What changed in this filing

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Item 1. Financial Statements

2024-11-04 compared with 2024-08-02 · 172 added, 127 removed, 432 unchanged (41% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

6 unchanged sentences

Interest expense, net

Other expense, net

Other expense (income), net

Loss before income taxes

Income tax provision (benefit)

Income tax (benefit) provision

Net loss per common share

2 unchanged sentences

and Subsidiaries

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss )

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Currency translation adjustments

1 unchanged sentence

Change in gains and losses on derivative instruments

Total other comprehensive loss, net of tax

Comprehensive loss

Total other comprehensive income (loss), net of tax

Comprehensive income (loss)

See accompanying notes to consolidated financial statements.

2 unchanged sentences

Consolidated Balance Sheets

September 30,

(in thousands, except per share data)

24 unchanged sentences

authorized - 200,000 shares;

issued and outstanding - 77,048 shares and 76,546 shares as of June 30, 2024 and December 31, 2023

issued and outstanding - 77,062 shares and 76,546 shares as of September 30, 2024 and December 31, 2023

Paid-in capital

6 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

3 unchanged sentences

Share-based compensation expense

Provision (benefit) for losses on accounts receivable

Loss on extinguishment of debt

Benefit for losses on accounts receivable

Loss (gain) on extinguishment of debt

Deferred income tax benefit

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

Gain on sale and dispositions of property and equipment

Gain from sales and dispositions of property and equipment

Changes in operating assets and liabilities:

7 unchanged sentences

Additions to computer software

Proceeds from sale of property and equipment

Proceeds from sales of property and equipment

Cash used for investing activities

2 unchanged sentences

Repayments under amended Receivables Financing Agreement

Repayments of term loans

( 1,286,400 )

Repayments of debt

Cash used for financing activities

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

Net increase in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

18 unchanged sentences

Balance, June 30, 2024

Other comprehensive income

Share-based compensation expense, exercises and other

Balance, September 30, 2024

Balance, December 31, 2022

5 unchanged sentences

Balance, June 30, 2023

Other comprehensive loss

Share-based compensation expense, exercises and other

Balance, September 30, 2023

See accompanying notes to consolidated financial statements.

10 unchanged sentences

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

We report our business under two distinct segments:

We report our business under two segments:

Products & Healthcare Services and Patient Direct.

12 unchanged sentences

Cash that is held by a major bank and has restrictions on its availability to us is classified as restricted cash.

Restricted cash as of June 30, 2024 and December 31, 2023 includes cash held in an escrow account as required by the Centers for Medicare & Medicaid Services in conjunction with the Bundled Payments for Care Improvement initiatives related to wind-down costs of Fusion5, as well as $ 13.4 million and $ 13.5 million of cash deposits received subject to limitations on use until remitted to a third-party financial institution (the Purchaser), pursuant to the Master Receivables Purchase Agreement (RPA).

Restricted cash as of September 30, 2024 and December 31, 2023 includes cash held in an escrow account as required by the Centers for Medicare & Medicaid Services in conjunction with the Bundled Payments for Care Improvement initiatives related to wind-down costs of Fusion5, as well as $ 13.2 million and $ 13.5 million of cash deposits received subject to limitations on use until remitted to a third-party financial institution (the Purchaser), pursuant to the Master Receivables Purchase Agreement (RPA).

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

June 30, 2024

September 30, 2024

December 31, 2023

8 unchanged sentences

Rental revenue, less estimated adjustments, is recognized as earned on a straight-line basis over the noncancelable lease term.

We recorded $ 148 million and $ 153 million for the three months ended June 30, 2024 and 2023 and $ 294 million and $ 300 million for the six months ended June 30, 2024 and 2023 in net revenue related to equipment we rent to patients.

Net revenue related to equipment that we rent to patients was $ 148 million and $ 158 million for the three months ended September 30, 2024 and 2023 and $ 442 million and $ 458 million for the nine months ended September 30, 2024 and 2023.

Sales of Accounts Receivable

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

As of June 30, 2024 and December 31, 2023, there were a total of $ 129 million and $ 124 million of uncollected accounts receivable, that were accounted for as sales and removed from our consolidated balance sheets.

As of September 30, 2024 and December 31, 2023, there were a total of $ 121 million and $ 124 million of uncollected accounts receivable, that were accounted for as sales and removed from our consolidated balance sheets.

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

2 unchanged sentences

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

Total accounts receivable sold under the RPA were $ 573 million and $ 1.1 billion for the three and six months ended June 30, 2024.

During the three and six months ended June 30, 2024, we received net cash proceeds of $ 569 million and $ 1.1 billion from the sale of accounts receivable under the RPA and collected $ 547 million and $ 1.1 billion of the sold accounts receivable.

Total accounts receivable sold under the RPA were $ 412 million for the three and six months ended June 30, 2023.

During the three and six months ended June 30, 2023, we received net cash proceeds of $ 409 million from the sale of accounts receivable under the RPA and collected $ 297 million of the sold accounts receivable.

The losses on sale of accounts receivable, inclusive of professional fees incurred to establish the agreement, recorded in other operating expense, net in the consolidated statements of operations were $ 3.9 million and $ 2.9 million for the three months ended June 30, 2024 and 2023 and $ 7.2 million and $ 3.6 million for the six months ended June 30, 2024 and 2023.

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

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

Total accounts receivable sold under the RPA were $ 482 million and $ 894 million for the three and nine months ended September 30, 2023.

During the three and nine months ended September 30, 2023, we received net cash proceeds of $ 478 million and $ 888 million from the sale of accounts receivable under the RPA and collected $ 508 million and $ 805 million of the sold accounts receivable.

The losses on sale of accounts receivable, inclusive of professional fees incurred to establish the agreement, recorded in other operating expense, net in the consolidated statements of operations were $ 3.6 million and $ 3.5 million for the three months ended September 30, 2024 and 2023 and $ 10.8 million and $ 7.1 million for the nine months ended September 30, 2024 and 2023.

The RPA is separate and distinct from the accounts receivable securitization program (the Receivables Financing Agreement).

Acquisition-Related Charges

Acquisition-related charges, included in the ‘acquisition-related charges and intangible amortization’ line item of our consolidated statements of operations, consist primarily of one-time costs related to acquisitions, including transaction costs necessary to consummate acquisitions, which consist of investment banking advisory fees and legal fees, director and officer tail insurance expense, severance and retention bonuses, and professional fees.

Acquisition-related charges also include transition expenses and costs to integrate personnel, systems and processes.

For the three and nine months ended September 30, 2024, we incurred $ 6.5 million and $ 10.2 million of acquisition-related costs related to the expected acquisition of Rotech Healthcare Holdings Inc.

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

For the three and nine months ended September 30, 2023, we incurred $ 9.4 million and $ 11.9 million of acquisition-related costs, consisting of costs primarily related to the acquisition of Apria, Inc.

Note 2—Fair Value

11 unchanged sentences

Note 3—Goodwill and Intangible Assets

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill at June 30, 2024:

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill at September 30, 2024:

Patient Direct

1 unchanged sentence

Currency translation adjustments

Carrying amount of goodwill, June 30, 2024

Intangible assets subject to amortization, which exclude indefinite-lived intangible assets at June 30, 2024 and December 31, 2023 were as follows:

June 30, 2024

Carrying amount of goodwill, September 30, 2024

Intangible assets subject to amortization, which exclude indefinite-lived intangible assets at September 30, 2024 and December 31, 2023 were as follows:

September 30, 2024

December 31, 2023

5 unchanged sentences

Weighted average useful life

At June 30, 2024 and December 31, 2023, $ 226 million and $ 250 million in net intangible assets were held in the Patient Direct segment and $ 100 million and $ 112 million were held in the Products & Healthcare Services segment.

Amortization expense for intangible assets was $ 16.3 million and $ 20.9 million for the three months ended June 30, 2024 and 2023 and $ 36.5 million and $ 41.8 million for the six months ended June 30, 2024 and 2023.

As of June 30, 2024, based on the current carrying value of intangible assets subject to amortization, estimated amortization expense were as follows:

At September 30, 2024 and December 31, 2023, $ 218 million and $ 250 million in net intangible assets were held in the Patient Direct segment and $ 96 million and $ 112 million were held in the Products & Healthcare Services segment.

Amortization expense for intangible assets was $ 14.6 million and $ 20.8 million for the three months ended September 30, 2024 and 2023 and $ 51.2 million and $ 62.7 million for the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, based on the current carrying value of intangible assets subject to amortization, estimated amortization expense were as follows:

2024 (remainder)

1 unchanged sentence

Note 4—Exit and Realignment Costs

We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain facilities, information technology (IT) strategic initiatives and other strategic actions.

We incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain facilities, information technology (IT) strategic initiatives and other strategic actions.

These charges also include costs associated with our Operating Model Realignment Program, which include professional fees, severance and other costs to streamline functions and processes.

These amounts are excluded from our segments’ operating income.

During the three months ended June 30, 2024 and 2023, exit and realignment charges, net of $ 29.3 million and $ 29.0 million included $ 28.3 million and $ 27.6 million in charges under our Operating Model Realignment Program and IT strategic initiatives.

During the six months ended June 30, 2024 and 2023, exit and realignment charges, net of $ 56.6 million and $ 44.6 million included $ 63.1 million and $ 42.8 million in charges under our Operating Model Realignment Program and IT strategic initiatives.

Exit and realignment charges, net for the six months ended June 30, 2024 also included a gain of $ 7.4 million associated with the sale of our corporate headquarters.

We expect to incur material future costs relating to our Operating Model Realignment Program and IT strategic initiatives, which we are not able to reasonably estimate.

The following table summarizes the activity related to exit and realignment cost accruals, which are classified as other current liabilities in our consolidated balance sheets, through June 30, 2024 and 2023:

During the three months ended September 30, 2024 and 2023, exit and realignment charges, net of $ 28.9 million and $ 30.2 million included $ 27.1 million and $ 27.8 million in charges under our Operating Model Realignment Program and IT strategic initiatives.

During the nine months ended September 30, 2024 and 2023, exit and realignment charges, net included $ 90.2 million and $ 70.6 million in charges under our Operating Model Realignment Program and IT strategic initiatives.

Exit and realignment charges, net for the nine months ended September 30, 2024 also included a gain of $ 7.4 million associated with the sale of our corporate headquarters.

During the nine months ended September 30, 2024 and 2023, exit and realignment charges, net were $ 85.5 million and $ 74.8 million.

We may incur material future costs relating to certain exit and realignment actions, which remain underway and we are not able to reasonably estimate.

Accrued exit and realignment costs, December 31, 2023

9 unchanged sentences

Accrued exit and realignment costs, June 30, 2024

Provision for exit and realignment activities:

Professional fees

IT strategic initiatives - related costs

Vendor contract and lease termination costs

Cash payments

Accrued exit and realignment costs, September 30, 2024

Accrued exit and realignment costs, December 31, 2022

2 unchanged sentences

IT strategic initiatives - related costs

Vendor contract and lease termination costs

Cash payments

3 unchanged sentences

IT strategic initiatives - related costs

Vendor contract and lease termination costs

Cash payments

Accrued exit and realignment costs, June 30, 2023

In addition to the exit and realignment accruals in the preceding table and the $ 7.4 million gain associated with the sale of our corporate headquarters, we also incurred $ 1.9 million and $ 8.4 million of costs that were expensed as incurred for the three and six months ended June 30, 2024, which primarily related to accelerated depreciation of certain assets held in our Products & Healthcare Services segment.

Provision for exit and realignment activities:

Professional fees

IT strategic initiatives - related costs

Vendor contract and lease termination costs

Cash payments

Accrued exit and realignment costs, September 30, 2023

In addition to the exit and realignment accruals in the preceding table and the $ 7.4 million gain associated with the sale of our corporate headquarters, we also incurred $ 1.4 million and $ 9.8 million of costs that were expensed as incurred for the three and nine months ended September 30, 2024, which were primarily related to accelerated depreciation of certain assets held in our Products & Healthcare Services segment.

We incurred $ 1.3 million of costs that were expensed as incurred for the three and nine months ended September 30, 2023, which primarily related to charges associated with a lease termination.

Debt, net of unamortized deferred financing costs, consists of the following:

June 30, 2024

September 30, 2024

December 31, 2023

5 unchanged sentences

Long-term debt

We have $ 171 million of 4.375 % senior notes due in December 2024 (the 2024 Notes), with interest payable semi-annually.

The 2024 Notes were sold at 99.6 % of the principal amount with an effective yield of 4.422 %.

Prior to September 15, 2024, we have the option to redeem the 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100 % of the principal amount or the present value of the remaining scheduled payments discounted at the applicable Benchmark Treasury Rate (as defined in the Indenture which governs the 2024 Notes) plus 30 basis points.

On and after September 15, 2024, we have the option to redeem the 2024 Notes in part or in whole prior to maturity at a redemption price equal to 100 % of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the applicable redemption date.

On July 31, 2024, we provided notice that we intend to redeem the 2024 Notes, see Note 14 in Notes to Consolidated Financial Statements.

On September 16, 2024 (the Redemption Date), we redeemed all of our outstanding 4.375 % senior notes due in December 2024 (the 2024 Notes), which had an outstanding aggregate principal balance amount of $ 171.3 million, pursuant to the terms of the indenture governing the 2024 Notes, at a redemption price equal to 100 % of the principal amount of the 2024 Notes, plus accrued and unpaid interest to, but excluding, the Redemption Date.

As of the Redemption Date, the 2024 Notes were no longer deemed outstanding and interest on the 2024 Notes ceased to accrue.

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

1 unchanged sentence

The interest rate under the Receivables Financing Agreement is based on a spread over a benchmark SOFR rate (as described in the Fourth Amendment to the Receivables Financing Agreement, as further amended by the Fifth Amendment to the Receivables Financing Agreement).

Under the Receivables Financing Agreement, certain of our accounts receivable balances are sold to our wholly owned special purpose entity, O&M Funding LLC.

The Receivables Financing Agreement matures in March 2025.

We had no borrowings at June 30, 2024 and December 31, 2023 under our Receivables Financing Agreement.

At June 30, 2024 and December 31, 2023, we had maximum revolving borrowing capacity of $ 450 million under our Receivables Financing Agreement.

On March 29, 2022, we entered into a term loan credit agreement with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (the Credit Agreement) that provides for two credit facilities (i) a $ 500 million Term Loan A facility (the Term Loan A), and (ii) a $ 600 million Term Loan B facility (the Term Loan

The interest rate on the Term Loan A is based on the sum of either Term SOFR or the Base Rate and 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).

Under the Receivables Financing Agreement, certain of our accounts receivable balances are sold to our wholly owned special purpose entity, O&M Funding LLC (O&M Funding).

The Receivables Financing Agreement was amended on October 18, 2024, as described in Note 14 – Subsequent Events.

We had no borrowings at September 30, 2024 and December 31, 2023 under our Receivables Financing Agreement.

At September 30, 2024 and December 31, 2023, we had maximum revolving borrowing capacity of $ 450 million under our Receivables Financing Agreement.

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

In addition to our scheduled principal payment of $ 6.3 million on the Term Loan A, we made an unscheduled principal payment of $ 20.0 million on the Term Loan A during the three months ended September 30, 2024.

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

7 unchanged sentences

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

We have a revolving credit agreement with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (Revolving Credit Agreement) with a maximum borrowing capacity of $ 450 million.

We have a revolving credit agreement with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (the Revolving Credit Agreement) with a maximum borrowing capacity of $ 450 million.

The interest rate under our Revolving Credit Agreement is based on the Adjusted Term SOFR Rate (as defined in the Revolving Credit Agreement).

The Revolving Credit Agreement matures in March 2027.

At June 30, 2024 and December 31, 2023, our Revolving Credit Agreement was undrawn, and we had letters of credit, which reduce Revolving Credit Agreement availability, totaling $ 31.5 million and $ 27.4 million, leaving $ 419 million and $ 423 million available for borrowing at the end of each period.

At September 30, 2024 and December 31, 2023, our Revolving Credit Agreement was undrawn, and we had letters of credit, which reduce Revolving Credit Agreement availability, totaling $ 31.5 million and $ 27.4 million, leaving $ 419 million and $ 423 million available for borrowing at the end of each period.

We also had letters of credit and bank guarantees which support certain leased facilities as well as other normal business activities in the U.S.

and Europe that were issued outside of the Revolving Credit Agreement for $ 2.9 million and $ 3.0 million as of June 30, 2024 and December 31, 2023.

The Revolving Credit Agreement, the Credit Agreement, the Receivables Financing Agreement, the 2024 Notes, 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.

and Europe that were issued outside of the Revolving Credit Agreement for $ 3.0 million as of September 30, 2024 and December 31, 2023.

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

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

We were in compliance with our debt covenants at June 30, 2024.

As of June 30, 2024, scheduled future principal payments of debt, excluding finance leases and other, were as follows:

We were in compliance with our debt covenants at September 30, 2024.

As of September 30, 2024, scheduled future principal payments of debt, excluding finance leases and other, were as follows:

2024 (remainder)

Of the $ 187 million due in 2024, $ 179 million is due in December 2024.

Current maturities at June 30, 2024 include $ 171 million in principal payments on our 2024 Notes, $ 28.1 million in principal payments on our Term Loan A, $ 6.0 million in principal payments on our Term Loan B, and $ 5.5 million in current portion of finance leases and other.

Current maturities at September 30, 2024 include $ 31.3 million in principal payments on our Term Loan A, $ 6.0 million in principal payments on our Term Loan B, and $ 5.4 million in current portion of finance leases and other.

Note 6—Retirement Plans

1 unchanged sentence

Retirement Plan).

As of June 30, 2024 and December 31, 2023, the accumulated benefit obligation of the U.S.

As of September 30, 2024 and December 31, 2023, the accumulated benefit obligation of the U.S.

Retirement Plan was $ 32.9 million and $ 34.1 million.

Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective teammates.

The components of net periodic benefit cost for the three and six months ended June 30, 2024 and 2023 were as follows:

The components of net periodic benefit cost for the three and nine months ended September 30, 2024 and 2023 were as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Interest cost

12 unchanged sentences

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

We do not view the fair value of our

derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure.

All derivatives are carried at fair value in our consolidated balance sheets.

We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure.

All derivatives

are carried at fair value in our consolidated balance sheets.

We consider the risk of counterparty default to be minimal.

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

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of June 30, 2024:

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of September 30, 2024:

Derivative Assets

27 unchanged sentences

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

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

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

Total Amount of Expense

Amount of Gain

Amount of (Loss) Gain

Line Items Presented in the

11 unchanged sentences

Three months ended

Six months ended

Nine months ended

Comprehensive Loss

Three months ended

Six months ended

Nine months ended

Three months ended

Six months ended

June 30, 2024

Nine months ended

September 30, 2024

Interest rate swaps

1 unchanged sentence

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

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and six months ended June 30, 2023:

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and nine months ended September 30, 2023:

Total Amount of Expense

13 unchanged sentences

Three months ended

Six months ended

Nine months ended

Comprehensive Loss

Three months ended

Six months ended

Nine months ended

Three months ended

Six months ended

June 30, 2023

Nine months ended

September 30, 2023

Interest rate swaps

1 unchanged sentence

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

For the three and six months ended June 30, 2024, we recognized losses of $ 1.0 million and $ 5.1 million associated with our economic (non-designated) foreign currency contracts.

For the three and six months ended June 30, 2023, we recognized a loss of $ 0.9 million associated with our economic (non-designated) foreign currency contracts.

For the three and nine months ended September 30, 2024, we recognized a gain of $ 4.2 million and a loss of $ 1.0 million associated with our economic (non-designated) foreign currency contracts.

For the three and nine months ended September 30, 2023, we recognized losses of $ 2.4 million and $ 3.3 million associated with our economic (non-designated) foreign currency contracts.

We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating expense, net for our foreign exchange contracts.

Note 8—Income Taxes

The effective tax rate was ( 89.9 )% and ( 22.5 )% for the three and six months ended June 30, 2024, compared to 8.8 % and 18.7 % in the same periods of 2023.

The change in these rates resulted primarily from remeasurement of our uncertain tax positions, as described below.

The effective tax rate was 7.4 % and ( 15.4 )% for the three and nine months ended September 30, 2024, compared to 41.5 % and 22.0 % in the same periods of 2023.

The change in these rates for the three month periods resulted primarily from changes in results of operations in the jurisdictions in which we operate and the incremental tax benefit recorded for foreign derived intangible income in the third quarter of 2023.

The change in these rates for the nine month periods resulted primarily from remeasurement of our uncertain tax positions, as described below, as well as the factors described for the three month periods.

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

6 unchanged sentences

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

The total change in estimate, net of an income tax benefit from the foreign taxing authority, is $ 17.2 million, or $( 0.22 ) impact per basic and diluted common share, including $ 4.0 million of interest, for the three and six months ended June 30, 2024 and is reflected within the income tax provision on our consolidated statements of operations.

The total change in estimate reflects an increase in the liability for unrecognized tax benefits of $ 19.1 million recorded within other current liabilities, partially offset by a $ 1.9 million increase in the receivable from the foreign taxing authority recorded within other current assets, on our consolidated balance sheet at June 30, 2024.

The total change in estimate, net of an income tax benefit from the foreign taxing authority, is $ 17.9 million, or $( 0.23 ) impact per basic and diluted common share, including $ 4.7 million of interest, for the nine months ended September 30, 2024 and is reflected within the income tax provision on our consolidated statements of operations.

The total change in estimate reflects an increase in the liability for unrecognized tax benefits of $ 19.7 million recorded within other current liabilities, partially offset by a $ 1.9 million increase in the receivable from the foreign taxing authority recorded within other current assets, on our consolidated balance sheet at September 30, 2024.

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

The liability for unrecognized tax benefits was $ 37.9 million at June 30, 2024 and $ 22.7 million at December 31, 2023.

Included in the liability at June 30, 2024 and December 31, 2023 were $ 2.7 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

Excluding the impact of $ 0.7 million of interest, there has been no change in estimate for the three months ended September 30, 2024.

The liability for unrecognized tax benefits was $ 38.2 million at September 30, 2024 and $ 22.7 million at December 31, 2023.

Unrecognized tax benefits of $ 35.5 million and $ 20.0 million at September 30, 2024 and December 31, 2023 would impact our effective tax rate if recognized.

We regularly assess the likelihood of adverse outcomes resulting from examinations such as this to determine the adequacy of our tax reserves.

We believe that we have adequately reserved for this matter and that the final

adjudication of this matter will not have a material impact on our consolidated financial position, results of operations or cash flows beyond the amounts described herein.

We believe that we have adequately reserved for this matter and that the final adjudication of this matter will not have a material impact on our consolidated financial position, results of operations or cash flows beyond the amounts described herein.

Note 9—Net Loss per Common Share

The following summarizes the calculation of net loss per common share attributable to common shareholders for the three and six months ended June 30, 2024 and 2023:

The following summarizes the calculation of net loss per common share attributable to common shareholders for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

3 unchanged sentences

Net loss per common share

Share-based awards of approximately 1.6 million shares for the three and six months ended June 30, 2024 and approximately 1.8 million and 1.7 million shares for the three and six months ended June 30, 2023 were excluded from the calculation of net loss per diluted common share as the effect would be anti-dilutive.

Share-based awards of approximately 1.4 million and 1.5 million shares for the three and nine months ended September 30, 2024 and approximately 1.5 million and 1.6 million shares for the three and nine months ended September 30, 2023 were excluded from the calculation of net loss per diluted common share as the effect would be anti-dilutive.

Note 10—Accumulated Other Comprehensive (Loss) Income

The following table shows the changes in accumulated other comprehensive (loss) income by component for the three and six months ended June 30, 2024 and 2023:

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

The following table shows the changes in accumulated other comprehensive (loss) income by component for the three and nine months ended September 30, 2024 and 2023:

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

Other comprehensive income (loss) before reclassifications

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Other comprehensive income (loss)

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

Accumulated other comprehensive (loss) income, June 30, 2023

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

Other comprehensive (loss) income before reclassifications

3 unchanged sentences

Other comprehensive income (loss)

Accumulated other comprehensive (loss) income, June 30, 2023

Accumulated other comprehensive (loss) income, September 30, 2023

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

Other comprehensive income (loss) before reclassifications

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

Other comprehensive income before reclassifications

Other comprehensive income before reclassifications, net of tax

Amounts reclassified from accumulated other comprehensive income (loss)

1 unchanged sentence

Other comprehensive income (loss)

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

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

Accumulated other comprehensive (loss) income, December 31, 2022

3 unchanged sentences

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

Other comprehensive loss

Accumulated other comprehensive (loss) income, June 30, 2023

Other comprehensive income (loss)

Accumulated other comprehensive (loss) income, September 30, 2023

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

Note 11—Segment Information

We periodically evaluate our application of accounting guidance for reportable segments and disclose information about reportable segments based on the way management organizes the enterprise for making operating

decisions and assessing performance.

We report our business under two segments:

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Products & Healthcare Services

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Consolidated capital expenditures

(1) Litigation and related charges includes settlement costs and related fees of legal matters within our Apria division, which do not occur in the ordinary course of our business, are non-recurring/infrequent and are inherently unpredictable in timing and amount.

These charges are reported within Other operating expense, net in our Statements of Operations for the three and six months ended June 30, 2024.

(2) Other share-based compensation expense is captured within Exit and realignment charges, net or Acquisition-related charges for the three and six months ended June 30, 2024 and 2023.

June 30, 2024

unpredictable in timing and amount.

These charges are reported within Other operating expense, net in our Statements of Operations for the three and nine months ended September 30, 2024.

(2) Other share-based compensation expense is captured within Exit and realignment charges, net or Acquisition-related charges for the three and nine months ended September 30, 2024 and 2023.

September 30, 2024

December 31, 2023

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Consolidated total assets

Non-cash charges (credits) to merchandise inventories valued at the lower of cost or market, with the approximate cost determined by the last-in, first-out (LIFO) method for distribution inventories in the U.S.

within our Products & Healthcare Services segment were $( 1.1 ) million and $( 4.5 ) million for the three months ended June 30, 2024 and 2023, and $ 4.3 million and $ 0.4 million for the six months ended June 30, 2024 and 2023.

The net book value of patient service equipment dispositions within the Patient Direct segment were $ 5.2 million and $ 8.1 million for the three months ended June 30, 2024 and 2023 and $ 14.8 million and $ 17.2 million for the six months ended June 30, 2024 and 2023.

Non-cash last-in, first-out (LIFO) charges (credits) to merchandise inventories valued at the lower of cost or market, with the approximate cost determined by the LIFO method for distribution inventories in the U.S.

within our Products & Healthcare Services segment, were $ 6.7 million and $( 3.7 ) million for the three months ended September 30, 2024 and 2023, and $ 11.0 million and $( 3.3 ) million for the nine months ended September 30, 2024 and 2023.

The net book value of patient service equipment sales and dispositions within the Patient Direct segment, net of the gain for returned equipment to Philips Respironics for previously recalled equipment, were $ 7.9 million and $ 10.0 million for the three months ended September 30, 2024 and 2023 and $ 22.7 million and $ 27.2 million for the nine months ended September 30, 2024 and 2023.

The following table presents net revenue by geographic area, which were attributed based on the location from which we ship products or provide services:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

United States

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

Based on current knowledge and the advice of counsel, we believe that the accrual as of June 30, 2024 for currently pending matters considered probable of loss, which is not material, is sufficient.

Based on current knowledge and the advice of counsel, we believe that the accrual as of September 30, 2024 for currently pending matters considered probable of loss, which is not material, is sufficient.

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

Note 14—Subsequent Events

On July 22, 2024, we entered into an Agreement and Plan of Merger to acquire Rotech Healthcare Holdings Inc., (Rotech) for $ 1.36 billion in cash.

On July 22, 2024, we entered into an Agreement and Plan of Merger to acquire Rotech for $ 1.36 billion in cash.

Given anticipated tax benefits of approximately $ 40 million from the transaction, the net purchase price is approximately $ 1.32 billion.

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In the event that we terminate the contract, we will be required to pay Rotech a termination fee of $ 70.0 million.

The transaction is subject to customary closing conditions, including expiration or termination of the applicable waiting period under the Hart Scott Rodino Act, and is expected to close by the end of 2024.

We have fully committed financing in place and expect to use a combination of cash and incremental borrowings to fund the purchase price.

On July 31, 2024, we provided notice that we intend to exercise the redemption option on our 2024 Notes effective September 16, 2024.

As disclosed in Note 5 in Notes to Consolidated Financial Statements , for redemptions o n and after September 15, 2024, we have the option to redeem the 2024 Notes in part or in whole prior to maturity at a redemption price equal to 100 % of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the applicable redemption date.

Note 14 - Subsequent Events

On October 18, 2024, O&M Funding 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 party hereto, 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, dated as of February 19, 2020.

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

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

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

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

What changed 10-Q

Item 1. Financial Statements