Owens_MinorMorningSession

Owens & MinorExpanding on Our Traditions2007 Investor DayBaltimore/Washington Distribution Center

December 5, 2007

2007 OMI Investor Day

Safe Harbor

Except for the historical information contained herein, the matters discussed in this presentation may constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These include: the ability to assimilate the operations of an acquired business, the potential loss of key personnel, intense competitive pressures, such as pricing, within the healthcare industry. They also include the success of direct marketing programs in attracting new customers, the ability to retain existing customers, changes in customer order patterns, changes in healthcare laws and regulations, changes in government, including Medicare, reimbursement guidelines and private insurer reimbursement amounts, the ability to maintain product suppliers, product price increases by suppliers and other factors discussed from time to time in the reports filed by the company with the Securities & Exchange Commission. The company assumes no obligation, and expressly disclaims any such obligation, to update or alter information, whether as a result of new information, future events, or otherwise.


Investor Day 2007

Craig R. SmithPresident & Chief Executive OfficerOwens & Minor, Inc.


Morning Session

• Healthcare Market Overview

• O&M Market Position

• Providing Value to Partners

• Strategic Direction

• Financial Overview – James Bierman


Healthcare Universe

DisposablesNon-Clinical

Devices Clinical DevicesPharmaceuticals

Consumer

Products

Technology

Outsourcing

Information

Insurance

Services

Acute Care

Non-Acute

Long-Term

Home Health

Labs

Providers

A $4 Trillion Market by 2015


Healthcare Universe

Disposables

Non-Clinical Devices

Clinical DevicesPharmaceuticals

Consumer

Products

Technology

Outsourcing

Information

Insurance

Services

Acute Care

Non-Acute

Long-Term

Home Health

Labs

Providers

Owens & Minor’s Market Today


Hospital Supply Chain =Significant Expense

15%

15%

25%

45%

100%Total Cost Incurred by Hospitals*Percent

Supply Chain Management Expense

Labor OtherSupplies Logistics Total

*Figures are based on estimates of Healthcare Financial Management Association. Source: S&P Industry Surveys: HealthcareFacilities; Healthcare Financial Management Association; industry reporting; O&M Research analysis


Celebrating 125 Yearsof Industry Leadership

CultureCulture

DependabilityDependability

Integrated PartnershipsIntegrated Partnerships

Superior Customer ServiceSuperior Customer Service

IntegrityIntegrity


Customer Service Excellence• Distinguishes O&M in the marketplace

• Right product, right place, right time, right price

• 94% customer satisfaction rating

Culture Matters

Owens & Minor University (OMU)

• Ongoing training & education for teammates• Investing approx. $1,200 annually per teammate• Customer courses in supply-chain management launched in 2007


Marketplace Leadership

• Market-leading distributor of med/surg supplies in acute-care market

• $6.7B in LTM* revenue

• 45 Distribution Centers nationwide

• 4,000 healthcare provider customers

• 1,300 suppliers; 170,000 SKUs; 1,400 private label SKUs

* Last twelve months as of 09/30/07; ** Health Industry Distributors Association (HIDA); company estimates


Investor Day 2007

Providing Valueto Healthcare Providers


Offsite Warehouse

Transportation

Receiving

Storeroom

Purchasing/Procurement

Accounts Payable

CEO, COO, CFO Offices

Specialty Areas

(Cath Lab; Radiology)

Par Areas(Nursing Floors)

Operating Room

Marketplace Evolution


Evolution of ServicesAnticipating Customer Need

Product Focus Process Focus

Consulting & OutsourcingConsulting & Outsourcing

Asset ManagementAsset Management

Logistics / ServicesLogistics / Services

Traditional DistributionTraditional Distribution

• Inventory: PANDAC®, SurgiTrackSM

• Clinical Inventory: QSightTM, Cyrus• Information Mgmt: WISDOMSM Family

• OMSolutionsSM

• ISCs

• J-I-T; L-U-M; OMDirectSM

• CostTrackSM – activity based management

• Bulk Shipments• MediChoice®

• Supplier Programs


Investor Day 2007

Providing Valueto Suppliers


Supplier Programs

• O&M provides essential services to suppliers• Accounts receivable management• Improved supply chain transparency• Warehousing & distribution

• Marketing relationships help drive market-share• FOCUS & EMPHASIS programs

• MediChoice® – area of focus Owens & Minor


2007 Suppliers of the Year

Supplier of the Year MediChoice® Category

Supplier of the Year Large Supplier Category

Supplier of the YearSmall-Medium Category


Investor Day 2007

Strategic Direction


Expanding on Our Traditions

Source: Frost & Sullivan; GHX and Company Estimates

OUR MARKETOUR MARKETOUR MARKET OUR MARKET

OPPORTUNITYOPPORTUNITY

$60+ Billion$60+ Billion$14 Billion$14 Billion


Strategic Avenues

• Selling new product lines to existing customer base– Products outside traditional med/surg

distribution

• Developing new markets for existing product lines– Non acute-care settings

• Continue to grow core business

OUR MARKETOPPORTUNITY

$60+ Billion$60+ Billion


• Nationwide Footprint – 45 distribution centers in the United States

• Workforce Quality & Longevity – Commitment to training and retention– Investment in teammates = dedicated, knowledgeable staff

• Significant Customer Relationships in Healthcare Market– O&M serves 2/3 of the acute-care hospitals in the U.S. – Trust-based, long-standing relationships (avg. 9 to 11 yrs)

• Reputation Built Over 125 Years in Healthcare– O&M = dependability, exceptional service, extensive knowledge of

logistics

SustainableCompetitive Advantage

* Last twelve months revenue as of 09/30/07


Investor Day 2007

James L. BiermanChief Financial OfficerOwens & Minor, Inc.


Financial Overview& Outlook

• Financial Drivers

• Sequential Improvement

• Recent Trends

• 2008 Outlook


Financial Drivers• Revenue Growth

– Sales force effectiveness– Product offering

• Gross Margin– Service offering– GPO contracts

• SG&A– Labor costs– Distribution network

• Cash Flow– Receivables management (DSO)– Inventory management (Inventory turns)


Sequential Improvement -Income Statementas of 9/30/07 ($ in millions, except per share data)

Net Revenues $1,686.7 $1,679.0 $1,686.2

Gross Margin 10.6% 10.5% 10.4%

SG&A 7.8% 7.9% 8.5%

Operating Margin 2.4% 2.2% 1.5%

Net Income $ 21.2 $ 18.3 $ 10.8

Diluted EPS $ 0.52 $ 0.45 $ 0.27

Sequential comparisons include: • Improved operating margin driven by stable gross margin results & progress in expense reduction due to cessation of service fees paid in Q1 to MCK; and leveraging the acquired business

2Q-2007 1Q-20073Q-2007


Sequential Improvement -Asset/Liability Managementas of 9/30/07 ($ in millions)

Operating Cash Flow $ 115.7 $ 89.7 $ (3.3)

DSO 29.5 28.0 29.7

Inventory turns 9.8 9.4 9.2

Debt $ 231.1 $ 369.0 $ 457.9

Sequential comparisons include: • Improved asset/liability management resulted in generation of significantoperating cash flow used to de-lever the balance sheet

2Q-2007 1Q-20073Q-2007


Revenue Trends($ in billions)

2002 2003 2004 2005 2006

$3.96$4.24

$4.53

$5.53

$4.82• YTD 9/30/07 revenue of $5.1B

• 5-Year CAGR = 11.1%;excl. McK = 7.3%

• Excluding MCK, revenuegrew:

- 8.9% in 2006- 9.7% YTD

* LTM = last twelve months as of 09/30/07

$6.70

LTM*

7.1% 6.8% 6.4% 14.7% 21.2%


Gross Margin Trends($ in millions)

2002 2003 2004 2005 2006

$417.2 $436.4

$516.1

• 3Q-07 gross margin was$178.3M, or 10.6% ofrevenues

• YTD 9/30/07 gross marginwas $529.8M, or 10.5% ofrevenues

$463.3

$596.8

$704.8

LTM*

10.5% 10.3% 10.2% 10.7% 10.8% 10.5%

Note: percentages represent gross margin as a % of revenue* LTM = last twelve months as of 09/30/07


SG&A Trends($ in millions)

$303.4$319.8

$381.4

• 3Q-07 SG&A was$131.4M, or 7.8% ofrevenues

• YTD 9/30/07 SG&Awas $407.6M, or 8.1%of revenues

$341.0

$471.9

$559.8

2002 2003 2004 2005 2006 LTM*

7.7% 7.5% 7.5% 7.9% 8.5% 8.4%

Note: percentages represent SG&A as a % of revenue* LTM = last twelve months as of 09/30/07


SG&A Costs

As a % ofTotal SG&A

Personnel CostsPersonnel Costs+/+/-- 50%50%

All Other CostsAll Other Costs+/+/-- 50%50%


SG&A Cost Characteristics

Selling Expense

Administrative

Semi-Variable

FixedWarehousing Semi-VariableDelivery Semi-VariableOccupancy FixedInformation Services Semi-Variable


Operating Earnings Trends($ in millions)

2002 2003 2004 2005 2006

$101.6$105.7

$117.4

• 3Q-07 operating earningswere $40.9M, or 2.4% ofrevenues

• YTD 9/30/07 operatingearnings were $102.4M,or 2.0% of revenues

$110.1

$102.8

$117.9

LTM*

2.6% 2.5% 2.4% 2.4% 1.9% 1.8%

Note: percentages represent operating earnings as a % of revenue* LTM = last twelve months as of 09/30/07


Operating Margin Trend

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07


Operating Earnings

CoreCore97.5%97.5%

DTCDTC2.5%2.5%

GROSSMARGIN SG&A

Services + -

D-T-C + + - -

Impact on Core Performance


Diluted EPS Trends($ in millions)

2002 2003 2004 2005 2006 LTM*

$1.27

$1.42

$1.53

$1.61

$1.20

$1.41

• 3Q-07 EPS was $0.52

• YTD 9/30/07 EPS = $1.23compared to $1.03 as of 9/30/06

* LTM = last twelve months as of 09/30/07


Dividend HistoryAnnual Dividend per Common Share

2003 2004 2005 2006 2007

• Dividends paid every yearsince 1930

• 5-year CAGR = 18%

• 4th Quarter ’07 dividend:− $0.17 per share− record date 12/14/07− payable date 12/31/07

$0.35

$0.44

$0.52

$0.60$0.68


Total Shareholder ReturnCumulative Total Return through 9/30/07

Source: Standard & Poors

0

100200

300

1-Year 3-Year 5-Year 10-Year

OMIS&P 500Russell 2000

%


2008 OutlookIncome Statement

• Revenue Growth– Targeted to be in the mid-single digit % range

• Gross Margin– Targeted to be consistent as a % of revenues compared

to the 2nd half of 2007

• SG&A– Targeted mid-single digit basis point improvement compared

to the 2nd half of 2007

• Annual Tax Rate– Targeted to be consistent with 2007


2008 OutlookCash Deployment

• Annual Dividend Payout Ratio– Targeted to be consistent with historical practice

• Capital Expenditures– Targeted to be in the range of $25-$35 million

• Excess Capital Usage– Financially/strategically attractive acquisitions

– De-lever revolver debt


Variables for 2008

• Contract Renewals

• DOD Activity

• Distribution Center Relocations

• Customer Credit Quality


Why Owens & Minor?

• Attractive component of the healthcare sector

• Benefits from the economies of scale

• A legacy – successful business for 125 years


Questions?

Owens & MinorExpanding on Our Traditions2007 Investor DayBaltimore/Washington Distribution CenterDecember 5, 2007

Economy & Finance

Owens_MinorMorningSession