Owens & Minor, Inc.

In Q2 2026, excluding the impact of the large commercial payor that rolled off in Q1, revenue grew 2%. Sleep grew about 5.5%, diabetes grew 4%, and ostomy and urology posted high single-digit growth, while respiratory and wound were down year over year. Second-quarter adjusted EBITDA was just over $60 million, adjusted EBITDA less PSE CapEx was $16.3 million, and the collections waterfall had an adverse impact of approximately $10 million in the quarter and $20 million in the first six months. The company reduced 2026 full-year revenue guidance to $2.45 billion-$2.55 billion and adjusted EBITDA guidance to $300 million-$320 million. Free cash flow fully levered is now expected to be breakeven to slightly positive for full-year 2026, and management said Q4 should be much stronger than Q3 and serve as the jump-off point for 2027.

Ed Pesicka said the quarter fell short, but framed the business as having made meaningful progress in its transition to a focused pure-play home-based health care company. He emphasized the renewal of the largest soft good contract, a new sole-source agreement expected to launch in early 2027, and a fee-for-service agreement that should support patient volume and utilization. His tone was candid about execution gaps, but optimistic that cost actions, logistics changes, and sleep-center expansion can improve growth and profitability beginning in late 2026 and into 2027.

Jon Leon focused on the financial drag from slower growth, higher expenses, and the collections waterfall. He said second-quarter adjusted EBITDA was just over $60 million, the collections issue hurt the income statement by about $10 million in Q2 and $20 million in the first half, and cash interest paid in Q2 included $12 million tied to the exchange of the 2029 and 2030 notes. On the balance sheet, total debt was $1.72 billion, down by almost $400 million since the end of March, and net debt was more than $55 million lower; he also said the debt maturity profile was extended to nearly 5.5 years with no maturities until 2029. He noted free cash flow fully levered is now expected to be breakeven to slightly positive in 2026, with an ATM program and NOL rights plan planned to protect value and support continued deleveraging.

Analysts focused on the collections issue, the implied second-half ramp, the timing of cost cuts, sleep trends, and whether the company’s fourth quarter is a sustainable run rate. Management said the audit problem involved a sharp increase in items under review by certain commercial payors, creating delays in payment and diverting resources from automation work, but they expect resolution in Q3. On the cost side, Ed said the earlier pause was due to the business absorbing more than $125 million of annualized cost takeout and stabilizing after the payor transition and balance-sheet work, not because of collections. They also said Q4 should be the strongest quarter and the launch point for 2027, helped by new agreements, sleep-center rollout, and revenue-cycle improvements flowing through with a lag.