What changed in this filing

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Item 1. Financial Statements

2026-05-11 compared with 2025-10-31 · 229 added, 601 removed, 261 unchanged (76% of the section changed)

Financial Statements

Owens & Minor, Inc.

Accendra Health, Inc.

and Subsidiaries

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

2 unchanged sentences

Selling, general and administrative expenses

Transaction breakage fee

Acquisition-related charges and intangible amortization

Exit and realignment charges, net

Exit and realignment (income) charges, net

Total operating costs and expenses

1 unchanged sentence

Interest expense, net

Transaction financing fees, net

Other expense, net

(Loss) income from continuing operations before income taxes

Income tax provision (benefit)

(Loss) income from continuing operations, net of tax

Loss from continuing operations before income taxes

Income tax benefit

Loss from continuing operations, net of tax

Loss from discontinued operations, net of tax

( 1,044,316 )

Basic loss per common share:

(Loss) income from continuing operations, net of tax

Loss from continuing operations, net of tax

Loss from discontinued operations, net of tax

Diluted loss per common share:

(Loss) income from continuing operations, net of tax

Loss from continuing operations, net of tax

Loss from discontinued operations, net of tax

See accompanying notes to unaudited condensed consolidated financial statements.

Owens & Minor, Inc.

Accendra Health, Inc.

and Subsidiaries

Condensed Consolidated Statements of Comprehensive (Loss) Income

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

( 1,044,316 )

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Change in gains and losses on derivative instruments

Total other comprehensive (loss) income, net of tax

Comprehensive (loss) income

( 1,025,385 )

Total other comprehensive income, net of tax

Comprehensive loss

See accompanying notes to unaudited condensed consolidated financial statements.

Owens & Minor, Inc.

Accendra Health, Inc.

and Subsidiaries

Condensed Consolidated Balance Sheets

September 30,

(in thousands, except per share data)

2 unchanged sentences

Accounts receivable, net

Inventories, net

Other current assets

Current assets held for sale - discontinued operations

Total current assets

Patient service equipment and other fixed assets, net

Patient service equipment and other fixed assets, net of accumulated depreciation and amortization of $ 180,939 and $ 207,595

Operating lease assets

1 unchanged sentence

Other assets, net

Noncurrent assets held for sale - discontinued operations

Liabilities and equity

Liabilities and (deficit) equity

Current liabilities

3 unchanged sentences

Other current liabilities

Current liabilities held for sale - discontinued operations

Total current liabilities

1 unchanged sentence

Operating lease liabilities, excluding current portion

Deferred income taxes, net

Other liabilities

Noncurrent liabilities held for sale - discontinued operations

Total liabilities

Commitments and contingencies

(Deficit) equity

Common stock, par value $ 2 per share;

2 unchanged sentences

Paid-in capital

(Accumulated deficit) retained earnings

Accumulated deficit

( 1,086,220 )

( 1,079,752 )

Accumulated other comprehensive loss

Total (deficit) equity

Total liabilities and equity

Total deficit

Total liabilities and (deficit) equity

See accompanying notes to unaudited condensed consolidated financial statements.

Owens & Minor, Inc.

Accendra Health, Inc.

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Operating activities:

( 1,044,316 )

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

Loss from discontinued operations, net of tax

Adjustments to reconcile net loss to cash used for operating activities:

Depreciation and amortization

Goodwill impairment charge

Loss on classification to held for sale

Share-based compensation expense

Loss on extinguishment of debt

Deferred income tax benefit

Deferred income tax expense (benefit)

Changes in operating lease right-of-use assets and lease liabilities

Gain from sale and dispositions of patient service equipment and other fixed assets

Gain from sale and dispositions of patient service equipment

Changes in operating assets and liabilities:

Accounts receivable, net

Inventories, net

Accounts payable

Net change in other assets and liabilities

Cash (used for) provided by operating activities

Cash used for operating activities from discontinued operations

Cash used for operating activities

Investing activities:

Additions to patient service equipment and other fixed assets

Proceeds from sale of patient service equipment and other fixed assets

Additions to patient service equipment ($ 41,343 and $ 44,484 ) and other fixed assets

Proceeds from sale of patient service equipment

Additions to computer software

Cash used for investing activities

Cash used for investing activities from discontinued operations

Cash provided by (used for) investing activities

Financing activities:

Borrowings under amended Receivables Financing Agreement

Repayments under amended Receivables Financing Agreement

( 1,286,400 )

Borrowings under Revolving Credit Facility

Repayments under Revolving Credit Facility

( 2,171,784 )

Repayments of debt

Repurchase of common stock

Cash provided by (used for) financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Cash used for financing activities from discontinued operations

Cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information:

4 unchanged sentences

See accompanying notes to unaudited condensed consolidated financial statements.

Owens & Minor, Inc.

Accendra Health, Inc.

and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (Deficit)

Condensed Consolidated Statements of Changes in (Deficit) Equity

Comprehensive

1 unchanged sentence

(Accumulated Deficit)

Equity (Deficit)

(Deficit) Equity

Balance, December 31, 2025

( 1,079,752 )

Other comprehensive income

Share-based compensation expense, exercises and other

Shares repurchased and retired

Balance, March 31, 2026

Other comprehensive income

Share-based compensation expense, exercises and other

Shares repurchased and retired

Balance, June 30, 2025

Other comprehensive loss

Share-based compensation expense, exercises and other

Balance, September 30, 2025

( 1,086,220 )

Balance, December 31, 2024

Other comprehensive loss

Share-based compensation expense, exercises and other

Balance, March 31, 2024

Other comprehensive loss

Share-based compensation expense, exercises and other

Balance, June 30, 2024

Other comprehensive income

Share-based compensation expense, exercises and other

Balance, September 30, 2024

Shares repurchased and retired

Balance, March 31, 2025

See accompanying notes to unaudited condensed consolidated financial statements.

Owens & Minor, Inc.

Accendra Health, Inc.

and Subsidiaries

3 unchanged sentences

Basis of Presentation and Consolidation.

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

and the subsidiaries it controls (the Company, we, us, or our) and contain all adjustments necessary to conform with United States (U.S.) generally accepted accounting principles (GAAP).

The unaudited condensed consolidated financial statements include the accounts of Accendra Health, Inc.

( f/k/a Owens & Minor, Inc.

) and the subsidiaries it controls (collectively, the Company, we, us, or our) and contain all adjustments necessary to conform with U.S.

generally accepted accounting principles (GAAP).

All significant intercompany accounts and transactions have been eliminated.

The results of operations for interim periods are not necessarily indicative of the results expected for the full year.

In connection with the anticipated sale of our Products & Healthcare Services (P&HS) segment as detailed in the discontinued operations and assets held-for-sale section below, we determined that our continuing operations’ business activities comprise a single operating and reporting segment.

Our continuing operations’ business activities comprise a single operating and reporting segment.

This determination is in accordance with ASC No.

280, Segment Reporting .

Revision of Prior Period Consolidated Financial Statements .

We revised our prior period financial statements to correct for a prior period accounting error that impacted our beginning retained earnings balance and total equity.

The error, which was discovered during the first quarter of 2025, related to the over accrual of accounts payable that had accumulated over multiple years.

We assessed the materiality of the error, both quantitatively and qualitatively, in accordance with the SEC’s Staff Accounting Bulletin No.

99, and concluded that the error was not material to any of our previously reported financial statements based upon the nature of the error, including the immaterial annual quantitative impacts to prior period condensed consolidated statements of operations.

Accordingly, the error was corrected through beginning retained earnings as of the earliest balance sheet date presented.

The cumulative impact of the error correction on our retained earnings and total equity as of the earliest balance sheet date presented, was an increase of $ 21 million.

The error also resulted in a cumulative $ 23 million reduction to accounts payable, a $ 1.6 million increase to other current liabilities, and a $ 0.5 million increase to other liabilities as of December 31, 2023.

Reclassifications.

1 unchanged sentence

Discontinued Operations and Assets Held-for-Sale.

On February 28, 2025, we announced that we were actively engaged in discussions regarding the anticipated sale of our P&HS segment.

On October 7, 2025, we, entered into an Equity Purchase Agreement, (the Purchase Agreement) by and among the Company, Dominion Healthcare Acquisition Corporation, a Delaware corporation (the Purchaser), and Dominion Healthcare Holdings, L.P., a Delaware limited partnership (Purchaser Parent) to sell the P&HS segment, for an aggregate of $ 375 million in cash, subject to certain adjustments for cash, indebtedness, net working capital and transaction expenses.

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

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

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

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

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

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

unless otherwise noted.

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

On October 7, 2025, we entered into an Equity Purchase Agreement (the Purchase Agreement) by and among the Company, Dominion Healthcare Acquisition Corporation, a Delaware corporation (the Purchaser), and Dominion Healthcare Holdings, L.P., a Delaware limited partnership (Purchaser Parent) to sell the P&HS business, for an aggregate of $ 375 million in cash, subject to certain adjustments for cash, indebtedness, net working capital and transaction expenses.

On December 31, 2025, we completed the sale of the P&HS business pursuant to the Purchase Agreement (the P&HS Sale).

We retained a 5 % equity interest in the P&HS business, which is reflected in other assets, net on our condensed consolidated balance sheets.

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

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

With the exception of Note 2, the Notes to the Condensed Consolidated Financial Statements reflect the continuing operations of the Company unless otherwise noted.

See Note 2 for additional information regarding discontinued operations and assets held for sale.

1 unchanged sentence

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

Significant estimates are used for,

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

Significant estimates are used for, but are not limited to, variable consideration, depreciation and amortization, goodwill valuation, valuation of intangible assets and other long-lived assets, self-insurance liabilities, tax liabilities, defined benefit obligations, share-based compensation and other contingencies.

Actual results may differ from these estimates.

Cash and Cash Equivalents.

Cash and cash equivalents include cash and marketable securities with an original maturity or maturity at acquisition of three months or less.

Cash and cash equivalents are stated at cost.

Nearly all of our cash and cash equivalents are held in cash depository accounts in major banks in the U.S.

Cash that has restrictions on its availability to us would be classified as restricted cash.

There was no restricted cash as of September 30, 2025 and December 31, 2024.

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

September 30, 2025

December 31, 2024

Cash and cash equivalents

Cash and cash equivalents of held for sale - discontinued operations

Total cash and cash equivalents

Book overdrafts represent the amount of outstanding checks issued in excess of related bank balances and are included in accounts payable in our condensed consolidated balance sheets, as they are similar to trade payables and are not subject to finance charges or interest.

Changes in book overdrafts are classified as operating activities in our condensed consolidated statements of cash flows.

Accounts Receivable, Net.

3 unchanged sentences

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

Included in accounts receivable were earned but unbilled receivables of $ 33 million as of September 30, 2025 and $ 30 million as of December 31, 2024.

Included in accounts receivable were earned but unbilled receivables of $ 39 million as of March 31, 2026 and $ 30 million as of December 31, 2025.

Delays, ranging from a single day to several weeks, between the date of service and billing can occur due to delays in obtaining certain required payor-specific documentation from internal and external sources.

Earned but unbilled receivables are aged from date of service and are considered in our analysis of historical performance and collectability.

Inventories, which primarily include medical supplies to be sold to customers , are determined using the first-in, first-out or weighted-average cost method at the lower of cost or net realizable value.

We periodically evaluate whether inventory valuation allowance adjustments are required.

In our evaluation, we review for obsolete inventory and slow-moving inventory which includes consideration of recent sales trends.

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

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

Patient Service Equipment and Other Fixed Assets, Net .

Patient service equipment consists of medical equipment rented to customers, primarily on a month-to-month basis, as well as equipment that may be sold.

Patient service equipment depreciation expense is classified in our condensed consolidated statements of operations within cost of net revenue for equipment rented to customers.

Other fixed assets, net are stated at cost less accumulated depreciation and amortization.

Depreciation and amortization expense for financial reporting purposes is generally computed on a straight-line method over the estimated useful lives of the assets.

In general, the estimated useful lives for computing depreciation are one to 10 years for patient service equipment, and up to 15 years for other fixed assets.

Straight-line and

accelerated methods of depreciation are used for income tax purposes.

Normal maintenance and repairs are expensed as incurred, and renovations and betterments are capitalized.

We suspend depreciation and amortization on assets that are held for sale.

We account for all of our lease arrangements, including for real estate, trucks, and patient service equipment, as operating leases.

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

Certain building leases include renewal options which the exercise of is at our sole discretion.

We generally do not include options to renew (or terminate) in our lease term, as part of our right-of-use assets and lease liabilities, as we generally do not have leases for which we believe we are reasonably certain to exercise those options.

Leases with a term of 12 months or less are not recorded on the condensed consolidated balance sheets;

we recognize lease expense for these leases on a straight-line basis over the lease term.

The depreciable lives of right-of-use assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

We elected the practical expedient to not separate lease and non-lease components for our leases.

Operating lease assets and liabilities are recognized at commencement date based on the present value of unpaid lease payments over the lease term.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments.

We use the implicit rate when readily determinable.

The right-of-use assets also include adjustments for any lease payments made and lease incentives received.

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

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

We evaluate goodwill for impairment annually, as of October 1, and if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

Qualitative factors are first assessed to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If it is determined that it is more likely than not the fair value does not exceed the carrying amount, then a quantitative test is performed.

Intangible Assets, Net.

Intangible assets acquired through purchases or business combinations are stated at fair value at the acquisition date and net of accumulated amortization in the condensed consolidated balance sheets.

Intangible assets, consisting primarily of customer relationships, customer contracts and tradenames are amortized over their estimated useful lives.

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

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

We suspend amortization on assets that are held for sale.

Computer Software.

We develop and purchase software for internal use.

Software development costs incurred during the application development stage are capitalized.

Once the software has been installed and tested, and is ready for use, additional costs incurred in connection with the software are expensed as incurred.

Capitalized computer software costs are amortized over the estimated useful life of the software, usually between three and 10 years .

Capitalized computer software costs are included in other assets, net, in the condensed consolidated balance sheets.

Unamortized software at September 30, 2025 and December 31, 2024 was $ 15 million and $ 26 million.

Long-Lived Asset Impairment Evaluation.

Long-lived assets, which include patient service equipment, finite-lived intangible assets, right-of-use assets, unamortized software costs, and other fixed assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable.

We assess long-lived assets for the potential impairments by comparing the carrying value of an asset, or group of related assets, to their estimated undiscounted future cash flows.

Self-Insurance Liabilities.

We are self-insured for certain teammate healthcare, workers’ compensation and automobile liability costs;

however, we maintain insurance for individual losses exceeding certain limits.

Liabilities are estimated for healthcare costs using current and historical claims data.

Liabilities for workers’ compensation and automobile liability claims are estimated using historical claims data and loss development factors.

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

Self-insurance liabilities are included in other current liabilities and other liabilities in the condensed consolidated balance sheets and were $ 27 million at September 30, 2025 and December 31, 2024.

Receivables Sale Program.

On October 18, 2024, we entered into a Receivables Purchase Agreement (the Receivables Sale Program) with persons from time to time, as Purchasers, PNC Bank, National Association, as Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent, pursuant to which accounts receivable with an aggregate outstanding amount not to exceed $ 450 million were sold, on a limited-recourse basis, to the Purchasers in exchange for cash.

Transactions under this agreement were accounted for as sales in accordance with ASC 860, Transfers and Servicing , with the sold receivables removed from our condensed consolidated balance sheets.

Under the Receivables Sale Program, we provided certain servicing and collection actions on behalf of the Purchasers;

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

Proceeds from the sales of accounts receivable were recorded as an increase to cash and cash equivalents and a reduction to accounts receivable, net in the condensed consolidated balance sheets.

Cash received from the sales of accounts receivable is reflected in the change in accounts receivable within cash provided by operating activities in the condensed consolidated statements of cash flows.

Total accounts receivable sold and net cash proceeds under the Receivables Sale Program were $ 343 million during the three months ended March 31, 2025, approximately $ 69 million of which related to continuing operations.

We collected $ 209 million of the sold accounts receivable during the three months ended March 31, 2025, approximately $ 42 million of which related to continuing operations.

The losses on sales of accounts receivable of continuing operations, inclusive of professional fees incurred to establish the agreement, recorded in selling, general, and administrative (SG&A) expenses in the condensed consolidated statements of operations were $ 0.4 million for the three months ended March 31, 2025.

In connection with the amendment to the Receivables Sale Program, as described below, any uncollected accounts receivable sold were settled on December 31, 2025.

Amended Receivables Sale Program.

On December 31, 2025, we entered into an Amended and Restated Receivables Purchase Agreement (the Amended Receivables Sale Program) with persons from time to time party thereto, as Purchasers, PNC Bank, as Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent, pursuant to which accounts receivable are sold, on a limited-recourse basis, to the Purchasers in exchange for cash in an aggregate outstanding amount not to exceed $ 150 million.

The Amended Receivables Sale Program amends and restates, in its entirety, the Receivables Sale Program dated as of October 18, 2024.

Transactions under this agreement are accounted for as sales in accordance with ASC 860, Transfers and Servicing, with the sold receivables removed from our condensed consolidated balance sheets.

Under the Amended Receivables Sale Program, we provide certain servicing and collection actions on behalf of the Purchasers;

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

The Amended Receivables Sale Program has a Scheduled Termination Date of October 18, 2027.

Total accounts receivable sold under the Amended Receivables Sale Program were $ 246 million during the three months ended March 31, 2026.

We collected $ 231 million of the sold accounts receivable during the three months ended March 31, 2026.

The losses on sale of accounts receivable recorded in SG&A were $ 1.5 million for the three months ended March 31, 2026.

As of March 31, 2026 and December 31, 2025, there was a total of $ 148 million and $ 134 million of uncollected accounts receivable sold and removed from our condensed consolidated balance sheets under the Amended Receivables Sale Program.

Retirement Plan.

We have a frozen noncontributory, unfunded retirement plan for certain retirees in the U.S.

Retirement Plan).

As of March 31, 2026 and December 31, 2025, the accumulated benefit obligation of the U.S.

Retirement Plan was $ 30 million and $ 31 million.

Revenue Recognition.

Revenues are primarily recognized under fee-for-service arrangements for sales of supplies, equipment and other items we sell to customers and equipment we rent to customers.

Revenues are generated through fee-for-service and capitation arrangements with large government and commercial payors (each, a Payor and collectively Payors) for equipment, supplies, services and other items rented and sold to patients.

Revenue for sales of products, including equipment and supplies, is recognized when control of the promised goods is transferred to customers and is presented net of applicable sales taxes.

Revenue generated from equipment that we rent to customers is primarily recognized as earned on a straight-line basis over the non-cancellable rental period, typically one month, and commences on delivery of the equipment to the customers.

Fee-for-service arrangement revenues are recorded only to the extent it is probable that a significant reversal will not occur in the future as amounts may include implicit price concessions under reimbursement arrangements with third-party payors, including private insurers under both commercial and Medicare Advantage plans, prepaid health plans, Medicare, Medicaid and customers.

Revenue is recognized under a portfolio approach, as we expect that this approach would not differ materially from considering each contract or performance obligation separately.

We use the expected value method in determining the variable consideration as part of determining the sales transaction price using historical reimbursement experience, historical sales returns, and other operating trends.

Payment terms and conditions vary by contract.

Sales of equipment and supplies inclusive of amounts recognized under capitation arrangements for the three and nine months ended September 30, 2025 were $ 528 million and $ 1.5 billion and $ 517 million and $ 1.5 billion for the three and nine months ended September 30, 2024.

Rental revenues inclusive of amounts recognized under capitation arrangements for the three and nine months ended September 30, 2025 were $ 169 million and $ 510 million and $ 170 million and $ 508 million for the three and nine months ended September 30, 2024.

Certain revenues are recognized under arrangements with third-party payors for which we stand ready to provide all necessary healthcare services to members for the period of the stand ready obligation which generally extends beyond one year.

extends beyond one year.

These agreements are generally referred to as capitation arrangements.

2 unchanged sentences

Capitation payments are typically received in the month members are entitled to healthcare services.

Revenue for these agreements amounted to $ 61 million and $ 182 million for the three and nine months ended September 30, 2025 and $ 60 million and $ 178 million for the three and nine months ended September 30, 2024.

The following table summarizes net revenue by product category:

Revenue for these agreements amounted to $ 32 million and $ 60 million for the three months ended March 31, 2026 and 2025.

Fee-for-service arrangement revenues are recorded only to the extent it is probable that a significant reversal will not occur in the future as amounts may include implicit price concessions under reimbursement arrangements with third-party payors, including private insurers, prepaid health plans, Medicare, Medicaid and customers.

Revenue is recognized under a portfolio approach, as we expect that this approach would not differ materially from considering each contract or performance obligation separately.

Payment terms and conditions vary by contract.

Sales of equipment and supplies inclusive of amounts recognized under capitation arrangements for the three months ended March 31, 2026 and 2025 were $ 481 million and $ 504 million.

Rental revenues inclusive of amounts recognized under capitation arrangements for the three months ended March 31, 2026 and 2025 were $ 146 million and $ 170 million.

The following table summarizes net revenue by product category for the three months ended March 31, 2026 and 2025:

Three Months Ended

Nine Months Ended

September 30,

Sleep therapy

Home respiratory therapy

The following table summarizes net revenue by payor type:

The following table summarizes net revenue by payor type for the three months ended March 31, 2026 and 2025:

Three Months Ended

Nine Months Ended

September 30,

Commercial payors (1)

2 unchanged sentences

Cost of net revenue includes the cost of products sold, patient service equipment depreciation expense, and other costs which are primarily personnel costs related to the set-up and utilization of equipment.

Cost of product sold includes non-cash expenses primarily for equipment converted from rental to sales in the amount of $ 11 million and $ 35 million for the three and nine months ended September 30, 2025 and $ 7.9 million and $ 23 million for the three and nine months ended September 30, 2024.

Cost of product sold includes non-cash expenses primarily for equipment converted from rental to sales in the amount of $ 10 million and $ 12 million for the three months ended March 31, 2026 and 2025.

The following table summarizes cost of net revenue for the three months ended March 31, 2026 and 2025:

Three Months Ended

Nine Months Ended

September 30,

Cost of product sold

1 unchanged sentence

Cost of net revenue

Selling, General and Administrative (SG&A) Expenses.

SG&A expenses include compensation costs, expenses for selling and administrative functions, shipping and handling costs and certain depreciation and amortization expense.

Shipping and Handling.

Shipping and handling costs are included in SG&A expenses in the condensed consolidated statements of operations and include costs to store, move, and prepare products for shipment, as well as costs to deliver products to customers.

Shipping and handling costs totaled $ 74 million and $ 213 million for the three and nine months ended September 30, 2025 and $ 68 million and $ 205 million for the three and nine months ended September 30, 2024.

Share-Based Compensation.

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

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

Income Taxes.

We account for income taxes under the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Valuation allowances are provided if it is more likely than not that a deferred tax asset will not be realized.

When we have claimed tax benefits that may be challenged by a tax authority, an estimate of the effect of these uncertain tax positions is recorded.

It is our policy to provide for uncertain tax positions and related interest and penalties based upon an assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.

To the extent that the tax outcome of these uncertain tax positions changes, based on our assessment, such changes in estimate may impact the income tax provision in the period in which such determination is made.

Fair Value Measurements.

Fair value is determined based on assumptions that a market participant would use in pricing an asset or liability.

Acquisition-Related Charges and Intangible Amortization.

Acquisition-related charges consist primarily of one-time costs related to the terminated acquisition of Rotech Healthcare Holdings Inc.

(Rotech), which consisted primarily of legal and professional fees.

For the three months ended March 31, 2026, we incurred no acquisition-related costs.

For the three months ended March 31, 2025, we incurred $ 16 million of acquisition-related costs.

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

These amounts are highly dependent on the size and frequency of acquisitions.

F air value is determined based on assumptions that a market participant would use in pricing an asset or liability.

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

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

The estimated fair value of our reporting unit determined during a quantitative review of goodwill utilizes unobservable inputs (Level 3).The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2).

When a quantitative goodwill test is performed, the estimated fair value of our reporting unit is determined with the use of unobservable inputs (Level 3).The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2).

See Note 5 for the fair value of debt.

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See Note 6 for the fair value of derivatives.

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

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

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

Acquisition-Related Charges and Intangible Amortization.

Acquisition-related charges consist primarily of one-time costs related to the terminated acquisition of Rotech Healthcare Holdings Inc.

(Rotech), which consisted primarily of legal and professional fees.

For the nine months ended September 30, 2025, we incurred $ 22 million of acquisition-related costs.

For the three and nine months ended September 30, 2024, we incurred $ 6.5 million and $ 10 million of acquisition-related costs related to the expected acquisition of Rotech Healthcare Holdings Inc.

(Rotech), which consisted primarily of legal and professional fees.

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

These amounts are highly dependent on the size and frequency of acquisitions.

Transaction Breakage Fee.

As previously disclosed, on July 22, 2024, we entered into an Agreement and Plan of Merger (the Merger Agreement) pursuant to which we agreed to acquire Rotech subject to the terms and conditions within the Merger Agreement.

On June 3, 2025, the Company, Rotech and Hitchcock Merger Sub Inc.

(Merger Sub) mutually agreed to terminate the Merger Agreement and entered into a mutual termination agreement (the Termination Agreement).

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

Exit and Realignment Charges, Net.

Exit and realignment charges, net consist of costs associated with optimizing our operations including significant changes to certain processes to increase net revenue and lower costs along with costs related to IT strategic initiatives and other strategic actions.

These costs include, but are not limited to, professional fees, severance and other costs to streamline functions and processes.

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

Liabilities are established at the cease-use date for remaining contractual obligations discounted using a credit-adjusted risk-free rate of interest.

We evaluate these assumptions quarterly and adjust the liabilities accordingly.

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

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

Note 2—Significant Concentration Risks

During the nine months ended September 30, 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 nine months ended September 30, 2025.

The largest commercial payor recently notified us that it intends to terminate certain of our contracts with them.

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

During the nine months ended September 30, 2025, three suppliers each contributed between 10 % and 25 % of our patient service equipment and supplies purchases collectively accounting for approximately 48 % of our total purchases.

Note 3—Discontinued Operations and Assets Held-for-Sale

On February 28, 2025, we announced that we were actively engaged in discussions regarding the anticipated sale of our P&HS segment.

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

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

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

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

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

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

Accordingly, the results of operations from our P&HS segment are reported in the accompanying condensed consolidated statements of operations as “Loss from discontinued operations, net of tax” for the three and nine months ended September 30, 2025 and 2024 and the related assets and liabilities are classified as held-for-sale as of September 30, 2025 and December 31, 2024 in the accompanying condensed consolidated balance sheets.

Note 2—Discontinued Operations

As described in Note 1, in accordance with GAAP, the financial position and results of operations of the P&HS business are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented.

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

Accordingly, the results of operations from our P&HS business are reported in the accompanying condensed consolidated statements of operations as “loss from discontinued operations, net of tax” for the three months ended March 31, 2025.

We have allocated interest expense, net to discontinued operations as a ratio of net assets and total debt in accordance with ASC 205, Presentation of Financial Statements .

The remaining P&HS goodwill balance of $ 106 million was fully impaired during the second quarter of 2025.

Our sale process provided a basis for the fair value of the P&HS segment, which includes the Global Products reporting unit.

We recognized a loss of $ 123 million and $ 772 million during the three and nine months ended September 30, 2025 in connection with the classification of the related assets and liabilities as held-for-sale, based on the estimated fair value, less costs to sell.

The fair value of the P&HS segment was determined from information received during our sale process, including the Purchase Agreement.

Subsequent changes in fair value will be recorded within discontinued operations and assets held for sale.

The following table summarizes the financial results of our discontinued operations for the three and nine months ended September 30, 2025 and 2024:

On December 31, 2025, we received cash proceeds of $ 342 million and recorded a $ 20 million investment for a 5 % retained equity interest, which was recorded in other assets, net on our condensed consolidated balance sheet as of December 31, 2025.

Net proceeds of $ 324 million from the P&HS Sale, net of cash sold, reflects $ 342 million of cash proceeds received and $ 18 million of P&HS cash conveyed.

The final purchase price will be determined subsequent to the completion of the sale to reflect adjustments in accordance with the Purchase Agreement, including final net working capital adjustments.

As of December 31, 2025, we estimated a purchase price adjustment receivable of approximately

$ 12 million to $ 15 million, which was recorded within other current assets on our condensed consolidated balance sheet.

Subsequent changes in fair value will be recorded within discontinued operations.

During the three months ended March 31, 2026, we incurred $ 18 million in separation costs to be reimbursed by the Company which are recorded within exit and realignment (income) charges, net on our condensed consolidated statement of operations and within accounts payable on our condensed consolidated balance sheet.

We have agreed to reimburse the Purchaser and its affiliates for 80 % of certain costs incurred in connection with the separation of P&HS from the Company’s retained business, subject to an aggregate cap of $ 65 million.

We will be obligated to reimburse the Purchaser for any such costs incurred after December 31, 2025, except that such reimbursements will not need to be paid:

(1) in advance of April 1, 2026;

(2) for amounts in excess of $ 15 million prior to October 1, 2026, or (3) for amounts in excess of $ 55 million prior to January 1, 2027.

We and the Purchaser will provide certain transition services to the other party pursuant to a certain customary transition services agreement (TSA).

Pursuant to the terms of the TSA, we have agreed that, in certain circumstances, we may be obligated to provide up to $ 115 million in credit support to the P&HS business.

The TSA includes customary services including information technology support and is anticipated to be substantially completed within two years , with some services being completed by December 31, 2026.

During the three months ended March 31, 2026, we have incurred $ 8.7 million in net fees for services received and for services provided under the TSA which are recorded within selling, general, and administrative expenses, net on our condensed consolidated statement of operations.

During the three months ended March 31, 2026, we exited certain TSA activities and replaced them with internal capabilities.

We expect to continue to exit certain TSA activities and replace with internal capabilities throughout the remainder of 2026.

The following table summarizes the financial results of our discontinued operations for the three months ended March 31, 2025:

Three Months Ended

Nine Months Ended

September 30,

March 31, 2025

Cost of goods sold

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Exit and realignment charges, net

Goodwill impairment charge

Loss on classification to held for sale

Other operating expense, net

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Loss from discontinued operations before income taxes

Income tax (benefit) provision for discontinued operations

Loss from discontinued operations, net of taxes

The assets and liabilities of the P&HS segment reflected on the condensed consolidated balance sheets at September 30, 2025, and December 31, 2024, are as follows:

September 30,

Assets held for sale - discontinued operations

Cash and cash equivalents

Accounts receivable, net

Merchandise inventories

Intercompany receivable

Other current assets, net

Property and equipment, net

Operating lease assets

Intangible assets, net

Deferred tax assets

Valuation allowance on disposal group classified as held for sale

Current assets held for sale - discontinued operations

Property and equipment, net

Operating lease assets

Intangible assets, net

Deferred tax assets

Other noncurrent assets, net

Total assets held for sale - discontinued operations

Liabilities held for sale - discontinued operations

Accounts payable

Accrued payroll and related liabilities

Current portion of long-term debt

Other current liabilities

Operating lease liabilities, current portion

Deferred tax liabilities

Current liabilities held for sale - discontinued operations

Long-term debt, excluding current portion

Operating lease liabilities, excluding current portion

Other liabilities

Deferred tax liabilities

Total liabilities held for sale - discontinued operations

Assets and liabilities held for sale as of September 30, 2025 are classified as current since we expect the divestiture to be completed within one year of the balance sheet date.

As of December 31, 2024, the assets and liabilities held for sale are classified separately as current or noncurrent because the noncurrent assets and liabilities did not meet the criteria for current classification as of December 31, 2024.

Merchandise inventories include $ 110 million subject to lien with an individual supplier as of September 30, 2025.

Receivables Purchase Agreement

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

We account for these transactions as sales with the sold receivables removed from our condensed consolidated balance sheets.

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

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

The RPA is separate and distinct from the Receivables Sale Program and the amendment as described below.

As a result of the amendment described below, the RPA was not utilized in the nine months ended September 30, 2025.

Proceeds from the sale of accounts receivable are recorded as an increase to cash and cash equivalents and a reduction to current assets of discontinued operations, in the condensed consolidated balance sheets.

Cash received from the sale of accounts receivable, net of payments made to the Purchaser, is reflected as cash provided by operating activities in the condensed consolidated statements of cash flows.

The accounts receivable sold under the RPA were entirely accounts receivable of the P&HS segment.

Total accounts receivable sold under the RPA were $ 542 million and $ 1.6 billion for the three and nine months ended September 30, 2024.

During the three and nine months ended September 30, 2024, we received net cash proceeds of $ 538 million and $ 1.6 billion from the sale of accounts receivable under the RPA and collected $ 550 million and $ 1.6 billion of the sold accounts receivable.

The losses on sale of accounts receivable, inclusive of professional fees incurred to establish the agreement, recorded in other operating expense, net in the financial results from discontinued operations were $ 3.6 million and $ 11 million for the three and nine months ended September 30, 2024.

Receivables Sale Program

On October 18, 2024, O&M Funding LLC and Owens & Minor Medical, LLC., each a wholly-owned subsidiary of the Company, entered into a Receivables Purchase Agreement (the Receivables Sale Program) with persons from time to time, as Purchasers, PNC Bank, National Association, as Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent, pursuant to which accounts receivable with an aggregate outstanding amount not to exceed $ 450 million are sold, on a limited-recourse basis, to the Purchasers in exchange for cash.

The Receivables Sale Program amends and restates in its entirety, the Receivables Financing Agreement.

Transactions under this agreement are accounted for as sales in accordance with ASC 860, Transfers and Servicing, with the sold receivables removed from our condensed consolidated balance sheets.

Under the Receivables Sale Program, we provide certain servicing and collection actions on behalf of the Purchasers;

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

Upon the completion of the sale of the P&HS segment the related accounts receivable will no longer be eligible for sale under the Receivables Sale Program as the program will not convey.

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

Cash received from the sales of accounts receivable is reflected in the change in accounts receivable within cash provided by operating activities in the consolidated statements of cash flows.

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

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

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

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

As of September 30, 2025 and December 31, 2024, there was a total of $ 200 million and $ 70 million of uncollected accounts receivable sold and removed from our condensed consolidated balance sheets under the Receivables Sale Program, $ 160 million and $ 56 million of which relate to the assets of discontinued operations and assets held for sale.

As of September 30, 2025 the $ 160 million of uncollected accounts receivable related to the assets of discontinued operations and assets held for sale is shown as an intercompany receivable within current assets of discontinued operations and assets held for sale with an equal amount reflected within other current liabilities in the condensed consolidated balance sheet.

The following table provides significant non-cash operating, select operating and significant investing cash flow information for our discontinued operations and assets held for sale:

Three Months Ended

Nine Months Ended

September 30,

Operating Activities:

Income tax benefit for discontinued operations

Loss from discontinued operations, net of tax

Significant non-cash adjustments to reconcile net loss to cash (used for) provided by operating activities:

Goodwill impairment charge

Loss on classification to held for sale

Depreciation and amortization

Share-based compensation

Changes in select operating assets and liabilities:

Accounts receivable, net

Accounts payable

Investing Activities:

Capital expenditures

Proceeds from sale of corporate headquarters

Note 4—Patient Service Equipment and Other Fixed Assets, Net

Patient service equipment and other fixed assets, net, consists of the following:

September 30, 2025

December 31, 2024

Patient service equipment

Building and leasehold improvements

Other fixed assets

Patient service equipment and other fixed assets, gross

Accumulated depreciation and amortization

Patient service equipment and other fixed assets, net

Total accounts receivable sold and net cash proceeds under the Receivables Sale Program were $ 343 million during the three months ended March 31, 2025, approximately $ 274 million of which related to discontinued operations.

We collected $ 209 million of the sold accounts receivable during the three months ended March 31, 2025, approximately $ 167 million of which related to discontinued operations.

The losses on sales of accounts receivable of continuing operations, inclusive of professional fees incurred to establish the agreement, recorded in loss on discontinued operations, net of tax in the condensed consolidated statements of operations were $ 1.7 million for the three months ended March 31, 2025.

As of December 31, 2025, there was no uncollected accounts receivable sold and removed from our consolidated balance sheet related to discontinued operations.

Note 3—Goodwill and Intangible Assets, Net

At September 30, 2025 and December 31, 2024, we had goodwill of $ 1.2 billion, net of accumulated goodwill impairment of $ 307 million.

Intangible assets, net subject to amortization, which excludes indefinite-lived intangible assets, at September 30, 2025 and December 31, 2024 were as follows:

September 30, 2025

At March 31, 2026 and December 31, 2025, we had goodwill of $ 1.2 billion, net of accumulated goodwill impairment of $ 307 million.

Intangible assets, net subject to amortization, at March 31, 2026 and December 31, 2025 were as follows:

March 31, 2026

December 31, 2025

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Weighted average useful life

Amortization expense for intangible assets was $ 29 million and $ 44 million for the three and nine months ended September 30, 2025 and $ 8.4 million and $ 33 million for the three and nine months ended September 30, 2024.

The increase as compared to the prior year was driven by the remaining useful life for an intangible asset being modified

as of June 30, 2025 as a result of a notice of a contract termination with a commercial Payor.

Amortization expense for intangible assets was $ 29 million for the three months ended March 31, 2026 and $ 7.6 million for the three months ended March 31, 2025.

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

The updated future intangible amortization is reflected in the table below.

As of September 30, 2025, based on the current carrying value of intangible assets subject to amortization and expected remaining useful life, estimated amortization expense were as follows:

As of March 31, 2026, based on the current carrying value of intangible assets subject to amortization and expected remaining useful life, estimated amortization expense was as follows:

2026 (remainder)

Total future amortization

Note 6—Leases

The components of lease expense for the three and nine months ended September 30, 2025 and 2024 were as follows:

Three Months Ended September 30,

Classification

Operating lease cost

SG&A expenses

Short-term lease cost

SG&A expenses, Cost of net revenue

Variable lease cost

SG&A expenses, Cost of net revenue

Total lease cost

Nine Months Ended September 30,

Classification

Operating lease cost

SG&A expenses

Short-term lease cost

SG&A expenses, Cost of net revenue

Variable lease cost

SG&A expenses, Cost of net revenue

Total lease cost

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

Supplemental balance sheet information as of September 30, 2025 and December 31, 2024 was as follows:

As of September 30,

As of December 31,

Classification

Operating lease assets

Current operating leases

Other current liabilities

Noncurrent operating leases

Operating lease liabilities, excluding current portion

Total operating lease liabilities

Other information related to leases for the nine months ended September 30, 2025 and 2024 was as follows:

Nine Months Ended September 30,

Supplemental cash flow information

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

Weighted average remaining lease term (years)

Operating leases

Weighted average discount rate

Operating leases

Maturities of operating lease liabilities as of September 30, 2025 were as follows:

2025 (remainder)

Total lease payments

Present value of lease liabilities

Note 7—Exit and Realignment Charges, Net

Note 4—Exit and Realignment (Income) Charges, Net

We incur exit and realignment and other charges associated with optimizing our operations which include IT strategic initiatives and other strategic actions.

These charges include professional fees, severance and other costs to streamline functions and enhance processes.

These charges include professional fees, severance and other costs to streamline functions and enhance processes and separation costs.

Separation costs primarily consist of professional fees including costs reimbursable to the Purchaser as described below and other wind-down costs incurred after the divestiture of the P&HS business.

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

Exit and realignment charges, net were $ 0.7 million and $ 17 million for the three and nine months ended September 30, 2025 and $ 14 million and $ 37 million for the three and nine months ended September 30, 2024.

These charges were primarily related to strategic operational improvements to increase net revenue and lower costs as well as a provision to accounts receivable related to our Fusion5 business which is in the process of being wound down.

We do not expect to incur material future costs relating to certain exit and realignment actions, which remain underway.

The following table summarizes the activity related to exit and realignment cost accruals, which are generally classified as other current liabilities in our condensed consolidated balance sheets, through September 30, 2025 and 2024:

Exit and realignment (income) charges, net were $( 24 ) million and $ 14 million for the three months ended March 31, 2026 and 2025.

These charges were primarily related to strategic operational improvements to increase net revenue and lower costs.

During the three months ended March 31, 2026 exit and realignment income, net also included a $ 52 million gain on sales of patient service equipment in connection with the contract termination with a commercial Payor and P&HS Sale separation costs.

During the three months ended March 31, 2025 exit and realignment charges, net also include a provision to accounts receivable related to our Fusion5 business which was in the process of being wound down.

As a result of the sale of our P&HS business, we have incurred $ 18 million in reimbursable separation costs during the three months ended March 31, 2026.

We expect to incur up to $ 65 million in exit and realignment costs associated with reimbursement to the Purchaser for certain future separation costs incurred by the Purchaser, as described in Note 2.

The following table summarizes the activity related to exit and realignment cost accruals, which are generally classified as other current liabilities or accounts payable in our condensed consolidated balance sheets, through March 31, 2026 and 2025:

Accrued exit and realignment costs, December 31, 2025

Provision for exit and realignment activities:

P&HS Sale separation costs

Professional fees

IT strategic initiatives and other

IT and other strategic initiatives

Cash payments

Accrued exit and realignment costs, March 31, 2026

Provision for exit and realignment activities:

Professional fees

IT strategic initiatives and other

Cash payments

Accrued exit and realignment costs, June 30, 2025

Provision for exit and realignment activities:

Professional fees

IT strategic initiatives and other

Cash payments

Accrued exit and realignment costs, September 30, 2025

Accrued exit and realignment costs, December 31, 2024

4 unchanged sentences

Accrued exit and realignment costs, March 31, 2025

Provision for exit and realignment activities:

Professional fees

IT strategic initiatives and other

Cash payments

Accrued exit and realignment costs, June 30, 2024

Provision for exit and realignment activities:

Professional fees

IT strategic initiatives and other

Cash payments

Accrued exit and realignment costs, September 30, 2024

In addition to the exit and realignment accruals in the preceding table, we also incurred $ 0.1 million and $ 7.7 million of costs that were expensed as incurred for the three and nine months ended September 30, 2025, which primarily related to wind-down costs of Fusion5.

Debt, net of unamortized deferred financing costs, as of September 30, 2025 and December 31, 2024 consisted of the following:

September 30, 2025

In addition to the exit and realignment accruals in the preceding table and the $ 52 million gain on patient service equipment, we also incurred $ 4.1 million of costs that were expensed as incurred during the three months ended March 31, 2026, which primarily related to P&HS Sale separation costs and $ 7.1 million of costs that were expensed as incurred for the three months ended March 31, 2025, which primarily related to wind-down costs of Fusion5.

Debt, net of unamortized deferred financing costs, as of March 31, 2026 and December 31, 2025 consisted of the following:

March 31, 2026

December 31, 2025

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Long-term debt

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

On March 29, 2022, we entered into a term loan credit agreement with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (the Credit Agreement) that provides for two credit facilities:

3 unchanged sentences

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 March 31, 2026.

On March 10, 2021, we issued $ 500 million of 4.500 % senior unsecured notes due in March 2029 (the 2029 Unsecured Notes), with interest payable semi-annually.

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

The 2029 Unsecured Notes have $ 479 million in principal outstanding excluding unamortized deferred financing costs as of March 31, 2026.

On March 29, 2022, we issued $ 600 million of 6.625 % senior unsecured notes due in April 2030 (the 2030 Unsecured Notes), with interest payable semi-annually.

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

The 2030 Unsecured Notes have $ 552 million in principal outstanding excluding unamortized deferred financing costs as of March 31, 2026.

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

3 unchanged sentences

The Revolving Credit Agreement matures in March 2027.

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

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

At September 30, 2025 and December 31, 2024, we

had letters of credit, which reduce Revolver availability, totaling $ 29 million and $ 31 million, leaving $ 150 million and $ 419 million available for borrowing.

At March 31, 2026 and December 31, 2025, we had $ 255 million and $ 204 million in outstanding borrowings on our Revolving Credit Agreement.

At March 31, 2026 and December 31, 2025, we had letters of credit, which reduce Revolving Credit Agreement availability, totaling $ 29 million and $ 30 million, leaving $ 166 million and $ 217 million available for borrowing.

As of March 31, 2026, the Term Loan A and the Revolving Credit Agreement are scheduled to mature within twelve months.

Absent refinancing, extension, or repayment of these obligations, the Company would need additional liquidity to meet its obligations as they come due during the twelve-month period following the issuance of these financial statements.

On May 11, 2026, we announced that we have received commitments from existing creditors to exchange and/or extend a substantial portion of our debt, which would extend the maturity of these obligations beyond twelve months from the balance sheet date (Balance Sheet Optimization Transaction), subject to satisfaction of certain customary conditions.

Based on the signed commitments received and the actions planned and described below, management expects the Company will have sufficient liquidity to meet its obligations as they come due during the twelve-month period following the issuance of these financial statements.

We intend to amend and extend the Revolving Credit Agreement into a revolving credit facility maturing in 2030, subject to earlier maturity in December 2028 based on the amount of certain levels of future indebtedness, with aggregate commitments of up to $ 300 million, for which, subsequent to the balance sheet date, we received commitments from existing lenders under the Revolving Credit Agreement.

We anticipate repaying the existing Revolving Credit Agreement using the proceeds from the P&HS business sale.

We intend to refinance the Term Loan A through the proceeds from the new 9.000 % senior secured first lien notes due 2032 to be issued in connection with the Balance Sheet Optimization Transaction, for which subsequent to the balance sheet date, we received commitments from certain holders of the 2029 Unsecured Notes and 2030 Unsecured Notes, subject to satisfaction of certain customary conditions.

While we have the intent and ability to refinance the Term Loan A beyond the next twelve months, these commitments expire within twelve months of the balance sheet date and therefore, the outstanding balance of the Term Loan A has been classified as a current liability as of March 31, 2026.

In addition to the impacts to the Term Loan A and the Revolving Credit Agreement described above, the Balance Sheet Optimization Transaction will include offers to exchange the 2029 Unsecured Notes into a combination of new 9.000 % senior secured first lien notes due 2032 and new 9.750 % senior secured second lien notes due 2033, as well as the 2030 Unsecured Notes into new 9.750 % senior secured second lien notes due 2033.

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

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

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

As of September 30, 2025, future principal payments due under our debt agreements or anticipated to be repaid within twelve months, were as follows:

2025 (remainder)

Current maturities at September 30, 2025 represent $ 280 million in debt anticipated to be repaid within the next twelve months in connection with expected net cash proceeds related to the Purchase Agreement.

Note 9—Share-Based Compensation

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

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

We use authorized and unissued common shares for grants of RSAs, SARs, PSAs or for stock option exercises.

At September 30, 2025, approximately 2.2 million common shares were available for issuance under the Plan.

We anticipate approximately 1.8 million unvested shares to be forfeited in connection with closing of the sale of the P&HS segment, which would increase the common shares available for issuance by this amount.

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

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

Under the 2018 Stock Incentive Plan, if outstanding equity awards are not assumed or substituted in connection with a change in control, unvested awards will vest in full upon the change in control.

Under the 2023 Omnibus Incentive Plan, unless the individual award agreements provide otherwise, if the successor company assumes the awards, vesting of the award will be accelerated upon a subsequent termination of employment without cause or, if the teammate resigns for good reason, in each case, within 24 months following the change in control, with any performance-based awards deemed earned based on the target performance levels.

Share-based compensation (benefit) expense for the three and nine months ended September 30, 2025 was ($ 0.1 ) million and $ 9.2 million with recognized tax expense of less than $ 0.1 million and benefits of $ 2.4 million.

Share-based compensation expense for the three and nine months ended September 30, 2024 was $ 3.5 million and $ 12.0 million with recognized tax benefits of $ 0.9 million and $ 3.1 million.

For the three months ended September 30, 2025, we incurred a $ 4.0 million benefit for changes in expected performance achievement associated with our 2023, 2024, and 2025 PSAs.

Unrecognized compensation cost related to nonvested RSAs, net of estimated forfeitures, was $ 27 million at September 30, 2025.

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

Unrecognized compensation cost related to nonvested PSAs as of September 30, 2025 was $ 4.3 million and will be recognized primarily in 2025, 2026, and 2027 if the related performance targets are met at the current level expected.

The following table summarizes the activity and value of nonvested RSAs and PSAs for the three and nine months ended September 30, 2025 and 2024:

Three Months Ended

September 30,

Grant-date Fair

Nonvested awards at beginning of period

Nonvested awards at end of period

Nine Months Ended

September 30,

Grant-date Fair

Nonvested awards at beginning of period

Nonvested awards at end of period

The total fair value of RSAs and PSAs vested during the three and nine months ended September 30, 2025 was $ 1.7 million and $ 14 million.

The total fair value of RSAs and PSAs vested during the three and nine months ended September 30, 2024 was $ 0.3 million and $ 17 million.

We were in compliance with our debt covenants at March 31, 2026.

As of March 31, 2026, future principal payments due under our debt agreements or anticipated to be repaid within twelve months, excluding the impact of the Balance Sheet Optimization Transaction described above, were as follows:

Current maturities at March 31, 2026 include $ 255 million in debt anticipated to be repaid within the next twelve months in connection with net cash proceeds received from the P&HS business sale and $ 326 million in principal outstanding on the Term Loan A which matures in March 2027.

Note 6—Derivatives

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We do not enter into derivative financial instruments for trading purposes.

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

We pay interest on our Credit Agreement at rates that fluctuate based on changes in benchmark interest rates.

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

The interest rate swaps were designated as cash flow hedges.

Cash flows related to the interest rate swap agreement are included in interest expense, net within discontinued operations, refer to Note 3.

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

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

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

The following table summarizes the terms and fair value of our outstanding cash flow hedges as of September 30, 2025:

Derivative Assets

Derivative Liabilities

Maturity Date

Classification

Interest rate swaps

Other assets, net

Other liabilities

The following table summarizes the terms and fair value of our outstanding cash flow hedges as of December 31, 2024:

Derivative Assets

Derivative Liabilities

The following table summarizes the terms and fair value of our outstanding cash flow hedges as of March 31, 2026 and December 31, 2025:

March 31, 2026

December 31, 2025

Notional Amount

Derivative Assets Fair Value

Derivative Liabilities Fair Value

Maturity Date

Classification

Interest rate swaps

other current assets

other assets, net

Other liabilities

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

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

The following table summarizes the effect of cash flow hedge accounting on our condensed consolidated statements of operations for the three and nine months ended September 30, 2025:

Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)

Total Amount of Expense Line Items Presented in the Condensed Consolidated Statement of Operations in Which the Effects are Recorded

Amount of Gain Reclassified from Accumulated Other Comprehensive Loss into Net Loss

Three months ended September 30, 2025

Nine months ended September 30, 2025

Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Income

Three months ended September 30, 2025

Nine months ended September 30, 2025

Three months ended September 30, 2025

Nine months ended September 30, 2025

Interest rate swaps

Loss from discontinued operations, net of tax

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

The following table summarizes the effect of cash flow hedge accounting on our condensed consolidated statements of operations for the three and nine months ended September 30, 2024:

Amount of (Loss) Gain Recognized in Other Comprehensive Income (Loss)

Total Amount of Expense Line Items Presented in the Condensed Consolidated Statement of Operations in Which the Effects are Recorded

Amount of Gain Reclassified from Accumulated Other Comprehensive Loss into Net Loss

Three months ended September 30, 2024

Nine months ended September 30, 2024

The following table summarizes the effect of cash flow hedge accounting on our condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025:

Three Months Ended

Amount of Gain Recognized in Other Comprehensive Income (Loss)

Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Income

Three months ended September 30, 2024

Nine months ended September 30, 2024

Three months ended September 30, 2024

Nine months ended September 30, 2024

Interest rate swaps

Loss from discontinued operations, net of tax

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

Interest expense, net

Total Amount of Expense Line Items Presented in the Condensed Consolidated Statements of Operations in Which the Effects are Recorded

Amount of Gain Reclassified from Accumulated Other Comprehensive Loss into Income

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

Note 7—Income Taxes

The effective tax rate was ( 54.3 )% and 0.8 % for the three and nine months ended September 30, 2025, compared to ( 31.6 )% and 32.2 % for the three and nine months ended September 30, 2024.

The change in these rates were primarily from changes in results of continuing operations, including the tax treatment associated with the $ 80 million transaction breakage incurred during the nine months ended September 30, 2025, as well as the impact of certain discrete tax items relative to pre-tax (loss) income.

The liability for unrecognized tax benefits was $ 52 million and $ 36 million at September 30, 2025 and December 31, 2024.

Substantially all of the $ 16 million increase in the liability for unrecognized tax benefits was the result of the tax treatment associated with the $ 80 million Rotech transaction breakage fee.

Included in the liability at September 30, 2025 and December 31, 2024 were no tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The effective tax rate was 60.2 % for the three months ended March 31, 2026, compared to 29.4 % for the three months ended March 31, 2025.

The change in these rates was primarily from changes in results of operations and changes in forecasted results reflected in the tax rates.

The liability for unrecognized tax benefits was $ 32 million and $ 49 million at March 31, 2026 and December 31, 2025.

Included in the liability at March 31, 2026 and December 31, 2025 were no tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

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

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In June 2025, we received the final assessment from the IRS for the 2015 through 2018 tax years, including interest.

The uncertain tax position for these years and related accrued interest has been remeasured to reflect the final amount to be paid.

The uncertain tax position for these years and related accrued interest have been remeasured to reflect the final amount to be paid.

This matter does not impact our 2023, 2024 or future tax years.

As of September 30, 2025, we owed $ 37 million associated with the NOPA matter, which includes $ 11 million of interest accrued on the matter through September 30, 2025.

The balance sheet classification and amount owed may be subject to change depending on the timing of a final agreement with the IRS.

In March 2026, we paid $ 19 million to the IRS to settle the 2015 through 2018 audit years, inclusive of $ 5.8 million of accrued interest.

As of March 31, 2026, the remaining amount owed associated with the transfer pricing matter was $ 16 million, which includes $ 5.2 million of interest accrued on the matter through March 31, 2026.

The balance sheet classification and amount owed may be subject to change depending on the timing of a final assessment from the IRS for the 2019-2022 audit years.

On July 4, 2025, the U.S.

Congress passed budget reconciliation bill H.R.

Congress enacted budget reconciliation bill H.R.

1 referred to as the One Big Beautiful Bill (OBBB).

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cash taxes with no material impact to the effective tax rate.

Note 12—Net (Loss) Income per Common Share

The following summarizes the calculation of net (loss) income per common share attributable to common shareholders for the three and nine months ended September 30, 2025 and 2024:

Note 8—Net Loss per Common Share

The following summarizes the calculation of net loss per common share attributable to common shareholders for the three months ended March 31, 2026 and 2025:

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

(Loss) income from continuing operations, net of tax

Loss from continuing operations, net of tax

Loss from discontinued operations, net of tax

( 1,044,316 )

Weighted average shares outstanding - basic

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Basic loss per common share:

(Loss) income from continuing operations, net of tax

Loss from continuing operations, net of tax

Loss from discontinued operations, net of tax

Diluted loss per common share:

(Loss) income from continuing operations, net of tax

Loss from continuing operations, net of tax

Loss from discontinued operations, net of tax

Share-based awards for the three and nine months ended September 30, 2025 of approximately 2.3 million and 2.2 million and 1.5 million shares for the nine months ended September 30, 2024 were excluded from the calculation of diluted loss per common share as the effect would be anti-dilutive.

In accordance with ASC 260, dilutive shares are included in computing the diluted loss per common share from discontinued operations, net of tax and net loss per diluted common share for the three months ended September 30, 2024 even though they were anti-dilutive, as the control number (income from continuing operations, net of tax) was in an income position.

Share-based awards for the three months ended March 31, 2026 and 2025 of approximately 1.3 million and 1.8 million were excluded from the calculation of diluted loss per common share as the effect would be anti-dilutive.

Note 9—Shareholders’ Equity

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

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

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

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

During the three months ended March 31, 2026, we did no t repurchase any shares.

During the period from February 26, 2025 (the date the share repurchase program was authorized) through December 31, 2025, we repurchased shares in open-market transactions and retired approximately 2.0 million shares of our common stock for an aggregate of $ 10 million, or a weighted average price per share of $ 5.19 .

Note 10—Accumulated Other Comprehensive (Loss) Income

The following table shows the changes in accumulated other comprehensive (loss) income by component for the three and nine months ended September 30, 2025 and 2024:

Accumulated other comprehensive (loss) income, June 30, 2025

Other comprehensive income (loss) before reclassifications

Other comprehensive income (loss) before reclassifications, net of tax

Amounts reclassified from accumulated other comprehensive income (loss)

Amounts reclassified from accumulated other comprehensive income (loss), net of tax

Other comprehensive income (loss)

Accumulated other comprehensive (loss) income, three months ended September 30, 2025

Accumulated other comprehensive (loss) income, June 30, 2024

The following table shows the changes in accumulated other comprehensive (loss) income by component for the three months ended March 31, 2026 and 2025:

Accumulated other comprehensive (loss) income, December 31, 2025

Other comprehensive income (loss) before reclassifications

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Other comprehensive income (loss)

Accumulated other comprehensive (loss) income, three months ended September 30, 2024

Accumulated other comprehensive (loss) income, three months ended March 31, 2026

Accumulated other comprehensive (loss) income, December 31, 2024

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Other comprehensive income (loss)

Accumulated other comprehensive (loss) income, nine months ended September 30, 2025

Accumulated other comprehensive (loss) income, December 31, 2023

Other comprehensive income before reclassifications

Other comprehensive income before reclassifications, net of tax

Amounts reclassified from accumulated other comprehensive income (loss)

Amounts reclassified from accumulated other comprehensive income (loss), net of tax

Other comprehensive income (loss)

Accumulated other comprehensive (loss) income, nine months ended September 30, 2024

Accumulated other comprehensive (loss) income, three months ended March 31, 2025

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

Note 11—Segment Information

As described in Note 1, the P&HS Sale was completed on December 31, 2025, and we no longer report the P&HS business within continuing operations.

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

Our President and Chief Executive Officer is the chief operating decision maker (CODM).

The CODM reviews financial information about the continuing operations business at an enterprise-wide consolidated level when allocating resources and assessing business performance.

Accordingly, we have determined that our business activities comprise a single operating and reporting segment.

Income (loss) from continuing operations, net of tax is the profit or loss measure used by the CODM that is most consistent with GAAP and therefore is the required measure of profitability.

Note 12—Commitments, Contingent Liabilities, and Legal Proceedings

On June 3, 2025, the Company, Rotech and Merger Sub mutually agreed to terminate the Merger Agreement and entered into the Termination Agreement.

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

This payment fulfills the obligation as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 for disclosure of other material contractual obligations.

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

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

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

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

Based on current knowledge and the advice of counsel, we believe that the accrual as of September 30, 2025 for currently pending matters considered probable of loss, is sufficient.

Based on current knowledge and the advice of counsel, we believe that the accrual as of March 31, 2026 for currently pending matters considered probable of loss, is sufficient.

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

Note 16—Segment Information

As described in Note 1, the P&HS segment has met the accounting requirements to be classified as discontinued operations and held for sale at September 30, 2025, and we no longer report the P&HS segment.

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

Our President, Chief Executive Officer & Director is the chief operating decision maker (CODM).

The CODM reviews financial information about the continuing operations business at an enterprise-wide consolidated level when allocating resources and assessing business performance.

Accordingly, we have determined that our business activities comprise a single operating and reporting segment.

Net income (loss) from continuing operations is the profit or loss measure used by the CODM that is most consistent with GAAP and therefore is the required measure of profitability.

Note 13—Recent Accounting Pronouncements

In December 2023, the FASB Issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which will require additional annual income tax disclosures, including disclosure of reconciling items by jurisdiction and nature to the extent those items exceed a specified threshold.

In addition, this ASU will require disclosure of income taxes paid, net of refunds received disaggregated by federal, state, and foreign and by jurisdiction if the amount is more than 5% of total income tax payments, net of refunds received.

The amendments in this ASU are effective for us in annual periods beginning after December 15, 2024.

The amendments in this ASU are required to be applied on a prospective basis and retrospective adoption is permitted.

We expect this ASU to only impact our disclosures with no impacts to our results of operations, financial condition and cash flows.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses which will require additional disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions.

The amendments in this ASU are effective for us in annual periods beginning after December 15, 2026.

The amendments in this ASU are required to be applied on a prospective basis and retrospective adoption is permitted.

We expect this ASU to only impact our disclosures with no impacts to our results of operations, financial condition and cash flows .

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient permitting the

assumption that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets.

The amendments in this ASU are effective for us in annual and interim periods beginning after December 15, 2025.

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

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software, which will require capitalization of software costs when management has authorized and committed to funding software projects and it is probable that the project will be completed and the software will be used to perform the function intended.

The amendments in this ASU are effective for us in annual periods beginning after December 15, 2027.

The amendments in this ASU are required to be applied on a prospective basis and retrospective adoption is permitted.

We are currently evaluating the effects of adopting this guidance on our consolidated financial statements.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 for disclosure of recent accounting pronouncements.

Note 14—Subsequent Events

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

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

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

On May 11, 2026, subsequent to March 31, 2026 but prior to the issuance of these condensed consolidated financial statements, the Company announced the Balance Sheet Optimization Transaction with commitments from existing creditors.

We intend to refinance the Term Loan A through the proceeds from the issuance of new 9.000 % senior secured first lien notes due 2032.

We intend to amend and extend the Revolving Credit Agreement into a revolving credit facility maturing in 2030 with aggregate commitments of up to $ 300 million.

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

What changed 10-Q

Item 1. Financial Statements