Mad Money

Hospital supplier Owens & Minor is expanding capacity to meet personal protective equipment demands

Key Points
  • "We are in the process of actually expanding capacity, but that's going to take probably 5 to 6 months to make sure that you have the capability to expand that capacity," Owens & Minor CEO Ed Pesicka told CNBC.
  • The hospital supplier expanded production capacities and work shifts earlier this year to meet high demands for personal protective equipment amid the coronavirus outbreak.
  • "So that's the time frame that we're looking at for additional expansion, beyond what we've done already by running 24/7," he said in a "Mad Money" interview.
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Owens & Minor CEO talks responding to hospital supplies shortages

Hospital supplier Owens & Minor added shifts and expanded factory production time to meet global demand for personal protective equipment in the fight against the coronavirus pandemic.

As demand continues to grow exponentially, the Virginia-based company is ramping up production of face masks and other medical gear to keep up, CEO Ed Pesicka told CNBC's Jim Cramer Friday.

"We are in the process of actually expanding capacity, but that's going to take probably 5 to 6 months to make sure that you have the capability to expand that capacity," he said in a "Mad Money" interview. "So that's the time frame that we're looking at for additional expansion, beyond what we've done already by running 24/7."

Pesicka said Owen & Minor, which operates both domestic and foreign facilities, in January began running plants nonstop and in February expanded to four daily shifts as hospitals needed more face masks and surgical gowns to care for an high rate of patients diagnosed with the novel COVID-19, which has spread from China to across the globe. The company is considering adding a fifth shift as not to "wear our employees out and our teammates out during this time," the chief executive said.

For example, one hospital client in New York that used as many as 20,000 masks per week on average is now using as many as 300,000 weekly, Pesicka said. New York is the epicenter of the coronavirus epidemic in the U.S. and demand for a range of more medical equipment has been met by a shortage in supply, particularly of ventilators to help mitigate breathing complications caused by the deadly virus.

"That demand isn't just here in the U.S. That demand's in other parts of the world, too," Pesicka explained. "That global demand has increased exponentially."

Owens & Minor has been around for nearly 140 years and employs 15,400 people, according to Factset. The health-care services company has a market value of $347.4 million. It supplies surgical gloves, surgical gowns and face masks, including N95 masks.

Pesicka's comments come days after mayors and governors across the nation, including from New York and Illinois, have blamed the federal government's coronavirus response on the shortage of PPE supplies.

Some of those officials and other groups have called on President Donald Trump to use the Defense Production Act to force companies to manufacturer and distribute items to address the outbreak, but the White House has only applied those powers to compel General Motors to make needed ventilators as of Friday afternoon.

Outside of that, the Trump administration has been hesitant.

"We're getting what we need without putting the heavy hand of government down," White House trade advisor Peter Navarro said earlier this week.

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