What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-05 · 157 added, 89 removed, 393 unchanged (38% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share data) 2021 2020 2021 2020

4 unchanged sentences

Acquisition-related and exit and realignment charges 8,624 6,054 14,587 12,118

Other operating income, net ( 2,605 ) ( 2,309 )

Other operating expense (income), net 464 ( 577 ) ( 2,141 ) ( 2,886 )

Operating income 96,884 22,196 243,577 32,953

Interest expense, net 11,540 21,605 25,212 44,948

Loss on extinguishment of debt

Other expense, net 569 719

(Gain) loss on extinguishment of debt — ( 1,856 ) 40,433 2,271

Other expense (income), net 1,028 ( 2,696 ) 1,598 ( 1,977 )

Income (loss) from continuing operations before income taxes 84,316 5,143 176,334 ( 12,289 )

3 unchanged sentences

Net income (loss) $ 65,896 $ ( 55,627 ) $ 135,486 $ ( 66,951 )

Income (loss) from continuing operations per common share:

basic and diluted $ 0.98 $ ( 0.15 )

Loss from discontinued operations per common share:

basic and diluted — ( 0.04 )

Net income (loss) per common share:

basic and diluted $ 0.98 $ ( 0.19 )

Basic income (loss) per common share:

Income (loss) from continuing operations $ 0.90 $ — $ 1.87 $ ( 0.14 )

Loss from discontinued operations — ( 0.91 ) — ( 0.96 )

Net income (loss) $ 0.90 $ ( 0.91 ) $ 1.87 $ ( 1.10 )

Diluted income (loss) per common share:

Income (loss) from continuing operations $ 0.87 $ — $ 1.80 $ ( 0.14 )

Loss from discontinued operations — ( 0.91 ) — ( 0.96 )

Net income (loss) $ 0.87 $ ( 0.91 ) $ 1.80 $ ( 1.10 )

See accompanying notes to consolidated financial statements.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended June 30,

(in thousands) 2021 2020 2021 2020

3 unchanged sentences

Change in unrecognized net periodic pension costs 36 595 157 765

Net gain (loss) on derivative instruments 20,044 ( 11,397 )

Change in gains and losses on derivative instruments — ( 76 ) 20,044 ( 11,473 )

Total other comprehensive income (loss), net of tax ( 2,412 ) 30,527 5,491 ( 8,878 )

4 unchanged sentences

Consolidated Balance Sheets

March 31, December 31,

June 30, December 31,

(in thousands, except per share data) 2021 2020

38 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2021 2020

4 unchanged sentences

Share-based compensation expense 13,040 7,814

Impairment charges — 9,080

Loss on divestiture — 65,472

Loss on extinguishment of debt

10 unchanged sentences

Investing activities:

Proceeds from divestiture — 133,000

Additions to property and equipment ( 14,630 ) ( 8,733 )

1 unchanged sentence

Proceeds from sale of property and equipment 22 69

Cash used for investing activities ( 6,619 ) ( 5,680 )

Proceeds from cash surrender value of life insurance policies — 6,032

Cash (used for) provided by investing activities ( 18,659 ) 126,959

Financing activities:

31 unchanged sentences

Balance, March 31, 2020 62,885 125,770 256,357 126,323 ( 92,112 ) 416,338

Net loss ( 55,627 ) ( 55,627 )

Other comprehensive income 30,527 30,527

Dividends declared ($ 0.0025 per share)

( 156 ) ( 156 )

Share-based compensation expense, exercises and other 852 1,704 2,376 4,080

Balance, June 30, 2020 63,737 $ 127,474 $ 258,733 $ 70,540 $ ( 61,585 ) $ 395,162

Balance, December 31, 2020 73,472 $ 146,944 $ 436,597 $ 167,022 $ ( 38,509 ) $ 712,054

5 unchanged sentences

Balance, March 31, 2021 75,100 150,200 430,490 236,177 ( 30,606 ) 786,261

Net income 65,896 65,896

Other comprehensive loss ( 2,412 ) ( 2,412 )

Dividends declared ($ 0.0025 per share)

( 187 ) ( 187 )

Share-based compensation expense, exercises and other 295 591 ( 2,130 ) ( 1,539 )

Balance, June 30, 2021 75,395 $ 150,791 $ 428,360 $ 301,886 $ ( 33,018 ) $ 848,019

See accompanying notes to consolidated financial statements.

9 unchanged sentences

All significant intercompany accounts and transactions have been eliminated.

The Movianto business represented a component that met accounting requirements to be classified as discontinued operations for the three months ended March 31, 2020.

In accordance with GAAP, the results of operations of the Movianto business are presented as discontinued operations through June 18, 2020 (the Divestiture Date) and, as such, have been excluded from continuing operations for the three months ended March 31, 2020.

The Movianto business represented a component that met accounting requirements to be classified as discontinued operations for the three and six months ended June 30, 2020.

With the exception of Note 3, the Notes to Consolidated Financial Statements reflect the continuing operations of Owens & Minor, Inc.

12 unchanged sentences

Cash that is held by a major bank and has restrictions on its availability to us is classified as restricted cash.

Restricted cash included in Other assets, net as of March 31, 2021 represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program.

Restricted cash included in Other assets, net as of June 30, 2021 represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) initiatives.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of those same amounts presented in the accompanying consolidated statements of cash flows.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Cash and cash equivalents $ 45,424 $ 83,058

14 unchanged sentences

Movianto was previously reported in the Global Solutions segment.

Accordingly, the results of operations from the Movianto business are reported in the accompanying consolidated statements of operations as Loss from discontinued operations, net of tax for the three months ended March 31, 2020.

The following table summarizes the financial results of our discontinued operations for the three months ended March 31, 2020:

Three Months Ended March 31, 2020

The following table summarizes the financial results of our discontinued operations for the three and six months ended June 30, 2020:

Three Months Ended June 30, 2020 Six Months Ended June 30, 2020

Net revenue $ 104,417 $ 226,759

2 unchanged sentences

Distribution, selling, and administrative expenses 76,560 157,512

Asset impairment charges 9,080

Loss on divestiture 56,392 65,472

Acquisition-related and exit and realignment charges 4,554 4,825

Other operating income, net ( 461 )

Operating income 393

Other operating expenses (income), net 73 ( 388 )

Operating loss ( 54,979 ) ( 54,585 )

Interest expense, net 1,424 3,144

Loss from discontinued operations before income taxes ( 56,403 ) ( 57,729 )

Income tax provision from discontinued operations 1,088

Income tax (benefit) provision from discontinued operations ( 615 ) 474

Loss from discontinued operations, net of tax $ ( 55,788 ) $ ( 58,203 )

We suspended depreciation and amortization on assets that are held-for-sale, including right-of-use assets recorded in accordance with ASU No.

2016-02, for three months ended March 31, 2020.

2016-02, for the three and six months ended June 30, 2020.

No revenue or expense have been recorded in discontinued operations related to the disposal group subsequent to the Divestiture Date.

We have entered into transition services agreements with a subsidiary of the Buyer, pursuant to which we and a subsidiary of the Buyer will provide to each other various transitional services.

Certain transition service arrangement costs and reimbursements were recorded during the three months ended March 31, 2021 and were immaterial for the period presented.

We had no assets and liabilities of the discontinued Movianto business reflected on the consolidated balance sheets at March 31, 2021 and December 31, 2020.

Certain transition service arrangement costs and reimbursements were recorded during the three and six months ended June 30, 2021 and were immaterial for the periods presented.

These arrangements were substantially completed as of June 30, 2021.

We had no assets and liabilities of the discontinued Movianto business reflected on the consolidated balance sheets at June 30, 2021 and December 31, 2020.

The following table provides operating and investing cash flow information for our discontinued operations:

Three Months Ended March 31, 2020

Six Months Ended June 30, 2020

Operating Activities:

Depreciation and amortization $ —

Impairment charges 9,080

Loss on divestiture $ 65,472

Investing Activities:

1 unchanged sentence

Note 4— Goodwill and Intangible Assets

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through March 31, 2021:

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through June 30, 2021:

Global Solutions Global Products Consolidated

1 unchanged sentence

Currency translation adjustments — ( 4,222 ) ( 4,222 )

Carrying amount of goodwill, March 31, 2021 $ 283,905 $ 107,444 $ 391,349

Intangible assets at March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021 December 31, 2020

Carrying amount of goodwill, June 30, 2021 $ 283,905 $ 105,959 $ 389,864

Intangible assets at June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021 December 31, 2020

Relationships Tradenames Other

5 unchanged sentences

Weighted average useful life 10 years 11 years 8 years 10 years 11 years 8 years

At March 31, 2021, $ 59.1 million in net intangible assets were held in the Global Solutions segment and $ 173 million were held in the Global Products segment.

Amortization expense for intangible assets was $ 10.0 million and $ 10.6 million for the three months ended March 31, 2021 and 2020.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is $ 29.9 million for the remainder of 2021, $ 38.9 million for 2022, $ 38.7 million for 2023, $ 33.9 million for 2024, $ 28.2 million for 2025 and $ 26.8 million for 2026.

At June 30, 2021, $ 55.1 million in net intangible assets were held in the Global Solutions segment and $ 166 million were held in the Global Products segment.

Amortization expense for intangible assets was $ 10.0 million and $ 10.6 million for the three months ended June 30, 2021 and 2020, and $ 20.1 million and $ 21.2 million for the six months ended June 30, 2021 and 2020.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is approximately $ 20 million for the remainder of 2021, $ 39 million for 2022, $ 39 million for 2023, $ 34 million for 2024, $ 28 million for 2025 and $ 27 million for 2026.

Note 5— Exit and Realignment Costs

1 unchanged sentence

These charges also include costs associated with our strategic organizational realignment which include management changes, certain professional fees, and costs to streamline administrative functions and processes and divestiture related costs.

Exit and realignment charges by segment for the three months ended March 31, 2021 and 2020 were as follows:

Exit and realignment charges by segment for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended

June 30, Six Months Ended June 30,

2021 2020 2021 2020

Global Solutions segment $ 6,507 $ 1,713 $ 10,801 $ 3,542

1 unchanged sentence

Total exit and realignment charges $ 8,624 $ 2,200 $ 14,587 $ 4,029

The following table summarizes the activity related to exit and realignment cost accruals through March 31, 2021 and 2020:

The following table summarizes the activity related to exit and realignment cost accruals through June 30, 2021 and 2020:

Accrued exit and realignment costs, December 31, 2020 $ 3,146

4 unchanged sentences

Accrued exit and realignment costs, March 31, 2021 2,388

Provision for exit and realignment activities:

Information system restructuring costs 1,611

Lease obligations ( 126 )

Cash payments ( 2,302 )

Accrued exit and realignment costs, June 30, 2021 $ 2,560

Accrued exit and realignment costs, December 31, 2019 $ 8,162

5 unchanged sentences

Accrued exit and realignment costs, March 31, 2020 4,192

In addition to the exit and realignment accruals in the preceding table, we also incurred $ 3.8 million of costs that were expensed as incurred for the three months ended March 31, 2021, including $ 3.2 million related to an increase in reserves associated with certain retained assets of Fusion5, $ 0.5 million in impairment charges related to our client engagement center, and $ 0.1 million in other asset charges.

There were no acquisition-related charges included within acquisition-related and exit and realignment charges presented in our consolidated statements of operations for the three months ended March 31, 2021.

Acquisition-related charges included within acquisition-related and exit and realignment charges presented in our consolidated statements of operations were $ 4.2 million for the three months ended March 31, 2020 and consisted primarily of transition costs for the Halyard acquisition.

Provision for exit and realignment activities:

Severance 809

Information system restructuring costs 671

Lease obligations 219

Cash payments ( 2,072 )

Accrued exit and realignment costs, June 30, 2020 $ 4,320

In addition to the exit and realignment accruals in the preceding table, we also incurred $ 6.2 million and $ 10.0 million of costs that were expensed as incurred for the three and six months ended June 30, 2021, which primarily includes $ 4.9 million and $ 8.0 million related to an increase in reserves associated with certain retained assets of Fusion5 for the three and six months ended June 30, 2021.

Acquisition-related charges included within acquisition-related and exit and realignment charges presented in our consolidated statements of operations were $ 3.9 million and $ 8.1 million for the three and six months ended June 30, 2020 and consisted primarily of transition costs for the Halyard acquisition.

We may incur additional costs in 2021 related to certain retained assets of Fusion5.

Debt consists of the following:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Amount Estimated

15 unchanged sentences

The 2024 Notes were sold at 99.6 % of the principal amount with an effective yield of 4.422 %.

We have the option to redeem the 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100 % of the principal amount or the present value of the remaining scheduled payments discounted at the applicable Benchmark Treasury Rate plus 30 basis points.

In March 2021, we issued $ 500 million, excluding debt issuance costs and deferred fees, of 4.500 % senior unsecured notes due in 2029 (the 2029 Unsecured Notes), with interest payable semi-annually (the Notes Offering).

1 unchanged sentence

We used a portion of the net proceeds from the Notes Offering to repay our Term B Loan and borrowings under our revolving credit facility.

In connection with these repayments, we recorded $ 15.3 million in write-offs of deferred financing costs and third party fees within l oss on extinguishment of debt for the three months ended March 31, 2021 .

In connection with these repayments, we recorded $ 15.3 million in write-offs of deferred financing costs and third party fees within loss on extinguishment of debt for the six months ended June 30, 2021.

No write-offs of deferred financing costs and third party fees were recorded for the three months ended June 30, 2021.

We may redeem all or part of the 2029 Unsecured Notes prior to March 31, 2024, at a price equal to 100 % of the principal amount of the 2029 Unsecured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make-whole” premium, as described in the Indenture dated March 10, 2021 (the Indenture).

4 unchanged sentences

and a syndicate of lenders (the Credit Agreement) with a $ 300 million revolving credit facility.

The interest rate on our revolving credit facility is based on a spread over either the Eurocurrency Rate or the Base Rate (each as defined in the Credit Agreement).

The interest rate on our revolving credit facility is based on a spread over a benchmark rate (as described in the Credit Agreement).

The Credit Agreement matures in March 2026.

At March 31, 2021 and December 31, 2020, we had borrowings of $ 6.7 million and $ 103 million and letters of credit of $ 11.4 million and $ 13.9 million outstanding under our revolving credit facilities.

At March 31, 2021 and December 31, 2020, we had $ 282 million and $ 283 million available for borrowing.

We also had letters of credit and bank guarantees outstanding for $ 1.9 million and $ 1.6 million as of March 31, 2021 and December 31, 2020, which supports certain leased facilities as well as other normal business activities in the United States and Europe.

These letters of credit and guarantees were issued independent of the Credit Agreement.

We entered into a Security and Pledge Agreement (the Security Agreement), dated March 10, 2021, pursuant to which we granted collateral on behalf of the holders of the 2024 Notes, and the parties secured under the Credit Agreement (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions.

The Credit Agreement included additional collateral requirements of the Credit Parties, including an obligation to pledge our owned U.S.

real estate and the remaining equity interests in foreign subsidiaries.

At June 30, 2021 and December 31, 2020, we had borrowings of $ 33.3 million and $ 103 million and letters of credit of $ 11.4 million and $ 13.9 million outstanding under our revolving credit facilities.

At June 30, 2021 and December 31, 2020, we had $ 255 million and $ 283 million available for borrowing.

We also had letters of credit and bank guarantees outstanding for $ 2.2 million and $ 1.6 million as of June 30, 2021 and December 31, 2020, which supports certain leased facilities as well as other normal business activities in the United States and Europe.

These letters of credit and guarantees were issued outside of the revolving credit facility.

We entered into a Security and Pledge Agreement (the Security Agreement), dated March 10, 2021, pursuant to which we granted collateral on behalf of the holders of the 2024 Notes, and the parties secured under the Credit Agreement (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries, subject to certain customary exceptions, and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions.

On March 10, 2021, we entered into an amendment to our accounts receivable securitization program (the Receivables Securitization Program).

Pursuant to the amended Receivables Securitization Program, the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed $ 450 million outstanding at any time.

The interest rate under the Receivables Securitization Program is based on a spread over the London Interbank Offered Rate (LIBOR) or successor rate.

The interest rate under the Receivables Securitization Program is based on a spread over a benchmark rate (as described in the Third Amendment to the Receivables Financing Agreement).

Under the Receivables Securitization Program, certain of our subsidiaries sell substantially all of their accounts receivable balances to our wholly owned special purpose entity, O&M Funding LLC.

The Receivables Securitization Program matures in March 2024.

The Credit Agreement, Receivables Securitization Program, 2024 Notes and 2029 Unsecured Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement.

The terms of the Credit Agreement also require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition or divestiture.

We were in compliance with our debt covenants at March 31, 2021.

As of March 31, 2021, scheduled future principal payments of debt, excluding finance leases and other, were $ 476 million in 2024, $ 6.7 million in 2026, and $ 500 million in 2029.

Current maturities include $ 1.1 million in current portion of finance leases.

We were in compliance with our debt covenants at June 30, 2021.

As of June 30, 2021, scheduled future principal payments of debt, excluding finance leases and other, were $ 476 million in 2024, $ 33.3 million in 2026, and $ 500 million in 2029.

Current maturities at June 30, 2021 include $ 1.1 million in current portion of finance leases.

Note 7— Retirement Plans

1 unchanged sentence

Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective teammates.

The components of net periodic benefit cost for the three months ended March 31, 2021 and 2020 were as follows:

The components of net periodic benefit cost for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Service cost $ 709 $ 357 $ 1,413 $ 708

13 unchanged sentences

We report cash flows from our hedging instruments in the same cash flow statement category as the hedged items.

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of March 31, 2021:

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of June 30, 2021:

Derivative Assets Derivative Liabilities

1 unchanged sentence

Economic (non-designated) hedges

Foreign currency contracts $ 18,700 April 2021 Other current assets $ — Other current liabilities $ 110

In March 2021, we terminated the remaining $ 300 million in notional value of interest rate swaps.

In September 2020, we had previously terminated $ 150 million in notional value of interest rate swaps.

The remaining balance of the fair value adjustments of $ 25.1 million, which related to these terminated interest rate swaps, within Accumulated other comprehensive loss was reclassified to Loss on extinguishment of debt within our Consolidated Statements of Operations for the three months ended March 31, 2021.

Foreign currency contracts $ 21,000 July 2021 Other current assets $ — Other current liabilities $ 116

In March 2021, we terminated the remaining $ 300 million in notional value of interest rate swaps concurrent with the debt financing transaction.

In September 2020, we terminated $ 150 million in notional value of interest rate swaps.

The remaining balance of the fair value adjustments of $ 25.1 million, which related to these terminated interest rate swaps, within Accumulated other comprehensive loss was reclassified to Loss on extinguishment of debt within our consolidated statements of operations for the six months ended June 30, 2021.

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of December 31, 2020:

5 unchanged sentences

Foreign currency contracts $ 30,300 January 2021 Other current assets $ 151 Other current liabilities $ —

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three months ended March 31, 2021:

Amount of Gain Recognized in Other Comprehensive Income Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and six months ended June 30, 2021:

Amount of Gain Recognized in Other Comprehensive Income (Loss) Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Three Months Ended June 30, 2021 Six Months Ended June 30, 2021

Interest rate swaps $ — $ 2,426 Loss on extinguishment of debt $ — $ ( 40,433 ) $ — $ ( 25,518 )

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three months ended March 31, 2020:

Amount of Loss Recognized in Other Comprehensive Loss Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income

The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and six months ended June 30, 2020:

Amount of Loss Recognized in Other Comprehensive Income (Loss) Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income

Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Three Months Ended June 30, 2020 Six Months Ended June 30, 2020

Interest rate swaps $ ( 2,439 ) $ ( 19,397 ) Interest expense, net $ ( 21,605 ) $ ( 44,948 ) $ ( 2,601 ) $ ( 3,860 )

The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.

For the three months ended March 31, 2021 and 2020, we recognized losses of $ 1.0 million and $ 2.7 million associated with our economic (non-designated) foreign currency contracts.

For the three and six months ended June 30, 2021 we recognized losses of $ 0.6 million and $ 1.6 million associated with our economic (non-designated) foreign currency contracts.

For the three and six months ended June 30, 2020 we recognized a gain of $ 1.3 million and a loss of $ 1.4 million associated with our economic (non-designated) foreign currency contracts.

We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating income, net for our foreign exchange contracts.

Note 9— Income Taxes

The effective tax rate was 24.4 % for the three months ended March 31, 2021, compared to a tax benefit of 48.9 % in the same quarter of 2020.

The change in these rates resulted primarily from an income tax benefit recorded in the first quarter of 2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax benefit associated with the vesting of restricted stock recorded in the first quarter of 2021.

The liability for unrecognized tax benefits was $ 21.0 million at March 31, 2021 and $ 20.8 million at December 31, 2020.

Included in the liability at March 31, 2021 and December 31, 2020 were $ 2.7 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The effective tax rate was 21.8 % and 23.2 % for the three and six months ended June 30, 2021, compared to 96.9 % and 28.8 % in the same periods of 2020.

The liability for unrecognized tax benefits was $ 23.6 million at June 30, 2021 and $ 20.8 million at December 31, 2020.

Included in the liability at June 30, 2021 and December 31, 2020 were $ 2.7 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

On August 26, 2020, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Services (IRS) regarding our 2015 and 2016 consolidated income tax returns.

Within the NOPA, the IRS has asserted that our taxable income for 2015 and 2016 should be higher based on their assessment of the appropriate amount of taxable income that we should

report in the United States in connection with our sourcing of products by our foreign subsidiaries for sale in the United States by our domestic subsidiaries.

On June 30, 2021, we received a NOPA from the IRS regarding our 2017 and 2018 consolidated income tax returns.

Within the NOPAs, the IRS has asserted that our taxable income for the aforementioned years should be higher based on their assessment of the appropriate amount of taxable income that we should report in the United States in connection with our sourcing of products by our foreign subsidiaries for sale in the United States by our domestic subsidiaries.

Our amount of taxable income in the United States is based on our transfer pricing methodology, which has been consistently applied through the current date.

5 unchanged sentences

Note 10— Net Income (Loss) per Common Share

The following summarizes the calculation of net income (loss) per common share attributable to common shareholders for the three months ended March 31, 2021 and 2020:

The following summarizes the calculation of net income (loss) per common share attributable to common shareholders for the three and six months ended June 30, 2021 and 2020:

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share data) 2021 2020 2021 2020

Income (loss) from continuing operations, net of tax $ 65,896 $ 161 $ 135,486 $ ( 8,748 )

Loss from discontinued operations, net of tax — ( 55,788 ) — ( 58,203 )

Net income (loss) $ 65,896 $ ( 55,627 ) $ 135,486 $ ( 66,951 )

Weighted average shares outstanding - basic 72,818 61,128 72,474 60,819

1 unchanged sentence

Weighted average shares outstanding - diluted 75,805 61,128 75,265 60,819

Basic income (loss) per common share:

Income (loss) from continuing operations $ 0.90 $ — $ 1.87 $ ( 0.14 )

Basic and diluted per share $ 0.98 $ ( 0.15 )

Loss from discontinued operations — ( 0.91 ) — ( 0.96 )

Basic and diluted per share $ — $ ( 0.04 )

Net income (loss) $ 0.90 $ ( 0.91 ) $ 1.87 $ ( 1.10 )

Basic and diluted per share $ 0.98 $ ( 0.19 )

Diluted income (loss) per common share:

Income (loss) from continuing operations $ 0.87 $ — $ 1.80 $ ( 0.14 )

Loss from discontinued operations — ( 0.91 ) — ( 0.96 )

Net income (loss) $ 0.87 $ ( 0.91 ) $ 1.80 $ ( 1.10 )

Note 11— Shareholders' Equity

1 unchanged sentence

We intend to use the net proceeds from the sale of our securities offered by this program for the repayment of indebtedness and/or for general corporate and working capital purposes.

As of March 31, 2021, no shares were issued and $ 50.0 million of common stock remained available under the at-the-market equity financing program.

As of June 30, 2021, no shares were issued and $ 50.0 million of common stock remained available under the at-the-market equity financing program.

Note 12— Accumulated Other Comprehensive Loss

The following table shows the changes in accumulated other comprehensive loss by component for the three months ended March 31, 2021 and 2020:

The following table shows the changes in accumulated other comprehensive loss by component for the three and six months ended June 30, 2021 and 2020:

Retirement Plans Currency

Adjustments Derivatives Total

Accumulated other comprehensive loss, December 31, 2020 $ ( 18,447 ) $ ( 18 ) $ ( 20,044 ) $ ( 38,509 )

Accumulated other comprehensive loss, March 31, 2021 $ ( 18,326 ) $ ( 12,280 ) $ — $ ( 30,606 )

Other comprehensive loss before reclassifications — ( 2,448 ) — ( 2,448 )

Income tax — — — —

Other comprehensive loss before reclassifications, net of tax — ( 2,448 ) — ( 2,448 )

Amounts reclassified from accumulated other comprehensive loss 48 — — 48

Income tax ( 12 ) — — ( 12 )

Amounts reclassified from accumulated other comprehensive loss, net of tax 36 — — 36

Other comprehensive income (loss) 36 ( 2,448 ) — ( 2,412 )

Accumulated other comprehensive loss, June 30, 2021 $ ( 18,290 ) $ ( 14,728 ) $ — $ ( 33,018 )

Retirement Plans Currency Translation Adjustments Derivatives Total

Accumulated other comprehensive loss, March 31, 2020 $ ( 14,521 ) $ ( 53,479 ) $ ( 24,112 ) $ ( 92,112 )

Other comprehensive income (loss) before reclassifications — 14,428 ( 2,439 ) 11,989

5 unchanged sentences

Other comprehensive income (loss) 595 30,008 ( 76 ) 30,527

Accumulated other comprehensive loss, March 31, 2021 $ ( 18,326 ) $ ( 12,280 ) $ — $ ( 30,606 )

Accumulated other comprehensive loss, June 30, 2020 $ ( 13,926 ) $ ( 23,471 ) $ ( 24,188 ) $ ( 61,585 )

Retirement Plans Currency

Adjustments Derivatives Total

Accumulated other comprehensive loss, December 31, 2020 $ ( 18,447 ) $ ( 18 ) $ ( 20,044 ) $ ( 38,509 )

Other comprehensive (loss) income before reclassifications — ( 14,710 ) 2,426 ( 12,284 )

Income tax — — ( 611 ) ( 611 )

Other comprehensive (loss) income before reclassifications, net of tax — ( 14,710 ) 1,815 ( 12,895 )

Amounts reclassified from accumulated other comprehensive loss 204 — 25,518 25,722

Income tax ( 47 ) — ( 7,289 ) ( 7,336 )

Amounts reclassified from accumulated other comprehensive loss, net of tax 157 — 18,229 18,386

Other comprehensive income (loss) 157 ( 14,710 ) 20,044 5,491

Accumulated other comprehensive loss, June 30, 2021 $ ( 18,290 ) $ ( 14,728 ) $ — $ ( 33,018 )

Retirement Plans Currency Translation Adjustments Derivatives Total

7 unchanged sentences

Other comprehensive income (loss) 765 1,830 ( 11,473 ) ( 8,878 )

Accumulated other comprehensive loss, March 31, 2020 $ ( 14,521 ) $ ( 53,479 ) $ ( 24,112 ) $ ( 92,112 )

Accumulated other comprehensive loss, June 30, 2020 $ ( 13,926 ) $ ( 23,471 ) $ ( 24,188 ) $ ( 61,585 )

We include amounts reclassified out of accumulated other comprehensive loss related to defined benefit pension plans as a component of net periodic pension cost recorded in Other expense, net.

3 unchanged sentences

Global Solutions and Global Products.

The Global Solutions segment includes our United States distribution, outsourced logistics and value-added services business.

The Global Solutions segment includes our United States distribution businesses (Medical Distribution and Patient Direct), outsourced logistics and value-added services business.

Global Products manufactures and sources medical surgical products through our production and kitting operations.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Segment net revenue

Global Solutions $ 1,977,579 $ 1,548,639 $ 3,827,088 $ 3,396,233

21 unchanged sentences

Consolidated capital expenditures $ 12,058 $ 6,429 $ 18,681 $ 12,142

March 31, 2021 December 31, 2020

2021 December 31, 2020

Total assets:

5 unchanged sentences

The following table presents net revenue by geographic area, which were attributed based on the location from which we ship products or provide services.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

United States $ 2,336,673 $ 1,737,615 $ 4,519,428 $ 3,771,069

13 unchanged sentences

The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.

At the present time, none of our lenders have requested that we transition away from LIBOR for our borrowings that bear interest based on LIBOR and we will continue to evaluate the impact through transition.

Our current debt agreements contemplate a transition from LIBOR to another benchmark rate in the event that LIBOR ceases to exist.

We do not expect the transition to have a material impact on our consolidated financial statements.

In October 2020, the FASB issued ASU No.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements