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OMI Owens & Minor

Participants
Trudi Allcott Director of Investor and Media Relations
Paul Phipps Chairman, President and Chief Executive Officer
Richard Meier President of International, Executive Vice President and Chief Financial Officer
Lisa Gill J.P. Morgan Securities LLC
Sean Dodge Jefferies LLC
Erin Wright Credit Suisse Securities
Robert Jones Goldman Sachs
David Larsen Leerink Partners
Evan Stover Robert W. Baird & Co.
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to the Owens & Minor’s Fourth Quarter and Full-Year 2017 Financial Results Conference Call. My name is Brian, and I'll be your operator for today. At this time, all participants are in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of this conference call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. to call, presentation Ms. like host to now today's for would turn over the your I Trudi Allcott. Ms. proceed, Please Allcott.

Trudi Allcott

Thank you, Harbor earnings operator. Owens Good to of morning, everyone, and would I we fourth Allcott, on like and begin. the Trudi team, & the welcome quarter full-year before I'm XXXX Safe call. read and behalf statement Minor to the

may those from our call our full update performance. And Phipps, our risk of will on Participating the materially provide our the into acquisition filings CEO, press an factors. discussion financial which Our our and comments discussion release. morning today, Officer of an of fourth XXXX, measures comparable business, differ are are a quarter forward-looking are non-GAAP Information President SEC and our in the financial will statements to our projected. financial financial strategy in In statements. the EVP insight the Halyard's risks In today the our our Randy will and information subject S&IP about this results that could and we are our Cody for to results more who be business and certain GAAP reference we press these these and release see and for President International, of focused of Chairman, results on website. reconciliations release press included our on overview who most and cause our transactions, make measures. Please details the business. included in full-year of actual the to These on of Meier, posted course measures and uncertainties and Financial Chief will supplemental today, discussion provide

start I'd off morning. like this things will Cody call who to to Now Cody? over Phipps, the turn

Paul Phipps

ongoing full-year efforts Trudi, year, us our a to make the and and significant XXXX good Minor. about challenging and the our the All then for to this few the year Randy segments challenges turn the faced comments competitive Owens everyone. joining forces Thank a quarter. executional for call Company. very fourth results. and in on was I’ll market you, you year morning. business, our to quarterly Thank & morning, and call and I’ll transform encountered throughout over discuss three

are distribution our Our to improve of business results distribution, negatively and increasingly our reality steps to continues are impact discounted toward We are the transformation continues unacceptable and face aggressive accelerate this we and to where to the the products to our subsidize performance. margins. market move used that taking

absorbed also counter a our slowdown improve We efficiency. customer aggressive had actions a trends, de-leveraging on we To losses of and expenses in which customers, these operational undertook effect saw to reduce growth the and existing business.

for we RBT year, revenue margin not call business as but transformation Our exceeded headwinds. our previously or mentioned to sufficient was rapid the and expectations it, offset the

and position Our long-term legacy to for distribution to propel announced profitability year. two our acquisitions diversify growth we large our leveraged needed and past future, we model business increasingly and goals. that strategy clear volume business our it as and achieve became business this strengthen To our the strategic to

margins. has expand August Minor direct of announced Byram portfolio the a addition in with year. to U.S. that been second growing gives higher Owens we we continuum the great the Healthcare, care, to in with consistent the strategy across our & a company us channel largest First, patients of to acquired last services and Byram access to

of payments. a the important become have that world a increasingly home. ability value-based This need to our We will home way many see our IDNs large enabling health the patients better all the of align platform to and their in is customers also follow it to

Byram meaningful be team our a the We have results. momentum of strategy date they our continuum to been to pleased has XXXX with contributor care will to brought strong and our and progress

bold we will own Prevention to timeframe. portfolio a & diversify is significant Halyard expect move our close which in history This our transaction largest intended be Second, we is two This business and that step a of the goals. to and achieve brand will announced we strengthen made model. Surgical in strengthen product believe and Infection the the Owens when business Minor's to acquisition April we

a as XX% revenues greater importance, to will low total of total strategic this growing double-digits. own our XX% of to brand Of and believe acquisition revenues. from the low product increase capabilities we that brand First, sales our percent reach own to a goal our platform single-digits even of to provides products

expansion Surgical Second, for our opportunities to we significant will markets with dependence reduce and of can & our also new Africa, for on global distribution our portfolio mix. with the margins Prevention favorably and a Infection growth point Japan, bundle product care. transaction access Minor Obviously, margins, Furthermore, enables should us business we with that it solutions including attractive having Canada, portfolio our of leading Owens this Australia. higher larger South at products impact and gives in

closing last we valuable has our forward to integral This the new the team. aligned will Halyard companies the with the transaction. team our strategy. bring believe said know resources Halyard our both quarter, will and from is business board tremendous are of finalizing skills and business model Teams plans us. we working welcoming part We business we close new upside As for on toward new to be and transaction once they and we look an

execution We focus. are to reorganizing our also enhance

coordinated two transactions, two will units; and enable products serve business the As These the global a address result to to business of today future. strategic organizing the market approach us solutions. needs the with global these and units company two we into are the into of healthcare

last of Solutions who the now that We leads and Global Stuart Lowery, us year our joined announced as formally Products its has joined Halyard of President COO as Health And have SBU. division Chris President. Global serves the Company Morris-Hipkins the

the the of are and environment steps of current Halyard acquisition our upcoming acquisition the our significant business. in Byram transformation remains While challenging,

performance. strategy remain All us on of our focused executing improving and our

the team patients committed needs remain serving home. they providers, whether are healthcare to mates payers customers, at Our valuable or manufactures, of

Going new our integrating to results. and bundling financial by our the value will operating over call that, on solutions facing turn model forward, we and products of diversifying to four, today improve improve Halyard added S&IP I problems our at business and Byram reduce successfully four priorities our solve future. and solutions two, to our to emphasizing our business care; customers One, performance. With focused and that the transformation costs remain committed and the rapid strengthening Randy? performance; three, and complex business; the in developing point review to Randy are executing

Richard Meier

I'll affecting Today, I a you, then the full-year for our the our on and and start will Thank with good of the Cody, the have quarter few followed performance. results business. review morning, factors discussion of S&IP Halyard by everyone. comments a

start our by far short for fell of Let's reviewing our XXXX financial expectations. results which

$XX.X net income $X.XX per $X.XX million XXXX, of net income $XX.X or For adjusted with share was or per million share.

year. consolidated $X.XX revenues billion were last the For billion compared $X.XX to year,

$XXX $XXX last for million were XXXX, consolidated For operating earnings operating of million period were earnings compared ago. the operating year $XXX earnings Adjusted consolidated $XX.X XXXX million million same versus a year. adjusted for to annual

provided new derived expenses margin performance softness the pressures, Reform XXXX, Benefits as Domestic incurred Products of recently Act expense these offset segment, our the our $XX.X to and enacted or RBT The Byram Tax support ongoing Europe During ongoing and segment well the in productivity gains to year. as is million $X.XX our by of which business. a the Healthcare in challenges. and control partially continued for customer be now initiatives benefit Proprietary from part hampered

reform we reminder, net quarter per for and the a impact from income share the of diluted As excluded adjusted the tax year.

of adjusted the in adjusted we was reform, range benefit tax effective tax to the the for in XX.X%. rate of effective Excluding XX% be an XX%. tax XXXX, expect year to the And rate

close Management international of included X.X growth realize operations impact measurements of intend the inventory Asset Healthcare. diversification times, Asset of It to or million to to Management the $X.XX net $XX.X of days The include Byram of $X.XX metrics was reported ongoing guidance income per the S&IP $XX DSO Halyard operations Cash important compared and provide our XX.X we is business that from the share continues million of per quarter, or both fourth million year. flow of further $XX last we to million $XXX model and income metrics upon and and share. transaction. net turns adjusted

quarter revenues increased $X.XX X.X% to the For billion. consolidated

businesses, to operating for fourth last earnings operating Performance $XX.X consolidated last was quarter quarter $XX compared quarter Adjusted year. the loss For operating year's longer earnings million. versus and million million were million, realignment issues $X.XX of $XX.X the of product to consolidated fourth future increased by large price fourth improve sales the during certain was cycles incurred fee-for-service and than exit compression, expected quarter for with performance. manufacturers, margin costs and our affected supply

three let's quarter annual Now and $X.XX year-ago. million $X.XX to market price affected billion $XXX XXXX. quarter in in billion earnings the million segment, the to revenues a segment results. look were the Fourth the year. the compared for compared Domestic $X.XX compression revenue fourth prior revenues were margin gross of Domestic billion, Annual $X.XX at and to operating billion negatively segment $XXX in segments. margin segment In were compared Domestic

from offsetting XXXX, usual healthcare were transformation Company's the of these million Domestic higher and we expense. reduction the Byram net revenues. addition, derived than quarter, In $XXX LIFO fourth initiatives. the during Healthcare, contributed segment August benefits in incurred Partially acquired and which to results expense the costs

International million revenues Fourth were year. year, to $XX $XXX Turning segment compared quarter $XXX the last $XXX results; year. segment last International million the compared million million to to for were revenues

was million to the last $X.X year, loss the year. of compared For $X.X income million operating segment

International experienced the implementing the quarter, than costs compared increased new income cost expected for the a in and the to International reduction onboard year. severance segment operating softer million of customers, prior loss quarterly segment a million, $X.X to revenue, in fee-for-service As $X.X lag had In initiatives. earnings, of the

$XXX million annual last to Next segment; Products million, a $XXX our were year. Products Proprietary compared in segment, Proprietary revenues

prior million million revenues For were the year. quarter, $XXX in to compared $XXX the

for $XX segment were inventory returns in $XX segment quarterly the earnings earnings The compared compared reserves million were million million while year. as in obsolescence. last operating in resulted an and Products Proprietary For lower $X.X declined to as the earnings operating to revenues year from the well before, operating increase million year, $XX.X

margin we Looking back and challenging pressures than were anticipated. pricing compression year, the more on

utilization fourth in to lower own quarter negative In did of year-end provision which impact such Other typically our volumes. costs which LIFO as addition, a see contributed our and not results. were did on which sales high unusually expected impact a results items the benefit had our rebound our not we healthcare the and also than rates, materialize,

which initiatives year. While launched results for the we transformation effect some our year, these factors of margin for mitigate yielded on help rapid all had and the of annualized benefits excess million a pricing pressures dampening $XX last year the and the in business an to

We to X% to operating long-term XXXX to benefits We’ve that these to before initiatives believe in said achieve and transformation contributions sustainable financial of XX%. incremental continue and we we goal see in of may end by to is it the million from our achieve earnings $XXX XXXX. of expect the up believe company growth

As integrating we to transaction the is closing excited look agreement and There Health remain we as S&IP we about momentum business. Halyard move good acquire towards business. ahead, S&IP the the

will continue discussed, offering, Owens us reach. our Minor, have expand & global our reposition transaction product allow this we and enhance to As to

flows business acquiring the channel. generated to for acquisition. we by revenues billion of be revenue As of $XXX incremental assets the of will S&IP million the approximately annual $XXX in through approximately a S&IP closing, expect The million. the Halyard’s from balance we gain our already Upon business reminder,

we profitable forward direction transaction believe Together years the increasingly also contributions deal platform global us million $XX At million and with first achieve to timeframe. present, clinical Byram Halyard’s synergies thereafter. the and the the believe in be looking this April the from to growth. in and the expertise new breadth Healthcare, year that give accretive we closing positive deliver will We three will accretive to $XX over and are

XXXX over Halyard Byram, closing believe will to business, we reform. dependent more a as as international financial improved record of $X.XX of detailed the as will XXXX. that tax board has consistent to Halyard the Thank timing Operator? result While public operator expression XXXX improvement payment over approved our first And we modest confidence the see outlook recently well a the and period existing Minor And turn last a a continuously. with remains years. the plan for X% performance of transaction, growth over our at on we integrate our quarter the dividend becoming improvements you. the prior the per paid outlook XXXX, on of we dividend broad finally, builds track of the for increase performance of the dividends call share, XX that, we in & in begin increases and in Upon Since questions. company provide benefits Owens transaction, our for as to

Operator

[Operator will from with the Lisa Morgan. Thank come Instructions] of our you, Gill first sir. J.P. question And line

is Your line now open.

Lisa Gill

me very Thanks Great. competitive just marketplace. Cody, much. with let start the

trying So initiatives forward, you are as around into we you're services. get then And whole some others me we idea you approach? about to the business of is are, to this talk reduction that using think bundled margins how today? we are try value one about those the and specifically do added to talk think and going One, that distribution about customers distribution this out to reading and for we or stands clearly business those Amazon how about looking today your bundle. think when four positioned what that Can about is of kind everything secondly,

Paul Phipps

question. the for Lisa Thanks Yes.

with first acceleration that's on of there. me our seen impact we've distribution part we're the bundling and had question products, that’s an on your First, subsidization which comment the is, let what out the obviously and margins an and calling of just of

emphasize enhances the as want our customers. point Our care we solutions we the we answer we second, that is that to as think twofold, that of logistics improves RBT. we value to through And want transformation of one, and and to that our or to really what we then and offset call business bring can much our

exists think is for? see What us are unlock as supply asking mentioned what help I Amazon that? So the end-to-end part the that they broken are frankly. asking customers chain. And supply is today do that customers and see And in do well. chain, question to value disconnected Where improve very what is them second your our the of that and a you chain supply we the

focused So care. investing on the platform, core we're investing distribution continuum in in of our

visibility. control the want no – acute constantly setting. of leave There's customers things There's hear the can't to costs. transparency. I from is those no One They

why back way that's the connect So to the made the We IDN. home acquisition. want to go then we that to Byram all and

I are is some constructively we're same Amazon and investing talking the the industry. and about where So solutions services that's in healthcare disrupting disrupting and of those that things believe

Let there. me pause

Lisa Gill

do So differentiated you on will them side of something they you Amazon? talking mean do et do you you that it The you from just I on view them Wall competition to bring acceleration – it as the potential going think Street because can view people the your marketplace, bringing constructively them article, then, to like Journal sounds to And see again foresee I mean Amazon your are customers, yesterday, based cetera? Seattle

Paul Phipps

Yes.

a lot there that customers well as it's talking our to as known of competitors out and including Amazon our think customers. large very is I well IDNs

I'm of they innovation, is to what the it say, much needs want saying needs transparency. connectivity, needs industry agree is think we it do, with. think and what it We for right they I disruption,

a lot that going So the the of are they what kind right same say solutions. of with path down we're

the right on is they unlock we're So with. to what that too be from the are believe solutions talking not far reckoned value I reckoned forced to to the are about. with? bringing now focused be forced But to trying Yes, off that's marketplace. what to Amazon happen they we're is through

Lisa Gill

Halyard And but know you like can on April. could it's the thoughts the I I any XXXX. just on us we’ll actual underlying other the then in initial you for around and your of early, I if when one get business ask question too give Great. guidance feel Okay. just that's know XXXX? disclosed guidance

be that You model thinking about we savings talked factors RBT, incremental about tax should the XXXX some our business benefits, are some perspective? other talked from of for core a about what from but

Paul Phipps

and transaction way business. the close our to business, give is improvements significant Byram we what in in clear diversifies give will are our portfolio it’s will our business base we to transaction much the transaction. close And and think it's Halyard it a core guidance that of like modeling it, is counting of we the said Yes. we're our we But distribution that's transaction, S&IP once But and modeling the We're just improvements a again, what And the we about such business. picture. Halyard, I'd once – it's business. – material on we once materially positive to want certainly because what should that strengthens and the in fairly we to you contribution outline to Halyard materially say addition Byram legacy we holding

Lisa Gill

you. Okay. Great. Thank

Paul Phipps

Lisa. you, Thank

Operator

from And question our Sean Thank Dodge line you. will of the next Jefferies. come with

open. now is line Your

Sean Dodge

the lower Yes. distribution little maybe then Thanks. mentioned of what what's us. Cody, talk or the on you it before about revenue maybe you products? so something of giving is from a the behind the subside there, using Products driving Is environment segment, Can little of you bit Proprietary on sale outlook worst the feeling And mentioned having the there? that to other a stabilized is the source different? kind production it services bit

Paul Phipps

there, would say I there Yes. on things Sean. is two going

losses. in First by and there private impacted and have Products Proprietary revenues were the in decline customer we our they segment, the products own label the

We with portion business. through did was comment that patch kitting that a decline there. a we So went our of significant the rough

done our very job business. running a I got that stabilizing operation that We've has well team good now. of think a there really

we're win what that's customers the win and customers team stabilizing with business. that pleased is result business and new in starting with not we're and about to that – with of we're year, pleased for speaking but the in terms got we're the we're where so pleased And last

Sean Dodge

to Okay. The think those I is the the losses quarter of the you roll are off that third are different that started or and client clients? referenced, this client ones or XXXX

Paul Phipps

The XXXX couple were a talked XXXX. Randy? impacted fully and of in the business big There in was about one losses that’s we now. annualized one that other our

Richard Meier

off saw with first think and that customers of the we the year. in XXXX, and larger I the started of third losses certainly we of rolled in fourth Sean some half customer quarter Yes, some

challenges we as of were we independent the business as large a there. we are stabilization little as impacted the Cody the rolled contracts. started the result terms to our of in some of some those fourth new in bit having. wins But through. IDN On we’re customer losses starting customers. that We saw a So coming see some Private volumes that kitting contracts business of Label some a side, and customer see and quarter, to around indicated, into And

So expect had than brighter would a we in little to XXXX XXXX. we

Paul Phipps

one the also excited into that of That's with things Halyard those products we're those the point with products. business. of Sean go I kitting the lot A the mentioned S&IP kits. of leverage about us addition for

Sean Dodge

the there think of detail cost like us International And the And you mix, segment was initiatives bit little a a you favorable the returning revenue the think Can given in lag segment, the International good. to I to very for then on what's timeline in give bit less profitability? things that? Okay, last me, a some one for then referenced of implementing there. to more

Paul Phipps

Sure.

cost. we the a we're the few was think little quarter longer initiatives implement a had than It improve I to looking than to took in really question fourth anticipated. first that

that and of the and So – see severance we the playing was upon the with of all like benefit roll won't realizing quarter, first XXXX. some we cost and but associated into quarter that so whatnot, we there

a some some was topline growth, continue our the terms for some customers. direct-to-market In see we that front-end good the of business topline we over of by to of driven lot of more organization as our of growth, took the of

in business challenges and we But what was over built was just underlying profitability that the with year. referencing the fee-for-service in sales direct-to-market bit softer Some the force of last the we fourth our little quarter a the we anticipated. than investment the side the the of course were on comments

Some of Europe. business the over just softer end was in market

customers is that a So fourth we seeing there's last in didn’t volume somewhat of rebound. a see of the early some through. pull What new number and We've in the onboard of also that quarter year. third days we're of

of to quarter see return expect the fourth business a XXXX. in profitability we’d to So in that

Sean Dodge

Okay, again. thank you

Paul Phipps

Thank you.

Operator

question Thank you. Suisse. our of the with Wright Erin come next will And from Credit line

Your line is now open.

Erin Wright

the maybe that certain Great, will those isolated product for some how from Is of you larger headwinds, and kind forward? thanks. Can were or going you speak specific from board-based of issues discussing manufacturers? different before recur to what what supply

Paul Phipps

unprecedented impacting Erin. Yes, We've of and rates it's that I��ll to high back seen customers. speak order kind our

there, I big from some of of we've impact think kind solutions in well some try take IV some obviously that. year. things actions for earlier they're needs the particularly taking specific of having but to of to our a this specific also our the we're and the of driven with impact to due inventories to more by and address shortage customers manufacturers that's and we're some seeing. is cover that to and we're quarter drivers end is seen hurricanes we're it of dealing and of of And it the our the customers the been side. disruptions But fourth unprecedented suppliers, in it with publicized on The working to try their large late of other levels

Erin Wright

in surprises close entail to have you initial you mentioned there I there but the start on acquisition of you kind don't incremental two Halyard any variable has guess some better that have of with XXXX you that the transaction. bring a Okay. And that's still sort been kind since think I as costs some we then guidance, together. were as Thanks. days the visibility would of here that companies or

Paul Phipps

in. and comment, I'll I’ll ask to Yes, jump Randy then

are teams all, of with First the far so very making. we're the pleased progress with

lot is brings Chris working and of was of move are teams Halyard that Obviously us Chris Former I good for bring Board. knowledge the and think a very the together. it he to on collaboratively a business COO Lowery really

you're on trying that that is It a So business through from that's for carve we're where how carve out. going complexity adds going to go. when you're track that out of a

the environment with that's and want right are is pleased figuring So the but work Randy, comment? a in out transition add going agreements, lot if how we're service now of figuring working to teams IT the that the does complexity. you out together,

Richard Meier

fourth Yes, closing the I the get pretty to speaking transition a Cody is said, the to The adjusted I quarter to timeframe think certain and and to first just that all it's Relative announcement add earnings. very things done. related close relatively those well. are out going the will costs, we time of our working we think still well from acquisition some a referencing the first I probably the the in targeting, teams the together we in we're are carved April incurred just all in costs were of quarter

Erin Wright

you. Thank Great. Okay.

Paul Phipps

Thank you.

Operator

Robert question next of come the Goldman Jones Sachs. our And from with you. Thank line will

Your line now is open.

Robert Jones

Cody, questions. the Great. throughout pressure is up. come the highlighted Thanks topic for pricing that's a you've XXXX. Amazon

partner comments? as you earlier competitor is landscape on or you some a You as as XXXX you experienced about as negative commented in had that you Amazon, new and forward wondering, purely could of the you Yes, is actually think elaborate as if we Amazon And results then just think potential yet has in call just well. beyond? Amazon that on about it in I'm XXXX? about the see the your an of curious as think you Do somebody earlier looking impact

Paul Phipps

Yes, your question. Robert, to try I'll first answer

or the from believe on think and office physician don't that let base office world and think perspective what base the seeing a space. consumer Amazon comes their think the our strength patient we're why small our I our from from that. business me in strength I First, the world large explain had my I impact we or comes really and in Their direct space

is So office traction our really office – small the where to the physician that picked direct some belief arenas. patient and of up is Amazon's

the From hospitals large large systems Street is about with had have hasn't a needs Journal talking and actually that go on standpoint space. they that address us. and that to in Where where from talked IDN. they standpoint impact we're hospital strong. the That's about that helping what to strength where So that is want they're enter yesterday Wall article The the desire their our that's and

and just into bring medical is hospital, not the the devices at but to of So how all to products the a we way care. to cath hospital room point of a knowledge lab operating medical the what to get the

and the our And customers again so what the or that the think inside we on our focused acute both of large need of setting we're developing solution idea along continuum care.

with So a go of and as there. that overlap knowledge IDNs, succeed Amazon's lot we bring large trying continuum lot want a we connect do what try have where to to and see out to into they of care of that's the to transparency with I and the extent

are their right they focused and where where on and are. learning competitor on behalf of desires What and now Yes, they solutions frankly industry. we're is the So our our forcing are overlap. there's customers extending

Robert Jones

that the that and as top XXXX? Halyard obviously and the on rate run we guidance the But savings. That's you're of think giving just thinking model about should framework underlying is to that out XXXX. XQ for operating right would far have official around RBT then And Got it. business then $XX what if for that quarterly as a Okay. look just as is Randy about earnings rate, the at not general I run million? I we know think But layer we is Is helpful. I

Richard Meier

well fourth the look with whole Byram integrating as quarter let As series the we in Halyard. at with things lot a as business transition on there going a is of alone just focusing just on the

the a quarter fourth consider go we forward. would rate wouldn't I run as good So

I more go where variety things the to want would that back a on you could the I quarter maybe of look we're full rate. where a quarter of then run indicative think would include fourth with and noise third quarter a establish Byram. you of not all about If in going going to to gets the be and But that think

Robert Jones

helpful. That's you. Thank

Operator

line question Larsen Thank Instructions] David you. And the will our Leerink. next with come from [Operator of

Your line now open. is

David Larsen

talk you the in be significant Can seem XXXX? about will SG&A of of in and drove Hi. costs sequential it a me pretty some like to was and it that little increase bit that $XX XQ almost million, what like

Richard Meier

full are business vast part Great incremental you large running of and year-over-year Byram. doing? simply with first we majority David. the the put Hi, that It’s costs Byram. in a had through question, was it How the quarter

David Larsen

Okay.

we we XXXX? can through continue guess as progress Sorry, I level expect to that elevated to see

Richard Meier

Yes. Offset.

David Larsen

Could years there or talks respect can what with exploratory of to many years & any how like or far sense? potentially able now? where Cardinal them or like might you of Minor hospital do say years, in now us point, just get of [indiscernible], supply from how you they help or having for distributor displace Amazon, when might it another XX%, XX%, medical Owens your a away Amazon is they be mind that to for XX XX% Amazon then need, is are take sort client five hospital And sort bit Okay. maybe to little to frame

Paul Phipps

more can and you're of I timing inappropriate their to do, to probably side. in patient for think is, talking it’s on David, What is say comment again, the office what’s what the I strength attempting Amazon is to us about. physician direct out

comment what putting that. the they they I large So IDNs they're try in there's solving world? interested that order? How think it's to understand of for What their timeframe. to me is a forth price they complexity that effort I How tell for lot can think appropriate don't that on you order? to of very they're in I

to going address understand to the I those. They're disrupt constructively to think have large in needs that IDNs healthcare. of they

I to into effort trying that think going out. a figure of lot

David Larsen

on just quickly then And segment. Okay. the Domestic

in mentioned costs some think I there for XQ, that you were on-boarded new business.

the those going up in P&L? able I you XQ, to capabilities business new we that are incremental on demand? think segment to income start XQ? turn be to is where And to ramping meet to nature, one-time costs you're that but be sorry, International that you again saw the I I’m – mean expect in operating positive expect that When in do do

Paul Phipps

Yes.

you the our they profitable. has on-boarded articulated into it very see quarter, in region, we that our if expect fourth initial turn quarter roll well. customers think region, startup, number a would first to I northern some southern in in costs the and which We to and of

on think I comment. your spot So with you

David Larsen

much. very Thanks Okay.

Paul Phipps

you. Thank

Operator

Thank W. question Evan you. next with come of from And will Robert Stover line the our Baird.

Your line open. is now

Evan Stover

I on thank financing thoughts for you. Hi, wanted get updated talk about deal. - the some hopefully Byram to some

results, And that the updated so five a higher there think but in you you like debt could and the five, rejiggering You cost your I as OMI? look entire you in lot stack, said read can talk leverage than was some had you. that cautioned area? provide the of your deal? maybe was result fours structure a debt Thank with the run us you're your fully pro deal are rate think lenders know I calculating I of put on going what just to what be higher. capital an it little also then about a I given you high with not expected you forma bit far Can the into does this your because something for leverage think what talk to leverage, would XQ just discussions in and to do about previously

Paul Phipps

related of I and the transactions you’re asking with was think more capital the Evan, Halyard Sure. structure to that Byram. the question

Just to Byram… refresh with

Evan Stover

Yes.

Halyard Sorry, with I replaced there, Byram yes. throughout

Paul Phipps

Byram but and the to would transaction We structures to financing bank a we Yes. bit refresh. had just permanent go we in characterize the bank bit capital using to of our I We transaction, financing the out market. announced schedule be to used out more committed borrowing I would understood where little the to you're that markets close indicated when more going, would a to to a capital put maturity capital favorable. look try Halyard where we little

plan on that. We continue doing to

to we I would within year-end, well be have still look pro within current go-to-market. think we would the still we as we of with certainly our forma that the performance future are package and our limits we for there covenant

as cost see You're up XX-year bit of with and have a some the treasury, the to the the credit that interest weeks will go markets, of back we basis assumptions non-investment and correct grade we higher XX market, recent with in in we've about that in widening world the capital the adding credit of spreads volatility rates in some probably points market. your bit seen little of the a some back

eventual benefit our cost over we're That to capital models paper that premature have putting capital bit Given longer-term to capital some the still the think what we will have comment next probably our committed of I little our as as sheet to four think six to would favorable me a balance to reaffirming I of overall on we out. markets, weeks, that a But weeks today. well might going be structure. market, the enter the for exact probably bank

Evan Stover

Great. Thank you.

Paul Phipps

End of bet. Q&A You

Operator

you. questions no this at there Thank And further are time.

yours. Phipps hand conference remarks. Sir, So pleasure his the Mr. to it's floor for the my to over closing is back

Paul Phipps

us Thank all joining you morning. this for

and the Our during our progress on focused joining and you improving Halyard on keenly for day. our our forward first teams our to We on remain occur X. have will look you closing serving transaction, good results. which May customers, a quarter updating Thank us call operating

Operator

and disconnect. day. participation conclude your for today's may our you Good on thank we does This program all and Ladies conference. gentlemen,