Owens & Minor to Sell Healthcare Provider Supply Unit for $375M, Refocusing on Patient Direct Business

Owens & Minor, a prominent player in the healthcare supply chain, has announced a significant strategic shift with the sale of its healthcare provider supply unit to investment firm Platinum Equity for $375 million. The deal, expected to close by the end of 2025, marks a pivotal moment for Owens & Minor as it refocuses its efforts on its patient direct business.

Divestiture Details and Strategic Implications

The sale encompasses Owens & Minor's division that provides medical supplies for infection prevention and services to healthcare providers. This unit generated $8 billion in net revenue last year, dwarfing the $2.7 billion from the patient direct business that the company will retain. Despite the significant revenue difference, the patient direct segment boasted a substantially higher operating income of $260 million compared to the divested unit's $53 million.

Edward Pesicka, CEO of Owens & Minor, revealed that the sale process was initiated following "inbound interest" from multiple parties earlier this year. The company had already listed the unit as a discontinued operation in its August financial reports, signaling the advanced stage of negotiations.

Focus on Patient Direct Business

With this divestiture, Owens & Minor is positioning itself to capitalize on what it perceives as a faster-growing and higher-margin business model. The patient direct unit focuses on delivering medical supplies directly to patients and home health agencies, aligning with broader healthcare trends towards home-based care and direct-to-consumer services.

This strategic pivot comes in the wake of a failed attempt to bolster its patient direct segment last year. Owens & Minor had pursued a $1.36 billion acquisition of Rotech Healthcare Holdings, a home medical equipment company, but the deal was mutually terminated in June following an investigation by the Federal Trade Commission.

Financial Considerations and Future Outlook

While the sale potentially increases Owens & Minor's capacity for future acquisitions, CEO Pesicka has indicated that the immediate focus will be on debt reduction. However, the company remains open to smaller, bolt-on acquisitions that could complement its patient direct business.

As part of the deal structure, Owens & Minor will retain a 5% stake in the divested business, potentially benefiting from any future sale by Platinum Equity. This arrangement allows the company to maintain a connection to its former unit while concentrating resources on its core patient-centric strategy.

The healthcare supply industry continues to evolve rapidly, with companies like Owens & Minor adapting their business models to meet changing market demands and capitalize on emerging opportunities in direct patient care and home health services.