OWENS & MINOR INC/VA/ (Form: 8-K, Received: 05/06/2020 06:48:52)

OWENS & MINOR, INC.

2020 PERFORMANCE SHARE AWARD AGREEMENT

THIS 2020 PERFORMANCE SHARE AWARD AGREEMENT (“Agreement”) dated as of _________, 2020 between Owens & Minor, Inc., a Virginia corporation (the “Company”), and _______________ (“Participant”) is made pursuant to and subject to the provisions of the Company's 2018 Stock Incentive Plan (as amended, the “Plan”). All capitalized terms used in this Agreement that are not otherwise defined shall have the same meanings given to them in the Plan.

1.Grant of Performance Share Award. In accordance with the Plan, on ________, 2020 (the “Date of Grant”), the Company granted to the Participant, subject to the terms and conditions of the Plan and the terms and conditions set forth in this Agreement, _______ shares of performance-based stock as more particularly described herein and subject to the requirements of Section 2 (the “Performance Shares”). The Participant will earn the Performance Shares to the extent that the requirements of Section 2 are satisfied. The Company will issue shares of Common Stock in accordance with Section 3 of this Agreement in settlement of the Performance Shares, if any, that the Participant earns in accordance with Section 2, which shares of Common Stock (the “Restricted Stock”) then will be further subject to the vesting and forfeiture provisions described in Section 4 (except as otherwise specifically provided in Section 3(b)). Upon satisfaction of the vesting provisions of Section 4, all restrictions applicable to the shares of Restricted Stock shall lapse.

2. Earning Performance Shares. Subject to the other provisions of this Agreement, this Section 2 determines the number of Performance Shares that the Participant may earn under this Agreement.

(a) (i) Step No. 1. Determine the Adjusted EPS achieved for the Performance Period.

(i) Step No. 2. Determine the Adjusted EPS Payout Percentage achieved for the Performance Period from the chart below that correlates to the Adjusted EPS achieved for the Performance Period. For purposes of determining the level of achievement and/or the Adjusted EPS Payout Performance, if Adjusted EPS is achieved at a level between Threshold and Target or Target and Maximum, the level of performance will be determined based on a straight-line interpolation of the achievement levels and/or Adjusted EPS Payout Percentages between Threshold and Target and Target and Maximum, as applicable (rounded down to the nearest hundredth of a percent). If Adjusted EPS is achieved at Threshold or below, the Adjusted EPS Payout Percentage shall be zero percent (0%). If Adjusted EPS is achieved at Maximum or a level above Maximum, the Adjusted EPS Payout Percentage shall be two hundred percent (200%).



Adjusted EPS Payout Summary
	Threshold	Target	Maximum
Adjusted EPS Goal	_____	____	____
Adjusted EPS Payout Percentage	0%	100%	200%

(ii) Step 3. Subject to the other provisions of this Agreement, the number of Performance Shares earned by the Participant shall be the Target Shares multiplied by the Adjusted EPS Payout Percentage determined in Step 2 above.

“Adjusted EPS” shall mean that term (also referred to as Adjusted Earnings Per Share) as presented in the Company’s Consolidated Statement of Income (Loss) (unaudited) attached to the press release furnished under Item 2.02 of the Company's Current Report on Form 8-K furnished to Securities Exchange Commission in connection with reporting the Company's adjusted earnings for the Performance Period, adjusted further, as approved by the Committee, to eliminate or exclude the effects of unusual or non-recurring items, including but not limited to, the effect of accounting changes; tangible and intangible asset impairment charges; fees, expenses and charges associated with debt and/or equity financing transactions, merger and acquisition activity (including the purchase or sale of a business unit or its assets and any post transaction-related claims, litigation or settlement charges); exit and realignment activities; gains/losses from asset sales not made in the ordinary course of business; regulatory or law changes; retirement plan gains/losses; gains/losses or charges associated with material litigation, regulatory, tax or insurance settlements; pandemics, natural disaster or similar events; and fluctuations in commodity prices or currency exchange rates.

“Performance Period” means fiscal year 2021.

“Target Shares” means the number of Performance Shares set forth in Section 1 of this Agreement, as may be adjusted from time to time in accordance with Section 10.

(b) Effect of Termination Prior to Determination of Restricted Stock. Except as provided in subparagraphs (c), (d) and (e), no Performance Shares will be earned if the Participant’s employment with, and service to, the Company and its Affiliates terminates or is terminated for any reason before the later to occur of (i) January 1, 2022, (ii) the date the Restricted Stock are certified by the Committee as provided in Section 3(b), or (iii) if the Committee has not certified the number of earned Performance Shares as required by Section 3(b), then March 15, 2022 (such later date to occur being referred to as the “Measurement Date”).

(c) Death or Disability. This subparagraph (c) applies if the Participant’s employment with, and service to, the Company and its Affiliates terminates before the Measurement Date, on account of the Participant’s death or permanent and total disability (as defined in Section 22(e)(3) of the Code). In the event of the Participant’s death prior to the Measurement Date, the number of Performance Shares earned by the Participant shall equal the number determined in accordance with subparagraph (a). In the event the Participant’s employment terminates before the Measurement Date due to permanent and total disability, the number of Performance Shares earned by the Participant shall equal the number determined in accordance with subparagraph (a) multiplied by a fraction. The numerator of the fraction shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 36-month period beginning January 1, 2020 and ending December 31, 2022 (including any period that the Participant was absent from work for illness, injury or short term disability, with Company or Affiliate approval, prior to termination of employment) and the denominator shall be 36.

(d) Retirement. This subparagraph (d) applies if the Participant’s employment with, and service to, the Company and its Affiliates terminates before the Measurement Date on account of the Participant’s retirement (defined below). In the event of the Participant’s retirement before the Measurement Date, the number of Performance Shares earned by the Participant shall equal the

number determined in accordance with subparagraph (a) multiplied by a fraction. The numerator of the fraction shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 36-month period beginning January 1, 2020 and ending December 31, 2022 and the denominator shall be 36. For purposes of this Agreement, retirement means severance from the employment of the Company (i) at or after the attainment of age 55 and after completing that number of years of service with the Company that, when added to Participant’s age at the time of severance from employment, equals at least 65 or (ii) at or after the attainment of age 65.

(e) Change in Control. The Participant will earn the number of Performance Shares equal to Target Shares if there is a Change in Control before the Committee has certified the number of earned Performance Shares as required by Section 3(b).

3. Settlement of Performance Shares. The Performance Shares will be settled in accordance with this Section 3.

(a) Administration of Award. The Committee shall administer this Agreement in accordance with the terms of the Plan. This Agreement is intended to comply both by its terms and in its operation with the applicable provisions of the Code in order to make it as tax-efficient for the Company as possible.

(b) Committee Certification. As soon as practicable after December 31, 2021 (but no later than March 15, 2022), the Committee will determine the Adjusted EPS Payout Percentage and resulting number of Performance Shares that are earned under the provisions of Section 2. The Committee’s determination shall be set forth in writing, as part of the minutes of a meeting of the Committee, by unanimous consent or otherwise. Notwithstanding the preceding sentences, a written determination of the Committee shall not be required in the case of Performance Shares that are earned pursuant to the provisions of Section 2(e).

(c) Issuance of Restricted Stock. As soon as practicable after the Committee’s certification under subparagraph (b) (but no later than March 15, 2022), the Committee shall issue shares of Restricted Stock under the Plan in settlement of the Performance Shares earned by the Participant. The number of shares of Restricted Stock issued shall equal the number of Performance Shares earned by the Participant. Notwithstanding the preceding sentences, (i) if the Performance Shares are earned pursuant to the provisions of Section 2(c) or 2(d), such Performance Shares shall be settled in shares of Common Stock that are not subject to the restrictions set forth in Section 4 and (ii) if the Performance Shares are earned pursuant to the provisions of Section 2(e), the number of shares of such Performance Shares to be issued under Section 2(e) shall be settled in shares of Common Stock that are not subject to the restrictions set forth in Section 4 and shall be issued to the Participant on the Control Change Date.

(d) Registration, etc. Shares of Restricted Stock issued in settlement of the Performance Shares shall be registered in the name of the Participant on the stock transfer books of the Company but shall be held by the Company (or its transfer agent) during the Restricted Period (defined below). The Company’s Secretary and its General Counsel shall serve as attorney-in-fact for Participant during the Restricted Period with full power and authority in Participant’s name to assign and convey to the Company any shares of Restricted Stock that Participant forfeits under Section 4(c) or that are recovered under Section 5. Each certificate representing shares of Restricted Stock may bear a

legend referring to the risk of forfeiture of the shares and stating that such shares are nontransferable until all restrictions have been satisfied and the legend has been removed.

4. Terms of Restricted Stock. The shares of Restricted Stock issued in settlement of the Performance Shares are subject to the following terms and conditions:

(a) Restricted Period. Until March 15, 2023 (the “Restricted Period”) or the lapse of restrictions as provided in subparagraph (c) hereof, the Restricted Stock shall be subject to the following restrictions:

(i) Participant shall not be entitled to receive the Common Stock evidencing the Restricted Stock;

(ii) Restricted Stock may not be sold, transferred, assigned, pledged, conveyed, hypothecated or otherwise disposed of; and

(iii) Restricted Stock may be forfeited immediately as provided in subparagraph (c) hereof.

(b) Distribution of Restricted Stock. If Participant remains in the continuous employment of the Company or an Affiliate during the entire Restricted Period and otherwise does not forfeit such shares pursuant to subparagraph (c) hereof, all restrictions applicable to the shares of Restricted Stock shall lapse upon expiration of the Restricted Period and a certificate or certificates representing the shares of Common Stock that were granted to Participant in the form of shares of Restricted Stock shall be delivered to Participant.

(i) Death. If Participant’s employment with the Company and its Affiliates is terminated before the expiration of the Restricted Period by reason of Participant’s death, all restrictions applicable to the shares of Restricted Stock shall immediately lapse on the date of Participant’s death and the certificate or certificates representing the shares of Common Stock shall be delivered to Participant’s estate.

(ii) Disability. If Participant’s employment with the Company and its Affiliates is terminated before the expiration of the Restricted Period by reason of total and permanent disability, restrictions on a pro rata number of shares of Restricted Stock shall lapse. The “pro rata number” shall be the number of shares of Restricted Stock multiplied by a fraction, the numerator of which shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 36-month period beginning January 1, 2020 and ending December 31, 2022 (including any period that the Participant was absent from work for illness, injury or short term disability, with Company or Affiliate approval, prior to termination of employment) and the denominator shall be 36. The certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be delivered to Participant.

(iii) Retirement. Once Participant is eligible to terminate employment by reason of retirement before the expiration of the Restricted Period, all restrictions on a pro rata number of shares of Restricted Stock shall lapse. The “pro rata number” shall be the number

of shares of Restricted Stock multiplied by a fraction, the numerator of which shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 36-month period beginning January 1, 2020 and ending December 31, 2022 and the denominator shall be 36. Notwithstanding the foregoing, if Participant’s service to the Company or an Affiliate continues from and after becoming eligible to retire or the date of retirement through (i) membership on the Board, (ii) a written consulting services arrangement with the Company or an Affiliate or (iii) at the Company’s discretion, a written restrictive covenant agreement with the Company (“Post-Retirement Service”), shares of Restricted Stock shall not be forfeited but shall continue to be held by the Company and become vested until the earlier of (A) the end of the Restricted Period at which time such shares shall be delivered to the Participant or (B) the date Participant ceases to provide Post-Retirement Service, as described above.

(iv) Termination of Employment by Company or Affiliate (other than as described in (vi) below).

With Cause. If the Company or an Affiliate terminates Participant’s employment with the Company and its Affiliates with “cause,” after the Measurement Period but before the expiration of the Restricted Period, all shares of Restricted Stock shall be forfeited immediately and all rights of Participant to such shares shall terminate immediately without further obligation on the part of the Company. For purposes of this Agreement, “cause” means: (i) misappropriation, theft or embezzlement of funds or property from the Company or an Affiliate or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company or an Affiliate, (ii) conviction of, or entry of a plea of “nolo contendere” with respect to, a felony which, in the reasonable opinion of the Company, is likely to cause material harm to the Company’s or an Affiliate’s business, customer or supplier relations, financial condition or prospects, (iii) violation of the Company’s Code of Honor or any successor code of conduct; or (iv) failure to substantially perform (other than by reason of illness or temporary disability, regardless of whether such temporary disability is or becomes a total and permanent disability (as defined in subparagraph 4(c)(ii) above), or by reason of approved leave of absence) the duties of Participant’s job.


2.	Without Cause. If Participant’s employment with the Company and its Affiliates is terminated by the Company or an Affiliate without “cause,” after the Measurement Period but before the expiration of the Restricted Period all restrictions on a pro rata number of Restricted Stock shall lapse. The “pro rata number”

shall be the number of shares of Restricted Stock multiplied by a fraction, the numerator of which shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 36-month period beginning January 1, 2020 and ending December 31, 2022 (and the denominator shall be 36).

(v) Termination of Employment by Participant. If Participant resigns from employment with the Company and its Affiliates before the expiration of the Restricted Period, without regard to the reason for such resignation (other than death, disability or Retirement as provided in subsections (i), (ii) and (iii) above), all of the Restricted Stock shall be forfeited immediately and all rights of Participant to such shares shall terminate immediately without further obligation on the part of the Company.

(vi) Change in Control.

If, upon a Change in Control, (i) the shares of Restricted Stock are assumed by, or a substitute award granted by, the surviving entity (together with its Related Entities, the “Surviving Entity”) in the Change in Control (such assumed or substituted award to be of the same type of award as the Restricted Stock with a value as of the Control Change Date substantially equal to the value of the Restricted Stock) and (ii) within 24 months of the Control Change Date, Participant’s employment with the Surviving Entity is terminated by the Surviving Entity without Cause (defined below) or by Participant for Good Reason (defined below), all restrictions applicable to the Restricted Stock shall immediately lapse on the date of employment termination and the shares of Common Stock evidencing the Restricted Stock upon which the restrictions have lapsed shall be delivered to Participant.

For purposes of this subsection 4(c)(vi), “Cause” shall mean (i) the willful and continued failure by Participant to substantially perform his or her duties with the Surviving Entity (other than any such failure resulting from Participant’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to Participant by the Surviving Entity, which demand specifically

identifies the manner in which the Surviving Entity believes that Participant has not substantially performed his or her duties, or (ii) the willful engaging by Participant in conduct which is demonstrably and materially injurious to the Surviving Entity, monetarily or otherwise. For purposes of this paragraph, no act, or failure to act, on Participant’s part shall be deemed "willful" unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Surviving Entity.


5.	For purposes of this subparagraph 4(c)(vi), “Good Reason” shall apply only if there is a meaning given to such term in the Executive Severance Agreement or Executive Change in Control Severance Agreement, as the case may be, between Participant and the Company, as such agreement from time to time may be amended, modified, extended or replaced by a successor agreement or plan.


6.	If, upon a Change in Control, the Restricted Stock are not assumed by, or a substitute award granted by, the Surviving

Entity in the Change in Control as provided in subparagraph 4(c)(vi)(a) above, all restrictions applicable to the Restricted Stock shall immediately lapse on the Control Change Date and the shares of Common Stock evidencing the Restricted Stock upon which the restrictions have lapsed shall be delivered to Participant.

5. Recoupment Policy. Notwithstanding any other provision in this Agreement to the contrary, the Performance Shares, the underlying Restricted Stock and any dividends related to either granted under this Agreement are subject to recoupment by the Company in accordance with the Company’s Policy on Recoupment of Executive Incentive Compensation in effect on the date of this Agreement, as such policy is interpreted and applied by the Company’s Board of Directors.

6. Nontransferability. The Performance Shares are nontransferable except by will or by the laws of descent and distribution. Shares of Restricted Stock issued in settlement of the Performance Shares cannot be transferred before the Restricted Period lapses except by will or by the laws of descent and distribution.

7. Shareholder Rights; Dividends. Except as otherwise specifically provided herein, the Participant shall not have any rights as a shareholder of the Company with respect to the Performance Shares. Upon the issuance of shares of Restricted Stock in settlement of the Performance Shares, the Participant shall have all of the rights of a shareholder of the Company with respect to those shares, including the right to vote the shares; provided, that the right to receive dividends shall be controlled by Section 15 hereof. Stock received as a dividend on, or in connection with a stock split of any shares of Restricted Stock issued in settlement of the Performance Shares shall be subject to the same vesting restrictions as the underlying shares of Restricted Stock. The Participant’s right to receive any extraordinary dividends or distributions with respect to shares of Restricted Stock issued in settlement of the Performance Shares shall be at the sole discretion of the Committee, but in the event of any such extraordinary event, the Committee shall take action appropriate to preserve the value of, and to prevent the unintended enhancement of value in, such shares of Restricted Stock.

8. Withholding. The Participant shall pay the Company any amount of taxes as may be necessary in the opinion of the Company to satisfy tax withholding required under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gains taxes, transfer taxes, and social security contributions. In lieu thereof, the Company shall have the right to retain, from the Restricted Stock, the number of Restricted Stock with Fair Market Value equal to the minimum amount required to be withheld. In any event, the Company shall have the right to deduct from all amounts paid to a Participant in cash (whether under the Plan or otherwise) any taxes required to be withheld.

9. No Right to Continued Employment. The award and settlement of the Performance Shares does not give Participant any right with respect to continuance of employment by the Company or an Affiliate,

nor shall it interfere in any way with the right of the Company or an Affiliate to terminate his or her employment at any time.

10. Change in Capital Structure. The number of Performance Shares and the performance criteria in Section 2 (or, after any settlement of the Performance Shares, the number of shares of Restricted Stock) shall be adjusted as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock split-ups subdivisions or consolidations of shares, other similar changes in capitalization or such other events as are described in the Plan.

11. Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia.

12. Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the Date of Grant and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the plan as in effect on the Date of Grant.

13. Participant Bound by Plan. Participant hereby acknowledges that a copy of the Plan has been made available to him or her and he or she agrees to be bound by all the terms and provisions of the Plan.

14. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon Participant and his or her successors in interest and the successors of the Company.

15. Dividends. Any dividends that would have been paid on any earned Performance Shares prior to settlement if the earned Performance Shares had been actual shares of Common Stock outstanding during the period from the Date of Grant through the date of issuance of the Restricted Stock upon settlement of the Performance Shares shall be accumulated without interest by the Company (the “PS Dividends”). No dividends will be paid on the Performance Shares if Restricted Stock is not earned and issued hereunder. Any cash dividends paid in respect of Restricted Stock will be accumulated and paid (along with the PS Dividends), without interest, if and at the time of expiration of the Restricted Period or, if earlier, the lapse of restrictions with respect to the Restricted Stock with respect to which the dividends were credited; provided, however, no cash dividends will be paid with respect to any Restricted Stock that is forfeited.

[Signatures continued on next page]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

OWENS & MINOR, INC.

By: ______________________________

President & Chief Executive Officer

By: __________________________________

Participant

FOR IMMEDIATE RELEASE

May 6, 2020

Owens & Minor Reports 1st Quarter Financial Results

Owens & Minor confirms earnings guidance for the year

RICHMOND, VA - May 6, 2020 - Owens & Minor, Inc. (NYSE-OMI) today reported financial results for the first quarter of 2020, as summarized in the table below.

“I am pleased with the way that our teams performed in a very challenging environment in response to the COVID-19 pandemic. I have seen our values play out in real life as our teams worked with customers, suppliers, and various agencies of state and federal governments to provide creative solutions to these challenges. We recognize our responsibilities and required leadership in supporting the Nation’s response to protect those on the front line. Our distribution, products, and services teams have rallied around our mission to Empower Our Customers to Advance Healthcare,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor.

“The decisive actions we took this quarter enabled us to quickly pivot and leverage the strength of our Americas based PPE manufacturing footprint. While we expect the second quarter to be very challenging due to the significant reduction in elective procedures, we are well positioned to partially offset this impact due to the increased demand for our PPE products.” In addition, Pesicka added, “During the second quarter, we will continue to invest in a disciplined manner to meet the needs of our customers as their demand for our services and products grows throughout the third and fourth quarter as elective procedures ramp back up. While 2020 is expected to continue to be very fluid, with downs and ups, our demonstrated ability to quickly pivot and leverage our strengths to best serve our customers provides us with the confidence to re-confirm our full year adjusted EPS guidance of $0.50 to $0.60.”



Financial Summary¹
($ in millions, except per share data)	1Q20	1Q19

Revenue	$2,123	$2,351

Operating Income, GAAP²	$10.8	$16.6
Adj. Operating Income, Non-GAAP²	$27.4	$31.1

Income (Loss) from continuing operations, GAAP²	($8.9)	($10.9)
Adj. Net Income, Non-GAAP²	$2.4	$3.7

Income (Loss) from continuing operations per share, GAAP²	($0.15)	($0.18)
Adj. Net income per share, Non-GAAP²	$0.04	$0.06
Adj. Net Income per share, Non-GAAP, constant currency^2,3	$0.08	$0.06
1. Adjusted net income and Adjusted net income per share relate to continuing operations. 2. Reconciliations of the differences between the non-GAAP financial measures presented in this release and their most directly comparable GAAP financial measures are included in the tables below. 3. Adjusted net income per share, non-GAAP at foreign currency exchange rates as of December 31, 2019.

1^st Quarter 2020 Highlights


•	On a constant currency basis, adjusted net income per share increased by $0.02 to $0.08 compared to the prior year quarter, a 33% increase.


•	Operating results reflect favorable revenue mix combined with continued operating efficiencies resulting in gross margin expansion of 88 basis points compared to in the first quarter of 2019.


•	The Company generated $93 million of operating cash flow in the first quarter, primarily from working capital improvements.


•	Total debt was reduced by $24 million in the first quarter, bringing the total for the last four quarters to $195 million.


•	The change in revenue compared to prior year was driven by lower sales as a result of customer non-renewals that occurred in early 2019 and reduced surgical procedures as a result of COVID-19 in our Medical Distribution business. These changes were partially offset by increased sales of personal protective equipment (PPE) and revenue growth in the Home Healthcare business.


•	On April 6, 2020, the Company announced that it had entered into a purchase agreement for the pending sale of its European logistics business, Movianto, to EHDH Holding Group, a privately held French company. The Company continues to believe that the transaction, which is subject to certain customary approvals and conditions to close, will close in the first half of 2020.

COVID-19 Update

•

The significant reduction in elective surgical procedures, which began mid-March, is expected to continue through the end of the 2^nd quarter of 2020. This reduction in surgical procedures will negatively impact our revenue and profit for the second quarter. However, elective procedures are assumed to recover at an accelerated rate during the 3^rd and 4^th quarter of 2020, partially offsetting the 2^nd quarter impact.


•	Owens & Minor expects to continue the production of our Americas based PPE at or near full capacity through the end of 2020 due to:


◦	Continued demand related to COVID-19


◦	Rebuilding of safety stock by our customers and government agencies in the event COVID-19 demand slows


◦	The need for PPE products as elective procedures ramp up


◦	Owens & Minor being named by the U.S. Department of Health and Human Services as one of five manufacturers to collectively provide approximately 600 million N95 respirator masks over the next 18 months.


◦	New operating protocols requiring PPE in non-healthcare related industries


•	Owens & Minor participated in Operation Local Production in which teammates in our Lexington, NC facility manufactured nearly 1 million cubic yards of fabric for delivery to New York City garment workers to make medical gowns for NYC hospitals.


•	Owens & Minor worked closely with FEMA’s Supply Chain Task Force on Project Air Bridge to accelerate the distribution of critical PPE to areas of greatest need and reduce the transit time of these supplies.


•	Owens & Minor reaches a milestone in the COVID-19 fight with nearly two billion units of PPE shipped during February and March 2020.

Financial Outlook

Key assumptions supporting guidance:


•	Elective procedures will not return to normal levels until Q3, negatively impacting revenues in our Global Solutions segment during Q2.


•	Hospitals will increase surgical capacity in Q3 and Q4 to partially recover from elective procedures that were postponed during Q2, driving incremental demand in both our Global Solutions and Global Products segments in the second half of the year.


•	Global Products production of PPE will continue to run at or near full capacity for the balance of the year to meet market demand and to satisfy federal government stockpiling commitments.


•	Additional favorability in commodity pricing for the remainder of the year.


•	Continued foreign exchange headwinds assumed for the balance of the year.

Based on the above assumptions, the Company continues to expect adjusted net income for 2020 to be in a range of $0.50 to $0.60¹ per share, on a constant currency basis, despite being challenged in the 2^nd quarter to achieve breakeven. The Company believes that it remains positioned to deliver sustained double-digit earnings growth beyond 2020.


1.	On a continuing operations basis; based on foreign currency rates in effect December 31, 2019.

Although the Company does provide guidance for adjusted net income per share (which is a non-GAAP financial measure), it is not able to forecast the most directly comparable measure calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of the GAAP amount are not predictable, making it impracticable for the Company to forecast. Such elements include, but are not limited to restructuring and acquisition charges. As a result, no GAAP guidance or reconciliation of the Company’s adjusted net income per share guidance is provided. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a potentially significant impact on its future GAAP financial results. The outlook is based on certain assumptions that are subject to the risk factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).

Dividend Information

The Board of Directors approved a second quarter 2020 dividend payment of $0.0025 per share, payable on June 30, 2020, to shareholders of record as of June 15, 2020.

Investor Conference Call for 1st Quarter Financial Results

Owens & Minor executives will host a conference call at 8:30 a.m. EDT on Wednesday, May 6, 2020, to discuss the results. Participants may access the call at 866-393-1604. The international dial-in number is 224-357-2191. A replay of the call will be available for one week by dialing 855-859-2056. The access code for the conference call, international dial-in and replay is 1874047. A webcast of the event will be available at www.owens-minor.com under the Investor Relations section.

Safe Harbor

This release is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the SEC's Fair Disclosure Regulation. This release contains certain ''forward-looking'' statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the statements in this release regarding our expectations with respect to our 2020 financial performance, earnings growth beyond 2020, the closing of the sale of the Company’s Movianto business, the impact of COVID-19 on the Company’s results and operations, as well as other statements related to the Company’s expectations regarding the performance of its business and improvement of operational performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. Investors should refer to Owens & Minor’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC including the sections captioned “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K filed with or furnished to the SEC, for a discussion of certain known risk factors that could cause the Company’s actual results to differ materially from its current estimates. These filings are available at www.owens-minor.com. Given these risks and uncertainties, Owens & Minor can give no assurance that any forward-looking statements will, in fact, transpire and, therefore, cautions investors not to place undue reliance on them. Owens & Minor specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

About Owens & Minor

Owens & Minor, Inc. (NYSE: OMI) is a global healthcare solutions company with integrated technologies, products, and services aligned to deliver significant and sustained value for healthcare providers and manufacturers across the continuum of care. With 17,000 dedicated teammates serving healthcare industry customers in 90 countries, Owens & Minor helps to reduce total costs across the supply chain by optimizing episode and point-of-care performance, freeing up capital and clinical resources, and managing contracts to optimize financial performance. A FORTUNE 500 company, Owens & Minor was founded in 1882 in Richmond, Virginia, where it remains headquartered today. The Company has distribution, production, customer service and sales facilities located across the Asia Pacific region, Europe, Latin America, and North America. For more information about Owens & Minor, visit owens-minor.com, follow @Owens_Minor on Twitter, and connect on LinkedIn at www.linkedin.com/company/owens-&-minor.

Contact

Chuck Graves, Director, Finance & Investor Relations, 804-723-7556, Chuck.Graves@owens-minor.com

SOURCE: Owens & Minor

Owens & Minor, Inc.

Consolidated Statements of Operations (unaudited)

(dollars in thousands, except per share data)



	Three Months Ended March 31,
	2020			2019
Net revenue	$	2,122,693		$	2,350,840
Cost of goods sold	1,854,134			2,074,219
Gross margin	268,559			276,621
Distribution, selling and administrative expenses	254,048			255,112
Acquisition-related and exit and realignment charges	6,064			4,863
Other operating (income) expense, net	(2,309		)	42
Operating income	10,756			16,604
Interest expense, net	23,342			25,458
Other expense, net	4,846			2,734
Loss from continuing operations before income taxes	(17,432		)	(11,588		)
Income tax benefit	(8,523		)	(670		)
Loss from continuing operations, net of tax	(8,909		)	(10,918		)
Loss from discontinued operations, net of tax	(2,415		)	(3,178		)
Net loss	$	(11,324	)	$	(14,096	)

Loss from continuing operations per common share: basic and diluted	$	(0.15	)	$	(0.18	)
Loss from discontinued operations per common share: basic and diluted	(0.04		)	(0.05		)
Net loss per common share: basic and diluted	$	(0.19	)	$	(0.23	)

Owens & Minor, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(dollars in thousands)



	March 31, 2020		December 31, 2019

Assets
Current assets
Cash and cash equivalents	$	92,315	$	67,030
Accounts receivable, net of allowances of $23,971 and $21,015	667,607		674,706
Merchandise inventories	1,108,844		1,146,192
Other current assets	151,635		79,372
Current assets of discontinued operations	499,410		439,983
Total current assets	2,519,811		2,407,283
Property and equipment, net of accumulated depreciation of $254,054 and $245,718	301,335		315,427
Operating lease assets	133,738		142,219
Goodwill	388,000		393,181
Intangible assets, net	271,513		285,018
Other assets, net	100,473		99,956
Total assets	$	3,714,870	$	3,643,084
Liabilities and equity
Current liabilities
Accounts payable	$	891,542	$	808,035
Accrued payroll and related liabilities	44,722		53,584
Other current liabilities	229,824		231,029
Current liabilities of discontinued operations	383,586		323,511
Total current liabilities	1,549,674		1,416,159
Long-term debt, excluding current portion	1,484,340		1,508,415
Operating lease liabilities, excluding current portion	109,381		117,080
Deferred income taxes	42,962		40,550
Other liabilities	112,175		98,726
Total liabilities	3,298,532		3,180,930
Total equity	416,338		462,154
Total liabilities and equity	$	3,714,870	$	3,643,084

Owens & Minor, Inc.

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)



	Three Months Ended March 31,
	2020			2019
Operating activities:
Net loss	$	(11,324	)	$	(14,096	)
Adjustments to reconcile net loss to cash provided by (used for) operating activities:
Depreciation and amortization	23,913			28,720
Share-based compensation expense	3,941			4,505
Impairment charges	9,080			—
Provision for losses on accounts receivable	5,213			3,619
Deferred income tax expense (benefit)	6,348			(8,613		)
Changes in operating lease right-of-use assets and lease liabilities	(714		)	(190		)
Changes in operating assets and liabilities:
Accounts receivable	(7,942		)	(22,573		)
Merchandise inventories	39,340			80,194
Accounts payable	98,743			(120,480		)
Net change in other assets and liabilities	(77,178		)	(15,668		)
Other, net	4,034			3,678
Cash provided by (used for) operating activities	93,454			(60,904		)

Investing activities:
Additions to property and equipment	(4,771		)	(11,674		)
Additions to computer software	(942		)	(2,605		)
Proceeds from sale of property and equipment	33			271
Cash used for investing activities	(5,680		)	(14,008		)

Financing activities:
Proceeds from issuance of debt	150,000			—
(Repayments) borrowings under revolving credit facility	(6,200		)	72,100
Repayments of debt	(166,798		)	(12,394		)
Financing costs paid	(5,785		)	(4,313		)
Cash dividends paid	(155		)	(4,764		)
Other, net	(2,468		)	(1,124		)
Cash (used for) provided by financing activities	(31,406		)	49,505
Effect of exchange rate changes on cash and cash equivalents	(62		)	(2,721		)
Net increase (decrease) in cash, cash equivalents and restricted cash	56,306			(28,128		)
Cash, cash equivalents and restricted cash at beginning of period	84,687			103,367
Cash, cash equivalents and restricted cash at end of period ⁽¹⁾	$	140,993		$	75,239
Supplemental disclosure of cash flow information:
Income taxes paid (received), net of refunds	$	2,695		$	(12,388	)
Interest paid	$	21,431		$	24,504

⁽¹⁾Restricted cash represents $16.3 million held in an escrow account as of March 31, 2020 as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program. Cash, cash equivalents and restricted cash also includes $32.4 million in cash of discontinued operations as of March 31, 2020.

Owens & Minor, Inc.

Summary Segment Information (unaudited)

(dollars in thousands)



	Three Months Ended March 31,
	2020					2019
				% of					% of
				consolidated					consolidated
	Amount			net revenue		Amount			net revenue
Net revenue:
Segment net revenue
Global Solutions	$	1,847,593		87.04	%	$	2,123,599		90.34	%
Global Products	391,192			18.43	%	347,085			14.76	%
Total segment net revenue	2,238,785					2,470,684
Inter-segment revenue
Global Products	(116,092		)	(5.47	)%	(119,844		)	(5.10	)%
Total inter-segment revenue	(116,092		)			(119,844		)
Consolidated net revenue	$	2,122,693		100.00	%	$	2,350,840		100.00	%

				% of segment					% of segment
Operating income:				net revenue					net revenue
Global Solutions	$	7,691		0.42	%	$	21,642		1.02	%
Global Products	18,571			4.75	%	7,724			2.23	%
Inter-segment eliminations	1,169					1,746
Intangible amortization	(10,611		)			(10,026		)
Acquisition-related and exit and realignment charges	(6,064		)			(4,863		)
Other ⁽¹⁾	—					381
Consolidated operating income	$	10,756		0.51	%	$	16,604		0.71	%

Depreciation and amortization:
Global Solutions	$	10,636				$	10,500
Global Products	13,277					12,607
Discontinued operations	—					5,613
Consolidated depreciation and amortization	$	23,913				$	28,720

Capital expenditures:
Global Solutions	$	1,032				$	3,341
Global Products	3,017					2,903
Discontinued operations	1,664					8,035
Consolidated capital expenditures	$	5,713				$	14,279

⁽¹⁾2019 included interest cost and net actuarial losses related to the U.S. Retirement Plan as well as Software as a Service (SaaS) implementation costs associated with the upgrading of our global IT platforms in connection with the redesign of our global information system strategy.

Owens & Minor, Inc.

Net Loss per Common Share (unaudited)

(dollars in thousands, except per share data)



	Three Months Ended March 31,
	2020			2019
Weighted average shares outstanding - basic and diluted	60,571,000			60,376,000

Loss from continuing operations	$	(8,909	)	$	(10,918	)
Basic and diluted per share	$	(0.15	)	$	(0.18	)

Loss from discontinued operations	$	(2,415	)	$	(3,178	)
Basic and diluted per share	$	(0.04	)	$	(0.05	)

Net loss	$	(11,324	)	$	(14,096	)
Basic and diluted per share	$	(0.19	)	$	(0.23	)

Owens & Minor, Inc.

GAAP/Non-GAAP Reconciliations (unaudited)

The following table provides a reconciliation of reported operating income and loss from continuing operations to non-GAAP measures used by management.



	Three Months Ended March 31,
(Dollars in thousands except per share data)	2020			2019
Operating income, as reported (GAAP)	$	10,756		$	16,604
Intangible amortization ⁽¹⁾	10,611			10,026
Acquisition-related and exit and realignment charges⁽²⁾	6,064			4,863
Software as a Service implementation costs ⁽³⁾	—			351
Other ⁽⁴⁾	—			(731		)
Operating income, adjusted (non-GAAP) (Adjusted Operated Income)	$	27,431		$	31,113
Operating income as a percent of revenue (GAAP)	0.51		%	0.71		%
Adjusted operating income as a percent of revenue (non-GAAP)	1.29		%	1.32		%

Loss from continuing operations, as reported (GAAP)	$	(8,909	)	$	(10,918	)
Intangible amortization ⁽¹⁾	10,611			10,026
Income tax expense (benefit) ⁽⁷⁾	(2,544		)	(1,350		)
Acquisition-related and exit and realignment charges⁽²⁾	6,064			4,863
Income tax expense (benefit) ⁽⁷⁾	(1,250		)	(735		)
Software as a Service implementation costs ⁽³⁾	—			351
Income tax expense (benefit) ⁽⁷⁾	—			(51		)
(Gain) loss on extinguishment and modification of debt ⁽⁵⁾	4,127			2,003
Income tax expense (benefit) ⁽⁷⁾	(989		)	(524		)
Other ⁽⁴⁾	577			—
Income tax expense (benefit) ⁽⁷⁾	(138		)	—
Tax adjustment ⁽⁶⁾	(5,187		)	—
Income from continuing operations, adjusted (non-GAAP) (Adjusted Net Income)	$	2,362		$	3,665

Loss from continuing operations per diluted common share, as reported (GAAP)	$	(0.15	)	$	(0.18	)
Intangible amortization ⁽¹⁾	0.14			0.14
Acquisition-related and exit and realignment charges⁽²⁾	0.08			0.07
Software as a Service implementation costs ⁽³⁾	—			0.01
(Gain) loss on extinguishment and modification of debt ⁽⁵⁾	0.05			0.02
Other ⁽⁴⁾	0.01			—
Tax adjustment ⁽⁶⁾	(0.09		)	—
Income from continuing operations per diluted common share, adjusted (non-GAAP) (Adjusted EPS)	$	0.04		$	0.06
Impact of currency at 2019 foreign currency exchange rates	0.04			—
Adjusted EPS, on a constant currency basis ⁽⁸⁾	$	0.08		$	0.06

Owens & Minor, Inc.

GAAP/Non-GAAP Reconciliations (unaudited), continued

The following items have been excluded in our non-GAAP financial measures:

⁽¹⁾Intangible amortization includes amortization of intangible assets established during purchase accounting for business combinations. These amounts are highly dependent on the size and frequency of acquisitions and are being excluded to allow for a more consistent comparison with forecasted, current and historical results and the results of our peers.

⁽²⁾ Acquisition-related charges were $4.2 million and $4.2 million for the three months ended March 31, 2020 and 2019, respectively, and consisted primarily of transition costs for the Halyard acquisition. Exit and realignment charges were $1.8 million and $0.7 million for the three months ended March 31, 2020 and 2019, respectively. Exit and realignment charges in the first quarter of 2020 were associated with severance from reduction in force and other costs related to the reorganization of the U.S. commercial, operations and executive teams. Exit and realignment charges in the first quarter of 2019 were associated with severance from reduction in force and other employee costs associated with the establishment of our client engagement center and other IT restructuring charges.

⁽³⁾ Software as a Service (SaaS) implementation costs were associated with significant global IT platforms in connection with the redesign of our global information system strategy.

⁽⁴⁾ Other includes interest costs and net actuarial losses related to the U.S. Retirement Plan.

⁽⁵⁾(Gain) loss on extinguishment and modification of debt in 2020 includes the write-off of deferred financing costs associated with the paydown of our Term A loans of $2.1 million and third party fees expensed as a result of the Fifth Amendment to the Credit Agreement in February 2020 of $2.2 million, which was offset by a gain on extinguishment of debt related to the partial repurchase of our 2021 Notes in March 2020 of $0.2 million. (Gain) loss on extinguishment and modification of debt in 2019 includes the write-off of deferred financing costs associated with the revolving credit facility as a result of the Fourth Amendment to the Credit Agreement in February 2019 of $2.0 million.

⁽⁶⁾ Includes a tax adjustment associated with the estimated benefits under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

⁽⁷⁾These charges have been tax effected in the preceding table by determining the income tax rate depending on the amount of charges incurred in different tax jurisdictions and the deductibility of those charges for income tax purposes.

⁽⁸⁾Excludes the impact of translational currency, which assumes 2020 results at 2019 rates.

Use of Non-GAAP Measures

This earnings release contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). In general, the measures exclude items and charges that (i) management does not believe reflect Owens & Minor, Inc.'s (the "Company") core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate the Company's performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company's performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth above should be carefully evaluated.



Virginia			54-1701843
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

9120 Lockwood Boulevard,	Mechanicsville	Virginia	23116
(Address of principal executive offices)			(Zip Code)

Post Office Box 27626, Richmond, Virginia			23261-7626
(Mailing address of principal executive offices)			(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $2 par value per share	OMI	New York Stock Exchange



Director	Votes For	Votes Against	Abstentions	Broker Non-Votes
Mark A. Beck	42,348,581	721,253	91,056	11,084,190
Gwendolyn M. Bingham	42,335,159	739,349	86,382	11,084,190
Robert J. Henkel	42,351,919	721,332	87,639	11,084,190
Mark F. McGettrick	41,789,812	1,280,197	90,881	11,084,190
Eddie N. Moore, Jr.	40,045,594	2,508,528	606,768	11,084,190
Edward A. Pesicka	41,986,498	1,082,423	91,969	11,084,190
Michael C. Riordan	42,354,775	711,159	94,956	11,084,190
Robert C. Sledd	40,827,401	2,246,061	87,428	11,084,190



Votes For	Votes Against	Abstentions	Broker Non-Votes
39,699,816	3,152,458	308,616	11,084,190



Votes For	Votes Against	Abstentions	Broker Non-Votes
42,195,450	755,306	210,134	11,084,190



o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.



Item 5.07	Submission of Matters to a Vote of Security Holders.


(1)	Election of eight directors, each for a one-year term, as follows:


(2)	Approval of the Amendment to the Owens & Minor, Inc. 2018 Stock Incentive Plan as follows:


(3)	Approval of the Owens & Minor, Inc. 2021 Teammate Stock Purchase Plan as follows:


(4)	Ratification of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020 as follows:


(5)	Advisory vote to approve the compensation of our named executive officers as follows:




		OWENS & MINOR, INC.

Date: May 6, 2020	By:	/s/ Nicholas J. Pace
		Name:	Nicholas J. Pace
		Title:	Executive Vice President, General Counsel and Corporate Secretary



10.1		Amendment No. 2 to the Owens & Minor, Inc. 2018 Stock Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed March 19, 2020. (File No. 001-09810))
10.2		Form of 2020 Performance Share Award Agreement
10.3		Owens & Minor, Inc. 2021 Teammate Stock Purchase Plan (incorporated by reference to Appendix C to the Company’s Definitive Proxy Statement on Schedule 14A filed March 19, 2020. (File No. 001-09810))
99.1		Press Release issued by the Company on May 6, 2020 announcing first quarter results (furnished pursuant to Item 2.02)