UPDATE 1-Owens & Minor Q2 profit beats Wall Street

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July 28 (Reuters) - Owens & Minor Inc (OMI.N), a distributor of medical and surgical supplies, posted a 29 percent rise in quarterly profit, beating market estimates, as gross margin improved, and raised its 2008 earnings outlook.

Net income for the second quarter was $23.6 million, or 57 cents per share, compared with $18.3 million, or 45 cents per share, a year earlier. The year-ago quarter included the impact of the integration of an acquired business.

Sales rose 7 percent to $1.79 billion.

Analysts were expecting the company to earn 56 cents a share, before special items, on revenue of $1.77 billion, according to Reuters Estimates.

Gross margin rose to 10.6 percent from 10.5 percent.

Owens & Minor expects to earn $2.30 to $2.40 a share in 2008, up from its prior forecast of $2.20 to $2.30 a share.

It still expects revenue growth of 5 percent to 7 percent for the year.

Analysts were expecting earnings of $2.31 a share on revenue of $7.17 billion.

Shares of the Richmond, Virginia-based company were up about 3 percent in after-hours trade. They closed at $48.24 Monday on the New York Stock Exchange. (Reporting by Esha Dey in Bangalore; Editing by Pratish Narayanan)