Thank you, operator. Good morning, everyone, and welcome to the Owens & Minor First Quarter 2020 Earnings Call. I’m Chuck Graves, and on behalf of the team, I’d like to read a Safe Harbor statement before we begin. Our comments on the call today will be focused on financial results for the first quarter of 2020, a response to the COVID-19 pandemic and our outlook for the remainder of the year, all of which are included in the press release we issued earlier this morning. Please note that certain statements made on this call are forward-looking statements, which are subject to risks and uncertainties. These forward-looking statements are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical facts, are forward-looking statements and include statements regarding our anticipated financial and operational performance. Forward-looking statements made on this call represent management’s current expectations and are based on information available at the time such statements are made. Forward-looking statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from any results predicted, assumed or implied by the forward-looking statements. The company has explained some of these risks and uncertainties in its SEC filings, including in the Risk Factors section of its Annual Report on Form 10-K and quarterly reports on Form 10-Q. Except as required by law or the listing rules of the New York Stock Exchange, the company expressly disclaims any intent or obligation to update any forward-looking statements. Additionally, in our discussion today, we will reference certain non-GAAP financial measures and information about these measures and reconciliations to the most comparable GAAP financial measures are included in our press release, in our quarterly report on Form 10-Q. This morning, I am joined by Ed Pesicka, our President and Chief Executive Officer, who will provide commentary on both the first quarter and on the COVID-19 pandemic. And Andy Long, our Executive Vice President and Chief Financial Officer, who will discuss our financial results for the quarter and provide additional insight into our outlook for the remainder of the year. Now I would like to turn the call over to Ed, who will start things off this morning. Ed?

Thank you, Chuck. Good morning, everyone, and thank you for joining us on the call today. Before I get to the four main topics of my prepared remarks, I want to spend some time on the COVID-19 pandemic that has affected the way we operate. I am proud of our team’s response to this crisis. We have lived up to our mission to empower our customers to advance healthcare. Over the last quarter, I have personally seen our values play out in real-life as our teams work with customers, suppliers, GPOs and various agencies of state and federal governments to provide creative solutions due to these unprecedented circumstances. Now more than ever, customers depend on our distribution, products and service teams and collaboration has never been better. As always, keeping our teammates safe as paramount. For example, we provided PPE to all our teammates in our distribution and manufacturing locations. We have trained our teammates on the proper use of PPE, implemented social distancing, and have put into practice temperature scans when our teammates arrive at work. Related to working remotely, we had an existing preparedness plans in place, and we seamlessly implemented those plans to allow for remote work where it was appropriate. We’ve adjusted our policy for teammates carrying for sick family members and provided free telemedicine options. We’ve quickly adjusted our product delivery methods based on new and ever-changing customer protocols to keep our drivers and hospital personnel safe. And finally, we have seen great teammate engagement and low absenteeism during these extraordinary times. As I mentioned earlier, today I’m going to cover four topics. I will first discuss the continued financial improvement as seen in the first quarter of the 2020 results, while we expect a fluid year with downs and ups, our business model gives…

Thank you, Ed, and good morning, everyone. Today, I’ll begin with a review of our first quarter financial results and then discuss our expectations of how we believe the COVID-19 pandemic will impact our financial performance for the remainder of the year. Consistent with the fourth quarter earnings call, please keep in mind that results from our Movianto business unit are treated as discontinued operations. All aspects of the deal remain on track, and we expect this transaction to close this quarter. My comments today, unless otherwise indicated, will be on a continuing operations basis. For the first quarter, net revenue was $2.12 billion compared to $2.35 billion for the prior year. This change was primarily driven by increased global product sales of personal protective equipment or PPE and revenue growth from our home healthcare business. This was offset by lower net revenue in our medical distribution business from previously discussed customer non-renewals that occurred in early 2019 and to a far lesser extent, the impact of COVID-19 from reduced surgical procedures. We expect revenue results for the remaining three quarters of this year will be negatively affected by the impact that COVID-19 is having on the healthcare system, and I will discuss this in more detail later in my remarks. Gross margin in the first quarter was 12.65%, an improvement of 88 basis points over prior year, primarily due to an improved sales mix with a greater proportion of higher-margin global products revenues. Distribution, selling and administrative expense of $254 million in the current quarter was flat compared to the first quarter of 2019, primarily as a result of sales mix and investments in the business partially offset by operational efficiencies. Adjusted net income for the quarter was $2.4 million or $0.04 per share. Adjusting for the impact of…

[Operator Instructions] Your first question comes from the line of Robert Jones with Goldman Sachs. Your line is open.

Great. Thanks for taking my question. This is Jack Rogoff on for Bob. Can you talk about what the level of elective procedure volume headwinds you saw exiting March versus what’s embedded in your expectations over the remainder of the year?

Sure. Now, this is Andy. I’m happy to answer that. So around the middle of the month of March, we did see a sharp decline in elective or products associated with elective procedures. And in terms of how that affected our guidance, we assumed that what we saw in the last two weeks of March would carry forward at the same level for the entire second quarter. And then at that point, we’re projecting a recovery and then an actual – a partial recovery of those elected procedures that were canceled and/or delayed in Q2 that those would be rescheduled, a portion of those will be rescheduled into Q2 and Q3. And then in terms of that cadence, also expecting stronger PPE sales out of our medical distribution business as well. So that’s part of that strength in the second half of the year.

Jack, this is Ed. One of the things we had done – I agree with Andy, that we did see the sharp drop-off in – at the end of March there. We have spent significant time staying very close to our customers, understanding as they’re getting ready to reopen potentially in timing. So one of the things we are doing is just like we do at the end of the year by building inventory for the beginning of the year, rush, we’re going to make sure that we have the right investments in inventory throughout the second quarter. So that way, if that – if the elected procedure start earlier than we expected, we’re ready and if they start at the end of the quarter or in the beginning of the third quarter, we’re ready also with products, so we don’t have any service interruptions, and we can really overserve the customers as they come back up online.

Got it. Thanks. That’s helpful. And then I’m sure there’s an interplay for your hospital customers between financial challenges near term and then stimulus from the government, along with the eventual return of elected procedures. I am curious how you expect this to impact your working capital improvements over the balance of the year as your customers work through these dynamics.

Sure. Here’s one of the things we saw, and this maybe have to shed some light onto it. If you think about when people started to work remotely, so we had a lot of our hospital networks send their people to work remotely kind of the back office accounts payable teams, if you look at it specifically around AR. We saw a delay in collections for a period of time as people are getting used to working from home. And about a week or two after people work from home, plus you add into that, the Cares Act, the funding, we saw our receivables come back to normal rates. We saw a large pickup on payables and reduction of receivable – their payables to us already on the receivables. And we really haven’t seen a big impact of that so far during the quarter. Andy, I don’t know if you want to add any other commentary around that.

Yes. Those are metrics that we watch very closely as an organization. And overall, at the end of the quarter, our DSO trend was favorable to where we were at the end of the year. And the other metric we look at is our past due receivables, and both of those metrics are in line with historical norms. So I think we’re in good shape at that point.

Got it. Thank you.

Our next question comes from the line of Jailendra Singh with Credit Suisse. Your line is open.

Thanks. Hi, everyone. So I just want to – can you elaborate more on your assumptions around elective procedures not coming back until Q3? Clearly, several states are now allowing electric surgeries. There are expectations that we might start seeing some surgeries coming back in Q2. I’m just trying to understand like why are you being kind of thinking that you might not see any recovery until Q3. Are you just being conservative? Or is it like more something you’re hearing from hospital clients, any thoughts on that?

Yes, absolutely. So as we put our forecast together, right? That was really formulated during the last – looking at the last two weeks of March and then the first several weeks of April. And we thought it was prudent to assume that those trends would continue through the second quarter. I guess the way I would characterize it is that if there were to be a return to normal sooner than what we’ve anticipated, I would think of it as then taking away from the optimism I have in the second half of the year, right? So if there’s fewer elective procedures deferred, that means there’s fewer elective procedures to make up in the second half of the year. So certainly could play out that the second quarter would be better than what I’ve laid out, but I wouldn’t change my full year assumptions based on that, if that makes sense.

Okay. And then maybe, Ed, if you can take a step back. And based on your experience and now dealing with this COVID-19 situation, if you guys can share some thoughts around maybe one or two structural changes or process improvements you think should be made to the U.S. supply chain industry to make sure the industry is better prepared to deal with any such pandemic in future. Any thoughts like what we should be doing moving forward, make sure we are better prepared for situations like this?

Sure. So as I spent a significant amount of time interacting with the federal government, specifically on this topic, and we have provided varying types of conversations around that. I think there’s really two ways to do it. It’s really around how do you drastically increase supply of the product here in the U.S., and how do you find ways to reduce demand, whether that’s through reusing a product and other technology I think what it’s proven out in this process is, if I think about Owens & Minor and our American-based manufacturing footprint versus others, that primarily have product manufactured for them in China or Asia or other parts of the world, what this has proven out is the ability – as I talked in my prepared remarks, and I want to make sure this wasn’t missed, our ability to control the domestic supply chain from manufacturing to distribution to the customer has made a big difference for us. I read the quote from the customer that addressed that specifically. And I think that is what fundamentally it shows works. If you can manufacture the product in the Americas, if you can quickly get it there and you have control of that supply chain from manufacturing to supply to distribution to the customer and makes a big difference on ability to serve our customer during peak demands.

Okay. Thanks a lot.

[Operator Instructions] Our next question comes from the line of Steven Valiquette with Barclays. Your line is open.

Steve, are you there?

You need to unmute. Okay, we may have lost Steven Valiquette. I’m not showing any further questions.

Well, great. Well, thank you, operator. I’d like to start by thanking everyone for joining us on the call this morning. And I have to tell you, I was really looking forward to seeing many of you at our May 22 Investor Day in New York. There’s going to be an opportunity for us to show the extended leadership team as well as provide everybody the opportunity to see some of the great things that we’re doing as a company. However, unfortunately, due to pandemic, we have to postpone this meeting, and we’ll schedule it for a later day, but we’re still going to have an Investor Day. Secondly, while this has been unprecedented time due to the COVID-19, I believe that our business model demonstrates that we can quickly adapt, we can quickly leverage our distribution products and service businesses to best service our customers. And finally, I want to take this opportunity to let everyone know that we take the responsibility to support the frontline health care workers very, very seriously. And I’d like to personally thank those on the frontline for all that they have done, all that they are doing and all that they will continue to do during this crisis. Thank you, everyone.

Thank you for your participation. This concludes the call. You may now disconnect.