Owens & Minor sells healthcare unit to Platinum Equity for $375mn, keeps 5% stake

Owens & Minor has entered into a definitive agreement to sell its Products & Healthcare Services (P&HS) segment to Platinum Equity for $375 million in cash while retaining a 5 percent equity interest in the divested business. The transaction marks one of the most significant structural shifts in the company’s 142-year history and represents a decisive move to reposition Owens & Minor as a streamlined, higher-margin, home-based care organization. The deal comes at a pivotal time for the healthcare distributor, which has faced mounting investor pressure to improve capital efficiency and reduce debt after several challenging quarters.

The sale will separate Owens & Minor’s distribution-heavy operations from its patient-direct business, signaling a pivot toward more scalable, technology-enabled healthcare delivery. The retained equity stake ensures the company maintains exposure to the potential upside of the divested business while unlocking liquidity to strengthen its balance sheet and fund growth in its home-care segment.

Why Owens & Minor’s divestiture to Platinum Equity represents a strategic reset in the healthcare distribution landscape

Owens & Minor’s decision to divest its P&HS unit did not emerge overnight. The segment, which supplies medical and surgical products to hospitals and health systems, generated roughly 74 percent of consolidated revenue in 2024. However, it carried thinner margins, high logistics costs, and significant exposure to cyclical hospital spending patterns. According to filings from Owens & Minor’s most recent annual report, the P&HS segment had been underperforming relative to the company’s Patient Direct division, which provides home healthcare and medical supplies directly to patients.

By shedding P&HS, Owens & Minor is effectively pivoting away from a low-margin distribution model and aligning itself with healthcare’s long-term migration toward decentralized, patient-centric care. CEO Edward Pesicka described the divestiture as a “critical step forward in simplifying operations and positioning the company for sustained profitability.” The strategic logic is clear: offload capital-intensive assets, reduce operating complexity, and focus on faster-growing verticals such as home medical equipment and chronic-care management.

Platinum Equity’s acquisition interest underscores the resilience of supply-chain-based healthcare services even amid margin compression. The private-equity firm, founded by billionaire Tom Gores, has been expanding its portfolio of industrial and logistics companies. Its operational turnaround model could help P&HS regain efficiency and profitability independent of Owens & Minor’s corporate structure. Industry analysts believe the transaction gives both parties breathing room: Owens & Minor gets liquidity and focus, while Platinum gains a mature infrastructure business with established market share and recurring customer relationships.

How the $375 million deal structure, retained equity, and tax assets could influence Owens & Minor’s financial recovery and investor sentiment

Under the definitive agreement, Owens & Minor will receive $375 million in cash at closing, subject to customary adjustments. The company will also retain a 5 percent equity stake and preferred return rights, enabling participation in any future upside from Platinum Equity’s ownership. Importantly, Owens & Minor will preserve over $150 million in tax attributes, including federal net operating loss carryforwards, which could significantly enhance its post-transaction cash flow.

Citi and Wells Fargo are acting as financial advisors to Owens & Minor, while Kirkland & Ellis is serving as legal counsel. Platinum Equity is advised by Gibson Dunn, Willkie Farr & Gallagher, and Latham & Watkins for regulatory matters. The transaction is expected to close by year-end, pending standard antitrust and regulatory reviews under the Hart-Scott-Rodino Act.

From an investor’s perspective, the timing of this divestiture may prove fortuitous. Owens & Minor’s stock has been volatile through 2025, falling more than 40 percent year-to-date amid concerns about leverage and competitive pricing pressure. Analysts at several investment research firms have noted that shedding P&HS could reduce revenue concentration risk and help unlock shareholder value through margin improvement and deleveraging.

Sentiment in capital markets appears cautiously optimistic. Institutional investors are expected to evaluate the deal based on two key metrics: how quickly Owens & Minor can improve adjusted EBITDA margins and whether the company can sustain free cash flow generation without the P&HS contribution. If both targets materialize, valuation multiples could rerate higher toward the median of specialty healthcare peers, reversing some of the stock’s underperformance.

What factors could determine Owens & Minor’s success in transforming into a pure-play home-care and patient-direct enterprise over the next 12 months

Transitioning from a hospital-supply distributor to a home-care-focused healthcare company involves operational and strategic complexities. Owens & Minor’s Patient Direct segment—anchored by Byram Healthcare—has delivered double-digit revenue growth and rising profitability, buoyed by increased demand for in-home chronic-disease management and reimbursement shifts favoring outpatient care. The company’s new strategic roadmap emphasizes direct-to-patient logistics, personalized device distribution, and digital ordering platforms to modernize fulfillment.

However, scaling Patient Direct will require sustained capital allocation and technology integration. Owens & Minor must invest in advanced analytics, telehealth logistics, and reimbursement systems to compete with entrenched players like McKesson and Cardinal Health that are also expanding into patient-direct channels. Maintaining service reliability during the transition—while integrating new systems and divesting a major business line—poses execution risk.

Industry observers note that Owens & Minor’s retained stake in P&HS offers an optional upside, but its near-term success depends on rapid cost optimization and customer retention in the Patient Direct business. The strategic narrative must also resonate with institutional investors who historically viewed Owens & Minor as a defensive, steady-cash-flow distributor. Transforming that perception into one of a growth-oriented healthcare innovator will require consistent quarterly results and transparent capital-allocation discipline.

Financially, proceeds from the sale are expected to strengthen Owens & Minor’s balance sheet, potentially enabling further debt reduction and selective M&A in home-care or digital-health technologies. The company’s recent debt repayments—$244 million in 2024—suggest a renewed focus on leverage control. If management successfully reallocates capital toward technology-enabled patient engagement and high-margin products, Owens & Minor could establish itself as one of the few mid-cap healthcare companies bridging supply chain and patient care under a unified operating model.

How changing healthcare economics and private equity participation could reshape valuations in the distribution and home-care sectors

Owens & Minor’s divestiture to Platinum Equity illustrates a broader trend: private equity’s growing appetite for healthcare infrastructure assets. As large distributors offload capital-intensive divisions, financial sponsors are stepping in to extract operational efficiencies and capitalize on the steady cash generation such assets provide. Platinum Equity’s bid reinforces investor confidence that distribution networks—though mature—remain attractive when managed with leaner cost structures and targeted automation investments.

For Owens & Minor, the more profound shift lies in aligning with macro healthcare trends that favor home-based care delivery. The U.S. healthcare system is experiencing a sustained migration from inpatient to outpatient and home-based care models, driven by policy reforms, aging populations, and payer pressure to reduce hospital utilization. Patient Direct aligns perfectly with that trajectory, promising recurring revenue and scalability without the capital burden of hospital distribution.

If the market rewards Owens & Minor for its strategic realignment, the company could command valuation multiples comparable to high-growth medical technology or digital-care peers rather than those typical of traditional distributors. Conversely, if execution falters, the narrative could quickly reverse, framing the divestiture as a distress sale rather than a deliberate transformation. Investors will likely watch the next two quarters for margin expansion, cash flow performance, and clarity on reinvestment strategy to gauge whether Owens & Minor’s bold repositioning truly delivers long-term value.

Owens & Minor’s sale of its Products & Healthcare Services unit marks a clear inflection point—a calculated retreat from scale toward specialization. With a strengthened balance sheet, renewed strategic clarity, and a retained equity interest in its former flagship division, the company is betting that leaner can mean stronger. If it delivers consistent execution and sustained patient-direct growth, this transaction could redefine its market identity and restore investor confidence in a business that is learning, at last, to trade volume for value.