million
18


Table of Contents
for the three months ended March 31, 2020. The increase was a result of higher revenues and favorable product mix combined with continued operating efficiencies compared to the prior year.

COVID-19 Update

We are closely monitoring the impact of the 2019 novel coronavirus (COVID-19) on all aspects of our business, including how it impacts our customers, teammates, suppliers, vendors and distribution channels. We have taken actions to protect our teammates while maintaining business continuity as we respond to the needs from this global pandemic. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our teammates, customers, suppliers and shareholders.
Revenue for the three months ended March 31, 2021 of $2.3 billion includes an increase in demand for personal protective equipment (PPE), which was partially offset by a reduction in elective surgical procedures primarily due to the impact of COVID-19. Operating income also benefited from improved productivity and increased manufacturing output related to PPE, favorable product mix and operating efficiencies. We have expanded our PPE production operations and have taken measures to increase and improve our production such as retooling existing equipment, installing and optimizing new production lines and ramping up our new non-woven fabric machinery. We expect that we will continue servicing our customers' needs related to the heightened demand for our PPE as a result of various factors, including the implementation of new regulations and healthcare protocols calling for increased use of PPE, healthcare professional preference for medical grade PPE, stockpile PPE demand and the creation of new channels for PPE demand in healthcare, non-healthcare and international markets.
In March 2020, under the Defense Production Act (DPA), we were awarded a contract with the U.S. Department of Health and Human Services to produce N-95 respirator masks in an effort to replenish the Strategic National Stockpile. In April 2020, also under the DPA, the U.S. Department of Defense initiated a technology investment agreement with us involving up to $30.0 million of anticipated funding of assets to expand capacity to supply N-95 respirator masks. Through March 31, 2021, approximately $27.8 million had been expended, substantially all of which had been reimbursed in accordance with this arrangement.
We are unable to predict the timing of the pandemic and the full impact that COVID-19 will have on our future financial position and operating results due to numerous variables and continued uncertainties. Although we have experienced growth in sales volumes for certain of our products (such as PPE) during the COVID-19 pandemic, as well as improved productivity and manufacturing output, there can be no assurance that such growth rates, increased sales volumes or other improvements will be maintained during or following the COVID-19 pandemic.
Results of Operations

Net revenue.

Three Months Ended
 March 31,
Change
(Dollars in thousands)20212020$%
Global Solutions$1,849,509 $1,847,593 $1,916 0.1 %
Global Products658,750 391,192 267,558 68.4 %
Inter-segment(181,725)(116,092)(65,633)(56.5)%
Net revenue$2,326,534 $2,122,693 $203,841 9.6 %
The change in net revenue for the three months ended March 31, 2021 reflected the impact of revenue growth in Global Products from increased demand for PPE, higher cost pass-through in gloves, along with strong performance in our Byram Patient Direct business. These were partially offset by a reduction in elective surgical procedures, primarily due to the impact of COVID-19, and one less selling day. Foreign currency translation had a favorable impact on net revenue of $9.3 million for the three months ended March 31, 2021 as compared to the prior year.

Cost of goods sold.

19


Table of Contents
Three Months Ended
 March 31,
Change
(Dollars in thousands)20212020$%
Cost of goods sold$1,883,783 $1,854,134 $29,649 1.6 %
Cost of goods sold includes the cost of the product (net of supplier incentives and cash discounts) and all costs incurred for shipments of products from manufacturers to our distribution centers for all customer arrangements where we are the primary obligor and bear risk of general and physical inventory loss. These are sometimes referred to as distribution contracts. Cost of goods sold also includes direct and certain indirect labor, material and overhead costs associated with our Global Products business. There is no cost of goods sold associated with our fee-for-service arrangements. Cost of goods sold compared to prior year reflects changes in sales activity, including sales mix.

Gross margin.

Three Months Ended
 March 31,
Change
(Dollars in thousands)20212020$%
Gross margin$442,751 $268,559 $174,192 64.9 %
As a % of net revenue19.03 %12.65 %
Gross margin increase in the three months ended March 31, 2021 was driven by sales growth, market dynamics including timing of cost changes, an overall improved sales mix, operating efficiencies primarily in Global Products and a favorable impact from foreign currency translation of $6.2 million.

Operating expenses.

Three Months Ended
 March 31,
Change
(Dollars in thousands)20212020$%
Distribution, selling and administrative expenses$292,701 $254,048 $38,653 15.2 %
As a % of net revenue12.58 %11.97 %
Acquisition-related and exit and realignment charges$5,963 $6,064 $(101)(1.7)%
Other operating income, net$(2,605)$(2,309)$(296)12.8 %
Distribution, selling and administrative (DS&A) expenses include labor and warehousing costs associated with our distribution and outsourced logistics services and all costs associated with our fee-for-service arrangements. Shipping and handling costs are primarily included in DS&A expenses and include costs to store, move, and prepare products for shipment, as well as costs to deliver products to customers. Overall DS&A expenses were affected by revenue growth, higher accrued incentive compensation, teammate benefits and charitable contributions, partially offset by operational efficiencies. DS&A expenses also included an unfavorable impact for foreign currency translation of $1.0 million for the three months ended March 31, 2021.
There were no acquisition-related charges for the three months ended March 31, 2021 compared to $4.2 million for the same period of 2020, which consisted primarily of transition costs for the Halyard acquisition. Exit and realignment charges were $6.0 million for the three months ended March 31, 2021 and consisted primarily of an increase in reserves associated with certain retained assets of Fusion5, IT restructuring charges and other costs related to the reorganization of the U.S. commercial, operations and executive teams. Exit and realignment charges were $1.8 million for the three months ended March 31, 2020 and consisted primarily of IT restructuring charges and other costs related to the reorganization of the U.S. commercial, operations and executive teams.
The change in other operating income, net was attributed primarily to lower foreign currency transaction gains offset by lower losses from the adjustments to fair value on our foreign currency contracts compared to prior year.

Interest expense, net.

20


Table of Contents
Three Months Ended
 March 31,
Change
(Dollars in thousands)20212020$%
Interest expense, net$13,672 $23,342 $(9,670)(41.4)%
Effective interest rate5.45 %7.17 %
Interest expense, net and the effective interest rate for the three months ended March 31, 2021 decreased primarily due to a reduction of debt and lower interest rates. See Note 6 in Notes to Consolidated Financial Statements.

Loss on extinguishment of debt.

Three Months Ended
 March 31,
Change
(Dollars in thousands)20212020$%
Loss on extinguishment of debt$40,433 $4,127 $36,306 879.7 %
Loss on extinguishment of debt for the three months ended March 31, 2021 includes the write-off of deferred financing costs and third party fees associated with the debt financing in March 2021 of $15.3 million and amounts reclassified from accumulated other comprehensive loss as a result of the termination of our interest rate swaps of $25.1 million. Loss on extinguishment of debt for the three months ended March 31, 2020 primarily includes the write-off of deferred financing costs and third party fees.

Other expense, net.

Three Months Ended
 March 31,
Change
(Dollars in thousands)20212020$%
Other expense, net$569 $719 $(150)(20.9)%
Other expense, net for the three months ended March 31, 2021 and 2020 represents interest cost and net actuarial losses related to our retirement plans.

Income taxes.

Three Months Ended
 March 31,
Change
(Dollars in thousands)20212020$%
Income tax provision (benefit)$22,429 $(8,523)$30,952 363.2 %
Effective tax rate24.4 %48.9 %
The change in the effective tax rate for the three months ended March 31, 2021 compared to the same period in 2020 resulted primarily from an income tax benefit recorded in the first quarter of 2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax benefit associated with the vesting of restricted stock recorded in the first quarter of 2021.


21


Table of Contents
Financial Condition, Liquidity and Capital Resources

Financial condition. We monitor operating working capital through days sales outstanding (DSO) and merchandise inventory days. We estimate a hypothetical increase (decrease) in DSO of one day would result in a decrease (increase) in our cash balances, an increase (decrease) in borrowings against our revolving credit facility or Receivables Securitization Program, or a combination thereof of approximately $25.9 million.
The majority of our cash and cash equivalents are held in cash depository accounts with major banks in the United States, Europe, and Asia. Changes in our working capital can vary in the normal course of business based upon the timing of inventory purchases, collections of accounts receivable, and payments to suppliers.

March 31, 2021December 31, 2020Change
(Dollars in thousands)$%
Cash and cash equivalents$54,455 $83,058 $(28,603)