What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-04 · 217 added, 321 removed, 283 unchanged (66% of the section changed)

2 unchanged sentences

and Subsidiaries

Consolidated Statements of Operations

Condensed Consolidated Statements of Operations

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

6 unchanged sentences

Interest expense, net

Other expense (income), net

Other expense, net

Loss before income taxes

Income tax (benefit) provision

Income tax benefit

Net loss per common share

See accompanying notes to consolidated financial statements.

See accompanying notes to condensed consolidated financial statements.

Owens & Minor, Inc.

and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss )

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended

Nine Months Ended

September 30,

(in thousands)

4 unchanged sentences

Total other comprehensive income (loss), net of tax

Comprehensive income (loss)

See accompanying notes to consolidated financial statements.

Comprehensive loss

See accompanying notes to condensed consolidated financial statements.

Owens & Minor, Inc.

and Subsidiaries

Consolidated Balance Sheets

September 30,

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

24 unchanged sentences

authorized - 200,000 shares;

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

issued and outstanding - 77,220 shares and 77,199 shares

Paid-in capital

2 unchanged sentences

Total liabilities and equity

See accompanying notes to consolidated financial statements.

See accompanying notes to condensed consolidated financial statements.

Owens & Minor, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

(in thousands)

3 unchanged sentences

Share-based compensation expense

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 from sales and dispositions of property and equipment

Gain from sale and dispositions of patient service equipment, property and equipment

Changes in operating assets and liabilities:

Accounts receivable

Accounts receivable, net

Merchandise inventories

1 unchanged sentence

Net change in other assets and liabilities

Cash provided by operating activities

Cash used for operating activities

Investing activities:

Additions to property and equipment

Proceeds from sale of property and equipment

Additions to computer software

Proceeds from sales of property and equipment

Cash used for investing activities

2 unchanged sentences

Repayments under amended Receivables Financing Agreement

( 1,286,400 )

Repayments of debt

Cash used for financing activities

Borrowings under Revolving Credit Facility

Repayments under Revolving Credit Facility

Repayments of term loans

Repurchase of common stock

Cash provided by financing activities

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

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

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

Cash, cash equivalents and restricted cash at beginning of period

1 unchanged sentence

Supplemental disclosure of cash flow information:

Income taxes paid (received), net

Income taxes paid, net

Interest paid

1 unchanged sentence

Unpaid purchases of property and equipment and computer software at end of period

See accompanying notes to consolidated financial statements.

See accompanying notes to condensed consolidated financial statements.

Owens & Minor, Inc.

and Subsidiaries

Consolidated Statements of Changes in Equity

Condensed Consolidated Statements of Changes in Equity

Comprehensive

1 unchanged sentence

Balance, December 31, 2024

Other comprehensive loss

Share-based compensation expense, exercises and other

Balance, March 31, 2024

Other comprehensive loss

Share-based compensation expense, exercises and other

Balance, June 30, 2024

Other comprehensive income

Share-based compensation expense, exercises and other

Balance, September 30, 2024

Balance, December 31, 2022

Other comprehensive income

Share-based compensation expense, exercises and other

Shares repurchased and retired

Balance, March 31, 2025

Other comprehensive loss

Share-based compensation expense, exercises and other

Balance, June 30, 2023

Balance, December 31, 2023

Other comprehensive loss

Share-based compensation expense, exercises and other

Balance, September 30, 2023

See accompanying notes to consolidated financial statements.

Balance, March 31, 2024

See accompanying notes to condensed consolidated financial statements.

Owens & Minor, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data, unless otherwise indicated)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation

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

Basis of Presentation and Consolidation.

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

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

2 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 segments:

We report our business under two distinct segments:

Products & Healthcare Services and Patient Direct.

The Products & Healthcare Services segment includes our Medical Distribution division, which includes our U.S.

distribution business, along with our outsourced logistics and value-added services businesses, and our Global Products division which manufactures and sources medical surgical products through our production and kitting operations.

The Patient Direct segment includes our home healthcare divisions (Byram and Apria).

The Products & Healthcare Services segment includes our United States (U.S.) distribution division (Medical Distribution), including outsourced logistics and value-added services and our Global Products division which manufactures and sources medical surgical products through our production and kitting operations.

Our Patient Direct segment provides delivery of disposable medical supplies sold directly to patients and home health agencies and is a leading provider of integrated home healthcare equipment and related services in the U.S.

Revision of Prior Period Condensed Consolidated Financial Statements .

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

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

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

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

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

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

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

Reclassifications.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Certain prior period amounts have been reclassified to conform to current year presentation.

Use of Estimates.

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

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

Actual results may differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

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

Cash, cash equivalents and restricted cash are stated at cost.

Nearly all of our cash, cash equivalents and restricted cash are held in cash depository accounts in major banks in North America, Europe, and Asia.

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 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.

September 30, 2024

December 31, 2023

Cash and cash equivalents

Restricted cash included in Other current assets

Restricted cash included in Other assets, net

Total cash, cash equivalents, and restricted cash

Cash, Cash Equivalents.

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

Cash and cash equivalents are stated at cost.

Nearly all of our cash and cash equivalents are held in cash depository accounts in major banks in North America, Europe, and Asia.

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

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

Rental Revenue.

2 unchanged sentences

Revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payors, including private insurers, prepaid health plans, Medicare, Medicaid and patients.

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

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 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.

Rental revenue, less estimated adjustments, is recognized as

earned on a straight-line basis over the noncancelable lease term.

We recorded $ 147 million for the three months ended March 31, 2025 and 2024 in revenue related to equipment we rent to patients.

Receivables Purchase Agreement.

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

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

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

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

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

Cash received from the 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 $ 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.

The RPA is separate and distinct from the Receivables Financing Agreement and the amendment as described below.

As a result of the amendment described below, the RPA was not utilized in the three months ended March 31, 2025.

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

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

Total accounts receivable sold under the RPA were $ 515 million for the three months ended March 31, 2024.

During the three months ended March 31, 2024, we received net cash proceeds of $ 512 million from the sale of accounts receivable under the RPA and collected $ 536 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 condensed consolidated statements of operations were $ 3.3 million for the three months ended March 31, 2024.

Receivables Sale Program.

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 financial institutions from time to time, as Purchasers, PNC Bank, National Association, as Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent, pursuant to which accounts receivable with an aggregate outstanding amount not to exceed $ 450 million are sold, on a limited-recourse basis, to the Purchasers in exchange for cash.

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

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

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

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

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

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

Total accounts receivable sold and net cash proceeds under the Receivables Sale program were $ 343 million during the three months ended March 31, 2025.

We collected $ 209 million of the sold accounts receivable for the three months ended March 31, 2025.

The losses on sales of accounts receivable, inclusive of professional fees incurred to establish the agreement, recorded in other operating expense, net in the condensed consolidated statements of operations were $ 2.1 million for the three months ended March 31, 2025.

As of March 31, 2025 and December 31, 2024, there was a total of $ 200 million and $ 70 million of uncollected accounts receivable sold and removed from our condensed consolidated balance sheet under the Receivables Sale Program.

Acquisition-Related Charges and Intangible Amortization.

Acquisition-related charges consist of one-time costs related to the planned 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.

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

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

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

Note 2—Fair Value

1 unchanged sentence

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

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

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

The estimated fair value of our reporting units determined during a quantitative review of goodwill utilizes unobservable inputs (Level 3).

The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2).

5 unchanged sentences

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

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

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

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 September 30, 2024:

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill at March 31, 2025:

Patient Direct

1 unchanged sentence

Currency translation adjustments

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

Carrying amount of goodwill, March 31, 2025

Intangible assets subject to amortization, which exclude indefinite-lived intangible assets, at March 31, 2025 and December 31, 2024 were as follows:

March 31, 2025

December 31, 2024

5 unchanged sentences

Weighted average useful life

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:

At March 31, 2025 and December 31, 2024, $ 202 million and $ 210 million in net intangible assets were held in the Patient Direct segment and $ 83 million and $ 89 million were held in the Products & Healthcare Services segment.

Amortization expense for intangible assets was $ 14 million and $ 20 million for the three months ended March 31, 2025 and 2024.

As of March 31, 2025, based on the current carrying value of intangible assets subject to amortization, estimated amortization expense were as follows:

2025 (remainder)

Total future amortization

Note 4—Exit and Realignment Costs

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 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.

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 September 30, 2024 and 2023:

Note 4—Exit and Realignment Costs, Net

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

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

These costs are not normal, cash operating expenses necessary for the Company to operate its business on an ongoing basis and are excluded from our segments’ operating income.

Exit and realignment charges, net were $ 31 million and $ 27 million for the three months ended March 31, 2025 and 2024.

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

In addition, the gain on the sale of our corporate home office in the amount of $ 7.4 million was included in exit and realignment charges, net for the three months ended March 31, 2024.We expect to incur material future costs relating to certain exit and realignment actions, which remain underway that 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 condensed consolidated balance sheets, through March 31, 2025 and 2024:

Accrued exit and realignment costs, December 31, 2024

1 unchanged sentence

Professional fees

IT strategic initiatives - related costs

IT strategic initiatives

Cash payments

Accrued exit and realignment costs, March 31, 2025

Provision for exit and realignment activities:

Professional fees

IT strategic initiatives - related costs

Cash payments

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, 2023

1 unchanged sentence

Professional fees

IT strategic initiatives - related costs

Vendor contract and lease termination costs

Cash payments

Accrued exit and realignment costs, March 31, 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, June 30, 2023

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.

In addition to the exit and realignment accruals in the preceding table, we also incurred $ 8.3 million of costs that were expensed as incurred for the three months ended March 31, 2025, which primarily related to wind-down costs

For the three months ended March 31, 2024, the table above excludes the $ 7.4 million gain associated with the sale of our corporate headquarters, we also incurred $ 6.5 million of costs that were expensed as incurred for the three months ended March 31, 2024, which primarily related to accelerated depreciation of certain assets held in our Products & Healthcare Services segment.

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

September 30, 2024

March 31, 2025

December 31, 2024

4.375 % Senior Notes, due December 2024

Revolving Credit Facility

4.500 % Senior Notes, due March 2029

3 unchanged sentences

Long-term debt

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.

The Receivables Financing Agreement has a maximum borrowing capacity of $ 450 million.

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 (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.

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 B).

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).

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.

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

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

We may redeem all or part of the 2029 Unsecured Notes at the applicable redemption prices described in the Indenture dated March 10, 2021 (the Indenture), plus accrued and unpaid interest, if any, to, but not including, the redemption date.

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

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

We may redeem all or part of the 2030 Unsecured Notes, prior to April 1, 2025, at a price equal to 100 % of the principal amount of the 2030 Unsecured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, plus a “make-whole” premium, as described in the Indenture dated March 29, 2022 (the New Indenture).

From and after April 1, 2025, we may redeem all or part of the 2030 Unsecured Notes at the applicable redemption prices described in the New Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

We may also redeem up to 40 % of the aggregate principal amount of the 2030 Unsecured Notes at any time prior to April 1, 2025, at a redemption price equal to 106.625 % with an amount equal to or less than the net cash proceeds from certain equity offerings, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

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 (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).

On March 29, 2022, we entered into an amendment to our revolving credit agreement, dated as of March 10, 2021 with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (Revolving Credit Agreement).

The amendment (i) increased the aggregate revolving credit commitments under the Revolving

Credit Agreement by $ 150 million, to an aggregate amount of $ 450 million and (ii) replaced the Eurocurrency Rate with the Adjusted Term SOFR Rate (each as defined in the Revolving Credit Agreement).

The Revolving Credit Agreement matures in March 2027.

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.

At March 31, 2025 we had $ 98 million in outstanding borrowings on our Revolving Credit Agreement.

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

At March 31, 2025 and December 31, 2024 we had letters of credit, which reduce Revolver availability, totaling $ 34 million and $ 31 million, leaving $ 318 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 in the U.S.

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.

and Europe that were issued outside of the Revolving Credit Agreement for $ 3.4 million and $ 2.9 million as of March 31, 2025 and December 31, 2024.

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

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

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

As of September 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 March 31, 2025.

As of March 31, 2025, scheduled future principal payments of debt, excluding finance leases and other, were as follows:

2025 (remainder)

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.

Current maturities at March 31, 2025 include $ 47.5 million in current borrowings on our Revolving Credit Facility and $ 2.4 million in current portion of finance leases and other.

Note 6—Retirement Plans

1 unchanged sentence

Retirement Plan).

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.

As of March 31, 2025 and December 31, 2024, the accumulated benefit obligation of the U.S.

Retirement Plan was $ 31 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 nine months ended September 30, 2024 and 2023 were as follows:

Three Months Ended

Nine Months Ended

September 30,

Interest cost

Recognized net actuarial loss

Net periodic benefit cost

Note 7—Derivatives

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

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

variable amounts calculated by reference to the notional amount.

The interest rate swaps were designated as cash flow hedges.

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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.

All derivatives are carried at fair value in our condensed 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 September 30, 2024:

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of March 31, 2025:

Derivative Assets

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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 nine months ended September 30, 2024:

Total Amount of Expense

Amount of (Loss) Gain

Line Items Presented in the

Amount of Gain Reclassified

Recognized in Other

Location of Gain

Consolidated Statement of

from Accumulated Other

Comprehensive Income

Reclassified from

Operations in Which the

Comprehensive Loss into

Accumulated Other

Effects are Recorded

Three months ended

Nine months ended

Comprehensive Loss

Three months ended

Nine months ended

Three months ended

Nine months ended

September 30, 2024

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

Amount of Gain Recognized in Other Comprehensive Income (Loss)

Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Income

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

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

Interest rate swaps

Interest expense, net

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 nine months ended September 30, 2023:

Total Amount of Expense

Amount of Gain

Line Items Presented in the

Amount of Gain Reclassified

Recognized in Other

Location of Gain

Consolidated Statement of

from Accumulated Other

Comprehensive Income

Reclassified from

Operations in Which the

Comprehensive Loss into

Accumulated Other

Effects are Recorded

Three months ended

Nine months ended

Comprehensive Loss

Three months ended

Nine months ended

Three months ended

Nine months ended

September 30, 2023

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

The following table summarizes the effect of cash flow hedge accounting on our condensed consolidated statements of operations for the three months ended March 31, 2024:

Amount of Gain Recognized in Other Comprehensive Income (Loss)

Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Income

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

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

Interest rate swaps

Interest expense, net

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

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.

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

For the three months ended March 31, 2025 and 2024, we recognized a gain of $ 4.2 million and a loss of $ 4.2 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 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.

The effective tax rate was 28.8 % for the three months ended March 31, 2025, compared to 19.3 % in the same period of 2024.

The change in these rates were primarily from changes in results of operations in the jurisdictions in which we operate and changes in forecasted results reflected in the tax rates.

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

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

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

On June 30, 2021, we received a NOPA from the IRS regarding our 2017 and 2018 consolidated income tax returns.

Within the NOPAs, the IRS has asserted that our taxable income for the aforementioned years should be higher based on their assessment of the appropriate amount of taxable income that we should report in the United States in connection with our sourcing of products by our foreign subsidiaries for sale in the United States by our domestic subsidiaries.

in connection with our sourcing of products by our foreign subsidiaries for sale in the U.S.

by our domestic subsidiaries.

The transfer pricing methodology was consistently applied for all years subject to the NOPAs and 2019 into 2022, but is no longer employed.

During the three months ended June 30, 2024, the IRS and the relevant foreign taxing authority mutually agreed to proposed adjustments to our 2015 through 2018 consolidated tax returns.

This was communicated to us in late June 2024.

In late June 2024, the IRS and the relevant foreign taxing authority mutually agreed to proposed adjustments to our 2015 through 2018 consolidated tax returns.

As a result, we remeasured the uncertain tax position for the 2015 through 2018 tax years, as well as the affected 2019 through 2022 tax years, to the amount expected to be paid upon a final agreement with the IRS.

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 $ 17.9 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.

As of March 31, 2025, we owed $ 44 million associated with the NOPA matter, which includes $ 13 million of interest accrued on the matter through March 31, 2025.

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

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.

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 nine months ended September 30, 2024 and 2023:

The following summarizes the calculation of net loss per common share attributable to common shareholders for the three months ended March 31, 2025 and 2024:

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except per share data)

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Net loss per common share:

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.

Share-based awards for the three months ended March 31, 2025 and 2024 of approximately 1.8 million and 1.6 million shares 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 nine months ended September 30, 2024 and 2023:

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

The following table shows the changes in accumulated other comprehensive (loss) income by component for the three months ended March 31, 2025 and 2024:

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

Other comprehensive income (loss) before reclassifications

3 unchanged sentences

Other comprehensive income (loss)

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

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

Other comprehensive (loss) income before reclassifications

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

Amounts reclassified from accumulated other comprehensive income (loss)

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

Other comprehensive income (loss)

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

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

Other comprehensive income before reclassifications

Other comprehensive income before reclassifications, net of tax

Amounts reclassified from accumulated other comprehensive income (loss)

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

Other comprehensive income (loss)

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

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

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

Other comprehensive (loss) income before reclassifications

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

Other comprehensive income (loss)before reclassifications

Other comprehensive income (loss) 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, September 30, 2023

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

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.

3 unchanged sentences

Products & Healthcare Services and Patient Direct.

The Products & Healthcare Services segment includes our Medical Distribution division, which includes our U.S.

The Patient Direct segment includes our home healthcare divisions (Byram and Apria).

We evaluate the performance of our segments based on their operating income excluding acquisition-related charges and intangible amortization and exit and realignment charges, net, along with other adjustments, that, as a result of their nature, would not be expected to occur as part of our normal business operations on a regular basis.

The Products & Healthcare Services segment includes our U.S.

distribution division (Medical Distribution), including our outsourced logistics and value-added services businesses, and our Global Products division which manufactures and sources medical surgical products through our production and kitting operations.

The Chief Operating Decision Maker (CODM) for both of our segments is the President, Chief Executive Officer & Director.

The CODM uses segment income to evaluate performance of our segments, determine incentive compensation, and engage in financial and operational planning, including the allocation of labor, financial and capital resources.

Segment income excludes acquisition-related charges and intangible amortization, exit and realignment charges, net, and goodwill impairment charges, along with other adjustments, that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.

Segment assets exclude inter-segment account balances as we believe their inclusion would be misleading and not meaningful.

The following tables present financial information by segment:

Three Months Ended

Nine Months Ended

September 30,

Products & Healthcare Services

Patient Direct

Consolidated net revenue

Operating income:

Three Months Ended March 31, 2025

Products & Healthcare Services

Patient Direct

Cost of goods sold

Distribution, selling and administrative expenses

Other operating expense, net

Segment income

Acquisition-related charges and intangible amortization

1 unchanged sentence

Litigation and related charges (1)

Consolidated operating income

Depreciation and amortization:

Operating income

Capital expenditures

(1) Litigation and related charges includes settlement costs and related fees of legal matters within our Patient Direct Segment, which do not occur in the ordinary course of our business 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 months ended March 31, 2025.

Three Months Ended March 31, 2024

Products & Healthcare Services

Patient Direct

Consolidated depreciation and amortization

Cost of goods sold

Distribution, selling and administrative expenses

Other operating expense, net

Segment income

Acquisition-related charges and intangible amortization

Exit and realignment charges, net

Operating income

Capital expenditures

Three Months Ended

Share-based compensation:

2 unchanged sentences

Consolidated share-based compensation:

Capital expenditures:

Depreciation and amortization:

Products & Healthcare Services

Patient Direct

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 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

Intangible amortization

Consolidated depreciation and amortization:

(1) Other share-based compensation expense is captured within exit and realignment charges, net or acquisition-related charges and intangible amortization for the three months ended March 31, 2025 and 2024.

(2) Other depreciation and amortization expense is captured within exit and realignment charges, net for the three months ended March 31, 2025 and 2024.

March 31, 2025

December 31, 2024

5 unchanged sentences

Consolidated total assets

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.

Non-cash LIFO charges 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 $ 8.6 million and $ 5.4 million for the three months ended March 31, 2025 and 2024.

The net book value of patient service equipment sales and dispositions within the Patient Direct segment, were $ 12 million and $ 9.6 million for the three months ended March 31, 2025 and 2024.

Excess and obsolete inventory adjustments included in our Products & Healthcare Services segment were $ 1.6 million and $ 6.4 million for the three months ended March 31, 2025 and 2024.

Excess and obsolete inventory adjustments are not material to the Patient Direct segment for the three months ended March 31, 2025 and 2024.

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

Nine Months Ended

September 30,

United States

2 unchanged sentences

Note 12—Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which will require disclosure of additional detailed information about a reportable segment’s expenses, including significant segment expenses regularly provided to the Chief Operating Decision Maker (CODM), the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment’s profit or loss.

This ASU is effective for us in annual periods beginning after December 15, 2023 and interim periods within annual years beginning after December 15, 2024.

The amendments in this ASU must be applied on a retrospective basis to all prior periods presented in the financial statements and early adoption is permitted.

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

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

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

In November 2024, the FASB issued ASU No.

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

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

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

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

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

Note 13—Commitments, Contingent Liabilities, and Legal Proceedings

Commitments include $ 48.4 million of legally binding lease payments for the Morgantown, West Virginia center of excellence for medical supplies and logistics lease signed, but not yet commenced.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2023 for disclosure of other material contractual obligations.

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

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

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

Based on current knowledge and the advice of counsel, we believe that the accrual as of September 30, 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.

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.

Rotech is a national leader in providing home medical equipment in the US.

Rotech is a national leader in providing home medical equipment in the U.S.

The definitive agreement contains certain termination rights for the Company and Rotech.

1 unchanged sentence

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 in the first half of 2025.

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

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

The Company and Rotech have entered into a timing agreement with the Federal Trade Commission (FTC) under which the FTC will have until June 10, 2025 to complete its review of the transaction.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for disclosure of other material contractual obligations.

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

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

Based on current knowledge and the advice of counsel, we believe that the accrual as of March 31, 2025 for currently pending matters considered probable of loss, is sufficient.

Note 14—Shareholders Equity

On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $ 100 million over the next 24 months .

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, 2025, we repurchased in open-market transactions and retired approximately 0.2 million shares of our common stock for an aggregate of $ 1.5 million, or an average price per share of $ 8.66 .

Note 15—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.

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 in connection with the financing of our previously announced proposed acquisition of Rotech (Acquisition).

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

Upon consummation of the Acquisition, we intend to use the net proceeds of the Offering, together with cash on hand and expected borrowings under a new senior secured incremental term loan B facility to finance the consummation of the Acquisition and other related transactions contemplated by the merger agreement, including the repayment of Rotech debt and to pay Acquisition related fees and expenses.

Any remaining net proceeds will be used for working capital and general corporate purposes.

If the Acquisition is not consummated on or prior to October 6, 2025, or upon the occurrence of certain other events, the proceeds will not be released to consummate the Acquisition and related transactions, but instead will be released for the purpose of redeeming the New Notes pursuant to a “Special Mandatory Redemption” in accordance with the procedures set forth in the indenture governing the New Notes.

The Special Mandatory Redemption price will be a price equal to 100 % of the initial issue price of the New Notes plus accrued and unpaid interest to, but excluding, the special mandatory redemption date.

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