Don't think you can assume 8x operating income since relative debt would be higher compared to previous. Also I think making the assumption that the post sell off consolidation would be completed in 2 years is tricky.
Also I can totally expect a situation where the remaining entity keeps a lot of corporate staff since they're close to the CEO leading to lower overall margins.
Nice find. Owens & Minor (OMI) is in a fascinating transition. At today’s depressed valuation (down ~90% from 2021 highs), the stock offers optionality: if execution is even moderately successful, upside could be several multiples over the next 3–5 years. I think you noted the bull case drivers: Structural Tailwinds, Business Mix Shift, Deleveraging Catalyst, Valuation Asymmetry.
This is not a “sleep well at night” stock — but for a deep value investor willing to stomach volatility and monitor execution closely, it is compelling. It’s less about the macro trend (very favorable) and more about whether this management team can finally stop tripping over itself.
For sure, it is really for that reason of management not being super high quality and my difficulty in finding durable competitive advantages that the company did not make it into my portfolio. Despite being a pretty interesting idea.
Hello Vik, I may not understand fully what Amazon Pharmacy does but I don't believe their businesses overlap at all. OMI makes home medical equipment like sleep apnea machines and diabetes equipment. So I don't believe they are competing.
On the front of competitors, this is an area I need to do more research. As of today I would say they are a very mid range player not bottom of the barrel but not the highest either. Typically because I invest for just a few years at a time a competitive moat plays a much less important role than if I was looking 10+ years out. They don't need to last forever, just turnaround for the next 5. Obviously a strong moat helps but I just wanted to illustrate how it plays into my strategy.
If this becomes a position of mine expect an even more detailed right up addressing each risk along with competition and management in detail. Sorry don't have a lot to pass on there.
OMI’s Patient Direct business overlaps with several established players: AdaptHealth (AHCO), Lincare, Cardinal Health (CAH), McKesson (MCK), Byram Healthcare & Apria peers (the last two were OMI’s acquisitions, and they compete with many smaller, regional homecare supply firms.).
Market is fragmented → OMI’s scale is an advantage (payer contracts, logistics, breadth of offerings).
With regard to the question on where/if Amazon fits in: there could be overlap if Amazon extends into durable medical equipment (DME) or chronic condition supplies (CPAP, ostomy, wound care), they could disrupt pricing and convenience. At the present time it does not appear they are a direct competitor. They’re closer to CVS, Walgreens, and traditional PBM/mail-order pharmacies.
That said, Amazon has experimented with medical supplies in limited categories (glucose monitors, test strips). If they leverage logistics + payer relationships, they could become a competitor. But regulatory, reimbursement, and service complexity (fitting CPAP machines, patient training, insurance claims) make this harder than shipping prescriptions.
OMI is one of the few national providers spanning multiple chronic care categories (not just respiratory or diabetes). That’s a differentiator vs. smaller regional players.
Great write up
Don't think you can assume 8x operating income since relative debt would be higher compared to previous. Also I think making the assumption that the post sell off consolidation would be completed in 2 years is tricky.
Also I can totally expect a situation where the remaining entity keeps a lot of corporate staff since they're close to the CEO leading to lower overall margins.
Check out my more recent post walking through these more clearly.
https://open.substack.com/pub/deepvaluecapitalbykyler/p/dv-capital-owens-and-minor-last-minute?utm_campaign=post-expanded-share&utm_medium=web
Nice find. Owens & Minor (OMI) is in a fascinating transition. At today’s depressed valuation (down ~90% from 2021 highs), the stock offers optionality: if execution is even moderately successful, upside could be several multiples over the next 3–5 years. I think you noted the bull case drivers: Structural Tailwinds, Business Mix Shift, Deleveraging Catalyst, Valuation Asymmetry.
This is not a “sleep well at night” stock — but for a deep value investor willing to stomach volatility and monitor execution closely, it is compelling. It’s less about the macro trend (very favorable) and more about whether this management team can finally stop tripping over itself.
For sure, it is really for that reason of management not being super high quality and my difficulty in finding durable competitive advantages that the company did not make it into my portfolio. Despite being a pretty interesting idea.
Hello Vik, I may not understand fully what Amazon Pharmacy does but I don't believe their businesses overlap at all. OMI makes home medical equipment like sleep apnea machines and diabetes equipment. So I don't believe they are competing.
On the front of competitors, this is an area I need to do more research. As of today I would say they are a very mid range player not bottom of the barrel but not the highest either. Typically because I invest for just a few years at a time a competitive moat plays a much less important role than if I was looking 10+ years out. They don't need to last forever, just turnaround for the next 5. Obviously a strong moat helps but I just wanted to illustrate how it plays into my strategy.
If this becomes a position of mine expect an even more detailed right up addressing each risk along with competition and management in detail. Sorry don't have a lot to pass on there.
OMI’s Patient Direct business overlaps with several established players: AdaptHealth (AHCO), Lincare, Cardinal Health (CAH), McKesson (MCK), Byram Healthcare & Apria peers (the last two were OMI’s acquisitions, and they compete with many smaller, regional homecare supply firms.).
Market is fragmented → OMI’s scale is an advantage (payer contracts, logistics, breadth of offerings).
With regard to the question on where/if Amazon fits in: there could be overlap if Amazon extends into durable medical equipment (DME) or chronic condition supplies (CPAP, ostomy, wound care), they could disrupt pricing and convenience. At the present time it does not appear they are a direct competitor. They’re closer to CVS, Walgreens, and traditional PBM/mail-order pharmacies.
That said, Amazon has experimented with medical supplies in limited categories (glucose monitors, test strips). If they leverage logistics + payer relationships, they could become a competitor. But regulatory, reimbursement, and service complexity (fitting CPAP machines, patient training, insurance claims) make this harder than shipping prescriptions.
OMI is one of the few national providers spanning multiple chronic care categories (not just respiratory or diabetes). That’s a differentiator vs. smaller regional players.