ACH 10-K & 10-Q changes, risk factors and insider trading
Accendra Health Inc. · NYSE · Wholesale-Medical, Dental & Hospital Equipment & Supplies · CIK 75252 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to the Sale of our Products & Healthcare Services Business”
New heading “The recent termination of certain contracts commercial Payor could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.”
New heading “A determination from the Centers for Medicare and Medicaid Services (CMS) would reduce reimbursement qualification for non-invasive ventilation products, which could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.”
New heading “Risks Related to the Sale of our Products & Healthcare Services Business”
New heading “We have sold our P&HS business, and there may be negative impacts on our financial condition, results of operations, cash flows, capital resources and liquidity.”
New heading “In connection with the sale of the P&HS business, we are required to provide certain transitional services which may divert management’s attention and harm our business.”
New heading “In connection with the sale of the P&HS business, we are receiving certain transitional services and are dependent on the successful execution of these services by a third party.”
New heading “Certain contracts used in our business were transferred or may need to be transferred or replaced in connection with the sale of the P&HS business and any failure to obtain such replacement contracts could increase our expenses or otherwise adversely affect our results of operations.”
New heading “The sale of certain assets associated with the P&HS business could negatively impact our business, and retained liabilities from businesses or assets that we have sold could adversely affect our financial results.”
Removed heading “An interruption in the ability of our business to manufacture products or the proper functioning of critical facilities and distribution networks may have a material adverse effect on our business and operations.”
Removed heading “Our capitation arrangements may prove unprofitable if actual utilization rates exceed our assumptions.”
Removed heading “We cannot assure you that the potential sale of the Products & Healthcare Services segment will be completed; and there may be negative impacts on our business, financial results, and operations.”
Removed heading “We cannot assure you that the proposed acquisition of Rotech (Rotech Acquisition) will be completed.”
Removed heading “We may fail to realize the anticipated benefits of the Rotech Acquisition or those benefits may take longer to realize than expected. We may also encounter significant difficulties in integrating the Rotech business into our operations.”
Removed heading “We and the Rotech business will be subject to business uncertainties while the Rotech Acquisition is pending that could adversely affect our business and the Rotech business.”
Removed heading “The pendency of the Rotech Acquisition could adversely affect our business, financial results, and operations.”
Removed heading “An inability to obtain key components, raw materials or manufactured products from third parties in a timely and cost-effective manner, or a material disruption in our supply chain, may have a material adverse effect on our business.”
Removed heading “Our Products & Healthcare Services segment is exposed to price fluctuations of key commodities, which may negatively impact our results of operations and cash flows.”
Removed heading “Our profitability and cash flows may vary based on the impacts of rising inflationary pressures.”
Removed heading “We must obtain clearance or approval from the appropriate regulatory authorities prior to introducing a new product or a modification to an existing product. The regulatory clearance process may result in substantial costs, delays and limitations on the types and uses of products we can bring to market, any of which could have a material adverse effect on our business.”
Removed heading “We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with the provision of healthcare services, and the products that we source, assemble, manufacture and sell which can be costly and disruptive to our business.”
Removed heading “Despite current indebtedness levels, we will incur substantially more debt to complete the Rotech Acquisition.”
Removed heading “Our global operations increase the extent of our exposure to the economic, political, currency, regulatory and other risks of international operations.”
Largest changes
“We manufacture our products in facilities in the U.S., Mexico, Honduras, Thailand and Ireland. …”see in full comparison
“Additionally, our common stock is subject to continued listing requirements on NYSE, including maintaining a minimum $1.00 share closing price for a period of 30 consecutive trading days. If the closing bid price of our common stock falls below $1.00 per share for 30 consecutive trading days, NYSE could issue a deficiency notice and ultimately delist our common stock if we fail to regain compliance. …”see in full comparison
“We depend on the availability of various components, raw materials and manufactured products supplied by others for our operations. …”see in full comparison
“In addition to product liability claims and litigation, an unsafe condition or injury to, or death of, a patient associated with our products could lead to a recall of, or issuance of a safety alert relating to, our products, or suspension or delay of regulatory product approvals or clearances, product seizures or detentions, governmental investigations, civil or criminal sanctions or injunctions to halt manufacturing and distribution of our products. …”see in full comparison
“We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with the provision of healthcare services, and the products that we source, assemble, manufacture and sell which can be costly and disruptive to our business.”see in full comparison
“Our global operations involve issues and risks, including but not limited to the following, any of which could have an adverse effect on our business, results of operations and cash flows: lack of familiarity with and expertise in conducting business in foreign markets; foreign currency fluctuations and exchange risk; unexpected changes in foreign regulations or conditions relating to labor, the economic or political environment, and social norms or requirements; adverse tax consequences and difficulties in repatriating cash generated or held abroad; …”see in full comparison
Full comparison: every changed paragraph (98)
Risks Related to the Sale of our Products & Healthcare Services Business
We have concentration in and dependence on certain healthcare provider customers, Group Purchasing Organizations, and Payors.
During the year ended December 31, 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 year ended December 31, 2025. A commercial Payor, with which we have multiple separately managed contracts, has terminated, or is in the process of terminating, certain of our contracts with them. The terminated agreements reflected $322 million or 12% of our net revenue, including $231 million of capitation revenue, which represents nearly all of our capitation revenue, for the year ended December 31, 2025. Refer to the risk factor titled, “The recent contract termination from a large commercial Payor could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity risk” below for additional information. Changes in a significant individual Payor relationship could have a material adverse effect on our financial condition, results of operations, cash flows, capital resources and liquidity.
In 2024, although no single customer accounted for 5% of our consolidated net revenue, our top ten customers in the U.S. represented approximately 23% of our consolidated net revenue. In addition, in 2024, approximately 65% of our consolidated net revenue was from sales to member hospitals under contract with our largest GPOs: Vizient, Premier and HPG. We could lose a significant healthcare provider customer or GPO relationship if an existing contract expires without being replaced or is terminated by the customer or GPO prior to its expiration. Although the termination of our relationship with a given GPO would not necessarily result in the loss of the member hospitals as customers, any such termination of a GPO relationship, or a significant individual healthcare provider customer relationship or Payor, could have a material adverse effect on our results of operations, financial condition and cash flows. In 2024, although no single Payor accounted for 10% of our consolidated net revenue, the largest Payor, with which we have multiple contracts, represented approximately 22% of our Patient Direct net revenue.
The medical products industry is subject to a multi-tiered costing structure, which can vary by manufacturer and/or product. Under this structure, certain institutions can obtain more favorable prices for medical products than we are able to obtain. The multi-tiered costing structure continues to expand as many large integrated healthcare providers and others with significant purchasing power, such as GPOs, demand more favorable pricing terms. Additionally, the formation of new provider networks and GPOs may shift purchasing decisions to entities or persons with whom we do not have a historical relationship. This may threaten our ability to compete effectively, which could in turn negatively impact our financial results. Although we are seeking to obtain similar terms from manufacturers to obtain access to lower prices demanded by GPO contracts or other contracts, and to develop relationships with provider networks and new GPOs, we cannot assure you that such terms will be obtained or contracts will be executed.
We do not have contracts or exclusive arrangements with most hospitals or physiciansphysicians, for our Patient Direct segment. Instead,but we attempt to work closely with hospitals and physicians to accept discharges and referrals of their patients who require our services. Therefore, theour success of our Patient Direct segment is significantly dependent on referrals from hospital and physician sources. If we are unable to successfully establish new referral sources and maintain strong relationships with our current referral sources, if there is an actual or perceived decrease in the quality of service and care levels we provide, or if efforts to increase the skill level and effectiveness of our sales force fail, our revenues may decline. In addition, our relationships with referral sources are subject to federal and state healthcare laws such as the U.S. federal Anti-kickbackAnti-Kickback Statute (Anti-kickbackAnti-Kickback Statute) and the U.S. federal Stark Law (Stark Law), and compliance with these laws limits the scope of our relationships with our referral sources.
Our revenues are determined by a number of factors, including mix of customers, the rates of payment among customers and the mix of our products and services provided. A shift towards customers with lower prices,compensation, or from higher gross margin products to lower gross margin products, would reduce our gross profits. Changes in the mix of our customers, products and services provided and payment methodologies could have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity.
In our Products & Healthcare Services segment in the U.S., we distribute products from approximately 1,000 suppliers and are dependent on these suppliers for the continuing supply of products. In 2024, sales of products of our ten largest domestic suppliers accounted for approximately 37% of consolidated net revenue. No sales of products of any individual suppliers exceeded 10% of our consolidated net revenue for 2024. We rely on suppliers to provide agreeable purchasing and delivery terms and performance incentives. Our ability to sustain adequate operating income has been, and will continue to be, dependent upon our ability to obtain favorable terms and incentives from suppliers, as well as suppliers continuing use of third-party distributors to sell and deliver their products. A change in terms by a significant supplier, the decision of such a supplier to distribute its products directly to healthcare providers rather than through third-party distributors, or a key supplier’s failure to sell and deliver us products necessary to meet our customers’ demands could have a material adverse effect on our results of operations, financial condition and cash flows.
In addition, for quality assurance or cost effectiveness, we have purchased from sole suppliers certain components and raw materials such as polymers used in our products, and we expect to continue to purchase these components and raw materials from these sole suppliers. Although there are other sources in the marketplace for these items, we may not be able to quickly establish additional or replacement sources for certain components or materials due to regulations and requirements of the U.S. Food and Drug Administration (FDA) and other regulatory authorities regarding the manufacture of our products. The loss of any sole supplier or any sustained supply interruption that affects the ability to manufacture or distribute our products in a timely or cost-effective manner could have a material adverse effect on our business, results of operations, financial condition and cash flows.
In our Patient Direct segment, weWe currently rely on a relatively small number of suppliers to provide us with the majority of our patient service equipment and supplies for our home healthcare business. During the year ended December 31, 2025, our three largest suppliers contributed 16%, 14% and 11% of our purchases collectively accounting for approximately 40%. From time to time, we also enter into certain exclusive arrangements with suppliers for the provision of patient service equipment and supplies. Further, some of our supply agreements contain pricing scales that depend on meeting certain order volumes. Our inability to procure certain equipment and supplies, including as a result of failure to maintain and renew certain agreements and access arrangements, could have a materially adverse effect on our results of operations and cash flows. We often use suppliers selectively for quality and cost reasons. Significant price increases, or disruptions in the ability to obtain such equipment and supplies from existing suppliers, such as the disruptions that were associated with the Philips Respironics recall as described in Management’s Discussion and Analysis of Financial Condition and Results of Operations, which primarily affected our 2024 results, may reduce our income and could force us to use alternative suppliers. Any change in the existing suppliers we use could cause delays in the delivery of products and possible losses in revenue, which could adversely affect our results of operations and cash flows. In addition, alternative suppliers may not be available, or may not provide their products and services at similar or favorable prices. If we cannot obtain the patient service equipment and supplies we currently use, or alternatives at similar or favorable prices, our ability to provide such products may be severely impacted, which could have an adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity.
WeOur business depends on the proper functioning and ouravailability externalof servicecomputer providers usesystems and rely on information systemsnetworks to performmeet ouroperational business operations including receiving, processing, analyzing, and managing data in distributing thousands of products to customers from numerous distribution centers.needs. These systems are also relied upon for receiving and filling orders for customers, billings to and collections from customers, the purchase of and payment for inventory and related transactions from our suppliers, and the secure electronic transmission, processing, storage, and hosting of sensitive information, including protected health information and other types of personal information, confidential financial information, proprietary information, and other sensitive information relating to our customers, company, and teammates. In addition, the success of our long-term growth strategy is dependent upon the ability to continually monitor and upgrade our information systems to provide better service to customers.
As described in Item 1C, we have an integrated framework to prevent, identify and mitigate risks related to cybersecurity attacks on our systems. Despite physical, technical, and administrative security measures by us and our external service providers and consultants, our technology systems and operations have been subject to cyberattacks in the past and may be subject to cyberattacks in the future subject to cyberattacks from sources beyond our control. In recent years, cyberattacks in our industry have increased and become more sophisticated. For instance, we expect threat actors may use more advanced tools and techniques, such as artificial intelligence (AI), that are designed to circumvent security controls. As a result, the risk of a cyberattack on our systems has increased. We do not oversee or actively monitor cybersecurity risks related to our external service providers and we rely on these providers to inform us of risks, breaches or cyberattacks. Cyberattacks include actual or attempted unauthorized access, tampering, malware insertion, ransomware attacks, or other system integrity events. A future cybersecurity incident could involve a material data breach or other material impact to the operations of our technology systems, or the third party service providers on which we rely, which could result in failure of our systems to operate properly for an extended period of time, litigation or regulatory action, loss of customers or revenue, and increased expense, any of which might have a material adverse impact on our business operations, reputation, our growth and strategic initiatives, results of operations, financial condition and cash flows.
The recent termination of certain contracts commercial Payor could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.
A commercial Payor, with which we have multiple separately managed contracts, has terminated, or is in the process of terminating, as applicable certain of our contracts with them. The termination resulted in minimal impacts to our operating income for the year ended December 31, 2025, as the transitions of agreements and services started late in the fourth quarter of 2025. While the transitions of agreements and services are expected to continue throughout the first half of 2026, the specific timing of when these contracts will wind down is highly dependent on the Payor’s successor provider’s ability to successfully transition customers among other factors. The terminated agreements reflected $322 million or 12% of our net revenue, including $231 million of capitation revenue, which represents nearly all of our capitation revenue, for the year ended December 31, 2025.
If we are unable to win new business to substitute this loss, effectively execute cost reduction actions, or maintain volume-based supplier discounts, the loss of this contractual relationship could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.
A determination from the Centers for Medicare and Medicaid Services (CMS) would reduce reimbursement qualification for non-invasive ventilation products, which could negatively impact our financial condition, results of operations, cash flows, capital resources and liquidity.
In June 2025, CMS released a final national coverage determination for non-invasive positive pressure ventilation (NIPPV) in the home for the treatment of chronic respiratory failure due to chronic obstructive pulmonary disease (COPD). This determination may make qualifying for NIPPV more difficult for new COPD patients seeking this treatment, as patients must meet a number of criteria before qualifying for coverage of an initial six-month period for respiratory assist devices and home mechanical ventilation. This CMS determination could adversely affect our business, results of operations, and financial condition.
An interruption in the ability of our business to manufacture products or the proper functioning of critical facilities and distribution networks may have a material adverse effect on our business and operations.
We manufacture our products in facilities in the U.S., Mexico, Honduras, Thailand and Ireland. If one or more of these facilities experiences damage, or if manufacturing capabilities are otherwise limited or stopped due to quality, regulatory or other reasons, including, but not limited to, pandemics; severe weather, fires or other natural disasters; terrorism or geopolitical events (such as the Russia-Ukraine conflict or a renewed conflict between Israel and Hamas or in the surrounding region); prolonged power or equipment failures; labor disputes or strikes; unsuccessful imports/exports of products resulting from trade restrictions or tariffs, or supply chain transportation disruptions, it may not be possible to timely manufacture the relevant products at required levels or at all. A reduction or interruption in any of these manufacturing processes could have a material adverse effect on our ability to offer services, distribute products and conduct our business. To the extent that we are unable, or it is not financially feasible, to mitigate the likelihood or potential impact of such events, or to manage effectively such events if they occur, there could be a material adverse effect on our business, results of operations, financial condition and cash flows.
Our capitation arrangements may prove unprofitable if actual utilization rates exceed our assumptions.
From time to time, we enter into capitation arrangements with commercial Payors pursuant to which they agree to pay us a set amount (on a per member per month basis for a defined patient population) without regard to the actual services provided. We negotiate the contractual rates in these arrangements with Payors based on assumptions regarding average expected utilization of services. If actual utilization rates exceed our assumptions, the profitability of such arrangements may be diminished. Moreover, we may be obligated to perform under such capitation arrangements even if the contractual reimbursement rates are insufficient to cover our costs based on actual levels of utilization.
The success of our business depends on our ability to attract, engage, develop and retain qualified and experienced teammates, including key executives. We may not be able to successfully compete for, attract, or retain qualified and experienced teammates, especially in North America where labor markets continue to be highly competitive. Competition among potential employers, labor shortages, and inflationary pressures might result in increased salaries, benefits or other teammate-related costs, or in our failure to recruit and retain teammates. We may experience sudden loss of key personnel due to a variety of causes, including competitive recruitment, retirement, illness, death, or disability, and must adequately plan for succession of key executive roles. Teammates might not successfully transition into new roles. If we are unable to recruit or retain a sufficient number of qualified employees, or if the costs of compensation or employee benefits increase substantially, our ability to deliver services effectively could suffer and our profitability would likely be adversely affected. In addition, employee union organizing activities have occurred in the past and may occur in the future, and the adverse impact of unionization and organizing activities on our costs and operating results could be substantial.
We cannot assure you that the potential sale of the Products & Healthcare Services segment will be completed; and there may be negative impacts on our business, financial results, and operations.
On February 28, 2025, we announced that we are actively engaged in discussions regarding the potential sale of our Products & Healthcare Services segment. This process is ongoing and there are a number of risks and uncertainties including the failure to complete any transaction. This could cause disruptions and create uncertainty surrounding our business and affect our relationships with our customers, suppliers and teammates. Although we intend to take actions to reduce any adverse effects, these uncertainties could cause customers, suppliers and others that deal with us to seek to change existing business relationships. In addition, teammate retention could be negatively impacted. If key teammates depart because of concerns relating to the uncertainty, our business could be harmed. Investor perceptions about the announcement could have a negative impact on the trading prices of our common stock and debt. We do not intend to disclose developments or provide updates on the progress or status of the potential sale until deemed further disclosure is appropriate or required. Accordingly, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of the Company could cause our stock price to fluctuate significantly.
We cannot assure you that the proposed acquisition of Rotech (Rotech Acquisition) will be completed.
There are a number of risks and uncertainties relating to the Rotech Acquisition. For example, the Rotech Acquisition may not be completed, or may not be completed in the timeframe, on the terms or in the manner currently anticipated, as a result of a number of factors, including, among other things, the failure to satisfy one or more of the conditions to closing in the Agreement and Plan of Merger. There can be no assurance that the conditions to closing of the Rotech Acquisition will be satisfied or waived or that other events will not intervene to delay or result in the failure to close the Rotech Acquisition. The Agreement and Plan of Merger may be terminated by the parties thereto under certain circumstances, including, without limitation, if the Rotech Acquisition has not been completed by July 22, 2025. Any delay in closing the Rotech Acquisition or a failure to close the Rotech Acquisition could have a negative impact on our business and the trading prices of our common stock and debt.
We may fail to realize the anticipated benefits of the Rotech Acquisition or those benefits may take longer to realize than expected. We may also encounter significant difficulties in integrating the Rotech business into our operations.
Our ability to realize the anticipated benefits of the Rotech Acquisition will depend, to a large extent, on our ability to integrate the Rotech business into ours. We may devote significant management attention and resources preparing for and integrating the business practices and operations of the Rotech business with ours. This integration process may be disruptive to our and the Rotech businesses, and, if implemented ineffectively or if it takes longer or is more costly than expected, could restrict realization of the expected benefits. Potential difficulties we may encounter in the integration process include:
Even if we are able to integrate the Rotech business successfully, this integration may not result in the realization of the full benefits that we currently expect, nor can we give assurances that these benefits will be achieved when expected or at all. Moreover, the integration of the Rotech business may result in unanticipated problems, expenses, liabilities, regulatory risks and competitive responses that could have material adverse consequences.
We and the Rotech business will be subject to business uncertainties while the Rotech Acquisition is pending that could adversely affect our business and the Rotech business.
Uncertainty about the effect of the Rotech Acquisition on teammates, customers and suppliers may have an adverse effect on us and the Rotech business. Although we and Rotech intend to take actions to reduce any adverse effects, these uncertainties could cause customers, suppliers and others that deal with us and/or the Rotech business to seek to change existing business relationships. In addition, teammate retention could be negatively impacted during the pendency of the Rotech Acquisition. If key teammates depart because of concerns relating to the uncertainty and difficulty of the integration process, our business could be harmed.
The pendency of the Rotech Acquisition could adversely affect our business, financial results, and operations.
The announcement and pendency of the Rotech Acquisition could cause disruptions and create uncertainty surrounding our business and affect our relationships with our customers, suppliers and teammates. In addition, we have diverted, and will continue to divert, significant management resources to complete the Rotech Acquisition, which could have a negative impact on our ability to manage existing operations or pursue alternative strategic transactions, which could adversely affect our business, financial condition and results of operations. Investor perceptions about the terms or benefits of the Rotech Acquisition could have a negative impact on the trading prices of our common stock and debt.
Our operations are subject to the many hazards inherent in the storage, transportation and provision of medical gas products and compressed and liquid oxygen, including ruptures, leaks and fires. These risks could result in substantial losses due to personal injury or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage and may result in curtailment or suspension of our related operations. If a significant accident or event occurs, it could adversely affect our business, financial position,condition, results of operations, and cash flows. Additionally, corrective action plans, fines or other sanctions may be levied by government regulators who oversee the storage, transportation and provision of hazardous materials such as compressed or liquid oxygen.
U.S. Generally Accepted Accounting Principles (GAAP) require us to test our goodwill for impairment on an annual basis, or more frequently if indicators for potential impairment exist. The testing required by GAAP involves estimates and judgments by management. Although we believe our assumptions and estimates are reasonable and appropriate, any significant adverse changes in one or a combination of key assumptions, including, but not limited to, a further decrease in our market capitalization, an increase in the discount rate, a failure to meet our business plans or expected earnings and cash flows, unanticipated events and circumstances such as the loss of a contract with a significant customer,Payor, changes in assumptions about the duration and magnitude of increased supply chain expense, commodities costs or inflationary pressures and our planned efforts to mitigate such impacts, disruptions in the supply chain, estimated demand and selling prices for personal protective equipment (PPE) or other products, a decrease in the terminal growth rate, increases in tax rates (including potential tax reform) or a significant change in industry or economic trends, may affect the accuracy or validity of such estimates and may result in goodwill impairment. As a result of an interim impairment test performed during the three months ended December 31, 2024, we recorded a goodwill impairment charge in our Apria reporting unit of $307 million. No impairment charges to goodwill were recorded in 2023continuing operations 2025 or 2022.2023. We may be required to record a material charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill is determined, which charge could adversely affect our results of operations.
Risks Related to the Sale of our Products & Healthcare Services Business
We have sold our P&HS business, and there may be negative impacts on our financial condition, results of operations, cash flows, capital resources and liquidity.
On December 31, 2025, we completed the P&HS Sale after which we are a significantly smaller, less diversified company with a single segment. We may be more vulnerable to changing market conditions, which could have a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, the diversification of revenue, costs, and cash flows has diminished, such that our results of operations, cash flows, working capital, effective tax rate, and financing requirements may be subject to increased volatility and our ability to fund capital expenditures and investments and service debt may be diminished. We may be unable to achieve the full strategic and financial benefits that we believe we may be able to achieve through the sale of our P&HS business, or such benefits may be delayed or may never occur at all. For example, we believe the sale could provide the following benefits, among others:
We may not achieve these or other anticipated benefits for a variety of reasons, including, among others: (i) the possibility that we may not benefit as expected from the increased focus on our Accendra Health business and simpler business model made possible by the sale and (ii) the risk of litigation, injunctions or other legal proceedings relating to the sale If we fail to achieve some or all of the benefits we expect to achieve as a result of the sale of our P&HS business, or if such benefits are delayed, our business, results of operations, financial condition and cash flows could be materially and adversely affected.
The sale of our P&HS business has resulted and will continue to result in significant separation costs, and we are obligated to reimburse Purchaser for the first $65 million of such costs subsequent to the completion of the sale, subject to conditions described in Note 3. See Note 3 “discontinued operations” in the Notes to Consolidated Financial Statements for additional information.
Furthermore, the sale process could cause disruptions and create uncertainty surrounding our business and affect our relationships with our customers, suppliers and teammates. Although we have taken actions to reduce any adverse effects, these uncertainties could cause customers, suppliers and others that deal with us to seek to change existing business relationships. In addition, teammate retention could be negatively impacted. If key teammates depart because of concerns relating to the uncertainty, our business could be harmed. Additionally, until the market has fully analyzed our valuation following the sale of the P&HS business, the price of our common stock may fluctuate. Furthermore, the sale has decreased the diversification of our revenues, costs and cash flows, and so our operations, cash flows, working capital, effective tax rate and financing requirements may be subject to increased volatility, and our ability to fund capital expenditures and investments, pay dividends and meet debt obligations and other liabilities may be diminished.
In connection with the sale of the P&HS business, we are required to provide certain transitional services which may divert management’s attention and harm our business.
In connection with the P&HS Sale, we are required to provide certain services to the Purchaser for a transitional period. Such transitional services arrangements may be in exchange for fees that do not fully compensate us for the cost of providing such transitional services and may also divert management’s attention and resources, away from the existing business, which could harm our business.
In connection with the sale of the P&HS business, we are receiving certain transitional services and are dependent on the successful execution of these services by a third party.
In connection with the P&HS Sale, we are receiving certain services from the Purchaser for a transitional period. We are dependent on the Purchaser to provide us with these services over a transitional period. If we are not able to successfully transition off of these transitional services timely, it could negatively impact our ability to achieve our strategic objectives and could have a material adverse effect on our results of operations or financial condition.
Certain contracts used in our business were transferred or may need to be transferred or replaced in connection with the sale of the P&HS business and any failure to obtain such replacement contracts could increase our expenses or otherwise adversely affect our results of operations.
In connection with the sale of the P&HS business, we have been required and will be further required to replace certain shared contracts. It is possible that, in connection with the replacement process, some parties may seek more favorable contractual terms from us. If we are unable to obtain such replacement contracts, the loss of these contracts could increase our expenses or otherwise materially adversely affect our business, results of operations and financial condition.
The sale of certain assets associated with the P&HS business could negatively impact our business, and retained liabilities from businesses or assets that we have sold could adversely affect our financial results.
The asset sales in connection with the P&HS business pose risks and challenges that could negatively impact our business, including retained liabilities related to divested businesses and sold assets, obligations to indemnify buyers against contingent liabilities and potential disputes with buyers. If post-completion liabilities and obligations related to divestitures and asset sales are substantial and exceed our expectations, our financial position, results of operations and cash flows could be negatively impacted. Any divestiture or asset sale may result in a dilutive impact to our future earnings if we are unable to offset the dilutive impact from the loss of revenue and profits associated with the divestiture or sold asset, as well as significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations or financial condition.
The medical/surgical supply distribution industry in which our Products & Healthcare Services segment operates is highly competitive and characterized by pricing and margin pressure for our business. We compete with other national distributors and a number of regional and local distributors, as well as customer self-distribution models and, to a lesser extent, certain outsourced logistics companies. In the U.S., several of our distribution partners and GPOs directly compete with us by sourcing their own brands. Competitive factors within the medical/surgical supply distribution industry include market pricing, the relative bargaining power of provider networks and GPOs, total delivered product cost, product availability, the ability to fill and invoice orders accurately, delivery time, range of services provided, efficient product sourcing, inventory management, information technology, electronic commerce capabilities, and the ability to meet customer-specific requirements. Our success is dependent on the ability to compete on the above factors, while managing internal costs and expenses.
The home healthcare industry in which ourwe Patient Direct segment operatesoperate is also intensely competitive and highly fragmented. There are a large number of providers, including hospital systems, physician specialists and sleep labs, industrial gas manufacturers, home healthcare agencies, health maintenance organizations, and alternative treatment providers. There are also relatively few barriers to entry in local home healthcare markets. Hospitals, health systems, and Payors are routinely looking to provide coverage and better control of post-acute healthcare services, including home healthcare services of the types we provide. From time to time our contracts are amended (sometimes through unilateral action regarding payment policy), renegotiated, subjected to a bidding process with our competitors, or terminated altogether. Payors may enlarge their provider networks, reducing the amount of referrals or revenue we may receive from them, reduce their provider networks in exchange for lower payment rates or change the order of preference among the providers to which they refer business. In addition, pharmacy benefit managers, such as CVS Health Corporation, are competing with us in the home healthcare market. Large technology companies, such as Amazon.com, Inc. and Alphabet Inc., have disrupted other supply businesses and, in the case of Amazon.com, Inc. and its emerging pharmacy offerings, entered the healthcare market. In the event such providers enter the home healthcare market, we may experience a loss of referrals or revenue.
An inability to obtain key components, raw materials or manufactured products from third parties in a timely and cost-effective manner, or a material disruption in our supply chain, may have a material adverse effect on our business.
We depend on the availability of various components, raw materials and manufactured products supplied by others for our operations. If the capabilities of suppliers and third-party manufacturers are limited or stopped, due to quality, regulatory or other reasons, including pandemics; severe weather, fires and natural disasters; terrorism or geopolitical events (such as the Russia-Ukraine conflict or a renewed conflict between Israel and Hamas or in the surrounding region); prolonged power or equipment failures; strikes or labor disputes; unsuccessful imports/exports of products as a result of shipping or trade restrictions or supply chain transportation disruptions, or other reasons, that could negatively impact our ability to manufacture or distribute our products and could lead to exposure to regulatory actions. Any material interruption in our supply chain could materially adversely affect our business operations, results of operations, financial condition and cash flows.
Furthermore, the failure of third parties to timely deliver quality products to us may negatively impact our operations. Disputes with significant suppliers, including disputes regarding pricing or performance, could adversely affect our ability to supply products to our customers and could materially adversely affect our results of operations, financial condition and cash flows. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from a single location or supplier, could adversely affect our business, results of operations, and cash flows, as well as require additional resources to restore our supply chain.
We have experienced, and may continue to experience, higher supply chain costs, particularly related to international freight and commodities. Due to competitive dynamics and contractual limitations, we may be unable to pass along these cost increases through higher prices. Short-term or sustained increases in demand for our products may exceed our production capacity or otherwise strain our supply chain. These and other supply chain issues can increase our costs, disrupt or reduce our production, delay our product shipments, prevent us from meeting customer demand, damage our customer relationships, and could materially adversely affect our business operations, results of operations, financial condition and cash flows.
Poor or deteriorating economic and political conditions in the U.S. and the other countries in which we conduct businessU.S could adversely affect the demand for healthcare services and consequently, the demand for our products and services. Such change in demand may result in further inventory valuation adjustments. Poor economic conditions also could lead our suppliers to offer less favorable terms of purchase to distributors,terms, which would negatively affect our profitability. Further, the potential decline in federal and state revenues that may result from a deterioration in economic and political conditions may create additional pressures to contain or reduce reimbursements for our services from Medicare, Medicaid and other government sponsored programs. There can be no assurance that a company’sour products or services will be considered cost-effective or that adequate third-party reimbursement will be available to enable a company to maintain price levels sufficient to realize profitability. Increases in job losses in the U.S. as a result of adverse economic conditions could result in a smaller percentage of our patients being covered by an employer group health plan and a larger percentage being covered by lower paying Medicare and Medicaid programs. Employers may also select more restrictive commercial plans with lower reimbursement rates. To the extent that Payors are negatively impacted by a decline in the economy, we may experience further pressure on commercial rates, a slowdown in collections and a reduction in the amounts we expect to collect. Furthermore, the collection of accounts receivable requires constant focus and involvement by management and ongoing enhancements to information systems and billing center operating procedures. There can be no assurance that we will be able to improve upon or maintain current levels of collectability and DSO in future periods. Worsening economic conditions have had and may continue to have an adverse impact on the businesses and financial health of many of our customers and hurt their creditworthiness. The bankruptcy, insolvency or other credit failure of one or more customers with substantial balances due to us could have a material adverse effect on our results of operations, financial condition and cash flows. These and other possible consequences of financial and economic decline could have a material adverse effect on our business, results of operations, financial condition and cash flows.
The U.S. and certain larger global economies experienced elevated inflation rates significantly above Central Bank targets duringfrom 2024.2021 Thethrough 2023, with inflation moderating but remaining above target levels through 2025.The Federal Reserve and other Central Banks raised interest rates during 2023 and 2024 and could do so again in the future. The present conditions and state of U.S. and global economies make it difficult to predict whether and/or when and to what extent a recession has occurred or will occur in the near future. Uncertainty about the effects of current and future economic and political conditions on us, our customers, suppliers and partners makes it difficult for us to forecast operating results and to make decisions about future investments. AnyInflation significanthas downturnand may continue to materially impact the costs to source materials or produce and distribute products to customers. Continued inflationary pressures could result in themarket healthpressures ofon our customers to reduce costs, which could impact our profitability and cash flows. Additionally, there is uncertainty that we will be able to pass elevated costs onto customers in an effort to offset inflationary pressures, or that such increases may outpace the generalcompensating economy,inflation-based increase in Medicare payment rates, or any recession, depression or other sustainedrate adverseincreases marketwe event,may including inflationary pressures, could have an adverse effect on our revenues and financial performance, resulting in impairment of assets.receive.
Any significant downturn in the health of the general economy, or any recession, depression or other sustained adverse market event, including inflationary pressures, could have an adverse effect on our revenues and financial performance, resulting in impairment of assets.
Our Products & Healthcare Services segment is exposed to price fluctuations of key commodities, which may negatively impact our results of operations and cash flows.
Our Global Products division, which falls within our Products & Healthcare Services segment, relies on product inputs, such as polypropylene and nitrile, as well as other commodities, in the manufacture of its products. Prices of these commodities are volatile and have fluctuated significantly in recent years, which may contribute to fluctuations in our results of operations and cash flows. The ability to hedge commodity prices is limited. Furthermore, due to competitive dynamics, we may be unable to pass along commodity-driven cost increases through higher prices. If we cannot fully offset cost increases through other cost reductions, or recover these costs through price increases or surcharges, we could experience lower margins and profitability which could have a material adverse effect on our business, results of operations and cash flows.
Management's Discussion & Analysis (MD&A)
New heading “Sale of Products & Healthcare Services Business”
New heading “Contract Termination with a Commercial Payor”
New heading “Non-operating expenses”
New heading “Non-GAAP Financial Measures”
Removed heading “Potential Sale of Products & Healthcare Services Segment”
Removed heading “Philips Respironics Recall”
Removed heading “Supplemental Financial Information (in thousands, except ratios and per share data)”
Removed heading “(1)Based on year end accounts receivable and net revenue for the fourth quarter ended December 31, 2024, 2023 and 2022. DSO in 2024 reflected the impact of the reduction in accounts receivable, net due to sales of accounts receivable under the Receivables Sale Program. Excluding the impact of the Receivables Sale Program, DSO would have been 25.7 as of December 31, 2024. DSO in 2023 reflected the impact of the reduction in accounts receivable, net due to sales of accounts receivable under the RPA. Excluding the impact of the RPA, DSO would have been 24.8 as of December 31, 2023.”
Removed heading “(2)Based on year end merchandise inventories and cost of goods sold for the fourth quarter ended December 31, 2024, 2023 and 2022. The 2022 figure reflects a $92 million inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with PPE inventory built up and a subsequent decline in demand as a result of the COVID-19 pandemic.”
Removed heading “NM – Not meaningful”
Removed heading “Interest expense, net.”
Removed heading “Loss (gain) on extinguishment of debt.”
Removed heading “Other expense, net.”
Largest changes
“We have incurred significant costs coordinating the Recall. During the second quarter of 2024, we reached an agreement with Philips requiring Philips to pay us for recalled equipment returned to Philips. During the year ended December 31, 2024, we received $18 million from Philips which was recorded in the ‘Other, net’ line item within investing activities of the consolidated statements of cash flows. …”see in full comparison
“Although we believe our assumptions and estimates are reasonable and appropriate, any significant adverse changes in one or a combination of key assumptions, including, but not limited to, a further decrease in our market capitalization, an increase in the discount rate, inflationary pressures and our planned efforts to mitigate such impacts, disruptions in the supply chain, a decrease in the terminal growth rate, increases in tax rates (including potential tax reform), a significant change in industry or economic trends, or the reporting unit specific factors described in the paragraphs …”see in full comparison
“Goodwill impairment testing is conducted at the reporting unit level, which is generally defined as an operating segment or a component, one level below our operating segments, for which discrete financial information is available and where segment management regularly reviews the operating results of that reporting unit. Our reporting units are: Global Products, Medical Distribution (including Services and Outsourced Logistics), Apria, and Byram. The Medical Distribution reporting unit does not have any goodwill as of December 31, 2024.”see in full comparison
“The quantitative impairment review of goodwill requires the extensive use of accounting estimates and assumptions. We determine the estimated fair value of our reporting units by using an equally weighted combination of the income-based approach and the market-based approach. The income-based approach is dependent upon several significant assumptions and estimates regarding future period cash flows, including assumptions with respect to future sales growth and a terminal growth rate. …”see in full comparison
“In June 2021, one of Apria’s suppliers, Philips, announced a voluntary recall of its continuous and non-continuous ventilators (certain continuous positive airway pressure (CPAP), bilevel positive airway pressure and ventilator devices) related to polyurethane foam used in those devices, which the U.S. Food and Drug Administration (FDA) identified as a Class I recall, the most serious category of recall (the June 2021 Recall). …”see in full comparison
“The estimated fair value of our Global Products reporting unit was substantially in excess of the carrying value. …”see in full comparison
Full comparison: every changed paragraph (119)
Sale of Products & Healthcare Services Business
On February 28, 2025, we announced that we were actively engaged in discussions regarding the potential sale of our Products & Healthcare Services business. 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 business, for an aggregate of $375 million in cash, subject to certain adjustments for cash, indebtedness, net working capital and transaction expenses. On December 31, 2025, we completed the sale of the P&HS business pursuant to the Purchase Agreement. We retained a 5% equity interest in the P&HS business.
In accordance with GAAP, the financial position and results of operations of the P&HS business are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. With the exception of Note 3, the Notes to Consolidated Financial Statements reflect the continuing operations of Accendra Health, Inc. unless otherwise noted. See Note 3 in the Notes to Consolidated Financial Statements for additional information regarding discontinued operations.
Management’s discussion and analysis of financial condition and results of operations is intended to assist the reader in the understanding and assessment of significant changes and trends related to our results of operations. The discussion and analysis presented below refers to, and should be read in conjunction with, the consolidated financial statements and accompanying notes included in Item 8 of Part II of this Annual Report on Form 10-K.
Accendra Health, Inc. (f/k/a Owens & Minor, Inc.) and subsidiaries (Accendra Health, we, us, our or the Company) is a leading nationwide provider of products, technology, and services that supports health beyond the hospital for millions of people each year. As discussed later within Note 1 to Consolidated Financial Statements, our business activities comprise a single operating and reporting segment.
Owens & Minor, Inc., along with its subsidiaries, is a global healthcare solutions company. We report our business under two segments: Products & Healthcare Services 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 (Byram and Apria).
Net (loss) per share from continuing operations was $(4.731.34) for the year ended December 31, 20242025 as compared to net (loss) per share from continuing operations of $(0.544.57) for the year ended December 31, 2023.2024. Our financial results for the year ended December 31, 20242025 as compared to the prior year were favorably impacted by the following: (1) ano goodwill impairment chargecharges for the year ended December 31, 2025 as compared to charges incurred for the year ended December 31, 2024 of $307 million related to our Apria reporting unit,million, or a $3.97 negative impact per share (see Notes 1 and 5 in the Notes to Consolidated Financial Statements); (2) revenue growth of $82 million; (3) a reduction in exit and realignment charges of $28 million; (4) the remeasurement of an uncertain tax position,position for the year ended December 31, 2024, including interest which resulted in a $19 million, or a $0.24 negative income tax charge per share (see Note 12 in the Notes to Consolidated Financial Statements); (3)that legaldid settlementsnot of $17 million related primarily to compensation and wage and hour disputes and (4) incremental exit and realignment charges of $11 million primarily related to our 2023-2024 Operating Model Realignment Program and information technology (IT) strategic initiativesreoccur and (5) thea decline$15 million reduction in Productsselling, &general Healthcareand Servicesadministrative segment operating income, as described below.expense. These impacts were partially offset by lower(1) acquisition-relatedan charges$80 andmillion transaction breakage fee incurred in connection with the termination of the Rotech acquisition; (2) an increase in cost of net revenue of $73 million; (3) an increase in intangible amortization of $14$33 million, lower interest expense of $14 million,million; and an(4) increase$18 million in Patienttransaction Directfees segment operating income as described below forduring the year ended December 31, 2024 as compared to the prior year.2025.
Net (loss) per share from continuing operations was $(4.57) for the year ended December 31, 2024 as compared to net income per share from continuing operations of $0.12 for the year ended December 31, 2023. Our financial results for the year ended December 31, 2024 as compared to the prior year were unfavorably impacted by the following: (1) a goodwill impairment charge incurred for the year ended December 31, 2024 of $307 million, or a $3.97 negative impact per share; (2) an $81 million increase in selling, general, and administrative expenses including legal settlements of $17 million related primarily to compensation and wage and hour disputes; (3) a $64 million increase in cost of net revenue; and (4) a $39 million increase in exit and realignment costs. These unfavorable impacts were partially offset by (1) a $128 million increase in net revenue; (2) a decrease in intangible amortization of $18 million; and (3) a $9.2 million decrease in interest expense, net.
Net (loss) per share was not impacted as compared to the prior year by foreign currency translation for the year ended December 31, 2024.
Products & Healthcare Services segment operating income was $53 million for the year ended December 31, 2024, compared to $58 million for the year ended December 31, 2023. The decline for the year ended December 31, 2024 as compared to the prior year was primarily due to (1) increased teammate benefit costs of $15 million and (2) competitive pricing pressures, including glove pricing, partially offset by revenue growth of 3.1% and savings derived by our sourcing initiatives of $15 million. Patient Direct segment operating income was $260 million for the year ended December 31, 2024, compared to $247 million for the year ended December 31, 2023. The increase for the year ended December 31, 2024 as compared to the prior year was primarily due to (1) 5.0% net revenue growth, (2) cost savings from IT strategic initiatives of $16 million, and (3) a benefit of $5.4 million from an agreement with Philips Respironics (Philips) for previously recalled equipment, partially offset by increased teammate benefit costs of $26 million and unfavorable changes in revenue mix. Segment operating incomes exclude adjustments noted in Note 16, “Segments”, in the Notes to Consolidated Financial Statements.
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.
ExpectedTermination 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 Healthcare Holdings Inc. (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, on June 5, 2025, we made a cash payment to Rotech of $80 million.
Contract Termination with a Commercial Payor
A commercial Payor, with which we have multiple separately managed contracts, has terminated, or is in the process of terminating, certain of our contracts with them. This termination resulted in minimal impacts to our operating income for the year ended December 31, 2025, as the transitions of agreements and services started late in the fourth quarter of 2025. While such transitions of agreements and services are expected to continue throughout the first half of 2026, the specific timing of when these contracts will wind down is highly dependent on the Payor’s successor provider’s ability to successfully transition customers among other factors. The terminated contracts reflected $322 million or 12% of our net revenue, including $231 million of capitation revenue, which represents nearly all of our capitation revenue, for the year ended December 31, 2025.
On July 22, 2024, we entered into an Agreement and Plan of Merger to acquire Rotech for $1.36 billion in cash. Given anticipated tax benefits of approximately $40 million from the transaction, the net purchase price is approximately $1.32 billion. Rotech is a national leader in providing home medical equipment in the US. 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 transaction is subject to customary closing conditions, including expiration or termination of the applicable waiting period under the Hart Scott Rodino Act, and is expected to close in the first half of 2025. We have fully committed financing in place and expect to use a combination of cash and incremental borrowings to fund the purchase price.
Philips Respironics Recall
In June 2021, one of Apria’s suppliers, Philips, announced a voluntary recall of its continuous and non-continuous ventilators (certain continuous positive airway pressure (CPAP), bilevel positive airway pressure and ventilator devices) related to polyurethane foam used in those devices, which the U.S. Food and Drug Administration (FDA) identified as a Class I recall, the most serious category of recall (the June 2021 Recall). In December 2022, Philips issued a subsequent voluntary recall related to deficiencies in repairs made to certain of the ventilators that had originally been recalled in June 2021 (together with the June 2021 recall, the Recall). In April 2024, Philips entered into a consent decree enjoining Philips from making and distributing non-medically necessary CPAP, bilevel positive airway pressure and ventilator devices at any of its Sleep and Respiratory Care Business facilities until the FDA determines that Philips has complied with the remediation and compliance activities set forth in the consent decree.
We have incurred significant costs coordinating the Recall. During the second quarter of 2024, we reached an agreement with Philips requiring Philips to pay us for recalled equipment returned to Philips. During the year ended December 31, 2024, we received $18 million from Philips which was recorded in the ‘Other, net’ line item within investing activities of the consolidated statements of cash flows. The corresponding benefit of $5.4 million on the returned equipment for the year ended December 31, 2024 is reflected in the ‘gain on sales and dispositions of property and equipment’ line item within operating activities of the consolidated statements of cash flows. While we believe the Recall matter with Philips has now been materially resolved and that we have access to a sufficient supply of CPAP, bilevel positive airway pressure and ventilator devices from other suppliers to service our home healthcare patients’ needs, other supply chain disruptions (including any future impact of the Recall and subsequent consent decree on our business) may have a material adverse effect on our financial condition or results of operations, cash flows and liquidity.
Supplemental Financial Information (in thousands, except ratios and per share data)
(1)Based on year end accounts receivable and net revenue for the fourth quarter ended December 31, 2024, 2023 and 2022. DSO in 2024 reflected the impact of the reduction in accounts receivable, net due to sales of accounts receivable under the Receivables Sale Program. Excluding the impact of the Receivables Sale Program, DSO would have been 25.7 as of December 31, 2024. DSO in 2023 reflected the impact of the reduction in accounts receivable, net due to sales of accounts receivable under the RPA. Excluding the impact of the RPA, DSO would have been 24.8 as of December 31, 2023.
(2)Based on year end merchandise inventories and cost of goods sold for the fourth quarter ended December 31, 2024, 2023 and 2022. The 2022 figure reflects a $92 million inventory valuation adjustment in our Products & Healthcare Services segment, primarily associated with PPE inventory built up and a subsequent decline in demand as a result of the COVID-19 pandemic.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations within this Annual Report on Form 10-K generallydiscusses discusses2025, 2024 and 2023 items and year-to-year comparisons between 2025, 2024 and 2023. Discussions of year-to-year comparisons between 2023 and 2022 can be found in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023, which is incorporated by reference herein.
2025 compared to 2024 and 2024 compared to 2023
The increase in our net revenue for the year ended December 31, 2025 was driven primarily 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 including our Sleep Journey Initiative. This increase was partially offset by $11 million of benefits in the last half of 2024 associated with two settlement benefits related to two multi-year claims reprocessing matters.
The increase in our net revenue for the year ended December 31, 2024 was driven primarily by sales growth in several product categories, including sleep therapy, diabetes, and wound care. The growth in these categories includes the benefits from certain successful sales activities including our Sleep Journey Initiative.
The increase in our Products & Healthcare Services segment net revenue for the year ended December 31, 2024 was driven by net revenue growth in the Medical Distribution division of 4.0%, driven by growth with existing customers, which was partially offset by a slight decline in our Global Products division, primarily driven by competitive pricing pressures, including glove pricing. The increase in our Patient Direct segment net revenue for the year ended December 31, 2024 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 $3.5 million for the year ended December 31, 2024 as compared to the prior year.
Cost of goodsnet sold.revenue.
The increase in cost of goodsnet soldrevenue reflects the increased cost associated with net revenuesales growth of 3.6%,3.1% and manufacturer price increases, as compared to prior year, partially offset by cost reductions in our Global Products division, including $15 million of savings associated with sourcing initiatives.year.
The increase in our cost of net revenue reflects the increased cost associated with sales growth of 5.0% and manufacturer price increases, as compared to prior year.
We value a portion of Products & Healthcare Services inventory held in the U.S. under the LIFO method. Had inventory been valued under the first-in, first-out (FIFO) method, cost of goods sold as a percentage of net revenue would have been 1 basis point higher in 2024 and 2 basis points lower in 2023.
Foreign currency translation had a favorable impact on cost of goods sold of $2.5 million for the year ended December 31, 2024 as compared to the prior year.
Gross profit.
The increase in gross profit for the year ended December 31, 2024 was driven by the same factors impacting net revenue and cost of goods sold as compared to the prior year.
Foreign currency translation had an unfavorable impact on gross profit of $1.0 million for the year ended December 31, 2024 as compared to the prior year.
The decrease in SG&A expenses for the year ended December 31, 2025 as compared to the prior year was driven primarily from a reduction in teammate benefit costs of $23 million and operating efficiencies in our revenue cycle and information technology, partially offset by inflationary increases and the cost to service the revenue growth of $82 million.
NM – Not meaningful
The increase in DS&A expenses was driven primarily by incremental costs to support the $367 million, or 3.6% net revenue growth, along with future revenue growth and an increase of $41 million in teammate benefit costs, partially offset by $18 million in expense savings from our IT strategic initiatives, $7.4 million of personnel cost savings related to 2023 organizational changes, and other productivity gains derived from operating efficiencies.
DS&A expenses also included a favorable impact from foreign currency translation of $0.9 million for the year ended December 31, 2024 as compared to the prior year.
Goodwill impairment chargescharge relatesfor tothe year ended December 31, 2024 reflected impairment recognized in theour former Apria reporting unit during the quarter ended December 31, 2024 relating to a combination of factors occurring in the fourth quarter of 2024. The majority of these factors are related to financial market changes inclusive of a decline in Owens & Minor’sour stock price and rising interest rates. Additionally, anticipated changes in pricing of a capitated contract also contributed to this charge.
Transaction breakage fee represents a cash payment to Rotech of $80 million made on June 5, 2025 for the termination of the Rotech acquisition.
Acquisition-related charges were $22 million for the year ended December 31, 2024 as compared to $18 million for the year ended December, 31, 2023. Acquisition-related charges in 2024 consisted of costs related to the expected acquisition of Rotech, which related primarily to legal and professional fees. Acquisition charges in 2023 consisted primarily of costs related to the Apria Acquisition. Intangible amortization was $65 million and $84 million for the years ended December 31, 20242025 and 20232024 related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees. Intangible amortization was $74 million and $40 million for the years ended December 31, 2025 and 2024 and related primarily to intangible assets acquired in the Apria, Halyard,Apria and Byram acquisitions. The declineincrease iswas relateddue to certainthe remaining useful life for an intangible assetsasset being fullymodified amortized.as of June 30, 2025 as a result of a notice of a contract termination with a commercial Payor. See Note 5 in the Notes to Consolidated Financial Statements.
Exit and realignment charges, net were $18 million for the year ended December 31, 2025. These charges included professional fees associated with strategic initiatives of $8.4 million, $6.8 million related to wind-down costs of Fusion5, severance associated with strategic realignments of $5.4 million, a $4.8 million gain on sale of patient service equipment in response to the contract termination with a commercial Payor and IT strategic initiatives and other of $1.5 million. Exit and realignment charges, net were $47 million for the year ended December 31, 2024 which included professional fees associated with strategic initiatives of $36 million and IT strategic initiatives and other of $11 million.
The increase in SG&A expenses was driven primarily by incremental costs to support the $128 million net revenue growth, along with future revenue growth, an increase in teammate incentive expense, excluding restricted stock, of $13 million.
Goodwill impairment charges relates to impairment recognized in the Apria reporting unit during the quarter ended December 31, 2024 relating to a combination of factors occurring in the fourth quarter of 2024. The majority of these factors are related to financial market changes inclusive of a decline in Accendra Health’s stock price and rising interest rates. Additionally, anticipated changes in pricing of a capitated contract also contributed to this charge.
Acquisition-related charges were $22 million for the year ended December 31, 2024 related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees. Acquisition-related charges for the year ended December 31, 2023 were $17 million, consisting of costs related to the acquisition of Apria. Intangible amortization was $40 million and $58 million for the years ended December 31, 2024 and 2023 and related primarily to intangible assets acquired in the Apria and Byram acquisitions. The decline is related to certain intangible assets being fully amortized. See Note 5 in the Notes to Consolidated Financial Statements.
Exit and realignment charges, net were $47 million for the year ended December 31, 2024 which included professional fees associated with strategic initiatives of $36 million and IT strategic initiatives and other of $11 million. Exit and realignment charges, net were $7.3 million for the year ended December 31, 2023, which included professional fees associated with strategic initiatives of $2.1 million and IT strategic initiatives and other of $5.3 million.
Non-operating expenses
The decrease in interest expense was primarily due to lower average outstanding borrowings of $45 million and a decrease in the effective interest rate of 15 basis points, partially offset by a reduction in interest income of $6.4 million.
Transaction financing fees, net for the year ended December 31, 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 the previously expected Rotech acquisition and $6.7 million in recognition of related previously deferred debt issuance costs.
Other expense, net for the years ended December 31, 2025 and 2024 includes interest cost and net actuarial losses related to our U.S. retirement plan. Other expense, net for the year ended December 31, 2024 also includes a $1.1 million loss on extinguishment of debt.
Exit and realignment charges, net were $110 million and $99 million for the years ended December 31, 2024 and 2023. Amounts in 2024 were primarily related to our (1) 2023-2024 Operating Model Realignment Program of $95 million, including professional fees, severance, and other costs to streamline functions and processes, (2) IT strategic initiatives such as converting certain divisions to a common IT system of $15 million, (3) other costs associated with strategic initiatives of $7.5 million, including lease exit costs and (4) $7.4 million gain on the sale of our corporate headquarters for the year ended December 31, 2024. Amounts in 2023 were primarily related to our (1) 2023-2024 Operating Model Realignment Program of $82.9 million, including professional fees, severance, and other costs to streamline functions and processes, (2) IT strategic initiatives such as converting certain divisions to a common IT system of $9.2 million and, (3) other costs associated with strategic initiatives of $7.0 million, including lease exit costs.
The change in other operating expense (income), net for the year ended December 31, 2024 as compared to the prior year reflects $2.8 million higher losses on sales of accounts receivable under the RPA and Receivables Sale Program. Other operating expense (income), net for the year ended December 31, 2024 reflected legal settlements of $17 million related primarily to compensation and hour wage disputes and a $5.4 million benefit for equipment returned to Philips, as described in the ‘Philips Respironics Recall’ section above.
During the year ended December 31, 2024, we incurred a favorable change of $6.0 million in foreign currency transaction gains and losses, net of derivative adjustments, as compared to the prior year.
Interest expense, net.
Loss (gain) on extinguishment of debt.
Loss on extinguishment of debt for the year ended December 31, 2024 represents the loss associated with early retirement of indebtedness of $45 million for our Term Loan A. Gain on extinguishment of debt for the year ended December 31, 2023 represented the gain associated with early retirement of indebtedness of $314 million. Refer to Note 8 in the Notes to Consolidated Financial Statements for additional content related to the early retirement of indebtedness.
Other expense, net.
What changed in the latest 10-Q
Risk Factors
Certain risk factors that we believe could affect our business and prospects are described in our Annual Report on Form 10-K for the year ended December 31, 2025. Through June 30, 2026, there have been no material changes in the risk factors described in such Annual Report.
Full comparison: every changed paragraph (1)
Certain risk factors that we believe could affect our business and prospects are described in our Annual Report on Form 10-K for the year ended December 31, 2025. Through MarchJune 31,30, 2026, there have been no material changes in the risk factors described in such Annual Report.
Management's Discussion & Analysis (MD&A)
Largest changes
“The interest rate on the Term Loan A is based on either the Term SOFR or the Base Rate plus an Applicable Rate which varies depending on the current Debt Ratings or Total Leverage Ratio, determined as to whichever shall result in more favorable pricing to the Borrowers (each as defined in the Credit Agreement). The interest rate on the Term Loan B is based on either the Term SOFR or the Base Rate plus an Applicable Rate. The Term Loan A matures in March 2027 and the Term Loan B matures in March 2029.”see in full comparison
“On May 11, 2026, we announced that we have received commitments from existing creditors to exchange and/or extend a substantial portion of our debt, which would extend the maturity of these obligations beyond twelve months from the balance sheet date (Balance Sheet Optimization Transaction), subject to satisfaction of certain customary conditions. …”see in full comparison
On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $100 million through February 2027.see in full comparisonUnderWe do not intend to make use of theprogram, we mayauthorized repurchaseshares of common stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions and 10b5-1 trading plans.program. During the three and six months endedMarchJune31,30, 2026, we did not repurchase any shares. During the period from February 26, 2025 (the date the share repurchase program was authorized) through December 31, 2025, we repurchased shares in open-market transactions and retired approximately 2.0 million shares of our common stock for an aggregate of $10 million, or a weighted average price per share of $5.19.The timing and amount of future common stock repurchases will depend on various factors, including our capital structure, available liquidity, market conditions, regulatory considerations and opportunities for growth.
“The Revolving Credit Agreement provides a revolving borrowing capacity of $300 million. The interest rate on our Revolving Credit Agreement is based on a spread over a benchmark rate (as described in the Revolving Credit Agreement). The Revolving Credit Agreement matures in January 2030 with potential springing maturities, the earliest being December 2028.”see in full comparison
(1)Based on period end accountssee in full comparisonreceivablereceivable, net and net revenue for the quarters endedMarchJune31,30, 2026 and December 31, 2025. Excluding the impact of the Amended Receivables Sale Program, DSO would have been36.137.1 and 29.8 as ofMarchJune31,30, 2026 and December 31, 2025.
“The decrease in net revenue for the three and six months ended June 30, 2026 was primarily driven by an $81 million and $123 million decrease in revenue from the terminated commercial Payor contracts described above, which drove declines in several product categories, including sleep therapy and home respiratory therapy. …”see in full comparison
Full comparison: every changed paragraph (57)
On February 28, 2025, we announced that we were actively engaged in discussions regarding the anticipated sale of our Products & Healthcare Services (P&HS) business. 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 business, for an aggregate of $375 million in cash, subject to certain adjustments for cash, indebtedness, net working capital and transaction expenses. On December 31, 2025, we completed the sale of the P&HS business pursuant to the Purchase Agreement. We retained a 5% equity interest in the P&HS business.business, which is reflected in other assets, net on our condensed consolidated balance sheets.
Net lossLoss from continuing operations per common share was $($0.081.16) for the three months ended MarchJune 31,30, 2026 as compared to $($0.051.09) for the three months ended MarchJune 31,30, 2025. Our financial results for the three months ended MarchJune 31,30, 2026 as compared to the prior year were impacted by lowera decrease in net revenue of $46$69 million, an increase in exit and realignment charges, net of $23 million, a $17 million loss on modification and extinguishment of debt, and an increase in interestacquisition-related expense,charges netand intangible amortization of $8.1$15 million, partially offset by aprior decreaseyear expenses that did not recur in exitthe current year period, including the transaction breakage fee of $80 million and realignmenttransaction (income)financing charges,fees, net of $37$18 millionmillion, and anlower increasedselling, incomegeneral, taxand benefitadministrative expenses (SG&A) of $8.2$24 million.
Loss from continuing operations per common share was $(1.25) for the six months ended June 30, 2026 as compared to $(1.14) for the six months ended June 30, 2025. Our financial results for the six months ended June 30, 2026 as compared to prior year were impacted by a decrease in net revenue of $115 million, an increase in acquisition-related charges and intangible amortization of $21 million, and a $17 million loss on modification and extinguishment of debt, partially offset by prior year expenses that did not recur in the current year period, including the transaction breakage fee of $80 million and transaction financing fees, net of $18 million, lower SG&A of $31 million and lower exit and realignment charges, net of $14 million.
In June 2026, we exchanged and/or extended a substantial portion of our debt (the Balance Sheet Optimization Transaction). In exchange (the Exchange Offers) for our outstanding 4.500% Senior Notes due 2029 (the 2029 Notes) and 6.625% Senior Notes due 2030 (the 2030 Notes, and together with the 2029 Notes, the Unsecured Notes), we offered (i) newly issued 9.000% Senior Secured First Lien Notes due 2032 (the 2032 Notes) to holders that participated in the new money issuance of the First Lien Notes and (ii) newly issued 9.750% Senior Secured Second Lien Notes due 2033 (the 2033 Notes, and together with the 2032 Notes, the Secured Notes).
In connection with the Exchange Offers for the 2029 Notes, we offered $326 million in aggregate principal amount of the newly issued 2032 Notes for cash. The Secured Notes were issued and guaranteed on a senior secured basis by the Company’s existing and future wholly owned domestic subsidiaries (including each subsidiary guarantor of the Unsecured Notes), subject to certain exceptions. The 2032 Notes were used to extinguish the $326 million in outstanding principal on the Term Loan A.
At the expiration of the Exchange Offers, $478 million in aggregate principal amount of 2029 Notes were tendered and $548 million in aggregate principal amount of 2030 Notes were tendered and cancelled, representing approximately 99.9% and 99.2% of the principal outstanding. Following such cancellation, and as of June 30, 2026, $0.3 million in aggregate principal amount of the 2029 Notes and $4.2 million in aggregate principal amount of the 2030 Notes remain outstanding. The Unsecured Notes are effectively subordinated to any of our secured indebtedness, including the Secured Notes and outstanding indebtedness under our credit agreements. The Exchange Offers of the Unsecured Notes for Secured Notes have been accounted for as a modification of debt in accordance with ASC 470, Debt.
The 2032 Notes will mature in June 2032 and have $539 million of principal outstanding excluding unamortized deferred financing costs as of June 30, 2026. The 2033 Notes will mature in June 2033 and have $698 million of principal outstanding excluding unamortized deferred financing costs as of June 30, 2026.
The completion of the Balance Sheet Optimization Transaction resulted in a loss on modification and extinguishment of debt of $17 million, including $16 million debt modification third party fees and $0.8 million in recognition of previously deferred debt issuance costs.
On May 11, 2026, we announced that we have received commitments from existing creditors to exchange and/or extend a substantial portion of our debt, which would extend the maturity of these obligations beyond twelve months from the balance sheet date (Balance Sheet Optimization Transaction), subject to satisfaction of certain customary conditions. Based on the signed commitments received and the actions planned and described below, management expects the Company will have sufficient liquidity to meet its obligations as they come due during the twelve-month period following the issuance of these financial statements.
We intend to amend and extend the Revolving Credit Agreement into a revolving credit facility maturing in 2030, subject to earlier maturity in December 2028 based on the amount of certain levels of future indebtedness, with aggregate commitments of up to $300 million, for which, subsequent to the balance sheet date, we received commitments from existing lenders under the Revolving Credit Agreement. We anticipate repaying the existing Revolving Credit Agreement using the proceeds from the P&HS business sale.
We intend to refinance the Term Loan A through the proceeds from the new 9.000% senior secured first lien notes due 2032 to be issued in connection with the Balance Sheet Optimization Transaction, for which subsequent to the balance sheet date, we received commitments from certain holders of the 2029 Unsecured Notes and 2030 Unsecured Notes, subject to satisfaction of certain customary conditions. While we have the intent and ability to refinance the Term Loan A beyond the next twelve months, these commitments expire within twelve months of the balance sheet date and therefore, the outstanding balance of the Term Loan A has been classified as a current liability as of March 31, 2026.
In addition to the impacts to the Term Loan A and the Revolving Credit Agreement described above, the Balance Sheet Optimization Transaction will include offers to exchange the 2029 Unsecured Notes into a combination of new 9.000% senior secured first lien notes due 2032 and new 9.750% senior secured second lien notes due 2033, as well as the 2030 Unsecured Notes into new 9.750% senior secured second lien notes due 2033.
A commercial Payor, with which we havehad multiple separately managed contracts, has terminated, or is in the process of terminating,terminated certain of our contracts with them. This termination resulted in minimal impacts to our operating income for the year ended December 31, 2025, as the transitions of agreements and services started late in the fourth quarter of 2025. While suchSuch transitions of agreements and services arewere expected to continuecompleted throughout the first half of 2026, the specific timing of when these agreements and services will wind down is highly dependent on the Payor’s successor provider’s ability to successfully transition customers among other factors.2026. The terminated portion of this relationship reflected $37 millionmillion, or 6%3%, of our net revenuerevenue, including nearly all of our capitation revenue, for the six months ended June 30, 2026. There was no related revenue for the three months ended MarchJune 31,30, 2026. We do not anticipate material impacts to our operating income from such Payor's remaining contract terminations for periods ending beyond March 31, 2026.
In connection with this contract termination, we sold $82$2.9 million and $85 million of patient service equipment during the three and six months ended MarchJune 31,30, 2026, which resulted in $52a $0.6 million ofloss gainsand a $(51) million gain on sales of patient service equipment within exit and realignment (income) charges, net on our condensed consolidated statements of operations. The proceeds from the salesales are reflected within the proceeds from sale of patient service equipment line item within the investing activities section of our condensed consolidated statements of cash flows.
The following discussion and analysis describes results of operations and material changes in the financial condition of Accendrathe Health, Inc. and its subsidiariesCompany since December 31, 2025. 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, 2025.
The decrease in net revenue for the three and six months ended June 30, 2026 was primarily driven by an $81 million and $123 million decrease in revenue from the terminated commercial Payor contracts described above, which drove declines in several product categories, including sleep therapy and home respiratory therapy. For the three months ended June 30, 2026, excluding the impact of the commercial Payor contract termination, notable drivers of net revenue growth by product category included Diabetes of $7.8 million, Sleep therapy of $7.7 million, Ostomy of $3.8 million and Urology of $2.6 million, partially offset by declines in Home respiratory therapy of $6.1 million and Wound care of $3.2 million. For the six months ended June 30, 2026, excluding the impact of the commercial Payor contract termination, notable drivers of net revenue growth by product category included Diabetes of $6.2 million, Sleep therapy of $14 million, Ostomy of $5.5 million and Urology of $4.2 million, partially offset by declines in Home respiratory therapy of $10 million and Wound care of $8.6 million.
The decrease in net revenue for the three months ended March 31, 2026 was primarily driven by a $42 million decrease in revenue from the terminated commercial Payor contracts described above, which drove declines in several product categories, including sleep therapy and home respiratory therapy.
The decrease in cost of net revenue for the three and six months ended MarchJune 31,30, 2026 reflects the lower cost associated with net revenue decline of 6.8%,10.1% and 8.5%, partially offset by manufacturer price increases.
The decrease in selling, general and administrative expenses (SG&A) for the three and six months ended MarchJune 31,30, 2026 was driven primarily fromby a reduction in net revenue of $46$69 million and $115 million and realized personnel and other savings actions,primarily due to the termination of the aforementioned contract with a commercial Payor, partially offset by inflationary increases.
Transaction breakage fee represents a cash payment to Rotech of $80 million during the three and six months ended June 30, 2025 for the termination of the Rotech acquisition.
Acquisition-related charges were $16$6.4 million and $22 million for the three and six months ended MarchJune 31,30, 2025 related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees. Intangible amortization was $29 million and $7.6$58 million for the three and six months ended MarchJune 31,30, 2026 and $7.6 million and $15 million for the three and six months ended June 30, 2025 relating to intangible assets acquired in the Apria and Byram acquisitions. The increase as compared to the prior year was driven by the remaining useful life for an intangible asset being modified as of June 30, 2025, as a result of a notice of a contract termination with the commercial Payor described above.
Exit and realignment (income) charges, net waswere $(24)$26 million and $2.2 million for the three and six months ended MarchJune 31,30, 2026 and primarily included a $0.6 million loss and a $(5251) million gain on sales of patient service equipment in connection with the contract termination with the commercial Payor described above, net separation costs incurred after the P&HS Sale related costs, including reimbursable separation costs of $26$22 million and $48 million, $2.1 million and $2.5 million in professional fees and charges related to IT and other strategic initiatives of $2.0$1.0 million and $3.0 million. Exit and realignment (income) charges, net were $14$2.5 million and $16 million for the three and six months ended MarchJune 31,30, 2025. These charges2025 primarily includedincluding professional fees associated with strategic initiatives of $6.2$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 of $6.8 million.Fusion5.
Interest expense, net for the three and six months ended MarchJune 31,30, 2026 increased compared to the prior year period during which we allocated interest expense, net to discontinued operations as a ratio of net assets and total debt in accordance with ASC 205, Presentation of Financial Statements. See Note 2 in the Notes to Condensed Consolidated Financial Statements for additional information regarding discontinued operations interest expense, net for the three and six months ended MarchJune 31,30, 2025.
Loss on modification and extinguishment of debt of $17 million includes $16 million debt modification third party fees and $0.8 million in recognition of previously deferred debt issuance costs upon the completion of the Balance Sheet Optimization Transaction.
Transaction financing fees, net for the three and six months ended June 30, 2025 includes $12 million in net interest paid and $6.7 million in recognition of previously deferred debt issuance costs, all in connection with the previously expected Rotech acquisition.
Other expense, net for the three and six months ended MarchJune 31,30, 2026 and 2025 primarily includes interest cost and net actuarial losses related to our U.S. retirement plan.
The change in these rates was primarily from changes in results of operations, primarily due to the tax impact of the completion of the Balance Sheet Optimization Transaction in the second quarter of 2026, and the tax treatment associated with the $80 million transaction breakage fee recorded in the second quarter of 2025.
The change in these rates was primarily from changes in results of operations and changes in forecasted results reflected in the tax rates.
The costs of the P&HS business that are classified as discontinued operations include only direct operating expenses. Indirect costs, such as those related to corporate and shared services previously allocated to the P&HS business, do not meet the criteria for discontinued operations and are reported within continuing operations. These costs (stranded costs) are reported within continuing operations and are included within Adjusted EBITDA.
The following tables present the reconciliations of loss from continuing operations, net of tax to Adjusted EBITDA and FCF for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following items have been excluded infrom our non-GAAP financial measuremeasures:
(1) Acquisition-related charges and intangible amortization for the three and six months ended MarchJune 31,30, 2025 includes $16$6.4 million and $22 million of acquisition-related costscharges 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) 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.
(23) During the three and six months ended MarchJune 31,30, 2026 exit and realignment (income) charges, net waswere $(24)$26 million and $2.2 million and primarily included a $0.6 million loss and $(5251) million gain on sales of patient service equipment in responseconnection towith the contract termination with athe commercial Payor,Payor netdescribed separation costs incurred after theabove, P&HS Sale related costs, including reimbursable separation costs of $26$22 million and $48 million, $2.1 million and $2.5 million in professional fees and charges related to IT and other strategic initiatives of $2.0$1.0 million and $3.0 million. Exit and realignment charges, net were $14$2.5 million and $16 million for the three and six months ended MarchJune 31,30, 2025 and primarily included professional fees associated with strategic initiatives of $6.2$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 of $6.8 million.Fusion5. These costs are not normal recurring, cash operating expenses necessary for the Company to operate its business on an ongoing basis.
(4) Transaction financing fees, net for the three and six months ended June 30, 2025 includes $12 million in net interest paid and $6.7 million in recognition of previously deferred debt issuance costs, all in connection with the previously expected Rotech acquisition.
(46) Other depreciation and amortization relates to patient service equipment and other fixed assets, excluding such amounts captured within exit and realignment (income) charges, net or acquisition-related charges and intangible amortization.
(57) Stock compensation includes share-based compensation expense related to our share-based compensation plans, excluding such amounts captured within exit and realignment (income) charges, net or acquisition-related charges and intangible amortization.
(8) Loss on modification and extinguishment of debt of $17 million includes $16 million debt modification third party fees and $0.8 million in recognition of previously deferred debt issuance costs upon the completion of the Balance Sheet Optimization Transaction.
(69) For the three and six months ended MarchJune 31,30, 2026 and 2025, other includes interest costs and net actuarial losses related to our frozen noncontributory, unfunded retirement plan for certain retirees in the U.S.
(710) Non-cash convert to sale write off expense includes non-cash charges primarily for equipment converted from rental to sales, excluding such amounts captured within in exit and realignment (income) charges, net. This reflects the non-cash write-off of the remaining book value of patient service equipment at the time of sale. The purchase of patient service equipment is captured within capital expenditures and is subsequently charged to our statements of operations through normal depreciation and this non-cash convert to sale write off expense. This line item does not include non-cash write off expense associated with sales of patient service equipment in connection with the contract termination with a commercial Payor, as such amounts are captured within exit and realignment (income) charges, net.
(1)Based on period end accounts receivablereceivable, net and net revenue for the quarters ended MarchJune 31,30, 2026 and December 31, 2025. Excluding the impact of the Amended Receivables Sale Program, DSO would have been 36.137.1 and 29.8 as of MarchJune 31,30, 2026 and December 31, 2025.
Liquidity and capital expenditures. The following table summarizes our condensed consolidated statements of cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:
Cash used for operating activities in the first threesix months of 2026 reflected a net loss and unfavorable changes in working capital, including $20$24 million in payments related to professional and closing costs of the P&HS Sale, a $19 million tax payment as described in Note 7 in the Notes to Condensed Consolidated Financial StatementsStatements, a $15 million payment of reimbursable separation costs related to the P&HS Sale as described in Note 4 in the Notes to Condensed Consolidated Financial Statements, $12 million of interest paid in connection with the Balance Sheet Optimization Transaction that was originally scheduled to be paid subsequent to June 30, 2026, and paymentsthe timing of teammate incentives. Cash usedprovided forby operating activities in the first threesix months of 2025 reflected a $130 million benefit from accounts receivable sold under the Receivables Sale Program, $104 million of which relates to accounts receivables sold of the P&HS segment, partially offset by an $80 million payment for the termination of the Rotech acquisition, $18 million in transaction financing fees, net loss,for the Rotech financing, and unfavorable changes in working capital and cash used from discontinuedcontinuing operations of $67 million. 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.operations.
Cash usedprovided forby investing activities in the first threesix months of 2026 included capital expenditures of $42$91 million, primarily for patient service equipment and our strategic and operational efficiency initiatives associated with other fixed assets and capitalized software, offset by $96$112 million in proceeds from sales of patient service equipment and other fixed assets including $82$85 million in proceeds from sales asin aconnection result ofwith the Payor contract termination. Cash used for investing activities in the first threesix months of 2025 included capital expenditures of $48$107 million, primarily for patient service equipment and $17$27 million in cash used from discontinued operations, offset by $17$35 million in proceeds from sales of patient service equipment.
Cash providedused byfor financing activities in the first threesix months of 2026 includedincludes $17 million in debt issuance costs paid and net borrowingsrepayments of $52$204 million under our Revolving Credit Facility.Agreement. Cash provided by financing activities in the first threesix months of 2025 included net borrowings of $98$135 million under our Revolving Credit Facility.Agreement.
On December 31, 2025, we entered into an Amended and Restated Receivables Purchase Agreement (the Amended Receivables Sale Program) with persons from time to time party thereto, as Purchasers, PNC Bank, as Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent, pursuant to which accounts receivable with an aggregate outstanding amount not to exceed $150 million are sold, on a limited-recourse basis, to the Purchasers in exchange for cash. Transactions under this agreement are accounted for as sales in accordance with ASC 860, Transfers and Servicing, with the sold receivables removed from our condensed consolidated balance sheets.
Total accounts receivable sold under the Amended Receivables Sale Program were $246$221 million and $466 million during the three and six months ended MarchJune 31,30, 2026. We collected $231$239 million and $470 million of the sold accounts receivable during the three and six months ended MarchJune 31,30, 2026. The losses on sale of accounts receivable recorded in SG&A were $1.5$1.8 million and $3.3 million for the three and six months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 2026 and December 31, 2025 there was a total of $148$130 million and $134 million of uncollected accounts receivable sold and removed from our condensed consolidated balance sheet under the Amended Receivables Sale Program.
The Revolving Credit Agreement provides a revolving borrowing capacity of $450 million. We have $837$511 million in outstanding termTerm loansLoan B under a term loan credit agreement (the Credit Agreement). The interest rate on ourthe RevolvingTerm CreditLoan AgreementB is based on a spread over a benchmark rate (as described ineither the RevolvingTerm CreditSOFR Agreement).or Thethe RevolvingBase CreditRate Agreementplus an Applicable Rate and matures in March 2027.2029.
The Revolving Credit Agreement provides a revolving borrowing capacity of $300 million. The interest rate on our Revolving Credit Agreement is based on a spread over a benchmark rate (as described in the Revolving Credit Agreement). The Revolving Credit Agreement matures in January 2030 with potential springing maturities, the earliest being December 2028.
At MarchJune 31,30, 2026 and December 31, 2025,2026, we had $255 million and $204 million inno outstanding borrowings on our Revolving Credit Agreement. At March 31, 2026Agreement and December 31, 2025 we had letters of credit,credit outstanding, which reduce Revolving Credit Agreement availability, totaling $29 million and $30 million, leaving $166 million and $217$271 million available for borrowing.
At December 31, 2025, we had $204 million in outstanding borrowings on our Revolving Credit Agreement and letters of credit outstanding, which reduce Revolving Credit Agreement availability, totaling $30 million, leaving $217 million available for borrowing. As described in Note 5 in the Notes to Condensed Consolidated Financial Statements, the borrowing capacity was amended on June 15, 2026. As of December 31, 2025, the borrowing capacity was $450 million.
The interest rate on the Term Loan A is based on either the Term SOFR or the Base Rate plus an Applicable Rate which varies depending on the current Debt Ratings or Total Leverage Ratio, determined as to whichever shall result in more favorable pricing to the Borrowers (each as defined in the Credit Agreement). The interest rate on the Term Loan B is based on either the Term SOFR or the Base Rate plus an Applicable Rate. The Term Loan A matures in March 2027 and the Term Loan B matures in March 2029.
The Revolving Credit Agreement, the Credit Agreement, the Amended Receivables Sale Program, the 20292032 Unsecured Notes,Notes and the 2030 Unsecured2033 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 MarchJune 31,30, 2026.
We regularly evaluate market conditions, our liquidity profile and various financing alternatives to enhance our capital structure. We havehave, from time to time, entered into, and from time to time in the future, we may enter into transactions to repay, repurchase or redeem our outstanding indebtedness (including by means of open market purchases, privately negotiated repurchases, tender or exchange offers and/or repayments or redemptions pursuant to the debt’s terms). Our ability to consummate any such transaction will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. 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, our Board of Directors authorized a share repurchase program of up to $100 million through February 2027. UnderWe do not intend to make use of the program, we mayauthorized 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.program. During the three and six months ended MarchJune 31,30, 2026, we did not repurchase any shares. During the period from February 26, 2025 (the date the share repurchase program was authorized) through December 31, 2025, we repurchased shares in open-market transactions and retired approximately 2.0 million shares of our common stock for an aggregate of $10 million, or a weighted average price per share of $5.19. The timing and amount of future common stock repurchases will depend on various factors, including our capital structure, available liquidity, market conditions, regulatory considerations and opportunities for growth.
We believe cash generated by operating activities, including available cash proceeds from the Amended Receivables Sale Program, available financing sources inclusive of the Balance Sheet Optimization Transaction expected to be completed during the second quarter of 2026,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. 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.
For a discussion of recent accounting pronouncements, see our Annual Report on Form 10-K for the year ended December 31, 2025 and Note 13 in the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the period ended on MarchJune 31,30, 2026.
ACH insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-05 | Gardner-Smith Kenneth |
Grant/award | 283,554 | — | — |
| 2026-09-23 | Leon Jonathan A |
Shares withheld for tax | 4,265 | $0.85 | $3.6K |
| 2026-05-18 | Galloway Heath H |
Shares withheld for tax | 1,822 | $2.91 | $5.3K |
| 2026-05-15 | Leon Jonathan A |
Shares withheld for tax | 1,770 | $3.04 | $5.4K |
| 2026-05-15 | Pesicka Edward A |
Shares withheld for tax | 17,692 | $3.04 | $53.8K |
| 2026-05-15 | Galloway Heath H |
Shares withheld for tax | 966 | $3.04 | $2.9K |
| 2026-05-15 | Bernocchi Perry A |
Shares withheld for tax | 7,908 | $3.04 | $24.0K |
| 2026-05-14 | Kline Teresa L. |
Grant/award | 31,191 | — | — |
| 2026-05-14 | Klemash Stephen W |
Grant/award | 31,191 | — | — |
| 2026-05-14 | Gardner-Smith Kenneth |
Grant/award | 31,191 | — | — |
| 2026-05-14 | Beck Mark A |
Grant/award | 31,191 | — | — |
Well-known investors holding ACH (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 3,081,407 | $10.5M | 0.01% | Reduced 7% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 1,067,324 | $3.7M | 0.0% | Added 46% |
| Two Sigma Investments | 2026-06-30 | 718,550 | $2.5M | 0.0% | Reduced 40% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 386,526 | $1.3M | 0.0% | Added 64% |
| Renaissance Technologies | 2026-06-30 | 324,413 | $1.1M | 0.0% | Added 2% |
| Millennium Management (Israel Englander) | 2026-06-30 | 202,018 | $690.9K | 0.0% | Reduced 57% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 53,915 | $122.9K | — | Sold out |