Owens & Minor, Inc.

Good day and thank you for standing by. Welcome to the Owens and Minor First Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your questions, press the star one again. Thank you. And please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Jackie Marcus, Investor Relations.

Thank you, Operator. Hello, everyone, and welcome to the Owens & Miner First Quarter 2025 Earnings Call. Our comments on the call will be focused on the financial results for the first quarter 2025, as well as our outlook for 2025, all of which are included in today's press release. The press release, along with the supplemental slides, are posted on the investor relations section of our website. Please note that during this call, we will make forward-looking statements that reflect the current views of Owens & Miner about our business, financial performance, and future events. The matters addressed in these statements are subject to risks and uncertainties. which could cause actual results to differ materially from those projected or implied here today. Our expectations, beliefs, and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs, and projections will result or be achieved. Please refer to our SEC filings for a full description of these risks and uncertainties including the risk factors section of our annual report on Form 10-K and our quarterly reports on Form 10-Q. Any forward-looking statements that we make on this call or in our earnings press release are as of today, and we undertake no obligation to update these statements as a result of new information or future events, except to the extent required by applicable law. In our discussion today, we will refer to non-GAAP financial measures and believe they might help investors to better understand our performance or business trends. Information about these measures and reconciliations to the most comparable GAAP financial measures are included in our press release. Today, I am joined by Ed Pasica, Owens & Miners President and Chief Executive Officer, and John Leon, the company's Chief Financial Officer. I will now turn the call over to Ed.

Thank you, Jackie. Good morning, everyone, and thank you for joining us on the call today. We hit the ground running in 2025, and we continue to progress forward on our broader long-term strategy. Starting with our patient direct segment, we've had a tremendous start to the year. Our top line grew in the mid single digits in the first quarter, and our operating income grew by 31%, or $14 million, resulting in a 173 basis point expansion. This exceptional performance was supported by many items, Let me share a few of them with you. Over the last year, we made an investment in the sleep journey. The objective of the sleep journey was to streamline the new start process and improve adherence for resupply, making it easier for customers to reorder needed products. The result of this investment can be seen in the first quarter results, which showed a meaningful increase in our sleep starts, and high single digit revenue growth in our sleep supplies for the first quarter. In addition, over the last year, we've invested in additional commercial resources. This has enabled us to streamline territories while expanding the sales reps bag, resulting in double digit growth in three categories, wound supplies, ostomy, and urology. Additionally, we continue to identify therapy categories for expansion. For example, within home respiratory space, we launched an organic expansion into chest wall oscillation therapy. Finally, during 2024, we began to invest in our already strong revenue cycle management process with the goal of enhancing our collection rates. These efforts began with a focus in our by-room division. I am pleased to report that these efforts resulted in a record collection rate in Q1. We are now moving the learnings to our APRIA division and anticipate this program will be completed by the end of the year. With respect to our planned acquisition of Rotech, we are awaiting a final decision from the regulators and still expect to close in the first half of 2025. We have our financing in place and we are ready to move forward. Moving on to our products and healthcare services segment. As a reminder, in February, we disclosed that we entered into discussions regarding the potential sale of our products and healthcare services segment. We remain actively engaged with a number of parties in the sale process for the segments. And I look forward to providing more information when it is prudent to do so. In the meantime, we continue to run this segment with the same level of commitment and attention to detail around serving our customers and delivering high quality products. I also recognize that the sale process creates a bit of a distraction in the day-to-day execution. Despite the effort needed to move the sale process forward, there were some great accomplishments in the quarter. Within our medical distribution division, we saw continued growth in same-store sales and an increase in proprietary product penetration. In addition, we have begun our distribution network automation efforts to drive long-term efficiency. We successfully opened a new state-of-the-art distribution center in Morgantown, West Virginia, to serve the state of West Virginia and surrounding areas, anchored by a long-term agreement with WVU. We also recently opened another distribution center in Sioux Falls, South Dakota, to serve the Upper Midwest. Finally, let me address tariffs. I will start by saying that Owens & Miner, we are dedicated to delivering high-quality medical products to support patient care. To date, we have worked extremely hard to mitigate the impact of care for our customers through cost reductions, investment in inventory, utilization of our U.S. manufacturing footprints, our multi-country sourcing approach, as well as offering un-tariff product substitutions. However, in a business that operates at less than 1% profit margin, we can no longer absorb these costs. The costs absorbed to date include the 2024 tariffs on Chinese facial protection and gloves, ranging from 25% to 50%. The tariffs implemented in March and April of this year, ranging from 145% for imports from China to 25% for non-USMCA imports from Mexico and Canada, and 10% or more for imports from most other countries. We anticipate the annual exposure of current tariffs on our products to be in the range of 100 million to 150 million. Accordingly, we are currently beginning to implement price increases in our P&HS segment that will be effective in early June. We have elected to impact only products affected by tariffs and not blend or use a weighted average method to spread tariffs across product categories. That said, we are using our diverse manufacturing footprint and our strategic sourcing options to offer our customer alternative products with lesser impact from tariffs. Our primary goal is to ensure our customers receive the high-quality and critical supplies and services that their providers and patients rely on every day. I am excited about what's ahead for our company, and I will now turn the call over to John to discuss our financial performance in the first quarter. John?