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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-9810

Owens & Minor, Inc.

(Exact name of Registrant as specified in its charter)

	Virginia		54-1701843
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	10900 Nuckols Road, Suite 400 Glen Allen, Virginia		23060
	(Address of principal executive offices)		(Zip Code)

	Post Office Box 27626, Richmond, Virginia		23261-7626
	(Mailing address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (804) 723-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $2 par value per share		OMI		New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Owens & Minor, Inc.’s common stock outstanding as of October 24, 2025 was 77,346,594 shares.

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Owens & Minor, Inc. and Subsidiaries

Index


Part I. Financial Information		Page

Item 1.	Financial Statements	3
	Condensed Consolidated Statements of Operations—Three and Nine Months Ended September 30, 2025 and 2024	3
	Condensed Consolidated Statements of Comprehensive (Loss) Income—Three and Nine Months Ended September 30, 2025 and 2024	4
	Condensed Consolidated Balance Sheets—September 30, 2025 and December 31, 2024	5
	Condensed Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2025 and 2024	6
	Condensed Consolidated Statements of Changes in Equity (Deficit)—Three and Nine Months Ended September 30, 2025 and 2024	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42

Part II. Other Information

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
	Signatures	47

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Part I. Financial Information

Item 1. Financial Statements

Owens & Minor, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2025		2024		2025		2024
Net revenue	$	697,264	$	686,846	$	2,053,065	$	1,985,089
Operating costs and expenses:
Cost of net revenue		375,067		355,075		1,087,024		1,037,700
Selling, general and administrative expenses		265,838		272,322		796,061		812,453
Transaction breakage fee		—		—		80,000		—
Acquisition-related charges and intangible amortization		29,229		14,855		66,603		42,905
Exit and realignment charges, net		660		13,515		16,826		37,062
Total operating costs and expenses		670,794		655,767		2,046,514		1,930,120
Operating income		26,470		31,079		6,551		54,969
Interest expense, net		29,029		28,953		79,252		79,949
Transaction financing fees, net		—		—		18,288		—
Other expense, net		1,076		1,168		2,993		2,869
(Loss) income from continuing operations before income taxes		(3,635)		958		(93,982)		(27,849)
Income tax provision (benefit)		1,972		(303)		(743)		(8,974)
(Loss) income from continuing operations, net of tax		(5,607)		1,261		(93,239)		(18,875)
Loss from discontinued operations, net of tax		(144,669)		(14,031)		(951,077)		(47,695)
Net loss	$	(150,276)	$	(12,770)	$	(1,044,316)	$	(66,570)

Basic loss per common share:
(Loss) income from continuing operations, net of tax	$	(0.07)	$	0.02	$	(1.21)	$	(0.25)
Loss from discontinued operations, net of tax		(1.87)		(0.19)		(12.34)		(0.62)
Net loss	$	(1.94)	$	(0.17)	$	(13.55)	$	(0.87)

Diluted loss per common share:
(Loss) income from continuing operations, net of tax	$	(0.07)	$	0.02	$	(1.21)	$	(0.25)
Loss from discontinued operations, net of tax		(1.87)		(0.18)		(12.34)		(0.62)
Net loss	$	(1.94)	$	(0.16)	$	(13.55)	$	(0.87)

See accompanying notes to unaudited condensed consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive (Loss) Income

(unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2025		2024		2025		2024
Net loss	$	(150,276)	$	(12,770)	$	(1,044,316)	$	(66,570)
Other comprehensive income (loss), net of tax:
Currency translation adjustments		262		25,966		20,992		7,398
Change in unrecognized net periodic pension costs		100		265		983		699
Change in gains and losses on derivative instruments		(556)		(4,905)		(3,044)		(3,697)
Total other comprehensive (loss) income, net of tax		(194)		21,326		18,931		4,400
Comprehensive (loss) income	$	(150,470)	$	8,556	$	(1,025,385)	$	(62,170)

See accompanying notes to unaudited condensed consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)


	September 30,		December 31,
(in thousands, except per share data)	2025		2024
Assets
Current assets
Cash and cash equivalents	$	32,837	$	27,572
Accounts receivable, net		202,731		218,270
Inventories		63,847		67,581
Other current assets		68,129		82,240
Current assets held for sale - discontinued operations		1,764,129		1,625,354
Total current assets		2,131,673		2,021,017
Patient service equipment and other fixed assets, net		259,729		249,283
Operating lease assets		119,093		126,928
Goodwill		1,228,140		1,228,140
Intangible assets, net		165,694		210,056
Other assets, net		131,897		89,539
Noncurrent assets held for sale - discontinued operations		—		731,193
Total assets	$	4,036,226	$	4,656,156
Liabilities and equity
Current liabilities
Accounts payable	$	339,728	$	359,927
Accrued payroll and related liabilities		45,231		73,678
Current portion of long-term debt		280,000		42,866
Other current liabilities		455,203		294,685
Current liabilities held for sale - discontinued operations		1,345,805		1,080,896
Total current liabilities		2,465,967		1,852,052
Long-term debt, excluding current portion		1,835,261		1,798,393
Operating lease liabilities, excluding current portion		81,352		89,466
Deferred income taxes, net		—		19,436
Other liabilities		83,153		72,551
Noncurrent liabilities held for sale - discontinued operations		—		237,894
Total liabilities		4,465,733		4,069,792
Commitments and contingencies
Equity
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 77,299 shares and 77,199 shares		154,598		154,398
Paid-in capital		468,469		454,151
(Accumulated deficit) retained earnings		(1,022,161)		27,159
Accumulated other comprehensive loss		(30,413)		(49,344)
Total (deficit) equity		(429,507)		586,364
Total liabilities and equity	$	4,036,226	$	4,656,156

See accompanying notes to unaudited condensed consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Nine Months Ended September 30,
(in thousands)	2025		2024
Operating activities:
Net loss	$	(1,044,316)	$	(66,570)
Adjustments to reconcile net loss to cash (used for) provided by operating activities:
Depreciation and amortization		184,651		199,588
Goodwill impairment charge		106,389		—
Loss on classification to held for sale		771,640		—
Share-based compensation expense		17,330		19,281
Loss on extinguishment of debt		—		311
Deferred income tax benefit		(53,762)		(15,119)
Changes in operating lease right-of-use assets and lease liabilities		249		7,156
Gain from sale and dispositions of patient service equipment and other fixed assets		(16,385)		(37,682)
Changes in operating assets and liabilities:
Accounts receivable, net		111,500		(60,887)
Inventories		(146,351)		(132,433)
Accounts payable		(10,680)		164,261
Net change in other assets and liabilities		(98,763)		4,719
Other, net		8,522		7,869
Cash (used for) provided by operating activities		(169,976)		90,494
Investing activities:
Additions to patient service equipment and other fixed assets		(177,823)		(148,031)
Proceeds from sale of patient service equipment and other fixed assets		53,369		84,759
Additions to computer software		(14,217)		(8,695)
Other, net		(1,910)		7,738
Cash used for investing activities		(140,581)		(64,229)
Financing activities:
Borrowings under amended Receivables Financing Agreement		—		1,286,400
Repayments under amended Receivables Financing Agreement		—		(1,286,400)
Borrowings under Revolving Credit Facility		2,442,484		—
Repayments under Revolving Credit Facility		(2,171,784)		—
Repayments of debt		—		(211,447)
Repurchase of common stock		(6,656)		—
Other, net		41,530		(13,060)
Cash provided by (used for) financing activities		305,574		(224,507)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		1,767		408
Net decrease in cash, cash equivalents and restricted cash		(3,216)		(197,834)
Cash, cash equivalents and restricted cash at beginning of period		49,382		272,924
Cash, cash equivalents and restricted cash at end of period	$	46,166	$	75,090
Supplemental disclosure of cash flow information:
Income taxes paid, net	$	8,784	$	7,610
Interest paid	$	96,138	$	104,278
Noncash investing activity:
Unpaid purchases of patient service equipment and other fixed assets at end of period	$	71,823	$	75,176

See accompanying notes to unaudited condensed consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (Deficit)

(unaudited)


		Common						Accumulated
	Common	Stock				Retained		Other
	Shares	($2 par		Paid-In		Earnings		Comprehensive		Total
(in thousands, except per share data)	Outstanding	value)		Capital		(Accumulated Deficit)		Loss		Equity (Deficit)
Balance, December 31, 2024	77,199	$	154,398	$	454,151	$	27,159	$	(49,344)	$	586,364
Net loss	—		—		—		(24,982)		—		(24,982)
Other comprehensive income	—		—		—		—		5,133		5,133
Share-based compensation expense, exercises and other	194		387		5,580		—		—		5,967
Shares repurchased and retired	(173)		(346)		—		(1,157)		—		(1,503)
Balance, March 31, 2025	77,220		154,439		459,731		1,020		(44,211)		570,979
Net loss	—		—		—		(869,058)		—		(869,058)
Other comprehensive income	—		—		—		—		13,992		13,992
Share-based compensation expense, exercises and other	630		1,260		6,970		—		—		8,230
Shares repurchased and retired	(653)		(1,306)		—		(3,847)		—		(5,153)
Balance, June 30, 2025	77,197		154,393		466,701		(871,885)		(30,219)		(281,010)
Net loss	—		—		—		(150,276)		—		(150,276)
Other comprehensive loss	—		—		—		—		(194)		(194)
Share-based compensation expense, exercises and other	102		205		1,768		—		—		1,973
Balance, September 30, 2025	77,299	$	154,598	$	468,469	$	(1,022,161)	$	(30,413)	$	(429,507)

Balance, December 31, 2023	76,546	$	153,092	$	434,185	$	389,845	$	(31,818)	$	945,304
Net loss	—		—		—		(21,886)		—		(21,886)
Other comprehensive loss	—		—		—		—		(11,619)		(11,619)
Share-based compensation expense, exercises and other	(97)		(195)		4,402		—		—		4,207
Balance, March 31, 2024	76,449		152,897		438,587		367,959		(43,437)		916,006
Net income	—		—		—		(31,913)		—		(31,913)
Other comprehensive loss	—		—		—		—		(5,307)		(5,307)
Share-based compensation expense, exercises and other	599		1,199		1,855		—		—		3,054
Balance, June 30, 2024	77,048		154,096		440,442		336,046		(48,744)		881,840
Net loss	—		—		—		(12,770)		—		(12,770)
Other comprehensive income	—		—		—		—		21,326		21,326
Share-based compensation expense, exercises and other	14		27		5,307		—		—		5,334
Balance, September 30, 2024	77,062	$	154,123	$	445,749	$	323,276	$	(27,418)	$	895,730

See accompanying notes to unaudited condensed consolidated financial statements.

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Owens & Minor, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

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

Note 1—Summary of Significant Accounting Policies

Basis of Presentation and Consolidation. The unaudited condensed consolidated financial statements include the accounts of Owens & Minor, Inc. and the subsidiaries it controls (the Company, we, us, or our) and contain all adjustments necessary to conform with United States (U.S.) generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. The results of operations for interim periods are not necessarily indicative of the results expected for the full year. In connection with the anticipated sale of our Products & Healthcare Services (P&HS) segment as detailed in the discontinued operations and assets held-for-sale section below, we determined that our continuing operations’ business activities comprise a single operating and reporting segment. This determination is in accordance with ASC No. 280, Segment Reporting.

Revision of Prior Period 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 retained 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 period amounts have been reclassified to conform to current year presentation.

Discontinued Operations and Assets Held-for-Sale. On February 28, 2025, we announced that we were actively engaged in discussions regarding the anticipated sale of our P&HS segment. On October 7, 2025, we, entered into an Equity Purchase Agreement, (the Purchase Agreement) by and among the Company, Dominion Healthcare Acquisition Corporation, a Delaware corporation (the Purchaser), and Dominion Healthcare Holdings, L.P., a Delaware limited partnership (Purchaser Parent) to sell the P&HS segment, for an aggregate of $375 million in cash, subject to certain adjustments for cash, indebtedness, net working capital and transaction expenses. We will retain a 5% equity interest in the P&HS segment. The Purchaser will be required to pay us a termination fee under certain specified circumstances of $9.4 million or $19 million depending on the stage of regulatory approval and other criteria. The sale is subject to customary closing conditions, including the Hart Scott Rodino Act and other regulatory approvals, and is expected to close in the first quarter of 2026.

The P&HS segment was initially classified as discontinued operations and assets held for sale as of June 30, 2025. In accordance with GAAP, the financial position and results of operations of the P&HS segment are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. With the exception of Note 3, the Notes to the Condensed Consolidated Financial Statements reflect the continuing operations of Owens & Minor, Inc. unless otherwise noted. See Note 3 for additional information regarding discontinued operations and assets held for sale.

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. Significant estimates are used for,

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but are not limited to, variable consideration, depreciation and amortization, goodwill valuation, valuation of intangible assets and other long-lived assets, estimated fair values of the net assets acquired in business combinations, self-insurance liabilities, tax liabilities, defined benefit obligations, share-based compensation and other contingencies. Actual results may differ from these estimates.

Cash and 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 the U.S. Cash that has restrictions on its availability to us would be classified as restricted cash. There was no restricted cash as of September 30, 2025 and December 31, 2024.

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


	September 30, 2025		December 31, 2024
Cash and cash equivalents	$	32,837	$	27,572
Cash and cash equivalents of held for sale - discontinued operations		13,329		21,810
Total cash and cash equivalents	$	46,166	$	49,382

Book overdrafts represent the amount of outstanding checks issued in excess of related bank balances and are included in accounts payable in our condensed consolidated balance sheets, as they are similar to trade payables and are not subject to finance charges or interest. Changes in book overdrafts are classified as operating activities in our condensed consolidated statements of cash flows.

Accounts Receivable, Net. Due to the nature of our industry and the reimbursement environment in which we operate, certain estimates are required to record net revenues and accounts receivable at their net realizable values, including estimating variable consideration. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements, contractual terms, and the uncertainty of reimbursement amounts for certain services may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application, claim amount or account review.

Included in accounts receivable were earned but unbilled receivables of $33 million as of September 30, 2025 and $30 million as of December 31, 2024. Delays, ranging from a single day to several weeks, between the date of service and billing can occur due to delays in obtaining certain required payor-specific documentation from internal and external sources. Earned but unbilled receivables are aged from date of service and are considered in our analysis of historical performance and collectability.

Inventories. Inventories, which primarily include medical supplies to be sold to customers, are determined using the first-in, first-out or weighted-average cost method at the lower of cost or net realizable value. We periodically evaluate whether inventory valuation allowance adjustments are required. In our evaluation, we review for obsolete inventory and slow-moving inventory which includes consideration of recent sales trends. We write down inventories which are considered excess and obsolete as a result of these assessments within cost of net revenue. Shifts in market trends and conditions, as well as changes in customer or payor preferences and behavior could affect the value of our inventories.

Patient Service Equipment and Other Fixed Assets, Net. Patient service equipment consists of medical equipment rented to customers, primarily on a month-to-month basis, as well as equipment that may be sold. Patient service equipment depreciation expense is classified in our condensed consolidated statements of operations within cost of net revenue for equipment rented to customers. Other fixed assets, net are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense for financial reporting purposes is generally computed on a straight-line method over the estimated useful lives of the assets. In general, the estimated useful lives for computing depreciation are one to 10 years for patient service equipment, and up to 15 years for other fixed assets. Straight-line and

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accelerated methods of depreciation are used for income tax purposes. Normal maintenance and repairs are expensed as incurred, and renovations and betterments are capitalized. We suspend depreciation and amortization on assets that are held for sale.

Leases. We account for all of our lease arrangements, including for real estate, trucks, and patient service equipment, as operating leases. We enter into non-cancelable agreements to lease most of our office, branch and warehouse facilities with remaining terms generally ranging from one to six years. Certain building leases include renewal options which the exercise of is at our sole discretion. We generally do not include options to renew (or terminate) in our lease term, as part of our right-of-use assets and lease liabilities, as we generally do not have leases for which we believe we are reasonably certain to exercise those options. Leases with a term of 12 months or less are not recorded on the condensed consolidated balance sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. The depreciable lives of right-of-use assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We elected the practical expedient to not separate lease and non-lease components for our leases. Operating lease assets and liabilities are recognized at commencement date based on the present value of unpaid lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. We use the implicit rate when readily determinable. The right-of-use assets also include adjustments for any lease payments made and lease incentives received.

Goodwill. We account for acquired businesses using the acquisition method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

We evaluate goodwill for impairment annually, as of October 1, and if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Qualitative factors are first assessed to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined that it is more likely than not the fair value does not exceed the carrying amount, then a quantitative test is performed.

Intangible Assets, Net. Intangible assets acquired through purchases or business combinations are stated at fair value at the acquisition date and net of accumulated amortization in the condensed consolidated balance sheets. Intangible assets, consisting primarily of customer relationships, customer contracts and tradenames are amortized over their estimated useful lives. In determining the useful life of an intangible asset, we consider our historical experience in renewing or extending similar arrangements. Intangible assets are generally amortized over one to 15 years based on their pattern of economic benefit or on a straight-line basis. We suspend amortization on assets that are held for sale.

Computer Software. We develop and purchase software for internal use. Software development costs incurred during the application development stage are capitalized. Once the software has been installed and tested, and is ready for use, additional costs incurred in connection with the software are expensed as incurred. Capitalized computer software costs are amortized over the estimated useful life of the software, usually between three and 10 years. Capitalized computer software costs are included in other assets, net, in the condensed consolidated balance sheets. Unamortized software at September 30, 2025 and December 31, 2024 was $15 million and $26 million.

Long-Lived Asset Impairment Evaluation. Long-lived assets, which include patient service equipment, finite-lived intangible assets, right-of-use assets, unamortized software costs, and other fixed assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. We assess long-lived assets for the potential impairments by comparing the carrying value of an asset, or group of related assets, to their estimated undiscounted future cash flows.

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Self-Insurance Liabilities. We are self-insured for certain teammate healthcare, workers’ compensation and automobile liability costs; however, we maintain insurance for individual losses exceeding certain limits. Liabilities are estimated for healthcare costs using current and historical claims data. Liabilities for workers’ compensation and automobile liability claims are estimated using historical claims data and loss development factors. If the underlying facts and circumstances of existing claims change or the historical trends are not indicative of future trends, then we may be required to adjust the liability and related expense accordingly. Self-insurance liabilities are included in other current liabilities and other liabilities in the condensed consolidated balance sheets and were $27 million at September 30, 2025 and December 31, 2024.

Revenue Recognition. Revenues are primarily recognized under fee-for-service arrangements for sales of supplies, equipment and other items we sell to customers and equipment we rent to customers. Revenue for sales of products, including equipment and supplies, is recognized when control of the promised goods is transferred to customers and is presented net of applicable sales taxes. Revenue generated from equipment that we rent to customers is primarily recognized as earned on a straight-line basis over the non-cancellable rental period, typically one month, and commences on delivery of the equipment to the customers.

Fee-for-service arrangement revenues are recorded only to the extent it is probable that a significant reversal will not occur in the future as amounts may include implicit price concessions under reimbursement arrangements with third-party payors, including private insurers under both commercial and Medicare Advantage plans, prepaid health plans, Medicare, Medicaid and customers. Revenue is recognized under a portfolio approach, as we expect that this approach would not differ materially from considering each contract or performance obligation separately. We use the expected value method in determining the variable consideration as part of determining the sales transaction price using historical reimbursement experience, historical sales returns, and other operating trends. Payment terms and conditions vary by contract. Sales of equipment and supplies inclusive of amounts recognized under capitation arrangements for the three and nine months ended September 30, 2025 were $528 million and $1.5 billion and $517 million and $1.5 billion for the three and nine months ended September 30, 2024. Rental revenues inclusive of amounts recognized under capitation arrangements for the three and nine months ended September 30, 2025 were $169 million and $510 million and $170 million and $508 million for the three and nine months ended September 30, 2024.

Certain revenues are recognized under arrangements with third-party payors for which we stand ready to provide all necessary healthcare services to members for the period of the stand ready obligation which generally extends beyond one year. These agreements are generally referred to as capitation arrangements. Revenue is recognized over the month that the members are entitled to healthcare services using the monthly contractual rate for each covered member. The actual number of covered members may vary each month. Capitation payments are typically received in the month members are entitled to healthcare services. Revenue for these agreements amounted to $61 million and $182 million for the three and nine months ended September 30, 2025 and $60 million and $178 million for the three and nine months ended September 30, 2024.

The following table summarizes net revenue by product category:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Diabetes	$	201,372	$	202,761	$	579,788	$	577,112
Sleep therapy		185,799		177,153		549,280		519,427
Home respiratory therapy		107,256		108,968		325,388		327,463
Ostomy		53,274		50,555		154,666		142,181
Wound care		48,001		51,475		141,469		141,868
Urology		28,976		27,748		85,815		78,382
Other		72,586		68,186		216,659		198,656
Net revenue	$	697,264	$	686,846	$	2,053,065	$	1,985,089

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The following table summarizes net revenue by payor type:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Commercial payors ⁽¹⁾	$	560,826	$	559,319	$	1,655,182	$	1,612,359
Medicare		126,785		117,388		368,839		342,429
Medicaid		9,653		10,139		29,044		30,301
Net revenue	$	697,264	$	686,846	$	2,053,065	$	1,985,089

(1)

Commercial payors includes revenue from Medicare Advantage plans.

Cost of Net Revenue. Cost of net revenue includes the cost of products sold, patient service equipment depreciation expense, and other costs which are primarily personnel costs related to the set-up and utilization of equipment. Cost of product sold includes non-cash expenses primarily for equipment converted from rental to sales in the amount of $11 million and $35 million for the three and nine months ended September 30, 2025 and $7.9 million and $23 million for the three and nine months ended September 30, 2024.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Cost of product sold	$	337,649	$	317,445	$	974,554	$	921,312
Patient service equipment depreciation		31,694		31,303		95,260		95,342
Other costs		5,724		6,327		17,210		21,046
Cost of net revenue	$	375,067	$	355,075	$	1,087,024	$	1,037,700

Selling, General and Administrative (SG&A) Expenses. SG&A expenses include compensation costs, expenses for selling and administrative functions, shipping and handling costs and certain depreciation and amortization expense.

Shipping and Handling. Shipping and handling costs are included in SG&A expenses in the condensed consolidated statements of operations and include costs to store, move, and prepare products for shipment, as well as costs to deliver products to customers. Shipping and handling costs totaled $74 million and $213 million for the three and nine months ended September 30, 2025 and $68 million and $205 million for the three and nine months ended September 30, 2024.

Share-Based Compensation. We account for share-based compensation to teammates at fair value and recognize the related expense primarily in SG&A expenses over the service period for awards expected to vest. The fair value of non-vested performance shares is dependent upon our assessment of the probability of achievement of financial targets for the performance period.

Income Taxes. We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are provided if it is more likely than not that a deferred tax asset will not be realized. When we have claimed tax benefits that may be challenged by a tax authority, an estimate of the effect of these uncertain tax positions is recorded. It is our policy to provide for uncertain tax positions and related interest and penalties based upon an assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent that the tax outcome of these uncertain tax positions changes, based on our assessment, such changes in estimate may impact the income tax provision in the period in which such determination is made.

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Fair Value Measurements. Fair value is determined based on assumptions that a market participant would use in pricing an asset or liability. 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, 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 unit 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). See Note 8 for the fair value of debt. The fair value of our derivative contracts is determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows. See Note 10 for the fair value of derivatives.

Our acquisitions may include contingent consideration as part of the purchase price. 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.

Acquisition-Related Charges and Intangible Amortization. Acquisition-related charges consist primarily of one-time costs related to the terminated acquisition of Rotech Healthcare Holdings Inc. (Rotech), which consisted primarily of legal and professional fees. For the nine months ended September 30, 2025, we incurred $22 million of acquisition-related costs. For the three and nine months ended September 30, 2024, we incurred $6.5 million and $10 million of acquisition-related costs related to the expected acquisition of Rotech Healthcare Holdings Inc. (Rotech), which consisted primarily of legal and professional fees. 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.

Transaction Breakage Fee. 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 Hitchcock Merger Sub Inc. (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 nine months ended September 30, 2025.

Exit and Realignment Charges, Net. Exit and realignment charges, net consist of costs associated with optimizing our operations including significant changes to certain processes to increase net revenue and lower costs along with costs related to IT strategic initiatives and other strategic actions. These costs include, but are not limited to, professional fees, severance and other costs to streamline functions and processes. Costs associated with exit and realignment activities are recorded at their fair value when incurred. Liabilities are established at the cease-use date for remaining contractual obligations discounted using a credit-adjusted risk-free rate of interest. We evaluate these assumptions quarterly and adjust the liabilities accordingly. Severance benefits are generally recorded when payment is considered probable and reasonably estimable. These costs are not normal, cash operating expenses necessary for the Company to operate its business on an ongoing basis.

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Note 2—Significant Concentration Risks

During the nine months ended September 30, 2025, our two largest commercial payors represented approximately 23% and 14% of our net revenue, derived from multiple separately managed contracts. Revenue reimbursed under arrangements with Medicare and state Medicaid programs was approximately 19% of our net revenue for the nine months ended September 30, 2025. The largest commercial payor recently notified us that it intends to terminate certain of our contracts with them. The terminated agreements reflected $242 million or 12% of our net revenue, including $173 million of capitation revenue, which represents nearly all of our capitation revenue, for the nine months ended September 30, 2025.

During the nine months ended September 30, 2025, three suppliers each contributed between 10% and 25% of our patient service equipment and supplies purchases collectively accounting for approximately 48% of our total purchases.

Note 3—Discontinued Operations and Assets Held-for-Sale

On February 28, 2025, we announced that we were actively engaged in discussions regarding the anticipated sale of our P&HS segment. On October 7, 2025, we entered into the Purchase Agreement by and among the Company, the Purchaser, and Purchaser Parent to sell the P&HS segment, for an aggregate of $375 million in cash, subject to certain adjustments for cash, indebtedness, net working capital and transaction expenses. We will retain a 5% equity interest in the P&HS segment. The Purchaser will be required to pay us a termination fee under certain specified circumstances of $9.4 million or $19 million depending on the stage of regulatory approval and other criteria. The sale is subject to customary closing conditions, including the Hart Scott Rodino Act and other regulatory approvals, and is expected to close in the first quarter of 2026.

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. The P&HS segment was initially classified as discontinued operations and assets held for sale as of June 30, 2025. Accordingly, the results of operations from our P&HS segment are reported in the accompanying condensed consolidated statements of operations as “Loss from discontinued operations, net of tax” for the three and nine months ended September 30, 2025 and 2024 and the related assets and liabilities are classified as held-for-sale as of September 30, 2025 and December 31, 2024 in the accompanying condensed consolidated balance sheets. We have allocated interest expense, net to discontinued operations as a ratio of net assets and total debt in accordance with ASC 205, Presentation of Financial Statements.

The remaining P&HS goodwill balance of $106 million was fully impaired during the second quarter of 2025. Our sale process provided a basis for the fair value of the P&HS segment, which includes the Global Products reporting unit. We recognized a loss of $123 million and $772 million during the three and nine months ended September 30, 2025 in connection with the classification of the related assets and liabilities as held-for-sale, based on the estimated fair value, less costs to sell. The fair value of the P&HS segment was determined from information received during our sale process, including the Purchase Agreement. Subsequent changes in fair value will be recorded within discontinued operations and assets held for sale.

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The following table summarizes the financial results of our discontinued operations for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Net revenue	$	2,007,078	$	2,034,279	$	5,945,052	$	6,019,721
Cost of goods sold		1,818,935		1,806,343		5,349,578		5,327,723
Gross profit		188,143		227,936		595,474		691,998
Distribution, selling, and administrative expenses		186,885		206,523		596,240		616,005
Acquisition-related charges and intangible amortization		—		6,243		12,549		18,491
Exit and realignment charges, net		25,122		15,365		57,713		48,467
Goodwill impairment charge		—		—		106,389		—
Loss on classification to held for sale		122,500		—		771,640		—
Other operating expense, net		2,217		6,680		6,923		9,806
Operating loss		(148,581)		(6,875)		(955,980)		(771)
Interest expense, net		7,636		7,601		27,828		28,158
Other expense		269		270		799		928
Loss from discontinued operations before income taxes		(156,486)		(14,746)		(984,607)		(29,857)
Income tax (benefit) provision for discontinued operations		(11,817)		(715)		(33,530)		17,838
Loss from discontinued operations, net of taxes	$	(144,669)	$	(14,031)	$	(951,077)	$	(47,695)

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The assets and liabilities of the P&HS segment reflected on the condensed consolidated balance sheets at September 30, 2025, and December 31, 2024, are as follows:


	September 30,		December 31,
	2025		2024
Assets held for sale - discontinued operations
Cash and cash equivalents	$	13,329	$	21,810
Accounts receivable, net		383,581		471,971
Merchandise inventories		1,220,698		1,064,298
Intercompany receivable		160,000		—
Other current assets, net		111,808		67,275
Property and equipment, net		274,795		—
Operating lease assets		283,741		—
Intangible assets, net		76,775		—
Deferred tax assets		11,042		—
Valuation allowance on disposal group classified as held for sale		(771,640)		—
Current assets held for sale - discontinued operations		1,764,129		1,625,354
Property and equipment, net		—		260,064
Operating lease assets		—		228,699
Goodwill		—		103,140
Intangible assets, net		—		88,670
Deferred tax assets		—		6,726
Other noncurrent assets, net		—		43,894
Total assets held for sale - discontinued operations	$	1,764,129	$	2,356,547
Liabilities held for sale - discontinued operations
Accounts payable	$	868,107	$	868,764
Accrued payroll and related liabilities		36,109		77,046
Current portion of long-term debt		7,694		2,683
Other current liabilities		118,504		82,400
Operating lease liabilities, current portion		297,505		50,003
Deferred tax liabilities		17,886		—
Current liabilities held for sale - discontinued operations		1,345,805		1,080,896
Long-term debt, excluding current portion		—		9,654
Operating lease liabilities, excluding current portion		—		196,746
Other liabilities		—		28,474
Deferred tax liabilities		—		3,020
Total liabilities held for sale - discontinued operations	$	1,345,805	$	1,318,790

Assets and liabilities held for sale as of September 30, 2025 are classified as current since we expect the divestiture to be completed within one year of the balance sheet date. As of December 31, 2024, the assets and liabilities held for sale are classified separately as current or noncurrent because the noncurrent assets and liabilities did not meet the criteria for current classification as of December 31, 2024. Merchandise inventories include $110 million subject to lien with an individual supplier as of September 30, 2025.

Receivables Purchase Agreement

On March 14, 2023, we entered into the 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. The RPA is separate and distinct from the Receivables Sale Program and the amendment as described below. As a result of the amendment described below, the RPA was not utilized in the nine months ended September 30, 2025.

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Proceeds from the sale of accounts receivable are recorded as an increase to cash and cash equivalents and a reduction to current assets of discontinued operations, 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. The accounts receivable sold under the RPA were entirely accounts receivable of the P&HS segment. 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. The losses on sale of accounts receivable, inclusive of professional fees incurred to establish the agreement, recorded in other operating expense, net in the financial results from discontinued operations were $3.6 million and $11 million for the three and nine months ended September 30, 2024.

Receivables Sale Program

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. 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. Upon the completion of the sale of the P&HS segment the related accounts receivable will no longer be eligible for sale under the Receivables Sale Program as the program will not convey.

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 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 consolidated statements of cash flows. The accounts receivable sold under the Receivables Sale Program were primarily accounts receivable of the P&HS segment. Total accounts receivable sold and net cash proceeds under the Receivables Sale program were $466 million and $1.3 billion during the three and nine months ended September 30, 2025, approximately $373 million and $1.0 billion of which were accounts receivable of the P&HS segment. We collected $465 million and $1.2 billion of the sold accounts receivable for the three and nine months ended September 30, 2025, approximately $372 million and $935 million of which were collections on accounts receivable of the P&HS segment. The losses on sales of accounts receivable were $3.0 million and $8.2 million for the three and nine months ended September 30, 2025, $2.4 million and $6.5 million of which relate to losses recorded in other operating expense, net in the financial results from discontinued operations.

As of September 30, 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 sheets under the Receivables Sale Program, $160 million and $56 million of which relate to the assets of discontinued operations and assets held for sale. As of September 30, 2025 the $160 million of uncollected accounts receivable related to the assets of discontinued operations and assets held for sale is shown as an intercompany receivable within current assets of discontinued operations and assets held for sale with an equal amount reflected within other current liabilities in the condensed consolidated balance sheet.

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The following table provides significant non-cash operating, select operating and significant investing cash flow information for our discontinued operations and assets held for sale:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2025		2024		2025		2024
Operating Activities:
Loss from discontinued operations, net of tax	$	(144,669)	$	(14,031)	$	(951,077)	$	(47,695)
Significant non-cash adjustments to reconcile net loss to cash (used for) provided by operating activities:
Goodwill impairment charge		—		—		106,389		—
Loss on classification to held for sale		122,500		—		771,640		—
Depreciation and amortization		—		17,229		34,664		59,679
Share-based compensation		2,509		2,159		8,205		7,327
Changes in select operating assets and liabilities:
Accounts receivable, net		(24,023)		(4,168)		95,961		(43,211)
Inventories		3,846		2,307		(150,085)		(120,627)
Accounts payable		(137,985)		(38,154)		12,078		77,430
Investing Activities:
Capital expenditures	$	(12,272)	$	(16,167)	$	(39,190)	$	(27,317)
Proceeds from sale of corporate headquarters		—		—		—		33,500

Note 4—Patient Service Equipment and Other Fixed Assets, Net

Patient service equipment and other fixed assets, net, consists of the following:


	September 30, 2025		December 31, 2024
Patient service equipment	$	417,122	$	388,445
Building and leasehold improvements		15,881		23,955
Other fixed assets		29,713		20,628
Patient service equipment and other fixed assets, gross		462,716		433,028
Accumulated depreciation and amortization		(202,987)		(183,745)
Patient service equipment and other fixed assets, net	$	259,729	$	249,283

Note 5—Goodwill and Intangible Assets, Net

At September 30, 2025 and December 31, 2024, we had goodwill of $1.2 billion, net of accumulated goodwill impairment of $307 million.

Intangible assets, net subject to amortization, which excludes indefinite-lived intangible assets, at September 30, 2025 and December 31, 2024 were as follows:


	September 30, 2025						December 31, 2024
	Customer				Other		Customer				Other
	Relationships		Tradenames		Intangibles		Relationships		Tradenames		Intangibles
Intangible assets, gross	$	132,300	$	143,000	$	38,000	$	132,300	$	143,000	$	38,000
Accumulated amortization		(52,604)		(67,420)		(27,582)		(24,326)		(56,437)		(22,481)
Intangible assets, net	$	79,696	$	75,580	$	10,418	$	107,974	$	86,563	$	15,519
Weighted average useful life		5 years		10 years		6 years		15 years		10 years		6 years

Amortization expense for intangible assets was $29 million and $44 million for the three and nine months ended September 30, 2025 and $8.4 million and $33 million for the three and nine months ended September 30, 2024. The increase as compared to the prior year was driven by the remaining useful life for an intangible asset being modified

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as of June 30, 2025 as a result of a notice of a contract termination with a commercial Payor. The updated future intangible amortization is reflected in the table below.

As of September 30, 2025, based on the current carrying value of intangible assets subject to amortization and expected remaining useful life, estimated amortization expense were as follows:


Year
2025 (remainder)	$	29,228
2026		68,122
2027		13,872
2028		11,953
2029		11,953
Thereafter		30,566
Total future amortization	$	165,694

Note 6—Leases

The components of lease expense for the three and nine months ended September 30, 2025 and 2024 were as follows:


		Three Months Ended September 30,
	Classification	2025		2024
Operating lease cost	SG&A expenses	$	14,355	$	14,152
Short-term lease cost	SG&A expenses, Cost of net revenue		1,533		2,534
Variable lease cost	SG&A expenses, Cost of net revenue		6,236		6,310
Total lease cost		$	22,124	$	22,996


		Nine Months Ended September 30,
	Classification	2025		2024
Operating lease cost	SG&A expenses	$	39,818	$	41,665
Short-term lease cost	SG&A expenses, Cost of net revenue		5,071		8,040
Variable lease cost	SG&A expenses, Cost of net revenue		18,406		18,767
Total lease cost		$	63,295	$	68,472

Variable lease cost consists primarily of taxes, insurance, and common area or other maintenance costs for our leased facilities and patient service equipment which are paid as incurred.

Supplemental balance sheet information as of September 30, 2025 and December 31, 2024 was as follows:


		As of September 30,		As of December 31,
	Classification	2025		2024
Assets:
Operating lease assets	Operating lease assets	$	119,093	$	126,928
Liabilities:
Current operating leases	Other current liabilities	$	46,031	$	41,217
Noncurrent operating leases	Operating lease liabilities, excluding current portion		81,352		89,466
Total operating lease liabilities		$	127,383	$	130,683

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Other information related to leases for the nine months ended September 30, 2025 and 2024 was as follows:


	Nine Months Ended September 30,
	2025			2024
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	40,741		$	41,604

Right-of-use assets obtained in exchange for new operating lease liabilities	$	23,968		$	24,508

Weighted average remaining lease term (years)
Operating leases		3.2			3.7

Weighted average discount rate
Operating leases		6.7	%		6.4	%

Maturities of operating lease liabilities as of September 30, 2025 were as follows:



2025 (remainder)	$	13,444
2026		50,593
2027		36,517
2028		23,642
2029		11,813
Thereafter		5,630
Total lease payments		141,639
Less: Interest		(14,256)
Present value of lease liabilities	$	127,383

Note 7—Exit and Realignment Charges, Net

We incur exit and realignment and other charges associated with optimizing our operations which include IT strategic initiatives and other strategic actions. These charges include professional fees, severance and other costs to streamline functions and enhance processes. These costs are not normal, cash operating expenses necessary for the Company to operate its business on an ongoing basis.

Exit and realignment charges, net were $0.7 million and $17 million for the three and nine months ended September 30, 2025 and $14 million and $37 million for the three and nine months ended September 30, 2024. These charges were primarily related to strategic 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. We do not expect to incur material future costs relating to certain exit and realignment actions, which remain underway.

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The following table summarizes the activity related to exit and realignment cost accruals, which are generally classified as other current liabilities in our condensed consolidated balance sheets, through September 30, 2025 and 2024:


	Total
Accrued exit and realignment costs, December 31, 2024	$	6,732
Provision for exit and realignment activities:
Professional fees		6,176
IT strategic initiatives and other		304
Cash payments		(7,516)
Accrued exit and realignment costs, March 31, 2025		5,696
Provision for exit and realignment activities:
Professional fees		1,916
IT strategic initiatives and other		192
Cash payments		(6,119)
Accrued exit and realignment costs, June 30, 2025		1,685
Provision for exit and realignment activities:
Professional fees		111
IT strategic initiatives and other		437
Cash payments		(863)
Accrued exit and realignment costs, September 30, 2025	$	1,370

Accrued exit and realignment costs, December 31, 2023	$	3,109
Provision for exit and realignment activities:
Professional fees		5,685
IT strategic initiatives and other		2,435
Cash payments		(2,463)
Accrued exit and realignment costs, March 31, 2024		8,766
Provision for exit and realignment activities:
Professional fees		12,453
IT strategic initiatives and other		2,982
Cash payments		(3,600)
Accrued exit and realignment costs, June 30, 2024		20,601
Provision for exit and realignment activities:
Professional fees		10,670
IT strategic initiatives and other		2,854
Cash payments		(16,842)
Accrued exit and realignment costs, September 30, 2024	$	17,283

In addition to the exit and realignment accruals in the preceding table, we also incurred $0.1 million and $7.7 million of costs that were expensed as incurred for the three and nine months ended September 30, 2025, which primarily related to wind-down costs of Fusion5.

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Note 8—Debt

Debt, net of unamortized deferred financing costs, as of September 30, 2025 and December 31, 2024 consisted of the following:


	September 30, 2025				December 31, 2024
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Term Loan A	$	324,224	$	329,513	$	322,957	$	327,066
Revolving Credit Facility		270,700		270,700		—		—
4.500% Senior Notes, due March 2029		474,802		385,273		473,976		427,117
Term Loan B		501,835		511,000		499,871		518,665
6.625% Senior Notes, due April 2030		543,700		455,479		542,311		518,671
Other		—		—		2,144		2,144
Total debt		2,115,261		1,951,965		1,841,259		1,793,663
Less current maturities, including anticipated repayments		(280,000)		(280,000)		(42,866)		(42,866)
Long-term debt	$	1,835,261	$	1,671,965	$	1,798,393	$	1,750,797

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.

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.

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

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%.

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

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, 2025 we had $271 million in outstanding borrowings on our Revolving Credit Agreement. At December 31, 2024 our Revolving Credit Agreement was undrawn. At September 30, 2025 and December 31, 2024, we

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had letters of credit, which reduce Revolver availability, totaling $29 million and $31 million, leaving $150 million and $419 million available for borrowing.

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, 2025.

As of September 30, 2025, future principal payments due under our debt agreements or anticipated to be repaid within twelve months, were as follows:


Year
2025 (remainder)	$	—
2026		280,000
2027		316,950
2028		—
2029		989,654
2030		552,189

Current maturities at September 30, 2025 represent $280 million in debt anticipated to be repaid within the next twelve months in connection with expected net cash proceeds related to the Purchase Agreement.

Note 9—Share-Based Compensation

We maintain a share-based compensation plan (the Plan) that is administered by the Our People & Culture Committee of the Board of Directors. The Plan allows us to award or grant to officers, directors and teammates incentive, non-qualified and deferred compensation stock options, stock appreciation rights (SARs), performance stock units and performance shares (collectively, Performance Stock Awards (PSAs)), restricted stock units and restricted stock (collectively, Restricted Stock Awards (RSAs)) and unrestricted stock. We use authorized and unissued common shares for grants of RSAs, SARs, PSAs or for stock option exercises. At September 30, 2025, approximately 2.2 million common shares were available for issuance under the Plan. We anticipate approximately 1.8 million unvested shares to be forfeited in connection with closing of the sale of the P&HS segment, which would increase the common shares available for issuance by this amount.

RSAs under the Plan generally vest over one, three or five years. PSAs under the Plan are issuable as restricted stock or common shares upon meeting performance goals and generally have a total performance and vesting period of three years. Under the 2018 Stock Incentive Plan, if outstanding equity awards are not assumed or substituted in connection with a change in control, unvested awards will vest in full upon the change in control. Under the 2023 Omnibus Incentive Plan, unless the individual award agreements provide otherwise, if the successor company assumes the awards, vesting of the award will be accelerated upon a subsequent termination of employment without cause or, if the teammate resigns for good reason, in each case, within 24 months following the change in control, with any performance-based awards deemed earned based on the target performance levels.

Share-based compensation (benefit) expense for the three and nine months ended September 30, 2025 was ($0.1) million and $9.2 million with recognized tax expense of less than $0.1 million and benefits of $2.4 million. Share-based compensation expense for the three and nine months ended September 30, 2024 was $3.5 million and $12.0 million with recognized tax benefits of $0.9 million and $3.1 million. For the three months ended September 30, 2025, we incurred a $4.0 million benefit for changes in expected performance achievement associated with our 2023, 2024, and 2025 PSAs. Unrecognized compensation cost related to nonvested RSAs, net of estimated forfeitures, was $27 million at September 30, 2025. This amount is expected to be recognized over a weighted-average period of 2.0 years, based on the maximum remaining vesting period required under the awards. Unrecognized compensation cost related to nonvested PSAs as of September 30, 2025 was $4.3 million and will be recognized primarily in 2025, 2026, and 2027 if the related performance targets are met at the current level expected.

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The following table summarizes the activity and value of nonvested RSAs and PSAs for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended
	September 30,
	2025			2024
		Weighted			Weighted
		Average			Average
		Grant-date Fair			Grant-date Fair
	Number of	Value		Number of	Value
	Shares	Per Share		Shares	Per Share
Nonvested awards at beginning of period	3,670	$	12.78	2,074	$	21.63
Granted	—		—	55		14.30
Vested	(93)		18.39	(12)		25.02
Forfeited	(53)		14.69	(101)		20.84
Nonvested awards at end of period	3,524		12.60	2,016		21.44

	Nine Months Ended
	September 30,
	2025			2024
		Weighted			Weighted
		Average			Average
		Grant-date Fair			Grant-date Fair
	Number of	Value		Number of	Value
	Shares	Per Share		Shares	Per Share
Nonvested awards at beginning of period	1,970	$	21.45	1,985	$	21.70
Granted	2,482		9.21	1,021		23.41
Vested	(652)		21.73	(671)		25.29
Forfeited	(276)		23.68	(319)		21.25
Nonvested awards at end of period	3,524		12.60	2,016		21.44

The total fair value of RSAs and PSAs vested during the three and nine months ended September 30, 2025 was $1.7 million and $14 million. The total fair value of RSAs and PSAs vested during the three and nine months ended September 30, 2024 was $0.3 million and $17 million.

Note 10—Derivatives

We are directly and indirectly affected by changes in interest rates, which may adversely impact our financial performance and are referred to as “market risks.” When deemed appropriate, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks. We do not enter into derivative financial instruments for trading purposes.

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. The interest rate swaps were designated as cash flow hedges. Cash flows related to the interest rate swap agreement are included in interest expense, net within discontinued operations, refer to Note 3.

We determine the fair value of our interest rate swaps based on observable market-based inputs or unobservable inputs that are corroborated by market data. We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure. All derivatives are carried at fair value in our 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.

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The following table summarizes the terms and fair value of our outstanding cash flow hedges as of September 30, 2025:

Notional

Derivative Assets

Derivative Liabilities

Amount

Maturity Date

Classification

Fair Value

Classification

Fair Value

Interest rate swaps

250,000

March 2027

Other assets, net

2,001

Other liabilities

—

The following table summarizes the terms and fair value of our outstanding cash flow hedges as of December 31, 2024:

Notional

Derivative Assets

Derivative Liabilities

Amount

Maturity Date

Classification

Fair Value

Classification

Fair Value

Interest rate swaps

300,000

March 2027

Other assets, net

6,113

Other liabilities

—

The notional amount of the interest rate swaps represents the amount in effect at the end of the period. 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 condensed consolidated statements of operations for the three and nine months ended September 30, 2025:


	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)					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

	Three months ended September 30, 2025		Nine months ended September 30, 2025		Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Income	Three months ended September 30, 2025		Nine months ended September 30, 2025		Three months ended September 30, 2025		Nine months ended September 30, 2025
Interest rate swaps	$	194	$	(1,127)	Loss from discontinued operations, net of tax	$	(144,669)	$	(951,077)	$	946	$	2,986

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 and nine months ended September 30, 2024:


	Amount of (Loss) Gain Recognized in Other Comprehensive Income (Loss)					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

	Three months ended September 30, 2024		Nine months ended September 30, 2024		Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Income	Three months ended September 30, 2024		Nine months ended September 30, 2024		Three months ended September 30, 2024		Nine months ended September 30, 2024
Interest rate swaps	$	(4,872)	$	1,283	Loss from discontinued operations, net of tax	$	(14,031)	$	(47,695)	$	1,757	$	6,280

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

Note 11—Income Taxes

The effective tax rate was (54.3)% and 0.8% for the three and nine months ended September 30, 2025, compared to (31.6)% and 32.2% for the three and nine months ended September 30, 2024. The change in these rates were primarily from changes in results of continuing operations, including the tax treatment associated with the $80 million transaction breakage incurred during the nine months ended September 30, 2025, as well as the impact of certain discrete tax items relative to pre-tax (loss) income.

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The liability for unrecognized tax benefits was $52 million and $36 million at September 30, 2025 and December 31, 2024. Substantially all of the $16 million increase in the liability for unrecognized tax benefits was the result of the tax treatment associated with the $80 million Rotech transaction breakage fee. Included in the liability at September 30, 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 U.S. 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.

In 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. In June 2025, we received the final assessment from the IRS for the 2015 through 2018 tax years including interest. The uncertain tax position for these years and related accrued interest has been remeasured to reflect the final amount to be paid. This matter does not impact our 2023, 2024 or future tax years. As of September 30, 2025, we owed $37 million associated with the NOPA matter, which includes $11 million of interest accrued on the matter through September 30, 2025. The balance sheet classification and amount owed may be subject to change depending on the timing of a final agreement with the IRS.

On July 4, 2025, The U.S. Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill (OBBB). The OBBB contains several changes to corporate taxation including modification to limitations on deductions for interest expense and accelerated fixed asset depreciation. We expect the legislation to decrease future U.S. cash taxes with no material impact to the effective tax rate.

Note 12—Net (Loss) Income per Common Share

The following summarizes the calculation of net (loss) income per common share attributable to common shareholders for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2025		2024		2025		2024
(Loss) income from continuing operations, net of tax	$	(5,607)	$	1,261	$	(93,239)	$	(18,875)
Loss from discontinued operations, net of tax		(144,669)		(14,031)		(951,077)		(47,695)
Net loss	$	(150,276)	$	(12,770)	$	(1,044,316)	$	(66,570)

Weighted average shares outstanding - basic		77,288		77,090		77,069		76,657
Dilutive shares		—		1,386		—		—
Weighted average shares outstanding - diluted		77,288		78,476		77,069		76,657

Basic loss per common share:
(Loss) income from continuing operations, net of tax	$	(0.07)	$	0.02	$	(1.21)	$	(0.25)
Loss from discontinued operations, net of tax		(1.87)		(0.19)		(12.34)		(0.62)
Net loss	$	(1.94)	$	(0.17)	$	(13.55)	$	(0.87)

Diluted loss per common share:
(Loss) income from continuing operations, net of tax	$	(0.07)	$	0.02	$	(1.21)	$	(0.25)
Loss from discontinued operations, net of tax		(1.87)		(0.18)		(12.34)		(0.62)
Net loss	$	(1.94)	$	(0.16)	$	(13.55)	$	(0.87)

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Share-based awards for the three and nine months ended September 30, 2025 of approximately 2.3 million and 2.2 million and 1.5 million shares for the nine months ended September 30, 2024 were excluded from the calculation of diluted loss per common share as the effect would be anti-dilutive. In accordance with ASC 260, dilutive shares are included in computing the diluted loss per common share from discontinued operations, net of tax and net loss per diluted common share for the three months ended September 30, 2024 even though they were anti-dilutive, as the control number (income from continuing operations, net of tax) was in an income position.

Note 13—Shareholders Equity

On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $100 million and expires February 2027. Under the program, we may repurchase shares of common stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions and 10b5-1 trading plans.

During the nine months ended September 30, 2025, we repurchased in open-market transactions and retired approximately 826 thousand shares of our common stock for an aggregate of $6.6 million, or an average price per share of $8.04.

Note 14—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, 2025 and 2024:


			Currency
	Retirement		Translation
	Plans		Adjustments		Derivatives		Total
Accumulated other comprehensive (loss) income, June 30, 2025	$	(4,887)	$	(27,369)	$	2,037	$	(30,219)
Other comprehensive income (loss) before reclassifications		14		262		194		470
Income tax		(3)		—		(50)		(53)
Other comprehensive income (loss) before reclassifications, net of tax

OWENS & MINOR INC/VA/ 10-Q