The Board of Owens & Minor (OMI) has approved a roughly 4% hike in the company’s quarterly dividend and authorized the repurchase of up to $100 million of the company's outstanding common stock. The share buyback will be executed over a period of three years, and will expire in Feb 2017.
Shares of OMI shot up as much as roughly 3% in the trading session following the announcement of the news. The stock closed at $35.35 yesterday, gaining around 2.6%.
However, the timing of the repurchase and the exact number of shares to be bought back will be determined by OMI, after considering the market conditions and other factors. The buyback represents the company’s plan to offset shares used for equity compensation. Further, the program stands to be suspended or discontinued at the sole discretion of management.
Along with the share repurchase program, the Board of OMI also announced the payment of the first-quarter 2014 cash dividend of 25 cents per share, reflecting a 4.2% increase over the prior quarter’s dividend. The increased dividend is payable on Mar 31, 2014, to shareholders of record as of Mar 17, 2014. OMI is known for rewarding its shareholders consistently since 1930, and the current year marks the 85th consecutive year in its history of paying dividends.
The recent share repurchase authorization provides OMI an additional opportunity to return capital to its shareholders, while the dividend payment demonstrates the company’s strong commitment toward recognizing the contribution of the stockholders.
OMI has been consistently focusing on creating long-term value for its shareholders and is adopting several initiatives to achieve its mission. Investments of over $330 million has been undertaken, including the acquisition of Movianto, to help it expand its footprint in healthcare and build the necessary infrastructure, all of which is likely to augment its future growth prospects.
Additionally, OMI has also built a sourcing arm in Asia to help support its three-pronged sourcing strategy of enhancing its private label, working with branded manufacturers and with diversity suppliers. Such attempts are being made to tap the growing opportunities in the healthcare business.
Anticipating revenue growth of up to 2% for 2014, OMI plans to position itself in the market as healthcare logistic experts, and seeks to provide value to its provider as well as its manufacturer customers.
Currently, OMI carries a Zacks Rank #4 (Sell).
Investors interested in the medical products industry can look at better-ranked stocks like NuVasive, Inc. (NUVA), Baxter International Inc. (BAX) and Covidien plc. (COV) While NuVasive holds a Zacks Rank #1 (Strong Buy), Baxter International and Covidien carry a Zacks Rank #2 (Buy).
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