What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-04 compared with 2023-05-05 · 163 added, 95 removed, 412 unchanged (39% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share data) 2023 2022 2023 2022

20 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2023 2022 2023 2022

4 unchanged sentences

Change in gains and losses on derivative instruments 3,299 2,764 ( 78 ) 2,764

Total other comprehensive income (loss), net of tax 1,594 ( 598 )

Total other comprehensive loss, net of tax ( 1,732 ) ( 15,770 ) ( 138 ) ( 16,368 )

Comprehensive (loss) income $ ( 29,973 ) $ 12,834 $ ( 52,797 ) $ 51,516

3 unchanged sentences

Consolidated Balance Sheets

March 31, December 31,

June 30, December 31,

(in thousands, except per share data) 2023 2022

20 unchanged sentences

Long-term debt, excluding current portion 2,309,853 2,482,968

Operating lease liabilities, excluding current portion 208,276 215,469

Operating lease liabilities, excluding current portion of $ 86,437 and $ 76,805

214,905 215,469

Deferred income taxes 55,354 60,833

4 unchanged sentences

authorized - 200,000 shares;

issued and outstanding - 76,196 shares and 76,279 shares

issued and outstanding - 76,440 shares and 76,279 shares as of June 30, 2023 and December 31, 2022

152,880 152,557

8 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

6 unchanged sentences

Loss on extinguishment of debt 843 —

Deferred income tax benefit ( 591 ) ( 69 )

Deferred income tax (benefit) provision ( 6,758 ) 1,601

Changes in operating lease right-of-use assets and lease liabilities ( 3,077 ) 606

Gain on sale and dispositions of property and equipment ( 8,269 ) —

(Gain) loss on sale and dispositions of property and equipment ( 18,563 ) 226

Changes in operating assets and liabilities, net of acquisitions:

10 unchanged sentences

Proceeds from sale of property and equipment 35,729 5,846

Other, net ( 418 ) ( 839 )

Cash used for investing activities ( 65,668 ) ( 1,745,299 )

4 unchanged sentences

Proceeds from issuance of debt — 1,691,000

Borrowings under revolving credit facility, net and Receivable Financing Agreement — 41,700

Borrowings under revolving credit facility, net and Receivables Financing Agreement — 30,000

Financing costs paid — ( 41,479 )

2 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash 196 ( 3,864 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 2,991 ) 155,988

Net increase in cash, cash equivalents and restricted cash 222,918 994

Cash, cash equivalents and restricted cash at beginning of period 86,185 72,035

1 unchanged sentence

Supplemental disclosure of cash flow information:

Income taxes paid, net of refunds $ 2,405 $ 4,478

Income taxes (received) paid, net $ ( 10,506 ) $ 25,782

Interest paid $ 78,625 $ 32,417

Noncash investing activity:

Unpaid purchases of property and equipment and software at end of period $ 64,658 $ —

Unpaid purchases of property and equipment and computer software at end of period $ 65,808 $ 56,429

See accompanying notes to consolidated financial statements.

13 unchanged sentences

Balance, March 31, 2023 76,196 152,391 420,680 385,590 ( 34,261 ) 924,400

Net loss — — — ( 28,241 ) — ( 28,241 )

Other comprehensive loss — — — — ( 1,732 ) ( 1,732 )

Share-based compensation expense, exercises and other 244 489 1,313 — — 1,802

Balance, June 30, 2023 76,440 $ 152,880 $ 421,993 $ 357,349 $ ( 35,993 ) $ 896,229

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

3 unchanged sentences

Balance, March 31, 2022 76,086 152,172 409,741 426,898 ( 41,189 ) 947,622

Net income — — — 28,604 — 28,604

Other comprehensive loss — — — — ( 15,770 ) ( 15,770 )

Share-based compensation expense, exercises and other 85 171 ( 1,968 ) — — ( 1,797 )

Balance, June 30, 2022 76,171 $ 152,343 $ 407,773 $ 455,502 $ ( 56,959 ) $ 958,659

See accompanying notes to consolidated financial statements.

6 unchanged sentences

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

and the subsidiaries it controls (we, us, our or the Company) and contain all adjustments (which are comprised only of normal recurring accruals and use of estimates) necessary to conform with U.S.

and the subsidiaries it controls (we, us, or our) and contain all adjustments (which are comprised only of normal recurring accruals and use of estimates) necessary to conform with U.S.

generally accepted accounting principles (GAAP).

15 unchanged sentences

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

Restricted cash as of March 31, 2023 and December 31, 2022 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.

Restricted cash as of June 30, 2023 and December 31, 2022 primarily represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services in conjunction with the Bundled Payments for Care Improvement initiatives related to wind-down costs of Fusion5.

Restricted cash as of June 30, 2023 also includes $ 6.4 million of cash deposits received subject to limitations on use until remitted to a third-party financial institution (the Purchaser), pursuant to the Master Receivables Purchase Agreement (RPA).

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cash and cash equivalents $ 286,307 $ 69,467

6 unchanged sentences

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.

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

We recorded $ 172 million in revenue related to equipment we rent to patients for the three months ended March 31, 2023.

Equipment rental revenue was not m aterial for the three months ended March 31, 2022 .

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

We recorded $ 175 million and $ 144 million for the three months ended June 30, 2023 and 2022 and $ 346 million and $ 151 million for the six months ended June 30, 2023 and 2022 in revenue related to equipment we rent to patients .

Sales of Accounts Receivable

On March 14, 2023, we entered into the RPA, pursuant to which accounts receivable with an aggregate outstanding amount not to exceed $ 200 million are sold, on a limited-recourse basis, to the Purchaser in exchange for cash.

As of June 30, 2023 there were a total of $ 115 million of uncollected accounts receivable, that had been sold and removed from our consolidated balance sheet.

We account for these transactions as sales in accordance with ASC 860, Transfers and Servicing, with the sold receivables removed from our consolidated balance sheets.

Under the RPA, we provide certain servicing and collection actions on behalf of the Purchaser;

however, we do not maintain any beneficial interest in the accounts receivable sold.

Proceeds from the sale of accounts receivable are recorded as an increase to cash and cash equivalents and a reduction to accounts receivable, net of allowances in the consolidated balance sheets.

Cash received from the sale of accounts receivable is reflected as cash provided by operating activities in the consolidated statements of cash flows.

Total accounts receivable sold under the RPA were $ 412 million for the three and six months ended June 30, 2023.

During the three and six months ended June 30, 2023, we received net cash proceeds of $ 409 million from the sale of accounts receivable under the RPA and collected $ 297 million of the sold accounts receivable.

The losses on sale of accounts receivable, inclusive of professional fees incurred to establish the agreement, recorded in other operating expense (income), net in the consolidated statements of operations were $ 2.9 million and $ 3.6 million for the three and six months ended June 30, 2023.

The RPA is separate and distinct from the accounts receivable securitization program (the Receivables Financing Agreement) .

Note 2— Fair Value

1 unchanged sentence

The assumptions used are in accordance with a three-tier hierarchy, defined by GAAP, that draws a distinction between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the use of present value and other valuation techniques in the determination of fair value (Level 3).

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued payroll and related liabilities reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments.

The carrying amount of restricted cash also approximates fair value due to its nature.

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued payroll and related liabilities reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments.

The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2).

11 unchanged sentences

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 fair value of the assets acquired and liabilities assumed recognized as of the Acquisition Date.

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

The following table presents the final 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 were determined 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.

As of March 31, 2023, the allocation of purchase price to assets and liabilities acquired is finalized.

Fair Value as of Acquisition Date

10 unchanged sentences

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

Current assets acquired includes $ 88.7 million in fair value of receivables, which reflects the approximate amount contractually owed.

Current assets acquired include $ 88.7 million in fair value of receivables, which reflects the approximate amount contractually owed.

We are amortizing the 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.

1 unchanged sentence

Approximately $ 33 million of the goodwill is deductible for income tax purposes.

The following table provides pro forma results of net revenue and net loss for the three months ended March 31, 2022 as if Apria was acquired on January 1, 2022.

The following table provides pro forma results of net revenue and net loss for the three and six months ended June 30, 2022 as if Apria was acquired on January 1, 2022, based on the final purchase price allocation.

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.

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

Net revenue $ 2,500,015 $ 5,184,080

Net loss $ ( 78,861 )

Pro forma net loss of $ 78.9 million for the three months ended March 31, 2022 includes pro forma adjustments for interest expense of $ 15.4 million, net of tax, and amortization of intangible assets of $ 8.9 million, net of tax.

Net income (loss) $ 34,408 $ ( 44,454 )

Pro forma net income of $ 34.4 million for the three months ended June 30, 2022 includes a pro forma adjustment for amortization of intangible assets, net of tax of ($ 5.8 ) million.

Pro forma net loss of $ 44.5 million for the six months ended June 30, 2022 includes pro forma adjustments for interest expense of $ 15.4 million, net of tax and amortization of intangible assets, net of tax of $ 3.1 million.

The pro forma net loss 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.

Acquisition-related charges within acquisition-related charges and intangible amortization presented in our consolidated statements of operations were $ 1.3 million and $ 31.9 million for the three months ended March 31, 2023 and 2022, which consisted primarily of costs related to the Apria Acquisition.

Acquisition-related charges within acquisition-related charges and intangible amortization presented in our consolidated statements of operations were $ 1.3 million and $ 6.4 million for the three months ended June 30, 2023 and 2022 and $ 2.5 million and $ 38.3 million for the six months ended June 30, 2023 and 2022.

Note 4— Goodwill and Intangible Assets

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through March 31, 2023:

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through June 30, 2023:

Patient Direct Products & Healthcare Services Consolidated

2 unchanged sentences

Currency translation adjustments — ( 1,138 ) ( 1,138 )

Carrying amount of goodwill, March 31, 2023 $ 1,535,252 $ 103,881 $ 1,639,133

Intangible assets subject to amortization at March 31, 2023 and December 31, 2022 were as follows:

March 31, 2023 December 31, 2022

Carrying amount of goodwill, June 30, 2023 $ 1,535,252 $ 101,897 $ 1,637,149

Intangible assets subject to amortization at June 30, 2023 and December 31, 2022 were as follows:

June 30, 2023 December 31, 2022

Relationships Tradenames Other

5 unchanged sentences

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

At March 31, 2023 and December 31, 2022, $ 294 million and $ 308 million in net intangible assets were held in the Patient Direct segment and $ 131 million and $ 137 million were held in the Products & Healthcare Services segment.

Amortization expense for intangible assets was $ 20.9 million and $ 10.3 million for the three months ended March 31, 2023 and 2022.

As of March 31, 2023, based on the current carrying value of intangible assets subject to amortization, estimated amortization expense, were as follows:

At June 30, 2023 and December 31, 2022, $ 279 million and $ 308 million in net intangible assets were held in the Patient Direct segment and $ 124 million and $ 137 million were held in the Products & Healthcare Services segment.

Amortization expense for intangible assets was $ 20.9 million and $ 30.9 million for the three months ended June 30, 2023 and 2022 and $ 41.8 million and $ 41.2 million for the six months ended June 30, 2023 and 2022.

As of June 30, 2023, based on the current carrying value of intangible assets subject to amortization, estimated amortization expense were as follows:

2023 (remainder) $ 41,489

Note 5— Exit and Realignment Costs

We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain distribution and outsourced logistics centers, administrative offices and warehouses, and information technology strategic initiatives.

These charges also include costs associated with our operating model realignment program, which include professional fees, severance and costs to streamline functions and processes.

Exit and realignment charges for the three months ended March 31, 2023 and 2022 were $ 15.7 million and $ 1.7 million.

We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain facilities and IT restructuring charges.

These charges also include costs associated with our Operating Model Realignment Program, which include professional fees, severance and other costs to streamline functions and processes.

Exit and realignment charges were $ 29.0 million and $ 1.2 million for the three months ended June 30, 2023 and 2022 and $ 44.6 million and $ 2.9 million for six months ended June 30, 2023 and 2022.

These amounts are excluded from our segments operating income.

We expect material additional costs in 2023 associated with the operating model realignment program and information technology strategic initiatives.

The following table summarizes the activity related to exit and realignment cost accruals through March 31, 2023 and 2022:

We expect material additional costs in 2023 associated with the Operating Model Realignment Program and IT restructuring charges.

The following table summarizes the activity related to exit and realignment cost accruals through June 30, 2023 and 2022:

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

2 unchanged sentences

Professional fees 9,012

Vendor contract and lease termination costs 1,824

Cash payments ( 5,546 )

Accrued exit and realignment costs, March 31, 2023 11,097

Provision for exit and realignment activities:

Severance 505

Professional fees 22,953

Vendor contract and lease termination costs 1,707

Cash payments ( 20,196 )

Accrued exit and realignment costs, June 30, 2023 $ 19,864

Accrued exit and realignment costs, December 31, 2021 $ 8,306

3 unchanged sentences

Accrued exit and realignment costs, March 31, 2022 3,085

Provision for exit and realignment activities:

Severance 246

Cash payments ( 3,477 )

Accrued exit and realignment costs, June 30, 2022 $ 822

Debt, net of unamortized deferred financing costs, consists of the following:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Amount Estimated

14 unchanged sentences

Long-term debt $ 2,309,853 $ 2,203,237 $ 2,482,968 $ 2,328,161

On March 29, 2022, we entered into an amendment to our accounts receivable securitization program (the Receivables Financing Agreement).

We have $ 246 million of 4.375 % senior notes due in December 2024 (the 2024 Notes), with interest payable semi-annually.

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

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

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.

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.

2 unchanged sentences

The Receivables Financing Agreement matures in March 2025.

We had no borrowings at March 31, 2023 and $ 96.0 million outstanding at December 31, 2022 under our Receivables Financing Agreement.

At March 31, 2023 and December 31, 2022, we had maximum revolving borrowing capacity of $ 450 million and $ 354 million under our Receivables 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 March 31, 2023 and December 31, 2022, our Revolving Credit Agreement was undrawn and we had letters of credit, which reduce Revolver availability, totaling $ 27.9 million leaving $ 422 million available for borrowing.

We also had letters of credit and bank guarantees, which supports certain leased facilities as well as other normal business activities in the United States and Europe that were issued outside of the Revolving Credit Agreement for $ 2.0 million and $ 2.3 million as of March 31, 2023 and December 31, 2022.

We had no borrowings at June 30, 2023 and $ 96.0 million outstanding at December 31, 2022 under our Receivables Financing Agreement.

At June 30, 2023 and December 31, 2022, we had maximum revolving borrowing capacity of $ 450 million and $ 354 million under our Receivables Financing Agreement.

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).

2 unchanged sentences

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

In addition to our scheduled principal payment of $ 1.5 million on the Term Loan B, we made unscheduled principal payments of $ 10 million on Term Loan B and $ 15 million on Term Loan A during the three months ended March 31, 2023 .

We have $ 246 million of 4.375 % senior notes due in December 2024 (the 2024 Notes), with interest payable semi-annually.

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

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

In addition to our scheduled principal payments of $ 3.1 million on the Term Loan A and $ 3.0 million on the Term Loan B, we made unscheduled principal payments of $ 35 million on Term Loan A and $ 30 million on Term Loan B during the six months ended June 30, 2023.

On March 10, 2021, we issued $ 500 million of 4.500 % senior unsecured notes due in March 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 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.

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.

5 unchanged sentences

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

The Revolving Credit Agreement matures in March 2027.

At June 30, 2023 and December 31, 2022, our Revolving Credit Agreement was undrawn, and we had letters of credit, which reduce Revolver availability, totaling $ 27.9 million, leaving $ 422 million available for borrowing.

We also had letters of credit and bank guarantees which support certain leased facilities as well as other normal business activities in the United States and Europe that were issued outside of the Revolving Credit Agreement for $ 2.1 million and $ 2.3 million as of June 30, 2023 and December 31, 2022.

The Revolving Credit Agreement, the Credit Agreement, the Receivables Financing Agreement, the 2024 Notes, the 2029 Unsecured Notes, and the 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 March 31, 2023.

As of March 31, 2023, scheduled future principal payments of debt, excluding finance leases and other, were as follows:

We were in compliance with our debt covenants at June 30, 2023.

As of June 30, 2023, scheduled future principal payments of debt, excluding finance leases and other, were as follows:

2023 (remainder) $ 9,250

1 unchanged sentence

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

Current maturities at March 31, 2023 include $ 12.5 million in principal payments on our Term Loan A, $ 6.0 million in principal payments on our Term Loan B, and $ 2.6 million in current portion of finance leases.

Current maturities at June 30, 2023 include $ 15.6 million in principal payments on our Term Loan A, $ 6.0 million in principal payments on our Term Loan B, and $ 2.8 million in current portion of finance leases.

Note 7— Retirement Plans

1 unchanged sentence

Retirement Plan).

As of March 31, 2023 and December 31, 2022, the accumulated benefit obligation of the U.S.

As of June 30, 2023 and December 31, 2022, the accumulated benefit obligation of the U.S.

Retirement Plan was $ 38.5 million and $ 39.3 million.

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

The components of net periodic benefit cost for the three months ended March 31, 2023 and 2022 were as follows:

The components of net periodic benefit cost for the three and six months ended June 30, 2023 and 2022 were as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Service cost $ 446 $ 617 $ 887 $ 1,250

9 unchanged sentences

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.

In order to mitigate the risk of increases in benchmark rates on our term loans, 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.

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

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.

3 unchanged sentences

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

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of March 31, 2023:

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of June 30, 2023:

Derivative Assets Derivative Liabilities

3 unchanged sentences

Economic (non-designated) hedges

Foreign currency contracts $ 70,473 April 2023 Other current assets $ 5 Other current liabilities $ 66

Foreign currency contracts $ 76,916 July - August 2023 Other current assets $ 269 Other current liabilities $ 2

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of December 31, 2022:

6 unchanged sentences

The notional amount of the interest rate swaps represents the amount in effect at the end of the period.

Based on contractual terms, the notional amount will decrease in increments of $ 50 million in March of each year until the maturity date.

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three months ended March 31, 2023:

Amount of (Loss) Recognized in Other Comprehensive Income (Loss) Location of Gain 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 Reclassified from Accumulated Other Comprehensive Loss into Income (Loss)

Based on contractual terms, the notional amount will decrease in increments of $ 50 million on the last business day of March of each year until the maturity date.

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and six months ended June 30, 2023:

Amount of Gain Recognized in Other Comprehensive Income (Loss) Location of Gain 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 Reclassified from Accumulated Other Comprehensive Loss into Income

Three months ended June 30, 2023 Six months ended June 30, 2023 Three months ended June 30, 2023 Six months ended June 30, 2023 Three months ended June 30, 2023 Six months ended June 30, 2023

Interest rate swaps $ 6,792 $ 4,405 Interest expense, net $ ( 40,728 ) $ ( 82,926 ) $ 2,335 $ 4,511

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and six months ended June 30, 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 Loss Reclassified from Accumulated Other Comprehensive Loss into Income

Three months ended June 30, 2022 Six months ended June 30, 2022 Three months ended June 30, 2022 Six months ended June 30, 2022 Three months ended June 30, 2022 Six months ended June 30, 2022

Interest rate swaps $ 2,044 $ 2,044 Interest expense, net $ ( 35,839 ) $ ( 47,858 ) $ ( 1,692 ) $ ( 1,692 )

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

For the three months ended March 31, 2023 and 2022, we recognized no gain (loss) and a loss of $ 0.1 million associated with our economic (non-designated) foreign currency contracts.

For the three and six months ended June 30, 2023, we recognized a loss of $ 0.9 million associated with our economic (non-designated) foreign currency contracts.

For the three and six months ended June 30, 2022, we recognized losses of $ 1.3 million and $ 1.4 million associated with our economic (non-designated) foreign currency contracts.

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

Note 9— Income Taxes

The effective tax rate was 27.7 % for the three months ended March 31, 2023, compared to 18.6 % in the same quarter of 2022.

The change in these rates resulted primarily from changes in income and losses and the incremental income tax benefit associated with the vesting of restricted stock recorded in the first quarter of 2022.

The liability for unrecognized tax benefits was $ 22.6 million at March 31, 2023 and $ 22.5 million at December 31, 2022.

Included in the liability at March 31, 2023 and December 31, 2022 were $ 2.7 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The effective tax rate was 8.8 % and 18.7 % for the three and six months ended June 30, 2023, compared to 25.6 % and 21.7 % in the same periods of 2022.

The change in these rates resulted primarily from changes in income and losses.

The liability for unrecognized tax benefits was $ 22.7 million at June 30, 2023 and $ 22.5 million at December 31, 2022.

Included in the liability at June 30, 2023 and December 31, 2022 were $ 2.7 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

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

1 unchanged sentence

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

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

Our amount of taxable income in the United States is based on our transfer pricing methodology, which has been consistently applied for all years subject to the NOPAs.

We strongly disagree with the IRS position and will pursue all available administrative and judicial remedies, including those available under the U.S.

4 unchanged sentences

Note 10— Net (Loss) Income per Common Share

The following summarizes the calculation of net (loss) income per common share attributable to common shareholders for the three months ended March 31, 2023 and 2022:

The following summarizes the calculation of net (loss) income per common share attributable to common shareholders for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share data) 2023 2022 2023 2022

6 unchanged sentences

Diluted $ ( 0.37 ) $ 0.37 $ ( 0.70 ) $ 0.89

Share-based awards for the three months ended March 31, 2023 of approximately 1.7 million shares were excluded from the calculation of net loss per diluted common share as the effect would be anti-dilutive.

Note 11— Shareholders' Equity

In May 2020, we entered into an equity distribution agreement, pursuant to which we may offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $ 50.0 million.

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

As of March 31, 2023, no shares were issued and $ 50.0 million of common stock remained available under the at-the-market equity financing program.

Share-based awards for the three and six months ended June 30, 2023 of approximately 1.8 million and 1.7 million shares were excluded from the calculation of net loss per diluted common share as the effect would be anti-dilutive.

Note 11— Accumulated Other Comprehensive (Loss) Income

The following table shows the changes in accumulated other comprehensive (loss) income by component for the three months ended March 31, 2023 and 2022:

The following table shows the changes in accumulated other comprehensive (loss) income by component for the three and six months ended June 30, 2023 and 2022:

Retirement Plans Currency

Adjustments Derivatives Total

Accumulated other comprehensive (loss) income, December 31, 2022 $ ( 7,201 ) $ ( 40,095 ) $ 11,441 $ ( 35,855 )

Other comprehensive income (loss) before reclassifications — 5,118 ( 2,387 ) 2,731

Accumulated other comprehensive (loss) income, March 31, 2023 $ ( 7,348 ) $ ( 34,977 ) $ 8,064 $ ( 34,261 )

Other comprehensive (loss) income before reclassifications — ( 5,167 ) 6,792 1,625

Income tax — — ( 1,766 ) ( 1,766 )

Other comprehensive income (loss) before reclassifications, net of tax — 5,118 ( 1,766 ) 3,352

Other comprehensive (loss) income before reclassifications, net of tax — ( 5,167 ) 5,026 ( 141 )

Amounts reclassified from accumulated other comprehensive income (loss) 123 — ( 2,335 ) ( 2,212 )

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive income (loss), net of tax 136 — ( 1,727 ) ( 1,591 )

Other comprehensive (loss) income ( 147 ) 5,118 ( 3,377 ) 1,594

Accumulated other comprehensive (loss) income, March 31, 2023 $ ( 7,348 ) $ ( 34,977 ) $ 8,064 $ ( 34,261 )

Other comprehensive income (loss) 136 ( 5,167 ) 3,299 ( 1,732 )

Accumulated other comprehensive (loss) income, June 30, 2023 $ ( 7,212 ) $ ( 40,144 ) $ 11,363 $ ( 35,993 )

Retirement Plans Currency Translation Adjustments Derivatives Total

Accumulated other comprehensive loss, December 31, 2021 $ ( 14,597 ) $ ( 25,994 ) $ — $ ( 40,591 )

Other comprehensive loss before reclassifications — ( 787 ) — ( 787 )

Accumulated other comprehensive loss, March 31, 2022 $ ( 14,408 ) $ ( 26,781 ) $ — $ ( 41,189 )

Other comprehensive (loss) income before reclassifications — ( 18,831 ) 2,044 ( 16,787 )

Income tax — — ( 532 ) ( 532 )

Other comprehensive loss before reclassifications, net of tax — ( 787 ) — ( 787 )

Other comprehensive (loss) income before reclassifications, net of tax — ( 18,831 ) 1,512 ( 17,319 )

Amounts reclassified from accumulated other comprehensive loss 386 — 1,692 2,078

2 unchanged sentences

Other comprehensive income (loss) 297 ( 18,831 ) 2,764 ( 15,770 )

Accumulated other comprehensive loss, March 31, 2022 $ ( 14,408 ) $ ( 26,781 ) $ — $ ( 41,189 )

Accumulated other comprehensive (loss) income, June 30, 2022 $ ( 14,111 ) $ ( 45,612 ) $ 2,764 $ ( 56,959 )

Retirement Plans Currency

Adjustments Derivatives Total

Accumulated other comprehensive (loss) income, December 31, 2022 $ ( 7,201 ) $ ( 40,095 ) $ 11,441 $ ( 35,855 )

Other comprehensive (loss) income before reclassifications — ( 49 ) 4,405 4,356

Income tax — — ( 1,145 ) ( 1,145 )

Other comprehensive (loss) income before reclassifications, net of tax — ( 49 ) 3,260 3,211

Amounts reclassified from accumulated other comprehensive income (loss) 246 — ( 4,511 ) ( 4,265 )

Income tax ( 257 ) — 1,173 916

Amounts reclassified from accumulated other comprehensive income (loss), net of tax ( 11 ) — ( 3,338 ) ( 3,349 )

Other comprehensive loss ( 11 ) ( 49 ) ( 78 ) ( 138 )

Accumulated other comprehensive (loss) income, June 30, 2023 $ ( 7,212 ) $ ( 40,144 ) $ 11,363 $ ( 35,993 )

Retirement Plans Currency

Adjustments Derivatives Total

Accumulated other comprehensive loss, December 31, 2021 $ ( 14,597 ) $ ( 25,994 ) $ — $ ( 40,591 )

Other comprehensive (loss) income before reclassifications — ( 19,618 ) 2,044 ( 17,574 )

Income tax — — ( 532 ) ( 532 )

Other comprehensive (loss) income before reclassifications, net of tax — ( 19,618 ) 1,512 ( 18,106 )

Amounts reclassified from accumulated other comprehensive loss 635 — 1,692 2,327

Income tax ( 149 ) — ( 440 ) ( 589 )

Amounts reclassified from accumulated other comprehensive loss, net of tax 486 — 1,252 1,738

Other comprehensive (loss) income 486 ( 19,618 ) 2,764 ( 16,368 )

Accumulated other comprehensive (loss) income, June 30, 2022 $ ( 14,111 ) $ ( 45,612 ) $ 2,764 $ ( 56,959 )

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

3 unchanged sentences

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 Global Products 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).

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

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

We evaluate the performance of our segments based on their operating income excluding acquisition-related charges and intangible amortization and 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.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Products & Healthcare Services $ 1,930,723 $ 1,927,388 $ 3,846,212 $ 4,061,429

15 unchanged sentences

Consolidated capital expenditures $ 49,489 $ 54,738 $ 100,979 $ 65,699

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Total assets:

5 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

United States $ 2,498,536 $ 2,376,573 $ 4,951,472 $ 4,638,592

38 unchanged sentences

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 March 31, 2023 for currently pending matters considered probable of loss, which is not material, is sufficient.

Based on current knowledge and the advice of counsel, we believe that the accrual as of June 30, 2023 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 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 15— Commitments and Contingencies

We anticipate that the noncancellable obligations beyond 12 months related to outsourced information technology operations, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, will no longer be material as a result of executed contract terminations, expected contract terminations, and insourcing of information technology operations.

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

What changed 10-Q

Item 1. Financial Statements