Owens & Minor Sells Products & Healthcare Services Division for $375 Million in Strategic Shift

Owens & Minor announced it will sell its Products & Healthcare Services business segment to private equity firm Platinum Equity for $375 million in a transaction that fundamentally reshapes the company's strategic direction. The sale represents a deliberate shift away from the company's traditional medical supply distribution roots toward a more focused home-care specialization through its Patient Direct division.

The decision comes after a challenging period for the 140-year-old healthcare logistics company, which has faced profitability pressures amid industry consolidation and inflationary headwinds. Earlier this year, the company abandoned a planned $1.36 billion acquisition of Rotech Healthcare Holdings and paid an $80 million termination fee, signaling the need for strategic reassessment. Chief Executive Edward A. Pesicka characterized the divestiture as a critical step in transforming Owens & Minor into what he described as a leading, pure-play, home-based care platform.

Platinum Equity, the Beverly Hills-based private equity firm founded by billionaire Tom Gores, brings substantial experience in healthcare and industrial operations. The firm previously demonstrated its healthcare sector expertise through transactions such as the 2002 merger that created SourceOne Healthcare Technologies. Platinum Equity co-president Jacob Kotzubei expressed commitment to enhancing the global capabilities of the acquired business, noting Owens & Minor's vital role in supporting healthcare providers and patients nationwide.

Financial terms include $375 million in cash at closing, with Owens & Minor retaining a 5% equity interest in the divested business and potential for additional proceeds if Platinum later sells the division. The company also expects to retain more than $150 million in tax assets from the transaction. Despite these financial benefits, investors reacted cautiously, with the company's stock declining nearly 10% following the announcement.

The transaction, subject to regulatory approval including Hart-Scott-Rodino Act review, is expected to close by year-end. Owens & Minor has engaged Citi and Wells Fargo as financial advisers, with Kirkland & Ellis providing legal counsel. The company plans to provide further details during its third-quarter earnings release scheduled for October 31.

This strategic move positions Owens & Minor to capitalize on the growing home-based healthcare market, projected to expand as aging populations and post-pandemic trends drive care outside traditional facilities. The transformation from a broad medical supply distributor to a focused home-care specialist represents a calculated bet on higher-margin services, potentially strengthening the company's competitive position despite reduced scale. The sale will likely remove Owens & Minor from the Fortune 500 ranking where it currently holds position 395, reflecting the significant reduction in overall revenue base but potentially improved profitability profile.