What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-11 · 155 added, 88 removed, 150 unchanged (62% of the section changed)

4 unchanged sentences

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.

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

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.

4 unchanged sentences

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 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.

Loss from continuing operations per common share was $(1.16) for the three months ended June 30, 2026 as compared to $(1.09) for the three months ended June 30, 2025.

Our financial results for the three months ended June 30, 2026 as compared to the prior year were impacted by a decrease in net revenue of $69 million, an increase in exit and realignment charges, net of $23 million, a $17 million loss on modification and extinguishment of debt, and an increase in acquisition-related charges and intangible amortization of $15 million, partially offset by prior year expenses that did not recur in the current year period, including the transaction breakage fee of $80 million and transaction financing fees, net of $18 million, and lower selling, general, and administrative expenses (SG&A) of $24 million.

Loss from continuing operations per common share was $(1.25) for the six months ended June 30, 2026 as compared to $ (1.14) for the six months ended June 30, 2025.

Our financial results for the six months ended June 30, 2026 as compared to prior year were impacted by a decrease in net revenue of $115 million, an increase in acquisition-related charges and intangible amortization of $21 million, and a $17 million loss on modification and extinguishment of debt, partially offset by prior year expenses that did not recur in the current year period, including the transaction breakage fee of $80 million and transaction financing fees, net of $18 million, lower SG&A of $31 million and lower exit and realignment charges, net of $14 million .

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

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.

In June 2026, we exchanged and/or extended a substantial portion of our debt (the Balance Sheet Optimization Transaction).

In exchange (the Exchange Offers) for our outstanding 4.500% Senior Notes due 2029 (the 2029 Notes) and 6.625% Senior Notes due 2030 (the 2030 Notes, and together with the 2029 Notes, the Unsecured Notes), we offered (i) newly issued 9.000% Senior Secured First Lien Notes due 2032 (the 2032 Notes) to holders that participated in the new money issuance of the First Lien Notes and (ii) newly issued 9.750% Senior Secured Second Lien Notes due 2033 (the 2033 Notes, and together with the 2032 Notes, the Secured Notes).

In connection with the Exchange Offers for the 2029 Notes, we offered $326 million in aggregate principal amount of the newly issued 2032 Notes for cash.

The Secured Notes were issued and guaranteed on a senior secured basis by the Company’s existing and future wholly owned domestic subsidiaries (including each subsidiary guarantor of

the Unsecured Notes), subject to certain exceptions.

The 2032 Notes were used to extinguish the $326 million in outstanding principal on the Term Loan A.

At the expiration of the Exchange Offers, $478 million in aggregate principal amount of 2029 Notes were tendered and $548 million in aggregate principal amount of 2030 Notes were tendered and cancelled, representing approximately 99.9% and 99.2% of the principal outstanding.

Following such cancellation, and as of June 30, 2026, $0.3 million in aggregate principal amount of the 2029 Notes and $4.2 million in aggregate principal amount of the 2030 Notes remain outstanding.

The Unsecured Notes are effectively subordinated to any of our secured indebtedness, including the Secured Notes and outstanding indebtedness under our credit agreements.

The Exchange Offers of the Unsecured Notes for Secured Notes have been accounted for as a modification of debt in accordance with ASC 470, Debt .

The 2032 Notes will mature in June 2032 and have $539 million of principal outstanding excluding unamortized deferred financing costs as of June 30, 2026.

The 2033 Notes will mature in June 2033 and have $698 million of principal outstanding excluding unamortized deferred financing costs as of June 30, 2026.

The completion of the Balance Sheet Optimization Transaction resulted in a loss on modification and extinguishment of debt of $17 million, including $16 million debt modification third party fees and $0.8 million in recognition of previously deferred debt issuance costs.

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.

A commercial Payor, with which we had multiple separately managed contracts, has terminated 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.

Such transitions of agreements and services were completed throughout the first half of 2026.

The terminated portion of this relationship reflected $37 million, or 3%, of our net revenue, including nearly all of our capitation revenue, for the six months ended June 30, 2026.

There was no related revenue for the three months ended June 30, 2026.

In connection with this contract termination, we sold $2.9 million and $85 million of patient service equipment during the three and six months ended June 30, 2026, which resulted in a $0.6 million loss and a $(51) million gain on sales of patient service equipment within exit and realignment charges, net on our condensed consolidated statements of operations.

The proceeds from the sales 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.

The following discussion and analysis describes results of operations and material changes in the financial condition of the Company since December 31, 2025.

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

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Home respiratory therapy

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.

Six Months Ended

(Dollars in thousands)

Sleep therapy

Home respiratory therapy

The decrease in net revenue for the three and six months ended June 30, 2026 was primarily driven by an $81 million and $123 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.

For the three months ended June 30, 2026, excluding the impact of the commercial Payor contract termination, notable drivers of net revenue growth by product category included Diabetes of $7.8 million, Sleep therapy of $7.7 million, Ostomy of $3.8 million and Urology of $2.6 million, partially offset by declines in Home respiratory therapy of $6.1 million and Wound care of $3.2 million.

For the six months ended June 30, 2026, excluding the impact of the commercial Payor contract termination, notable drivers of net revenue growth by product category included Diabetes of $6.2 million, Sleep therapy of $14 million, Ostomy of $5.5 million and Urology of $4.2 million, partially offset by declines in Home respiratory therapy of $10 million and Wound care of $8.6 million.

Cost of net revenue.

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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.

Six Months Ended

(Dollars in thousands)

Cost of products sold

Patient service equipment depreciation

Cost of net revenue

As a % of net revenue

The decrease in cost of net revenue for the three and six months ended June 30, 2026 reflects the lower cost associated with net revenue decline of 10.1% and 8.5%, partially offset by manufacturer price increases.

Operating expenses.

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As a % of net revenue

Transaction breakage fee

Acquisition-related charges and intangible amortization

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.

Exit and realignment charges, net

NM - Not meaningful

Six Months Ended

(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 SG&A for the three and six months ended June 30, 2026 was driven primarily by a reduction in net revenue of $69 million and $115 million and realized personnel and other savings primarily due to the termination of the aforementioned contract with a commercial Payor , partially offset by inflationary increases.

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

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

Intangible amortization was $29 million and $58 million for the three and six months ended June 30, 2026 and $7.6 million and $15 million for the three and six months ended June 30, 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.

Exit and realignment charges, net were $26 million and $2.2 million for the three and six months ended June 30, 2026 and primarily included a $0.6 million loss and a $(51) million gain on sales of patient service equipment in connection with the contract termination with the commercial Payor described above, P&HS Sale related costs, including reimbursable separation costs of $22 million and $48 million, $2.1 million and $2.5 million in professional fees and charges related to IT and other strategic initiatives of $1.0 million and $3.0 million.

Exit and realignment charges, net were $2.5 million and $16 million for the three and six months ended June 30, 2025 primarily including professional fees associated with strategic initiatives of $1.9 million and $8.1 million.

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

Non-operating expenses.

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Effective interest rate

Loss on modification and extinguishment of debt

Transaction financing fees, net

Other expense, net

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.

NM - Not meaningful

Six Months Ended

(Dollars in thousands)

Interest expense, net

Effective interest rate

Loss on modification and extinguishment of debt

Transaction financing fees, net

Other expense, net

NM - Not meaningful

Interest expe nse, net for the three and six months ended June 30, 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 and six months ended June 30, 2025.

Loss on modification and extinguishment of debt of $17 million includes $16 million debt modification third party fees and $0.8 million in recognition of previously deferred debt issuance costs upon the completion of the Balance Sheet Optimization Transaction.

Transaction financing fees, net for the three and six months ended June 30, 2025 includes $12 million in net interest paid and $6.7 million in recognition of previously deferred debt issuance costs, all in connection with the previously expected Rotech acquisition.

Other expense, net for the three and six months ended June 30, 2026 and 2025 primarily includes interest cost and net actuarial losses related to our U.S.

retirement plan.

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(Dollars in thousands)

Income tax provision (benefit)

Effective tax rate

Six Months Ended

(Dollars in thousands)

Income tax benefit

Effective tax rate

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

The change in these rates was primarily from changes in results of operations, primarily due to the tax impact of the completion of the Balance Sheet Optimization Transaction in the second quarter of 2026, and the tax treatment associated with the $80 million transaction breakage fee recorded in the second quarter of 2025.

Non-GAAP Financial Measures

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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.

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.

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,

The following tables present the reconciliations of loss from continuing operations, net of tax to Adjusted EBITDA and FCF for the three and six months ended June 30, 2026 and 2025 :

Three Months Ended June 30,

(Dollars in thousands)

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

Income tax provision (benefit)

Interest expense, net

Acquisition-related charges and intangible amortization (1)

Transaction breakage fee (2)

Exit and realignment charges, net (3)

Transaction financing fees, net (4)

Litigation and related charges (5)

Other depreciation and amortization (6)

Stock compensation (7)

Loss on modification and extinguishment of debt (8)

Adjusted EBITDA (non-GAAP)

Non-cash convert to sale write off expense (10)

Patient service equipment capital expenditures

Interest paid

Free cash flow (non-GAAP)

Six Months Ended June 30,

(Dollars in thousands)

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

Income tax benefit

1 unchanged sentence

Acquisition-related charges and intangible amortization (1)

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

Transaction breakage fee (2)

Exit and realignment charges, net (3)

Transaction financing fees, net (4)

Litigation and related charges (5)

1 unchanged sentence

Stock compensation (7)

Loss on modification and extinguishment of debt (8)

Adjusted EBITDA (non-GAAP)

3 unchanged sentences

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 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.

The following items have been excluded from our non-GAAP financial measures:

(1) Acquisition-related charges and intangible amortization for the three and six months ended June 30, 2025 includes $6.4 million and $22 million of acquisition-related charges 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) 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.

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

(3) During the three and six months ended June 30, 2026 exit and realignment charges, net were $26 million and $2.2 million and primarily included a $0.6 million loss and $(51) million gain on sales of patient service equipment in connection with the contract termination with the commercial Payor described above, P&HS Sale related costs, including reimbursable separation costs of $22 million and $48 million, $2.1 million and $2.5 million in professional fees and charges related to IT and other strategic initiatives of $1.0 million and $3.0 million.

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

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

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 for the three and six months ended June 30, 2025 includes $12 million in net interest paid and $6.7 million in recognition of previously deferred debt issuance costs, all in connection with the previously expected Rotech acquisition.

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

These costs do not occur in the ordinary course of our business 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.

(6) 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.

(7) 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.

(8) Loss on modification and extinguishment of debt of $17 million includes $16 million debt modification third party fees and $0.8 million in recognition of previously deferred debt issuance costs upon the completion of the Balance Sheet Optimization Transaction.

(9) For the three and six months ended June 30, 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.

(10) 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 exit and realignment 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

5 unchanged sentences

(Dollars in thousands)

March 31, 2026

June 30, 2026

December 31, 2025

2 unchanged sentences

Accounts payable

(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.

(1) Based on period end accounts receivable, net and net revenue for the quarters ended June 30, 2026 and December 31, 2025.

Excluding the impact of the Amended Receivables Sale Program, DSO would have been 37.1 and 29.8 as of June 30, 2026 and December 31, 2025.

Liquidity and capital expenditures.

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

Three Months Ended

The following table summarizes our condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025:

Six Months Ended

(Dollars in thousands)

Net cash provided by (used for):

Net cash (used for) provided by:

Operating activities from continuing operations

8 unchanged sentences

Effect of exchange rate changes

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.

Net (decrease) increase in cash and cash equivalents

Cash used for operating activities in the first six months of 2026 reflected a net loss and unfavorable changes in working capital, including $24 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 , a $15 million payment of reimbursable separation costs related to the P&HS Sale as described in Note 4 in the Notes to Condensed Consolidated Financial Statements , $12 million of interest paid in connection with the Balance Sheet Optimization Transaction that was originally scheduled to be paid subsequent to June 30, 2026, and the timing of teammate incentives.

Cash provided by operating activities in the first six months of 2025 reflected a $130 million benefit from accounts receivable sold under the Receivables Sale Program, $104 million of which relates to accounts receivables sold of the P&HS segment, partially offset by an $80 million payment for the termination of the Rotech acquisition, $18 million in transaction financing fees, net for the Rotech financing, and unfavorable changes in working capital from continuing operations.

Cash provided by investing activities in the first six months of 2026 included capital expenditures of $91 million, primarily for patient service equipment and our strategic and operational efficiency initiatives associated with other fixed assets and capitalized software, offset by $112 million in proceeds from sales of patient service equipment and other fixed assets including $85 million in proceeds from sales in connection with the Payor contract termination .

Cash used for investing activities in the first six months of 2025 included capital expenditures of $107 million, primarily for patient service equipment and $27 million in cash used from discontinued operations, offset by $35 million in proceeds from sales of patient service equipment.

Cash used for financing activities in the first six months of 2026 includes $17 million in debt issuance costs paid and net repayments of $204 million under our Revolving Credit Agreement.

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

Capital Resources.

2 unchanged sentences

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.

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.

Total accounts receivable sold under the Amended Receivables Sale Program were $221 million and $466 million during the three and six months ended June 30, 2026.

We collected $239 million and $470 million of the sold accounts receivable during the three and six months ended June 30, 2026.

The losses on sale of accounts receivable recorded in SG&A were $1.8 million and $3.3 million for the three and six months ended June 30, 2026.

As of June 30, 2026 and December 31, 2025 there was a total of $130 million and $134 million of uncollected accounts receivable sold and removed from our condensed consolidated balance sheet under the Amended Receivables Sale Program.

We have $511 million in outstanding Term Loan B under a term loan credit agreement (the Credit Agreement).

The interest rate on the Term Loan B is based on either the Term SOFR or the Base Rate plus an Applicable Rate and matures in March 2029.

The Revolving Credit Agreement provides a revolving borrowing capacity of $300 million.

We have $837 million in outstanding term loans under a term loan credit agreement (the Credit Agreement).

The interest rate on our Revolving Credit Agreement is based on a spread over a benchmark rate (as described in the Revolving Credit Agreement).

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).

The interest rate on the Term Loan B is based on either the Term SOFR or the Base Rate plus an Applicable Rate.

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

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.

The Revolving Credit Agreement matures in January 2030 with potential springing maturities, the earliest being December 2028.

At June 30, 2026, we had no outstanding borrowings on our Revolving Credit Agreement and letters of credit outstanding, which reduce Revolving Credit Agreement availability, totaling $29 million, leaving $271 million available for borrowing.

At December 31, 2025, we had $204 million in outstanding borrowings on our Revolving Credit Agreement and letters of credit outstanding, which reduce Revolving Credit Agreement availability, totaling $30 million, leaving $217 million available for borrowing.

As described in Note 5 in the Notes to Condensed Consolidated Financial Statements, the borrowing capacity was amended on June 15, 2026.

As of December 31, 2025, the borrowing capacity was $450 million.

The Revolving Credit Agreement, the Credit Agreement, the Amended Receivables Sale Program, the 2032 Notes and the 2033 Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of any of the related agreements.

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

We were in compliance with our debt covenants at June 30, 2026.

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

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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 three months ended March 31, 2026, we did not repurchase any shares.

We do not intend to make use of the authorized repurchase program.

During the three and six months ended June 30, 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 believe cash generated by operating activities, including available cash proceeds from the Amended Receivables Sale Program, available financing sources, 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 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.

Recent Accounting Pronouncements

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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● our ability to successfully implement our strategic initiatives;

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

● our ability to timely select and appoint the Company’s next President and CEO;

● 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;

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● 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;

● 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;

● risks related to public health crises or future outbreaks of health crises or other adverse public health developments such as the novel coronavirus (COVID-19) global pandemic;

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

● the risk that information systems are interrupted, 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;

● risks related to public health crises or future outbreaks of health crises or other adverse public health developments;

● the risk of an impairment to goodwill or other long-lived assets;

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● our ability to meet performance targets specified by customer contracts under contractual commitments;

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

● the outcome of outstanding and any future litigation, including product and professional liability claims;

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

Quantitative and Qualitative Disclosures About Market Risk

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 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