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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-08 · 180 added, 138 removed, 115 unchanged (73% of the section changed)

1 unchanged sentence

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

and its subsidiaries since December 31, 2024.

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

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

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

Owens & Minor, Inc., along with its subsidiaries, (we, us, or our) is a global healthcare solutions company.

Our business has two distinct segments:

Products & Healthcare Services (P&HS) and Patient Direct.

The Products & Healthcare Services segment includes our 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.

The Patient Direct segment includes our home healthcare divisions.

Net (loss) per share was $(0.32) for the three months ended March 31, 2025 as compared to net (loss) per share of $(0.29) for the three months ended March 31, 2024.

Our financial results for the three months ended March 31, 2025 as compared to the prior year period were impacted by acquisition-related charges of $16 million related to the planned acquisition of Rotech Healthcare Holdings Inc.

(Rotech), a $3.9 million increase in exit and realignment charges, net, partially offset by a decrease in intangible amortization of $6.5 million.

Net (loss) per share was unfavorably impacted as compared to the prior year by foreign currency translation in the amount of $(0.03) for the three months ended March 31, 2025.

Products & Healthcare Services segment operating income was $1.2 million for the three months ended March 31, 2025, compared to $11 million for the three months ended March 31, 2024.

This decrease was primarily driven by a $17 million decrease in net revenue, partially offset by a reduction in teammate benefit costs of $10 million.

Patient Direct segment operating income was $60 million for the three months ended March 31, 2025, compared to $46 million for the three months ended March 31, 2024.

This segment’s results reflect revenue growth of 5.7% and a reduction in teammate benefits costs of $5.9 million.

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

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

Net loss from continuing operations per common share was ($1.09) for the three months ended June 30, 2025 as compared to ($0.09) for the three months ended June 30, 2024.

Our financial results for the three months ended June 30, 2025 as compared to the prior year were impacted by the transaction breakage fee of $80 million, transaction financing fees, net of $18 million, and an increase in acquisition-related costs of $2.7 million partially offset by a decrease in intangible amortization of $2.5 million due to certain intangible assets that were fully amortized in 2024 and an increase in net revenue.

Net loss from continuing operations per common share was ($1.14) for the six months ended June 30, 2025 as compared to ($0.26) for the six months ended June 30, 2024.

Our financial results for the six months ended June 30, 2025 as compared to prior year were impacted by the transaction breakage fee of $80 million, transaction financing fees, net of $18 million, and an increase in acquisition-related costs of $19 million related to the terminated acquisition of Rotech, partially offset by a decrease in intangible amortization of $9.2 million due to certain intangible assets that were fully amortized in 2024 and an increase in net revenue.

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

Potential Sale of Products & Healthcare Services Segment

On February 28, 2025, we announced that we are actively engaged in discussions regarding the potential sale of our Products & Healthcare Services segment.

There is no set timetable for the potential sale and there can be no assurance that we will complete a transaction.

Planned Acquisition of Rotech

On July 22, 2024, we entered into an agreement and plan of merger to acquire Rotech for $1.36 billion in cash (the Acquisition).

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 U.S.

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

In the event that we terminate the contract, we will be required to pay Rotech a termination fee of $70 million.

The Acquisition 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 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.

Contemplated Sale of Products & Healthcare Services Segment

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

We are in the final stages of our process for the divestiture and have concluded the P&HS segment has met the accounting requirements to be classified as discontinued operations and held for sale as of June 30, 2025.

During this process we remain committed to serving our P&HS segment customers.

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

All discussion, unless otherwise noted, reflects the continuing operations of Owens & Minor, Inc.

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

Termination of Acquisition of Rotech

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

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

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

Notice of Contract Termination with a Commercial Payor

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

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

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

The agreements expected to be terminated reflected approximately $160 million or 12% of our net revenue, and nearly all of our $121 million capitation revenue, for the six months ended June 30, 2025.

Results of Operations

1 unchanged sentence

(Dollars in thousands)

Products & Healthcare Services

Patient Direct

Net revenue for the three months ended March 31, 2025, was negatively impacted by approximately $41 million as a result of one less sales day during the period compared to the same period in 2024.

The Products & Healthcare Services net revenue decrease was primarily driven by one less sales day along with a decline in our Global Products division due to competitive pricing pressures, including glo ve pricing .

The increase in our Patient Direct segment net revenue for the three months ended March 31, 2025 was driven primarily by growth across a number of product categories, including diabetes and sleep supplies.

Foreign currency translation had an unfavorable impact on net revenue of $1.7 million for the three months ended March 31, 2025 as compared to the prior year period.

Cost of goods sold.

Three Months Ended

Sleep therapy

Home respiratory therapy

Six Months Ended

(Dollars in thousands)

Cost of goods sold

The increase in cost of goods sold for the three months ended March 31, 2025 reflects the increased cost associated with net revenue growth of 0.7% and a rise in commodity input costs, partially offset by cost avoidance associated with certain procurement activities.

Foreign currency translation had an unfavorable impact on cost of goods sold of $1.6 million for the three months ended March 31, 2025 as compared to the prior year period.

Gross profit.

Sleep therapy

Home respiratory therapy

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

The growth in these categories includes the benefits from certain successful sales activities.

In addition, improved collection rates contributed to revenue growth.

Diabetes revenue growth has been hindered by market shifts of diabetes business into the pharmacy channel.

Furthermore, in order to not disrupt our customers critical needs during supplier disruptions, we modified our customer ordering quantities and our delivery frequency for diabetes supplies during the three months ended June 30, 2025.

Absent this headwind, our revenue growth rate for the three months ended June 30, 2025 would have been approximately 4% as compared to the comparable prior period.

Cost of net revenue.

Three Months Ended

(Dollars in thousands)

As a % of net revenue

The changes in gross profit for the three months ended March 31, 2025 were driven by the same factors impacting net revenue and cost of goods sold.

Foreign currency translation had an unfavorable impact on gross profit of $3.3 million for the three months ended March 31, 2025 as compared to the prior year period.

Cost of products sold

Patient service equipment depreciation

Cost of net revenue

Six Months Ended

(Dollars in thousands)

Cost of products sold

Patient service equipment depreciation

Cost of net revenue

The increase in cost of net revenue for the three and six months ended June 30, 2025 reflects the increased cost associated with net revenue growth of 3.3% and 4.4% primarily due to increased sales volume.

Operating expenses.

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(Dollars in thousands)

Distribution, selling and administrative expenses

Selling, general and administrative expenses

As a % of net revenue

Transaction breakage fee

Acquisition-related charges and intangible amortization

Exit and realignment charges, net

Other operating expense, net

The decrease in Distribution, selling and administrative expenses (DS&A) expenses for the three months ended March 31, 2025 was driven primarily by a reduction in teammate benefits costs of $16 million and expense savings from operating efficiencies, partially offset by inflationary expense increases.

Foreign currency translation had a favorable impact on DS&A of $0.4 million for the three months ended March 31, 2025 as compared to the prior year period.

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

We incurred no acquisition related charges for the three months ended March 31, 2024.

Intangible amortization was $14 million for the three months ended March 31, 2025 and $20 million for the three months ended March 31, 2024 relating primarily to intangible assets acquired in the Apria, Halyard, and Byram acquisitions.

NM - Not meaningful

Six Months Ended

(Dollars in thousands)

Selling, general and administrative expenses

As a % of net revenue

Transaction breakage fee

Acquisition-related charges and intangible amortization

Exit and realignment charges, net

NM - Not meaningful

The decrease in selling, general and administrative expenses (SG&A) expenses for the three and six months ended June 30, 2025 were primarily from operating efficiencies in our revenue cycle and information technology along with lower benefit costs, partially offset by inflationary increases and the cost to service the revenue growth of $22 million and $58 million, respectively.

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

Acquisition-related charges were $6.4 million and $22 million for the three and six months ended June 30, 2025 and $3.7 million for the three and six months ended June 30, 2024 consisted of costs for the terminated acquisition of Rotech, which related primarily to legal and professional fees.

Intangible amortization was $7.6 million and $15 million for the three and six months ended June 30, 2025 and $10 million and $24 million for the three and six months ended June 30, 2024 relating to intangible assets acquired in the Apria and Byram acquisitions.

The decrease was due to certain intangible assets that were fully amortized in 2024.

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

These charges primarily related to (1) kitting and manufacturing initiatives of $10 million (2) professional fees associated with the potential sale of our P&HS segment of $7.1 million, (3) an accounts receivable provision of $6.8 million associated with Fusion 5, which is no longer part of our core operations (4) $5.7 million in professional fees associated with Patient Direct strategic initiatives and (5) $1.5 million of other charges.

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

These charges primarily related to (1) the 2023-2024 Operating Model Realignment Program of $33 million, including professional fees, severance, and other costs to streamline functions and processes and (2) costs related to IT strategic initiatives such as converting certain divisions to common IT systems of $1.2 million partially offset by (3) a $7.4 million gain on the sale of our corporate headquarters.

The change in other operating expense, net for the three months ended March 31, 2025 as compared to the prior year reflects an unfavorable change of $1.1 million in foreign currency transaction gains and losses, net of derivative adjustments, as compared to the prior year.

Interest expense, net.

Exit and realignment charges, net were $2.5 million and $16 million for the three and six months ended June 30, 2025.

These charges primarily included professional fees associated with strategic initiatives of $1.9 million and $8.1 million.

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

Exit and realignment charges, net were $15 million and $24 million for the three and six months ended June 30, 2024.

These charges primarily included professional fees associated with strategic initiatives of $12 million and $18 million.

Non-operating expenses.

Three Months Ended

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Effective interest rate

Interest expense, net for the three months ended March 31, 2025 decreased due to lower average outstanding borrowings of $169 million and a decrease in the effective interest rate of 19 basis points as compared to the three months ended March 31, 2024, partially offset by a decrease in interest income.

See Note 5 of Notes to Condensed Consolidated Financial Statements.

Transaction financing fees, net

Other expense, net

Three Months Ended

NM - Not meaningful

Six Months Ended

(Dollars in thousands)

Interest expense, net

Effective interest rate

Transaction financing fees, net

Other expense, net

Other expense, net for the three months ended March 31, 2025 and 2024 includes interest cost and net actuarial losses related to our retirement plans.

NM - Not meaningful

Interest expe nse, net for the three months ended June 30, 2025 increased due a reduction in interest income of $2.4 million, partially offset by lower average outstanding borrowings of $61 million and a 5 basis point decline in our effective interest rate as compared to the three months ended June 30, 2024 .

Interest expense, net, for the six months ended June 30, 2025 decreased due to a decrease in the effective interest rate of 13 basis points and lower average outstanding borrowings of $113 m illion, partially offset by a decrease in interest income of $4.6 million as compared to the six months ended June 30, 2024.

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

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

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

retirement plan.

Income taxes.

3 unchanged sentences

Effective tax rate

The change in the effective tax rate for the three months ended March 31, 2025 compared to the same period in 2024 resulted primarily from changes in results of operations in the jurisdictions in which we operate and changes in forecasted results reflected in the tax rates.

Six Months Ended

(Dollars in thousands)

Income tax benefit

Effective tax rate

The change in these rates were primarily from changes in results of operations, including the tax treatment associated with the $80 million transaction breakage fee for the three and six months ended June 30, 2025.

Adjusted EBITDA

We use Adjusted EBITDA, a financial measure that is not in accordance with generally accepted accounting principles in the United States, or U.S.

GAAP, to analyze our financial results.

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

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

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

In general, non-GAAP measures exclude items and charges that (i) management does not believe reflect the Company’s core business

and relate more to strategic, multi-year corporate activities;

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

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

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

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

The following table presents the reconciliation of net loss to Adjusted EBITDA for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Net loss, as reported (GAAP)

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

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

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

The following tables present the reconciliations of loss from continuing operations, net of tax to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024:

Three Months Ended June 30,

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

Income tax benefit

1 unchanged sentence

Acquisition-related charges and intangible amortization (1)

Transaction breakage fee (2)

Exit and realignment charges, net (3)

Transaction financing fees, net (4)

Litigation and related charges (5)

Other depreciation and amortization (7)

Stock compensation (8)

LIFO charges (5)

Adjusted EBITDA (non-GAAP)

Six Months Ended June 30,

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

Income tax benefit

Interest expense, net

Acquisition-related charges and intangible amortization (1)

Transaction breakage fee (2)

Exit and realignment charges, net (3)

Transaction financing fees, net (4)

Litigation and related charges (5)

Other depreciation and amortization (7)

Stock compensation (8)

Adjusted EBITDA (non-GAAP)

(1) Acquisition-related charges consist primarily of one-time costs related to the planned acquisition of Rotech, which consisted primarily of legal and professional fees.

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

We incurred no acquisition related charges for the three months ended March 31, 2024.

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

Acquisition-related charges consist primarily of one-time costs related to acquisitions, including transaction costs necessary to consummate acquisitions, such as advisory fees and legal fees, director and officer tail insurance expense, as well as transition costs, such as severance and retention bonuses, IT integration costs and professional fees.

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

(1) Acquisition-related charges and intangible amortization for the three and six months ended June 30, 2025 includes $6.4 million and $22 million of acquisition-related costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees.

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

Acquisition-related charges and intangible amortization for the three and six months ended June 30, 2024 includes $3.7

million of acquisition-related costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees.

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

Acquisition-related charges 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, as well as transition costs, such as severance and retention bonuses, IT integration costs and professional fees.

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

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

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

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

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

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

Exit and realignment charges, net were $15 million and $24 million for the three and six months ended June 30, 2024.

These charges primarily included professional fees associated with strategic initiatives of $12 million and $18 million and costs related to IT strategic initiatives such as converting certain divisions to common IT systems.

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

(3) Other depreciation and amortization relates to property and equipment and capitalized computer software, excluding such amounts captured within exit and realignment charges, net or acquisition-related charges.

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

(5) LIFO charges include non-cash adjustments 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 P&HS segment.

(6) Litigation and related charges includes settlement costs and related charges of legal matters within our Patient Direct segment.

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

(7) For the three months ended March 31, 2025 and 2024, other includes interest costs and net actuarial losses related to our frozen noncontributory, unfunded retirement plan for certain retirees in the U.S.

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

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

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

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

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

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

Financial Condition, Liquidity and Capital Resources

Financial condition .

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

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

We estimate a hypothetical increase (decrease) in DSO of one day would result in a decrease (increase) in our cash balances, an increase (decrease) in borrowings against our Revolving Credit Agreement, or a combination thereof of approximately $7.5 million.

The majority of our cash and cash equivalents are held in cash depository accounts with major banks in North America, Europe, and Asia.

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

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

(Dollars in thousands)

March 31, 2025

June 30, 2025

December 31, 2024

Cash and cash equivalents

Accounts receivable, net

Merchandise inventories

Accounts receivable

Inventory days (2)

Accounts payable

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

Consolidated DSO reflected the impact of the reduction in accounts receivable, net of allowances, due to sales of accounts receivable under the Receivables Sale Program.

Excluding the impact of the Receivables Sale Program, consolidated DSO would have been 26.4 as of March 31, 2025 and 25.7 as of December 31, 2024.

(2) Based on period end merchandise inventories and cost of goods sold for the quarters ended March 31, 2025 and December 31, 2024.

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

Excluding the impact of the Receivables Sale Program, DSO would have been 31.5 and 30.7 as of June 30, 2025 and December 31, 2024.

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

Liquidity and capital expenditures.

The following table summarizes our condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024:

Three Months Ended

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

Six Months Ended

(Dollars in thousands)

Net cash (used for) provided by:

Net cash provided by (used for):

Operating activities

2 unchanged sentences

Effect of exchange rate changes

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

Cash used for operating activities in the first three months of 2025 reflected unfavorable changes in working capital including an increase in inventories ahead of the opening of two new large distribution centers as well as in anticipation of tariffs and payment of accrued teammate benefits, partially offset by an increase in accounts payable primarily related to inventory purchases, a $130 million benefit from accounts receivable sold under the Receivables Sale Program and cash provided by operating income.

Cash used for operating activities in the first three months of 2024 reflected unfavorable changes in working capital and cash provided by operating income.

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

Cash used for investing activities in the first three months of 2025 included capital expenditures of $65 million, primarily for patient service equipment and our strategic and operational efficiency initiatives associated with other fixed assets and capitalized software, offset by $17 million in proceeds from sale of patient service equipment and other fixed assets.

Cash used for investing activities in the first three months of 2024 included capital expenditures of $49 million, primarily for patient service equipment, other fixed assets and capitalized software, offset by $50 million in proceeds from sales of patient service equipment and other fixed assets which included $34 million in gross proceeds related to the sale of our corporate headquarters.

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

Cash provided by financing activities in the first three months of 2024 included repayments of term loans of $4.6 million.

We had no borrowings under our Revolving Credit Facility for the first three months of 2024 and had net borrowings of $66 million under our amended Receivables

Financing Agreement.

Payments for taxes related to the vesting of restricted stock awards, which are included in Other, net, were $2.6 million for the first three months of 2024.

Net increase in cash, cash equivalents and restricted cash

Cash provided by operating activities in the first six months of 2025 reflected a net loss and favorable changes in working capital, an $80 million payment for the termination of the Rotech acquisition, $18 million in transaction financing fees, net for the Rotech financing, an increase in inventory primarily related to inventory purchases within the P&HS segment and a $130 million benefit from accounts receivables sold under the Receivables Sale Program, $104 million of which relates to accounts receivables sold of the P&HS segment.

Cash provided by operating activities in the first six months of 2024 reflected a net loss and favorable changes in working capital.

Cash used for investing activities in the first six months of 2025 included capital expenditures of $134 million, primarily for patient service equipment and our strategic and operational efficiency initiatives associated with other fixed assets and capitalized software, offset by $35 million in proceeds from sale of patient service equipment and other fixed assets.

Cash used for investing activities in the first six months of 2024 included capital expenditures of $95 million, primarily for patient service equipment, other fixed assets and capitalized software, offset by $67 million in proceeds from sales of patient service equipment and other fixed assets which included $34 million in gross proceeds related to the sale of our corporate headquarters.

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

Cash used for financing activities in the first six months of 2024 included repayments of term loans of $12 million.

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

Payments for taxes related to the vesting of restricted stock awards, which are included in Other, net, were $8.0 million for the first six months of 2024.

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

Capital Resources.

Our primary sources of liquidity include cash and cash equivalents, our Receivables Sale Program (as defined below), and our Revolving Credit Agreement.

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.

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

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

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

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

Total accounts receivable sold under the Receivables Sale Program and net cash proceeds were $343 million for 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 are recorded in other operating expense, net in the condensed consolidated statements of operations and were $2.1 million for the three months ended March 31, 2025.

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

Total accounts receivable sold and net cash proceeds under the Receivables Sale program were $496 million and $840 million during the three and six months ended June 30, 2025, approximately $397 million and $672 million of which were accounts receivable of the P&HS segment.

We collected $495 million and $704 million of the sold accounts receivable for the three and six months ended June 30, 2025, approximately $396 million and $563 million of which were collections on accounts receivable of the P&HS segment.

The losses on sales of accounts receivable were $3.1 million and $5.2 million for the three and six months ended June 30, 2025, $2.5 million and $4.1 million of which relate to losses recorded in other operating expense, net in the financial results from discontinued operations.

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

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

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

At June 30, 2025 we had $135 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 United States 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 Receivables Sale Program, the 4.500% senior unsecured notes due in March 2029, and the 6.625% senior unsecured notes due in April 2030 contain cross-default provisions which could result in the acceleration of payments due in the event of default of any of the related agreements.

At June 30, 2025 and December 31, 2024 we had letters of credit, which reduce Revolver availability, totaling $29 million and $31 million, leaving $286 million and $419 million available for borrowing.

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

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

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

We were in compliance with our debt covenants at March 31, 2025.

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

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

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

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

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 proposed acquisition of Rotech .

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.

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

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

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

On June 10, 2025 (the Redemption

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

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

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

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

Under the program, Owens & Minor 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 $1.5 million, or an average price per share of $8.66.

We believe cash generated by operating activities, available financing sources, and borrowings under the Revolving Credit Agreement, as well as cash on hand, will be sufficient to fund our working capital needs, capital expenditures, long-term strategic growth, payments under long-term debt and lease arrangements, debt repurchases, share repurchases and other cash requirements.

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 and six months ended June 30, 2025, we repurchased in open-market transactions and retired approximately 0.7 million and 0.8 million shares of our common stock for an aggregate of $5.1 million and $6.6 million, or an average price per share of $7.87 and $8.04.

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

Subsequent to the contemplated sale of our P&HS segment we do not expect the Receivables Sale Program to continue in its existing form.

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

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

Our cash and cash equivalents held by our foreign subsidiaries subject to repatriation totaled $27 million and $22 million at March 31, 2025 and December 31, 2024.

As of March 31, 2025, we are permanently reinvested in our foreign subsidiaries.

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

Our cash and cash equivalents held by our foreign subsidiaries subject to repatriation totaled $16 million and $22 million at June 30, 2025 and December 31, 2024 and is reflected in discontinued operations and assets held for sale.

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

Contractual Obligations

For disclosure of material contractual obligations, see our Annual Report on Form 10-K for the year ended December 31, 2024 and Note 13 in the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the period ended on March 31, 2025.

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

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see our Annual Report on Form 10-K for the year ended December 31, 2024 and Note 12 in the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the period ended on March 31, 2025.

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

Forward-looking Statements

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

● our ability to successfully complete a transaction related to the potential sale of our Products & Healthcare Services segment;

● uncertainties related to trade policy and tariffs;

● our ability to successfully complete a transaction related to the contemplated sale of our Products & Healthcare Services segment;

● increasing competitive and pricing pressures in the marketplace;

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

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

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

● our ability to successfully implement our strategic initiatives;

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

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

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

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

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

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

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

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

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

Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024.

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

Risk Factors” and below in “Item 1A.

Risk Factors”.

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

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Certain quantitative and qualitative market risk disclosures are described in our Annual Report on Form 10-K for the year ended December 31, 2024.

Through March 31, 2025, there have been no material changes in the quantitative and qualitative market risk disclosures described in such Annual Report.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis