Accendra Health Q3 revenue falls 13.7% to $602M
Terminated commercial-payor contracts reduced quarterly revenue by $82 million, while the June exchange canceled $478 million of 2029 notes and $548 million of 2030 notes.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Accendra Health reported third-quarter net revenue of $601.775 million, down 13.7% from $697.264 million; nine-month revenue was $1,842.789 million, down 10.2% from $2,053.065 million. Terminated commercial-payor contracts reduced revenue by $82 million in the quarter and $205 million over nine months. Continuing-operations net loss was $17.961 million versus $5.607 million; total net loss was $19.699 million versus $150.276 million, including a $144.669 million prior-year discontinued-operations loss.
For nine months, operating cash use was $93.495 million versus $169.976 million; cash and equivalents were $26.608 million at September 30, 2026, versus $281.989 million at December 31, 2025. A June 2026 debt exchange canceled $478 million of 2029 notes and $548 million of 2030 notes. At September 30, 2026, principal outstanding was $539 million on 9.000% 2032 first-lien notes and $698 million on 9.750% 2033 second-lien notes.
The P&HS sale closed December 31, 2025, with Accendra retaining a 5% equity interest. On October 29, 2026, an amendment extended the receivables program’s scheduled termination from October 2027 to October 2029, with standard contingencies.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month operating cash use fell to $93.495 million from $169.976 million.
- Minor pointQuarterly net loss narrowed to $19.699 million from $150.276 million.
Negative
- Moderate pointQuarterly revenue fell 13.7% to $601.775 million.
- Moderate pointContinuing-operations loss widened to $17.961 million from $5.607 million.
Filing Explained
The company reported 238 million dollars of revolver availability, while reimbursable separation costs had reached their 65-million-dollar cap.
At
By quarter-end, reimbursable P&HS separation costs had reached the
At quarter-end, the company reported
Key Figures
Key Terms
capitation arrangements financial
limited-recourse basis financial
principal recapture liability financial
cross-default provisions financial
anti-dilutive financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was ACH's revenue in the third quarter of 2026?
How did ACH restructure its debt in June 2026?
What changed in ACH's revolving credit agreement?
When does ACH's receivables sale program terminate?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of Registrant as specified in its charter)
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| (State or other jurisdiction of | | (I.R.S. Employer |
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| (Address of principal executive offices) | | (Zip Code) |
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Registrant’s telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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☒ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares of the Company’s common stock outstanding as of September 30, 2026 was
Table of Contents
Accendra Health, Inc. and Subsidiaries
Index
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Part I. Financial Information | Page | |
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Item 1. | Financial Statements | 3 |
| Condensed Consolidated Statements of Operations—Three and Nine Months Ended September 30, 2026 and 2025 | 3 |
| Condensed Consolidated Statements of Comprehensive Loss—Three and Nine Months Ended September 30, 2026 and 2025 | 4 |
| Condensed Consolidated Balance Sheets—September 30, 2026 and December 31, 2025 | 5 |
| Condensed Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2026 and 2025 | 6 |
| Condensed Consolidated Statements of Changes in (Deficit) Equity—Three and Nine Months Ended September 30, 2026 and 2025 | 7 |
| Notes to Condensed Consolidated Financial Statements | 8 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 35 |
Item 4. | Controls and Procedures | 35 |
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Part II. Other Information | | |
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Item 1. | Legal Proceedings | 35 |
Item 1A. | Risk Factors | 36 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 37 |
Item 5. | Other Information | 37 |
Item 6. | Exhibits | 38 |
| Signatures | 39 |
2
Table of Contents
Part I. Financial Information
Item 1. Financial Statements
Accendra Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(unaudited)
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
(in thousands, except per share data) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net revenue | | $ | | | $ | | | $ | | | $ | |
Operating costs and expenses: | | | | | | | | | | | | |
Cost of net revenue | |
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Selling, general and administrative expenses | |
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Transaction breakage fee | |
| — | | | — | |
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Acquisition-related charges and intangible amortization | |
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Exit and realignment charges, net | | | | | | | | | | | | |
Total operating costs and expenses | | | | | | | | | | | | |
Operating income (loss) | |
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| ( | |
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Interest expense, net | |
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Loss on modification and extinguishment of debt | | | — | | | — | | | | | | — |
Transaction financing fees, net | | | — | | | — | | | — | | | |
Other expense, net | |
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Loss from continuing operations before income taxes | |
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Income tax (benefit) provision | |
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Loss from continuing operations, net of tax | | | ( | | | ( | | | ( | | | ( |
Loss from discontinued operations, net of tax | | | ( | | | ( | | | ( | | | ( |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Basic loss per common share: | |
| | | | | | | | |
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Loss from continuing operations, net of tax | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Loss from discontinued operations, net of tax | | | ( | | | ( | | | ( | | | ( |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Diluted loss per common share: | | | | | | | | | | | | |
Loss from continuing operations, net of tax | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Loss from discontinued operations, net of tax | | | ( | | | ( | | | ( | | | ( |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
See accompanying notes to unaudited condensed consolidated financial statements.
3
Table of Contents
Accendra Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss
(unaudited)
| | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
(in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | | ||||
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Other comprehensive (loss) income, net of tax: | |
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Currency translation adjustments | |
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Change in unrecognized net periodic pension costs | |
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Change in gains and losses on derivative instruments | |
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Total other comprehensive (loss) income, net of tax | |
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Comprehensive loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
See accompanying notes to unaudited condensed consolidated financial statements.
4
Table of Contents
Accendra Health, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
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| | September 30, | | December 31, | ||
(in thousands, except per share data) | | 2026 | | 2025 | ||
Assets |
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Current assets |
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Cash and cash equivalents | | $ | | | $ | |
Accounts receivable, net | |
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Inventories, net | |
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Other current assets | |
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Total current assets | |
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Patient service equipment and other fixed assets, net of accumulated depreciation and amortization of $ | |
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Operating lease assets | |
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Goodwill | |
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Intangible assets, net | |
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Other assets, net | |
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Total assets | | $ | | | $ | |
Liabilities and (deficit) equity | |
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Current liabilities | |
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Accounts payable | | $ | | | $ | |
Accrued payroll and related liabilities | |
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Current portion of long-term debt | | | | | | |
Other current liabilities | |
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Total current liabilities | |
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Long-term debt, excluding current portion | |
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Operating lease liabilities, excluding current portion of $ | |
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Other liabilities | |
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Total liabilities | |
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Commitments and contingencies | |
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(Deficit) equity | |
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Common stock, par value $ | |
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Paid-in capital | |
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Accumulated deficit | |
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Accumulated other comprehensive loss | |
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Total deficit | |
| ( | |
| ( |
Total liabilities and deficit | | $ | | | $ | |
See accompanying notes to unaudited condensed consolidated financial statements.
5
Table of Contents
Accendra Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(unaudited)
| | | | | | |
| | Nine Months Ended September 30, | ||||
(in thousands) | | 2026 | | 2025 | ||
Operating activities: | | | | | | |
Net loss | | $ | ( | | $ | ( |
Loss from discontinued operations, net of tax | | | | | | |
Adjustments to reconcile net loss to cash used for operating activities: | |
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Depreciation and amortization | |
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Share-based compensation expense | |
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Deferred income tax benefit | |
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Changes in operating lease right-of-use assets and lease liabilities | |
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Gain from sale of non-core asset | | | ( | | | — |
Gain from sale and dispositions of patient service equipment | |
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Changes in operating assets and liabilities: | |
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Accounts receivable, net | |
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Inventories | |
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Accounts payable | |
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Accrued interest expense | | | | | | |
Accrued payroll and related liabilities | | | ( | | | ( |
Net change in other assets and liabilities | |
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Other, net | |
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Cash used for operating activities from discontinued operations | | | | | | ( |
Cash used for operating activities | |
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Investing activities: | |
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Additions to patient service equipment ($ | |
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Proceeds from sale of patient service equipment | |
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Additions to computer software | |
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Proceeds from sale of non-core asset | | | | | | — |
Other, net | |
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Cash used for investing activities from discontinued operations | | | | | | ( |
Cash provided by (used for) investing activities | |
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Financing activities: | |
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Borrowings under Revolving Credit Agreement | | | | | | |
Repayments under Revolving Credit Agreement | | | ( | | | ( |
Proceeds from debt issuance | | | | | | — |
Repayments of debt | |
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Financing costs paid | | | ( | | | — |
Repurchase of common stock | |
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Other, net | |
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Cash provided by financing activities from discontinued operations | | | — | | | |
Cash (used for) provided by financing activities | |
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Effect of exchange rate changes on cash and cash equivalents | |
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Net decrease in cash and cash equivalents | |
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Cash and cash equivalents at beginning of period | |
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Cash and cash equivalents at end of period | | $ | | | $ | |
Supplemental disclosure of cash flow information: | |
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Income taxes paid, net | | $ | | | $ | |
Interest paid | | $ | | | $ | |
Noncash investing activity: | |
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Unpaid purchases of patient service equipment and other fixed assets at end of period | | $ | | | $ | |
See accompanying notes to unaudited condensed consolidated financial statements.
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Accendra Health, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in (Deficit) Equity
(unaudited)
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| | | | Common | | | | | | | | Accumulated | | | | ||
| | Common | | Stock | | | | | (Accumulated Deficit) | | Other | | | | |||
| | Shares | | ($ | | Paid-In | | Retained | | Comprehensive | | Total | |||||
(in thousands, except per share data) | | Outstanding | | value) | | Capital | | Earnings | | Loss | | (Deficit) Equity | |||||
Balance, December 31, 2025 |
| | | $ | | | $ | | | $ | ( | | $ | ( | | $ | ( |
Net loss |
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Other comprehensive income |
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Share-based compensation expense, exercises and other |
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Balance, March 31, 2026 |
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Net loss |
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Other comprehensive loss |
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Share-based compensation expense, exercises and other |
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Balance, June 30, 2026 |
| | | | | | | | | | ( | | | ( | | | ( |
Net loss |
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Other comprehensive loss |
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Share-based compensation expense, exercises and other |
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Balance, September 30, 2026 |
| | | $ | | | $ | | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | | | | | | |
Balance, December 31, 2024 |
| | | $ | | | $ | | | $ | | | $ | ( | | $ | |
Net loss |
| — | |
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| — | |
| ( | |
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Other comprehensive income |
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Share-based compensation expense, exercises and other |
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Shares repurchased and retired | | ( | | | ( | | | — | | | ( | | | — | | | ( |
Balance, March 31, 2025 |
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Net loss |
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Other comprehensive income |
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Share-based compensation expense, exercises and other |
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Shares repurchased and retired | | ( | | | ( | | | — | | | ( | | | — | | | ( |
Balance, June 30, 2025 |
| | | | | | | | | | ( | | | ( | | | ( |
Net loss |
| — | |
| — | |
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| — | |
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Other comprehensive loss |
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Share-based compensation expense, exercises and other |
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Balance, September 30, 2025 |
| | | $ | | | $ | | | $ | ( | | $ | ( | | $ | ( |
See accompanying notes to unaudited condensed consolidated financial statements.
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Table of Contents
Accendra Health, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in thousands, except per share data, unless otherwise indicated)
Note 1—Summary of Significant Accounting Policies
Basis of Presentation and Consolidation. The unaudited condensed consolidated financial statements include the accounts of Accendra Health, Inc. (f/k/a Owens & Minor, Inc.) and the subsidiaries it controls (collectively, the Company, we, us, or our) and contain all adjustments necessary to conform with U.S. generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. Our continuing operations’ business activities comprise a single operating and reporting segment. This determination is in accordance with ASC 280, Segment Reporting.
Reclassifications. Certain prior period amounts have been reclassified to conform to current year presentation.
Discontinued Operations. 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 (the Purchaser Parent) to sell the P&HS business, for an aggregate of $
The P&HS business was initially classified as discontinued operations and assets held for sale as of June 30, 2025. In accordance with GAAP, the financial position and results of operations of the P&HS business are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. With the exception of Note 2, the Notes to Condensed Consolidated Financial Statements reflect the continuing operations of the Company unless otherwise noted. See Note 2 for additional information regarding discontinued operations.
Use of Estimates. The preparation of consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures. Significant estimates are used for, but are not limited to, variable consideration, depreciation and amortization, goodwill valuation, valuation of intangible assets and other long-lived assets, self-insurance liabilities, tax liabilities, defined benefit obligations, share-based compensation and other contingencies. Actual results may differ from these estimates.
Accounts Receivable, Net. Due to the nature of our industry and the reimbursement environment in which we operate, certain estimates are required to record net revenue and accounts receivable at their net realizable values, including estimating variable consideration. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements, contractual terms, and the uncertainty of reimbursement amounts for certain services may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application, claim amount or account review.
Included in accounts receivable were earned but unbilled receivables of $
Receivables Sale Program. On October 18, 2024, we entered into a Receivables Purchase Agreement (the Receivables Sale Program) with persons from time to time, as Purchasers, PNC Bank, National Association, as
8
Table of Contents
Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent, pursuant to which accounts receivable with an aggregate outstanding amount not to exceed $
Proceeds from the sales of accounts receivable were recorded as an increase to cash and cash equivalents and a reduction to accounts receivable, net in the condensed consolidated balance sheets. Cash received from the sales of accounts receivable is reflected in the change in accounts receivable, net within cash used for operating activities in the condensed consolidated statements of cash flows. Total accounts receivable sold and net cash proceeds under the Receivables Sale Program were $
Amended Receivables Sale Program. On December 31, 2025, Accendra Funding LLC (Accendra Funding) and Byram Healthcare Centers, Inc. (Byram), each a wholly owned subsidiary of the Company, 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 are sold, on a limited-recourse basis, to the Purchasers in exchange for cash in an aggregate outstanding amount not to exceed $
Transactions under this agreement are accounted for as sales in accordance with ASC 860, Transfers and Servicing, with the sold receivables removed from our condensed consolidated balance sheets. Under the Amended Receivables Sale Program, we provide certain servicing and collection actions on behalf of the Purchasers; however, we do not maintain any beneficial interest in the accounts receivable sold. The Amended Receivables Sale Program has a scheduled termination date of October 18, 2027.
Total accounts receivable sold under the Amended Receivables Sale Program were $
Revenue Recognition. Revenues are generated through fee-for-service and capitation arrangements with large government and commercial payors (each, a Payor and collectively Payors) for equipment, supplies, services and other items rented and sold to customers. Revenue for sales of products, including equipment and supplies, is recognized when control of the promised goods is transferred to customers and is presented net of applicable sales taxes. Revenue generated from equipment that we rent to customers is primarily recognized as earned on a straight-line basis over the non-cancellable rental period, typically one month, and commences on delivery of the equipment to the customers.
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Certain revenues are recognized under arrangements with third-party payors for which we stand ready to provide all necessary healthcare services to members for the period of the stand ready obligation which generally extends beyond one year. These agreements are generally referred to as capitation arrangements. Revenue is recognized over the month that the members are entitled to healthcare services using the monthly contractual rate for each covered member. The actual number of covered members may vary each month. Capitation payments are typically received in the month members are entitled to healthcare services. Revenue for these agreements amounted to $
Fee-for-service arrangement revenues are recorded only to the extent it is probable that a significant reversal will not occur in the future as amounts may include implicit price concessions under reimbursement arrangements with third-party payors, including private insurers, prepaid health plans, Medicare, Medicaid and customers. Revenue is recognized under a portfolio approach, as we expect that this approach would not differ materially from considering each contract or performance obligation separately. We use the expected value method in determining the variable consideration as part of determining the sales transaction price using historical reimbursement experience, historical sales returns, and other operating trends. Payment terms and conditions vary by contract. Sales of equipment and supplies inclusive of amounts recognized under capitation arrangements were $
The following table summarizes net revenue by product category for the three and nine months ended September 30, 2026 and 2025:
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Diabetes | | $ | | | $ | | | $ | | | $ | |
Sleep therapy | | | | | | | | | | | | |
Home respiratory therapy | | | | | | | | | | | | |
Ostomy | | | | | | | | | | | | |
Wound care | | | | | | | | | | | | |
Urology | | | | | | | | | | | | |
Other | |
| | | | | |
| | | | |
Net revenue | | $ | | | $ | | | $ | | | $ | |
The following table summarizes net revenue by payor type for the three and nine months ended September 30, 2026 and 2025:
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Commercial payors (1) | | $ | | | $ | | | $ | | | $ | |
Medicare | | | | | | | | | | | | |
Medicaid | | | | | | | | | | | | |
Net revenue | | $ | | | $ | | | $ | | | $ | |
(1) Commercial payors includes revenue from Medicare Advantage plans.
Cost of Net Revenue. Cost of net revenue includes the cost of products sold, patient service equipment depreciation expense, and other costs which are primarily personnel costs related to the set-up and utilization of equipment. Cost of products sold includes non-cash expenses primarily for equipment converted from rental to sales in
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the amount of $
The following table summarizes cost of net revenue for the three and nine months ended September 30, 2026 and 2025:
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Cost of products sold | | $ | | | $ | | | $ | | | $ | |
Patient service equipment depreciation | | | | | | | | | | | | |
Other costs | | | | | | | | | | | | |
Cost of net revenue | | $ | | | $ | | | $ | | | $ | |
Acquisition-Related Charges and Intangible Amortization. Acquisition-related charges consist primarily of one-time costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees. Acquisition-related charges and intangible amortization also include amortization of intangible assets established during acquisition method of accounting for business combinations. These amounts are highly dependent on the size and frequency of acquisitions. For the three and nine months ended September 30, 2026, we incurred
Other Current Liabilities. Other current liabilities include $
Fair Value. Fair value is determined based on assumptions that a market participant would use in pricing an asset or liability. The assumptions used are in accordance with a three-tier hierarchy, defined by GAAP, that draws a distinction between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the use of present value and other valuation techniques in the determination of fair value (Level 3).
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued payroll and related liabilities reported in the condensed consolidated balance sheets approximate fair value due to the short-term nature of these instruments. When a quantitative goodwill test is performed, the estimated fair value of our reporting unit is determined with the use of unobservable inputs (Level 3). As compared to the date of the most recent quantitative goodwill test, there have been adverse changes, including a decrease in our market capitalization and the fair value of our debt. If significant adverse changes occur, including a further decrease in our market capitalization and the fair value of our debt, an increase in the discount rate, a failure to meet our business plans or expected earnings and cash flows, and other unanticipated events and circumstances we may be required to record a material charge to earnings in our condensed consolidated financial statements during the period in which any impairment of our goodwill is determined, which could adversely affect our results of operations.
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The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2). See Note 5 for the fair value of debt. The fair values of our derivative contracts are determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows. See Note 6 for the fair value of derivatives.
Note 2—Discontinued Operations
As described in Note 1, 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. The P&HS business was initially classified as discontinued operations and assets held for sale as of June 30, 2025. Accordingly, the results of operations from our P&HS business are reported in the accompanying condensed consolidated statements of operations as loss from discontinued operations, net of tax for the three and nine months ended September 30, 2026 and September 30, 2025. We have allocated interest expense, net to discontinued operations as a ratio of net assets and total debt in accordance with ASC 205, Presentation of Financial Statements.
On December 31, 2025, we received cash proceeds of $
We agreed to reimburse the Purchaser and its affiliates for
We and the Purchaser provide certain transition services to the other party pursuant to a certain customary transition services agreement (the TSA). Pursuant to the terms of the TSA, we have agreed that, in certain circumstances, we may be obligated to provide up to $
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The following table summarizes the financial results of our discontinued operations for the three and nine months ended September 30, 2026 and September 30, 2025:
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net revenue | | $ | — | | $ | | | $ | — | | $ | |
Cost of goods sold | | | — | |
| | | | — | | | |
Gross profit | | | — | | | | | | — | | | |
Distribution, selling, and administrative expenses | | | — | | | | | | — | | | |
Acquisition-related charges and intangible amortization | | | — | | | — | | | — | | | |
Exit and realignment charges, net | | | — | | | | | | — | | | |
Goodwill impairment charge | | | — | | | — | | | — | | | |
Purchase price adjustment | | | | | | — | | | | | | — |
Loss on classification to held for sale | | | — | | | | | | — | | | |
Other operating expense, net | | | — | |
| | | | — | | | |
Operating loss | | | ( | | | ( | | | ( | | | ( |
Interest expense, net | | | — | |
| | | | — | | | |
Other expense | | | — | |
| | | | — | | | |
Loss from discontinued operations before income taxes | | | ( | | | ( | | | ( | | | ( |
Income tax benefit for discontinued operations | | | ( | |
| ( | | | ( | | | ( |
Loss from discontinued operations, net of tax | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Receivables Sale Program. Total accounts receivable sold and net cash proceeds under the Receivables Sale Program were $
Note 3—Goodwill and Intangible Assets, Net
At September 30, 2026 and December 31, 2025, we had goodwill of $
Intangible assets, net subject to amortization at September 30, 2026 and December 31, 2025 were as follows:
| | | | | | | | | | | | | | | | | | | |
| | September 30, 2026 | | December 31, 2025 | | ||||||||||||||
| | Customer | | | | | Other | | Customer | | | | | Other | | ||||
| | Relationships | | Tradenames | | Intangibles | | Relationships | | Tradenames | | Intangibles | | ||||||
Intangible assets, gross | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | |
Accumulated amortization | |
| ( | |
| ( | |
| ( | |
| ( | |
| ( | |
| ( | |
Intangible assets, net | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | |
Weighted average useful life | |
| |
| |
| |
| |
| |
| | ||||||
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Amortization expense for intangible assets was $
As of September 30, 2026, based on the current carrying value of intangible assets subject to amortization and expected remaining useful life, estimated amortization expense was as follows:
| | | |
Year | | | |
2026 (remainder) | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| |
Thereafter | | | |
Total future amortization | | $ | |
Note 4—Exit and Realignment Charges, Net
We incur exit and realignment and other charges associated with optimizing our operations which include IT strategic initiatives and other strategic actions, professional fees, severance and other costs to streamline functions and enhance processes and separation costs. Separation costs primarily consist of professional fees including costs reimbursable to the Purchaser as described in Note 2 and other wind-down costs incurred after the sale of the P&HS business. These costs are not normal recurring, cash operating expenses necessary for the Company to operate its business on an ongoing basis. We may incur future material costs, which we are not able to reasonably estimate.
Exit and realignment charges, net were $
As a result of the sale of our P&HS business, we have incurred $
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The following table summarizes the activity related to exit and realignment cost accruals, which are generally classified as other current liabilities or accounts payable in our condensed consolidated balance sheets, through September 30, 2026 and 2025:
| | | |
| | Total | |
Accrued exit and realignment costs, December 31, 2025 | | $ | |
Provision for exit and realignment activities: | |
| |
P&HS Sale separation costs, professional fees and other | |
| |
Professional fees | |
| |
IT and other strategic initiatives | | | |
Cash payments | |
| ( |
Accrued exit and realignment costs, March 31, 2026 | |
| |
Provision for exit and realignment activities: | |
| |
P&HS Sale separation costs, professional fees and other | |
| |
Professional fees | |
| |
IT and other strategic initiatives | |
| |
Cash payments | |
| ( |
Accrued exit and realignment costs, June 30, 2026 | | | |
Provision for exit and realignment activities: | | | |
P&HS Sale separation costs, professional fees and other | | | |
Professional fees | | | |
IT and other strategic initiatives | | | |
Cash payments | | | ( |
Accrued exit and realignment costs, September 30, 2026 | | $ | |
| | | |
Accrued exit and realignment costs, December 31, 2024 | | $ | |
Provision for exit and realignment activities: | | | |
Professional fees | | | |
IT strategic initiatives and other | | | |
Cash payments | | | ( |
Accrued exit and realignment costs, March 31, 2025 | |
| |
Provision for exit and realignment activities: | | | |
Professional fees | | | |
IT strategic initiatives and other | | | |
Cash payments | | | ( |
Accrued exit and realignment costs, June 30, 2025 | | | |
Provision for exit and realignment activities: | | | |
Professional fees | | | |
IT strategic initiatives and other | | | |
Cash payments | | | ( |
Accrued exit and realignment costs, September 30, 2025 | | $ | |
In addition to the exit and realignment accruals in the preceding table, exit and realignment charges, net included (gains) and costs that were recognized as incurred including a $(
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Note 5—Debt
Debt, net of unamortized deferred financing costs, as of September 30, 2026 and December 31, 2025 consisted of the following:
| | | | | | | | | | | | |
| | September 30, 2026 | | December 31, 2025 | ||||||||
| | Carrying | | Estimated | | Carrying | | Estimated | ||||
| | Amount | | Fair Value | | Amount | | Fair Value | ||||
Term Loan A | | $ | — | | $ | — | | $ | | | $ | |
Revolving Credit Agreement | | | | | | | | | | | | |
|
| | | | | |
| | |
| | |
Term Loan B | |
| | | | | |
| | |
| |
|
| | | | | |
| | |
| | |
| | | | | | | | — | | | — | |
| | | | | | | | — | | | — | |
Total debt | |
| | |
| | |
| | |
| |
Less current maturities, including anticipated repayments | |
| ( | |
| ( | |
| ( | |
| ( |
Long-term debt | | $ | | | $ | | | $ | | | $ | |
On March 29, 2022, we entered into a term loan credit agreement with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (the Credit Agreement) that provided for
In June 2026, we exchanged and/or extended a substantial portion of our debt (the Balance Sheet Optimization Transaction). Pursuant to exchange offers (the Exchange Offers) for our outstanding
In connection with the Exchange Offers for the 2029 Notes, we offered $
At the expiration of the Exchange Offers, $
The 2032 Notes bear interest at a rate of
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in the First Lien Indenture. On and after June 15, 2029, we may redeem all or part of the 2032 Notes at the applicable redemption prices described in the First Lien Indenture.
The 2032 Notes will mature in June 2032 and have $
The 2033 Notes bear interest at a rate of
The 2033 Notes will mature in June 2033 and have $
The completion of the Balance Sheet Optimization Transaction resulted in a loss on modification and extinguishment of debt of $
On June 15, 2026, we entered into an amendment, extending the maturity date to January 2030 with potential springing maturities, the earliest being December 2028, to our revolving credit agreement, dated as of March 10, 2021 and with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (the Revolving Credit Agreement). The amendment decreased the aggregate revolving credit commitments under the Revolving Credit Agreement by $
At September 30, 2026 and December 31, 2025, we had $
The Revolving Credit Agreement, the Credit Agreement, the 2032 Notes and the 2033 Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of any of the related agreements. The terms of the applicable credit agreements also require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition or divestiture. We were in compliance with our debt covenants at September 30, 2026.
As of September 30, 2026, future principal payments due under our debt agreements were as follows:
| | | |
Year | | | |
2026 (remainder) | | $ | |
2027 | |
| — |
2028 | |
| — |
2029 | |
| |
2030 | |
| |
2031 | | | — |
2032 | |
| |
2033 | |
| |
Current maturities at September 30, 2026 include $
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Note 6—Derivatives
We are directly and indirectly affected by changes in interest rates, which may adversely impact our financial performance and are referred to as “market risks.” When deemed appropriate, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks. We do not enter into derivative financial instruments for trading purposes.
We voluntarily terminated our interest rate swap in May 2026, which resulted in a cash receipt of $
The following table summarizes the terms and fair value of our outstanding cash flow hedge as of December 31, 2025:
| | | |
| | December 31, 2025 | |
Notional Amount | | $ | |
Derivative Assets Fair Value | | $ | |
Derivative Liabilities Fair Value | | $ | — |
Maturity Date | | | March 2027 |
Classification | | | Other assets, net |
The following table summarizes the effect of cash flow hedge accounting on our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025:
| | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | | ||||
Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | | $ | — | | $ | | | $ | | | $ | ( | |
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income | | Interest expense, net | | Interest expense, net | | Interest expense, net | | Interest expense, net | | ||||
Total Amount of Expense Line Items Presented in the Condensed Consolidated Statements of Operations in Which the Effects are Recorded | | $ | | | $ | | | $ | | | $ | | |
Amount of Gain Reclassified from Accumulated Other Comprehensive Loss into Income | | $ | | | $ | | | $ | | | $ | | |
The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.
Note 7—Income Taxes
The effective tax rate was
The liability for unrecognized tax benefits was $
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The deferred tax asset balance within other assets, net on our condensed consolidated balance sheets was $
On August 26, 2020, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service (IRS) regarding our 2015 and 2016 consolidated income tax returns. On June 30, 2021, we received a NOPA from the IRS regarding our 2017 and 2018 consolidated income tax returns. Within the NOPAs, the IRS has asserted that our taxable income for the aforementioned years should be higher based on their assessment of the appropriate amount of taxable income that we should report in the U.S. in connection with the sourcing of products by our former foreign subsidiaries for sale in the U.S. by our former domestic subsidiaries. These former foreign and domestic subsidiaries were sold as part of the P&HS Sale. The transfer pricing methodology was consistently applied for all years subject to the NOPAs and 2019 into 2022, but is no longer employed.
In June 2024, the IRS and the relevant foreign taxing authority mutually agreed to proposed adjustments to our 2015 through 2018 consolidated tax returns. As a result, we remeasured the uncertain tax position for the 2015 through 2018 tax years, as well as the affected 2019 through 2022 tax years, to the amount expected to be paid upon a final agreement with the IRS. In June 2025, we received the final assessment from the IRS for the 2015 through 2018 tax years, including interest. The uncertain tax position for these years and related accrued interest have been remeasured to reflect the final amount to be paid. This matter does not impact any tax years subsequent to 2022. In March 2026, we paid $
Note 8—Net Loss per Common Share
The following summarizes the calculation of net loss per common share attributable to common shareholders for the three and nine months ended September 30, 2026 and 2025:
| | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 30, | | September 30, | | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | | ||||
Loss from continuing operations, net of tax | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Loss from discontinued operations, net of tax | | | ( | | | ( | | | ( | | | ( | |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
| | | | | | | | | | | | | |
Weighted average shares outstanding - basic | |
| | |
| | |
| | |
| | |
Dilutive shares | |
| | |
| | |
| | |
| | |
Weighted average shares outstanding - diluted | |
| | |
| | |
| | |
| | |
| | | | | | | | | | | | | |
Basic loss per common share: | |
| | |
| | |
| | |
| | |
Loss from continuing operations, net of tax | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Loss from discontinued operations, net of tax | | | ( | | | ( | | | ( | | | ( | |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
| | | | | | | | | | | | | |
Diluted loss per common share: | | | | | | | | | | | | | |
Loss from continuing operations, net of tax | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Loss from discontinued operations, net of tax | | | ( | | | ( | | | ( | | | ( | |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Share-based awards of approximately
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Note 9—Shareholders’ Equity
On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $
During the three and nine months ended September 30, 2026, we did
Note 10—Accumulated Other Comprehensive (Loss) Income
The following table shows the changes in accumulated other comprehensive (loss) income by component for the three and nine months ended September 30, 2026 and 2025:
| | | | | | | | | | | | |
| | | | | Currency | | | | | | | |
| | Retirement | | Translation | | | | | | | ||
| | Plans | | Adjustments | | Derivatives | | Total | ||||
Accumulated other comprehensive (loss) income, June 30, 2026 | | $ | ( | | $ | ( | | $ | | | $ | ( |
Other comprehensive income (loss) before reclassifications | |
| | | | | | | | |
| |
Income tax | |
| ( | | | | | | | |
| ( |
Other comprehensive income (loss) before reclassifications, net of tax | |
| | |
| | |
| | |
| |
Amounts reclassified from accumulated other comprehensive income (loss) | |
| | | | | | | ( | |
| ( |
Income tax | |
| | | | | | | | |
| |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | |
| | |
| | |
| ( | |
| ( |
Other comprehensive income (loss) | |
| | |
| | |
| ( | |
| ( |
Accumulated other comprehensive (loss) income, September 30, 2026 | | $ | ( | | $ | ( | | $ | | | $ | ( |
| | | | | | | | | | | | |
| | | | | Currency | | | | | | | |
| | Retirement | | Translation | | | | | | | ||
| | Plans | | Adjustments | | Derivatives | | Total | ||||
Accumulated other comprehensive (loss) income, June 30, 2025 | | $ | ( | | $ | ( | | $ | | | $ | ( |
Other comprehensive income (loss) before reclassifications | |
| | |
| | |
| | |
| |
Income tax | |
| ( | |
| | |
| ( | |
| ( |
Other comprehensive income (loss) before reclassifications, net of tax | |
| | |
| | |
| | |
| |
Amounts reclassified from accumulated other comprehensive income (loss) | |
| | |
| | |
| ( | |
| ( |
Income tax | |
| ( | |
| | |
| | |
| |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | |
| | |
| | |
| ( | |
| ( |
Other comprehensive income (loss) | |
| | |
| | |
| ( | |
| ( |
Accumulated other comprehensive (loss) income, September 30, 2025 | | $ | ( | | $ | ( | | $ | | | $ | ( |
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| | | | | | | | | | | | |
| | | | | Currency | | | | | | | |
| | Retirement | | Translation | | | | | | | ||
| | Plans | | Adjustments | | Derivatives | | Total | ||||
Accumulated other comprehensive (loss) income, December 31, 2025 | | $ | ( | | $ | — | | $ | | | $ | ( |
Other comprehensive income (loss) before reclassifications | |
| | |
| ( | |
| | |
| |
Income tax | |
| ( | |
| — | |
| ( | |
| ( |
Other comprehensive income (loss) before reclassifications, net of tax | |
| | |
| ( | |
| | |
| |
Amounts reclassified from accumulated other comprehensive income (loss) | |
| — | |
| — | |
| ( | |
| ( |
Income tax | |
| — | |
| — | |
| | |
| |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | |
| — | |
| — | |
| ( | |
| ( |
Other comprehensive income (loss) | |
| | |
| ( | |
| ( | |
| ( |
Accumulated other comprehensive (loss) income, September 30, 2026 | | $ | ( | | $ | ( | | $ | | | $ | ( |
| | | | | | | | | | | | |
| | | | | Currency | | | | | | | |
| | Retirement | | Translation | | | | | | | ||
| | Plans | | Adjustments | | Derivatives | | Total | ||||
Accumulated other comprehensive (loss) income, December 31, 2024 | | $ | ( | | $ | ( | | $ | | | $ | ( |
Other comprehensive income (loss) before reclassifications | |
| | |
| | |
| ( | |
| |
Income tax | |
| ( | |
| — | |
| | |
| |
Other comprehensive income (loss) before reclassifications, net of tax | |
| | |
| | |
| ( | |
| |
Amounts reclassified from accumulated other comprehensive income (loss) | |
| | |
| — | |
| ( | |
| ( |
Income tax | |
| ( | |
| — | |
| | |
| |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | |
| | |
| — | |
| ( | |
| ( |
Other comprehensive income (loss) | |
| | |
| | |
| ( | |
| |
Accumulated other comprehensive (loss) income, September 30, 2025 | | $ | ( | | $ | ( | | $ | | | $ | ( |
We include amounts reclassified out of accumulated other comprehensive (loss) income related to defined benefit pension plans as a component of net periodic pension cost recorded in other expense, net.
Note 11—Segment Information
As described in Note 1, the P&HS Sale was completed on December 31, 2025, and we no longer report the P&HS business within continuing operations. The P&HS business was initially classified as discontinued operations and assets held for sale as of June 30, 2025. Our President and Chief Executive Officer is the chief operating decision maker (CODM). The CODM reviews financial information about the continuing operations business at an enterprise-wide consolidated level when allocating resources and assessing business performance. Accordingly, we have determined that our business activities comprise a single operating and reporting segment. Income (loss) from continuing operations, net of tax is the profit or loss measure used by the CODM that is most consistent with GAAP and therefore is the required measure of profitability.
Note 12—Commitments, Contingent Liabilities, and Legal Proceedings
Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 for disclosure of other material contractual obligations.
We are party to various legal claims that are ordinary and incidental to our business, including claims related to commercial disputes, employment, workers’ compensation, product liability, regulatory and other matters. We maintain insurance coverage for employment, product liability, workers’ compensation and other personal injury litigation
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matters, subject to policy limits, applicable deductibles and insurer solvency. We establish reserves from time to time based upon periodic assessment of the potential outcomes of pending matters.
Based on current knowledge and the advice of counsel, we believe that the accrual as of September 30, 2026 for currently pending matters considered probable of loss is sufficient. In addition, we believe that other currently pending matters are not reasonably possible to result in a material loss, as payment of the amounts claimed is remote, the claims are immaterial, individually and in the aggregate, or the claims are expected to be adequately covered by insurance, subject to policy limits, applicable deductibles, exclusions and insurer solvency.
Note 13—Recent Accounting Pronouncements
Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 for disclosure of recent accounting pronouncements.
Note 14—Subsequent Events
On October 29, 2026, Accendra Funding and Byram entered into the Third Amendment to the Amended & Restated Receivables Purchase Agreement (the RPA Amendment), which amends the Amended Receivables Sale Program. The RPA Amendment extended the scheduled termination date from October 2027 until October 2029, with standard contingencies, and revises account control provisions and reporting obligations.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Sale of Products & Healthcare Services Business
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 (the 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, which is reflected in other assets, net on our condensed consolidated balance sheets.
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 2, the Notes to Condensed Consolidated Financial Statements reflect the continuing operations of Accendra Health, Inc. unless otherwise noted. See Note 2 in the Notes to Condensed Consolidated Financial Statements for additional information regarding discontinued operations.
Overview
Accendra Health, Inc., along with its subsidiaries, (collectively, the Company, we, us, or our) is a leading nationwide provider of products, technology, and services that supports health beyond the hospital for millions of people each year. As discussed within Note 1 in the Notes to Condensed Consolidated Financial Statements, our business activities comprise a single operating and reporting segment.
Loss from continuing operations, net of tax per common share was $(0.23) for the three months ended September 30, 2026 as compared to $(0.07) for the three months ended September 30, 2025. Our financial results for the three months ended September 30, 2026 as compared to the prior year were impacted by a decrease in net revenue of $95 million, an increase in interest expense, net of $8.6 million and an increase in exit and realignment charges, net of $4.9 million, partially offset by a decrease in cost of net revenue of $35 million, a decrease in acquisition-related charges and intangible amortization of $24 million, a decrease in the income tax provision of $21 million and lower selling, general, and administrative expenses (SG&A) of $16 million.
Loss from continuing operations, net of tax per common share was $(1.48) for the nine months ended September 30, 2026 as compared to $(1.21) for the nine months ended September 30, 2025. Our financial results for the nine months ended September 30, 2026 as compared to prior year were impacted by a decrease in net revenue of $210 million, an increase in interest expense, net of $25 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 $48 million, a decrease in cost of net revenue of $47 million, a decrease in the income tax provision of $26 million and lower exit and realignment charges, net of $9.1 million.
Refer to “Results of Operations” for further detail of quantitative and qualitative drivers of our results.
Balance Sheet Optimization Transaction
In June 2026, we exchanged and/or extended a substantial portion of our debt (the Balance Sheet Optimization Transaction). Pursuant to exchange offers (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 2032 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
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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 cancelled 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 September 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 September 30, 2026. The 2033 Notes will mature in June 2033 and have $698 million of principal outstanding excluding unamortized deferred financing costs as of September 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.
Contract Termination with a Commercial Payor and Equipment Sales
A commercial Payor, with which we had multiple separately managed contracts, has 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. Such transitions of agreements and services were completed throughout the first half of 2026. The terminated portion of this relationship reflected $37 million, or 2%, of our net revenue, including nearly all of our capitation revenue, for the nine months ended September 30, 2026. There was no related revenue for the three months ended September 30, 2026.
In connection with this contract termination, we sold $85 million of patient service equipment during the nine months ended September 30, 2026, which resulted in a $(51) million gain on sales of patient service equipment within exit and realignment charges, net on our condensed consolidated statements of operations. The proceeds from the sales 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.
Leadership Transition
On October 5, 2026, Kenneth Gardner-Smith succeeded Edward A. Pesicka as President and Chief Executive Officer. Mr. Gardner-Smith has served on our Board of Directors since March 2022 and continues to serve as a director. In connection with the transition, Mr. Pesicka retired from the Board of Directors and entered into a consulting agreement with us, under which he will serve as an advisor for up to thirty months to support the transition. Also on October 5, 2026, Scott Lloyd joined the Company as Chief Commercial Officer, a newly created role that brings commercial strategy, sales, and provider and payor partnerships under a single leader. On October 28, 2026 Mr. Lloyd was appointed as an officer of the Company.
Results of Operations
The following discussion and analysis describes results of operations and material changes in the financial condition of the Company 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.
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Net revenue.
| | | | | | | | | | | | | |
| | Three Months Ended | | | | | |
| | ||||
| | September 30, | | Change |
| | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % |
| | |||
Diabetes | | $ | 195,615 | | $ | 201,372 |
| $ | (5,757) | | (2.9) | % | |
Sleep therapy | |
| 144,487 | |
| 185,799 |
| | (41,312) | | (22.2) | % | |
Home respiratory therapy | | | 88,947 | | | 107,256 | | | (18,309) | | (17.1) | % | |
Ostomy | | | 55,227 | | | 53,274 | | | 1,953 | | 3.7 | % | |
Wound care | | | 41,603 | | | 48,001 | | | (6,398) | | (13.3) | % | |
Urology | | | 28,710 | | | 28,976 | | | (266) | | (0.9) | % | |
Other | | | 47,186 | | | 72,586 | | | (25,400) | | (35.0) | % | |
Net revenue | | $ | 601,775 | | $ | 697,264 |
| $ | (95,489) | | (13.7) | % | |
| | | | | | | | | | | | | |
| | Nine Months Ended | | | | | |
| | ||||
| | September 30, | | Change |
| | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % | | | |||
Diabetes | | $ | 580,222 | | $ | 579,788 | | $ | 434 | | 0.1 | % | |
Sleep therapy | |
| 460,433 | |
| 549,280 | | | (88,847) | | (16.2) | % | |
Home respiratory therapy | | | 277,297 | | | 325,388 | | | (48,091) | | (14.8) | % | |
Ostomy | | | 162,239 | | | 154,666 | | | 7,573 | | 4.9 | % | |
Wound care | | | 121,239 | | | 141,469 | | | (20,230) | | (14.3) | % | |
Urology | | | 89,796 | | | 85,815 | | | 3,981 | | 4.6 | % | |
Other | | | 151,563 | | | 216,659 | | | (65,096) | | (30.0) | % | |
Net revenue | | $ | 1,842,789 | | $ | 2,053,065 | | $ | (210,276) | | (10.2) | % | |
The decrease in net revenue for the three and nine months ended September 30, 2026 was primarily driven by an $82 million and $205 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 September 30, 2026, excluding the impact of the commercial Payor contract termination and the sold non-core asset, notable drivers of the net revenue decline by product category included home respiratory therapy of $6.3 million, diabetes of $5.8 million, wound care of $2.6 million, and urology of $0.3 million, partially offset by growth in sleep therapy of $5.6 million and ostomy of $2.0 million.
For the nine months ended September 30, 2026, excluding the impact of the commercial Payor contract termination and the sold non-core asset, notable drivers of the net revenue decline by product category included home respiratory therapy of $16 million and wound care of $11 million, partially offset by growth in sleep therapy of $15 million, ostomy of $7.6 million and urology of $4.0 million.
Cost of net revenue.
| | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | ||||
| | September 30, | | Change | | | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % | | | |||
Cost of products sold | | $ | 305,214 | | $ | 337,649 | | $ | (32,435) | | (9.6) | % | |
Patient service equipment depreciation | | | 30,278 | | | 31,694 | | | (1,416) | | (4.5) | % | |
Other costs | | | 4,977 | | | 5,724 | | | (747) | | (13.1) | % | |
Cost of net revenue | | $ | 340,469 | | $ | 375,067 | | $ | (34,598) | | (9.2) | % | |
As a % of net revenue | | | 56.6 | % | | 53.8 | % | | | | | | |
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| | | | | | | | | | | | | |
| | Nine Months Ended | | | | | | | | ||||
| | September 30, | | Change | | | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | | $ | | % | | | ||
Cost of products sold | | $ | 932,118 | | $ | 974,554 | | $ | (42,436) | | (4.4) | % | |
Patient service equipment depreciation | | | 92,162 | | | 95,260 | | | (3,098) | | (3.3) | % | |
Other costs | | | 15,769 | | | 17,210 | | | (1,441) | | (8.4) | % | |
Cost of net revenue | | $ | 1,040,049 | | $ | 1,087,024 | | $ | (46,975) | | (4.3) | % | |
As a % of net revenue | | | 56.4 | % | | 52.9 | % | | | | | | |
The decrease in cost of net revenue for the three and nine months ended September 30, 2026 reflects the lower cost associated with net revenue decline of 13.7% and 10.2%. The increase in cost of net revenue as a percentage of net revenue for the three and nine months ended September 30, 2026 reflected lower collection rates.
Operating expenses.
| | | | | | | | | | | | | |
| | Three Months Ended | | | | | |
| | ||||
| | September 30, | | Change | | | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % |
| | |||
Selling, general and administrative expenses | | $ | 249,463 | | $ | 265,838 | | $ | (16,375) | | (6.2) | % | |
As a % of net revenue |
| | 41.5 | % | | 38.1 | % |
| | | | | |
Acquisition-related charges and intangible amortization | | $ | 4,975 | | $ | 29,229 | | $ | (24,254) | | (83.0) | % | |
Exit and realignment charges, net | | $ | 5,534 | | $ | 660 | | $ | 4,874 | | 738.5 | % | |
| | | | | | | | | | | | | |
| | Nine Months Ended | | | | | |
| | ||||
| | September 30, | | Change |
| | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % |
| | |||
Selling, general and administrative expenses | | $ | 748,248 | | $ | 796,061 | | $ | (47,813) | | (6.0) | % | |
As a % of net revenue | |
| 40.6 | % |
| 38.8 | % |
| | | | | |
Transaction breakage fee | | $ | — | | $ | 80,000 | | $ | (80,000) | | NM | | |
Acquisition-related charges and intangible amortization | | $ | 63,433 | | $ | 66,603 | | $ | (3,170) | | (4.8) | % | |
Exit and realignment charges, net | | $ | 7,750 | | $ | 16,826 | | $ | (9,076) | | (53.9) | % | |
NM - Not meaningful | | | | | | | | | | | | | |
The decrease in SG&A for the three and nine months ended September 30, 2026 was driven primarily by a reduction in net revenue of $95 million and $210 million and realized personnel and other savings 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 nine months ended September 30, 2025 for the termination of the Rotech acquisition.
Acquisition-related charges were $22 million for the nine months ended September 30, 2025 related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees. Intangible amortization was $5.0 million and $63 million for the three and nine months ended September 30, 2026 and $29 million and $44 million for the three and nine months ended September 30, 2025 relating to intangible assets acquired in the Apria and Byram acquisitions. The change in amortization expense for the three and nine months ended September 30, 2026 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 a commercial Payor. As of June 30, 2026, this customer relationship intangible asset had been fully amortized and removed from our condensed consolidated balance sheet.
Exit and realignment charges, net were $5.5 million and $7.8 million for the three and nine months ended September 30, 2026 and primarily included a $(33) million gain on the sale of a non-core asset in each period and $34 million and $82 million of P&HS Sale related costs, inclusive of $30 million and $65 million of reimbursable separation costs, $1.4 million and $3.9 million of professional fees, and $2.9 million and $5.9 million of and charges related to IT and other strategic initiatives. Exit and realignment charges, net for the nine months ended September 30, 2026 also included a $(51) million gain on sales of patient service equipment in connection with the contract termination with the
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commercial Payor described above. Exit and realignment charges, net were $0.7 million and $17 million for the three and nine months ended September 30, 2025. These charges included professional fees associated with strategic initiatives of $0.1 million and $8.2 million and charges related to IT strategic initiatives of $0.4 million and $0.9 million for the three and nine months ended September 30, 2025. For the nine months ended September 30, 2025, exit and realignment charges, net also included $6.8 million related to wind-down costs of Fusion5.
Non-operating expenses.
| | | | | | | | | | | | |
| | Three Months Ended | | | | | |
| ||||
| | September 30, | | Change | | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Interest expense, net | | $ | 37,621 | | $ | 29,029 | | $ | 8,592 | | 29.6 | % |
Effective interest rate | | | 8.2 | % | | 6.9 | % | | | | | |
Other expense, net | | $ | 532 | | $ | 1,076 | | $ | (544) | | (50.6) | % |
| | | | | | | | | | | | |
| | Nine Months Ended | | | | | |
| ||||
| | September 30, | | Change |
| |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % |
| |||
Interest expense, net | | $ | 104,509 | | $ | 79,252 | | $ | 25,257 | | 31.9 | % |
Effective interest rate | | | 7.2 | % | | 7.0 | % | | | | | |
Loss on modification and extinguishment of debt | | $ | 17,296 | | $ | — | | $ | 17,296 | | NM | |
Transaction financing fees, net | | $ | — | | $ | 18,288 | | $ | (18,288) | | NM | |
Other expense, net | | $ | 2,197 | | $ | 2,993 | | $ | (796) | | (26.6) | % |
NM - Not meaningful | |
| | | | | | | | | | |
Interest expense, net for the three and nine months ended September 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 nine months ended September 30, 2025. Additionally, there was an increase in the effective interest rate of 132 and 27 basis points for the three and nine months ended September 30, 2026 as compared to the prior year. In addition, interest expense, net and the effective interest rate for the three and nine months ended September 30, 2026 were reduced by $4.3 million and $5.0 million of principal recapture liability amortization resulting from our Balance Sheet Optimization Transaction. See Note 1 in the Notes to Condensed Consolidated Financial Statements for additional information regarding our accounting policy associated with the principal recapture liability.
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 nine months ended September 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 nine months ended September 30, 2026 and 2025 primarily includes interest cost and net actuarial losses related to our U.S. retirement plan.
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Income taxes.
| | | | | | | | | | | | | |
| | Three Months Ended | | | | | |
| | ||||
| | September 30, | | Change | | | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % |
| | |||
Income tax (benefit) provision | | $ | (18,858) | | $ | 1,972 | | $ | (20,830) | | (1,056.3) | % | |
Effective tax rate |
| | 51.2 | % | | (54.3) | % |
| | | | | |
| | | | | | | | | | | | | |
| | Nine Months Ended | | | | | |
| | ||||
| | September 30, | | Change |
| | |||||||
(Dollars in thousands) | | 2026 | | 2025 | | $ | | % |
| | |||
Income tax benefit |
| $ | (27,194) |
| $ | (743) |
| $ | (26,451) |
| (3,560.0) | % |
|
Effective tax rate |
| | 19.3 | % | | 0.8 | % | | | | | |
|
The change in these rates was primarily from changes in results of operations, including the tax treatment associated with the Balance Sheet Optimization Transaction completed during the nine months ended September 30, 2026, and the tax treatment associated with the $80 million transaction breakage fee incurred during the nine months ended September 30, 2025.
Non-GAAP Financial Measures
The following financial measures, Adjusted EBITDA and Free Cash Flow (FCF), are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). In general, non-GAAP measures exclude items and charges that (i) management does not believe reflect the Company’s core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred in multiple or prior periods without predictable trends.
Management provides these non-GAAP financial measures to investors as supplemental metrics because management believes it is useful to assist readers in assessing the effects of items and events on its financial and operating results and in comparing the Company’s performance to that of its competitors. However, the non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
The non-GAAP financial measures disclosed by the Company should not be considered substitutes for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements set forth below should be carefully evaluated.
We use Adjusted EBITDA, a financial measure that is not in accordance with GAAP, to analyze our financial results and as one of our incentive metrics and to provide an understanding of underlying operating results and trends by excluding items that are not closely related to ongoing operations. We use FCF, a financial measure that is not in accordance with GAAP, to evaluate the capacity of our operations to generate free cash flow. We utilize FCF as a performance metric.
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. These costs (stranded costs) are reported within continuing operations and are included within Adjusted EBITDA.
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The following tables present the reconciliations of loss from continuing operations, net of tax to Adjusted EBITDA and FCF for the three and nine months ended September 30, 2026 and 2025:
| | | | | | | | |
| | | Three Months Ended September 30, | |||||
(Dollars in thousands) | | | 2026 | | 2025 | |||
Loss from continuing operations, net of tax, as reported (GAAP) | | $ | | (17,961) | | $ | (5,607) | |
Income tax (benefit) provision | |
| | (18,858) | |
| 1,972 | |
Interest expense, net | |
| | 37,621 | |
| 29,029 | |
Acquisition-related charges and intangible amortization (1) | | | | 4,975 | | | 29,229 | |
Exit and realignment charges, net (3) | | | | 5,534 | | | 660 | |
Litigation and related charges (5) | | | | — | | | 1,765 | |
Other depreciation and amortization (6) | | | | 33,943 | | | 34,870 | |
Stock compensation (7) | | | | 2,113 | | | (168) | |
Other (9) | |
| | 408 | |
| 424 | |
Adjusted EBITDA (non-GAAP) | | | | 47,775 | | | 92,174 | |
Non-cash convert to sale write off expense (10) | |
| | 7,436 | |
| 9,387 | |
Patient service equipment capital expenditures | |
| | (38,509) | |
| (42,046) | |
Interest paid | | | | (10,861) | | | (30,293) | |
Free cash flow (non-GAAP) | | $ | | 5,841 | | $ | 29,222 | |
| | | | | | |
| | Nine Months Ended September 30, | ||||
(Dollars in thousands) | | 2026 | | 2025 | ||
Loss from continuing operations, net of tax, as reported (GAAP) | | $ | (113,499) | | $ | (93,239) |
Income tax benefit | |
| (27,194) | |
| (743) |
Interest expense, net | |
| 104,509 | |
| 79,252 |
Acquisition-related charges and intangible amortization (1) | | | 63,433 | | | 66,603 |
Transaction breakage fee (2) | | | — | | | 80,000 |
Exit and realignment charges, net (3) | | | 7,750 | | | 16,826 |
Transaction financing fees, net (4) | | | — | | | 18,288 |
Litigation and related charges (5) | | | 64 | | | 2,156 |
Other depreciation and amortization (6) | | | 102,927 | | | 105,628 |
Stock compensation (7) | | | 9,721 | | | 8,784 |
Loss on modification and extinguishment of debt (8) | | | 17,296 | | | — |
Other (9) | |
| 1,225 | |
| 1,272 |
Adjusted EBITDA (non-GAAP) | | | 166,232 | | | 284,827 |
Non-cash convert to sale write off expense (10) | |
| 26,333 | |
| 35,070 |
Patient service equipment capital expenditures | |
| (123,648) | |
| (143,790) |
Interest paid | | | (90,185) | | | (96,138) |
Free cash flow (non-GAAP) | | $ | (21,268) | | $ | 79,969 |
The following items have been excluded from our non-GAAP financial measures:
(1) Acquisition-related charges and intangible amortization for the nine months ended September 30, 2025 includes $22 million of acquisition-related charges 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.
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(2) Transaction breakage fee represents a cash payment to Rotech of $80 million during the nine months ended September 30, 2025 for the termination of the Rotech acquisition.
(3) Exit and realignment charges, net were $5.5 million and $7.8 million for the three and nine months ended September 30, 2026 and primarily included a $(33) million gain on the sale of a non-core asset, $34 million and $82 million of P&HS Sale related costs, inclusive of reimbursable separation costs of $30 million and $65 million, $1.4 million and $3.9 million of professional fees, and $2.9 million and $5.9 million of charges related to IT and other strategic initiatives. Exit and realignment charges, net for the nine months ended September 30, 2026 also included a $(51) million gain on sales of patient service equipment in connection with the contract termination with the commercial Payor described above. Exit and realignment charges, net were $0.7 million and $17 million for the three and nine months ended September 30, 2025. These charges included professional fees associated with strategic initiatives of $0.1 million and $8.2 million and charges related to IT strategic initiatives of $0.4 million and $0.9 million for the three and nine months ended September 30, 2025. For the nine months ended September 30, 2025, exit and realignment charges, net also included $6.8 million related to wind-down costs of 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 nine months ended September 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.
(5) Litigation and related charges includes settlement costs and related charges of legal matters. These costs do not occur in the ordinary course of our business and are inherently unpredictable in timing and amount.
(6) Other depreciation and amortization relates to patient service equipment and other fixed assets, excluding such amounts captured within exit and realignment charges, net or acquisition-related charges and intangible amortization.
(7) Stock compensation includes share-based compensation expense related to our share-based compensation plans, excluding such amounts captured within exit and realignment charges, net or acquisition-related charges and intangible amortization.
(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 from the completion of the Balance Sheet Optimization Transaction.
(9) For the three and nine months ended September 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.
(10) 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 exit and realignment 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 charges, net.
Financial Condition, Liquidity and Capital Resources
Financial condition. We monitor operating working capital through days sales outstanding (DSO). We estimate a hypothetical increase (decrease) in DSO of one day would result in a decrease (increase) in our cash balances, an increase (decrease) in borrowings against our Revolving Credit Agreement, or a combination thereof of approximately $6.5 million.
The majority of our cash and cash equivalents are held in cash depository accounts with major banks in the U.S. Changes in our working capital can vary in the normal course of business based upon the timing of capital expenditures,
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inventory purchases, collections of accounts receivable and payments to suppliers.
| | | | | | | | | | | | | |
| | | | | | | | Change |
| | |||
(Dollars in thousands) | | September 30, 2026 | | December 31, 2025 | | $ | | % |
| | |||
Cash and cash equivalents | | $ | 26,608 | | $ | 281,989 | | $ | (255,381) | | (90.6) | % | |
Accounts receivable, net | | $ | 107,323 | | $ | 95,907 | | $ | 11,416 | | 11.9 | % | |
DSO (1) | | | 16.4 | | | 12.4 | | | | | | | |
Accounts payable |
| $ | 381,885 |
| $ | 363,565 |
| $ | 18,320 |
| 5.0 | % |
|
Refer to the liquidity and capital expenditures section below for additional information on the change in the cash and cash equivalents balance as compared to December 31, 2025.
Liquidity and capital expenditures. The following table summarizes our condensed consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025:
| | | | | | |
| | Nine Months Ended | ||||
| | September 30, | ||||
(Dollars in thousands) | | 2026 | | 2025 | ||
Net cash (used for) provided by: |
| | |
| | |
Operating activities from continuing operations | | $ | (93,495) | | $ | 19,725 |
Operating activities from discontinued operations | | | — | | | (189,701) |
Operating activities | | | (93,495) | | | (169,976) |
Investing activities from continuing operations | | | 28,446 | | | (101,391) |
Investing activities from discontinued operations | | | — | | | (39,190) |
Investing activities | |
| 28,446 | |
| (140,581) |
Financing activities from continuing operations | | | (190,292) | | | 260,669 |
Financing activities from discontinued operations | | | — | | | 44,905 |
Financing activities | |
| (190,292) | |
| 305,574 |
Effect of exchange rate changes | |
| (40) | |
| 1,767 |
Net decrease in cash and cash equivalents | | $ | (255,381) | | $ | (3,216) |
Cash used for operating activities in the first nine months of 2026 reflected a net loss and unfavorable changes in working capital, including $32 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 Statements, $16 million in payment of third-party fees in connection with the Balance Sheet Optimization Transaction for debt treated as a modification, 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, and an $11 million unfavorable change in accrued payroll and related liabilities including the timing of teammate incentives, net of $26 million of prefunded payroll recorded within other current assets at December 31, 2025. Cash used for operating activities in the first nine months of 2025 reflected a net loss including the impact of the $80 million transaction breakage fee for the termination of the Rotech acquisition, $18 million in transaction financing fees, net for the Rotech acquisition financing, $22 million in legal settlement payments for two litigation matters, and unfavorable changes in working capital. Cash used for operating activities from discontinued operations included a $150 million increase in P&HS inventory, partially offset by a $130 million benefit from accounts receivables sold under the Receivables Sale Program, $104 million of which relates to accounts receivables sold of the P&HS business.
Cash provided by investing activities in the first nine months of 2026 included capital expenditures of $131 million, primarily for patient service equipment and our strategic and operational efficiency initiatives associated with other fixed assets and capitalized software, offset by $125 million in proceeds from sales of patient service equipment including $85 million in proceeds from sales in connection with the Payor contract termination, and $33 million in proceeds from the sale of a non-core asset. Cash used for investing activities in the first nine months of 2025 included
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capital expenditures of $153 million, primarily for patient service equipment and $39 million in cash used from discontinued operations, offset by $53 million in proceeds from sales of patient service equipment.
Cash used for financing activities in the first nine months of 2026 includes $21 million in debt issuance costs paid and net repayments of $169 million under our Revolving Credit Agreement. Cash provided by financing activities in the first nine months of 2025 included net borrowings of $271 million under our Revolving Credit Agreement. Cash provided by financing activities from discontinued operations includes a bank overdraft of $47 million due to a bank administrative error by our agent bank on September 30, 2025. This matter was resolved the following business day.
Capital Resources. Our primary sources of liquidity include cash and cash equivalents, our Amended Receivables Sale Program, and our Revolving Credit Agreement. These funds are used to meet our cash obligations which primarily consist of debt service costs, capital expenditures including patient service equipment, inventory purchases, teammate costs, and other operating and non-operating costs.
We believe cash generated by operating activities, including available cash proceeds from the Amended Receivables Sale Program, available financing sources, and borrowings under the Revolving Credit Agreement, as well as cash on hand, will be sufficient to fund our working capital needs, capital expenditures, long-term strategic growth, payments under long-term debt and lease arrangements, debt repurchases and other short-term and long-term cash requirements. While we believe that we will have the ability to meet our financing needs in the foreseeable future, changes in general 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 and (iii) our cost of borrowing.
We have incurred recurring losses and cash outflows from operating activities during 2026. In an effort to alleviate these conditions, management evaluated various revenue generating and cost-saving measures in order to improve profitability and cash flows from operations and developed a value creation plan, which is in progress.
The actual timing at which we may achieve profitability and positive cash flow from operations depends on a variety of factors, including successful implementation of cost-saving measures, continued growth in sleep and respiratory, and optimizing our revenue cycle management to ensure we collect timely and completely. Our liquidity forecasts are based upon successful execution of our value creation plan and includes management’s best estimate of the timing for achieving the benefits from the plan. The extent to which our future results and liquidity needs are further affected may depend on our ability to implement cost-saving measures, win referrals, support and maintain patients over the life of their therapy and timely collect revenue. We believe continued execution of our value creation plan and our current liquidity position will be sufficient to meet short-term and long-term cash requirements.
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 $229 million and $695 million during the three and nine months ended September 30, 2026. We collected $223 million and $693 million of the sold accounts receivable during the three and nine months ended September 30, 2026. The losses on sale of accounts receivable recorded in SG&A were $1.7 million and $5.0 million for the three and nine months ended September 30, 2026. As of September 30, 2026 and December 31, 2025 there was a total of $136 million and $134 million of uncollected accounts receivable sold and removed from our condensed consolidated balance sheet under the Amended Receivables Sale Program.
We have $511 million in outstanding Term Loan B under a term loan credit agreement (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 and matures in March 2029.
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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 September 30, 2026, we had $35 million in outstanding borrowings on our Revolving Credit Agreement and letters of credit outstanding, which reduced Revolving Credit Agreement availability, totaling $27 million, leaving $238 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 reduced 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 Revolving Credit Agreement, the Credit Agreement, the Amended Receivables Sale Program, the 2032 Notes and the 2033 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 Revolving Credit Agreement 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 these covenants at September 30, 2026. Assuming the continued execution of our value creation plan, we expect to remain in compliance with these covenants. However, if we are unable to do so, the acceleration of payments due and losing our ability to access borrowings under our Revolving Credit Agreement would negatively impact our liquidity position and our ability to meet our cash obligations.
If we do not successfully achieve cost savings or experience an increase in revenues consistent with our projected timing under the value creation plan, additional capital sources may be required, the timing and source of which are uncertain. We regularly evaluate market conditions, our liquidity profile and various financing alternatives to enhance our capital structure. We have, 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. We do not intend to make use of the authorized repurchase program. During the three and nine months ended September 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.
Recent Accounting Pronouncements
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 September 30, 2026.
Forward-looking Statements
Certain statements in this discussion constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, all forward-looking statements involve risks and uncertainties and, as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and
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unknown risks, including, but not limited to:
| ● | our ability to successfully separate from the P&HS business; |
| ● | our ability to successfully transition off of transition services timely; |
| ● | increasing competitive and pricing pressures in the marketplace; |
| ● | our ability to retain existing and attract new customers and our dependence on sales to certain customers; |
| ● | our dependence on certain vendors, suppliers and third-parties; |
| ● | our ability to successfully identify, close, manage or integrate acquisitions; |
| ● | our ability to successfully implement our strategic initiatives; |
| ● | volatility in the price of our common stock and securities and our ability to cure noncompliance with NYSE listing standards and maintain the listing of our common stock on the NYSE; |
| ● | our ability to successfully transition and onboard the Company’s new President and CEO; |
| ● | uncertainties related to, and our ability to adapt to and comply with, changes in government regulations, including healthcare, tax and product licensing laws and regulations; |
| ● | uncertainties related to general economic, regulatory and business conditions and our ability to adapt to changes in product pricing and other terms of purchase by suppliers of product; |
| ● | the risk that information systems are interrupted, damaged or fail for any extended period of time, that new information systems are not successfully implemented or integrated, or that there is a data security breach in our information systems or a third party’s information systems that impacts our business; |
| ● | uncertainties related to reimbursement qualification for non-invasive ventilation products; |
| ● | the ability of customers and suppliers to meet financial commitments due to us; |
| ● | changing trends in customer profiles and ordering patterns; |
| ● | our ability to manage operating expenses and improve operational efficiencies; |
| ● | availability of, and our ability to access, special inventory buying opportunities; |
| ● | our ability to continue to obtain financing at reasonable rates and to manage financing costs and interest rate risk, and our ability to refinance, extend or repay our substantial indebtedness; |
| ● | our ability to attract and retain talented and qualified teammates; |
| ● | recalls of any products, or safety risks or the discovery of serious safety issues with the products we sell; |
| ● | changes, delays and uncertainties in the reimbursement process; |
| ● | our ability to meet the terms to qualify for supplier incentives; |
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| ● | our ability to avoid infringement, misappropriation or other violations of the intellectual property and proprietary rights of third parties; |
| ● | our ability to engage in transactions that may be limited by the restrictive covenants in our credit facilities and notes; |
| ● | risks related to public health crises or future outbreaks of health crises or other adverse public health developments; |
| ● | the risk of an impairment to goodwill or other long-lived assets; |
| ● | our ability to timely or adequately respond to technological advances; |
| ● | our failure to adequately insure against losses, including from substantial claims and litigation; |
| ● | our ability to meet performance targets specified by customer contracts under contractual commitments; |
| ● | the outcome of outstanding and any future litigation, including product and professional liability claims; and |
| ● | other factors detailed from time to time in the reports we file with the SEC, including those described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025. |
We undertake no obligation to update or revise any forward-looking statements, except as required by applicable law.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Certain quantitative and qualitative market risk disclosures are described in our Annual Report on Form 10-K for the year ended December 31, 2025. Changes to our variable rate debt are described in Note 5 in the Notes to Condensed Consolidated Financial Statements and the termination of our interest rate swap is described in Note 6 in the Notes to Condensed Consolidated Financial Statements. Through September 30, 2026, there have been no material changes in the quantitative and qualitative market risk disclosures described in such Annual Report.
Item 4. Controls and Procedures
We carried out an evaluation, with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2026. There was no change in our internal control over financial reporting that occurred during the period of this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
Certain legal proceedings pending against us are described in our Annual Report on Form 10-K for the year ended December 31, 2025. Through September 30, 2026, there have been no material developments in any legal proceedings reported in such Annual Report.
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Item 1A. 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. These risk factors are in addition to those set forth in our Annual Report mentioned in other parts of this report and are not all of the risks that we face. We could also be affected by risks that we currently are not aware of or that we currently do not consider material to our business. Through September 30, 2026, there have been no other material changes in the risk factors described in such Annual Report.
The market price for our common stock does not meet the New York Stock Exchange (NYSE) continued listing requirements and our efforts to cure the noncompliance may be unsuccessful.
Our common stock is subject to continued listing requirements on the NYSE as set forth in the NYSE’s Listed Company Manual. As previously disclosed, on October 6, 2026, we received notice from the NYSE that we were not in compliance with its continued listing standards because the average closing price of our common stock was less than $1.00 per share over a consecutive 30 trading-day period. This notice has no immediate impact on the listing of our common stock on the NYSE, subject to our compliance with the NYSE’s other continued listing requirements. We have a period of six months following the receipt of this notice to regain compliance with the minimum share price requirement. We intend to cure the NYSE minimum stock price listing requirement through a reverse stock split, which requires shareholder approval. We have called a special meeting of shareholders to approve a reverse stock split at a ratio in the range of 1-for-20 to 1-for-30. We cannot assure that the reverse stock split proposal will be approved and implemented.
As previously disclosed, on October 27, 2026, we received notice from the NYSE that we were not in compliance with its continued listing standards because we have an average market capitalization of less than $50 million over a consecutive 30 trading-day period and stockholders’ equity of less than $50 million. This notice has no immediate impact on the listing of our common stock on the NYSE, subject to our compliance with the NYSE’s other continued listing requirements. We have a period of 18 months following receipt of this notice to regain compliance with the market capitalization and stockholders’ equity requirement. The Company is considering a number of available alternatives to cure its non-compliance with this NYSE continued listing standard. The NYSE will review the Company’s business plan and, if accepted, the Company will be subject to quarterly monitoring by the NYSE of the progress of the business plan.
While we intend to regain compliance, the NYSE could ultimately delist our common stock if we fail to do so. Given our recent stock price decline and recent financial challenges, including the loss of significant Payor contracts, and the divestiture of our P&HS business, there is a risk that our stock price could remain below the minimum share price requirement. If our stock were delisted and traded on the over-the-counter market, it would significantly reduce liquidity, make it more difficult for shareholders to sell their shares, impair our ability to raise capital and could have a material adverse effect on our business operations and our financial condition, results of operations and cash flows.
Changes in our management team resulting from the hiring or departure of executives and key employees from time to time could disrupt our business.
Any significant leadership changes or senior management transitions involve inherent risk. In addition, executive leadership transition periods can be disruptive and may result in a loss of personnel with deep institutional or technical knowledge, or result in changes to business strategy or objectives, and may negatively impact our operations and relationships with employees and customers due to increased or unanticipated expenses, operational inefficiencies, uncertainty regarding changes in strategy, decreased employee morale and productivity and increased turnover.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $100 million through February 2027. We do not intend to make use of the authorized repurchase program.
| | | | | | | | | | |
(in thousands, except per share data) | | | | | | | | | | |
Period | | Total Number of Shares Purchased | | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Program (1) | | | Approximate Dollar Value of Shares That May Yet be Purchased Under the Program (2) |
February 26-February 28, 2025 | | — | | $ | — | | — | | $ | 100,000 |
March 1-March 31, 2025 | | 173 | | $ | 8.66 | | 173 | | $ | 98,500 |
April 1-April 30, 2025 | | 653 | | $ | 7.87 | | 653 | | $ | 93,360 |
May 1-May 31, 2025 | | — | | $ | — | | — | | $ | 93,360 |
June 1-June 30, 2025 | | — | | $ | — | | — | | $ | 93,360 |
July 1-July 31, 2025 | | — | | $ | — | | — | | $ | 93,360 |
August 1-August 31, 2025 | | — | | $ | — | | — | | $ | 93,360 |
September 1-September 30, 2025 | | — | | $ | — | | — | | $ | 93,360 |
October 1-October 31, 2025 | | — | | $ | — | | — | | $ | 93,360 |
November 1-November 30, 2025 | | 1,129 | | $ | 3.10 | | 1,129 | | $ | 89,860 |
December 1-December 31, 2025 | | — | | $ | — | | — | | $ | 89,860 |
January 1-January 31, 2026 | | — | | $ | — | | — | | $ | 89,860 |
February 1-February 28, 2026 | | — | | $ | — | | — | | $ | 89,860 |
March 1-March 31, 2026 | | — | | $ | — | | — | | $ | 89,860 |
April 1-April 30, 2026 | | — | | $ | — | | — | | $ | 89,860 |
May 1-May 31, 2026 | | — | | $ | — | | — | | $ | 89,860 |
June 1-June 30, 2026 | | — | | $ | — | | — | | $ | 89,860 |
July 1-July 31, 2026 | | — | | $ | — | | — | | $ | 89,860 |
August 1-August 31, 2026 | | — | | $ | — | | — | | $ | 89,860 |
September 1-September 30, 2026 | | — | | $ | — | | — | | $ | 89,860 |
Total (3) | | 1,955 | | | | | 1,955 | | | |
| (1) | On February 26, 2025, our Board of Directors authorized a share repurchase program of up to $100 million. The program expires in February 2027. We do not intend to make use of the authorized repurchase program. |
| (2) | During the period from February 26, 2025 (the date the share repurchase program was authorized) through September 30, 2026, 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. |
| (3) | Represents the period from February 26, 2025 (the date the share repurchase program was authorized) through September 30, 2026. |
Item 5. Other Information.
On
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Item 6. Exhibits
| (a) | Exhibits |
3.1 | | |
3.1 | | Articles of Amendment designating Series C Cumulative Preferred Stock of Accendra Health, Inc., as filed with the Secretary of the Commonwealth of Virginia on August 10, 2026 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 10, 2026). |
| | |
4.1 | | Section 382 Rights Agreement, dated as of August 10, 2026, between Accendra Health, Inc. and Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on August 10, 2026). |
| | |
10.1 | | Offer Letter, accepted September 16, 2026, between Accendra Health, Inc. and Kenneth Gardner-Smith (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 17, 2026). |
| | |
10.2 | | Consulting Agreement, dated September 28, 2026, between Accendra Health, Inc. and Edward A. Pesicka (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K/A filed on September 28, 2026). |
| | |
31.1 | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | |
31.2 | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | |
32.1 | | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| | |
32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| | |
101.INS | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| | |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
| | |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| | |
101.DEF | | Inline XBRL Taxonomy Definition Linkbase Document |
| | |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
| | |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| | |
104 | | Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101) |
| | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| |
| Accendra Health, Inc. |
| (Registrant) |
| |
Date: November 5, 2026 | /s/ Kenneth Gardner-Smith |
| Kenneth Gardner-Smith |
| President, Chief Executive Officer & Director |
| |
Date: November 5, 2026 | /s/ Jonathan A. Leon |
| Jonathan A. Leon |
| Executive Vice President & Chief Financial Officer |
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