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Owens & Minor(OMI) stock March 2018

The bull side is that its in an industry that has historically, and esp over past few
decades, had great pricing power. General healthcare industry has a great inelastic
demand. This companies been around since 1800s. They serve US and Europe.
Overall developed world is aging. They are trading at a low valuation with a 11p/e
and offer a great dividend yield of 6% and a price to book at 1.03. Current price is

Bear side the stock has has
gotten hit hard recently due to
an earnings miss and the
release that they lost a
customer. The general long
term bear consensus is that
since bezos has said a few
sentences about tackling the
health industry that amazon is
going to take over it. I think
that is an insane assumption mainly due to the difference in what they are selling.
OMI does a lot of technical supplies that have to be on point for surgeries and
have to be linked with certain insurance plans etc it is a cluster fuck no doubt. I
agree somewhat with the debate that there are two types of companies 1 disrupted
and 2 disruptor's & I think its applicable to many areas of health care especially in
the US, but OMI has a lot of long term relationships. I can see that their pricing
power and gross margins will decline in the future slightly which has already been
happening lately. So the question to answer is do they have enough potential
defensive plays either through strategy, relationships, complexity, regulation to
survive and come out long term doing ok.

One way to answer this I assume is to look at the acquisitions they have made in
past couple years and there new strategy of 2 business units.

1. global solutions – contain majority of OWI legacy biz with focus on
distribution, logistics, inventory mgmt

but they should be ok with a current ratio of 1. is its debt/equity. esp given uncertainty of topline and gross. And then on the product side.depth. albeit they have some intangibles. I think this is a decent play at this price. overall the pie is going to grow.6 esp if they can turn over there inventory and AR. By providing the value added services that a firm with this experience. and relationships can pull off. . I will assume they will come out of this – and while some healthcare may get disrupted. One thing that is bothersome. While the company has some head wins. compared to the market at a 27 multiple. focusing not so much on hospital trays but products that are more complex due to seriousness of the product and likely regulation. the market is not giving them any credit for future earnings potential. global products – primarily the large acquisition they made of halyard health’s surgical and infection prevention I think this is likely a good way to position against disruptor's coming into healthcare.2. Doing the logic of a price/book of 1.