Owens & Minor (OMI)

January 24, 2010

Summary

• Leading Med-Surg Distributor focused on Acute Care

• Steady Growth – Organic and Acquisition• Dividend Growth Story – 2.26%• Valuation relatively attractive at 13.7X PE

Summary StockVal®OWENS & MINOR INCORPORATED (OMI) Price 40.6871 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

PRICE0.1

0.2

0.4

0.8

1.6

3.2

6.2

12.4

24.8

49.6

HI 49LO 0ME 7CU 41GR 11.0%

01-19-197301-22-2010

PRICE RELATIVE TO S&P 500 INDEX WITH OPERATING EPS (SPX)0.2

0.30.4

0.7

1.0

1.4

2.1

3.1

4.7

6.9

HI 6.82 LO 0.25 ME 1.94 CU 5.21

01-19-197301-22-2010

ProfileCompany Profile

OWENS & MINOR INCORPORATED (OMI)Price 40.680 01/22/10 FYE Dec

StockVal ®

Business Description:Owens & Minor, Inc. (O&M) is a distributor of medical and surgical supplies to the acute-care market and a healthcare supply-chain management company. In its acute-care supply distribution business, the Company distributes over 220,000 finished medical and surgical products produced by over 1,600 suppliers to approximately 4,500 healthcare provider customers from 55 distribution and service centers nationwide. Its primary distribution customers are acute-care hospitals. Other customers include the federal government, for which Owens & Minor serves as a prime vendor for medical and surgical supply distribution services for the United States Department of Defense. The Company serves alternate care providers including ambulatory surgery centers, physicians' practices, clinics, home healthcare organizations, nursing homes and rehabilitation facilities. Effective October 1, 2008, the Company completed the acquisition of certain assets and liabilities of The Burrows Company (Burrows).

Price Change: Fundamentals: Valuation: Other Current Stats:Diff YTY 5-yr% SP5 $ %Chg Current Median

1-Week EPS T4Q (op) P/E T4Q Market Value4-Weeks EPS F12M P/E F12M Avg. Volume (thou)8-Weeks EPS Est. FY1 P/E FY1 Beta (60 mo.)13-Weeks EPS Est. FY2 P/E FY2 Pre-Tax Margin T4Q52-Weeks Revs T4Q P/Sales Net Profit Margin T4QQTD Cash Flw T4Q P/Cash Flw Return on Equity T4QYTD Book Value P/Book LT Debt/Capital2009 Dividend Est. Div. Yld GRE Median

-4.24 0.70 -2.07 -0.07 2.88 4.19 -14.52 -13.96 1.45 -30.49 -5.24 -3.15 -5.24 -3.15 14.02 -9.43

2.70 15.42.96 15.02.60 6.52.94 13.17955 13.53.23 13.2

17.81 8.90.92 NA

15.1 19.2 13.7 17.3 15.7 NA 13.8 NA 0.21 0.25

12.60 15.22 2.28 2.48

2.26% 2.00%

17044740.372%1%

16%34%

13.0%

Contact:Address:

Internet:Country:Employees:Cusip:

Expected Report Date:

GICS Econ Sec:GICS Ind Grp:GICS Ind:GICS Sub Ind:

Russell Sec:Russell Ind:

SV Sector:SV Industry I:SV Industry II:

Exchange:Options Exchange:S&P 500 %:S&P 500 Stock:

Analyst:Rating:

Universe:Equity Type:

Chuck Graves9120 Lockwood Boulevard,Mechanicsville, VA 23116804-723-7556

http://www.owens-minor.com/USA

5300690732102

02/01/10

HlthCareHlthEqSrHCPrvSrvHlthDist

HealthCrMedInstr

05 Health Care082 Medical Products/Supplies

NYSE PO0.0168%No

Company History• Founded in 1888 by Otho Ownens and Gil Minor• Based in Richmond, VA• Original focus was pharmaceutical distribution• Entered Med-Surg in the 1966• IPO in 1971 (OMB), NYSE 1988 (OMI)• Acquired National Healthcare in 1989• Divests wholesale drug division to Bergen Brunswig in

1992• Purchases Stuart Medical in 1993 – doubles size• Acquires MCK acute care biz in 2006• Purchases The Burrows Company in 2008

Business • 55 Distribution Centers in U.S.• 4500 Customers• 38% of Sales through Novation GPO (2011 contract)• 20% of sales through Premier GPO (2011 contract)• 12% of sales through Broadlane GPO (Tenant Health)

– 2012 contract• Cost-plus contracting, with volume discounts and

minimum commitments• Supplier concentration: COV 14%, JNJ 11%• Customer concentration: Top 10 = 20%• Key Competitors: Cardinal Health (CAH), MedLine

(private)

Key National Branded Suppliers• 3M Health Care (Wound Care, Face Masks, Sterilization, Skin Prep,

Monitoring Electrodes) • Smith & Nephew (Wound Care, Skin Care)• Teleflex (Respiratory, Anesthesia Masks)• Covidien (Antiembolic Stockings, Contrast Media, Thermometers, Enteral

Feeding, Incontinent Briefs, Monitoring Electrodes, Oximetry)• Kimberly-Clark (Apparel, Packs and Gowns, Face Masks, Gloves)• BD (Needles, Blood Collection, IV Catheters, Scalpel Blades, Sharps

Disposal)• Welch Allyn (Otoscopes, Ophthalmoscopes, Thermometers, BP Units)• Ethicon (Endoscopic Products, Sutures)• Cardinal (Gloves, Suction Canisters, Skin Prep, Custom Procedure Trays)• B. Braun (IV Catheters, Sets and Solutions)• Medical Action Industries (OR Towels, Patient Plastic Utensils, IV Start

Kit)• U.S. Surgical (Endoscopic Products, Sutures)

MediChoice (1800 Private Label Products)

• Admissions• Anesthesia• Apparel• Central Supply• Diagnostics• Gloves• Housekeeping• Kits & Trays

• Maternity & Nursery• Nursing• O.R. Products• Orthopedic Rehab• Patient Care• Respiratory• Urology• Wound Care

Management• CoB – Gil Minor III, 68, former CEO 1984-2005, joined company

1963 • CEO – Craig Smith, 57, since 2005. COO from 1995-2005 and

w/company since 1989• CFO – Jim Bierman, since 2007• EVP, Distribution – E.V. Clarke, previously ran MCK unit that was

acquired in 2006

• Very fair compensation program• Cash bonuses targeted at 75% for CEO and 50% for other officers and

based upon net income, sales and return on assets• LT Stock Compensation is 50% time-based and 50% performance-based

restricted stock (operating earnings)

Ownership Issues

• Insiders own 4%, CEO is 1.2% • 5% Short position (7 days)• Member Russell 2000 and S&P 400• 4 institutions >5% (Wellington, Barclays,

TROW and Allianz)

Long-Term Revenue GrowthStockVal®OWENS & MINOR INCORPORATED (OMI) Price 40.68

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

REVENUES3300

4100

5100

6400

8000 HI 7955LO 3308ME 4525CU 7955GR 9.7%

03-31-200009-30-2009

REVENUE-PER-SHARE80

100

130

160

200 HI 191LO 85ME 114CU 191GR 9.0%

03-31-200009-30-2009

REVENUES YTY % CHANGE0

6

12

18

24HI 31.6 LO 3.8 ME 7.9 CU 13.5

03-31-200009-30-2009

REVENUE-PER-SHARE YTY % CHANGE-8

0

8

16

24HI 30.3 LO -3.0 ME 6.6 CU 12.6

03-31-200009-30-2009

Income Statement• Sales YTD: $6bln, +13%• OM 2.4% vs. 2.5%

• 2-3% LT EBITDA Margin• ROC tends to be 9%

Balance Sheet

• Cash $43mm• Inventory $680mm, + 12% YOY• AR $510mm, +9% YOY• Net PPE $83mm• LTD $208mm• Equity $746mm ($475mm tangible)

Cash Flow

2009YTD • NI = $72mm vs $73mm• D&A = $18.6mm vs $16.3mm• CapEx = $14.1mm vs $12.6mm • FCF = $76.5mm flat • 2008 FCF = $105mm

Technicals

• Sideways action for 30 months, but in LT uptrend• Support 39 then 37• Resistance 45

Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10

OWENS & MINOR INCORPORATED (OMI)PRICE 40.68 DATE 01-22-2010PRICE 40.68 DATE 01-22-2010StockVal®

3030

3232

3434

3737

3939

4242

4545

4848

5151

5454

58

62

150

50

1.21

SP5AB Analytical Services

PRICE / YR-FORWARD EPS ESTS1212

1414

1616

1818

2020

2222

Dividend HistoryStockVal®OWENS & MINOR INCORPORATED (OMI) Price 40.68

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

DIVIDENDS-PER-SHARE0.1

0.2

0.4

0.6

1.0HI 0.89 LO 0.18 ME 0.34 CU 0.89 GR 13.6%

03-31-199709-30-2009

DIVIDEND YIELD %0.8

1.2

1.6

2.0

2.4

2.8

3.2

HI 3.1 LO 1.0 ME 1.9 CU 2.3

01-17-199701-22-2010

DIVIDEND YIELD RELATIVE TO S&P 500 INDEX WITH OPERATING EPS (SPX)0.4

0.8

1.2

1.6

2.0

2.4

2.8

HI 2.65 LO 0.68 ME 1.03 CU 1.03

01-17-199701-22-2010

ValuationStockVal®OWENS & MINOR INCORPORATED (OMI) Price 40.68

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

PRICE / YR-FORWARD EPS ESTS9

12

15

18

21HI 20.0 LO 9.3 ME 15.7 CU 13.7

01-21-200001-22-2010

PRICE / BOOK VALUE1

2

3

4HI 3.7 LO 1.9 ME 2.5 CU 2.3

01-21-200001-22-2010

ENTERPRISE VALUE/SALES0.20

0.24

0.28

0.32

0.36HI 0.4 LO 0.2 ME 0.3 CU 0.2

01-21-200001-22-2010

ENTERPRISE VALUE/EBITDA6

9

12

15

18HI 17.2 LO 7.7 ME 10.0 CU 8.6

01-21-200001-22-2010

8 Analysts - Neutral

2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10

StockVal®OWENS & MINOR INCORPORATED (OMI)PRICE 40.7 DATE 01-22-10 BUY/SELL RATING 2.9 ANALYSTS 8

3030

3232

3434

3636

3838

4040

4242

4444

4646

4848

REUTERS BUY/SELL RATING

1

2

3

4

HOLD

BUY

Calendar

• 1/25 Jefferies Conference (10:15 EST)• 2/8 2009 Q4 EPS (Call 2/9 at 8:30 EST)• 2/10 UBS Conference

2010 Guidance

• Provided on 12/10/09– Sales growth of 4-6%– EPS of $2.90-3.05 (Consensus was $2.89)

• Announced also termination of Pension Plan– Will Fully Fund - $8-13mm– Pre-Tax charge in 2011 of $15-19mm

Target

• 2011 Consensus = 3.29• PE of 15 $49

Conclusion

• Classic example of slow but steady growth with excellent capital allocation practices

• Industry with oligopolistic structure, high barriers to entry

• Reasonable upside/downside – target up 20% before dividend, downside support - 9%