What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-31 compared with 2025-08-11 · 116 added, 106 removed, 189 unchanged (54% of the section changed)

5 unchanged sentences

Owens & Minor, Inc., along with its subsidiaries, (the Company, we, us, or our) is a leading provider of integrated equipment, supplies, and related services supporting home-based care in the United States .

As discussed within Note 1 in the Notes to Consolidated Financial Statements, our business activities comprise a single operating and reporting segment.

Net loss from continuing operations per common share was ($1.09) for the three months ended June 30, 2025 as compared to ($0.09) for the three months ended June 30, 2024.

Our financial results for the three months ended June 30, 2025 as compared to the prior year were impacted by the transaction breakage fee of $80 million, transaction financing fees, net of $18 million, and an increase in acquisition-related costs of $2.7 million partially offset by a decrease in intangible amortization of $2.5 million due to certain intangible assets that were fully amortized in 2024 and an increase in net revenue.

Net loss from continuing operations per common share was ($1.14) for the six months ended June 30, 2025 as compared to ($0.26) for the six months ended June 30, 2024.

Our financial results for the six months ended June 30, 2025 as compared to prior year were impacted by the transaction breakage fee of $80 million, transaction financing fees, net of $18 million, and an increase in acquisition-related costs of $19 million related to the terminated acquisition of Rotech, partially offset by a decrease in intangible amortization of $9.2 million due to certain intangible assets that were fully amortized in 2024 and an increase in net revenue.

As discussed within Note 1 in the Notes to Condensed Consolidated Financial Statements, our business activities comprise a single operating and reporting segment.

Net (loss) income from continuing operations per common share was ($0.07) for the three months ended September 30, 2025 as compared to $0.02 for the three months ended September 30, 2024.

Our financial results for the three months ended September 30, 2025 as compared to the comparable prior year period were impacted by an increase in intangible amortization of $21 million and an increase in costs of net revenue of $20 million, partially offset by a decrease in exit and realignment costs of $13 million, an increase in net revenue of $10 million, and a decrease in acquisition-related costs of $6.5 million.

Net loss from continuing operations per common share was ($1.21) for the nine months ended September 30, 2025 as compared to ($0.25) for the nine months ended September 30, 2024.

Our financial results for the nine months ended September 30, 2025 as compared to the comparable prior year period were impacted by the transaction breakage fee of $80 million, transaction financing fees, net of $18 million, and an increase in acquisition-related costs of $12 million related to the terminated acquisition of Rotech, as well as an increase in costs of net revenue of $49 million, and an increase in intangible amortization of $12 million, partially offset by an increase in net revenue of $68 million, a decrease in exit and realignment costs of $20 million, and a decrease in selling, general and administration expenses of $16 million.

Refer to “Results of Operations” for further detail of quantitative and qualitative drivers of our results.

Contemplated Sale of Products & Healthcare Services Segment

On February 28, 2025, we announced that we are actively engaged in discussions regarding the contemplated sale of our Products & Healthcare Services (P&HS) segment.

We are in the final stages of our process for the divestiture and have concluded the P&HS segment has met the accounting requirements to be classified as discontinued operations and held for sale as of June 30, 2025.

During this process we remain committed to serving our P&HS segment customers.

In accordance with GAAP, the financial position and results of operations of the P&HS segment are presented as discontinued operations and assets held for sale and, as such, have been excluded from continuing operations for all periods presented.

All discussion, unless otherwise noted, reflects the continuing operations of Owens & Minor, Inc.

Purchase Agreement to Sell the Products & Healthcare Services Segment

On February 28, 2025, we announced that we were actively engaged in discussions regarding the sale of our Products & Healthcare Services (P&HS) segment.

On October 7, 2025, we entered into the Purchase Agreement by and among the Company, the Purchaser, and Purchaser Parent to sell the P&HS segment, for an aggregate of $375 million in cash, subject to certain adjustments for cash, indebtedness, net working capital and transaction expenses.

We will retain a 5% equity interest in the P&HS segment.

The Purchaser will be required to pay us a termination fee under certain specified circumstances of $9.4 million or $19 million depending on the stage of regulatory approval and other criteria.

The sale is subject to customary closing conditions, including the Hart Scott Rodino Act and other regulatory approvals, and is expected to close in the first quarter of 2026.

We remain committed to serving our P&HS segment customers through the closing of the sale.

The P&HS segment was initially classified as discontinued operations and assets held for sale as of June 30, 2025.

In accordance with GAAP, the financial position and results of operations of the P&HS segment are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented.

See Note 3 in the Notes to Condensed Consolidated Financial Statements for additional information regarding discontinued operations and assets held for sale.

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On June 3, 2025, the Company, Rotech and Merger Sub mutually agreed to terminate the Merger Agreement and entered into a mutual termination agreement (the Termination Agreement).

In accordance with the terms of the Termination Agreement, we incurred and made a cash payment to Rotech of $80 million during the three and six months ended June 30, 2025.

In accordance with the terms of the Termination Agreement, on June 5, 2025, we made a cash payment to Rotech of $80 million.

Notice of Contract Termination with a Commercial Payor

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As a result of this notice of termination, we expect net neutral impacts to our financial results through the end of 2025, as the transitions of agreements and services are expected to start late in the fourth quarter of 2025.

While such transitions of agreements and services are expected to continue throughout the first half of 2026, the specific timing of when these agreements will wind down is highly dependent on the Payor’s successor provider’s ability to successfully transition customers among other factors.

The agreements expected to be terminated reflected approximately $160 million or 12% of our net revenue, and nearly all of our $121 million capitation revenue, for the six months ended June 30, 2025.

While such transitions of agreements and services are expected to continue throughout the first half of 2026, the specific timing of when these contracts will wind down is highly dependent on the Payor’s successor provider’s ability to successfully transition customers among other factors.

The terminated contracts reflected $242 million or 12% of our net revenue, including $173 million of capitation revenue, which represents nearly all of our capitation revenue, for the nine months ended September 30, 2025.

Results of Operations

Three Months Ended

September 30,

(Dollars in thousands)

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Home respiratory therapy

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

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Home respiratory therapy

The increase in net revenue for the three and six months ended June 30, 2025 was driven by sales growth in several product categories, including sleep therapy, ostomy and urology.

The growth in these categories includes the benefits from certain successful sales activities.

In addition, improved collection rates contributed to revenue growth.

Diabetes revenue growth has been hindered by market shifts of diabetes business into the pharmacy channel.

Furthermore, in order to not disrupt our customers critical needs during supplier disruptions, we modified our customer ordering quantities and our delivery frequency for diabetes supplies during the three months ended June 30, 2025.

Absent this headwind, our revenue growth rate for the three months ended June 30, 2025 would have been approximately 4% as compared to the comparable prior period.

The increase in net revenue for the three and nine months ended September 30, 2025 was driven by sales growth in several product categories, including sleep therapy, ostomy and urology.

The growth in these categories includes the benefits from certain successful sales activities including our Sleep Journey Initiative .

Diabetes revenue growth has been hindered by market shifts of diabetes business away from our primary distribution channel.

Cost of net revenue.

Three Months Ended

September 30,

(Dollars in thousands)

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Cost of net revenue

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

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Cost of net revenue

The increase in cost of net revenue for the three and six months ended June 30, 2025 reflects the increased cost associated with net revenue growth of 3.3% and 4.4% primarily due to increased sales volume.

The increase in cost of net revenue for the three and nine months ended September 30, 2025 reflects the increased cost associated with sales volume growth of 3.7% and 4.1% and manufacturer prices increases.

Operating expenses.

Three Months Ended

September 30,

(Dollars in thousands)

1 unchanged sentence

As a % of net revenue

Transaction breakage fee

Acquisition-related charges and intangible amortization

Exit and realignment charges, net

NM - Not meaningful

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

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The decrease in selling, general and administrative expenses (SG&A) expenses for the three and six months ended June 30, 2025 were primarily from operating efficiencies in our revenue cycle and information technology along with lower benefit costs, partially offset by inflationary increases and the cost to service the revenue growth of $22 million and $58 million, respectively.

Transaction breakage fee represents a cash payment to Rotech of $80 million during the three and six months ended June 30, 2025 for the termination of the Rotech acquisition.

Acquisition-related charges were $6.4 million and $22 million for the three and six months ended June 30, 2025 and $3.7 million for the three and six months ended June 30, 2024 consisted of costs for the terminated acquisition of Rotech, which related primarily to legal and professional fees.

Intangible amortization was $7.6 million and $15 million for the three and six months ended June 30, 2025 and $10 million and $24 million for the three and six months ended June 30, 2024 relating to intangible assets acquired in the Apria and Byram acquisitions.

The decrease was due to certain intangible assets that were fully amortized in 2024.

Exit and realignment charges, net were $2.5 million and $16 million for the three and six months ended June 30, 2025.

These charges primarily included professional fees associated with strategic initiatives of $1.9 million and $8.1 million.

For the six months ended June 30, 2025 exit and realignment charges, net also included $6.8 million related to wind-down costs of Fusion5.

Exit and realignment charges, net were $15 million and $24 million for the three and six months ended June 30, 2024.

These charges primarily included professional fees associated with strategic initiatives of $12 million and $18 million.

The decrease in selling, general and administrative expenses (SG&A) expenses for the three and nine months ended September 30, 2025 were primarily from a $4.0 million benefit associated with updated expected achievement for our performance share awards, a reduction in teammate incentive expense of $0.8 million and $10 million, operating efficiencies in our revenue cycle and information technology, partially offset by healthcare expense increases of $3.7 million and $7.6 million, inflationary increases and the cost to service the revenue growth of $10 million and $68 million, respectively.

Transaction breakage fee represents a cash payment to Rotech of $80 million made on June 5, 2025 for the termination of the Rotech acquisition.

Acquisition-related charges were $22 million for the nine months ended September 30, 2025, and $6.5 million and $10 million for the three and nine months ended September 30, 2024, consisting of costs for the terminated acquisition of Rotech, which related primarily to legal and professional fees.

Intangible amortization was $29 million and $44 million for the three and nine months ended September 30, 2025 and $8.4 million and $33 million for the three and nine months ended September 30, 2024 relating to intangible assets acquired in the Apria and Byram acquisitions.

The increase was due to the remaining useful life for an intangible asset being modified as of June 30, 2025 as a result of a notice of a contract termination with a commercial Payor.

See Note 5 in the Notes to Condensed Consolidated Financial Statements for additional information regarding intangible amortization.

Exit and realignment charges, net were $0.7 million and $17 million for the three and nine months ended September 30, 2025.

These charges included professional fees associated with strategic initiatives of $0.1 million and $8.2 million and IT strategic initiatives of $0.4 million and $0.9 million for the three and nine months ended September 30, 2025.

For the nine months ended September 30, 2025 exit and realignment charges, net also included $6.8 million related to wind-down costs of Fusion5.

Exit and realignment charges, net were $14 million and $37 million for the three and nine months ended September 30, 2024.

These charges included professional fees associated with strategic initiatives of $11 million and $29 million and IT strategic initiatives of $2.9 million and $8.3 million for the three and nine months ended September 30, 2024.

Non-operating expenses.

Three Months Ended

September 30,

(Dollars in thousands)

1 unchanged sentence

Effective interest rate

Transaction financing fees, net

Other expense, net

NM - Not meaningful

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

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NM - Not meaningful

Interest expe nse, net for the three months ended June 30, 2025 increased due a reduction in interest income of $2.4 million, partially offset by lower average outstanding borrowings of $61 million and a 5 basis point decline in our effective interest rate as compared to the three months ended June 30, 2024 .

Interest expense, net, for the six months ended June 30, 2025 decreased due to a decrease in the effective interest rate of 13 basis points and lower average outstanding borrowings of $113 m illion, partially offset by a decrease in interest income of $4.6 million as compared to the six months ended June 30, 2024.

Interest expense, net for the three months ended September 30, 2025 increased due to a reduction in interest income of $1.9 million, partially offset by lower average outstanding borrowings of $48 million and a 23 basis point decline in our effective interest rate as compared to the three months ended September 30, 2024.

Interest expense, net, for the nine months ended September 30, 2025 decreased due to a decrease in the effective interest rate of 17 basis points and lower average outstanding borrowings of $92 million, partially offset by a decrease in interest income of $6.6 million as compared to the nine months ended September 30, 2024.

See Note 8 in the Notes to Condensed Consolidated Financial Statements.

Transaction financing fees, net for the three and six months ended June 30, 2025 consisted of debt financing fees associated with the terminated acquisition of Rotech, including $12 million of costs, net of income on the related cash held in escrow, on the financing issued in connection with previously expected Rotech acquisition and $6.7 million in recognition of related previously deferred debt issuance costs.

Other expense, net for the three and six months ended June 30, 2025 and 2024 includes interest cost and net actuarial losses related to our U.S.

Transaction financing fees, net for the nine months ended September 30, 2025 consisted of debt financing fees associated with the terminated acquisition of Rotech, including $12 million of costs, net of income on the related cash held in escrow, on the financing issued in connection with previously expected Rotech acquisition and $6.7 million in recognition of related previously deferred debt issuance costs.

Other expense, net for the three and nine months ended September 30, 2025 and 2024 includes interest cost and net actuarial losses related to our U.S.

retirement plan.

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Three Months Ended

September 30,

(Dollars in thousands)

Income tax benefit

Income tax provision (benefit)

Effective tax rate

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

1 unchanged sentence

Effective tax rate

The change in these rates were primarily from changes in results of operations, including the tax treatment associated with the $80 million transaction breakage fee for the three and six months ended June 30, 2025.

The change in these rates were primarily from changes in results of operations as well as the impact of certain discrete tax items relative to pre-tax (loss) income.

The change for the nine months ended September 30, 2025 also includes the tax treatment associated with the $80 million transaction breakage fee.

Adjusted EBITDA

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generally accepted accounting principles, or GAAP, to analyze our financial results and as one of our incentive metrics.

In general, non-GAAP measures exclude items and charges that (i) management does not believe reflect the Company’s core business

and relate more to strategic, multi-year corporate activities;

In general, non-GAAP measures exclude items and charges that (i) management does not believe reflect the Company’s core business and relate more to strategic, multi-year corporate activities;

or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends.

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Adjusted EBITDA disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and financial results calculated in accordance with GAAP and this reconciliation to those financial statements set forth below should be carefully evaluated.

The following tables present the reconciliations of loss from continuing operations, net of tax to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Loss from continuing operations, net of tax, as reported (GAAP)

Income tax benefit

The following tables present the reconciliations of (loss) income from continuing operations, net of tax to Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended September 30,

(Loss) income from continuing operations, net of tax, as reported (GAAP)

Income tax provision (benefit)

Interest expense, net

Acquisition-related charges and intangible amortization (1)

Transaction breakage fee (2)

Exit and realignment charges, net (3)

Transaction financing fees, net (4)

Litigation and related charges (5)

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Adjusted EBITDA (non-GAAP)

Six Months Ended June 30,

Nine Months Ended September 30,

Loss from continuing operations, net of tax, as reported (GAAP)

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The following items have been excluded in our non-GAAP financial measure:

(1) Acquisition-related charges and intangible amortization for the three and six months ended June 30, 2025 includes $6.4 million and $22 million of acquisition-related costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees.

Acquisition-related charges and intangible amortization also includes amortization of intangible assets established during acquisition method of accounting for business combinations.

Acquisition-related charges and intangible amortization for the three and six months ended June 30, 2024 includes $3.7

million of acquisition-related costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees.

(1) Acquisition-related charges and intangible amortization for the nine months ended September 30, 2025 includes $22 million of acquisition-related costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees.

Acquisition-related charges and intangible amortization for the three and nine months ended September 30, 2024 includes $6.5 million and $10 million of acquisition-related costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees.

Acquisition-related charges and intangible amortization also includes amortization of intangible assets established during acquisition method of accounting for business combinations.

1 unchanged sentence

These amounts are highly dependent on the size and frequency of acquisitions and are being excluded to allow for a more consistent comparison with forecasted, current and historical results.

(2) Transaction breakage fee represents a cash payment to Rotech of $80 million during the three and six months ended June 30, 2025 for the termination of the Rotech acquisition.

(3) During the three and six months ended June 30, 2025 exit and realignment charges, net were $2.5 million and $16 million and primarily included professional fees associated with strategic initiatives of $1.9 million and $8.1 million.

During the six months ended June 30, 2025 exit and realignment charges, net also included $6.8 million related to wind-down costs of Fusion5.

Exit and realignment charges, net were $15 million and $24 million for the three and six months ended June 30, 2024.

These charges primarily included professional fees associated with strategic initiatives of $12 million and $18 million and costs related to IT strategic initiatives such as converting certain divisions to common IT systems.

(2) Transaction breakage fee represents a cash payment to Rotech of $80 million made on June 5, 2025, for the termination of the Rotech Acquisition.

(3) During the three and nine months ended September 30, 2025 exit and realignment charges, net were $0.7 million and $17 million.

During the nine months ended September 30, 2025 exit and realignment charges, net also included $6.8 million related to wind-down costs of Fusion5.

Exit and realignment charges, net were $14 million and $37 million for the three and nine months ended September 30, 2024.

These costs are not normal recurring, cash operating expenses necessary for the Company to operate its business on an ongoing basis.

(4) Transaction financing fees, net includes $12 million, net of income on the related cash held in escrow, on the financing issued in connection with previously expected Rotech acquisition and $6.7 million in recognition of related previously deferred debt issuance costs.

(5) Litigation and related charges includes settlement costs and related charges of legal matters.

These costs do not occur in the ordinary course of our business, are non-recurring/infrequent and are inherently unpredictable in timing and amount.

(6) For the three and six months ended June 30, 2025 and 2024, other includes interest costs and net actuarial losses related to our frozen noncontributory, unfunded retirement plan for certain retirees in the United States (U.S.).

(5) Litigation and related charges includes settlement costs and related charges of certain legal matters.

These costs do not occur in the ordinary course of our business, are inherently unpredictable in timing and amount.

(6) For the three and nine months ended September 30, 2025 and 2024, other includes interest costs and net actuarial losses related to our frozen noncontributory, unfunded retirement plan for certain retirees in the United States (U.S.).

(7) Other depreciation and amortization relates to patient service equipment and other fixed assets, excluding such amounts captured within exit and realignment charges, net or acquisition-related charges and intangible amortization.

(8) Stock compensation includes share-based compensation expense related to our share-based compensation plans, excluding such amounts captured within exit and realignment charges, net or acquisition-related charges and intangible amortization.

For the three and nine months ended September 30, 2025 stock compensation includes a $4.0 million benefit associated with updated expected achievement for our performance share awards.

Financial Condition, Liquidity and Capital Resources

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We estimate a hypothetical increase (decrease) in DSO of one day would result in a decrease (increase) in our cash balances, an increase (decrease) in borrowings against our Revolving Credit Agreement, or a combination thereof of approximately $7.6 million.

The majority of our cash and cash equivalents are held in cash depository accounts with major banks in the United States.

The majority of our cash and cash equivalents are held in cash depository accounts with major banks in the U.S.

Changes in our working capital can vary in the normal course of business based upon the timing of inventory purchases, collections of accounts receivable and payments to suppliers.

(Dollars in thousands)

June 30, 2025

September 30, 2025

December 31, 2024

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Accounts payable

(1) Based on period end accounts receivable and net revenue for the quarters ended June 30, 2025 and December 31, 2024.

Excluding the impact of the Receivables Sale Program, DSO would have been 31.5 and 30.7 as of June 30, 2025 and December 31, 2024.

(2) Based on period end inventories and cost of net revenue for the quarters ended June 30, 2025 and December 31, 2024.

(1) Based on period end accounts receivable and net revenue for the quarters ended September 30, 2025 and December 31, 2024.

Excluding the impact of the Receivables Sale Program, DSO would have been 32.0 and 30.7 as of September 30, 2025 and December 31, 2024.

(2) Based on period end inventories and cost of net revenue for the quarters ended September 30, 2025 and December 31, 2024.

Liquidity and capital expenditures.

The following table summarizes our condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024:

Six Months Ended

The following table summarizes our condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024:

Nine Months Ended

September 30,

(Dollars in thousands)

Net cash provided by (used for):

Net cash (used for) provided by:

Operating activities

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Effect of exchange rate changes

Net increase in cash, cash equivalents and restricted cash

Cash provided by operating activities in the first six months of 2025 reflected a net loss and favorable changes in working capital, an $80 million payment for the termination of the Rotech acquisition, $18 million in transaction financing fees, net for the Rotech financing, an increase in inventory primarily related to inventory purchases within the P&HS segment and a $130 million benefit from accounts receivables sold under the Receivables Sale Program, $104 million of which relates to accounts receivables sold of the P&HS segment.

Cash provided by operating activities in the first six months of 2024 reflected a net loss and favorable changes in working capital.

Cash used for investing activities in the first six months of 2025 included capital expenditures of $134 million, primarily for patient service equipment and our strategic and operational efficiency initiatives associated with other fixed assets and capitalized software, offset by $35 million in proceeds from sale of patient service equipment and other fixed assets.

Cash used for investing activities in the first six months of 2024 included capital expenditures of $95 million, primarily for patient service equipment, other fixed assets and capitalized software, offset by $67 million in proceeds from sales of patient service equipment and other fixed assets which included $34 million in gross proceeds related to the sale of our corporate headquarters.

Cash provided by financing activities in the first six months of 2025 included net borrowings of $135 million under our Revolving Credit Facility.

Cash used for financing activities in the first six months of 2024 included repayments of term loans of $12 million.

We had no borrowings under our Revolving Credit Facility for the first six months of 2024 and the activity under our amended Receivables Financing Agreement netted to no impact on our outstanding borrowings.

Payments for taxes related to the vesting of restricted stock awards, which are included in Other, net, were $8.0 million for the first six months of 2024.

Refer to Note 3 to the Notes to the Consolidated Financial Statements for the operating and investing cash flow information for our discontinued operations and assets held for sale .

Net decrease in cash, cash equivalents and restricted cash

Cash used for operating activities in the first nine months of 2025 reflected a net loss including the impact of the $80 million termination fee of the Rotech acquisition, $18 million in transaction financing fees, net for the Rotech acquisition financing, $22 million in legal settlement payments for two litigation matters, and unfavorable changes in working capital, including a $150 million increase in P&HS segment inventory, partially offset by a $130 million benefit from accounts receivables sold under the Receivables Sale Program, $104 million of which relates to accounts receivables sold of the P&HS segment.

Cash provided by operating activities in the first nine months of 2024 reflected

unfavorable changes in working capital, including a $121 million unfavorable change in the P&HS segment inventory, partially offset by a $77 million favorable change in P&HS segment accounts payable.

Cash used for investing activities in the first nine months of 2025 included capital expenditures of $192 million, including $144 million of patient service equipment, and our strategic and operational efficiency initiatives associated with other fixed assets and capitalized software, partially offset by $53 million in proceeds from the regular sale of patient service equipment and other fixed assets.

Cash used for investing activities in the first nine months of 2024 included capital expenditures of $157 million, primarily for the patient service equipment, other fixed assets and capitalized software, partially offset by $85 million in regular proceeds from sales of patient service equipment and other fixed assets which included $34 million in gross proceeds related to the sale of our corporate headquarters, and $17 million included in the ‘other, net’ line item for settlement with Philips for returned equipment.

Cash provided by financing activities in the first nine months of 2025 included net borrowings of $271 million under our Revolving Credit Facility.

Cash used for financing activities in the first nine months of 2024 included repayments of debt of $211 million, including $171 million paid to redeem the 4.375% seniors notes that were due in December 2024, and $20 million of unscheduled and $20 million of scheduled repayments on term loans.

We had no borrowings under our Revolving Credit Facility for the first nine months of 2024 and the activity under our amended Receivables Financing Agreement netted to no impact on our outstanding borrowings.

A bank administrative error by our agent bank on September 30, 2025 resulted in a bank overdraft of $47 million, which is reflected in Other, net.

This matter was resolved the following business day.

Payments for taxes related to the vesting of restricted stock awards, which are included in Other, net, were $8.1 million for the first nine months of 2024.

Refer to Note 3 to the Notes to the Condensed Consolidated Financial Statements for the operating and investing cash flow information for our discontinued operations and assets held for sale .

Capital Resources.

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The accounts receivable sold under the Receivables Sale Program were primarily accounts receivable of the P&HS segment.

Total accounts receivable sold and net cash proceeds under the Receivables Sale program were $496 million and $840 million during the three and six months ended June 30, 2025, approximately $397 million and $672 million of which were accounts receivable of the P&HS segment.

We collected $495 million and $704 million of the sold accounts receivable for the three and six months ended June 30, 2025, approximately $396 million and $563 million of which were collections on accounts receivable of the P&HS segment.

The losses on sales of accounts receivable were $3.1 million and $5.2 million for the three and six months ended June 30, 2025, $2.5 million and $4.1 million of which relate to losses recorded in other operating expense, net in the financial results from discontinued operations.

Total accounts receivable sold and net cash proceeds under the Receivables Sale program were $466 million and $1.3 billion during the three and nine months ended September 30, 2025, approximately $373 million and $1.0 billion of which were accounts receivable of the P&HS segment.

We collected $465 million and $1.2 billion of the sold accounts receivable for the three and nine months ended September 30, 2025, approximately $372 million and $935 million of which were collections on accounts receivable of the P&HS segment.

The losses on sales of accounts receivable were $3.0 million and $8.2 million for the three and nine months ended September 30, 2025, $2.4 million and $6.5 million of which relate to losses recorded in other operating expense, net in the financial results from discontinued operations.

The Revolving Credit Agreement provides a revolving borrowing capacity of $450 million.

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

At June 30, 2025 we had $135 million in outstanding borrowings on our Revolving Credit Agreement.

At September 30, 2025, we had $271 million in outstanding borrowings on our Revolving Credit Agreement.

At December 31, 2024, our Revolving Credit Agreement was undrawn.

At June 30, 2025 and December 31, 2024 we had letters of credit, which reduce Revolver availability, totaling $29 million and $31 million, leaving $286 million and $419 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 within our P&HS segment, which is classified as held-for-sale as of June 30, 2025, in the United States and Europe that were issued outside of the Revolving Credit Agreement for $3.5 million and $2.9 million as of June 30, 2025 and December 31, 2024.

At September 30, 2025 and December 31, 2024, we had letters of credit, which reduce Revolver availability, totaling $29 million and $31 million, leaving $150 million and $419 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 within our P&HS segment, which is classified as held-for-sale as of September 30, 2025, in the United States and Europe that were issued outside of the Revolving Credit Agreement for $3.5 million and $2.9 million as of September 30, 2025 and December 31, 2024.

The Revolving Credit Agreement, the Credit Agreement, the Receivables Sale Program, 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 June 30, 2025.

We were in compliance with our debt covenants at September 30, 2025.

On April 4, 2025, we completed the sale of $1.0 billion aggregate principal amount of 10.000% Senior Secured Notes due 2030 (the New Notes) in a private offering (the Offering) to persons reasonably believed to be “qualified institutional buyers” in the United States, as defined in Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and to certain non-U.S.

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On June 3, 2025, the Company, Rotech and Merger Sub mutually agreed to terminate the Merger Agreement and entered into a mutual termination agreement (the Termination Agreement).

On June 10, 2025 (the Redemption

Date), the New Notes were redeemed in full at a price equal to 100% of the aggregate principal amount of the New Notes, plus accrued and unpaid interest up to, but excluding the Redemption Date.

On June 10, 2025 (the Redemption Date), the New Notes were redeemed in full at a price equal to 100% of the aggregate principal amount of the New Notes, plus accrued and unpaid interest up to, but excluding the Redemption Date.

We regularly evaluate market conditions, our liquidity profile and various financing alternatives to enhance our capital structure.

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We cannot provide any assurance as to if or when we will consummate any such transactions or the terms of any such transaction.

On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $100 million over the next 24 months.

On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $100 million and expires in February 2027.

Under the program, we may repurchase shares of common stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions and 10b5-1 trading plans.

During the three and six months ended June 30, 2025, we repurchased in open-market transactions and retired approximately 0.7 million and 0.8 million shares of our common stock for an aggregate of $5.1 million and $6.6 million, or an average price per share of $7.87 and $8.04.

We believe cash generated by operating activities, available financing sources, and borrowings under the Revolving Credit Agreement, cash on hand, and planned proceeds from a sale of our P&HS segment, will be sufficient to fund our working capital needs, capital expenditures, long-term strategic growth, payments under long-term debt and lease arrangements, debt repurchases, share repurchases and other cash requirements.

Subsequent to the contemplated sale of our P&HS segment we do not expect the Receivables Sale Program to continue in its existing form.

During the nine months ended September 30, 2025, we repurchased in open-market transactions and retired 826 thousand shares of our common stock for an aggregate of $6.6 million, or an average price per share of $8.04.

We believe cash generated by operating activities, available financing sources, and borrowings under the Revolving Credit Agreement, cash on hand, and planned proceeds from the sale of our P&HS segment, will be sufficient to fund our working capital needs, capital expenditures, payments under long-term debt and lease arrangements, debt repurchases, share repurchases and other cash requirements.

Subsequent to the sale of our P&HS segment we expect to amend the Receivables Sale Program to expand sales of our Patient Direct receivables.

While we believe that we will have the ability to meet our financing needs in the foreseeable future, changes in economic conditions may impact (i) the ability of financial institutions to meet their contractual commitments to us, (ii) the ability of our customers and suppliers to meet their obligations to us or (iii) our cost of borrowing.

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associated with the P&HS segment, which is reported under discontinued operations and assets held for sale.

Our cash and cash equivalents held by our foreign subsidiaries subject to repatriation totaled $16 million and $22 million at June 30, 2025 and December 31, 2024 and is reflected in discontinued operations and assets held for sale.

As of June 30, 2025, we are permanently reinvested in our foreign subsidiaries.

Our cash and cash equivalents held by our foreign subsidiaries subject to repatriation totaled $13 million and $22 million at September 30, 2025 and December

31, 2024 and is reflected in discontinued operations and assets held for sale.

As of September 30, 2025, we are permanently reinvested in our foreign subsidiaries.

Contractual Obligations

For disclosure of material contractual obligations, see our Annual Report on Form 10-K for the year ended December 31, 2024 and Note 15 in the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the period ended on June 30, 2025.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see our Annual Report on Form 10-K for the year ended December 31, 2024 and Note 17 in the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the period ended on June 30, 2025.

Forward-looking Statements

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Such forward-looking statements involve known and unknown risks, including, but not limited to:

● our ability to successfully complete a transaction related to the contemplated sale of our Products & Healthcare Services segment;

● our ability to successfully complete the anticipated sale of our Products & Healthcare Services segment;

● increasing competitive and pricing pressures in the marketplace;

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● our ability to engage in transactions that may be limited by the restrictive covenants in our credit facilities and existing notes;

● our ability to comply with environmental, health and safety regulations;

● the risk that information systems are interrupted or damaged or fail for any extended period of time, that new information systems are not successfully implemented or integrated, or that there is a data security breach in our information systems or a third party’s information systems that impacts our business;

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● volatility in the price of our common stock and securities;

● other factors detailed from time to time in the reports we file with the SEC, including those described in “Item 1A.

Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024 as amended and supplemented by the risk factors set forth in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 in “Item 1A.

● o ther factors detailed from time to time in the reports we file with the SEC, including those described in “Item 1A.

Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024 as amended and supplemented by the risk factors set forth in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2025 and June 30, 2025 in “Item 1A.

Risk Factors” and below in “Item 1A.

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Certain quantitative and qualitative market risk disclosures are described in our Annual Report on Form 10-K for the year ended December 31, 2024.

Through June 30, 2025, there have been no material changes in the quantitative and qualitative market risk disclosures described in such Annual Report.

Through September 30, 2025, there have been no material changes in the quantitative and qualitative market risk disclosures described in such Annual Report.

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 2. Management’s Discussion and Analysis