Owens & Minor, Inc. History
Glen Allen, Virginia 23060
Telephone: (804) 747-9794
Fax: (804) 273-0232
Incorporated: 1927 as Owens & Minor Drug Company, Inc.
Sales: $4.24 billion (2004)
Stock Exchanges: New York
Ticker Symbol: OMI
NAIC: 423450 Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers
Owens & Minor's mission is to provide our customers and suppliers with the most responsive, efficient and cost-effective distribution system for the delivery of healthcare products and services in the markets we serve; to earn a return on our invested capital consistent with being an industry leader; and to manage our business with the highest ethical standards in a socially responsible manner with particular emphasis on the welfare of our teammates and the communities we serve.
- The Owens & Minor Drug Company is established.
- Bodeker Drug Company is acquired.
- Owens & Minor enter the surgical supply business.
- The wholesale drug business is divested, making Owens & Minor solely a medical and surgical supplier.
The second-largest wholesale distributor of medical and surgical supplies in the United States, Owens & Minor, Inc. owns distribution centers across the nation that serve hospitals, primary care facilities, healthcare systems, and group purchasing organizations. Originally founded as a wholesale drug company in 1882, Owens & Minor first entered the medical and surgical supply business in 1966 and then, through a series of acquisitions completed during the ensuing three decades, entrenched its position in its new business, divesting its wholesale drug business in 1992 to operate exclusively as a medical and surgical supply distributor during the mid-1990s.
The corporate history of Owens & Minor charts the history of the Minor family, tracing the roots of a family tree that stretch back more than a century before the company was founded. Four generations before a Minor family member founded the company that would employ generations of Minors, Dr. George Gilmer spent his life working as an apothecary-surgeon, attending to patients in colonial Williamsburg until his death in 1751. Dr. Gilmer was the first in a long line of family members who would spend their professional careers working in the pharmaceutical or medical fields, beginning a legacy that would continue on two centuries later and inspire his son to enter the medical profession as well.
Dr. Gilmer's son and namesake followed his father's footsteps and received training in the medical field. The younger Gilmer, who would earn distinction as Thomas Jefferson's personal physician, practiced medicine in Charlottesville, Virginia, working there as a doctor before and after the Revolutionary War. His sister, Lucy Gilmer, lived in Charlottesville as well, where she married Dr. Peter Minor, also a Charlottesville physician. The married couple's son, George Gilmer Minor, took to the seas and studied medicine abroad, then returned to the United States and began practicing medicine in New Kent County, not far from Williamsburg. Following the conclusion of the Civil War, George Gilmer Minor, the first of many generations to bear that name, moved his family to the newly reconstructed and burgeoning city of Richmond, Virginia, where his son, George Gilmer Minor, Jr., cofounded what would become one of the oldest family-operated companies in the country. It was in Richmond and through the efforts of George Gilmer Minor, Jr., that Owens & Minor was first established.
Before entering into the business world on his own, George Gilmer Minor, Jr., worked as a salesman for a Richmond wholesale drug firm called Powers Taylor Drug Company. The introduction to the wholesale drug business would have a lasting effect on the youngest of the Minor family, as would the fortuitous meeting between Minor and another salesman, Otho O. Owens. Owens, who worked for a rival drug company named Purcell Ladd and Company, and Minor presumably met through the course of their business, as each plied his trade in and around the Richmond area. Any competitive fire between Owens and Minor was forever snuffed in January 1882, when the two salesmen entered into business together and established a company that a century later would dominate its industry as Owens & Minor, Inc.
The company was founded as Owens & Minor Drug Company and operated as a wholesale and retail business, with the wholesale side of the enterprise conducted behind the retail space that faced Richmond's Main Street. From these quarters, Owens & Minor sold patent medicines, cosmetics, prepared prescriptions, and a wide range of other goods, including window glass, paints, oils, and dyes. Otho Owens served as the company's president, heading the operation for the first five years, until Owens & Minor Drug Company was reorganized as a limited partnership comprising 24 investors, and for the ensuing 19 years, until his death in 1906. George Gilmer Minor, Jr., then took the reins of command, picking up where Owens left off and guiding the company for five years until his death in 1911.
The next leader of the company came from neither the Owens nor the Minor family, but instead from inside the organization itself. Conway M. Knox, a former stock boy for the company who had worked his way up Owens & Minor's ranks, received the ultimate promotion in 1911, when he succeeded George Gilmer Minor, Jr., as president. Under Knox's watch, Owens & Minor moved to a larger location, occupying in 1913 what would serve as the company's headquarters for more than the next 50 years. Knox superintended the company's fortunes for a commensurate amount of time, serving as the president from 1911 to 1941, successfully bringing the company through one world war, a devastating, decade-long economic depression, and to the dawn of World War II. During his tenure at Owens & Minor, Knox was assisted by two sons of the company's founder, George Gilmer Minor, III, and William Y. Minor, who were with the company when it was incorporated in 1927, the year the Owens family sold their stake in the company and brought to an end a 45-year business relationship between the two families. George Gilmer Minor, III, succeeded Knox as president of the company in 1941, but his term was cut tragically short, ending just 15 months after it began with his death in 1942.
To fill the leadership void, the company once again turned to someone outside the Minor family, naming James B. Bowers president in 1942. Bowers had joined the company in 1902 and served as its president for five years before retiring in 1947, ending his career after 50 years of involvement with Owens & Minor. The next Minor to take charge of the company would be the company's most influential leader in its first century of business, a man who represented the third generation of the Minor family to head Owens & Minor and who would direct the company into a new line of business that would predicate its existence during the 1990s.
In 1934, George Gilmer Minor, IV, joined the family business directly from the Virginia Military Institute, starting with Owens & Minor as an office boy and eventually gaining experience in every facet of the company's operations before succeeding Bowers in 1947. Grandson of the company's founder, George Gilmer Minor, IV, would play as pivotal a role in the company's history as his grandfather had played, and like his grandfather, he went by the name George Gilmer Minor, Jr.
In a presidency that would span 29 years, George Gilmer Minor, Jr., waited until 1955 to make his first major move. At the time, the number of competitors in Richmond's drug wholesale business community had been whittled down to three major companies: Bodeker Drug Company; Powers Taylor, which had purchased Purcell Ladd in 1910, the company Otho Owens had worked for; and Owens & Minor. In 1955, however, that number was reduced to two when Owens & Minor acquired the accounts and the name of Bodeker Drug Company. Bodeker Drug Co. was well-known to generations of Richmond citizens, having been established in 1846, nearly two decades before Owens & Minor Drug Co. was founded. Bodeker Drug was also twice as large as its new owner, giving Owens & Minor a considerable boost to its business and lending the company a new name: Owens, Minor & Bodeker Drug Co.
1966 Entry into a New Business
In the wake of the 1955 acquisition of Bodeker Drug Co., the company expanded, establishing its first distribution center outside of Richmond in 1959 in Wilson, North Carolina, and another in Norfolk, Virginia, in 1962. The company's acquisitive pace picked up under George Gilmer Minor, Jr.'s presidency as well, accelerating Owens, Minor & Bodeker's growth appreciably. The company completed ten acquisitions between 1964 and 1981, but none was as important as the purchase of A&J Hospital Supply in 1966. From 1966 forward, Owens, Minor & Bodeker would gradually become a different kind of company entirely.
Up until 1966, the company had always operated as a wholesale drug firm, devoting 84 years to the sale of pharmaceutical goods, but with the acquisition of A&J Hospital Supply, Owens, Minor & Bodeker Drug Co. entered the medical and surgical distribution business for the first time. The move into a new business area, a move spearheaded by George Gilmer Minor, Jr., began to steer the company in a new direction, one that would completely reshape the company and define its existence during the 1990s. From 1966 forward, all major acquisitions would add to the company's presence in the medical and surgical distribution field, not its storied wholesale drug business. Owens, Minor & Bodeker Drug Co. did not abandon the wholesale drug business by any means, but it would be another 18 years before the company acquired a company whose business was related to the wholesale drug business.
Further acquisitions in the medical and surgical distribution business followed the 1966 purchase of A&J Hospital Supply, as the company, with George Gilmer Minor, Jr., still leading the way, strove to expand its new business. In 1968, the company acquired the Richmond, Norfolk, and Washington, D.C., operations belonging to Powers & Anderson, Inc., then the following year purchased Powers & Anderson's operations in Charleston, South Carolina. With the properties gained from this two-year buying spree, Owens, Minor & Bodeker gained strategically valuable product lines for the medical and surgical distribution market. Next, in 1970, the company acquired Augusta, Georgia-based Marks Surgical, another strategically important move that helped Owens, Minor & Bodeker eclipse $20 million in sales by the end of the year and widen its geographical scope to comprise a four-state territory.
Growth in the 1970s
The company went public the following year, in 1971, offering stock for the first time on the over-the-counter exchange, then embarked on another acquisition spree, entrenching its position in the medical and surgical distribution market. In 1972 the company acquired Murray Drug, based in Norfolk, Virginia, then two years later purchased White Surgical of Knoxville. In 1976 the company increased its geographic territory, gaining four locations in Texas and Louisiana through the acquisition of Southern Hospital, and securing a foothold in Florida fours years later with the purchase of Jacksonville, Florida-based Medical Supply.
These acquisitions were completed during a decade that saw Owens, Minor & Bodeker Drug Co.'s sales volume increase sixfold and its geographic scope broaden considerably. The company entered the 1970s generating slightly more than $20 million a year, and exited the decade with annual sales exceeding $130 million. Geographically, the acquisitions completed by Owens, Minor & Bodeker helped extend its service territory from six to ten states during the 1970s, as year by year the magnitude of the company's medical and surgical distribution business grew.
Aside from exponential growth, the 1970s also marked the end of an era when George Gilmer Minor, Jr., ended his nearly 30-year presidency in 1976. George Gilmer Minor, Jr., who had been instrumental in the company's diversification into the medical and surgical distribution business, stayed on as chairman and chief executive officer after 1976, but from that year until 1981 another individual from outside the Minor family, William F. Fife, assumed the duties of president. When Fife, in turn, vacated the post of president in 1981, the next Minor in line, George Gilmer Minor, III, stepped in, beginning a term of office that would carry the company through the mid-1990s and would span the complete transformation his father had initiated in 1966.
George Gilmer Minor, III, fifth by generation and the fourth Minor to head the company, joined the family business at age 15, beginning his career as a schoolboy before assuming a more influential role in the company's operation after his graduation from Virginia Military Institute in 1963 and his graduation from the Colgate Darden School of Business Administration at the University of Virginia in 1966. Following his education, George Gilmer Minor, III, went on to become the division manager of the company's wholesale drug division and general manager of all three drug divisions. Continuing his rise through the company's ranks, George Gilmer Minor, III, eventually was named vice-president of operations for Owens, Minor & Bodeker, gaining more and more responsibility until he was ultimately selected as the company's president in 1981, a year during which he had played a leading role in the company's acquisition of eight locations belonging to the Will Ross division of G.D. Searle, the second-largest distributor of medical and surgical supplies in the country.
In January 1982, at the beginning of the company's centennial year, a name change was effected and Owens, Minor & Bodeker Drug Co. became Owens & Minor, Inc. Acquisitions continued to drive the company's growth during the 1980s, including the purchase of Oklahoma City-based S&S Hospital Supply in 1983, a year in which medical and surgical supplies as a percentage of total sales doubled. Florida Hospital Supply was purchased the following year, representing the first wholesale drug acquisition in nearly two decades, but the most momentous development in 1984 occurred in Owens & Minor's other business segment. For the first time, medical and surgical sales eclipsed the total generated by the company's 102-year-old wholesale drug business, marking a milestone in Owens & Minor's history that foretold the direction the company was headed toward.
Sales reached $367 million in 1985, the year George Gilmer Minor, III, announced his ambitious goal of reaching $1 billion in sales by 1990. Toward this lofty goal, the company made an important step in 1985 when it signed a three-year contract with the Voluntary Hospitals of America, the largest nonprofit hospital system in the United States, which was renewed in 1988 in perpetuity. The company expanded beyond the Sunbelt in 1987 with the acquisition of Bridgeton, New Jersey-based Leon Stotter Company, then expanded westward in 1989 through the purchase of National Healthcare, which operated in California, Arizona, Texas, Oregon, Utah, and Colorado.
1992 Divestiture of Wholesale Drug Division
In 1990, the year George Gilmer Minor, III, had hoped to reach $1 billion in sales, Owens & Minor recorded $1.2 billion in sales, exceeding earlier expectations. Two years later, after 110 years in the business, Owens & Minor exited the drug wholesale trade, divesting nearly all the assets composing its drug wholesale division. From 1992 forward, Owens & Minor executives would focus exclusively on the business the previous generation had first entered in 1966, devoting their energies and resources toward positioning the company as one of the country's preeminent surgical and medical supply distributors. In 1994, two years after selling its drug wholesale business, Owens & Minor completed a gigantic leap toward becoming one of the country's elite medical and surgical supply competitors when the company acquired $890 million-in-sales Stuart Medical, Inc., the third largest distributor of medical and surgical supplies in the nation.
On the heels of this major acquisition, Owens & Minor recorded $2.4 billion in sales, then the following year, in 1995, generated $2.97 billion in sales, more than eight times the figure posted ten years earlier. Owens & Minor was growing at a robust pace during the 1990s, and as management, with George Gilmer Minor, III, leading the way, looked toward the late 1990s and the beginning of the 21st century, further acquisitions in the medical and surgical supply field were expected.
The New Millennium Begins with a Bang
However, the late 1990s did not altogether live up to the expectations it had set in the middle of the decade. A major sign of trouble came in May 1998, when the corporation lost its largest account (Columbia/HCA Healthcare Corp oration) to a rival firm. The loss of the account meant the loss of more than 10 percent of Owens & Minor's annual revenues. The corporate stock dropped like a stone, collapsing 23 percent in value virtually overnight.
This impending disaster required extensive damage control--including the laying off of about 250 employees. Fortunately, foresight by Owens & Minor executives had already begun to put the solutions in place. A new extranet IT system, designed to allow both customers and supplies share product data online, went live in 1997. It replaced an older, outmoded mainframe system that could only present customers with usage reports on a quarterly basis. The new system, which allowed customers to interact with the data almost in real time, allowed hospitals to judge their inventories of supplies more accurately and to order new supplies on a more timely basis.
By the end of fiscal 1998 Owens & Minor's new system had changed the loss of the Columbia/HCA account from what could have been a major disaster into a much less troubling hiccup. Even as early as the end of the third quarter of 1998, analysis showed that, while sales had dropped (as compared with the same period in the previous year), profits had actually increased and earning per share had gone up by as much as 25 percent. The company's use of IT systems--rare in the pharmaceutical and healthcare supply industry--brought it an estimated $100 million in new business over the next three years. The system also allowed Owens & Minor to shave their operating margins to a tremendously lean 2.3 percent. In 1999, Owens & Minor introduced OM Direct, an online service that allows customers and suppliers to interact directly over the internet. The new system is set up to permit customers to log their inventory directly into the online database using a handheld computer and an infrared scanning bar-code reader.
These innovations allowed Owens & Minor to remain at the top of the medical supply industry during the early years of the 21st century. Between 1999 and 2002, company profits increased by 37 percent, while stock price increased about 150 percent during the same period. At the end of the first quarter of 2004, dividends paid to shareholders of record had increased 38 percent over what they had been the previous year. Owens & Minor's performance demonstrates that the corporation remains a major player in the medical supplies industry well into its second century.
Principal Subsidiaries: A. Kuhlman & Co.; Koley's Medical Supply, Inc.; Lyons Physician Supply Company; National Medical Supply Corporation; Owens & Minor Medical, Inc.; Owens & Minor West, Inc.; Stuart Medical, Inc.
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Source: International Directory of Company Histories, Vol.68. St. James Press, 2005.