Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to Owens & Minor Second Quarter 2025 Financial Results. 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. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Jackie Marcus, Investor Relations. Please go ahead. Thank you, operator. Hello everyone, and welcome to the Owens & Minor Second Quarter Earnings Call. Our comments on the call will be focused on the financial results for the second quarter of 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 & Minor about our business, financial performance, and future events. The matters addressed in these statements are subject to risk 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 that. 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 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 Edward Pesicka, Owens & Minor's President and Chief Executive Officer, Jon Leon, the company's Chief Financial Officer, and Perry Bernocchi, the company's Executive Vice President and CEO of Patient Direct. 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 are in the final stages of our robust process for the divestiture of the Products & Healthcare Services segment, and as a result, have classified this segment as discontinued operations. We are looking forward to concluding the sale of the business and working with a buyer who has the vision and greater flexibility to better support our customers and long-term growth. I'm excited about the opportunities ahead as we transition into a focused, pure-play patient direct business. Building on the momentum gained since we entered the patient direct space eight years ago, and supported by favorable demographic trends and meaningful scale, we are confident in our ability to lead as the market continues to evolve. For more than 140 years, Owens & Minor has continuously evolved organically and through strategic acquisitions and divestitures. From its origins as a pharmacy to expanding into pharmaceutical distribution, then shifting into medical surgical distribution and manufacturing, and eventually developing a small Patient Direct segment. The planned divestiture of our Products & Healthcare Services segment represents the next evolution in Owens & Minor, enabling us to concentrate exclusively on the higher margin, higher growth Patient Direct segment. This transition positions Owens & Minor to capitalize on strong, sustainable tailwinds in the home-based care market. Demographic shifts and macro-economic trends are driving increased demand for home-based healthcare to treat chronic conditions. According to the CDC, as of 2024, approximately 40% of American adults live with at least one chronic condition, while 12% manage five or more. Furthermore, five of the top 10 leading causes of death in the United States are linked to preventable or treatable chronic diseases. As healthcare providers seek more effective models, the home has become an essential care setting, supporting longer, healthier lives for patients and unlocking greater efficiency. Let me now discuss a little more about our continuing operations, Patient Direct. I'm excited about the opportunity ahead as we transition into a focused, pure-play patient direct business. This is a business that delivers essential supplies for home-based care, a business that is a proven, trusted partner to providers, payers, and patients alike. Since our acquisition in 2017, it has grown from approximately $450 million in annual revenue and approximately $38 million in EBITDA to a projected revenue between $2.76 billion and $2.82 billion, and an adjusted EBITDA range of $376 million- $382 million in 2025. Our patient direct business is built on a strong culture of disciplined growth, one that never sacrifices returns or patient care standards in the pursuit of expansion. With favorable demographic trends, meaningful scale, and leadership position, we are poised for profitable growth as the home-based care market continues to evolve. At a high level, our long-term strategy for patient direct remains firmly intact. We are committed to delivering disciplined growth through both organic initiatives and strategic acquisitions, while continuing to expand our EBITDA dollars. In the near term, our priorities include completing the divestiture and focusing on our continuing operations, which include mitigating stranded costs, reducing debt, advancing IT infrastructure and automation, and executing on initiatives aimed at driving revenue and EBITDA growth. We will build on the momentum and successful efforts over the past year, including improvements in revenue cycle, the Sleep Journey program, category expansion, and addition of the sales force to support both new and existing markets. On the inorganic front, in June, we announced the termination of our agreement to acquire Rotech. While the outcome was disappointing, the path to obtain regulatory clearance for this merger proved unviable in terms of time, expense, and opportunity. Looking ahead, we will continue to evaluate selective acquisition opportunities that are additive to Patient Direct's capabilities, align with our strategic vision, and help us maintain our leadership position in this evolving market. Finally, I am pleased to have Perry Bernocchi, our long-term Patient Direct leader, join us on the call today. Perry has been the architect and operational leader of the success and growth of patient direct since Owens & Minor acquired Byram in 2017, a company that Perry has led for over the past 20 years. I would also like to thank our teammates who have done a great job in staying focused on serving our customers. With that, I will now turn the call over to Jon to discuss our financial performance in the second quarter and our outlook for the rest of the year. Jon? Thanks, Ed, and good morning, everyone. As I'm sure you saw in our press release this morning, and as Ed mentioned, the divestiture of the Products & Healthcare Services segment is far enough along that we are now reporting that segment as discontinued operations. As a result, our reported financials and most of my comments today will speak only to continuing operations, which is made up of our Patient Direct business, certain functional operations, and stranded costs stemming from the planned separation of P&HS. Details around the quarter and any discussion of the outlook for the business on this call will cover only non-GAAP financial measures. I also want to point you to the $80 million in expenses from the termination of the Rotech acquisition and the related $18 million in Rotech-related financing costs, which both occurred in the second quarter. Each of these items has its own line in our GAAP results, but are not included in our non-GAAP adjusted results. Cash costs for these items are included in the GAAP net loss on the statement of cash flows. Importantly, please note that all GAAP to non-GAAP financial reconciliations can be found in the press release filed earlier this morning. With the planned P&HS divestiture, our financial results will take some explanation in getting used to and require a reset of expectations. Let's begin to unpack the second quarter results. Revenue for the quarter was $682 million, an increase of 3.3% vs the second quarter of 2024. While that is a lower growth rate than we had expected, it is important to note that in order to not disrupt our customers' critical needs during supply disruptions, we modified customer ordering quantities and our delivery frequency for diabetes supplies throughout the quarter. Absent this headwind, our growth rate in the quarter would have been approximately 4%. Once again, the sleep category, in particular sleep supplies, led the overall growth rate, and urology and ostomy showed very strong growth. Diabetes was lower than planned in the quarter, as I alluded to, but we expect to see some rebound during the back half of the year, but it will remain below prior year due to the shift from DME to pharmacy channels. Smaller categories, including the new chest wall oscillation therapy products line, performed very well. As we've previously discussed, the investment we made in 2024 and early 2025, and what we refer to as a sleep journey, has shown a strong return. For the six months ended June 30, revenue was $1.36 billion, a nearly 4.5% increase over the $1.3 billion earned in the first six months of 2024. Sleep, ostomy, and urology showed the strongest year-over-year growth. For the second quarter, adjusted EBITDA was $96.6 million, or a 14.2% margin rate, compared to $91.1 million, or a 13.8% margin rate in the second quarter of 2024. The growth in adjusted EBITDA was driven by volume growth and approved collection rate, a margin favorable product mix, productivity gains, and lower benefit costs. For the year-to-date period, adjusted EBITDA was $192.7 million, or 14.2% of revenue, compared to $160.3 million, or 12.3% of revenue in the prior year, driven by the same factors I just described for the second quarter, although volume growth and margin favorable product mix were significantly more impactful for the year-to-date comparison. Stranded costs impacting adjusted EBITDA include approximately $11 million in the second quarter of 2025 and $14 million for the year-to-date period, a former corporate cost that will now be absorbed by the patient direct business. That compares to a stranded cost of $17 million in last year's second quarter and about $28 million in the year-to-date June 2024 period. The year-over-year change is largely due to lower compensation and benefit costs in 2025. These stranded costs include a number of functional area costs, including teammate expenses and previously shared third-party agreements, for example. Please recognize that should the sale of P&HS be announced shortly, we would expect these stranded costs to rise before falling due to some lost economies of scale and short-term spending on programs to build the proper cost structure for the optimal long-term outcome. Of course, over time, we expect these expenses to decline as a percentage of the overall patient direct business. Plans are being established to relentlessly focus on reducing these expenses, thereby improving profitability. Interest expense requires a little explanation. In accordance with GAAP, certain qualifying interest expense is reflected in discontinued operations. As a result, interest expense for continuing operations for the second quarter was $26 million, compared to $25.6 million in the second quarter of 2024. Despite this presentation, Owens & Minor is responsible for the cash interest obligations of both the continuing and discontinued operations. Our adjusted effective tax rate for the continuing operations was 32.5% in the second quarter, as compared to 28% in the second quarter last year. We now expect our annual adjusted effective tax rate to run between 40 basis points- 45 basis points higher than it previously did due to the impact of permanent differences between book and tax income on an overall lower amount of earnings. Adjusted net income for the quarter was $20.5 million, or $0.26/ share, compared to $19.3 million, or $0.25/ share last year. For the six months ended June 30th, adjusted net income was $43.7 million, or $0.55/ share, vs $21.9 million, or $0.28/ share in the year-ago period. Now let me turn to the balance sheet. First, I want to again unequivocally state that when we sell the P&HS business, 100% of the net proceeds will be applied to debt reduction. Further, nothing about the recent strategic announcements changes our target leverage range of 2x-3x EBITDA. At June 30th, net debt was $1.9 billion. That's an increase of about $126 million since the end of 2024 and an increase of $31 million in the second quarter. That means that absent the unanticipated $100 million in cash paid to terminate the Rotech acquisition, net debt would have only been up about $25 million compared to the year in 2024 and down about $70 million in the second quarter. I'm explaining the net debt change this way to highlight what was a very good cash flow quarter. Moving to cash flow, please note that the statement of cash flow remains on a consolidated basis. I'm pleased that cash provided from operating activity in Q2 was $38 million, completely reversing the cash used in operating activity in Q1. Again, remember that the $100 million of Rotech-related outlays is included in the $38 million of cash provided from operating activity, which obviously would have been significantly higher absent the termination of the Rotech acquisition. This improvement in cash flow was due to a significant working capital reduction of nearly $94 million in the quarter, driven by lower P&HS inventory levels compared to the first quarter and improved collection rates as a result of our enhanced revenue cycle operations in patient direct. Similar to the sleep journey, past and ongoing investments in our already best-in-class patient direct collection rate continue to pay off. The team has been very focused on working to sell the P&HS business and have also been developing our outlook for the newly defined continuing operations for the remainder of 2025. As we think about the performance of continuing operations for the full year of 2025, we expect revenue of between $2.76 billion and $2.82 billion, adjusted net income per share ranging from $1.02- $1.07, and an adjusted EBITDA range of $376 million- $382 million. To assist with modeling, that would mean that through the back half of 2025, revenue is expected to range from $1.40 billion- $1.46 billion, adjusted net income from $0.47- $0.52/ share, and adjusted EBITDA from $183 million- $189 million. Also, with the assumption that a sale of the P&HS business is announced shortly, we would expect the profit path for the back half of the year to not reflect the typical seasonality of the patient direct business. This is due to an anticipated increase in stranded costs as we go closer to the expected close of the divestiture. Essentially, we would expect to have to spend money early to save more money later. Again, this assumes a near-term sale announcement and would only be expected to be a back half of 2025 issue. Please also refer to the guidance presentation with related assumptions that we filed this morning and resides on the investor relations section of our website. We do remain very excited about the future of the patient direct business and the future opportunity to be a focused, pure-play home-based care business. With that, I'll now turn the call back to Kate for Q&A. Kate? At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. We request that you limit yourself to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Michael Cherny with Leerink Partners. Your line is open. Good morning. Thanks for taking the question. Maybe Jon, first on the dynamics of the transaction. Obviously, we don't know exactly the timing, even though it seems like it's moving along. As you think about the dynamics of the stranded costs, how long do you think that the elevated level of stranded costs will take throughout the closure of the transaction? How quickly can you flip that to some level of leverage on the back end? Yeah, Mike, I think the first way to think about it, the number I threw out for Q2, the $11 million, is a pretty good near-term annualized run rate. I would expect by the time, certainly by the time we get, let's pick, you know, let's hypothetically say the deal would have closed before the end of the year. I would say by the time we get to the back half of 2026, we are now seeing a trajectory of those numbers starting to come down. Okay. Thanks. That's helpful. Maybe a question on the broader business, in particular on the diabetes side. You talked about some of the changes in the channel. How should we think about the, call it, medium-term trajectory of the diabetes business? Are you, what are your considerations? What's built in about any potential changes related to competitive bidding on various different diabetes products, CGM, etc? Yeah, certainly a couple of things to keep in mind. Obviously, for example, you know, everybody's talked about the shift from DME to pharmacy has been going on for quite some time. That will continue, albeit we think potentially at a slower rate. Keep in mind, we have a fully functioning pharmacy capability. We're seeing growth in that area, but it's a point of emphasis for us as we go forward to get more and more activities through our own pharmacy channel. We're confident in that. That will happen over time. Competitive bidding, as I'm sure you've heard from some of others, it's very early. We don't know what the outlook is. Right now, as proposed, it may not be the biggest issue in the world. You know, we're not terribly exposed to Medicare rates. It's less than 20% of our overall revenue. It's the same thing. It's a little early to call it, but not everything about the competitive bidding proposal as it's constructed today is a negative. Certainly, there could be future pressure, but it's far too early to call. Yeah, I think the way we think about competitive bidding is from an impact on pricing, you're really looking out into, you know, really not till 2028, even 2029. I think the other aspect of it is, as Jon alluded to, if we look at overall our Byram business and our APRI business, our combined P&HS, it's probably less than 13% of our business that is going to be potentially impacted by that. The last thing on competitive bidding is, what we're seeing and what we believe too is the scale that we have can help us as we look at competitive bidding as it moves forward. Great. Thank you. Your next question comes from the line of Kevin Caliendo with UBS. Your line is open. Hey, guys. Thanks for taking my question or questions. I have 100. I don't know where to start. If we think about this transaction that's happening, right, we're trying to look through the balance sheet at some of the items there. The current assets vs current liabilities held for sale is $430 million. You have this classification of a write-down, a write-down vs classification of $639 million. Is there anything there that we can read through that tells us sort of what the price of this asset might end up looking like, or if you can help us think about what kind of multiple you got for this business, either on adjusted EBITDA or adjusted EBIT? The first part of that question, Kevin, is probably not, no, you can't read through it. It's pretty hard. We're kind of happy with that. I would tell you, we're still very actively engaged. What you saw there is a best estimate of the bidding process that we've been through thus far. We are still in a very active process. This is the point. Yeah, we're just trying to remain diligent and thorough as we work with the parties in this process right now. Okay. I appreciate that. One topic that's been driving your stock was the sort of perceived loss of a contract for next year with Kaiser. When we think about the run rate of patient direct in the second half of the year of what we're looking at here, should we sort of annualize that in terms of adjusted EBITDA, try to make an assumption around what happens with Kaiser? Can you still grow, do you think, in 2026 in this business? We think in 2025, actually, there'll be very limited impact in 2025 as a result of this. The bulk of the transition will happen in 2026. When you talk about growth, I think the question has to be, is it top line growth or bottom line growth? Because, again, every capitated contract is different. This is really the vast majority that contract is our really, when you separate the rest of it, we have very few other capitated contracts. I think the way we think about this is, you know, being able to use the assets that we have, the equipment that we have, provides us an opportunity to go out and capture other business. While the top line may not be the same, we think there's an opportunity to drive stronger bottom line on this as we move forward. Okay. Your next question comes from the line of John Stansel with JPMorgan. Your line is open. Great. Could you spend a little bit more time talking through the factors on patient direct revenue growth in the quarter? I think even backing out the diabetes contribution, you know, 4% will be a bit of a deceleration from recent quarters. Anything just to think about that as we then kind of progress into the second half? I appreciate, you know, it'll grow second half vs first half, but still kind of in that 4% range for full-year growth. Just anything to think about on the growth side. Thank you. Yeah, John, it's Jon Leon. I think it's fair to say we expect decent growth in the back half, not terribly dissimilar to what you just saw in the first half, certainly. Diabetes, as I mentioned, we expect some rebound because of having to deal with the supply disruptions. We handled that in a very customer-centric way throughout the second quarter, and that was the right thing to do despite the impact it had on the top line. As I mentioned, sleep is doing very well. Both sleep starts and specifically sleep supplies, we expect that to continue throughout the remainder of the year. We still think home respiratory is going to do okay. NIV is going to always be the laggard as it has been for a number of quarters now, but oxygen is going to continue to rebound at a slow pace. As I mentioned, this quarter, Ostomy, Urology will continue to be very strong. It was a double-digit growth for us percentage-wise. We think we'll do okay in those smaller categories. I think we're pretty much bullish. I think we'll have a little bit of that backup, a downside, I'm sorry, a little bit of rebound in diabetes, but it won't be crazy. If you think about what we've done in the first half, which is about 4.5%, that is not dissimilar to what to expect in the second half. That, and just an additional disclosure, when the Q comes out, we will have, you know, we'll show the categories out there in a little more detail. You have a little more visibility to it. Again, year-to-date, we're in the, you know, call it a single digit for in diabetes and continue to see nice growth, as Jon alluded to, in sleep and in some of our other categories. I think on the diabetes side of it, Jon raised this in his prepared remarks that we do have the shift from DME to pharmacy, and we do have a pharmacy. That way, when we do, we can, excuse me, maintain that business, capture it in pharmacy. The top line revenue is lower, but we have the similar pull-through within that business. It does affect the top line, but we do have similar pull-through in the diabetes space. Got it. Just looking at the quarter, you know, $11 million of stranded costs in Q2 2025, $17 million in Q2 2024. Most of the delta between the quarters on an adjusted EBITDA basis seems like it's coming from lower stranded costs. Is anything just to think about there, kind of core growth, kind of diabetes was kind of weighing down core performance ex-stranded costs, or anything else you'd just highlight? Yeah, I mean, it was not a great growth quarter on a standalone basis. We expect that in the second half. You're right, you analyzed the stranded costs correctly. When you get to continuing ops analysis, there's also a change in allocation of functional costs as well. It's a little hard, we appreciate it's a little hard for you guys to cut through all that. The overall growth rate at an EBITDA level on the legacy patient direct business before the stranded costs and functional expenses change was still in the mid-single digits, and we would expect something comparable in the back half of the year. Your next question comes from the line of Daniel Grosslight with Citi, your line is open. Hi guys, thanks for taking the question. Just looking at guidance, I don't know if there's a way for you to help bridge new guidance vs old guidance. Particularly, really, I'm looking at a bottom line or EBITDA being reduced by $196 million. Can you just bridge to us that reduction? How much is from just no longer including P&HS vs stranded costs vs some of these other more fundamental items like the shift from DME to pharmacy and diabetes? Thanks. Yeah, I mean, I would tell you the shift from the overall shift from DME to pharmacy isn't going to be material to the change. We laid out the stranded costs, basically telling you to take what we talked about in Q2. The $11 million roughly annualized is a good number, though I said, as I mentioned in my remarks, it could increase with the announced sale in the back half of the year. Beyond that, Daniel, I really can't give you too much insight, obviously, into what P&HS would have been and what's included in discontinued ops now, just due to the way the accounting requirements are, and of course, we're very active in the divestiture process. Okay. Going back to one of Kevin's questions, just on the discontinued operations, that $430 million is your best estimate. What is that an estimate of, actually? Is that what you think you can get in the sale process? No, that is not what we think we can get in the, that's not, it's nothing to do with the projected valuation of what we think in the, that is completely unrelated to what we think we can get for the asset. Okay. Sorry, last one for me, just on cash flow. Can you maybe just break out what's kind of, what the free cash flow conversion of this business looks like, you know, when we adjust for all of P&HS, because it's a little bit difficult now with cash flow, including everything in income statement, just including in continuing operations, PD. Maybe if you can help us think through just free cash flow conversion and of the CapEx currently on the cash flow statement, how much of that kind of remains once this deal closes? Yeah, the way what we've put out in our assumptions this morning, Daniel, I mean, basically, we're looking at, as I got it to, $376 million- $382 million of annual adjusted EBITDA on the business. That's the patient direct business, all these stranded functional costs observed. Net CapEx of $135 million- $104 million coming out of that, and then interest off of a P&L perspective of $97 million- $100 million. There's probably another $30 million- $35 million of discontinued operations interest expense that we would still be paying on a cash basis. Those are the pieces to think about. You're free cash flow, I don't know what that adds up to, but you're probably in the $60 million- $70 million range. Okay. Thank you. Your next question comes from the line of Jay Lewis with Baird, your line is open. Hi, thanks for the question. I was wondering if you could just hit a little bit on the one big beautiful bill and any expectations you have around the impact that could have on your cash flow or your cash taxes paid in 2025 and 2026? Yeah, Jay, it's Jon Leon. The one big beautiful bill is a net positive for us. I think the way to think about it, it's a continuation of the tax legislation that was put in place in 2017 that was at that time beneficial to the business. The continuation of that legislation from a tax perspective would continue to benefit the company from a tax-specific cash tax basis. Obviously, we got a fair amount of debt on the balance sheet. Interest deductibility, 163(j), helps us out, as with some other attributes of that. I would refer to the big beautiful bill as a net positive on the company financially. Operator, any other questions? Before going to the next question, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. Your next question comes from the line of Allen Lutz with Bank of America, your line is open. Good morning, and thanks for taking the questions. One for Ed. You talk a little bit about strategic acquisitions and some of the learnings from Rotech, a little bit of excess time and expenses on that deal. As we think about your pursuit of future acquisitions, I guess it makes sense for us to think that they're likely to be smaller in scope. As you think about the learnings from Rotech, is there any other considerations or thought that you think are important as you look at future potential deals? Thanks. Yeah, I think, Alan, the most important one is what you alluded to there, you know, and Jon talked about it in his prepared remarks. I mean, we're going to continue to focus on playing down bids. If there's some smaller ones that make sense for us that can fit within the business, we will look at those and pursue those accordingly. We did do a debrief afterwards on learning on Rotech. The time was a factor on it and several other aspects of it. I think as we think through this going forward, it will be more focused on those smaller bolt-ons as we focus on getting rid of our stranded costs, increasing our free cash flow, paying down debts. That way, we can do more of those as we get into the future. The other thing, since I did bring up cash flow, I will add that I know Jon made the comment earlier too on free cash flow. One of the things we will have is potentially some lower patient CapEx in the future. As the capitated contract moves away and the equipment comes back, we have the ability to use that equipment vs having to go out and acquire new equipment for patient CapEx for startups. There will be a short-term benefit of that also from a cash flow standpoint. Thanks, Ed. One question for Jon. It looks like EBITDA margins are expected to step down a little bit in the second half of the year. Are there any stranded costs embedded in there? How should we think about, if they're not, what is embedded in that step down in 2H? Thank you. Yeah, Al, that's 100% related to an expected increase in stranded costs, assuming that there's an announced P&HS divestiture fairly soon. Perfect. If that doesn't take place in 2025, it's reasonable to assume that the first half run rate is kind of a good ballpark for where things could be, ex those potential stranded costs? That's correct. Great. Thank you. That's the first half run rate. You see on your prepared remarks, Jon, you said that Q2 is probably representative of what it is. Q2, yeah. Of each quarter. Yeah, from a margin perspective, that's right. That's right, yes. I'll turn the call back. Go ahead, operator. First of all, I want to thank all of our teammates, obviously, for continuing to support our customers, supporting the patients in everything we do. We look forward to continuing to move forward with a singular focus on our patient direct business, closing out this transaction, and having the business laser-focused as a pure-play patient direct business. Thank you, everyone. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.