What changed in this filing

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Item 9A. Controls and Procedures

2023-02-28 compared with 2022-02-23 · 386 added, 376 removed, 1016 unchanged (43% of the section changed)

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Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2022.

On the Acquisition Date, we completed the acquisition of 100% of Apria.

As permitted by the Securities and Exchange Commission under the current year acquisition scope exception, we have excluded this acquisition, except for certain balances associated with acquisition accounting, from our 2022 assessment of the effectiveness of our internal control over financial reporting since it was not practical for management to conduct an assessment of internal control over financial reporting between the Acquisition Date and the date of management's assessment.

Management’s Report on Internal Control over Financial Reporting

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In making this assessment, management used the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).

Based on management’s assessment and the COSO criteria, management believes that our internal control over financial reporting was effective as of December 31, 2021.

Based on management’s assessment and the COSO criteria, management believes that our internal control over financial reporting was effective as of December 31, 2022 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

In reliance on guidance set forth in Question 3 of a “Frequently Asked Questions” interpretative release issued by the Staff of the SEC’s Office of the Chief Accountant and the Division of Corporation Finance in September 2004, as revised on September 24, 2007, regarding Securities Exchange Act Release No.

34-47986, Management’s Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, management determined that it would exclude Apria, Inc.

(Apria), which was acquired on March 29, 2022, from the scope of the assessment of the effectiveness of our internal control over financial reporting.

It was not practical for management to conduct an assessment of internal control over financial reporting in the period between the date the acquisition was completed and the date of management’s assessment.

Except for goodwill and intangible assets recorded by the Company in connection with the purchase of Apria, management excluded Apria from its assessment of internal control over financial reporting.

Excluding $1.5 billion of goodwill and intangible assets (see Note 3 and Note 7 of Notes to the Consolidated Financial Statements), this acquisition represented $496 million of assets and $937 million of revenues as of and for the year ended December 31, 2022, of our consolidated financial statements.

Apria will be included in management’s assessment of internal control over financial reporting for the year ending December 31, 2023.

The effectiveness of our internal control over financial reporting as of December 31, 2022, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their unqualified report which is included in this annual report.

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Pesicka, President, Chief Executive Officer & Director

/s/ Andrew G.

Long, Executive Vice President & Chief Financial Officer

/s/ Alexander J.

Bruni, Executive Vice President & Chief Financial Officer

Changes in Internal Control over Financial Reporting

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Report of Independent Registered Public Accounting Firm

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated February 23, 2022 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 28, 2023 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Apria, Inc.

during 2022, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, Apria, Inc.’s internal control over financial reporting associated with total assets of $496 million and total revenues of $937 million included in the consolidated financial statements of the Company as of and for the year ended December 31, 2022.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Apria, Inc.

Basis for Opinion

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February 28, 2023

Information required by Items 10-14 can be found under Corporate Officers at the end of the electronic filing of this Form 10-K and the registrant’s 2022 Proxy Statement pursuant to instructions (1) and G(3) of the General Instructions to Form 10-K.

Information required by Items 10-14 can be found under Information about our Executive Officers under Part I of this Form 10-K and the registrant’s 2022 Proxy Statement pursuant to instructions G(3) of the General Instructions to Form 10-K.

Because our common stock is listed on the New York Stock Exchange (NYSE), our Chief Executive Officer is required to make, and he has made, an annual certification to the NYSE stating that he was not aware of any violation of the corporate governance listing standards of the NYSE.

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Consolidated Statements of Operations for the Years Ended December 31, 202 2 , 202 1 and 20 2 0

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021, 2020 and 2019

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020

Consolidated Balance Sheets as of December 31, 202 2 and 202 1

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Acquisition-related and exit and realignment charges 55,022 34,076 37,752

Other operating (income) expense, net ( 6,191 ) ( 2,372 ) 2,225

Other operating income, net ( 5,252 ) ( 6,191 ) ( 2,372 )

Operating income 142,913 368,473 204,118

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Other expense (income), net 3,131 3,196 ( 407 )

Income (loss) from continuing operations before income taxes 276,754 109,908 ( 28,719 )

Income tax provision (benefit) 55,165 21,834 ( 6,135 )

Income (loss) from continuing operations 221,589 88,074 ( 22,584 )

Income from continuing operations before income taxes 10,891 276,754 109,908

Income tax (benefit) provision ( 11,498 ) 55,165 21,834

Income from continuing operations 22,389 221,589 88,074

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

Net income (loss) $ 221,589 $ 29,871 $ ( 62,371 )

Basic income (loss) per common share:

Income (loss) from continuing operations $ 3.05 $ 1.39 $ ( 0.37 )

Net income $ 22,389 $ 221,589 $ 29,871

Basic income per common share:

Income from continuing operations $ 0.30 $ 3.05 $ 1.39

Loss from discontinued operations — — ( 0.92 )

Net income (loss) $ 3.05 $ 0.47 $ ( 1.03 )

Diluted income (loss) per common share:

Income (loss) from continuing operations $ 2.94 $ 1.39 $ ( 0.37 )

Net income $ 0.30 $ 3.05 $ 0.47

Diluted income per common share:

Income from continuing operations $ 0.29 $ 2.94 $ 1.39

Loss from discontinued operations — — ( 0.92 )

Net income (loss) $ 2.94 $ 0.47 $ ( 1.03 )

Net income $ 0.29 $ 2.94 $ 0.47

See accompanying notes to consolidated financial statements.

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

Year ended December 31, 2022 2021 2020

Net income (loss) $ 221,589 $ 29,871 $ ( 62,371 )

Net income $ 22,389 $ 221,589 $ 29,871

Other comprehensive income (loss), net of tax:

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Total other comprehensive income (loss), net of tax 4,736 ( 2,082 ) 14,198

Comprehensive income (loss) $ 219,507 $ 44,069 $ ( 69,466 )

Comprehensive income $ 27,125 $ 219,507 $ 44,069

See accompanying notes to consolidated financial statements.

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authorized— 200,000 shares;

issued and outstanding— 75,433 shares and 73,472 shares

issued and outstanding— 76,279 shares and 75,433 shares as of December 31, 2022 and 2021

152,557 150,865

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Operating activities:

Net income (loss) $ 221,589 $ 29,871 $ ( 62,371 )

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Net income $ 22,389 $ 221,589 $ 29,871

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 228,667 90,621 93,336

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Loss on divestiture — — 65,472

Loss on extinguishment and modification of debt 40,433 11,219 830

Loss on extinguishment of debt — 40,433 11,219

Deferred income tax (benefit) expense ( 26,361 ) ( 29,736 ) 15,564

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Changes in operating lease right-of-use assets and lease liabilities 353 1,463 ( 1,676 )

Changes in operating assets and liabilities:

Gain on sale and dispositions of property and equipment ( 26,260 ) — —

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable 1,101 ( 2,201 ) ( 34,818 )

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Investing activities:

Acquisition, net of cash acquired ( 1,684,607 ) — —

Proceeds from divestiture — — 133,000

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Additions to computer software ( 8,492 ) ( 8,705 ) ( 8,769 )

Proceeds from sale of property and equipment 48,383 — —

Other, net ( 1,670 ) ( 3,940 ) 6,266

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Proceeds from issuance of common stock — — 189,971

Repayments of revolving credit facility, net ( 103,200 ) ( 74,700 ) ( 32,200 )

Borrowings (repayments) under revolving credit facility, net and accounts receivable securitization program 30,000 ( 103,200 ) ( 74,700 )

Repayments of debt ( 4,500 ) ( 553,140 ) ( 617,271 )

Borrowings under amended accounts receivable securitization program 1,022,300 — —

Repayments under amended accounts receivable securitization program ( 1,156,300 ) — —

Financing costs paid ( 42,602 ) ( 13,912 ) ( 10,367 )

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Other, net ( 42,793 ) ( 17,961 ) ( 16,491 )

Cash used for financing activities ( 129,478 ) ( 379,386 ) ( 130,197 )

Cash provided by (used for) financing activities 1,497,105 ( 129,478 ) ( 379,386 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 3,485 ) ( 3,540 ) 9,909

Net (decrease) increase in cash, cash equivalents and restricted cash ( 62,471 ) 49,819 ( 18,680 )

Net increase (decrease) in cash, cash equivalents and restricted cash 14,150 ( 62,471 ) 49,819

Cash, cash equivalents and restricted cash at beginning of year 72,035 134,506 84,687

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Interest paid $ 107,022 $ 38,717 $ 89,961

Noncash investing activity:

Unpaid purchases of property and equipment and software at end of period $ 67,852 $ — $ —

See accompanying notes to consolidated financial statements.

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Balance, December 31, 2019 62,843 $ 125,686 $ 251,401 $ 137,774 $ ( 52,707 ) $ 462,154

Net loss ( 62,371 ) ( 62,371 )

Other comprehensive loss ( 7,095 ) ( 7,095 )

Dividends declared ($ 0.01 per share)

( 525 ) ( 525 )

Share-based compensation expense, exercises and other 549 1,098 12,628 13,726

Balance, December 31, 2019 62,843 125,686 251,401 137,774 ( 52,707 ) 462,154

Net income — — — 29,871 — 29,871

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Balance, December 31, 2021 75,433 150,865 440,608 387,619 ( 40,591 ) 938,501

Net income — — — 22,389 22,389

Other comprehensive income — — — — 4,736 4,736

Share-based compensation expense, exercises and other 846 1,692 ( 21,714 ) — — ( 20,022 )

Balance, December 31, 2022 76,279 $ 152,557 $ 418,894 $ 410,008 $ ( 35,855 ) $ 945,604

See accompanying notes to consolidated financial statements.

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Our teammates serve healthcare industry customers in approximately 70 countries, by producing quality products and helping to reduce total costs across the healthcare supply chain by optimizing point-of care performance, freeing up capital and clinical resources and managing contracts to optimize financial performance.

Basis of Presentation.

Basis of Presentation and Consolidation.

The consolidated financial statements include the accounts of Owens & Minor, Inc.

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Unless otherwise indicated, information in these notes to consolidated financial statements relates to continuing operations.

The results of operations of businesses acquired by the Company are included as of the respective acquisition date.

Our business has two distinct segments:

Products & Healthcare Services and Patient Direct.

Products & Healthcare Services provides distribution, outsourced logistics and value-added services, and manufactures and sources medical surgical products through our production and kitting operations.

Patient Direct expands our business along the continuum of care through delivery of disposable medical supplies sold directly to patients and home health agencies and is a leading provider of integrated home healthcare equipment and related services in the United States.

Beginning in 2022, we have reported financial results using this two segment structure and have recast our prior year segment results on the same basis.

Reclassifications.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Certain prior year amounts have been reclassified to conform to the current year segment presentation.

Use of Estimates.

The preparation of the consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures.

Estimates are used for, but are not limited to, the allowances for losses on accounts receivable, inventory valuation allowances, customer discounts and allowances, supplier incentives, depreciation and amortization, goodwill valuation, valuation of intangible assets and other long-lived assets, self-insurance liabilities, tax liabilities, defined benefit obligations, share-based compensation and other contingencies.

Significant estimates are used for, but are not limited to, the allowances for losses on accounts receivable, inventory valuation allowances, variable consideration, depreciation and amortization, goodwill valuation, valuation of intangible assets and other long-lived assets, estimated fair values of the net assets acquired in business combinations, self-insurance liabilities, tax liabilities, defined benefit obligations, share-based compensation and other contingencies.

Actual results may differ from these estimates.

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Cash, cash equivalents and restricted cash are stated at cost.

Nearly all of our cash, cash equivalents and restricted cash are held in cash depository accounts in major banks in the United States, Europe, and Asia.

Nearly all of our cash, cash equivalents and restricted cash are held in cash depository accounts in major banks in North America, Europe, and Asia.

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 December 31, 2021 and 2020 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 related to wind-down costs of Fusion5.

As of December 31, 2020, restricted cash included in other current assets represents cash held in a designated account as required by the Fifth Amendment to the Credit Agreement, which stipulates that the cash held within this account is to be used to repay the 2021 Notes, which were fully repaid as of December 31, 2020, or the Term A Loans.

Restricted cash included in other assets, net as of December 31, 2022 and 2021 primarily 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 related to wind-down costs of Fusion5.

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.

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Cash and cash equivalents $ 69,467 $ 55,712

Restricted cash included in Other current assets — 35,126

Restricted cash included in Other assets, net 16,718 16,323

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Accounts Receivable, Net.

In general, accounts receivable from customers are recorded at the invoiced amount and are reduced by any rebates due to the customer, which are estimated based on contractual terms or historical experience.

Accounts receivable, net are recorded at net realizable value.

In the Products & Healthcare Services segment, accounts receivable from customers are recorded at net realizable value of the invoiced amount and are reduced by any rebates due to the customer, which are estimated based on contractual terms or historical experience.

We assess finance charges on overdue accounts receivable that are recognized as other operating income based on their estimated ultimate collectability.

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Customer deposits in excess of outstanding receivable balances are classified as other current liabilities.

For our Patient Direct business, accounts receivable are recorded net of a contractual allowance.

Due to the nature of our industry and the reimbursement environment in which we operate, certain estimates are required to record total net revenues and accounts receivable at their net realizable values, including estimating variable consideration.

Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available.

Specifically, the complexity of many third-party billing arrangements, contractual terms, and the uncertainty of reimbursement amounts for certain services may result in adjustments to amounts originally recorded.

Such adjustments are typically identified and recorded at the point of cash application, claim denial or account review.

We maintain valuation allowances based upon the expected collectability of accounts receivable.

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Merchandise Inventories.

Merchandise inventories are valued at the lower of cost or market, with cost determined by the last-in, first-out (LIFO) method for distribution inventories in the U.S.

Cost of remaining inventories are determined using the first-in, first out (FIFO) or weighted-average cost method.

Merchandise inventories are valued at the lower of cost or market, with the approximate cost determined by the last-in, first-out (LIFO) method for distribution inventories in the U.S.

within our Products & Healthcare Services segment.

Cost of remaining inventories are determined using the first-in, first out (FIFO) or weighted-average cost method at the lower of cost or net realizable value.

We periodically evaluate whether inventory valuation allowance adjustments are required, which includes consideration of recent sales trends.

In our evaluation, we review for expired or obsolete inventory and slow-moving inventory.

We write down inventories which are considered excess and obsolete as a result of these assessments.

Shifts in market trends and conditions, as well as changes in customer preferences and behavior could affect the value of our inventories.

Property and Equipment.

Property and equipment are stated at cost less accumulated depreciation.

Depreciation and amortization expense for financial reporting purposes is computed on a straight-line method over the estimated useful lives of the assets or, for capital leases and leasehold improvements, over the term of the lease, if shorter.

In general, the estimated useful lives for computing depreciation and amortization are three to 15 years for machinery and equipment, five to 40 years for buildings, and up to 15 years for leasehold and land improvements.

Property and equipment are stated at cost less accumulated depreciation and amortization.

Depreciation expense for financial reporting purposes is computed on a straight-line method over the estimated useful lives of the assets or, for capital leases and leasehold improvements, over the term of the lease, if shorter.

In general, the estimated useful lives for computing depreciation are three to 15 years for machinery and equipment, five to 40 years for buildings, one to 10 years for patient equipment, and up to 15 years for leasehold and land improvements.

Straight-line and accelerated methods of depreciation are used for income tax purposes.

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and associated unpaid liabilities and grant proceeds receivable are considered non-cash changes in such balances for purposes of preparation of our consolidated statements of cash flows.

Patient equipment consists of medical equipment rented to patients on a month-to-month basis.

Patient equipment depreciation is classified in our consolidated statements of operations within cost of goods sold as the equipment is rented to patients as part of our primary operations within the Patient Direct segment.

We enter into non-cancelable agreements to lease most of our office and warehouse facilities with remaining terms generally ranging from one to 10 years.

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In determining the useful life of an intangible asset, we consider our historical experience in renewing or extending similar arrangements.

Customer relationships are generally amortized over three to 15 years and other intangible assets are amortized

generally for periods between one and 15 years, based on their pattern of economic benefit or on a straight-line basis.

Intangible assets are generally amortized over one to 15 years based on their pattern of economic benefit or on a straight-line basis.

We suspend amortization on assets that are held for sale.

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We also develop software for external use.

Our software as a service (SaaS) subscription revenue is generated from granting customers the right to use our software products and were not material to our consolidated financial statements for 2022, 2021 and 2020.

Costs related to the research and development of software for external use are expensed as incurred until the technological feasibility of the product is established.

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Depreciation and amortization expense includes $ 14.0 million, $ 10.3 million, and $ 10.2 million of software amortization for the years ended December 31, 2022, 2021, and 2020.

Beginning in 2020, implementation costs incurred for a cloud computing arrangement that is considered a service contract (software as a service or SaaS) are capitalized consistent with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

In 2019, these costs were expensed as incurred.

Our SaaS subscription revenue is generated from granting customers the right to use our software products and were not material to our consolidated financial statements for 2021, 2020 and 2019.

Long-Lived Assets.

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If the underlying facts and circumstances of existing claims change or historical trends are not indicative of future trends, then we may be required to adjust the liability and related expense accordingly.

Self-insurance liabilities are included in other current liabilities in the consolidated balance sheets and were not material as of December 31, 2021 and 2020.

Self-insurance liabilities are included in other current liabilities and other liabilities in the consolidated balance sheets and were $ 25.6 million and $ 11.2 million in total at December 31, 2022 and 2021.

Revenue Recognition.

Our revenue is primarily generated from sales contracts with customers.

Under most of our distribution and product sales arrangements, our performance obligations are limited to delivery of products to a customer upon receipt of a purchase order.

For these arrangements, we recognize revenue at the point in time when shipment is completed, as control passes to the customer upon product receipt.

Revenue for sales of products, including equipment and supplies, is recorded when control of the promised goods is transferred.

Revenue for activity-based fees and other services is recognized over time as activities are performed.

Depending on the specific contractual provisions and nature of the performance obligation, revenue from services may be recognized on a straight-line basis over the term of the service, on a proportional performance model, based on level of effort, or when final deliverables have been provided.

Our contracts sometimes allow for forms of variable consideration including rebates, discounts and performance guarantees.

In these cases, we estimate the amount of consideration to which we will be entitled in exchange for transferring the product or service to the customer.

Rebates and customer discounts are estimated based on contractual terms or historical experience and we maintain an accrual for rebates or discounts that have been earned but are unpaid.

In our Products & Healthcare Services segment, under most of our distribution and product sales arrangements, our performance obligations are limited to delivery of products to a customer upon receipt of a purchase order.

For these arrangements, we recognize revenue at the point in time when shipment is completed, as control passes to the customer upon product receipt.

Our contracts sometime allow for forms of variable consideration including rebates, discounts, performance guarantees, and implicit price concessions.

We estimate the amount of consideration to which we will be entitled in exchange for transferring the product or service to the customer under the expected value method as part of determining the sales transaction price using contractual terms, historical experience, and other operating trends.

The amount accrued for rebates and discounts due to customers was $ 86.9 million and $ 118 million at December 31, 2022 and 2021.

Additionally, we generate fees from arrangements that include performance targets related to cost-saving initiatives for customers that result from our supply-chain management services.

Achievement against performance targets, measured in accordance with contractual terms, may result in additional fees paid to us or, if performance targets are not achieved, we may be obligated to refund or reduce a portion of our fees or to provide credits toward future purchases by the customer.

For these arrangements, contingent revenue is deferred and recognized as the performance target is achieved and the applicable contingency is released.

When we determine that a loss is probable under a contract, the estimated loss is accrued.

The amount deferred under these arrangements is not material.

For our Patient Direct sales, revenues are recorded based upon the estimated amounts due from patients and third-party payors.

Third-party payors include federal and state agencies (under Medicare and Medicaid programs), managed care health plans and commercial insurance companies.

Estimates of contractual allowances are based upon historical collection rates for the related payor agreements.

The estimated reimbursement amounts are made on a payor-specific basis and are recorded based on the best information available regarding management’s interpretation of the applicable laws, regulations and reimbursement terms.

In most cases, we record revenue gross, as we are the primary obligor in the arrangement and we obtain control of the products before they are transferred to the customer.

In most cases, we record revenue gross, as we are the primary obligor.

When we act as an agent in a sales arrangement and do not bear a significant portion of inventory risks, primarily for our outsourced logistics business, we record revenue net of product cost.

Sales taxes collected from customers and remitted to governmental authorities are excluded from revenues.

Within our Patient Direct segment, revenues are recognized under fee-for-service arrangements for equipment we rent to patients and sales of equipment, supplies and other items we sell to patients.

Revenue that is generated from equipment that we rent to patients is primarily recognized over the noncancelable rental period, typically one month, and commences on delivery of the equipment to the patients.

Revenues are recorded at amounts estimated to be received under reimbursement arrangements with large government and commercial payors (Payors), including private insurers, prepaid health plans, Medicare, Medicaid and patients.

Rental revenue, less estimated adjustments, is recognized as earned on a straight-line basis over the noncancellable lease term.

We recorded $ 447 million in revenue related to equipment we rent to patients for the year ended December 31, 2022.

Equipment rental revenue was not material in 2021 and 2020.

See Note 20 for disaggregation of revenue by segment and geography as we believe that best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

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In situations where we act as an agent in a sales arrangement and do not bear a significant portion of these risks, primarily for our outsourced logistics business, there is no cost of goods sold and all costs to provide the service to the customer are recorded in distribution, selling and administrative expenses.

Within our Patient Direct segment, patient equipment depreciation is classified in the Company’s consolidated statements of operations within cost of goods sold as the equipment is rented to patients as part of the Company’s primary operations.

Depreciation expense for patient equipment was $ 88.7 million for the year ended December 31, 2022 and was not material for the years ended 2021 and 2020.

As a result of different practices of categorizing costs and different business models throughout our industry, our gross margins may not necessarily be comparable to other companies in our industry.

Inventory valuation allowance adjustments, including for excess and obsolete inventory, are recorded as a charge to cost of goods sold.

Distribution, Selling and Administrative (DS&A) Expenses.

DS&A expenses include shipping and handling costs, labor, depreciation, amortization and other costs for selling and administrative functions and all costs associated with our fee-for-service arrangements.

DS&A expenses include shipping and handling costs, labor, depreciation other than for patient equipment, amortization and other costs for selling and administrative functions.

Shipping and Handling.

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Share-Based Compensation.

We account for share-based payments to teammates at fair value and recognize the related expense in distribution, selling and administrative expenses over the service period for awards expected to vest.

We account for share-based payments to teammates at fair value and recognize the related expense in DS&A expenses over the service period for awards expected to vest.

The fair value of nonvested performance shares is dependent upon our assessment of the probability of achievement of financial targets for the performance period.

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We earn a portion of our operating income in foreign jurisdictions outside the United States.

We continue to remain permanently reinvested in our foreign subsidiaries, with the exception of a subsidiary in Thailand.

We have no specific plans to indefinitely reinvest the unremitted earnings of our foreign subsidiary located in Thailand as of December 31, 2021.

As such, we have recorded withholding tax liabilities that would be incurred upon future distribution to the United States.

There are no unrecognized deferred taxes as there is no outside basis difference unrelated to unremitted earnings for Thailand.

We will continue to evaluate our foreign earnings repatriation policy in 2022 for all our foreign subsidiaries.

Our policy election for global intangible low-taxed income (GILTI) is that we will record such taxes as a current period expense once incurred and will follow the tax law ordering approach.

We are permanently reinvested in our foreign subsidiaries.

Prior to September 30, 2022, we were not indefinitely reinvested in our subsidiary in Thailand.

Due to our change of plans to reinvest the unremitted earnings in Thailand, we have released all withholding tax liabilities incurred in prior years.

Our policy election for global intangible low-taxed income is that we will record such taxes as a current period expense once incurred and will follow the tax law ordering approach.

Fair Value Measurements.

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See Note 13 for the fair value of derivatives.

Our acquisitions may include contingent consideration as part of the purchase price.

The fair value of contingent consideration is estimated as of the acquisition date and at the end of each subsequent reporting period based on the present value of the contingent payments to be made using a weighted probability of possible payments (Level 3).

Subsequent changes in fair value are recorded as adjustments to acquisition-related and exit and realignment charges within the consolidated statements of operations.

Acquisition-Related and Exit and Realignment Charges .

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Exit and realignment charges consist of costs associated with optimizing our operations which includes the consolidation of certain distribution centers, warehouses, our client engagement center and IT restructuring charges.

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

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

Costs associated with exit and realignment activities are recorded at their fair value when incurred.

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We evaluate these assumptions quarterly and adjust the liability accordingly.

The current portion of contractual termination costs are included in other current liabilities in our consolidated balance sheets, and the non-current portion is included in other liabilities, which were not material to our consolidated balance sheets as of December 31, 2021 and 2020.

Severance benefits are recorded when payment is considered probable and reasonably estimable.

Income (Loss) Per Share.

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Gains and losses on intercompany foreign currency transactions that are long-term in nature and which we do not intend to settle in the foreseeable future are also recognized in other comprehensive income (loss) in shareholders’ equity.

Realized gains and losses from foreign currency transactions are recorded in other operating (income) expense, net in the consolidated statements of operations and were not material to our consolidated results of operations in 2021, 2020, and 2019.

Realized gains and losses from foreign currency transactions are recorded in other operating income, net in the consolidated statements of operations and were not material to our consolidated results of operations in 2022, 2021, and 2020.

Discontinued Operations .

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See Note 3 for additional information regarding discontinued operations.

Contingent Consideration .

Consideration for the sale of certain assets of Fusion5 included contingent earn-outs.

The earn-outs were excluded from the initial loss on the divestiture and will be recognized in income when realized and earned, consistent with the accounting guidance for gain contingencies.

Our acquisitions may include contingent consideration as part of the purchase price.

The fair value of the contingent consideration is estimated as of the acquisition date based on the present value of the contingent payments to be made using a weighted probability of possible payments.

Each reporting period thereafter, we revalue these obligations and record changes in their fair value as an adjustment to Acquisition-related and exit and realignment charges within the consolidated statements of operations.

Business Combinations .

We account for acquired businesses using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values.

Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

The results of operations of the businesses acquired by the Company are included as of the respective acquisition date.

Recent Accounting Pronouncements .

During 2021, we adopted Accounting Standard Updates (ASU’s) issued by the Financial Accounting Standards Board (FASB).

In December 2019, the FASB issued ASU No.

2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

We adopted ASU No.

2019-12 effective beginning January 1, 2021.

Its adoption did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

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

Our current debt agreements contemplate a transition from LIBOR to another benchmark rate when LIBOR ceases to exist.

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

During 2022, we adopted Accounting Standard Updates (ASU) issued by the Financial Accounting Standards Board (FASB).

In October 2021, the FASB issued ASU No.

2020-10, Codification Improvements, to improve consistency by amending the FASB Accounting Standards Codification (the Codification) to include all disclosure guidance in the appropriate disclosure sections.

This ASU also clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology.

The amendments in this ASU do not change GAAP and, therefore, are not expected to result in a significant change in practice.

We adopted ASU No.

2020-10 effective beginning January 1, 2021.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

ASU 2021-08 requires the company acquiring contract assets and contract liabilities obtained in a business combination to recognize and measure them in accordance with ASC 606, Revenue from Contracts with Customers.

At the acquisition date, the company acquiring the business should record related revenue, as if it had originated the contract.

Before the update such amounts were recognized by the acquiring company at fair value.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued.

We adopted ASU 2021-08 prospectively, effective beginning January 1, 2022.

Its adoption did not have a material impact on our consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance, which requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy.

The amendments are effective for fiscal years beginning after December 15, 2021.

We adopted ASU 2021-10 effective beginning January 1, 2022.

Its adoption did not have a material impact on our consolidated financial statements.

Recently issued accounting pronouncements not yet adopted as of December 31, 2022:

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Early adoption is permitted.

We are still evaluating the impact the adoption of ASU No.

2016-13 will have on our consolidated financial statements and related disclosures;

however, we do not expect this to have a material impact.

The adoption of ASU No.

2016-13 will not have a material impact on our consolidated financial statements and related disclosures.

Subsequent to the issuance of ASU No.

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These ASUs will have the same effective date and transition requirements as ASU No.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

The amendments are effective for fiscal years beginning after December 15, 2021.

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

Note 2— Significant Risks and Uncertainties

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In 2022, 2021 and 2020, no sales of products of any individual suppliers exceeded 10% of our consolidated net revenue.

Note 3— Discontinued Operations

Note 3— Acquisitions and Discontinued Operations

Acquisitions.

On March 29, 2022 (the Acquisition Date), we completed the acquisition of 100 % of Apria, Inc.

(Apria) pursuant to the Agreement and Plan of Merger (Apria Acquisition) dated January 7, 2022, in exchange for approximately $ 1.7 billion, net of $ 144 million of cash acquired.

The purchase was funded with a combination of debt and cash on hand.

At the time of the Apria Acquisition, each share of Apria’s common stock was converted into the right to receive $ 37.50 in cash.

Apria is a leading provider of integrated home healthcare equipment and related services in the United States.

This business is reported as part of the Patient Direct segment.

The following table presents the preliminary estimated fair value of the assets acquired and liabilities assumed recognized as of the Acquisition Date.

The fair value and useful lives of tangible and intangible assets acquired have been estimated based on various valuation methods, including the income and cost approach, using several significant unobservable inputs including, but not limited to projected cash flows and a discount rate.

These inputs are considered Level 3 inputs.

The allocation of purchase price to assets and liabilities acquired is not yet complete, as valuations of tangible and intangible assets and liabilities are still in process.

Preliminary Fair Value Originally Estimated as of Acquisition Date (1)

Differences Between Prior and the Current Periods Preliminary Fair Value Estimate Preliminary Fair Value Currently Estimated as of Acquisition Date

Assets acquired:

Current assets $ 142,136 $ 32 $ 142,168

Goodwill 1,267,079 ( 17,314 ) 1,249,765

Intangible assets 295,466 19,834 315,300

Other non-current assets 371,320 ( 17,083 ) 354,237

Total assets $ 2,076,001 $ ( 14,531 ) $ 2,061,470

Liabilities assumed:

Current liabilities $ 241,266 $ 7,036 $ 248,302

Noncurrent liabilities 150,128 ( 21,567 ) 128,561

Total liabilities 391,394 ( 14,531 ) 376,863

Fair value of net assets acquired, net of cash $ 1,684,607 $ — $ 1,684,607

(1) As previously reported in our first quarter 2022 Form 10-Q .

Current assets acquired includes $ 91.3 million in fair value of receivables, which reflects the approximate amount contractually owed.

We are amortizing the preliminary fair value of acquired intangible assets, primarily customer relationships, including Payor and capitated relationships, and trade names over their estimated weighted average useful lives of one to 15 years.

Goodwill of $ 1.2 billion, which we assigned to our Patient Direct segment, consists largely of expected opportunities to expand into new markets and further develop a presence in the home healthcare business.

Approximately $ 32 million of the goodwill is expected to be deductible for income tax purposes.

The following table provides unaudited pro forma results of net revenue and net (loss) income for the year ended December 31, 2022 and 2021 as if Apria was acquired on January 1, 2021.

The pro forma results below are not necessarily indicative of the results that would have been if the acquisition had occurred on the dates indicated, nor are the pro forma results indicative of results which may occur in the future.

Year Ended December 31,

Net revenue $ 10,232,588 $ 10,930,590

Net (loss) income $ ( 97,687 ) $ 286,466

Pro forma net loss of $ 97.7 million for the year ended December 31, 2022 includes pro forma adjustments for interest expense of $ 20.8 million and amortization of intangible assets of $ 10.5 million, which reflects the updated preliminary purchase price allocation.

The pro forma net loss for the year ended December 31, 2022 also includes $ 39.4 million in seller transaction expenses and stock compensation expense associated with $ 108 million owed to the holders of Apria stock awards in connection with the Apria Acquisition.

Revenue and net loss of Apria since the Acquisition Date included in the consolidated statement of operations for the year ended December 31, 2022 were $ 937 million and $ 3.3 million, respectively.

Discontinued Operations.

On June 18, 2020, we completed the divestiture of our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $ 133 million.

We concluded that the Movianto business met the criteria for discontinued operations as of December 31, 2019 and through the Divestiture Date, as the intention to sell represented a strategic shift and the criteria for held-for-sale were met.

Movianto was previously reported in the Global Solutions segment.

Accordingly, the results of operations from the Movianto business were reported in the accompanying consolidated statements of operations as Loss from discontinued operations, net of tax for the years ended December 31, 2020 and 2019.

Movianto was previously reported in the Global Solutions segment and would have been reported within Products & Healthcare Services under our current segment structure.

The following table summarizes the financial results of our discontinued operations:

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Distribution, selling, and administrative expenses — — 157,512

Asset impairment charges — — 32,112

Loss on divestiture — — 65,472

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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 the year ended December 31, 2020.

2016-02 Leases (Topic 842) , for the year ended December 31, 2020.

All revenue and expense included in discontinued operations during the year ended December 31, 2020 related to activity through the Divestiture Date.

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

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

Certain transition service arrangement costs and reimbursements were recorded during the years ended December 31, 2021 and 2020.

These amounts were immaterial for the years ended December 31, 2021 and 2020.

These arrangements were substantially completed as of December 31, 2021.

We had no assets and liabilities associated with the discontinued Movianto business reflected on the consolidated balance sheet as of December 31, 2022 and 2021.

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Operating activities:

Depreciation and amortization $ — $ — $ 17,111

Asset impairment charges — — 32,112

Loss on divestiture $ — $ — $ 65,472

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Note 5— Merchandise Inventories

At December 31, 2021 and 2020 we had inventory of $ 1.5 billion and $ 1.2 billion, of which $ 835 million and $ 807 million were valued under LIFO.

At December 31, 2022 and 2021 we had net inventory of $ 1.3 billion and $ 1.5 billion, of which $ 840 million and $ 835 million were valued under LIFO.

If LIFO inventories had been valued on a current cost or FIFO basis, they would have been greater by $ 231 million and $ 225 million as of December 31, 2022 and 2021.

At December 31, 2022 and 2021, included in our inventory was $ 84.4 million and $ 99.5 million in raw materials, $ 73.7 million and $ 73.8 million in work in process and the remainder was finished goods.

For the year ended December 31, 2022, primarily due to demand declines and builds in excess personal protective equipment (PPE), the Company increased its estimate of inventory valuation allowances.

This change in estimate contributed to a $ 92.3 million (approximately $ 69.6 million, net of tax) valuation adjustment, or an approximate $ 0.93 and $ 0.91 impact per basic and diluted common share.

At December 31, 2022 and 2021 we had inventory valuation allowances of $ 128 million and $ 25.4 million.

Note 6— Property and Equipment, Net

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Machinery and equipment 470,071 431,836

Patient service equipment 324,007 —

Construction in progress 14,400 25,637

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Property and equipment, net $ 578,269 $ 317,235

Depreciation expense for property and equipment and assets under finance leases was $ 40.5 million, $ 41.5 million, and $ 43.5 million for the years ended December 31, 2021, 2020, and 2019.

Depreciation and amortization expense for property and equipment and assets under finance leases was $ 136 million, $ 40.5 million, and $ 41.5 million for the years ended December 31, 2022, 2021, and 2020.

Note 7— Goodwill and Intangible Assets, Net

In connection with our new segment structure, which began in the first quarter of 2022, goodwill is now reported as part of Products & Healthcare Services or Patient Direct.

There was no change to our underlying reporting units as part of that segment change and therefore no reallocation of goodwill.

As of October 1, 2022, we performed our annual impairment test and concluded that there were no impairments of goodwill.

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The following table summarizes the changes in the carrying amount of goodwill through December 31, 2022:

Global Solutions Global Products Consolidated

Patient Direct Products & Healthcare Services Consolidated

Net carrying amount of goodwill, December 31, 2020 $ 283,905 $ 110,181 $ 394,086

Currency translation adjustments — ( 6,717 ) ( 6,717 )

Acquisition 2,816 2,816

Net carrying amount of goodwill, December 31, 2021 283,905 106,280 390,185

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Weighted average useful life 13 years 10 years 6 years 10 years 11 years 8 years

At December 31, 2021 and 2020, $ 47.3 million and $ 63.2 million in net intangible assets were held in the Global Solutions segment and $ 162 million and $ 180 million were held in the Global Products segment.

At December 31, 2022 and 2021, $ 308 million and $ 45.7 million in net intangible assets were held in the Patient Direct segment and $ 137 million and $ 164 million were held in the Products & Healthcare Services segment.

Amortization expense for intangible assets was $ 78.8 million for 2022, $ 39.8 million for 2021 and $ 41.5 million for 2020.

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Total finance lease cost 4,271 2,353 2,246

Short-term lease cost DS&A Expenses 871 1,081 348

Variable lease cost DS&A Expenses 17,491 15,611 16,415

Short-term lease cost DS&A Expenses, Cost of goods sold 4,129 871 1,081

Variable lease cost DS&A Expenses, Cost of goods sold 35,431 17,491 15,611

Total lease cost $ 125,351 $ 80,112 $ 72,613

Variable lease cost consists primarily of taxes, insurance, and common area or other maintenance costs for our leased facilities which are paid as incurred.

Variable lease cost consists primarily of taxes, insurance, and common area or other maintenance costs for our leased facilities and patient services equipment which are paid as incurred.

Supplemental balance sheet information is as follows:

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The gross value recorded under finance leases was $ 21.5 million and $ 20.6 million with associated accumulated depreciation of $ 11.3 million and $ 11.7 million as of December 31, 2022 and 2021.

Operating lease assets include $ 88.6 million in right-of-use assets and $ 91.9 million of operating lease liabilities associated with Apria as of December 31, 2022.

Other information related to leases was as follows:

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Maturities of lease liabilities as of December 31, 2022 were as follows:

Operating Leases Finance Leases Total

Operating Leases (1)

Finance Leases Total

2023 $ 100,499 $ 3,557 $ 104,056

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Present value of lease liabilities $ 292,274 $ 14,408 $ 306,682

(1) Operating lease payments exclude $ 40.2 million of legally binding lease payments for the Morgantown, West Virginia center of excellence for medical supplies and logistics lease signed, but not yet commenced.

Note 9— Exit and Realignment Costs

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Year ended December 31, 2022 2021 2020

Global Solutions $ 22,243 $ 22,093 $ 9,133

Global Products 8,866 3,839 5,264

Products & Healthcare Services $ 6,414 $ 28,760 $ 25,622

Patient Direct 483 2,349 310

Total exit and realignment charges $ 6,897 $ 31,109 $ 25,932

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Information system restructuring costs 2,119

Lease obligations 1,051

Cash payments ( 20,328 )

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Severance 2,018

Information system restructuring costs 4,752

Lease obligations 440

Cash payments ( 13,502 )

Accrued exit and realignment charges, December 31, 2022 $ 969

In addition to the exit and realignment accruals in the preceding table, we also incurred $ 11.2 million of costs that were expensed as incurred for the year ended December 31, 2021, which primarily includes $ 9.6 million of wind-down costs related to Fusion5.

We also incurred $ 10.6 million of costs that were expensed as incurred for the year ended December 31, 2020, including $ 4.9 million in impairment charges related to our client engagement center right-of-use asset, $ 3.7 million in loss on the sale of certain Fusion5 assets and $ 2.0 million in other asset charges.

We expect material additional costs in 2022 for activities that were initiated through December 31, 2021.

Additionally, we anticipate new actions will be taken in 2022 that will incur costs similar to prior years.

In addition to the exit and realignment accruals in the preceding table, we also incurred $ 0.7 million of costs that were expensed as incurred for the year ended December 31, 2022, which related to an increase in reserves associated with certain retained assets of Fusion5.

We also incurred $ 11.2 million of costs that were expensed as incurred for the year ended December 31, 2021, which primarily includes $ 9.6 million of wind-down costs related to Fusion5.

We also incurred $ 10.6 million of costs that were expensed as incurred for the year ended December 31, 2020, including $ 4.9 million in impairment charges related to our client engagement center right-of-use asset, $ 3.7 million in loss on the sale of certain disposed assets and $ 2.0 million in other asset charges.

Acquisition-related and exit and realignment charges presented in our consolidated statements of operations includes acquisition-related charges of $ 48.1 million, $ 3.0 million and $ 11.8 million for the years ended December 31, 2022, 2021 and 2020.

Acquisition-related charges in 2021 consisted primarily of costs related to the pending Apria transaction.

Acquisition-related charges in 2020 and 2019 consisted primarily of transition costs for the Halyard acquisition.

Acquisition-related charges in 2022 and 2021 consisted primarily of costs related to the Apria transaction.

Acquisition-related charges in 2020 consisted primarily of transition costs for the Halyard acquisition.

Note 10— Debt

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Amount Estimated

Term Loan A-2 $ — $ — $ 33,865 $ 34,390

Term Loan B — — 477,525 486,614

Receivables Securitization Program 197,026 200,000 152,929 155,100

4.375 % Senior Notes, due December 2024

$ 245,510 $ 237,772 $ 245,086 $ 263,263

Revolver — — 103,200 103,200

Receivables Securitization Program 93,142 96,000 197,026 200,000

Term Loan A 490,816 485,000 — —

4.500 % Senior Notes, due March 2029

492,762 396,625 491,656 515,225

Term Loan B 576,587 597,733 — —

6.625 % Senior Notes, due April 2030

585,180 516,060 — —

Finance leases and other 16,877 16,877 15,809 15,809

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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 (as defined) plus 30 basis points.

On March 29, 2022, we entered into an amendment to our Receivables Financing Agreement.

The amended Receivables Financing Agreement has a maximum borrowing capacity of $ 450 million.

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

Under the Receivables Financing Agreement, 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 Financing Agreement matures in March 2025.

At December 31, 2022 and 2021, we had borrowings of $ 96.0 million and $ 200 million outstanding under our Receivables Financing Agreement.

At December 31, 2022 and 2021, we had maximum revolving borrowing capacity of $ 354 million and $ 100 million available under our Receivable Financing Agreement.

On March 29, 2022, we entered into an amendment to our revolving credit agreement, dated as of March 10, 2021 with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (Revolving Credit Agreement).

The amendment (i) increased the aggregate revolving credit commitments under the Revolving Credit Agreement by $ 150 million, to an aggregate amount of $ 450 million and (ii) replaced the Eurocurrency Rate with the Adjusted Term SOFR Rate (each as defined in the Revolving Credit Agreement).

The Revolving Credit Agreement matures in March 2027.

At December 31, 2022, we had no borrowings and letters of credit of $ 27.9 million outstanding under our Revolving Credit Agreement.

At December 31, 2021, we had no borrowings and letters of credit of $ 9.4 million outstanding under our Revolving Credit Agreement.

At December 31, 2022 and 2021, we had $ 422 million and $ 291 million available for borrowing under our Revolving Credit Agreement.

We also had letters of credit and bank guarantees, which were issued outside of the Revolving Credit Agreement for $ 2.3 million and $ 2.2 million as of December 31, 2022 and 2021, which supports certain leased facilities as well as other normal business activities in the United States and Europe.

On March 29, 2022, we entered into a term loan credit agreement with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (the Credit Agreement) that provides for two new credit facilities (i) a $ 500 million Term Loan A facility (the Term Loan A), and (ii) a $ 600 million Term Loan B facility (the Term Loan B).

The interest rate on the Term Loan A is based on either the Term SOFR or the Base Rate plus an Applicable Rate which varies depending on the current Debt Ratings or Total Leverage Ratio, determined as to whichever shall result in more favorable pricing to the Borrowers (each as defined in the Credit Agreement).

The interest rate on the Term Loan B is based on either the Term SOFR or the Base Rate plus an Applicable Rate.

The Term Loan A will mature in March 2027 and the Term Loan B will mature in March 2029.

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

The 2029 Unsecured Notes were sold at 100 % of the principal amount with an effective yield of 4.500 %.

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 loss on extinguishment of debt for the year ended December 31, 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).

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).

On or after March 31, 2024, we may redeem all or part of the 2029 Unsecured Notes at the applicable redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

We may also redeem up to 40 % of the aggregate principal amount of the 2029 Unsecured Notes at any time prior to March 31, 2024, at a redemption price equal to 104.5 % with an amount equal to or less than the net cash proceeds from certain equity offerings, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

On March 10, 2021, we terminated our then existing credit agreement and all obligations thereunder were repaid.

On that same date, we entered into a new credit agreement with Bank of America, N.A.

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 a benchmark rate (as described in the Credit Agreement).

The Credit Agreement matures in March 2026.

At December 31, 2021, we had no borrowings and letters of credit of $ 9.4 million outstanding under our revolving credit facilities.

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

At December 31, 2021 and 2020, we had $ 291 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 December 31, 2021 and 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 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 any of the related agreements.

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.

On March 29, 2022, we completed the sale of $ 600 million in aggregate principal amount of our 6.625 % senior notes due in April 2030 (the 2030 Unsecured Notes), with interest payable semi-annually.

The 2030 Unsecured Notes were sold at 100 % of the principal amount with an effective yield of 6.625 %.

We may redeem all or part of the 2030 Unsecured Notes, prior to April 1, 2025, at a price equal to 100 % of the principal amount of the 2030 Unsecured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, plus a “make-whole” premium, as described in the Indenture dated March 29, 2022 (the New Indenture).

From and after April 1, 2025, we may redeem all or part of the 2030 Unsecured Notes at the applicable redemption prices described in the New Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

We may also redeem up to 40 % of the aggregate principal amount of 2030 Unsecured Notes at any time prior to April 1, 2025, at a redemption price equal to 106.625 % with an amount equal to or less than the net cash proceeds from certain equity offerings, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The 2029 Unsecured Notes and 2030 Unsecured Notes are effectively subordinated to any of our secured indebtedness, including indebtedness under our credit agreements.

On March 29, 2022, we entered into a Security Agreement Supplement pursuant to which the Security and Pledge Agreement (the Security Agreement), dated March 10, 2021 was supplemented to grant collateral on behalf of the holders of the 2024 Notes, and the parties secured under the credit agreements (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Grantors (as defined in the Security Agreement) in the Grantors’ present and future subsidiaries, subject to certain customary exceptions, and (b) all present and future personal property and assets of the Grantors, subject to certain exceptions.

The Revolving Credit Agreement, the Credit Agreement, Receivables Financing Agreement, 2024 Notes, 2029 Unsecured Notes, and 2030 Unsecured Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of any of the related agreements.

The terms of the applicable credit agreements 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 December 31, 2022.

As of December 31, 2021, scheduled future principal payments of debt, excluding finance leases and other, were $ 446 million in 2024 and $ 500 million in 2029.

Current maturities at December 31, 2021 include $ 2.0 million in current portion of finance leases.

As of December 31, 2022, scheduled future principal payments of debt, excluding finance leases and other, were as follows:

2023 $ 15,375

2029 1,059,500

Of the $ 274 million due in 2024, $ 254 million is due in December 2024.

Current maturities at December 31, 2022 include $ 9.4 million in principal payments on our Term Loan A, $ 6.0 million in principal payments on our Term Loan B, and $ 2.5 million in current portion of finance leases.

Note 11— Share-Based Compensation

We maintain a share-based compensation plan (the Plan) that is administered by the Our People & Culture Committee of the Board of Directors.

We use authorized and unissued common shares for grants of restricted stock or for stock option exercises.

The Plan allows us to award or grant to officers, directors and teammates incentive, non-qualified and deferred compensation stock options, stock appreciation rights (SARs), performance stock units and performance shares (collectively Performance Stock Awards (PSAs)), restricted stock units and restricted stock (collectively Restricted Stock Awards (RSAs)) and unrestricted stock.

We use authorized and unissued common shares for grants of RSAs, SARs, PSAs or

for stock option exercises.

At December 31, 2022, approximately 5.1 million common shares were available for issuance under the Plan.

Restricted stock awarded under the Plan generally vests over one , three or five years .

Performance shares awarded under the Plan are issuable as restricted stock upon meeting performance goals and generally have a total performance and vesting period of three years .

We recognize the fair value of stock-based compensation awards, which is based upon the market price of the underlying common stock at the grant date, on a straight-line basis over the estimated requisite service period, which may be based on a service condition, a performance condition, a market condition, or any combination of these.

The fair value of performance shares as of the date of grant is estimated assuming that performance goals will be achieved at target levels.

If such goals are not probable of being met, or are probable of being met at different levels, recognized compensation cost is adjusted to reflect the change in estimated fair value of restricted stock to be issued at the end of the performance period.

RSAs under the Plan generally vest over one , three or five years .

PSAs under the Plan are issuable as restricted stock or common shares upon meeting performance goals and generally have a total performance and vesting period of three years .

RSAs are earned based on service conditions and PSAs are earned based on service conditions, performance conditions, market conditions, or any combination of these.

The fair value of PSAs as of the date of grant is estimated assuming that performance goals will be achieved at target levels.

If such goals are not probable of being met, or are probable of being met at different levels, recognized compensation cost is adjusted to reflect the change in estimated fair value.

Total share-based compensation expense for December 31, 2022, 2021 and 2020 was $ 21.0 million, $ 25.0 million and $ 19.7 million with recognized tax benefits of $ 5.5 million, $ 6.5 million and $ 5.1 million.

Unrecognized compensation cost related to nonvested restricted stock awards, net of estimated forfeitures, was $ 30.8 million at December 31, 2021.

Unrecognized compensation cost related to nonvested RSAs, net of estimated forfeitures, was $ 27.8 million at December 31, 2022.

This amount is expected to be recognized over a weighted-average period of 2.0 years, based on the maximum remaining vesting period required under the awards.

Unrecognized compensation cost related to nonvested performance share awards as of December 31, 2021 was $ 14.3 million and will be recognized primarily in 2022 and 2023 if the related performance targets are met.

The following table summarizes the activity and value of nonvested restricted stock and performance share awards for the years ended December 31, 2021, 2020 and 2019:

Unrecognized compensation cost related to nonvested PSAs as of December 31, 2022 was $ 4.2 million and will be recognized primarily in 2023 and 2024 if the related performance targets are met.

The following table summarizes the activity and value of nonvested RSAs and PSAs for the years ended December 31, 2022, 2021 and 2020:

2022 2021 2020

Shares Weighted

Grant-date Fair

Per Share Number of

Shares Weighted

Grant-date Fair

Per Share Number of

Shares Weighted

Grant-date Fair

Nonvested awards at beginning of year 4,325 $ 11.57 4,816 $ 7.64 4,515 $ 9.69

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Nonvested awards at end of year 2,777 22.52 4,325 11.57 4,816 7.64

The total fair value of restricted stock vesting during the years ended December 31, 2021, 2020 and 2019 was $ 16.8 million, $ 17.8 million and $ 13.8 million.

The total fair value of RSAs and PSAs vesting during the years ended December 31, 2022, 2021 and 2020 was $ 21.6 million, $ 16.8 million and $ 17.8 million.

Note 12— Retirement Plans

Savings and Retirement Plans.

We maintain a voluntary 401(k) savings and retirement plan covering substantially all full-time and certain part-time teammates in the United States who have completed one month of service and have attained age 18 .

We maintain a voluntary 401(k) savings and retirement plans covering substantially all full-time and certain part-time teammates in the United States who have met eligibility requirements.

We match a certain percentage of each teammates’ contribution.

The plan also provides for a discretionary contribution by us to the plan for all eligible teammates, subject to certain limits, and discretionary profit-sharing contributions.

These plans also provide for discretionary contributions by us for all eligible teammates, subject to certain limits, and discretionary profit-sharing contributions.

We may increase or decrease our contributions at our discretion, on a prospective basis.

We incurred $ 23.2 million, $ 21.6 million and $ 10.5 million of expense related to this plan in 2021, 2020 and 2019.

We incurred $ 14.0 million, $ 23.2 million and $ 21.6 million of expense related to these plans in 2022, 2021 and 2020.

We also maintain defined contribution plans in some countries outside of the United States in which we operate.

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Interest cost 1,176 1,080

Actuarial loss (gain) ( 4,462 ) 6,632

Actuarial gain ( 8,359 ) ( 4,462 )

Benefits paid ( 3,720 ) ( 3,758 )

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The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.

We determine the fair value of our foreign currency derivatives based on observable market-based inputs or unobservable inputs that are corroborated by market data.

We pay interest on our Credit Agreement which fluctuates based on changes in our benchmark interest rates.

In order to mitigate the risk of increases in benchmark rates, we entered into an interest rate swap agreement whereby we agree to exchange with the counterparty, at specified intervals, the difference between fixed and variable amounts calculated by reference to the notional amount.

The interest rate swaps were designated as cash flow hedges.

Cash flows related to the interest rate swap agreement are included in interest expense.

We determine the fair value of our foreign currency derivatives and interest rate swaps based on observable market-based inputs or unobservable inputs that are corroborated by market data.

We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure.

All derivatives are carried at fair value in our consolidated balance sheets in other current assets and other current liabilities.

All derivatives are carried at fair value in our consolidated balance sheets.

We consider the risk of counterparty default to be minimal.

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Notional Amount Maturity Date Classification Fair Value Classification Fair Value

Cash flow hedges

Interest rate swaps $ 400,000 March 2027 Other assets, net $ 15,461 Other liabilities $ —

Economic (non-designated) hedges

Foreign currency contracts $ 58,321 January 2023 Other current assets $ 440 Other current liabilities $ 42

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 year ended December 31, 2021.

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

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Cash flow hedges

Interest rate swaps $ 300,000 May 2022 and May 2025 Other assets, net $ — Other liabilities $ 17,872

Economic (non-designated) hedges

Foreign currency contracts $ 9,700 January 2022 Other current assets $ 81 Other current liabilities $ —

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

The 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 year ended December 31, 2021.

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the year ended December 31, 2022:

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 Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income

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

Interest rate swaps $ 14,814 Interest expense, net $ ( 128,891 ) $ ( 647 )

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

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Amount of Loss 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 Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income

Interest rate swaps $ ( 19,741 ) Interest expense, net $ ( 83,398 ) $ ( 9,232 )

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

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

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Interest rate swaps $ ( 19,741 ) Interest expense, net $ ( 83,398 ) $ ( 9,232 )

Foreign currency contracts $ ( 28 ) Cost of goods sold $ ( 8,082,448 ) $ 517

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

For the years ended December 31, 2021, 2020 and 2019 we recognized a loss of $ 2.3 million, a loss of $ 0.7 million and a gain of $ 1.0 million, associated with our economic (non-designated) foreign currency contracts.

For the years ended December 31, 2022, 2021 and 2020 we recognized a loss of $ 0.9 million, $ 2.3 million and $ 0.7 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) expense, net for our foreign exchange contracts.

Note 14— Income Taxes

The components of income (loss) from continuing operations before income taxes consist of the following:

The components of income from continuing operations before income taxes consist of the following:

Year ended December 31, 2022 2021 2020

Income (loss) from continuing operations before income taxes:

Income from continuing operations before income taxes:

$ ( 17,650 ) $ 231,424 $ 80,632

Foreign 28,541 45,330 29,276

Income (loss) from continuing operations before income taxes $ 276,754 $ 109,908 $ ( 28,719 )

Income from continuing operations before income taxes $ 10,891 $ 276,754 $ 109,908

The income tax provision (benefit) consists of the following:

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Total deferred tax provision (benefit) ( 26,361 ) ( 29,736 ) 15,565

Total income tax provision (benefit) $ 55,165 $ 21,834 $ ( 6,135 )

Total income tax (benefit) provision $ ( 11,498 ) $ 55,165 $ 21,834

A reconciliation of the federal statutory rate to our effective income tax rate is shown below:

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Nondeductible compensation 28.9 % 1.0 % — %

Foreign repatriation change (Thailand) ( 96.3 ) % — % — %

Non-deductible transaction costs 19.5 % — % — %

Foreign derived intangible income (FDII) — % ( 3.2 ) % — %

Global intangible low-taxed income 5.0 % — % — %

Other ( 0.1 ) % 1.6 % 1.0 %

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Interest limitation 19,890 206

Derivatives — 7,920

R&D Capitalized Costs 14,017 —

Other 7,982 4,694

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Computer software 5,532 8,068

Derivatives 4,020 —

Insurance ( 20 ) 1,040

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capital loss carryforward, which has a full valuation allowance, has an expiration date of five years.

As of December 31, 2022, federal net operating losses of approximately $ 190.6 million are available to offset future federal taxable income.

The entire $ 190.6 million of net operating losses have an unlimited carryforward period and will not expire.

The capital loss and net operating loss carryforwards in various state jurisdictions have various expiration dates ranging from five years to an unlimited carryforward period.

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Unrecognized tax benefits at December 31, $ 22,499 $ 21,385

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

deductibility.

Included in the liability for unrecognized tax benefits at December 31, 2022 and 2021, were $ 2.7 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

These tax positions are temporary differences which do not impact the annual effective tax rate under deferred tax accounting.

Any change in the deductibility period of these tax positions would impact the timing of cash payments to taxing jurisdictions.

Unrecognized tax benefits of $ 18.7 million and $ 18.0 million at December 31, 2021 and 2020 would impact our effective tax rate if recognized.

Unrecognized tax benefits of $ 19.8 million and $ 18.7 million at December 31, 2022 and 2021 would impact our effective tax rate if recognized and the remaining would not impact our effective tax rate.

We recognize accrued interest and penalties related to unrecognized tax benefits.

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The former owners are contractually obligated to indemnify us for all income tax liabilities incurred by Byram entities prior to its acquisition on August 1, 2017, and for all income tax liabilities incurred by the Halyard foreign entities located in Thailand, Mexico, and Honduras prior to its acquisition on April 30, 2018 .

Note 15— Net Income (Loss) per Common Share

The following table summarizes the calculation of net income (loss) per share attributable to common shareholders for the years ended December 31, 2021, 2020 and 2019:

Note 15— Net Income per Common Share

The following table summarizes the calculation of net income per share attributable to common shareholders for the years ended December 31, 2022, 2021 and 2020:

Year ended December 31, 2022 2021 2020

Income (loss) from continuing operations, net of tax $ 221,589 $ 88,074 $ ( 22,584 )

Income from continuing operations, net of tax $ 22,389 $ 221,589 $ 88,074

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

Net income (loss) $ 221,589 $ 29,871 $ ( 62,371 )

Net income $ 22,389 $ 221,589 $ 29,871

Weighted average shares outstanding - basic 74,496 72,744 63,368

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Basic income (loss) per common share:

Income (loss) from continuing operations $ 3.05 $ 1.39 $ ( 0.37 )

Income from continuing operations $ 0.30 $ 3.05 $ 1.39

Loss from discontinued operations — — ( 0.92 )

Net income (loss) $ 3.05 $ 0.47 $ ( 1.03 )

Net income $ 0.30 $ 3.05 $ 0.47

Diluted income (loss) per common share:

Income (loss) from continuing operations $ 2.94 $ 1.39 $ ( 0.37 )

Income from continuing operations $ 0.29 $ 2.94 $ 1.39

Loss from discontinued operations — — ( 0.92 )

Net income (loss) $ 2.94 $ 0.47 $ ( 1.03 )

Net income $ 0.29 $ 2.94 $ 0.47

Note 16— Shareholders’ Equity

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We pay scheduled fees under the agreement, which can vary based on changes in the level of support required.

Assuming no early termination of the contract, our estimated remaining annual obligations under this agreement are $ 33.6 million in 2022, $ 32.6 million in 2023, $ 32.1 million in 2024, and $ 15.9 million in 2025.

We use a third party company for the management of our U.S.

private fleet transportation that provides a robust technology platform, which includes customer tracking and additional delivery capabilities.

Under this contractual commitment, we pay scheduled fees which can vary based on changes in the level of support required.

Assuming no early termination of this contract, our estimated remaining annual obligations under this agreement are $ 2.3 million in 2022, $ 2.3 million in 2023, and $ 2.1 million in 2024.

In addition to these fixed annual obligations disclosed herein, we are also contractually obligated to reimburse the third party company for variable costs including, but not limited to, vehicle costs, driver wages and fringe benefits, fuel, and insurance premiums.

On January 7, 2022, we entered into an Agreement and Plan of Merger to acquire Apria, Inc.

(Apria) for $ 37.50 in cash per share of common stock, representing an equity value of approximately $ 1.45 billion, as well as the assumption of debt and cash for a total transaction value of approximately $ 1.6 billion.

See Note 21 for additional information.

Assuming no early termination of the contract, our estimated remaining annual obligations under this agreement are $ 32.6 million in 2023, $ 32.1 million in 2024, and $ 15.9 million in 2025.

Note 19— Legal Proceedings

We are subject to various legal actions that are ordinary and incidental to our business, including contract disputes, employment, workers’ compensation, product liability, regulatory and other matters.

We have insurance coverage for employment, product liability, workers’ compensation and other personal injury litigation matters, subject to policy limits, applicable deductibles and insurer solvency.

We are party to various legal claims that are ordinary and incidental to our business, including ones related to commercial disputes, employment, workers’ compensation, product liability, regulatory and other matters.

We maintain insurance coverage for employment, product liability, workers’ compensation and other personal injury litigation matters, subject to policy limits, applicable deductibles and insurer solvency.

We establish reserves from time to time based upon periodic assessment of the potential outcomes of pending matters.

Based on current knowledge and the advice of counsel, we believe that the accrual as of December 31, 2022 for currently pending matters considered probable of loss, which is not material, is sufficient.

In addition, we believe that other currently pending matters are not reasonably likely to result in a material loss, as payment of the amounts claimed is remote, the claims are insignificant, individually and in the aggregate, or the claims are expected to be adequately covered by insurance.

In addition, we believe that other currently pending matters are not reasonably possible to result in a material loss, as payment of the amounts claimed is remote, the claims are immaterial, individually and in the aggregate, or the claims are expected to be adequately covered by insurance, subject to policy limits, applicable deductibles, exclusions, and insurer solvency.

Note 20— Segment Information

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We report our business under two segments:

Global Solutions and Global Products.

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.

We evaluate the performance of our segments based on their operating income excluding intangible amortization and acquisition-related and exit and realignment charges that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.

Products & Healthcare Services and Patient Direct.

The Products & Healthcare Services segment includes our United States distribution business (Medical Distribution), outsourced logistics and value-added services business, and our Global Products business which manufactures and sources medical surgical products through our production and kitting operations.

The Patient Direct segment includes our home healthcare businesses (Byram and Apria).

We evaluate the performance of our segments based on their operating income excluding intangible amortization, acquisition-related, exit and realignment charges, along with other adjustments, that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.

Segment assets exclude inter-segment account balances as we believe their inclusion would be misleading and not meaningful.

We believe all inter-segment sales are at prices that approximate market.

The following tables present financial information by segment:

Year ended December 31, 2022 2021 2020

Segment net revenue

Global Solutions $ 7,860,475 $ 7,212,011 $ 8,243,867

Global Products 2,655,728 1,810,331 1,433,977

Total segment net revenue 10,516,203 9,022,342 9,677,844

Inter-segment net revenue

Global Products ( 730,888 ) ( 542,165 ) ( 466,905 )

Total inter-segment net revenue ( 730,888 ) ( 542,165 ) ( 466,905 )

Products & Healthcare Services $ 7,898,397 $ 8,825,646 $ 7,662,429

Patient Direct 2,057,078 959,669 817,748

Consolidated net revenue $ 9,955,475 $ 9,785,315 $ 8,480,177

Operating income:

Global Solutions $ 66,634 $ 30,946 $ 83,592

Global Products 371,929 259,929 65,054

Inter-segment eliminations 3,793 ( 7,515 ) 45

Products & Healthcare Services $ 175,309 $ 384,390 $ 215,698

Patient Direct 193,748 57,966 67,662

Intangible amortization ( 78,847 ) ( 39,807 ) ( 41,490 )

Acquisition-related and exit and realignment charges ( 55,022 ) ( 34,076 ) ( 37,752 )

Inventory valuation adjustment (1)

( 92,275 ) — —

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Depreciation and amortization:

Global Solutions $ 39,485 $ 41,286 $ 42,444

Global Products 51,136 52,050 54,302

Discontinued operations — — 19,932

Products & Healthcare Services $ 77,539 $ 75,548 $ 77,131

Patient Direct 151,128 15,073 16,205

Consolidated depreciation and amortization $ 228,667 $ 90,621 $ 93,336

Capital expenditures:

Global Solutions $ 20,266 $ 20,386 $ 10,987

Global Products 29,424 35,780 22,289

Products & Healthcare Services $ 49,824 $ 48,282 $ 55,110

Patient Direct 116,758 1,408 1,056

Discontinued operations — — 3,027

Consolidated capital expenditures $ 166,582 $ 49,690 $ 59,193

(1) 2019 included interest cost and net actuarial losses related to the U.S.

Retirement Plan as well as software as a service (SaaS) implementation costs associated with the upgrading of our global IT platforms in connection with the redesign of our global information system strategy.

(1) Relates to an inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with PPE inventory built up and a subsequent decline in demand as a result of the COVID-19 pandemic.

December 31, 2022 2021

Total assets:

Global Solutions $ 2,158,755 $ 2,117,372

Global Products 1,322,084 1,135,209

Products & Healthcare Services $ 2,809,600 $ 3,012,303

Patient Direct 2,507,216 468,536

Segment assets 5,316,816 3,480,839

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Consolidated long-lived assets $ 1,342,632 $ 754,993

Note 21— Subsequent Events

On January 7, 2022, we entered into an Agreement and Plan of Merger to acquire Apria for $ 37.50 in cash per share of common stock, representing an equity value of approximately $ 1.45 billion, as well as the assumption of debt and cash for a total transaction value of approximately $ 1.6 billion.

Apria is a provider of integrated home healthcare equipment and related services in the United States.

The Agreement and Plan of Merger contains certain termination rights for the Company and Apria.

In the event that Apria terminates the contract for a superior proposal, Apria will be required to pay the Company a termination fee of $ 42.0 million.

The transaction, which has been approved by the board of directors of both companies, is subject to customary closing conditions, including the Hart Scott Rodino Act and other regulatory approvals and the approval of Apria’s stockholders, and is expected to close during the first half of 2022.

Beginning with the first quarter of 2022, we began operating our company through two new segments:

Patient Direct and Products & Healthcare Services.

These segments align more closely with the way we go to market.

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated balance sheets of Owens & Minor, Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of Goodwill Impairment Assessment

As discussed in notes 1 and 7 to the consolidated financial statements, the Company evaluates its goodwill for impairment annually, as of October 1, and whenever events occur or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable.

Through an assessment of qualitative factors, the Company determined it was more likely than not that the fair value of the Global Products reporting unit exceeded its carrying amount.

The Global Products segment manufactures and sources medical surgical products.

The carrying amount of goodwill as of December 31, 2021 was $390 million.

Of this amount, the carrying amount of goodwill for the Global Products reporting unit was $106 million.

We identified the evaluation of the goodwill impairment assessment of the Global Products reporting unit as a critical audit matter.

A higher degree of auditor judgment was required to evaluate the outlook of general economic conditions

and market demand for the Company’s medical surgical products, which are inherently uncertain.

These qualitative factors could have a significant effect on the Company’s determination of whether a further quantitative test is performed.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of fair value of acquired intangible assets

As discussed in Note 3 to the consolidated financial statements, on March 29, 2022 the Company completed the acquisition of 100% of Apria, Inc., which was accounted for using the acquisition method of accounting.

The Company recorded intangible assets with an acquisition-date fair value of $315 million, which included certain trade names and payor and capitated relationships intangible assets.

The fair value of intangible assets acquired have been estimated based on various valuation methods, including the income approach.

We identified the evaluation of the acquisition-date fair values of certain trade names and payor and capitated relationships intangible assets as a critical audit matter.

A higher degree of auditor judgment was required to evaluate certain projected revenues used in the valuation models to determine the fair value of these intangible assets.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the goodwill impairment process.

This included a control related to the Company’s assessment of the outlook of general economic conditions and market demand for the Company’s medical surgical products.

We evaluated the Company’s assessment of these qualitative factors by (1) comparing financial results to prior valuations and forecasts and performing a sensitivity analysis on expected changes to certain inputs from the most recent fair value calculation and whether those changes would increase/decrease the fair value, and (2) analyzing macroeconomic information contained in third party analyst reports on the Company and certain other market data sources.

We involved valuation professionals with specialized skills and knowledge, who assisted in analyzing general economic conditions and market demand for the Company’s medical surgical products.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls related to the development of the projected revenues.

We performed sensitivity analyses over the projected revenues to assess the impact of changes in those assumptions on the Company’s determination of fair value.

We assessed management’s projected revenues by comparing them to historical revenue trends.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the projected revenues by comparing them to the projected revenues of a set of comparable companies and other market data.

Estimates of variable consideration on equipment and supplies sales and estimated adjustments on equipment rental revenues

As discussed in Note 1 to the consolidated financial statements, within the Company’s Patient Direct segment, revenues are recognized under fee-for-service arrangements for equipment rented to patients and sales of equipment, supplies and other items sold to patients.

The Company’s Patient Direct segment net revenue was $2,057 million for the year ended December 31, 2022.

Revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including private insurers, prepaid health plans, Medicare, Medicaid and patients.

The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration on equipment and supplies sales and estimated adjustments to record revenue at an amount probable of being collected for equipment rental revenues.

The Company uses contractual agreements, historical experience, and other operating trends to determine the estimates of variable consideration on equipment and supplies sales and estimated adjustments on equipment rental revenues.

We identified the evaluation of the estimates of variable consideration on equipment and supplies sales and estimated adjustments on equipment rental revenues as a critical audit matter.

A higher degree of auditor judgment was required to evaluate the relevance and reliability of the historical experience and other operating trends.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s estimate of variable consideration on certain equipment and supplies sales.

We assessed the relevance and reliability of the Company’s historical experience on net revenues recorded during the current year by selecting certain historical payments and comparing them to underlying support.

We assessed management’s ability to estimate by comparing previous estimates to actual results and current estimates.

We also compared current operating trends to the current year estimates.

We have served as the Company’s auditor since 1987.

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(incorporated herein by reference to our Current Report on Form 8-K, Exhibit 3.1, dated July 29, 2008)

3.2 Amended and Restated Bylaws of the Company effective January 31, 2022 (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 3.1, dated January 31, 2022)

3.2 Amended and Restated Bylaws of the Company effective October 28 , 2022 (incorporated herein by reference to the our Quarterly Report on Form 10-Q , Exhibit 3.1, date d November 2 , 2022)

4.1 Indenture, dated September 16, 2014, by and among Owens & Minor, Inc., Owens and Minor Distribution, Inc., Owens & Minor Medical, Inc.

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Bank National Association, as trustee (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.3, dated March 11, 2021).

4.10 Indenture dated March 29, 2022 by and among the Company, the guarantors named therein and Regions Bank, as trustee (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.1, dated March 29, 2022)

4.11 Form of Global Note for the 6.625% Senior Notes due 2030 (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.2, dated March 29, 2022)

4.12 Seventh Supplemental Indenture dated as of March 29, 2022, by and among the Company, the guarantors named therein and U.S.

Bank National Association, as trustee (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.3, dated March 29, 2022)

4.13 First Supplemental Indenture dated as of March 29, 2022, by and among the Company, the guarantors named therein and Regions Bank, as trustee, to the Indenture dated as of March 10, 2021 (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.4, dated March 29, 2022)

4.14 First Supplemental Indenture dated as of March 29, 2022, by and among the Company, the guarantors named therein and Regions Bank, as trustee, to the Indenture dated of March 29, 2022 (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.5, dated March 29, 2022)

4.15 Description of Securities - filed herewith

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2017 Teammate Stock Purchase Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed March 22, 2017 (File No.

001-09810)) *

10.30 Credit Agreement, dated as of July 27, 2017, by and among Owens & Minor Distribution, Inc., Owens & Minor Medical, Inc., Barista Acquisition I, LLC, and Barista Acquisition II, LLC, (the “Borrowers”), Owens & Minor, Inc.

43 unchanged sentences

10.53 Agreement of Resignation, Appointment, and Acceptance, dated as September 10, 2021, by and among Owens & Minor, Inc., U.S.

Bank National Association, as Prior Trustee, and Regions Bank, as Successor Trustee(incorporated herein by reference to our Form 10-Q, Exhibit 10.

1 , dated Nove mber 3 , 20 21 )

Bank National Association, as Prior Trustee, and Regions Bank, as Successor Trustee(incorporated herein by reference to our Form 10-Q, Exhibit 10.1, dated November 3, 2021)

10.54 Form of Owens & Minor, Inc.

3 unchanged sentences

10.56 Amendment No.

1 to Credit Agreement, among Owens & Minor Distribution, Inc., Owens & Minor Medical, Inc., Barista Acquisition I, LLC, Barista Acquisition II, LLC, O&M Halyard, Inc., Byram Healthcare Centers, Inc., Owens & Minor, Inc., and Bank Of America - filed herewith

10.57 Executive Separation Agreement and General Release, dated as of January 9, 2022, by and between Christopher Lowery and Owens & Minor Medical, Inc.

- filed herewith*,**

(incorporated herein by reference to our Form 10-K, Exhibit 10.57, dated February 23, 2022)*,**

10.58 Form of Restricted Stock Agreement (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.1, dated March 1, 2022)**

10.59 Form of Restricted Stock Unit Award Agreement (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.2, dated March 1, 2022)**

10.60 Form of 2022 Performance Stock Unit Award Agreement (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.3, dated March 1, 2022)**

10.61 Credit Agreement dated as of March 29, 2022, by and among the Company, certain subsidiaries of the Company party thereto, as borrowers, JPMorgan Chase Bank, N.A., as an administrative agent and collateral agent, and a syndicate of financial institutions, as lenders (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.1, dated March 29, 2022)**

10.62 Fourth Amendment to Receivables Financing Agreement, dated as of March 29, 2022, by and among O&M Funding LLC, as borrower, Owens & Minor Medical, Inc., as initial servicer, the lenders party thereto, and PNC Bank, National Association, as administrative agent (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 10.2, dated March 29, 2022)**

10.63 Joinder to Credit Agreement, Amendment No.

2 to Credit Agreement, Amendment No.

1 to Security Agreement and Amendment No.

1 to Guaranty, dated as of March 29, 2022, by and among the Company and certain subsidiaries of the Company, as borrowers, the guarantors and lenders thereto and Bank of America, N.A., as administrative agent and collateral agent, L/C issuer and swing line lender (incorporated herein by reference to our Quarterly Report on Form 10-Q, Exhibit 10.6, for the quarter ended March 31, 2022)

10.64 Amendment No.

3 to the Owens & Minor, Inc.

2018 Stock Incentive Plan (incorporated herein by reference to our Quarterly Report on Form 10-Q, Exhibit 10.6, for the quarter ended March 31, 2022)**

10.65 Executive Separation Agreement and General Release, dated as of October 12, 2022, by and between Jeffrey T.

Jochims and Owens & Minor, Inc.

(incorporated herein by reference to our Form 10-Q, Exhibit 10.2, dated November 2, 2022) **

11.1 Calculation of Net Income (Loss) per Common Share.

20 unchanged sentences

We hereby undertake to furnish copies of such omitted materials supplementally upon request by the SEC.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 23rd day of February, 2022.

Form 10-K Summary

OWENS & MINOR, INC.

1 unchanged sentence

President, Chief Executive Officer & Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 23rd day of February, 2022:

/s/ Edward A.

Pesicka /s/ Gwendolyn M.

Pesicka Gwendolyn M.

Pesicka /s/ Robert J.

Pesicka Robert J.

President, Chief Executive Officer & Director Director

/s/ Andrew G.

Long /s/ Robert J.

Long Robert J.

/s/ Alexander J.

Bruni /s/ Rita F.

Johnson-Mills

Bruni Rita F.

Johnson-Mills

Executive Vice President & Chief Financial Officer

Beck /s/ Stephen W.

Beck Stephen W.

/s/ Michael W.

Lowry /s/ Stephen W.

Lowry Stephen W.

Senior Vice President, Corporate Controller & Chief Accounting Officer Director

Beck /s/ Teresa L.

Beck Teresa L.

Chair of the Board of Directors Director

/s/ Aster Angagaw /s/ Mark F.

Aster Angagaw Mark F.

/s/ Gwendolyn M.

Bingham /s/ Carissa L.

Bingham Carissa L.

Director Director

Corporate Officers

President, Chief Executive Officer & Director

President and Chief Executive Officer since joining Owens & Minor in March 2019.

Pesicka was also appointed to the board of directors at the time he joined the company.

Previously Mr.

Pesicka served as an independent consultant and advisor in the healthcare, life sciences and distribution industries since January 1, 2016.

From January 2000 through April 2015, Mr.

Pesicka served in various roles of increasing responsibility at Thermo Fisher Scientific Inc., including, most recently, Chief Commercial Officer and Senior Vice President from January 2014 to April 2015.

Prior to that, he was President, Customer Channels at Thermo Fisher from July 2008 to January 2014 and President, Research Market from November 2006 to July 2008.

Earlier in his career, Mr.

Pesicka held various Vice President-level roles in Thermo Fischer Scientific’s finance department, serving as Chief Financial Officer of numerous divisions.

Prior to Thermo Fisher Scientific, Mr.

Pesicka spent eight years with TRW, Inc.

in its finance department and three years with PricewaterhouseCoopers as an auditor.

Executive Vice President & Chief Financial Officer

Executive Vice President & Chief Financial Officer of Owens & Minor since joining the company on November 11, 2019.

Prior to that, Mr.

Long served as the Chief Executive Officer of Insys Therapeutics, Inc.

(“Insys”) from April 2019 to November 8, 2019.

Prior to that, Mr.

Long served as the Chief Financial Officer of Insys from August 2017.

Prior to joining Insys, Mr.

Long served as senior vice president of Global Finance at Patheon, a pharmaceutical company, from 2015 to 2017.

Prior to working at Patheon, Mr.

Long served as Vice President of Finance for multiple divisions at Thermo Fisher Scientific from 2006 until 2015.

Long has served as a Member of the Board of Directors of Insys, which filed for Chapter 11 bankruptcy protection in June 2019, from April 2019 until his resignation on November 8, 2019.

Christopher Lowery (58)

President, Global Products

President, Global Products business unit of Owens & Minor since January 2018.

Prior to that, from November 2014 to December 2017, Mr.

Lowery served as Senior Vice President and Chief Operating Officer at Halyard Health, Inc.

From April 2010 to October 2014, Mr.

Lowery served as Vice President of Sales and Marketing at Kimberly-Clark Health Care.

Prior to joining Kimberly-Clark Health Care, he held several senior marketing and sales roles at Covidien, a global health care products company.

Lowery will leave the Company effective March 31, 2022 by mutual agreement.

During his remaining employment with the Company, Mr.

Lowery will report to the Company’s Chief Executive Officer and assist with the transition of his leadership duties as part of this planned transition.

Jeffrey Jochims, the Company’s Chief Operating Officer, and President, Products & Healthcare Services, will assume Mr.

Lowery’s duties and responsibilities.

Executive Vice President, Chief Operating Officer & President, Products & Healthcare Services

Executive Vice President & Chief Operating Officer (COO) since November 1, 2019, and Executive Vice President, COO and President Products & Healthcare Services since January 2022.

In his capacities as COO and President, Products & Healthcare Services, Mr.

Jochims is responsible for the performance and operations of our global product manufacturing and sourcing activities, medical-surgical product distribution and supply, and healthcare services supporting perioperative activities.

Jochims retains oversight responsibility for the company’s strategic planning and corporate communications.

From February 2021 to January 2022, Mr.

Jochims was COO and President, Medical Distribution.

Jochims joined Owens & Minor in April 2019 and served as Executive Vice President, Strategy & Solutions prior to becoming COO.

Prior to joining Owens & Minor, Mr.

Jochims served from 2015 to 2019 as an executive consultant and board member to companies in the healthcare, pharmaceutical and life sciences industries.

Additionally during that period, Mr.

Jochims was a co-founder and principal of 4C Measures, a start-up technology business.

Prior to that, from 2000 until 2014, Mr.

Jochims served in positions of increasing authority at Thermo Fisher Scientific, including January 2012 - December 2014 as President of the Global Research & Safety Market division publicly known as Fisher Scientific.

Prior to that, he was President of the Safety Market Division from January 2010 to January 2012, Vice President of Global Channel Development & Strategy from May 2007 to December 2009 and Vice President - Division General Counsel & Deputy General Counsel from May 2000-2007.

Executive Vice President & Chief Human Resources Officer

Executive Vice President & Chief Human Resources Officer since February 2020.

Prior to that, Ms.

Neal served as Senior Vice President & Chief Human Resources Officer, after joining Owens & Minor in March 2018.

A global Human Resources professional, Ms.

Neal worked for Becton Dickinson (BD), from 2005 to 2018, where she most recently served as Senior Vice President, Human Resources, Life Sciences.

Additionally, Ms.

Neal led the organization and talent integration for BD’s acquisitions of Bard and CareFusion.

Executive Vice President, General Counsel & Corporate Secretary

Executive Vice President, General Counsel & Corporate Secretary since May 2018.

Pace joined Owens & Minor in 2016, serving as its Senior Vice President, General Counsel & Corporate Secretary.

Prior to joining the company, Mr.

Pace served as Executive Vice President, General Counsel & Secretary of Landmark Health, LLC, from July-December 2015.

From January 2014 to July 2015, he served in simultaneous roles of Senior Vice President, Strategy & General Counsel of Landmark Health, LLC and Executive Vice President, Corporate Development & General Counsel of Avalon Health Services, LLC, two Francisco Partners portfolio companies.

From March to October 2013, Mr.

Pace served as Executive Vice President, Operations & Compliance for Health Diagnostic Laboratory, Inc., which filed for Chapter 11 bankruptcy protection in June 2015.

Prior to that role, he served as Executive Vice President, General Counsel & Secretary of Amerigroup Corporation, where he worked from 2006-2013 until its sale to Anthem, Inc.

Senior Vice President, Corporate Treasurer

Senior Vice President, Corporate Treasurer of Owens & Minor since May 2018.

Prior to that, Mr.

Leon served as Vice President, Treasurer, after joining Owens & Minor in January 2017.

Before joining Owens & Minor, Mr.

Leon worked for the Brinks Company for nineteen years, beginning in 1998, where he served as Treasurer.

Senior Vice President, Corporate Controller & Chief Accounting Officer

Senior Vice President, Corporate Controller & Chief Accounting Officer since June 2018.

Prior to that, from May 2016 to June 2018, Mr.

Lowry was Senior Vice President, Corporate Controller and Vice President, Corporate Controller beginning in 2013.

Prior to that, from 2009 to 2013 Mr.

Lowry was the Vice President, Treasurer.

Lowry joined Owens & Minor in 1988.

/s/ Kenneth Gardner-Smith

Kenneth Gardner-Smith

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-K

Item 9A. Controls and Procedures