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Item 1A. Risk Factors

2026-02-20 compared with 2025-02-28 · 168 added, 288 removed, 330 unchanged (58% of the section changed)

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Operational Risks

Risks Related to the Sale of our Products & Healthcare Services business

Industry and Economic Risks

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Operational Risks

● We have concentration in and dependence on certain healthcare provider customers, Group Purchasing Organizations, and Payors.

● Our failure to establish and maintain relationships with hospital and physician referral sources may cause our revenue to decline.

● Possible changes in customer and product mix could have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources, and liquidity.

● Our business is dependent on certain significant suppliers.

● Our operations depend on the proper financial functioning of information systems, and our business or results of operations could be adversely affected if we experience a cyberattack or other systems breach or failure.

● An interruption in the ability of our business to manufacture products or the proper functioning of critical facilities and distribution networks may have a material adverse effect on our business and operations.

● Our capitation arrangements may prove unprofitable if actual utilization rates exceed our assumptions.

● Our ability to attract and retain talented and qualified teammates is critical to our success and competitiveness.

● We cannot assure you that the potential sale of the Products & Healthcare Services segment will be completed;

and there may be negative impacts on our business, financial results, and operations.

● We cannot assure you that the proposed acquisition of Rotech (Rotech Acquisition) will be completed.

● We may fail to realize the anticipated benefits of the Rotech Acquisition or those benefits may take longer to realize than expected.

We may also encounter significant difficulties in integrating the Rotech business into our operations.

● We and the Rotech business will be subject to business uncertainties while the Rotech Acquisition is pending that could adversely affect our business and the Rotech business.

● The pendency of the Rotech Acquisition could adversely affect our business, financial results, and operations.

● Our inability to adequately integrate acquisitions could have a material adverse effect on our operations.

● Our operations involve the storage, transportation and provision of compressed and liquid oxygen, which carries an inherent risk of rupture or other accidents with the potential to cause substantial loss.

● Our goodwill may become further impaired, which would require us to record a significant charge to earnings in accordance with generally accepted accounting principles.

● Our concentration in and dependence on certain Payors.

● Our failure to maintain our relationships with hospital and physician referral sources may cause revenue decline.

● Changes in customer and product mix could materially adversely affect our financial condition and results of operations.

● Our business dependence on certain significant suppliers.

● Our operations depend on proper functioning of information systems;

and a cyberattack or systems breach could adversely affect business.

● The recent termination of our contracts with a large commercial payor could negatively impact our financial condition and liquidity.

● A CMS determination reducing reimbursement qualification for non-invasive ventilation products could negatively impact our financial results.

● Our ability to attract and retain talented teammates is critical to our success.

● Our inability to adequately integrate acquisitions could materially adversely affect operations.

● The storage, transportation and provision of compressed and liquid oxygen carries inherent risk of rupture or accidents.

● Our goodwill may become further impaired, requiring significant charge to earnings.

Risks Related to the Sale of our Products & Healthcare Services Business

● The sale of the P&HS business may negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.

● We are required to provide transitional services which may divert the management’s attention and harm our business.

● We are dependent on the successful execution of transitional services by third party.

● Certain of our contracts were transferred or may need to be transferred or replaced and the failure to obtain replacements could increase our expenses.

● The sale of P&HS assets could negatively impact business, and the retained liabilities could adversely affect our financial results.

Industry and Economic Risks

● We face increasing competition, accelerating pricing pressure and changes in technology.

● An inability to obtain key components, raw materials or manufactured products from third parties in a timely and cost-effective manner, or a material disruption in our supply chain, may have a material adverse effect on our business.

● Uncertainty about current and future economic conditions and other adverse changes in general political conditions may adversely affect demand for our products and services and collectability of our accounts receivable.

● Our Products & Healthcare Services segment is exposed to price fluctuations of key commodities, which may negatively impact our results of operations and cash flows.

● Uncertainty about economic conditions and adverse political changes may affect demand for our products, services and our accounts receivable collectability.

● Changing conditions in the U.S.

healthcare industry may impact our results of operations and cash flows.

● Our profitability and cash flows may vary based on the impacts of rising inflationary pressures.

healthcare industry may impact the results of our operations and cash flows.

Litigation & Regulatory Risks

● We are subject to stringent regulatory and licensing requirements, and we have been, are and could become the subject of federal and state investigations and compliance reviews.

● We must obtain clearance or approval from appropriate regulatory authorities prior to consummating transactions of certain healthcare related businesses.

● We must obtain clearance or approval from the appropriate regulatory authorities prior to introducing a new product or modification to an existing product.

The regulatory clearance process may result in substantial costs, delays and limitations on the types and uses of products we can bring to market, any of which could have a material adverse effect on our business.

● Our failure to comply with regulatory requirements or receive regulatory clearances or approvals for our medical gas facilities, products or operations could adversely affect our business.

● Our business may be adversely affected if we are unable to adequately establish, maintain, protect and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of such rights.

● We may become subject to litigation, investigations, claims and other legal proceedings brought by regulatory agencies, third parties, or individuals.

● We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with the provision of healthcare services, and the products that we source, assemble, manufacture and sell which can be costly and disruptive to our business.

● We could be subject to adverse changes in the tax laws or challenges to our tax positions.

● Audits by tax authorities could result in additional tax payments for prior periods, and tax legislation could materially adversely affect our financial results and tax liabilities.

● Our aspirations, goals and disclosures related to ESG matters expose us to numerous risks, including risks to our reputation and stock price.

● Our amended and restated bylaws designates the U.S.

District Court for the Eastern District of Virginia as the exclusive forum for certain litigation that may be initiated by stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

● We are subject to stringent regulatory and licensing requirements;

and potential federal and state investigations and compliance reviews.

● We must obtain regulatory clearance prior to consummating certain healthcare transactions.

● Our failure to comply with regulatory requirements or receive clearances or approvals for our medical gas facilities could adversely affect our business.

● Our business may be adversely affected if we are unable to establish, maintain, protect and enforce intellectual property rights.

● We may become subject to litigation, investigations, claims and legal proceedings.

● We could be subject to adverse tax law changes, challenges to tax positions and audits resulting in additional payments.

● Our ESG-related aspirations, goals and disclosures expose us to risks including reputational and stock price risks.

● Our amended bylaws designate U.S.

District Court for Eastern District of Virginia as the exclusive forum for certain litigation, which could limit our stockholders’ ability to obtain favorable judicial forum.

Risks Related to Our Debt

● We may not be able to generate sufficient cash to service our debt and other obligations.

● We may not be able to refinance, extend or repay our substantial indebtedness which would have a material adverse effect on our financial condition.

● Our credit facilities and our existing notes have restrictive covenants that could limit our financial flexibility.

● Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

● Despite current indebtedness levels, we will incur substantially more debt to complete the Rotech Acquisition.

● Despite current indebtedness levels, we may continue to incur indebtedness in the future, and the amount of that additional indebtedness may be substantial, which could further exacerbate the risks described herein.

● We may not be able to refinance, extend or repay our substantial indebtedness.

● We may not be able to generate sufficient cash to service debt and other obligations.

● Our credit facilities and existing notes have restrictive covenants that could limit financial flexibility.

● Our variable rate indebtedness subjects us to interest rate risk.

● We may continue to incur additional substantial indebtedness in the future.

General Risk Factors

● Our continued success is substantially dependent on positive perceptions of our reputation.

● We are subject to risks related to public health crises, future outbreaks of health crises or other adverse public health developments.

● The market price for our common stock and debt have been, and may continue to be, highly volatile.

● Our global operations increase the extent of our exposure to the economic, political, currency, regulatory and other risks of international operations.

● We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.

● We are subject to risks related to public health crises and future outbreaks.

● The market price for our common stock and debt have been and may continue to be volatile.

● We may be adversely affected by global climate change or legal, regulatory or market responses to such change.

Operational Risks

We have concentration in and dependence on certain healthcare provider customers, Group Purchasing Organizations, and Payors.

In 2024, although no single customer accounted for 5% of our consolidated net revenue, our top ten customers in the U.S.

represented approximately 23% of our consolidated net revenue.

In addition, in 2024, approximately 65% of our consolidated net revenue was from sales to member hospitals under contract with our largest GPOs:

Vizient, Premier and HPG.

We could lose a significant healthcare provider customer or GPO relationship if an existing contract expires without being replaced or is terminated by the customer or GPO prior to its expiration.

Although the termination of our relationship with a given GPO would not necessarily result in the loss of the member hospitals as customers, any such termination of a GPO relationship, or a significant individual healthcare provider customer relationship or Payor, could have a material adverse effect on our results of operations, financial condition and cash flows.

In 2024, although no single Payor accounted for 10% of our consolidated net revenue, the largest Payor, with which we have multiple contracts, represented approximately 22% of our Patient Direct net revenue.

The medical products industry is subject to a multi-tiered costing structure, which can vary by manufacturer and/or product.

Under this structure, certain institutions can obtain more favorable prices for medical products than we are able to obtain.

The multi-tiered costing structure continues to expand as many large integrated healthcare providers and others with significant purchasing power, such as GPOs, demand more favorable pricing terms.

Additionally, the formation of new provider networks and GPOs may shift purchasing decisions to entities or persons with whom we do not have a historical relationship.

This may threaten our ability to compete effectively, which could in turn negatively impact our financial results.

Although we are seeking to obtain similar terms from manufacturers to obtain access to lower prices demanded by GPO contracts or other contracts, and to develop relationships with provider networks and new GPOs, we cannot assure you that such terms will be obtained or contracts will be executed.

We have concentration in and dependence on certain Payors.

During the year ended December 31, 2025, our two largest commercial Payors represented approximately 23% and 14% of our net revenue, derived from multiple separately managed contracts.

Revenue reimbursed under arrangements with Medicare and state Medicaid programs was approximately 19% of our net revenue for the year ended December 31, 2025.

A commercial Payor, with which we have multiple separately managed contracts, has terminated, or is in the process of terminating, certain of our contracts with them .

The terminated agreements reflected $322 million or 12% of our net revenue, including $231 million of capitation revenue, which represents nearly all of our capitation revenue, for the year ended December 31, 2025.

Refer to the risk factor titled, “The recent contract termination from a large commercial Payor could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity risk” below for additional information.

Changes in a significant individual Payor relationship could have a material adverse effect on our financial condition, results of operations, cash flows, capital resources and liquidity.

Our failure to establish and maintain relationships with hospital and physician referral sources may cause our revenue to decline.

We do not have contracts or exclusive arrangements with most hospitals or physicians for our Patient Direct segment.

Instead, we attempt to work closely with hospitals and physicians to accept discharges and referrals of their patients who require our services.

Therefore, the success of our Patient Direct segment is significantly dependent on referrals from hospital and physician sources.

If we are unable to successfully establish new referral sources and maintain strong relationships with our current referral sources, if there is an actual or perceived decrease in the quality of service and care levels we provide, or if efforts to increase the skill level and effectiveness of our sales force fail, our revenues may decline.

We do not have contracts or exclusive arrangements with most hospitals or physicians, but we attempt to work closely with hospitals and physicians to accept discharges and referrals of their patients who require our services.

Therefore, our success is significantly dependent on referrals from hospital and physician sources.

If we are unable to

successfully establish new referral sources and maintain strong relationships with our current referral sources, if there is an actual or perceived decrease in the quality of service and care levels we provide, or if efforts to increase the skill level and effectiveness of our sales force fail, our revenues may decline.

In addition, our relationships with referral sources are subject to federal and state healthcare laws such as the U.S.

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Our revenues are determined by a number of factors, including mix of customers, the rates of payment among customers and the mix of our products and services provided.

A shift towards customers with lower prices, or from higher gross margin products to lower gross margin products, would reduce our gross profits.

A shift towards customers with lower compensation, or from higher gross margin products to lower gross margin products, would reduce our gross profits.

Changes in the mix of our customers, products and services provided and payment methodologies could have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity.

Our business is dependent on certain significant suppliers.

In our Products & Healthcare Services segment in the U.S., we distribute products from approximately 1,000 suppliers and are dependent on these suppliers for the continuing supply of products.

In 2024, sales of products of our ten largest domestic suppliers accounted for approximately 37% of consolidated net revenue.

No sales of products of any individual suppliers exceeded 10% of our consolidated net revenue for 2024.

We rely on suppliers to provide agreeable

purchasing and delivery terms and performance incentives.

Our ability to sustain adequate operating income has been, and will continue to be, dependent upon our ability to obtain favorable terms and incentives from suppliers, as well as suppliers continuing use of third-party distributors to sell and deliver their products.

A change in terms by a significant supplier, the decision of such a supplier to distribute its products directly to healthcare providers rather than through third-party distributors, or a key supplier’s failure to sell and deliver us products necessary to meet our customers’ demands could have a material adverse effect on our results of operations, financial condition and cash flows.

In addition, for quality assurance or cost effectiveness, we have purchased from sole suppliers certain components and raw materials such as polymers used in our products, and we expect to continue to purchase these components and raw materials from these sole suppliers.

Although there are other sources in the marketplace for these items, we may not be able to quickly establish additional or replacement sources for certain components or materials due to regulations and requirements of the U.S.

Food and Drug Administration (FDA) and other regulatory authorities regarding the manufacture of our products.

The loss of any sole supplier or any sustained supply interruption that affects the ability to manufacture or distribute our products in a timely or cost-effective manner could have a material adverse effect on our business, results of operations, financial condition and cash flows.

In our Patient Direct segment, we currently rely on a relatively small number of suppliers to provide us with the majority of our patient service equipment and supplies for our home healthcare business.

We currently rely on a relatively small number of suppliers to provide us with the majority of our patient service equipment and supplies for our home healthcare business.

During the year ended December 31, 2025, our three largest suppliers contributed 16%, 14% and 11% of our purchases collectively accounting for approximately 40%.

From time to time, we also enter into certain exclusive arrangements with suppliers for the provision of patient service equipment and supplies.

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We often use suppliers selectively for quality and cost reasons.

Significant price increases, or disruptions in the ability to obtain such equipment and supplies from existing suppliers, such as the disruptions that were associated with the Philips Respironics recall as described in Management’s Discussion and Analysis of Financial Condition and Results of Operations, may reduce our income and could force us to use alternative suppliers.

Significant price increases, or disruptions in the ability to obtain such equipment and supplies from existing suppliers, such as the disruptions that were associated with the Philips Respironics recall as described in Management’s Discussion and Analysis of Financial Condition and Results of Operations, which primarily affected our 2024 results, may reduce our income and could force us to use alternative suppliers.

Any change in the existing suppliers we use could cause delays in the delivery of products and possible losses in revenue, which could adversely affect our results of operations and cash flows.

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Our operations depend on the proper functioning of information systems, and our business or results of operations could be adversely affected if we experience a cyberattack or other systems breach or failure.

We and our external service providers use and rely on information systems to perform our business operations including receiving, processing, analyzing, and managing data in distributing thousands of products to customers from numerous distribution centers.

Our business depends on the proper functioning and availability of computer systems and networks to meet operational needs.

These systems are also relied upon for receiving and filling orders for customers, billings to and collections from customers, the purchase of and payment for inventory and related transactions from our suppliers, and the secure electronic transmission, processing, storage, and hosting of sensitive information, including protected health information and other types of personal information, confidential financial information, proprietary information, and other sensitive information relating to our customers, company, and teammates.

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As described in Item 1C, we have an integrated framework to prevent, identify and mitigate risks related to cybersecurity attacks on our systems.

Despite physical, technical, and administrative security measures by us and our external service providers and consultants, our technology systems and operations have in the past and may be in the future subject to cyberattacks from sources beyond our control.

Despite physical, technical, and administrative security measures by us and our external service providers and consultants, our technology systems and operations have been subject to cyberattacks in the past and may be subject to cyberattacks in the future from sources beyond our control.

In recent years, cyberattacks in our industry have increased and become more sophisticated.

For instance, we expect threat actors may use more advanced tools and techniques, such as artificial intelligence (AI), that are designed to circumvent security controls.

As a result, the risk of a cyberattack on our systems has increased.

result, the risk of a cyberattack on our systems has increased.

We do not oversee or actively monitor cybersecurity risks related to our external service providers and we rely on these providers to inform us of risks, breaches or cyberattacks.

include actual or attempted unauthorized access, tampering, malware insertion, ransomware attacks, or other system integrity events.

Cyberattacks include actual or attempted unauthorized access, tampering, malware insertion, ransomware attacks, or other system integrity events.

A future cybersecurity incident could involve a material data breach or other material impact to the operations of our technology systems, or the third party service providers on which we rely, which could result in failure of our systems to operate properly for an extended period of time, litigation or regulatory action, loss of customers or revenue, and increased expense, any of which might have a material adverse impact on our business operations, reputation, our growth and strategic initiatives, results of operations, financial condition and cash flows.

An interruption in the ability of our business to manufacture products or the proper functioning of critical facilities and distribution networks may have a material adverse effect on our business and operations.

We manufacture our products in facilities in the U.S., Mexico, Honduras, Thailand and Ireland.

If one or more of these facilities experiences damage, or if manufacturing capabilities are otherwise limited or stopped due to quality, regulatory or other reasons, including, but not limited to, pandemics;

severe weather, fires or other natural disasters;

terrorism or geopolitical events (such as the Russia-Ukraine conflict or a renewed conflict between Israel and Hamas or in the surrounding region);

prolonged power or equipment failures;

labor disputes or strikes;

unsuccessful imports/exports of products resulting from trade restrictions or tariffs, or supply chain transportation disruptions, it may not be possible to timely manufacture the relevant products at required levels or at all.

A reduction or interruption in any of these manufacturing processes could have a material adverse effect on our ability to offer services, distribute products and conduct our business.

To the extent that we are unable, or it is not financially feasible, to mitigate the likelihood or potential impact of such events, or to manage effectively such events if they occur, there could be a material adverse effect on our business, results of operations, financial condition and cash flows.

Our capitation arrangements may prove unprofitable if actual utilization rates exceed our assumptions.

From time to time, we enter into capitation arrangements with commercial Payors pursuant to which they agree to pay us a set amount (on a per member per month basis for a defined patient population) without regard to the actual services provided.

We negotiate the contractual rates in these arrangements with Payors based on assumptions regarding average expected utilization of services.

If actual utilization rates exceed our assumptions, the profitability of such arrangements may be diminished.

Moreover, we may be obligated to perform under such capitation arrangements even if the contractual reimbursement rates are insufficient to cover our costs based on actual levels of utilization.

The recent termination of certain contracts commercial Payor could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.

A commercial Payor, with which we have multiple separately managed contracts, has terminated, or is in the process of terminating, as applicable certain of our contracts with them .

The termination resulted in minimal impacts to our operating income for the year ended December 31, 2025, as the transitions of agreements and services started late in the fourth quarter of 2025.

While the 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.

If we are unable to win new business to substitute this loss, effectively execute cost reduction actions, or maintain volume-based supplier discounts, the loss of this contractual relationship could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.

A determination from the Centers for Medicare and Medicaid Services (CMS) would reduce reimbursement qualification for non-invasive ventilation products, which could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.

In June 2025, CMS released a final national coverage determination for non-invasive positive pressure ventilation (NIPPV) in the home for the treatment of chronic respiratory failure due to chronic obstructive pulmonary disease (COPD).

This determination may make qualifying for NIPPV more difficult for new COPD patients seeking this treatment, as patients must meet a number of criteria before qualifying for coverage of an initial six-month period for respiratory assist devices and home mechanical ventilation.

This CMS determination could adversely affect our business, results of operations, and financial condition.

Our ability to attract and retain talented and qualified teammates is critical to our success and competitiveness.

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Competition among potential employers, labor shortages, and inflationary pressures might result in increased salaries, benefits or other teammate-related costs, or in our failure to recruit and retain teammates.

We may experience sudden loss of key personnel due to a variety of causes, including illness, and must adequately plan for succession of key executive roles.

We may experience sudden loss of key personnel due to a variety of causes, including competitive recruitment, retirement, illness, death, or disability, and must adequately plan for succession of key executive roles.

Teammates might not successfully transition into new roles.

If we are unable to recruit or retain a sufficient number of qualified employees, or if the costs of compensation or employee benefits increase substantially, our ability to deliver services effectively could suffer and our profitability would likely be adversely affected.

In addition, union organizing activities have occurred in the past and may occur in the future, and the adverse impact of unionization and organizing activities on our costs and operating results could be substantial.

We cannot assure you that the potential sale of the Products & Healthcare Services segment will be completed;

and there may be negative impacts on our business, financial results, and operations.

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

This process is ongoing and there are a number of risks and uncertainties including the failure to complete any transaction.

This could cause disruptions and create uncertainty surrounding our business and affect our relationships with our customers, suppliers and teammates.

Although we intend to take actions to reduce any adverse effects, these uncertainties could cause customers, suppliers and others that deal with us to seek to change existing business relationships.

In addition, teammate retention could be negatively impacted.

If key teammates

depart because of concerns relating to the uncertainty, our business could be harmed.

Investor perceptions about the announcement could have a negative impact on the trading prices of our common stock and debt.

We do not intend to disclose developments or provide updates on the progress or status of the potential sale until deemed further disclosure is appropriate or required.

Accordingly, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of the Company could cause our stock price to fluctuate significantly.

We cannot assure you that the proposed acquisition of Rotech (Rotech Acquisition) will be completed.

There are a number of risks and uncertainties relating to the Rotech Acquisition.

For example, the Rotech Acquisition may not be completed, or may not be completed in the timeframe, on the terms or in the manner currently anticipated, as a result of a number of factors, including, among other things, the failure to satisfy one or more of the conditions to closing in the Agreement and Plan of Merger.

There can be no assurance that the conditions to closing of the Rotech Acquisition will be satisfied or waived or that other events will not intervene to delay or result in the failure to close the Rotech Acquisition.

The Agreement and Plan of Merger may be terminated by the parties thereto under certain circumstances, including, without limitation, if the Rotech Acquisition has not been completed by July 22, 2025.

Any delay in closing the Rotech Acquisition or a failure to close the Rotech Acquisition could have a negative impact on our business and the trading prices of our common stock and debt.

We may fail to realize the anticipated benefits of the Rotech Acquisition or those benefits may take longer to realize than expected.

We may also encounter significant difficulties in integrating the Rotech business into our operations.

Our ability to realize the anticipated benefits of the Rotech Acquisition will depend, to a large extent, on our ability to integrate the Rotech business into ours.

We may devote significant management attention and resources preparing for and integrating the business practices and operations of the Rotech business with ours.

This integration process may be disruptive to our and the Rotech businesses, and, if implemented ineffectively or if it takes longer or is more costly than expected, could restrict realization of the expected benefits.

Potential difficulties we may encounter in the integration process include:

● Inability to successfully combine operations in a manner that would result in the anticipated benefits of the Rotech Acquisition in the timeframe currently anticipated or at all;

● Complexities associated with managing the expanded operations;

● Integrating personnel;

● Creation of uniform standards, internal controls, procedures, policies and information systems;

● Unforeseen increased expenses, delays or regulatory issues associated with integrating the operations;

● Performance shortfalls as a result of the diversion of management’s attention caused by the integration.

Even if we are able to integrate the Rotech business successfully, this integration may not result in the realization of the full benefits that we currently expect, nor can we give assurances that these benefits will be achieved when expected or at all.

Moreover, the integration of the Rotech business may result in unanticipated problems, expenses, liabilities, regulatory risks and competitive responses that could have material adverse consequences.

We and the Rotech business will be subject to business uncertainties while the Rotech Acquisition is pending that could adversely affect our business and the Rotech business.

Uncertainty about the effect of the Rotech Acquisition on teammates, customers and suppliers may have an adverse effect on us and the Rotech business.

Although we and Rotech intend to take actions to reduce any adverse effects, these uncertainties could cause customers, suppliers and others that deal with us and/or the Rotech business to seek to change existing business relationships.

In addition, teammate retention could be negatively impacted during the pendency of the Rotech Acquisition.

If key teammates depart because of concerns relating to the uncertainty and difficulty of the integration process, our business could be harmed.

The pendency of the Rotech Acquisition could adversely affect our business, financial results, and operations.

The announcement and pendency of the Rotech Acquisition could cause disruptions and create uncertainty surrounding our business and affect our relationships with our customers, suppliers and teammates.

In addition, we have diverted, and will continue to divert, significant management resources to complete the Rotech Acquisition, which could have a negative impact on our ability to manage existing operations or pursue alternative strategic transactions, which could adversely affect our business, financial condition and results of operations.

Investor perceptions about the terms or benefits of the Rotech Acquisition could have a negative impact on the trading prices of our common stock and debt.

In addition, employee union organizing activities have occurred in the past and may occur in the future, and the adverse impact of unionization and organizing activities on our costs and operating results could be substantial.

Our inability to adequately integrate acquisitions could have a material adverse effect on our operations.

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These risks could result in substantial losses due to personal injury or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage and may result in curtailment or suspension of our related operations.

If a significant accident or event occurs, it could adversely affect our business, financial position, results of operations, and cash flows.

If a significant accident or event occurs, it could adversely affect our business, financial condition, results of operations, and cash flows.

Additionally, corrective action plans, fines or other sanctions may be levied by government regulators who oversee the storage, transportation and provision of hazardous materials such as compressed or liquid oxygen.

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The testing required by GAAP involves estimates and judgments by management.

Although we believe our assumptions and estimates are reasonable and appropriate, any significant adverse changes in one or a combination of key assumptions, including, but not limited to, a further decrease in our market capitalization, an increase in the discount rate, a failure to meet our business plans or expected earnings and cash flows, unanticipated events and circumstances such as the loss of a contract with a significant customer, changes in assumptions about the duration and magnitude of increased supply chain expense, commodities costs or inflationary pressures and our planned efforts to mitigate such impacts, disruptions in the supply chain, estimated demand and selling prices for personal protective equipment (PPE) or other products, a decrease in the terminal growth rate, increases in tax rates (including potential tax reform) or a significant change in industry or economic trends, may affect the accuracy or validity of such estimates and may result in goodwill impairment.

result of an interim impairment test performed during the three months ended December 31, 2024, we recorded a goodwill impairment charge in our Apria reporting unit of $307 million.

No impairment charges to goodwill were recorded in 2023 or 2022.

Although we believe our assumptions and estimates are reasonable and appropriate, any significant adverse changes in one or a combination of key assumptions, including, but not limited to, a further decrease in our market capitalization, an increase in the discount rate, a failure to meet our business plans or expected earnings and cash flows, unanticipated events and circumstances such as the loss of a contract with a significant Payor, changes in assumptions about the duration and magnitude of increased supply chain expense, commodities costs or inflationary pressures and our planned efforts to mitigate such impacts, disruptions in the supply chain, a decrease in the terminal growth rate, increases in tax rates (including potential tax reform) or a significant change in industry or economic trends, may affect the accuracy or validity of such estimates and may result in goodwill impairment.

As a result of an interim impairment test performed during the three months ended December 31, 2024, we recorded a goodwill impairment charge in our Apria reporting unit of $307 million.

No impairment charges to goodwill were recorded in continuing operations 2025 or 2023.

We may be required to record a material charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill is determined, which charge could adversely affect our results of operations.

Risks Related to the Sale of our Products & Healthcare Services Business

We have sold our P&HS business , and there may be negative impacts on our financial condition, results of operations, cash flows, capital resources and liquidity.

On December 31, 2025, we completed the P&HS Sale after which we are a significantly smaller, less diversified company with a single segment.

We may be more vulnerable to changing market conditions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

In addition, the diversification of revenue, costs, and cash flows has diminished, such that our results of operations, cash flows, working capital, effective tax rate, and financing requirements may be subject to increased volatility and our ability to fund capital expenditures and investments and service debt may be diminished.

We may be unable to achieve the full strategic and financial benefits that we believe we may be able to achieve through the sale of our P&HS business, or such benefits may be delayed or may never occur at all.

For example, we believe the sale could provide the following benefits, among others:

● directing capital toward the higher growth and higher margin Accendra Health business;

● applying proceeds from the sale to repay certain of our indebtedness.

We may not achieve these or other anticipated benefits for a variety of reasons, including, among others:

(i) the possibility that we may not benefit as expected from the increased focus on our Accendra Health business and simpler business model made possible by the sale and (ii) the risk of litigation, injunctions or other legal proceedings relating to the sale If we fail to achieve some or all of the benefits we expect to achieve as a result of the sale of our P&HS business, or if such benefits are delayed, our business, results of operations, financial condition and cash flows could be materially and adversely affected.

The sale of our P&HS business has resulted and will continue to result in significant separation costs, and we are obligated to reimburse Purchaser for the first $65 million of such costs subsequent to the completion of the sale, subject to conditions described in Note 3.

See Note 3 “discontinued operations” in the Notes to Consolidated Financial Statements for additional information.

Furthermore, the sale process could cause disruptions and create uncertainty surrounding our business and affect our relationships with our customers, suppliers and teammates.

Although we have taken actions to reduce any adverse effects, these uncertainties could cause customers, suppliers and others that deal with us to seek to change existing business relationships.

In addition, teammate retention could be negatively impacted.

If key teammates depart because of concerns relating to the uncertainty, our business could be harmed.

Additionally, until the market has fully analyzed our valuation following the sale of the P&HS business, the price of our common stock may fluctuate.

Furthermore, the sale has decreased the diversification of our revenues, costs and cash flows, and so our operations, cash flows, working capital, effective tax rate and financing requirements may be subject to increased volatility, and our ability to fund capital expenditures and investments, pay dividends and meet debt obligations and other liabilities may be diminished.

In connection with the sale of the P&HS business, we are required to provide certain transitional services which may divert management’s attention and harm our business.

In connection with the P&HS Sale, we are required to provide certain services to the Purchaser for a transitional period.

Such transitional services arrangements may be in exchange for fees that do not fully compensate us for the cost of providing such transitional services and may also divert management’s attention and resources, away from the existing business, which could harm our business.

In connection with the sale of the P&HS business, we are receiving certain transitional services and are dependent on the successful execution of these services by a third party.

In connection with the P&HS Sale, we are receiving certain services from the Purchaser for a transitional period.

We are dependent on the Purchaser to provide us with these services over a transitional period.

If we are not able

to successfully transition off of these transitional services timely, it could negatively impact our ability to achieve our strategic objectives and could have a material adverse effect on our results of operations or financial condition.

Certain contracts used in our business were transferred or may need to be transferred or replaced in connection with the sale of the P&HS business and any failure to obtain such replacement contracts could increase our expenses or otherwise adversely affect our results of operations.

In connection with the sale of the P&HS business, we have been required and will be further required to replace certain shared contracts.

It is possible that, in connection with the replacement process, some parties may seek more favorable contractual terms from us.

If we are unable to obtain such replacement contracts, the loss of these contracts could increase our expenses or otherwise materially adversely affect our business, results of operations and financial condition.

The sale of certain assets associated with the P&HS business could negatively impact our business, and retained liabilities from businesses or assets that we have sold could adversely affect our financial results.

The asset sales in connection with the P&HS business pose risks and challenges that could negatively impact our business, including retained liabilities related to divested businesses and sold assets, obligations to indemnify buyers against contingent liabilities and potential disputes with buyers.

If post-completion liabilities and obligations related to divestitures and asset sales are substantial and exceed our expectations, our financial position, results of operations and cash flows could be negatively impacted.

Any divestiture or asset sale may result in a dilutive impact to our future earnings if we are unable to offset the dilutive impact from the loss of revenue and profits associated with the divestiture or sold asset, as well as significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations or financial condition.

Industry and Economic Risks

We face increasing competition, accelerating pricing pressure and changes in technology.

The medical/surgical supply distribution industry in which our Products & Healthcare Services segment operates is highly competitive and characterized by pricing and margin pressure for our business.

We compete with other national distributors and a number of regional and local distributors, as well as customer self-distribution models and, to a lesser extent, certain outsourced logistics companies.

In the U.S., several of our distribution partners and GPOs directly compete with us by sourcing their own brands.

Competitive factors within the medical/surgical supply distribution industry include market pricing, the relative bargaining power of provider networks and GPOs, total delivered product cost, product availability, the ability to fill and invoice orders accurately, delivery time, range of services provided, efficient product sourcing, inventory management, information technology, electronic commerce capabilities, and the ability to meet customer-specific requirements.

Our success is dependent on the ability to compete on the above factors, while managing internal costs and expenses.

The home healthcare industry in which our Patient Direct segment operates is also intensely competitive and highly fragmented.

The home healthcare industry in which we operate is intensely competitive and highly fragmented.

There are a large number of providers, including hospital systems, physician specialists and sleep labs, industrial gas manufacturers, home healthcare agencies, health maintenance organizations, and alternative treatment providers.

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Such unanticipated changes could cause us to incur increased capital expenditures and change strategies and could have a material adverse effect on our business, results of operations, financial condition and cash flows.

An inability to obtain key components, raw materials or manufactured products from third parties in a timely and cost-effective manner, or a material disruption in our supply chain, may have a material adverse effect on our business.

We depend on the availability of various components, raw materials and manufactured products supplied by others for our operations.

If the capabilities of suppliers and third-party manufacturers are limited or stopped, due to quality, regulatory or other reasons, including pandemics;

severe weather, fires and natural disasters;

terrorism or geopolitical events (such as the Russia-Ukraine conflict or a renewed conflict between Israel and Hamas or in the surrounding region);

prolonged power or equipment failures;

strikes or labor disputes;

unsuccessful imports/exports of products as a result of shipping or trade restrictions or supply chain transportation disruptions, or other reasons, that could negatively impact our ability to manufacture or distribute our products and could lead to exposure to regulatory actions.

Any material interruption in our supply chain could materially adversely affect our business operations, results of operations, financial condition and cash flows.

Furthermore, the failure of third parties to timely deliver quality products to us may negatively impact our operations.

Disputes with significant suppliers, including disputes regarding pricing or performance, could adversely affect our ability to supply products to our customers and could materially adversely affect our results of operations, financial condition and cash flows.

Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from a single location or supplier, could adversely affect our business, results of operations, and cash flows, as well as require additional resources to restore our supply chain.

We have experienced, and may continue to experience, higher supply chain costs, particularly related to international freight and commodities.

Due to competitive dynamics and contractual limitations, we may be unable to pass along these cost increases through higher prices.

Short-term or sustained increases in demand for our products may exceed our production capacity or otherwise strain our supply chain.

These and other supply chain issues can increase our costs, disrupt or reduce our production, delay our product shipments, prevent us from meeting customer demand, damage our customer relationships, and could materially adversely affect our business operations, results of operations, financial condition and cash flows.

Uncertainty about current and future economic conditions and other adverse changes in general political conditions may adversely affect demand for our products and services and collectability of our accounts receivable.

Poor or deteriorating economic and political conditions in the U.S.

and the other countries in which we conduct business could adversely affect the demand for healthcare services and consequently, the demand for our products and services.

Poor or deteriorating economic and political conditions in the U.S could adversely affect the demand for healthcare services and consequently, the demand for our products and services.

Such change in demand may result in further inventory valuation adjustments.

Poor economic conditions also could lead our suppliers to offer less favorable terms of purchase to distributors, which would negatively affect our profitability.

Poor economic conditions also could lead our suppliers to offer less favorable terms, which would negatively affect our profitability.

Further, the potential decline in federal and state revenues that may result from a deterioration in economic and political conditions may create additional pressures to contain or reduce reimbursements for our services from Medicare, Medicaid and other government sponsored programs.

There can be no assurance that a company’s products or services will be considered cost-effective or that adequate third-party reimbursement will be available to enable a company to maintain price levels sufficient to realize profitability.

There can be no assurance that our products or services will be considered cost-effective or that adequate third-party reimbursement will be available to enable a company to maintain price levels sufficient to realize profitability.

Increases in job losses in the U.S.

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The bankruptcy, insolvency or other credit failure of one or more customers with substantial balances due to us could have a material adverse effect on our results of operations, financial condition and cash flows.

These and other possible

consequences of financial and economic decline could have a material adverse effect on our business, results of operations, financial condition and cash flows.

and certain larger global economies experienced inflation rates above Central Bank targets during 2024.

The Federal Reserve and other Central Banks raised interest rates during 2023 and 2024 and could do so again in the future.

These and other possible consequences of financial and economic decline could have a material adverse effect on our business, results of operations, financial condition and cash flows.

and global economies experienced elevated inflation rates significantly above Central Bank targets from 2021 through 2023, with inflation moderating but remaining above target levels through 2025.The Federal Reserve and other Central Banks raised interest rates during 2023 and 2024 and could do so again in the future.

The present conditions and state of U.S.

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Uncertainty about the effects of current and future economic and political conditions on us, our customers, suppliers and partners makes it difficult for us to forecast operating results and to make decisions about future investments.

Inflation has and may continue to materially impact the costs to source materials or produce and distribute products to customers.

Continued inflationary pressures could result in market pressures on our customers to reduce costs, which could impact our profitability and cash flows.

Additionally, there is uncertainty that we will be able to pass elevated costs onto customers in an effort to offset inflationary pressures, or that such increases may outpace the compensating inflation-based increase in Medicare payment rates, or any other rate increases we may receive.

Any significant downturn in the health of the general economy, or any recession, depression or other sustained adverse market event, including inflationary pressures, could have an adverse effect on our revenues and financial performance, resulting in impairment of assets.

Our Products & Healthcare Services segment is exposed to price fluctuations of key commodities, which may negatively impact our results of operations and cash flows.

Our Global Products division, which falls within our Products & Healthcare Services segment, relies on product inputs, such as polypropylene and nitrile, as well as other commodities, in the manufacture of its products.

Prices of these commodities are volatile and have fluctuated significantly in recent years, which may contribute to fluctuations in our results of operations and cash flows.

The ability to hedge commodity prices is limited.

Furthermore, due to competitive dynamics, we may be unable to pass along commodity-driven cost increases through higher prices.

If we cannot fully offset cost increases through other cost reductions, or recover these costs through price increases or surcharges, we could experience lower margins and profitability which could have a material adverse effect on our business, results of operations and cash flows.

Changing conditions in the U.S.

healthcare industry may impact our results of operations and cash flows.

A large percentage of our revenue is derived in the U.S.

We, along with our customers and suppliers, are subject to extensive federal and state regulations relating to healthcare as well as the policies and practices of the private healthcare insurance industry.

In recent years, there have been a number of government and private initiatives to reduce healthcare costs and government spending.

These changes have included an increased reliance on managed care;

These changes

have included an increased reliance on managed care;

consolidation of competitors, suppliers and customers;

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We expect the healthcare industry to continue to change significantly and these potential changes, which may include a reduction in government support of healthcare services, adverse changes in legislation or regulations, and further reductions in healthcare reimbursement practices, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our profitability and cash flows may vary based on the impacts of rising inflationary pressures.

Inflation has and may continue to materially impact the costs to source materials or produce and distribute finished goods to customers.

Continued inflationary pressures could result in market pressures on our customers to reduce costs, which could impact our profitability and cash flows.

Litigation & Regulatory Risks

We are subject to stringent regulatory and licensing requirements, and we have been, are and could become the subject of federal and state investigations and compliance reviews.

We are subject to stringent regulatory and licensing requirements, and we have been, are and in the future could become the subject of federal and state investigations and compliance reviews.

We are required to comply with extensive and complex laws and regulations at the federal, state and local government levels in the U.S.

and other countries where we operate.

We, and certain of our employees, also are required to hold permits and licenses and to comply with the operational and security standards of various governmental bodies and agencies.

Any failure to comply with these laws and regulations or any failure to maintain the necessary permits, licenses or approvals, or to comply with the required standards, could disrupt our operations and/or adversely affect our results of operations, financial condition and cash flows.

The manufacturing, labeling, and marketing related to our products are subject to an extensive regulatory approval process by the FDA and other regulatory agencies in the U.S.

The process for obtaining FDA and other required regulatory approvals is lengthy, costly, and uncertain.

There can be no guarantee that, even after such time and expenditures we will be able to obtain the necessary regulatory approvals or that the approved labeling will be sufficient for favorable marketing and promotional activities.

If we are unable to obtain these approvals in a timely fashion, or if after approval for marketing, a product is later shown to be ineffective or to have unacceptable side effects not discovered during testing, we may experience significant adverse effects, which in turn, could negatively affect our business.

Among the U.S.

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Such sanctions and damages could adversely affect our results of operations, financial condition and cash flows.

Our global operations are also subject to risks of violation of laws, including those that prohibit improper payments to and bribery of government officials and other individuals and organizations.

These laws include the U.S.

FCPA, the U.K.

Bribery Act and other similar laws and regulations in foreign jurisdictions, any violation of which could result in substantial liability and a loss of reputation in the marketplace.

Failure to comply with these laws also could subject us to civil and criminal penalties that could adversely affect our business, results of operations, financial condition and cash flows.

Our Patient Direct segment is a Medicare-certified supplier and participates in state Medicaid programs.

We are a Medicare-certified supplier and participates in state Medicaid programs.

Failure to comply with applicable standards and regulations could result in civil or criminal sanctions, including the loss of our ability to participate in Medicare, Medicaid and other federal and state healthcare programs.

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Regulations currently in place continue to evolve, and new laws in this area could further restrict our ability to collect, handle and maintain personal or patient information, or could require us to incur additional compliance costs, either of which could have an adverse impact on our results of operations and cash flows.

Violations of federal (such as HIPAA), state or foreign laws (such as the EU GDPR or U.K.

GDPR) concerning privacy and data protection could subject us to civil or criminal penalties, breach of contract claims, costs for remediation and harm to our reputation.

Violations of federal (such as HIPAA) and state laws concerning privacy and data protection could subject us to civil or criminal penalties, breach of contract claims, costs for remediation and harm to our reputation.

AI, particularly generative AI, is an emerging technology subject to a complex and evolving regulatory landscape at both the federal and state level.

Regulatory considerations surrounding AI in healthcare are still developing and many

regulatory agencies including the FDA are developing and implementing requirements related to the functionality, safety, efficacy, and privacy of AI and machine learning technologies.

Regulatory considerations surrounding AI in healthcare are still developing and many regulatory agencies including the FDA are

developing and implementing requirements related to the functionality, safety, efficacy, and privacy of AI and machine learning technologies.

The increased cost and difficulty with complying with such legal requirements, or a failure to do so, may have an adverse effect our business.

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The clarity and completeness of each patient medical file, some of which is the work product of physicians not employed by us, is essential to successfully challenging any payment denials.

Certain of our operations engage in Ethylene Oxide (EtO) sterilization of medical products either directly or indirectly through third-parties.

Certain of our former operations under the P&HS business engaged in Ethylene Oxide (EtO) sterilization of medical products either directly or indirectly through third-parties.

In the U.S., several regulators, including the EPA, the FDA, and agencies at the state and local level, play a role in regulating the use of EtO sterilization.

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Additionally, we have incurred, and may incur additional costs associated with defending EtO emissions litigation.

We have taken and will continue to take measures to comply with all applicable emissions regulations and to reduce emissions.

We have taken measures to comply with all applicable emissions regulations and to reduce emissions.

However, no assurance can be given that current or future legislative or regulatory action, or current or future litigation to which we may become a party, will not significantly increase the costs of conducting sterilization operations or curtail or eliminate the use of EtO in our operations.

Further, we could be liable for damages and fines as a result of legislative or regulatory action or litigation, which could have a material adverse effect on our financial condition, results of operations, cash flows, capital resources and liquidity.

Accordingly, our

arrangements and business practices may be the subject of government scrutiny or be found to violate applicable laws.

Accordingly, our arrangements and business practices may be the subject of government scrutiny or be found to violate applicable laws.

If federal or state government officials challenge our operations or arrangements with third parties that we have structured based upon our interpretation of these laws, rules, and regulations, such a challenge could potentially disrupt our business operations and we may incur substantial defense costs, even if we successfully defend our interpretation of these laws, rules, and regulations.

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The governmental authorities can, in some cases, delay or stop the proposed transaction from proceeding.

These laws may make certain jurisdictions less suitable for investments into healthcare businesses and may result in creased compliance costs, introduce delays to investment and divestment transactions, alter transaction terms and structures and ultimately impact the returns of such investments.

Refer to the ‘We cannot assure you that the Rotech Acquisition will be completed’ risk factor within ‘Operational Risks’ above for additional detail specific to the Rotech Acquisition.

We must obtain clearance or approval from the appropriate regulatory authorities prior to introducing a new product or a modification to an existing product.

In the U.S., before we can market a new product, or a new use of, or claim for, or significant modification to, an existing product, we generally must first receive clearance or approval from the FDA and certain other regulatory authorities.

Most major markets for medical products outside the U.S.

also require clearance, approval or compliance with certain standards before a product can be commercially marketed.

The process of obtaining regulatory clearances and approvals to market a medical product can be costly and time consuming, involve rigorous pre-clinical and clinical testing, require changes in products or result in limitations on the indicated uses of products.

We cannot assure you that these clearances and approvals will be granted on a timely basis, or at all.

In addition, once a medical product has been cleared or approved, a new clearance or approval may be required before it may be modified, its labeling changed or marketed for a different use.

Medical products are cleared or approved for one or more specific intended uses and promoting a device for an off-label use could result in government enforcement action.

Furthermore, a product approval or clearance can be withdrawn or limited due to unforeseen problems with the medical product or issues relating to its application.

The regulatory clearance and approval process may result in, among other things, delayed, if at all, realization of product net sales, substantial additional costs and limitations on the types of products we may bring to market or their indicated uses, any one of which could have a material adverse effect on our results of operations, financial condition and cash flows.

These laws may make certain jurisdictions less suitable for investments into healthcare businesses and may result increased compliance costs, introduce delays to investment and divestment transactions, alter transaction terms and structures and ultimately impact the returns of such investments.

Our failure to comply with regulatory requirements or receive regulatory clearances or approvals for our medical gas facilities, products or operations could adversely affect our business.

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The FDA and state authorities conduct periodic, unannounced inspections at medical gas facilities to assess compliance with the cGMP and other regulations.

We expend significant time, money, and resources in an effort to achieve substantial compliance with the cGMP regulations and other federal and state law requirements at

each of our medical gas facilities.

We expend significant time, money, and resources in an effort to achieve substantial compliance with the cGMP regulations and other federal and state law requirements at each of our medical gas facilities.

There can be no assurance, however, that these efforts will be successful and that our medical gas facilities will achieve and maintain compliance with federal and state laws and regulations.

Our failure to achieve and maintain regulatory compliance at our medical gas facilities could result in enforcement action, including warning letters, fines, product recalls or seizures, temporary or permanent injunctions, or suspensions in operations at one or more locations, as well as civil or criminal penalties, all of which could materially harm our business, financial condition, results of operations, cash flows, capital resources, and liquidity.

The medical gas products we manufacture and distribute and certain other products we distribute are subject to extensive regulation by the FDA and other federal and state governing authorities.

The medical gas products we distribute and certain other products we distribute are subject to extensive regulation by the FDA and other federal and state governing authorities.

Compliance with FDA, state, and other requirements regarding production, safety, quality, manufacturing, distribution and marketing is costly and time-consuming, and while we seek to be in full compliance, instances of non-compliance could arise from time to time.

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We may not be successful in receiving certification in the future.

Other potential product manufacturing-related risks include difficulties or delays in product manufacturing, sales, or marketing, which could affect future results through regulatory actions, shutdowns, approval delays, withdrawals, recalls, penalties, supply disruptions or shortages, reputational harm, product liability, and/or unanticipated costs.

Failure to comply with applicable regulatory requirements could result in administrative enforcement action by the FDA or state agencies, which may include any of the following:

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and criminal prosecution.

There is also a risk that we may not adequately implement sustainable processes and procedures to maintain regulatory compliance and to address future regulatory agency findings, should they occur.

There is also a risk that we may not adequately implement sustainable processes and procedures to maintain regulatory compliance and to address future regulatory agency

findings, should they occur.

The FDA may change its policies, adopt additional regulations or revise existing regulations, each of which could prevent or delay certification of our medical gases, or could impact our ability to market a device that was previously certified or cleared by the FDA.

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There is a risk that we could be subject to payment of additional wages, insurance and employment, and payroll-related taxes and sizeable statutory penalties negatively impacting our financial position, results of operations and cash flows.

In addition, our involvement in these matters and any related adverse rulings may result in increased costs and expenses, significant costs in defending such claims, even if groundless, reputational damage, cause us from time to time to significantly increase our legal expenses and/or modify our pay practices, all of which would likely have an adverse impact on our financial performance and profitability.

We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with the provision of healthcare services, and the products that we source, assemble, manufacture and sell which can be costly and disruptive to our business.

There is an inherent risk of liability in the provision of the services we provide and the design, assembly, manufacture and marketing of the medical products of the types we sell.

As participants in the healthcare industry, we are and expect to be periodically subject to lawsuits, some of which may involve large claims and significant costs to defend, such as mass tort or other class actions.

A number of factors could result in an unsafe condition or injury to, or death of, a patient with respect to the products that we source, assemble, manufacture or sell, including physician technique and experience in performing the relevant surgical procedure, component failures, manufacturing flaws, design defects or inadequate disclosure of product-related risks or information.

A successful claim in excess of, or not covered by, our insurance policies could have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity.

Our insurance policies are also subject to annual renewal and our insurance premiums could be subject to material increases in the future.

In addition to product liability claims and litigation, an unsafe condition or injury to, or death of, a patient associated with our products could lead to a recall of, or issuance of a safety alert relating to, our products, or suspension or delay of regulatory product approvals or clearances, product seizures or detentions, governmental investigations, civil or criminal sanctions or injunctions to halt manufacturing and distribution of our products.

Any one of these could result in significant costs and negative publicity resulting in reduced market acceptance and demand for our products and harm our reputation.

In addition, a recall or injunction affecting our products could temporarily shut down production lines or place products on a shipping hold.

In April 2023 the FDA recommended that consumers, health care providers and facilities not use certain models of O&M Halyard surgical N95 respirators when fluid resistance is required.

While there was no injury or damage to any individuals, as a result of the recommendation we voluntarily stopped the sale in the U.S.

of the affected respirators for a temporary period, until the FDA concluded testing and updated its recommendations for use.

While the FDA recommendation did not materially affect our results of operations for 2023,

there is no guarantee that future recommendations or sanctions will be resolved on the same timeline or favorably, if at all.

All of the foregoing types of legal proceedings and regulatory actions are inherently unpredictable and, regardless of the outcome, could disrupt our business, result in substantial costs or the diversion of management attention and could have a material adverse effect on our results of operations, financial condition and cash flows.

In addition, our

involvement in these matters and any related adverse rulings may result in increased costs and expenses, significant costs in defending such claims, even if groundless, reputational damage, cause us from time to time to significantly increase our legal expenses and/or modify our pay practices, all of which would likely have an adverse impact on our financial performance and profitability.

We could be subject to adverse changes in the tax laws or challenges to our tax positions.

We operate throughout the U.S.

and other countries.

As a result, we are subject to the tax laws and regulations of the U.S.

federal, state and local governments and of various foreign jurisdictions.

From time to time, legislative and regulatory initiatives are proposed, including but not limited to proposals to repeal last-in, first-out (LIFO) treatment of inventory in the U.S.

or changes in tax accounting methods for inventory, import tariffs and taxes, or other tax items.

We operate throughout the U.S., and we are subject to the tax laws and regulations of the U.S.

federal, state and local governments.

From time to time, legislative and regulatory initiatives are proposed, including but not limited to proposals for changes in tax accounting methods for inventory, import tariffs and taxes, including the pass through impact from certain indirect suppliers, or other tax items.

Changes in tax laws and regulations could adversely affect our tax positions, tax rate or cash payments for taxes.

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In addition, our interpretation of reporting frameworks or standards may differ from those of others and such frameworks or standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.

There is also increasing interest from regulators across jurisdictions with respect to ESG matters and any new and emerging ESG-related regulations, disclosure-related and otherwise, to which we are subject may lead to increased costs, compliance burdens and scrutiny of our ESG disclosures.

If our ESG practices do not meet evolving and varied regulator, investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees and our attractiveness as an investment, business partner or acquiror could be negatively impacted.

Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain ESG-related matters.

Both advocates and opponents to certain ESG initiatives are increasingly resorting to a range of activism forms,

including media campaigns and litigation, to advance their perspectives.

There are efforts by some stakeholders and regulators to reduce companies’ efforts on certain ESG-related matters.

Both advocates and opponents to certain ESG initiatives are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives.

To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business.

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In addition, some stakeholders may disagree with our goals and initiatives.

Further, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on ESG matters.

Further, organizations that provide information to

investors on corporate governance and related matters have developed ratings processes for evaluating companies on ESG matters.

Such ratings are used by some investors to inform their investment and voting decisions, and thus unfavorable ESG ratings may have a negative impact on our reputation, stock and debt prices and access to and costs of capital.

Our amended and restated bylaws designates the U.S.

Our amended and restated bylaws designate the U.S.

District Court for the Eastern District of Virginia as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Pursuant to our amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the U.S.

District Court for the Eastern District of Virginia, (or, if U.S.

District Court for the Eastern District of Virginia lacks subject matter jurisdiction, another state or federal court located within the Commonwealth of Virginia) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a duty owed to the Company by any director or officer or other employee of the Company or the Company’s shareholders, (iii) any action asserting a claim against the Company or any director or officer or other employee of the Company arising pursuant to any provision of the Virginia Stock Corporation Act, our articles of incorporation or our amended and restated bylaws (as applicable) or (iv) any action asserting a claim against the Company or any director or officer or other employee of the Company governed by the internal affairs doctrine.

District Court for the Eastern District of Virginia, (or, if such court lacks subject matter jurisdiction, another state or federal court located within the Commonwealth of Virginia) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a duty owed to the Company by any director or officer or other employee of the Company or the Company’s shareholders, (iii) any action asserting a claim against the Company or any director or officer or other employee of the Company arising pursuant to any provision of the Virginia Stock Corporation Act, our articles of incorporation or our amended and restated bylaws (as applicable) or (iv) any action asserting a claim against the Company or any director or officer or other employee of the Company governed by the internal affairs doctrine.

In addition, our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the U.S federal district courts shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.

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Risks Related to Our Debt

We may not be able to refinance, extend or repay our substantial indebtedness which would have a material adverse effect on our financial condition.

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

The Term Loan A and Term Loan B have $326 million and $511 million of principal outstanding excluding unamortized deferred financing costs as of December 31, 2025.

The Revolving Credit Agreement matures in March 2027 and as of December 31, 2025, we had an outstanding balance of $204 million.

The 2029 Notes and 2030 Notes become due and payable in March 2029 and April 2030.

We may need to raise capital in order to repay our indebtedness.

As of December 31, 2025, we owed $479 million and $552 million in principal under our 2029 Notes and 2030 Notes, respectively.

If we are unable to raise sufficient capital to repay these obligations at maturity and we are otherwise unable to extend the maturity dates or refinance these obligations, we would be in default.

We cannot provide any assurances that we will be able to raise the necessary amount of capital to repay these obligations or that we will be able to extend the maturity dates or otherwise refinance these obligations.

Upon a default, our lenders would have the right to exercise its rights and remedies to collect, which would include foreclosing on our assets.

Accordingly, a default would have a material adverse effect on our business and financial condition.

We may not be able to generate sufficient cash to service our debt and other obligations.

As of December 31, 2025, on a consolidated basis we had $2.1 billion of aggregate principal amount of indebtedness, excluding deferred financing costs and third party fees, $217 million of undrawn availability under our revolving credit facility, as well as other contractual obligations due beyond the next twelve months.

Our ratio of total debt to total shareholders’ equity as of December 31, 2024 was 328%.

See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations” of this Annual Report on Form 10-K for additional details.

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In the absence of such operating results and resources, we could face substantial liquidity problems and may be required to dispose of material assets or operations to meet our debt service and other obligations.

be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due.

We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due.

If we are unable to service our debt obligations from cash flows, we may need to refinance all or a portion of our debt obligations prior to maturity.

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We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all.

We may not be able to refinance, extend or repay our substantial indebtedness which would have a material adverse effect on our financial condition.

Our 2029 Notes and 2030 Notes become due and payable in March 2029 and April 2030.

We may need to raise capital in order to repay the 2029 Notes and 2030 Notes.

As of December 31, 2024, we owed $479 million and $552 million in principal under our 2029 Notes and 2030 Notes, respectively.

If we are unable to raise sufficient capital to repay these obligations at maturity and we are otherwise unable to extend the maturity dates or refinance these obligations, we would be in default.

We cannot provide any assurances that we will be able to raise the necessary amount of capital to repay this obligation or that we will be able to extend the maturity dates or otherwise refinance this obligation.

Upon a default, our lenders would have the right to exercise its rights and remedies to collect, which would include foreclosing on our assets.

Accordingly, a default would have a material adverse effect on our business and financial condition.

Our credit facilities and our existing notes have restrictive covenants that could limit our financial flexibility.

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If interest rates were to increase, our debt service obligations on our variable rate indebtedness would increase even though the amount borrowed remained the same, and our earnings and cash flows will correspondingly decrease.

Despite current indebtedness levels, we will incur substantially more debt to complete the Rotech Acquisition.

We and our subsidiaries will incur substantial additional indebtedness in the future in order to complete the Rotech Acquisition, which could significantly increase our leverage.

If new debt is added to our current debt levels, the related risks that we and our subsidiaries now face to service debt levels and the risks associated with failure to adequately service our debt could intensify.

Despite current indebtedness levels, we may continue to incur indebtedness in the future, and the amount of that additional indebtedness may be substantial, which could further exacerbate the risks described herein.

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We are subject to risks related to public health crises, future outbreaks of health crises or other adverse public health developments.

As a global healthcare solutions company, we could be impacted by public health crises, pandemic or contagious diseases.

For example, the COVID-19 pandemic disrupted global capital markets and the global supply chain as well as demand for our products and services.

While we experienced growth in sales volumes for certain of our products (such as PPE) during the COVID-19 pandemic, as well as improved productivity and manufacturing output, we may not experience the same result following any other public health crisis.

As a healthcare solutions company, we could be impacted by public health crises, pandemic or contagious diseases.

For example, the COVID-19 pandemic disrupted capital markets, supply chains for equipment and medical supplies, and our services.

Further, actions by the U.S.

government or other foreign governments in response to any such public health developments could adversely affect our business and operations, such as closure of one or more facilities for an unknown period of time.

We may incur additional costs to ensure we met the needs of our customers and protect our workforce or to implement operational changes in response to any future pandemics.

federal, state or local governments in response to any such public health developments could adversely affect our business and operations, such as closure of one or more facilities for an unknown period of time.

We may incur additional costs to ensure we meet the needs of our customers and protect our workforce or to implement operational changes in response to any future pandemics.

We may experience additional impacts which are not currently known.

The market price for our common stock and debt have been, and may continue to be, highly volatile.

A variety of factors may have a significant impact on the market price of our common stock and debt, including, but not limited to:

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general market and economic conditions;

any future outbreaks or reemergence of the COVID-19

pandemic, and any future pandemics;

the threat or outbreak of war, terrorism or public unrest (including, without limitation, the war in the Ukraine and a wider European conflict, renewed conflict between Israel and Hamas and the surrounding region, or any other global conflict);

any future outbreaks, and any future pandemics;

the threat or outbreak of war, terrorism or public unrest (including, without limitation, geopolitical conflicts, including the war in Ukraine, conflicts in the Middle East, or tensions involving other regions);

and the other factors discussed in this Item 1A.

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This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which could have a material adverse effect on our business.

Our global operations increase the extent of our exposure to the economic, political, currency, regulatory and other risks of international operations.

Our global operations involve issues and risks, including but not limited to the following, any of which could have an adverse effect on our business, results of operations and cash flows:

lack of familiarity with and expertise in conducting business in foreign markets;

foreign currency fluctuations and exchange risk;

unexpected changes in foreign regulations or conditions relating to labor, the economic or political environment, and social norms or requirements;

adverse tax consequences and difficulties in repatriating cash generated or held abroad;

local economic environments, recession, inflation, indebtedness, currency volatility and competition;

and changes in trade protection laws and other laws affecting trade and investment, including import/export regulations in both the U.S.

and foreign countries.

Additionally, our common stock is subject to continued listing requirements on NYSE, including maintaining a minimum $1.00 share closing price for a period of 30 consecutive trading days.

If the closing bid price of our common stock falls below $1.00 per share for 30 consecutive trading days, NYSE could issue a deficiency notice and ultimately delist our common stock if we fail to regain compliance.

Given our recent stock price and recent financial challenges, including the loss of significant Payor contracts, goodwill impairment charges and the divestiture of our P&HS business, there is a risk that our stock price could fall below the minimum share price requirement.

If our stock were delisted and

traded on the over-the-counter market, it would significantly reduce liquidity, make it more difficult for shareholders to sell their shares, impair our ability to raise capital and could have a material effect on our business operations and our financial condition, results of operations and cash flows.

We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.

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For example, in 2024 the state of California enacted a series of laws that will require reporting of greenhouse gas emissions and climate risks.

The European Parliament’s Corporate Sustainability Reporting Directive (“CSRD”) recently came into effect and requires impacted companies, including multi-national companies with an EU presence, to make extensive sustainability and climate-related disclosures.

These and similar regulatory requirements, which may differ across jurisdictions, are likely to result in increased costs and complexities of compliance in order to collect, measure and report on the relevant climate-related information.

Our supply chain will likely be subject to these same transitional risks and may pass along any related cost increases to us.

These evolving regulatory requirements These events and impacts could materially adversely affect our business operations and our financial position, results of operations and cash flows.

These events and impacts could materially adversely affect our business operations and our financial position, results of operations and cash flows.

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 1A. Risk Factors