Owens & Minor(OMI) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including statements of operations, comprehensive loss, balance sheets, cash flows, and changes in equity, along with detailed notes on accounting policies, discontinued operations, debt, and other financial disclosures Condensed Consolidated Statements of Operations Net loss significantly increased due to discontinued operations and a transaction breakage fee, despite a slight rise in net revenue Condensed Consolidated Statements of Operations (Three and Six Months Ended June 30, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $681,917 | $660,401 | $1,355,801 | $1,298,244 | | Operating (loss) income | $(39,710) | $16,922 | $(19,919) | $23,892 | | Loss from continuing operations, net of tax | $(83,822) | $(6,742) | $(87,632) | $(20,135) | | Loss from discontinued operations, net of tax | $(785,236) | $(25,171) | $(806,408) | $(33,664) | | Net loss | $(869,058) | $(31,913) | $(894,040) | $(53,799) | | Basic loss per common share (Net loss) | $(11.30) | $(0.42) | $(11.60) | $(0.70) | - The significant increase in net loss for both periods was primarily driven by a substantial loss from discontinued operations and an $80 million transaction breakage fee[11][63] Condensed Consolidated Statements of Comprehensive Loss Comprehensive loss substantially increased, driven by higher net loss, partially offset by positive currency translation adjustments Condensed Consolidated Statements of Comprehensive Loss (Three and Six Months Ended June 30, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(869,058) | $(31,913) | $(894,040) | $(53,799) | | Currency translation adjustments | $14,773 | $(5,302) | $20,730 | $(18,568) | | Total other comprehensive income (loss), net of tax | $13,992 | $(5,307) | $19,125 | $(16,926) | | Comprehensive loss | $(855,066) | $(37,220) | $(874,915) | $(70,725) | - Comprehensive loss significantly increased for both periods, primarily reflecting the higher net loss, partially offset by positive currency translation adjustments in 2025[13] Condensed Consolidated Balance Sheets Total assets decreased while liabilities increased, leading to a shift from positive equity to a deficit position Condensed Consolidated Balance Sheets (as of June 30, 2025 and December 31, 2024, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total current assets | $2,298,513 | $2,021,017 | | Total assets | $4,154,545 | $4,656,156 | | Total current liabilities | $2,674,523 | $1,852,052 | | Total liabilities | $4,435,555 | $4,069,792 | | Total (deficit) equity | $(281,010) | $586,364 | - Total assets decreased, driven by the reclassification of noncurrent assets held for sale to current assets held for sale, while total liabilities increased, resulting in a shift from positive equity to a deficit[16] Condensed Consolidated Statements of Cash Flows Operating cash flow significantly declined due to net loss, goodwill impairment, and a loss on classification to held for sale Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Cash provided by operating activities | $2,544 | $63,187 | | Cash used for investing activities | $(101,117) | $(37,040) | | Cash provided by (used for) financing activities | $124,477 | $(24,920) | | Net increase in cash, cash equivalents and restricted cash | $27,705 | $545 | - Operating cash flow significantly decreased in 2025, impacted by the net loss, goodwill impairment charge of $106.4 million, and a loss on classification to held for sale of $649.1 million[18] Condensed Consolidated Statements of Changes in Equity (Deficit) Total equity transitioned from a positive balance to a significant deficit, primarily due to the period's substantial net loss Condensed Consolidated Statements of Changes in Equity (Deficit) (as of June 30, 2025, in thousands) | Metric | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :-------------------- | :---------------- | :------------- | :------------ | | Total Equity (Deficit) | $586,364 | $570,979 | $(281,010) | - The company's total equity shifted from a positive balance to a significant deficit by June 30, 2025, primarily due to the substantial net loss incurred during the period[19] - Shares repurchased and retired totaled 826 thousand for $6.7 million during the six months ended June 30, 2025[19] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies, significant financial events, and segment information Note 1—Summary of Significant Accounting Policies This note details the company's accounting principles, including the reclassification of the P&HS segment as discontinued operations, correction of a prior period accounting error, and policies for revenue recognition, goodwill, and intangible assets - The P&HS segment has been classified as discontinued operations and held for sale as of June 30, 2025, with its financial results excluded from continuing operations[25] - A prior period accounting error related to over accrual of accounts payable was corrected, increasing retained earnings and total equity by $21 million as of December 31, 2023[22][23][24] - An $80 million cash payment was incurred for the termination of the Rotech Healthcare Holdings Inc. acquisition during the three and six months ended June 30, 2025[63] Note 2—Significant Concentration Risks The company has significant revenue concentration with its two largest commercial payors and government programs, and supplier concentration with three key suppliers Revenue and Supplier Concentration (Six Months Ended June 30, 2025) | Category | Percentage of Net Revenue/Purchases | | :------- | :---------------------------------- | | Two largest commercial payors | 24% and 14% of net revenue | | Medicare and state Medicaid programs | ~19% of net revenue | | Three largest suppliers | ~46% of patient service equipment and supplies purchases | Note 3—Discontinued Operations and Assets Held-for-Sale The P&HS segment was classified as discontinued operations and held for sale as of June 30, 2025, leading to a $649 million loss on classification and a full impairment of its $106 million goodwill - The P&HS segment was classified as discontinued operations and assets held for sale as of June 30, 2025[66][68] - A loss of $649 million was recognized in connection with the classification of assets and liabilities as held-for-sale, based on estimated fair value less costs to sell[70] - The remaining P&HS goodwill balance of $106 million was fully impaired as of June 30, 2025[70] Financial Results of Discontinued Operations (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------- | :------------ | :------------ | | Net revenue | $3,937,974 | $3,985,442 | | Loss from discontinued operations, net of taxes | $(806,408) | $(33,664) | Note 4—Patient Service Equipment and Other Fixed Assets, Net Patient service equipment and other fixed assets, net, increased to $259,301k at June 30, 2025, primarily due to an increase in patient service equipment Patient Service Equipment and Other Fixed Assets, Net (in thousands) | Asset Category | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Patient service equipment, gross | $411,769 | $388,445 | | Patient service equipment and other fixed assets, net | $259,301 | $249,283 | Note 5—Goodwill and Intangible Assets, Net Goodwill remained at $1.2 billion, while intangible assets, net, decreased due to amortization and a modified useful life for an asset following a contract termination - Goodwill was $1.2 billion (net of $307 million accumulated impairment) at June 30, 2025 and December 31, 2024[80] Intangible Assets, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Intangible assets, net | $194,924 | $210,056 | - Amortization expense for intangible assets was $15 million for the six months ended June 30, 2025, down from $24 million in the prior year[80] - The remaining useful life for an intangible asset was modified due to a commercial Payor contract termination[81] Note 6—Leases Total lease cost decreased for the six months ended June 30, 2025, with a slight reduction in operating lease assets and liabilities, and a shorter weighted average remaining lease term Lease Costs and Balances (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | | Total lease cost | $41,170 | $45,477 | | Operating lease assets (June 30, 2025) | $120,188 | $126,928 (Dec 31, 2024) | | Total operating lease liabilities (June 30, 2025) | $124,686 | $130,683 (Dec 31, 2024) | - The weighted average remaining lease term for operating leases decreased to 3.6 years from 3.9 years[84] - The weighted average discount rate for operating leases increased to 6.5% from 6.3%[84] Note 7—Exit and Realignment Charges, Net Exit and realignment charges, net, decreased significantly for the six months ended June 30, 2025, primarily due to lower professional fees for strategic initiatives and wind-down costs for Fusion5 Exit and Realignment Charges, Net (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | | Exit and realignment charges, net | $16,166 | $23,547 | - Charges for 2025 primarily included $8.1 million in professional fees for strategic initiatives and $6.8 million related to Fusion5 wind-down costs[86] - Accrued exit and realignment costs decreased to $1.7 million at June 30, 2025, from $6.7 million at December 31, 2024[87] Note 8—Debt Total debt increased to $1.98 billion at June 30, 2025, driven by increased Revolving Credit Facility borrowings, with a significant portion of debt reclassified to current maturities due to anticipated repayment from the P&HS segment sale Total Debt (Carrying Amount, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Total debt | $1,977,745 | $1,841,259 | | Current portion of long-term debt | $383,000 | $42,866 | - Outstanding borrowings on the Revolving Credit Agreement were $135 million at June 30, 2025, compared to undrawn at December 31, 2024[94] - The company was in compliance with all debt covenants at June 30, 2025[95] - Current maturities include $383 million in debt anticipated to be repaid within the next twelve months from expected P&HS segment sale proceeds[97] Note 9—Share-Based Compensation Share-based compensation expense increased to $9.3 million for the six months ended June 30, 2025, with approximately 1.7 million common shares available for issuance under the Plan Share-Based Compensation Expense (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | | Share-based compensation expense | $9,300 | $8,400 | - Approximately 1.7 million common shares were available for issuance under the Plan at June 30, 2025[98] - Unrecognized compensation cost for nonvested RSAs was $32 million (expected over 2.2 years) and for nonvested PSAs was $12 million (primarily in 2025-2027)[100] Note 10—Derivatives The company uses interest rate swaps as cash flow hedges to manage interest rate risk, with a notional amount of $250 million outstanding at June 30, 2025 - Interest rate swaps are used as cash flow hedges to mitigate the risk of increases in benchmark rates on term loans[104] Interest Rate Swaps (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Notional Amount | $250,000 | $300,000 | | Derivative Assets (Fair Value) | $2,752 | $6,113 | - A loss of $1.3 million was recognized in Other Comprehensive Income (Loss) for interest rate swaps for the six months ended June 30, 2025[107] Note 11—Income Taxes The effective tax rate decreased significantly to 3.0% for the six months ended June 30, 2025, primarily due to the tax treatment of the $80 million transaction breakage fee, leading to an increase in unrecognized tax benefits Income Tax Benefit and Effective Tax Rate (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----- | :------------ | :------------ | | Income tax benefit | $(2,715) | $(8,671) | | Effective tax rate | 3.0% | 30.1% | - The change in effective tax rate was primarily due to the tax treatment associated with the $80 million Rotech transaction breakage fee[109] - The liability for unrecognized tax benefits increased to $53 million at June 30, 2025, from $36 million at December 31, 2024, largely due to the Rotech transaction breakage fee[110] - The company owed $37 million, including $10 million in interest, as of June 30, 2025, related to a final IRS assessment for 2015-2018 tax years[112] Note 12—Net Loss per Common Share Basic and diluted net loss per common share significantly increased to $(11.60) for the six months ended June 30, 2025, primarily driven by the substantial loss from discontinued operations Net Loss per Common Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----- | :------------ | :------------ | | Basic loss per common share (Net loss) | $(11.60) | $(0.70) | | Diluted loss per common share (Net loss) | $(11.60) | $(0.70) | - Loss from discontinued operations contributed $(10.46) to the basic loss per common share for the six months ended June 30, 2025[114] - Approximately 2.2 million share-based awards were excluded from diluted EPS calculation as their effect would be anti-dilutive[116] Note 13—Shareholders Equity The Board authorized a $100 million share repurchase program, under which the company repurchased approximately 0.8 million shares for $6.6 million during the six months ended June 30, 2025 - A share repurchase program of up to $100 million was authorized by the Board of Directors on February 26, 2025, over the next 24 months[117] - Approximately 0.8 million shares of common stock were repurchased and retired for an aggregate of $6.6 million during the six months ended June 30, 2025[118] Note 14—Accumulated Other Comprehensive (Loss) Income Accumulated other comprehensive loss improved to $(30,219)k at June 30, 2025, from $(49,344)k at December 31, 2024, primarily due to positive currency translation adjustments Accumulated Other Comprehensive (Loss) Income (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Accumulated other comprehensive (loss) income | $(30,219) | $(49,344) | - Currency translation adjustments contributed $20.7 million in income for the six months ended June 30, 2025, compared to a loss of $18.6 million in the prior year[120] Note 15—Commitments, Contingent Liabilities, and Legal Proceedings The company terminated the Rotech Merger Agreement with an $80 million cash payment and maintains sufficient accruals for various ordinary legal claims - The Merger Agreement with Rotech was terminated on June 3, 2025, resulting in an $80 million cash payment[122] - Accruals for currently pending legal matters considered probable of loss are deemed sufficient[125] Note 16—Segment Information Following the reclassification of the P&HS segment as discontinued operations, the company now operates as a single operating and reporting segment - The company's business activities now comprise a single operating and reporting segment, with net income (loss) from continuing operations as the primary profitability measure[126] Note 17—Recent Accounting Pronouncements The company is assessing the impact of new ASUs on income tax and expense disclosures, expecting only disclosure impacts without affecting financial results or cash flows - ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) are expected to impact only disclosures, with no effect on results of operations, financial condition, or cash flows[127][128][129] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of the company's financial performance, including the impact of the P&HS segment sale, Rotech acquisition termination, and a commercial payor contract termination, detailing changes in revenue, costs, operating and non-operating expenses, income taxes, and liquidity, highlighting key drivers and future outlook Overview The company, now a single segment, experienced significant financial impacts from a transaction breakage fee and financing fees related to a terminated acquisition - The company is a leading provider of integrated equipment, supplies, and services for home-based care in the US, now operating as a single segment[131] Net Loss from Continuing Operations per Common Share | Period | 2025 | 2024 | | :----- | :------------ | :------------ | | Three months ended June 30 | $(1.09) | $(0.09) | | Six months ended June 30 | $(1.14) | $(0.26) | - Financial results were significantly impacted by an $80 million transaction breakage fee and $18 million in transaction financing fees related to the terminated Rotech acquisition[132][133] Contemplated Sale of Products & Healthcare Services Segment The company is nearing the sale of its P&HS segment, which has been reclassified as discontinued operations and held for sale - The company is in the final stages of discussions for the contemplated sale of its P&HS segment, which has been classified as discontinued operations and held for sale as of June 30, 2025[135] Termination of Acquisition of Rotech The Rotech acquisition merger agreement was mutually terminated, resulting in an $80 million cash payment - The Merger Agreement to acquire Rotech was mutually terminated on June 3, 2025, resulting in an $80 million cash payment to Rotech[136] Notice of Contract Termination with a Commercial Payor A commercial payor's contract termination, affecting 12% of net revenue, is expected to have a net neutral financial impact through 2025 - A commercial Payor intends to terminate certain contracts, which represented approximately $160 million or 12% of net revenue and nearly all capitation revenue for the six months ended June 30, 2025[137] - Net neutral financial impacts are expected through the end of 2025, with transitions of agreements and services anticipated to start late in Q4 2025 and continue through H1 2026[137] Results of Operations This section analyzes the company's revenue, cost of revenue, operating expenses, non-operating expenses, income taxes, and Adjusted EBITDA Net revenue Net revenue increased by 3.3% for Q2 2025 and 4.4% for YTD 2025, driven by growth in sleep therapy, ostomy, and urology, despite headwinds in diabetes revenue Net Revenue by Product Category (in thousands) | Product Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Diabetes | $191,056 | $194,361 | $378,416 | $374,351 | | Sleep therapy | $181,622 | $170,237 | $363,481 | $342,274 | | Ostomy | $51,893 | $47,059 | $101,392 | $91,626 | | Urology | $28,696 | $25,645 | $56,839 | $50,634 | | Net revenue | $681,917 | $660,401 | $1,355,801 | $1,298,244 | - The increase in net revenue was driven by sales growth in sleep therapy (+6.7% Q2, +6.2% YTD), ostomy (+10.3% Q2, +10.7% YTD), and urology (+11.9% Q2, +12.3% YTD)[138][139] - Diabetes revenue growth was hindered by market shifts into the pharmacy channel and modified customer ordering quantities due to supplier disruptions[139] Cost of net revenue Cost of net revenue increased by 3.8% for Q2 2025 and 4.3% for YTD 2025, reflecting the higher costs associated with increased sales volume Cost of Net Revenue (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of products sold | $319,517 | $305,496 | $636,906 | $603,864 | | Cost of net revenue | $357,315 | $344,372 | $711,957 | $682,623 | - The increase in cost of net revenue was primarily due to the increased cost of products sold, reflecting higher sales volume[142] Operating expenses Operating expenses were significantly impacted by an $80 million transaction breakage fee, SG&A expenses decreased due to efficiencies, while acquisition-related charges increased and exit and realignment charges decreased Operating Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling, general and administrative expenses | $267,853 | $269,919 | $530,223 | $540,132 | | Transaction breakage fee | $80,000 | — | $80,000 | — | | Acquisition-related charges and intangible amortization | $13,918 | $13,761 | $37,374 | $28,050 | | Exit and realignment charges, net | $2,541 | $15,427 | $16,166 | $23,547 | - SG&A expenses decreased due to operating efficiencies in revenue cycle and IT, and lower benefit costs, partially offset by inflationary increases[143] - Acquisition-related charges increased due to costs for the terminated Rotech acquisition, while intangible amortization decreased as certain assets were fully amortized in 2024[145] Non-operating expenses Non-operating expenses included $18.3 million in transaction financing fees related to the terminated Rotech acquisition, while interest expense remained relatively stable Non-Operating Expenses (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense, net | $26,009 | $25,588 | $50,223 | $50,997 | | Transaction financing fees, net | $18,288 | — | $18,288 | — | - Transaction financing fees, net, of $18.3 million were incurred for debt financing associated with the terminated Rotech acquisition[148] - Interest expense, net, for the six months ended June 30, 2025, decreased due to a lower effective interest rate and average outstanding borrowings, partially offset by a decrease in interest income[147] Income taxes The income tax benefit decreased significantly, and the effective tax rate dropped to 3.0% for YTD 2025, primarily due to the tax treatment of the $80 million transaction breakage fee Income Tax Benefit and Effective Tax Rate | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax benefit | $(1,127) | $(2,740) | $(2,715) | $(8,671) | | Effective tax rate | 1.3% | 28.9% | 3.0% | 30.1% | - The change in tax rates was primarily driven by the tax treatment associated with the $80 million transaction breakage fee[150] Adjusted EBITDA Adjusted EBITDA increased for both Q2 and YTD 2025, reflecting adjustments for non-GAAP items such as the transaction breakage fee, acquisition-related charges, and exit and realignment charges Adjusted EBITDA (non-GAAP, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Adjusted EBITDA | $96,635 | $91,080 | $192,653 | $160,300 | - Key exclusions from GAAP net loss to arrive at Adjusted EBITDA include the $80 million transaction breakage fee, acquisition-related charges, exit and realignment charges, and transaction financing fees[155][156][157][158][159] Financial Condition, Liquidity and Capital Resources This section reviews the company's financial position, liquidity sources, capital expenditures, and capital structure Financial condition Cash and cash equivalents increased, while accounts receivable decreased and Days Sales Outstanding (DSO) improved, indicating better working capital management Key Financial Condition Metrics (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Cash and cash equivalents | $38,258 | $27,572 | | Accounts receivable | $196,379 | $218,270 | | DSO (days) | 26.2 | 28.9 | | Inventories | $69,227 | $67,581 | | Inventory days | 17.6 | 17.2 | - A hypothetical one-day increase (decrease) in DSO would result in a $7.5 million decrease (increase) in cash balances or an increase (decrease) in Revolving Credit Agreement borrowings[162] Liquidity and capital expenditures Cash provided by operating activities significantly decreased for YTD 2025, impacted by the Rotech termination payment and financing fees, while cash used for investing activities increased due to higher capital expenditures Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :------- | :------------ | :------------ | | Operating activities | $2,544 | $63,187 | | Investing activities | $(101,117) | $(37,040) | | Financing activities | $124,477 | $(24,920) | - Operating cash flow in 2025 was impacted by an $80 million Rotech termination payment, $18 million in transaction financing fees, and a $130 million benefit from the Receivables Sale Program[165] - Capital expenditures increased to $134 million in YTD 2025 from $95 million in YTD 2024, primarily for patient service equipment and strategic initiatives[166] Capital Resources The company's liquidity is supported by cash, the Receivables Sale Program, and the Revolving Credit Agreement, a $1.0 billion Senior Secured Notes offering for the Rotech acquisition was terminated and redeemed, and a $100 million share repurchase program is underway - Primary sources of liquidity include cash and cash equivalents, the Receivables Sale Program, and the Revolving Credit Agreement[170] - The Revolving Credit Agreement has a $450 million capacity, with $135 million outstanding and $286 million available for borrowing at June 30, 2025[172][173] - A $1.0 billion Senior Secured Notes offering, initially for the Rotech acquisition, was completed but subsequently terminated and redeemed on June 10, 2025, following the merger agreement termination[175][176][177] - The Board authorized a $100 million share repurchase program, under which approximately 0.8 million shares were repurchased for $6.6 million during the six months ended June 30, 2025[179] Contractual Obligations Material contractual obligations are referenced in the Annual Report on Form 10-K and Note 15 of this Quarterly Report - Material contractual obligations are disclosed in the Annual Report on Form 10-K for December 31, 2024, and Note 15 of this Quarterly Report[182] Recent Accounting Pronouncements Recent accounting pronouncements are detailed in the Annual Report on Form 10-K and Note 17 of this Quarterly Report - Recent accounting pronouncements are discussed in the Annual Report on Form 10-K for December 31, 2024, and Note 17 of this Quarterly Report[183] Forward-looking Statements Forward-looking statements are subject to known and unknown risks and uncertainties, and actual results may differ materially from projections - Forward-looking statements involve known and unknown risks and uncertainties, and actual results could differ materially from projections[184] - Key risks include the ability to complete the P&HS segment sale, competitive pressures, dependence on customers and suppliers, regulatory changes, and financing costs[186][190] - The company does not undertake to update or revise any forward-looking statements, except as required by applicable law[187] Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in the company's quantitative and qualitative market risk disclosures since the Annual Report on Form 10-K for December 31, 2024 - No material changes in market risk disclosures were reported through June 30, 2025, compared to the Annual Report on Form 10-K for December 31, 2024[188] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the period - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025[189] - There was no change in internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting during the period[189] Part II. Other Information This section covers legal proceedings, risk factors, equity security sales, exhibits, and official signatures Item 1. Legal Proceedings No material developments in legal proceedings were reported through June 30, 2025, beyond those previously disclosed in the Annual Report on Form 10-K and Management's Discussion and Analysis - No material developments in legal proceedings were reported through June 30, 2025, other than those described in the Annual Report on Form 10-K and Management's Discussion and Analysis[191] Item 1A. Risk Factors New and revised risk factors include the potential negative impact of a commercial payor contract termination, reduced reimbursement for non-invasive ventilation products by CMS, and various risks associated with the contemplated sale of the P&HS segment, such as business disruption and reduced diversification - A commercial Payor's notice of contract termination could negatively impact financial condition, as affected agreements represented approximately 12% of net revenue for the six months ended June 30, 2025[193] - A June 2025 CMS determination may reduce reimbursement qualification for non-invasive ventilation products, potentially adversely affecting the business[194] - Risks related to the contemplated sale of the P&HS segment include potential delays, business disruptions, reduced diversification, significant costs, and the possibility of retained liabilities[195][196][198][199][200][203][204] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Board authorized a $100 million share repurchase program, under which approximately 0.8 million shares were repurchased for $6.6 million during the six months ended June 30, 2025 - The Board of Directors authorized a share repurchase program of up to $100 million over the next 24 months, starting February 26, 2025[205][208] Share Repurchase Activity (in thousands, except per share data) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares That May Yet be Purchased Under the Program | | :----- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------------- | | Year-to-date (June 30, 2025) | 826 | $8.07 | $93,360 | Item 6. Exhibits This section lists the exhibits filed with the 10-Q report, including the Termination Agreement for the Rotech acquisition, CEO/CFO certifications, and XBRL-related documents - Key exhibits include the Termination Agreement for the Rotech acquisition, CEO/CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[211] Signatures The report was signed by Edward A. Pesicka, President, Chief Executive Officer & Director, and Jonathan A. Leon, Executive Vice President & Chief Financial Officer, on August 11, 2025 - The report was signed by Edward A. Pesicka (President, CEO & Director) and Jonathan A. Leon (Executive Vice President & CFO) on August 11, 2025[213]