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Item 2. Management’s Discussion and Analysis

2026-05-11 compared with 2025-10-31 · 132 added, 199 removed, 106 unchanged (76% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis describes results of operations and material changes in the financial condition of Owens & Minor, Inc.

and its subsidiaries since December 31, 2024 on a continuing operations basis unless otherwise noted.

Trends of a material nature are discussed to the extent known and considered relevant.

This discussion should be read in conjunction with the consolidated financial statements, related notes thereto, and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

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

Sale of Products & Healthcare Services Business

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

We retained a 5% equity interest in the P&HS business.

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 Condensed Consolidated Financial Statements reflect the continuing operations of Accendra Health, Inc.

unless otherwise noted.

See Note 2 in the Notes to Condensed Consolidated Financial Statements for additional information regarding discontinued operations.

Accendra Health, Inc., along with its subsidiaries, (collectively, the Company, we, us, or our) is a leading nationwide provider of products, technology, and services that supports health beyond the hospital for millions of people each year.

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

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

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

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

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

Net loss from continuing operations per common share was ($0.08) for the three months ended March 31, 2026 as compared to ($0.05) for the three months ended March 31, 2025.

Our financial results for the three months ended March 31, 2026 as compared to the prior year were impacted by lower net revenue of $46 million and an increase in interest expense, net of $8.1 million, partially offset by a decrease in exit and realignment (income) charges, net of $37 million and an increased income tax benefit of $8.2 million.

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

Purchase Agreement to Sell the Products & Healthcare Services Segment

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

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

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

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

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

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

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

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

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

Termination of Acquisition of Rotech

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 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, on June 5, 2025, we made a cash payment to Rotech of $80 million.

Notice of Contract Termination with a Commercial Payor

A commercial Payor, with which we have multiple separately managed contracts, recently notified us that it intends to terminate certain of our contracts with them.

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

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

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

Balance Sheet Optimization Transaction

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.

Contract Termination with a Commercial Payor and Equipment Sales

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

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

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

The terminated portion of this relationship reflected $37 million or 6% of our net revenue including nearly all of our capitation revenue, for the three months ended March 31, 2026.

We do not anticipate material impacts to our operating income from such Payor's remaining contract terminations for periods ending beyond March 31, 2026.

In connection with this contract termination, we sold $82 million of patient service equipment during the three months ended March 31, 2026, which resulted in $52 million of gains on sales of patient service equipment within exit and realignment (income) charges, net on our condensed consolidated statements of operations.

The proceeds from the sale are reflected within the proceeds from sale of patient service equipment line item within the investing activities section of our condensed consolidated statements of cash flows.

Results of Operations

The following discussion and analysis describes results of operations and material changes in the financial condition of Accendra Health, Inc.

and its subsidiaries since December 31, 2025.

Trends of a material nature are discussed to the extent known and considered relevant.

Three Months Ended

September 30,

(Dollars in thousands)

1 unchanged sentence

Home respiratory therapy

Nine Months Ended

September 30,

(Dollars in thousands)

Sleep therapy

Home respiratory therapy

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

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

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

The decrease in net revenue for the three months ended March 31, 2026 was primarily driven by a $42 million decrease in revenue from the terminated commercial Payor contracts described above, which drove declines in several product categories, including sleep therapy and home respiratory therapy.

Cost of net revenue.

Three Months Ended

September 30,

(Dollars in thousands)

2 unchanged sentences

Cost of net revenue

Nine Months Ended

September 30,

(Dollars in thousands)

Cost of products sold

Patient service equipment depreciation

Cost of net revenue

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

As a % of net revenue

The decrease in cost of net revenue for the three months ended March 31, 2026 reflects the lower cost associated with net revenue decline of 6.8%, partially offset by manufacturer price increases.

Operating expenses.

Three Months Ended

September 30,

(Dollars in thousands)

2 unchanged sentences

Acquisition-related charges and intangible amortization

Exit and realignment charges, net

Nine Months Ended

September 30,

(Dollars in thousands)

Selling, general and administrative expenses

As a % of net revenue

Transaction breakage fee

Acquisition-related charges and intangible amortization

Exit and realignment charges, net

NM - Not meaningful

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

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

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

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

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

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

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

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

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

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

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

Exit and realignment (income) charges, net

The decrease in selling, general and administrative expenses (SG&A) for the three months ended March 31, 2026 was driven primarily from a reduction in net revenue of $46 million and realized personnel savings actions, partially offset by inflationary increases.

Acquisition-related charges were $16 million for the three months ended March 31, 2025 related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees.

Intangible amortization was $29 million and $7.6 million for the three months ended March 31, 2026 and 2025 relating to intangible assets acquired in the Apria and Byram acquisitions.

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 the commercial Payor described above.

Exit and realignment (income) charges, net was $(24) million for the three months ended March 31, 2026 and primarily included a $(52) million gain on sales of patient service equipment in connection with the contract termination with the commercial Payor described above, net separation costs incurred after the P&HS Sale of $26 million and charges related to IT and other strategic initiatives of $2.0 million.

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

These charges primarily included professional fees associated with strategic initiatives of $6.2 million and wind-down costs of Fusion5 of $6.8 million.

Non-operating expenses.

Three Months Ended

September 30,

(Dollars in thousands)

2 unchanged sentences

Other expense, net

Nine Months Ended

September 30,

(Dollars in thousands)

Interest expense, net

Effective interest rate

Transaction financing fees, net

Other expense, net

NM - Not meaningful

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

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

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

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

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

Interest expe nse, net for the three months ended March 31, 2026 increased compared to the prior year period during which w e 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.

See Note 2 in the Notes to Condensed Consolidated Financial Statements for additional information regarding discontinued operations interest expense, net for the three months ended March 31, 2025.

Other expense, net for the three months ended March 31, 2026 and 2025 includes interest cost and net actuarial losses related to our U.S.

retirement plan.

1 unchanged sentence

Three Months Ended

September 30,

(Dollars in thousands)

Income tax provision (benefit)

Effective tax rate

Nine Months Ended

September 30,

(Dollars in thousands)

Income tax benefit

Effective tax rate

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

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

Adjusted EBITDA

We use Adjusted EBITDA, a financial measure that is not in accordance with U.S.

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

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

Non-GAAP Financial Measures

The following financial measures, Adjusted EBITDA and Free Cash Flow (FCF), are not calculated in accordance with U.S.

generally accepted accounting principles (GAAP).

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

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

We believe Adjusted EBITDA is useful to investors as a supplemental metric to assist readers in assessing our financial performance and in comparing the Company’s performance to that of its competitors.

However, this non-GAAP measure used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

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

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

Three Months Ended September 30,

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

Income tax provision (benefit)

Interest expense, net

Acquisition-related charges and intangible amortization (1)

Exit and realignment charges, net (3)

Litigation and related charges (5)

Other depreciation and amortization (7)

Stock compensation (8)

Adjusted EBITDA (non-GAAP)

Nine Months Ended September 30,

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

Management provides these non-GAAP financial measures to investors as supplemental metrics because management believes it is useful to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company’s performance to that of its competitors.

However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth below should be carefully evaluated.

We use Adjusted EBITDA, a financial measure that is not in accordance with GAAP, to analyze our financial results and as one of our incentive metrics and to provide an understanding of underlying operating results and trends by excluding items that are not closely related to ongoing operations.

We use FCF, a financial measure that is not in accordance with GAAP, to evaluate the capacity of our operations to generate free cash flow.

We utilize FCF as a performance metric.

The costs of the P&HS business that are classified as discontinued operations include only direct operating expenses.

Indirect costs, such as those related to corporate and shared services previously allocated to the P&HS business, do not meet the criteria for discontinued operations and are reported within continuing operations.

These costs (stranded costs) are reported within continuing operations and are included within Adjusted EBITDA.

The following tables present the reconciliations of loss from continuing operations, net of tax to Adjusted EBITDA and FCF for the three months ended March 31, 2026 and 2025 :

Three Months Ended March 31,

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

2 unchanged sentences

Acquisition-related charges and intangible amortization (1)

Transaction breakage fee (2)

Exit and realignment charges, net (3)

Transaction financing fees, net (4)

Exit and realignment (income) charges, net (2)

Litigation and related charges (3)

2 unchanged sentences

Adjusted EBITDA (non-GAAP)

Non-cash convert to sale write off expense (7)

Patient service equipment capital expenditures

Interest paid

Free cash flow (non-GAAP)

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

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

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

(1) Acquisition-related charges and intangible amortization for the three months ended March 31, 2025 includes $16 million of acquisition-related costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees.

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

1 unchanged sentence

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

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

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

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

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

(2) During the three months ended March 31, 2026 exit and realignment (income) charges, net was $(24) million and primarily included a $(52) million gain on sales of patient service equipment in response to the contract termination with a commercial Payor, net separation costs incurred after the P&HS Sale of $26 million and charges related to IT and other strategic initiatives of $2.0 million.

Exit and realignment charges, net were $14 million for the three months ended March 31, 2025 and primarily included professional fees associated with strategic initiatives of $6.2 million and wind-down costs of Fusion5 of $6.8 million.

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

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

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

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

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

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

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

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

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

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

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

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

(6) For the three months ended March 31, 2026 and 2025, other includes interest costs and net actuarial losses related to our frozen noncontributory, unfunded retirement plan for certain retirees in the U.S.

(7) Non-cash convert to sale write off expense includes non-cash charges primarily for equipment converted from rental to sales, excluding such amounts captured within in exit and realignment (income) charges, net.

This reflects the non-cash write-off of the remaining book value of patient service equipment at the time of sale.

The purchase of patient service equipment is captured within capital expenditures and is subsequently charged to our statements of operations through normal depreciation and this non-cash convert to sale write off expense.

This line item does not include non-cash write off expense associated with sales of patient service equipment in connection with the contract termination with a commercial Payor, as such amounts are captured within exit and realignment (income) charges, net.

Financial Condition, Liquidity and Capital Resources

Financial condition .

We monitor operating working capital through days sales outstanding (DSO) and inventory days.

We monitor operating working capital through days sales outstanding (DSO).

We estimate a hypothetical increase (decrease) in DSO of one day would result in a decrease (increase) in our cash balances, an increase (decrease) in borrowings against our Revolving Credit Agreement, or a combination thereof of approximately $7.0 million.

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

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

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

(Dollars in thousands)

September 30, 2025

March 31, 2026

December 31, 2025

Cash and cash equivalents

Accounts receivable

Inventory days (2)

Accounts receivable, net

Accounts payable

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

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

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

(1) Based on period end accounts receivable and net revenue for the quarters ended March 31, 2026 and December 31, 2025.

Excluding the impact of the Amended Receivables Sale Program, DSO would have been 36.1 and 29.8 as of March 31, 2026 and December 31, 2025.

Liquidity and capital expenditures.

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

Nine Months Ended

September 30,

The following table summarizes our condensed consolidated statements of cash flows for the three months ended March 31, 2026 and 2025:

Three Months Ended

(Dollars in thousands)

Net cash (used for) provided by:

Net cash provided by (used for):

Operating activities from continuing operations

Operating activities from discontinued operations

Operating activities

Investing activities from continuing operations

Investing activities from discontinued operations

Investing activities

Financing activities from continuing operations

Financing activities from discontinued operations

Financing activities

Effect of exchange rate changes

Net decrease in cash, cash equivalents and restricted cash

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

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

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

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

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

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

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

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

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

This matter was resolved the following business day.

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

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

Net increase in cash and cash equivalents

Cash used for operating activities in the first three months of 2026 reflected a net loss and unfavorable changes in working capital, including $20 million in payments related to professional and closing costs of the P&HS Sale, a $19 million tax payment as described in Note 7 in the Notes to Condensed Consolidated Financial Statements and payments of teammate incentives.

Cash used for operating activities in the first three months of 2025 reflected a net loss, unfavorable changes in working capital and cash used from discontinued operations of $67 million.

working capital is typical during the first quarter of the year due to the nature of our business and the annual payment of teammate incentives.

Cash used for investing activities in the first three months of 2026 included capital expenditures of $42 million, primarily for patient service equipment and our strategic and operational efficiency initiatives associated with other fixed assets and capitalized software, offset by $96 million in proceeds from sales of patient service equipment and other fixed assets including $82 million in proceeds from sales as a result of the Payor contract termination .

Cash used for investing activities in the first three months of 2025 included capital expenditures of $48 million, primarily for patient service equipment and $17 million in cash used from discontinued operations, offset by $17 million in proceeds from sales of patient service equipment.

Cash provided by financing activities in the first three months of 2026 included net borrowings of $52 million under our Revolving Credit Facility.

Cash provided by financing activities in the first three months of 2025 included net borrowings of $98 million under our Revolving Credit Facility.

Capital Resources.

Our primary sources of liquidity include cash and cash equivalents, Receivables Sale Program, and our Revolving Credit Agreement.

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.

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.

Our primary sources of liquidity include cash and cash equivalents, our Amended Receivables Sale Program, and our Revolving Credit Agreement.

These funds are used to meet our cash obligations which primarily consist of debt service costs, capital expenditures including patient service equipment, inventory purchases, teammate costs, and other operating and non-operating costs.

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 with an aggregate outstanding amount not to exceed $150 million are sold, on a limited-recourse basis, to the Purchasers in exchange for cash.

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

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 consolidated balance sheet under the Amended Receivables Sale Program.

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

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The Revolving Credit Agreement matures in March 2027.

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.

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

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

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.

We also had letters of credit and bank guarantees which support certain leased facilities as well as other normal business activities within our P&HS segment, which is classified as held-for-sale as of September 30, 2025, in the United States and Europe that were issued outside of the Revolving Credit Agreement for $3.5 million and $2.9 million as of September 30, 2025 and December 31, 2024.

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

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

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

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

persons outside the United States in offshore transactions pursuant to Regulation S under the Securities Act.

The Offering was conducted in connection with the financing of the Company’s proposed acquisition of Rotech.

At the closing of the Offering, the gross proceeds were placed into a segregated escrow account where they were held for the benefit of the holders of the New Notes pending the consummation of the proposed acquisition of Rotech.

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

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

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

The terms of the applicable credit agreements

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

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

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

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

On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $100 million and expires in 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 826 thousand shares of our common stock for an aggregate of $6.6 million, or an average price per share of $8.04.

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

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

During the three months ended March 31, 2026, we did not 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.

The timing and amount of future common stock repurchases will depend on various factors, including our capital structure, available liquidity, market conditions, regulatory considerations and opportunities for growth.

We believe cash generated by operating activities, including available cash proceeds from the Amended Receivables Sale Program, available financing sources inclusive of the Balance Sheet Optimization Transaction expected to be completed during the second quarter of 2026, and borrowings under the Revolving Credit Agreement, as well as cash on hand, will be sufficient to fund our working capital needs, capital expenditures, long-term strategic growth, payments under long-term debt and lease arrangements, debt repurchases, share repurchases and other cash requirements.

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

We earn a portion of our operating income in foreign jurisdictions outside the U.S.

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

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

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

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

Contractual Obligations

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

Recent Accounting Pronouncements

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

For a discussion of recent accounting pronouncements, see our Annual Report on Form 10-K for the year ended December 31, 2025 and Note 13 in the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the period ended on March 31, 2026.

Forward-looking Statements

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

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

● our ability to successfully separate from the P&HS business;

● our ability to successfully transition off of transition services timely;

● increasing competitive and pricing pressures in the marketplace;

● our ability to retain existing and attract new customers and our dependence on sales to certain customers;

● our dependence on certain vendors, suppliers and third-parties for key components, raw materials, finished goods, equipment and services;

● our dependence on certain vendors, suppliers and third-parties;

● our ability to successfully identify, close, manage or integrate acquisitions;

● our ability to successfully implement our strategic initiatives;

● our ability to successfully manage our international operations, including risks associated with changes in international trade regulations, foreign currency volatility, adverse tax consequences, and other risks of operating in international markets;

● uncertainties related to the impacts of current and potential tariffs and other trade-related measures, restrictions and policies and any retaliatory counter measures, and our plans to mitigate those impacts;

● our ability to successfully complete the Balance Sheet Optimization Transaction;

● uncertainties related to, and our ability to adapt to and comply with, changes in government regulations, including healthcare, tax and product licensing laws and regulations;

● risks arising from possible violations of legal, regulatory or licensing requirements of the markets in which we operate;

● uncertainties related to general economic, regulatory and business conditions and our ability to adapt to changes in product pricing and other terms of purchase by suppliers of product;

● uncertainties related to reimbursement qualification for non-invasive ventilation products;

● our ability to meet the terms to qualify for supplier funding programs;

● the ability of customers and suppliers to meet financial commitments due to us;

● changes in manufacturer preferences between direct sales and wholesale distribution;

● changing trends in customer profiles and ordering patterns;

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● our ability to attract and retain talented and qualified teammates;

● recalls of any of our products, or safety risks or the discovery of serious safety issues with our products;

● recalls of any products, or safety risks or the discovery of serious safety issues with the products we sell;

● changes, delays and uncertainties in the reimbursement process;

● our ability to adequately establish, maintain, protect and enforce our intellectual property and proprietary rights as well as avoid infringement, misappropriation or other violations of the intellectual property and proprietary rights of third parties;

● our ability to meet the terms to qualify for supplier incentives;

● our ability to avoid infringement, misappropriation or other violations of the intellectual property and proprietary rights of third parties;

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

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

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

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

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

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

Risk Factors” and below in “Item 1A.

Risk Factors” .

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

Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025.

We undertake no obligation to update or revise any forward-looking statements, except as required by applicable law.

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Certain quantitative and qualitative market risk disclosures are described in our Annual Report on Form 10-K for the year ended December 31, 2025.

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

Through March 31, 2026, there have been no material changes in the quantitative and qualitative market risk disclosures described in such Annual Report.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis