Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Net income (loss)	$	44,129	$	46,081	$	179,614	$	(20,871)
Other comprehensive income (loss), net of tax:
Currency translation adjustments	(12,014)		5,173		(26,724)		7,003
Change in unrecognized net periodic pension costs	395		167		552		932
Change in gains and losses on derivative instruments	—		1,681		20,044		(9,792)
Total other comprehensive income (loss), net of tax	(11,619)		7,021		(6,128)		(1,857)
Comprehensive income (loss)	$	32,510	$	53,102	$	173,486	$	(22,728)

See accompanying notes to consolidated financial statements.

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2017 2016 2017 2016
Net income $ 10,871
$ 29,831
$ 49,796
$ 81,682
Other comprehensive income (loss), net of tax:
Currency translation adjustments (net of income tax of $0 in 2017 and 2016) 12,254
1,401
40,151
2,443
Change in unrecognized net periodic pension costs (net of income tax of $220 and $665 in 2017 and $194 and $532 in 2016) 236
218
702
701
Other (net of income tax of $0 in 2017 and 2016) 94
82
288
119
Total other comprehensive income (loss), net of tax 12,584
1,701
41,141
3,263
Comprehensive income $ 23,455
$ 31,532
$ 90,937
$ 84,945

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Owens & Minor, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)


	September 30,		December 31,
(in thousands, except per share data)	2021		2020
Assets
Current assets
Cash and cash equivalents	$	39,759	$	83,058
Accounts receivable, net of allowances of $19,273 and $19,087	759,744		700,792
Merchandise inventories	1,514,387		1,233,751
Other current assets	84,335		118,264
Total current assets	2,398,225		2,135,865
Property and equipment, net of accumulated depreciation of $320,389 and $284,126	308,463		315,662
Operating lease assets	184,554		144,755
Goodwill	386,693		394,086
Intangible assets, net	209,789		243,351
Other assets, net	96,395		101,920
Total assets	$	3,584,119	$	3,335,639
Liabilities and equity
Current liabilities
Accounts payable	$	1,118,753	$	1,000,186
Accrued payroll and related liabilities	100,171		109,447
Other current liabilities	206,094		236,094
Total current liabilities	1,425,018		1,345,727
Long-term debt, excluding current portion	959,485		986,018
Operating lease liabilities, excluding current portion	154,009		119,932
Deferred income taxes	37,093		50,641
Other liabilities	121,509		121,267
Total liabilities	2,697,114		2,623,585
Commitments and contingencies	0		0
Equity
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 75,429 shares and 73,472 shares	150,858		146,944
Paid-in capital	434,952		436,597
Retained earnings	345,832		167,022
Accumulated other comprehensive loss	(44,637)		(38,509)
Total equity	887,005		712,054
Total liabilities and equity	$	3,584,119	$	3,335,639

See accompanying notes to consolidated financial statements.

September 30, December 31,
(in thousands, except per share data) 2017 2016
Assets
Current assets
Cash and cash equivalents $ 98,415
$ 185,488
Accounts receivable, net of allowances of $14,609 and $13,538 732,756
606,084
Merchandise inventories 989,251
916,311
Other current assets 311,499
254,156
Total current assets 2,131,921
1,962,039
Property and equipment, net of accumulated depreciation of $224,970 and $201,399 203,587
191,718
Goodwill, net 690,230
414,936
Intangible assets, net 231,886
82,511
Other assets, net 76,532
66,548
Total assets $ 3,334,156
$ 2,717,752
Liabilities and equity
Current liabilities
Accounts payable $ 875,630
$ 750,750
Accrued payroll and related liabilities 31,998
45,051
Other current liabilities 296,663
238,837
Total current liabilities 1,204,291
1,034,638
Long-term debt, excluding current portion 917,256
564,583
Deferred income taxes 137,539
90,383
Other liabilities 71,286
68,110
Total liabilities 2,330,372
1,757,714
Commitments and contingencies

Equity
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 61,249 shares and 61,031 shares 122,499
122,062
Paid-in capital 224,183
219,955
Retained earnings 683,444
685,504
Accumulated other comprehensive loss (26,342 ) (67,483 )
Total equity 1,003,784
960,038
Total liabilities and equity $ 3,334,156
$ 2,717,752

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Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


	Nine Months Ended September 30,
(in thousands)	2021		2020
Operating activities:
Net income (loss)	$	179,614	$	(20,871)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization	68,142		69,494
Share-based compensation expense	19,078		15,275
Loss on divestiture	—		65,472
Loss on extinguishment of debt	40,433		2,580
Provision for losses on accounts receivable	19,270		9,583
Deferred income tax (benefit) expense	(18,286)		25,017
Changes in operating lease right-of-use assets and lease liabilities	1,190		(1,328)
Changes in operating assets and liabilities:
Accounts receivable	(84,381)		(20,173)
Merchandise inventories	(284,188)		52,605
Accounts payable	120,821		136,156
Net change in other assets and liabilities	(8,341)		(69,117)
Other, net	20,484		3,503
Cash provided by operating activities	73,836		268,196
Investing activities:
Proceeds from divestiture	—		133,000
Additions to property and equipment	(26,446)		(21,678)
Additions to computer software	(6,179)		(4,702)
Proceeds from sale of property and equipment	41		178
Proceeds from cash surrender value of life insurance policies	—		6,032
Cash (used for) provided by investing activities	(32,584)		112,830
Financing activities:
Proceeds from issuance of debt	574,900		150,000
Repayments under revolving credit facility, net	(90,900)		(107,900)
Repayments of debt	(553,140)		(270,399)
Financing costs paid	(13,912)		(10,367)
Cash dividends paid	(548)		(467)
Payment for termination of interest rate swaps	(15,434)		—
Other, net	(18,188)		(5,822)
Cash used for financing activities	(117,222)		(244,955)
Effect of exchange rate changes on cash and cash equivalents	(2,454)		6,721
Net (decrease) increase in cash, cash equivalents and restricted cash	(78,424)		142,792
Cash, cash equivalents and restricted cash at beginning of period	134,506		84,687
Cash, cash equivalents and restricted cash at end of period	$	56,082	$	227,479
Supplemental disclosure of cash flow information:
Income taxes paid (received), net of refunds	$	83,606	$	(1,892)
Interest paid	$	32,035	$	61,271

See accompanying notes to consolidated financial statements.

Nine Months Ended September 30,
(in thousands) 2017 2016
Operating activities:
Net income $ 49,796
$ 81,682
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 41,060
42,182
Share-based compensation expense 8,592
8,934
Provision for losses on accounts receivable 1,158
(216 )
Deferred income tax (benefit) expense (4,585 ) (3,233 )
Changes in operating assets and liabilities:
Accounts receivable (79,114 ) 5,023
Merchandise inventories (56,134 ) (5,066 )
Accounts payable 79,787
58,742
Net change in other assets and liabilities (40,634 ) (44,903 )
Other, net 5,719
1,366
Cash provided by operating activities 5,645
144,511
Investing activities:
Acquisition, net of cash acquired (366,569 ) —
Additions to property and equipment (24,963 ) (13,682 )
Additions to computer software and intangible assets (12,826 ) (7,081 )
Proceeds from sale of property and equipment 780
4,497
Cash used for investing activities (403,578 ) (16,266 )
Financing activities:
Change in bank overdraft —
21,753
Proceeds from debt issuance 250,000
—
Borrowing under revolving credit facility 117,200
—
Financing costs paid (1,798 ) —
Cash dividends paid (47,316 ) (47,802 )
Repurchases of common stock (5,000 ) (48,654 )
Other, net (7,363 ) (8,118 )
Cash provided by (used for) financing activities 305,723
(82,821 )
Effect of exchange rate changes on cash and cash equivalents 5,137
6,652
Net increase (decrease) in cash and cash equivalents (87,073 ) 52,076
Cash and cash equivalents at beginning of period 185,488
161,020
Cash and cash equivalents at end of period $ 98,415
$ 213,096
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 26,917
$ 57,996
Interest paid $ 19,951
$ 20,023

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Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(unaudited)


(in thousands, except per share data)	Common Shares Outstanding	Common Stock ($2 par value )		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance, December 31, 2020	73,472	$	146,944	$	436,597	$	167,022	$	(38,509)	$	712,054
Net income						69,589				69,589
Other comprehensive income								7,903		7,903
Dividends declared ($0.0025 per share)						(434)				(434)
Share-based compensation expense, exercises and other	1,628	3,256		(6,107)						(2,851)
Balance, March 31, 2021	75,100	150,200		430,490		236,177		(30,606)		786,261
Net income						65,896				65,896
Other comprehensive loss								(2,412)		(2,412)
Dividends declared ($0.0025 per share)						(187)				(187)
Share-based compensation expense, exercises and other	295	591		(2,130)						(1,539)
Balance, June 30, 2021	75,395	150,791		428,360		301,886		(33,018)		848,019
Net income						44,129				44,129
Other comprehensive loss								(11,619)		(11,619)
Dividends declared ($0.0025 per share)						(183)				(183)
Share-based compensation expense, exercises and other	34	67		6,592						6,659
Balance, September 30, 2021	75,429	$	150,858	$	434,952	$	345,832	$	(44,637)	$	887,005

Balance, December 31, 2019	62,843	$	125,686	$	251,401	$	137,774	$	(52,707)	$	462,154
Net loss						(11,324)				(11,324)
Other comprehensive loss								(39,405)		(39,405)
Dividends declared ($0.0025 per share)						(127)				(127)
Share-based compensation expense, exercises and other	42	84		4,956						5,040
Balance, March 31, 2020	62,885	125,770		256,357		126,323		(92,112)		416,338
Net loss						(55,627)				(55,627)
Other comprehensive income								30,527		30,527
Dividends declared ($0.0025 per share)						(156)				(156)
Share-based compensation expense, exercises and other	852	1,704		2,376						4,080
Balance, June 30, 2020	63,737	127,474		258,733		70,540		(61,585)		395,162
Net income						46,081				46,081
Other comprehensive income								7,021		7,021
Dividends declared ($0.0025 per share)						(156)				(156)
Share-based compensation expense, exercises and other	(21)	(42)		3,269						3,227
Balance, September 30, 2020	63,716	$	127,432	$	262,002	$	116,465	$	(54,564)	$	451,335

See accompanying notes to consolidated financial statements.

(in thousands, except per share data)
Common
Shares
Outstanding

Common
Stock
($ 2 par value )

Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive Income
(Loss)

Total
Equity
Balance December 31, 2015 62,803
$ 125,606
$ 211,943
$ 706,866
$ (51,825 ) $ 992,590
Net income 81,682
81,682
Other comprehensive loss 3,263
3,263
Dividends declared ($0.765 per share) (47,671 ) (47,671 )
Shares repurchased and retired (1,378 ) (2,757 ) (45,896 ) (48,653 )
Share-based compensation expense, exercises and other 274
549
4,923
5,472
Balance September 30, 2016 61,699
$ 123,398
$ 216,866
$ 694,981
$ (48,562 ) $ 986,683

Balance December 31, 2016 61,031
$ 122,062
$ 219,955
$ 685,504
$ (67,483 ) $ 960,038
Net income 49,796
49,796
Other comprehensive income 41,141
41,141
Dividends declared ($0.7725 per share) (47,169 ) (47,169 )
Shares repurchased and retired (155 ) (310 ) (4,687 ) (4,997 )
Share-based compensation expense, exercises and other 373
747
4,228
4,975
Balance September 30, 2017 61,249
$ 122,499
$ 224,183
$ 683,444
$ (26,342 ) $ 1,003,784

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Owens & Minor, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

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

Note 1—~~Basis~~Summary of ~~Presentation and Use of Estimates~~Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Owens & Minor, Inc. and the subsidiaries it controls (we, us, or our) and contain all adjustments (which are comprised only of normal recurring accruals and use of estimates) necessary to conform with U.S. generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. The Movianto businessrepresented a component that met accounting requirements to be classified as discontinued operations for the nine months ended September 30, 2020. In accordance with GAAP, the results of operations of the Movianto business are presented as discontinued operations through June 18, 2020 (the Divestiture Date) and, as such, have been excluded from continuing operations for the nine months ended September 30, 2020. With the exception of Note 3, the Notes to Consolidated Financial Statements reflect the continuing operations of Owens & Minor, Inc. and its subsidiaries. See Note 3 for additional information regarding discontinued operations. The results of operations for interim periods are not necessarily indicative of the results expected for the full year. The Clinical & Procedural Solutions (CPS) business segment has been renamed "Proprietary Products" effective January 1, 2017. Byram Healthcare (Byram), acquired on August 1, 2017, is included in the Domestic segment. There have been no other changes to the segment composition or our method of measuring segment operating earnings.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

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. Actual results may differ from these estimates.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash includes cash and marketable securities with an original maturity or maturity at acquisition of three months or less. Cash, cash equivalents and restricted cash are stated at cost. Nearly all of our cash, cash equivalents and restricted cash are held in cash depository accounts in major banks in the United States, Europe, and Asia. Cash that is held by a major bank and has restrictions on its availability to us is classified as restricted cash. Restricted cash included in Other assets, net as of September 30, 2021 represents cash held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) initiatives.

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


	September 30, 2021		December 31, 2020
Cash and cash equivalents	$	39,759	$	83,058
Restricted cash included in Other current assets	—		35,126
Restricted cash included in Other assets, net	16,323		16,322
Total cash, cash equivalents, and restricted cash	$	56,082	$	134,506

Note 2—Fair Value

The carrying amounts of cash and cash equivalents, accounts receivable ~~financing receivables,~~and accounts payable ~~and financing payables included~~reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments. The carrying amount of restricted cash also approximates fair value due to its nature. The fair value of ~~long-term~~ 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). ~~We determine~~See Note 6 for the fair value of ~~our derivatives, if any,~~debt. The fair value of foreign currency contracts is determined based on ~~estimated amounts that would be received or paid~~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 ~~terminate~~determine the ~~contracts at the reporting date based on current market prices for applicable currencies.~~present value of expected future cash flows. See Note 8 for the fair value of ~~long-term debt.~~derivatives.

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Note 3—~~Acquisition~~Discontinued Operations

On ~~August 1, 2017,~~June 18, 2020, we completed the ~~acquisition~~divestiture of ~~Byram Healthcare,~~our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $133 million. We concluded that the Movianto business met the criteria for discontinued operations through the Divestiture Date, as the intention to sell represented a ~~leading domestic distributor~~strategic shift and the criteria for held-for-sale were met. Movianto was previously reported in the Global Solutions segment.

Accordingly, the results of ~~reimbursable medical supplies sold directly to patients and home health agencies.~~

~~The consideration was $367 million,~~operations from the Movianto business are reported in the accompanying consolidated statements of operations as Loss from discontinued operations, net of ~~cash acquired, which is subject to final working capital adjustments with~~tax for the ~~seller. The purchase price was allocated on a preliminary basis to the underlying assets acquired~~three and liabilities assumed based upon our current estimate of their fair values at the date of acquisition. The purchase price exceeded the preliminary estimated fair value of the net tangible and identifiable intangible assets by $263 million, which was allocated to goodwill. nine months ended September 30, 2020.

The following table ~~presents~~summarizes the ~~preliminary estimated fair value~~financial results of our discontinued operations for the three and nine months ended September 30, 2020:


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Net revenue	$	—	$	226,759
Cost of goods sold	—		53,923
Gross margin	—		172,836
Distribution, selling, and administrative expenses	—		157,512
Loss on divestiture	—		65,472
Acquisition-related and exit and realignment charges	—		4,825
Other operating income, net	—		(388)
Operating loss	—		(54,585)
Interest expense, net	—		3,144
Loss from discontinued operations before income taxes	—		(57,729)
Income tax provision from discontinued operations	—		474
Loss from discontinued operations, net of tax	$	—	$	(58,203)

We suspended depreciation and amortization on assets that are held-for-sale, including right-of-use assets recorded in accordance with ASU No. 2016-02, for the nine months ended September 30, 2020.

No revenue or expense have been recorded in discontinued operations related to the disposal group subsequent to the Divestiture Date.

We have entered into transition services agreements with a subsidiary of the ~~assets acquired~~Buyer, pursuant to which we and ~~liabilities assumed recognized~~a subsidiary of the Buyer will provide to each other various transitional services. Certain transition service arrangement costs and reimbursements were recorded during the three and nine months ended September 30, 2021 and 2020 and were immaterial for the periods presented. These arrangements were substantially completed as of the acquisition date. The fair value of intangibles from this acquisition was primarily determined by applying the income approach, using several significant unobservable inputs for projected cash flows and a discount rate. These inputs are considered Level 3 inputs. The allocation of purchase price toSeptember 30, 2021.

We had no assets and liabilities ~~acquired is not yet complete.~~of the discontinued Movianto business reflected on the consolidated balance sheets at September 30, 2021 and December 31, 2020.

The following table provides operating and investing cash flow information for our discontinued operations:


	Nine Months Ended September 30, 2020
Operating Activities:
Loss on divestiture	$	65,472
Investing Activities:
Capital expenditures	3,027

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Preliminary Fair
Value Estimated as of
Acquisition Date
Assets acquired:
Current assets $ 62,902
Goodwill 263,155
Intangible assets 156,000
Noncurrent assets 3,615
Total assets 485,672
Liabilities assumed:
Current liabilities 72,397
Noncurrent liabilities 46,706
Total liabilities 119,103
Fair value of net assets acquired, net of cash $ 366,569

~~We are amortizing the preliminary fair value of acquired intangible assets, primarily customer relationships and a tradename, over their estimated remaining weighted average useful lives of 10 years.~~

Goodwill of $263 million, which we assigned to our Domestic segment, consists largely of expected opportunities to expand into the non-acute market with direct to patient distribution capabilities. None of the goodwill recognized is expected to be deductible for income tax purposes.

~~Pro forma results of operations for Byram has not been presented because the effects on revenue and net income were not material to our historic consolidated financial statements.~~

Acquisition-related expenses in the current year consisted primarily of transaction costs incurred to perform due diligence and to analyze, negotiate and consummate the Byram acquisition, and costs to transition the acquired operations. We recognized pre-tax acquisition-related expenses of $3.1 million in 2017 related to these activities.

Note 4—~~Financing Receivables and Payables~~

At September 30, 2017 and December 31, 2016, we had financing receivables of $176.9 million and $156.5 million and related payables of $105.5 million and $110.0 million outstanding under our order-to-cash program and product financing arrangements, which were included in other current assets and other current liabilities, respectively, in the consolidated balance sheets.

~~Note 5—~~Goodwill and Intangible Assets

The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through September 30, ~~2017:~~2021:

Domestic International Proprietary Products Consolidated
Carrying amount of goodwill, December 31, 2016 $ 180,006
$ 19,391
$ 215,539
$ 414,936
Acquisition (See Note 3) 263,155
—
—
263,155
Currency translation adjustments —
10,001
2,138
12,139
Carrying amount of goodwill, September 30, 2017 $ 443,161
$ 29,392
$ 217,677
$ 690,230


	Global Solutions		Global Products		Consolidated
Carrying amount of goodwill, December 31, 2020	$	283,905	$	110,181	$	394,086
Currency translation adjustments	—		(7,393)		(7,393)
Carrying amount of goodwill, September 30, 2021	$	283,905	$	102,788	$	386,693

Intangible assets at September 30, ~~2017,~~2021 and December 31, ~~2016,~~2020 were as follows:

September 30, 2017 December 31, 2016

Customer
Relationships

Other
Intangibles
Customer
Relationships Other
Intangibles

Gross intangible assets $ 241,444
$ 41,483
$ 118,223
$ 4,045
Accumulated amortization (48,757 ) (2,284 ) (38,429 ) (1,328 )
Net intangible assets $ 192,687
$ 39,199
$ 79,794
$ 2,717


	September 30, 2021						December 31, 2020
	Customer Relationships		Tradenames		Other Intangibles		Customer Relationships		Tradenames		Other Intangibles
Gross intangible assets	$	265,527	$	90,000	$	43,313	$	270,505	$	90,000	$	43,245
Accumulated amortization	(139,632)		(31,152)		(18,267)		(121,209)		(24,881)		(14,309)
Net intangible assets	$	125,895	$	58,848	$	25,046	$	149,296	$	65,119	$	28,936
Weighted average useful life	10 years		11 years		8 years		10 years		11 years		8 years

At September 30, ~~2017, $163.5~~2021, $51.1 million in net intangible assets were held in the ~~Domestic~~Global Solutions segment ~~$10.2~~and $159 million were held in the ~~International segment and $58.2 million were held in the Proprietary~~Global Products segment. Amortization expense for intangible assets was ~~$5.1~~$10.0 million and ~~$2.2~~$10.2 million for the three months ended September 30, ~~2017~~2021 and ~~2016~~2020, and ~~$9.7~~$30.1 million and ~~$6.6~~$31.5 million for the nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is ~~$11.6~~approximately $10 million for the remainder of ~~2017, $24.6~~2021, $39 million for ~~2018, $24.7~~2022, $39 million for ~~2019, $24.7~~2023, $34 million for ~~2020, $24.4~~2024, $28 million for ~~2021~~2025 and ~~$23.5~~$27 million for ~~2022.~~2026.

Note 6—5—Exit and Realignment ~~Charges~~Costs

We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain distribution and outsourced logistics centers, administrative offices and warehouses, ~~in the United States~~our client engagement center and ~~Europe.~~IT restructuring charges. These charges also include costs associated with our strategic organizational realignment which include ~~management changes,~~leadership reorganization costs, certain professional fees, and costs to streamline administrative functions and ~~processes.~~processes and divestiture related costs.

Exit and realignment charges by segment for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Domestic segment $ 3,880
$ 1,224
$ 12,421
$ 14,194
International segment 574
457
1,406
3,284
Proprietary Products segment 592
465
1,015
1,574
Total exit and realignment charges $ 5,046
$ 2,146
$ 14,842
$ 19,052


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Global Solutions segment	$	5,352	$	2,714	$	16,166	$	6,255
Global Products segment	1,028		2,877		4,801		3,364
Total exit and realignment charges	$	6,380	$	5,591	$	20,967	$	9,619

Table of Contents

The following table summarizes the activity related to exit and realignment cost accruals through September 30, ~~2017~~2021 and ~~2016:~~2020:


	Total
Accrued exit and realignment costs, December 31, 2020	$	3,146
Provision for exit and realignment activities:
Information system restructuring costs	1,029
Lease obligations	347
Other	781
Cash payments	(2,915)
Accrued exit and realignment costs, March 31, 2021	2,388
Provision for exit and realignment activities:
Information system restructuring costs	1,611
Lease obligations	(126)
Other	989
Cash payments	(2,302)
Accrued exit and realignment costs, June 30, 2021	2,560
Provision for exit and realignment activities:
Information system restructuring costs	1,506
Lease obligations	107
Other	3,142
Cash payments	(4,199)
Accrued exit and realignment costs, September 30, 2021	$	3,116

Accrued exit and realignment costs, December 31, 2019	$	8,162
Provision for exit and realignment activities:
Severance	1,391
Information system restructuring costs	183
Lease obligations	202
Other	53
Cash payments	(5,799)
Accrued exit and realignment costs, March 31, 2020	4,192
Provision for exit and realignment activities:
Severance	809
Information system restructuring costs	671
Lease obligations	219
Other	501
Cash payments	(2,072)
Accrued exit and realignment costs, June 30, 2020	4,320
Provision for exit and realignment activities:
Severance	1,950
Information system restructuring costs	77
Lease obligations	848
Other	2,716
Cash payments	(7,083)
Accrued exit and realignment costs, September 30, 2020	$	2,828

Lease
Obligations

Severance and
Other
Total
Accrued exit and realignment costs, December 31, 2016 $ —
$ 2,238
$ 2,238
Provision for exit and realignment activities —
3,211
3,211
Change in estimate —
(304 ) (304 )
Cash payments —
(3,034 ) (3,034 )
Accrued exit and realignment costs, March 31, 2017 —
2,111
2,111
Provision for exit and realignment activities —
1,382
1,382
Change in estimate —
(18 ) (18 )
Cash payments —
(667 ) (667 )
Accrued exit and realignment costs, June 30, 2017 —
2,808
2,808
Provision for exit and realignment activities —
3,156
3,156
Cash payments —
(423 ) (423 )
Accrued exit and realignment costs, September 30, 2017 $ —
$ 5,541
$ 5,541

Accrued exit and realignment costs, December 31, 2015 $ 486
$ 1,840
$ 2,326
Provision for exit and realignment activities —
9,895
9,895
Cash payments, net of sublease income (486 ) (1,287 ) (1,773 )
Accrued exit and realignment costs, March 31, 2016 —
10,448
10,448
Provision for exit and realignment activities —
1,254
1,254
Cash payments, net of sublease income —
(7,087 ) (7,087 )
Accrued exit and realignment costs, June 30, 2016 —
4,615
4,615
Provision for exit and realignment activities —
725
725
Change in Estimate —
(268 ) (268 )
Cash payments, net of sublease income —
(2,066 ) (2,066 )
Accrued exit and realignment costs, September 30, 2016 $ —
$ 3,006
$ 3,006

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In addition to the exit and realignment accruals in the preceding table, we also incurred ~~$1.9~~$1.6 million and $11.6 million of costs that were expensed as incurred for the three ~~months ended September 30, 2017, including $1.7 million in information system restructuring costs,~~ and ~~$0.2 million in other costs. For the~~ nine months ended September 30, ~~2017, we recognized $7.4~~2021, which primarily includes $1.5 million and $9.6 million of wind-down costs ~~that were expensed as incurred, including $4.5 million in asset write-downs, $1.9 million in information system restructuring costs and $1.0 million in other costs.~~

We incurred $1.7 million of costs that were expensed as incurred for the three months ended September 30, 2016, including $0.7 million in other facility costs, $0.5 million in labor costs, $0.4 million in information systems costs, and $0.1 million in other costs. For the nine months ended September 30, 2016, we recognized $7.4 million of costs that were expensed as incurred, including $3.6 million in consulting costs, $1.8 million in information system costs, $0.7 million in other facility costs, $0.5 million in labor costs, and $0.8 million in other costs.

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~~Note 7—Retirement Plans~~

We have a noncontributory, unfunded retirement plan for certain officers and other key employees in the United States. Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective employees.

~~The components of net periodic benefit cost, which are included in distribution, selling and administrative expenses,~~related to Fusion5 for the three and nine months ended September 30, ~~2017~~2021.

There were no acquisition-related charges included within acquisition-related and ~~2016, were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Service cost $ 26
$ 27
$ 53
$ 70
Interest cost 474
508
1,422
1,523
Recognized net actuarial loss 456
412
1,367
1,236
Net periodic benefit cost $ 956
$ 947
$ 2,842
$ 2,829

~~Certain~~exit and realignment charges presented in our consolidated statements of ~~our foreign subsidiaries have health and welfare plans covering substantially all of their respective employees. Our expense for these plans totaled $0.5 million and $0.4 million~~operations for the three ~~months ended September 30, 2017~~ and ~~2016 and $1.3 million for the~~ nine months ended September 30, ~~2017~~2021. Acquisition-related charges within acquisition-related and ~~2016.~~exit and realignment charges presented in our consolidated statements of operations were $0.8 million and $8.9 million for the three and nine months ended September 30, 2020, which consisted primarily of transition costs for the Halyard acquisition.

We may incur additional charges in 2021 for wind-down costs related to Fusion5.

Note 8—6—Debt

Debt consists of the following:


	September 30, 2021				December 31, 2020
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Term Loan A-2	$	—	$	—	$	33,865	$	34,390
Term Loan B	—		—		477,525		486,614
Receivables Securitization Program	196,683		200,000		152,929		155,100
4.375% Senior Notes, due December 2024	245,011		261,329		244,780		253,241
Revolver	12,300		12,300		103,200		103,200
4.500% Senior Notes, due March 2029	491,430		507,075		—		—
Finance leases and other	15,677		15,677		13,668		13,668
Total debt	961,101		996,381		1,025,967		1,046,213
Less current maturities	(1,616)		(1,616)		(39,949)		(40,453)
Long-term debt	$	959,485	$	994,765	$	986,018	$	1,005,760

We have ~~$275~~$246 million, ~~of 3.875% senior notes due 2021 (the “2021 Notes”)~~excluding deferred financing costs and ~~$275 million~~third party fees, of 4.375% senior notes due in 2024 (the ~~“2024 Notes”)~~2024 Notes), with interest payable semi-annually. ~~The 2021 Notes were sold at 99.5% of the principal amount with an effective yield of 3.951%.~~ The 2024 Notes were sold at 99.6% of the principal amount with an effective yield of 4.422%. We have the option to redeem the ~~2021 Notes and~~ 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100% of the principal amount or the present value of the remaining scheduled payments discounted at the applicable Benchmark Treasury Rate (as defined) plus 30 basis points. As

In March 2021, we issued $500 million, excluding deferred financing costs and third party fees, of 4.500% senior unsecured notes due in 2029 (the 2029 Unsecured Notes), with interest payable semi-annually (the Notes Offering). The 2029 Unsecured Notes were sold at 100% of the principal amount with an effective yield of 4.500%. We used a portion of the net proceeds from the Notes Offering to repay our Term B Loan and borrowings under our revolving credit facility. In connection with these repayments, we recorded $15.3 million in write-offs of deferred financing costs and third party fees within loss on extinguishment of debt for the nine months ended September 30, ~~2017~~2021. No write-offs of deferred financing costs and ~~December 31, 2016,~~third party fees were recorded for the ~~estimated fair value~~three months ended September 30, 2021. We may redeem all or part of the ~~2021~~2029 Unsecured Notes ~~was $280.1 million and $274.5 million and the estimated fair value~~prior to March 31, 2024, at a price equal to 100% of the principal amount of the 2029 Unsecured Notes redeemed, plus accrued and unpaid interest, if any, to, but not including, the redemption date, plus a “make-whole” premium, as described in the Indenture dated March 10, 2021 (the Indenture). On or after March 31, 2024, we may redeem all or part of the 2029 Unsecured Notes ~~was $276.9 million~~at the applicable redemption prices described in the Indenture, plus accrued and ~~$270.0 million, respectively.~~unpaid interest, if any, to, but not including, the redemption date. We may also redeem up to 40% of the aggregate principal amount of the 2029 Unsecured Notes at any time prior to March 31, 2024, at a redemption price equal to 104.5% with an amount equal to or less than the net cash proceeds from certain equity offerings, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

On ~~July 27, 2017,~~March 10, 2021, we terminated our then existing credit agreement and all obligations thereunder were repaid. On that same date, we entered into a new ~~Credit Agreement replacing the Amended Credit Agreement. The new~~credit agreement ~~provides borrowing capacity~~with Bank of ~~$600 million~~America, N.A. and a ~~$250~~syndicate of lenders (the Credit Agreement) with a $300 million ~~term loan. We make principal payments under the term loan on a quarterly basis with the remaining outstanding principal due in five years. The~~ revolving credit facility has a five-year maturity. The proceeds from the new borrowing were primarily used to fund the Byram acquisition which closed on August 1, 2017. Under the Credit Agreement, we have the ability to request two one-year extensions and to request an increase in aggregate commitments by up to $200 million.facility. The interest rate on our revolving credit facility is based on a spread over a benchmark rate (as described in the Credit Agreement). The Credit Agreement matures in March 2026.

At September 30, 2021 and December 31, 2020, we had borrowings of $12.3 million and $103 million and letters of credit of $9.4 million and $13.9 million outstanding under our revolving credit facilities. At September 30, 2021 and December

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31, 2020, we had $278 million and $283 million available for borrowing. We also had letters of credit and bank guarantees outstanding for $2.2 million and $1.6 million as of September 30, 2021 and December 31, 2020, which supports certain leased facilities as well as other normal business activities in the United States and Europe. These letters of credit and guarantees were issued outside of the revolving credit facility.

We entered into a Security and Pledge Agreement (the Security Agreement), dated March 10, 2021, pursuant to which we granted collateral on behalf of the holders of the 2024 Notes, and the parties secured under the Credit Agreement ~~which is~~(the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries, subject to ~~adjustment quarterly,~~certain customary exceptions, and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions.

On March 10, 2021, we entered into an amendment to our accounts receivable securitization program (the Receivables Securitization Program). Pursuant to the amended Receivables Securitization Program, the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed $450 million outstanding at any time. The interest rate under the Receivables Securitization Program is based on a spread over a benchmark rate (as described in the ~~London Interbank Offered Rate (LIBOR),~~Third Amendment to the ~~Federal Funds Rate or~~Receivables Financing Agreement). Under the ~~Prime Rate, plus an adjustment based on the better~~Receivables Securitization Program, certain of our ~~debt ratings or leverage ratio (Credit Spread) as defined by~~subsidiaries sell substantially all of their accounts receivable balances to our wholly owned special purpose entity, O&M Funding LLC. The Receivables Securitization Program matures in March 2024.

The Credit Agreement, Receivables Securitization Program, 2024 Notes and 2029 Unsecured Notes contain cross-default provisions which could result in the ~~Credit Agreement. We are charged a commitment fee~~acceleration of ~~between 12.5 and 25.0 basis points on~~payments due in the ~~unused portion~~event of default of any of the ~~facility.~~related agreements. The terms of the Credit Agreement ~~limit the amount of indebtedness that we may incur and~~also require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an ~~acquisition. Based on our leverage ratio at September 30, 2017, the interest rate under the credit facility is LIBOR plus 1.375%.~~

At September 30, 2017, we had borrowings of $117.2 million under the revolver and letters of credit of approximately $5.1 million outstanding under the Credit Agreement, leaving $477.7 million available for borrowing.acquisition or divestiture. We ~~also had a letter of credit outstanding for $1.3 million as of September 30, 2017 and $1.1 million at December 31, 2016, which supports our facilities leased in Europe.~~

~~The Credit Agreement and senior notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement. We believe we~~ were in compliance with our debt covenants at September 30, ~~2017.~~2021.

As of September 30, 2021, scheduled future principal payments of debt, excluding finance leases and other, were $446 million in 2024, $12.3 million in 2026, and $500 million in 2029. Current maturities at September 30, 2021 include $1.6 million in current portion of finance leases.

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Note ~~9—Income Taxes~~7—Retirement Plans

We have a noncontributory, unfunded retirement plan for certain retirees in the United States. Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective teammates.

The ~~effective tax rate was 48.1% and 34.3%~~components of net periodic benefit cost for the three and nine months ended September 30, ~~2017,~~2021 and 2020 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Service cost	$	693	$	362	$	2,106	$	1,073
Interest cost	443		498		1,337		1,488
Recognized net actuarial loss	353		214		1,060		642
Net periodic benefit cost	$	1,489	$	1,074	$	4,503	$	3,203

Note 8—Derivatives

We are directly and indirectly affected by changes in foreign currency, 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 enter into foreign currency contracts to manage our foreign exchange exposure related to certain balance sheet items that do not meet the requirements for hedge accounting. These derivative instruments are adjusted to fair value at the end of each period through earnings. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.

We determine the fair value of our foreign currency derivatives based on observable market-based inputs or unobservable inputs that are corroborated by market data. We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure. All derivatives are carried at fair value in our consolidated balance sheets in other current assets and other current liabilities. We consider the risk of counterparty default to be minimal. We report cash flows from our hedging instruments in the same cash flow statement category as the hedged items.

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The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of September 30, 2021:

Derivative Assets

Derivative Liabilities

Notional Amount

Maturity Date

Classification

Fair Value

Classification

Fair Value

Economic (non-designated) hedges

Foreign currency contracts

14,400

October 2021

Other current assets

Other current liabilities

—

In March 2021, we terminated the remaining $300 million in notional value of interest rate swaps concurrent with the debt financing transaction. In September 2020, we terminated $150 million in notional value of interest rate swaps. The remaining balance of the fair value adjustments of $25.1 million, which related to these terminated interest rate swaps, within Accumulated other comprehensive loss was reclassified to Loss on extinguishment of debt within our consolidated statements of operations for the nine months ended September 30, 2021.

The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of December 31, 2020:


				Derivative Assets			Derivative Liabilities
	Notional Amount		Maturity Date	Classification	Fair Value		Classification	Fair Value
Cash flow hedges
Interest rate swaps	$	300,000	May 2022 and May 2025	Other assets, net	$	—	Other liabilities	$	17,872

Economic (non-designated) hedges
Foreign currency contracts	$	30,300	January 2021	Other current assets	$	151	Other current liabilities	$	—

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and nine months ended September 30, 2021:


	Amount of Gain Recognized in Other Comprehensive Income (Loss)				Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income	Total Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded				Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income
	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021			Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Interest rate swaps	$	—	$	2,426	Loss on extinguishment of debt	$	—	$	(40,433)	$	—	$	(25,518)

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

The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and nine months ended September 30, 2020:

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	Amount of Loss Recognized in Other Comprehensive Income (Loss)				Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income	Total Amount of Expense Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded				Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income
	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020			Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020		Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Interest rate swaps	$	(515)	$	(19,913)	Interest expense, net	$	(20,975)	$	(65,923)	$	(3,028)	$	(6,889)

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

For the three and nine months ended September 30, 2021 we recognized losses of $0.9 million and $2.5 million associated with our economic (non-designated) foreign currency contracts. For the three and nine months ended September 30, 2020 we recognized losses of $0.9 million and $2.3 million associated with our economic (non-designated) foreign currency contracts.

We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating income, net for our foreign exchange contracts.

Note 9—Income Taxes

The effective tax rate was 12.6% and 20.8% for the three and nine months ended September 30, 2021, compared to ~~36.3%~~13.8% and ~~37.3%~~9.4% in the same periods of ~~2016.~~2020. The ~~changes~~change in ~~the effective tax rate compared to 2016~~these rates resulted primarily from a change in income mix among different tax rate jurisdictions and the effect of certain acquisition-related costs which were not deductible for tax purposes offset on a year to date basis by the release of an income tax ~~valuation allowance~~benefit recorded in ~~Europe for $3.4 million during~~ the ~~second~~first quarter of ~~2017.~~

2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act and in the third quarter of 2021 associated with the 2017 Tax Cuts and Jobs Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax benefit associated with the vesting of restricted stock. The liability for unrecognized tax benefits was ~~$13.3~~$23.0 million at September 30, ~~2017,~~2021 and ~~$10.7~~$20.8 million at December 31, ~~2016.~~2020. Included in the liability at September 30, ~~2017~~2021 and December 31, 2020 were ~~$5.0~~$2.7 million of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

On August 26, 2020, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Services (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 United States in connection with our sourcing of products by our foreign subsidiaries for sale in the United States by our domestic subsidiaries. Our amount of taxable income in the United States is based on our transfer pricing methodology, which has been consistently applied through the current date. We strongly disagree with the IRS position and will pursue all available administrative and judicial remedies, including those available under the U.S. - Ireland Income Tax Treaty to alleviate double taxation. We regularly assess the likelihood of adverse outcomes resulting from examinations such as this to determine the adequacy of our tax reserves. We believe that we have adequately reserved for this matter and that the final adjudication of this matter will not have a material impact on our consolidated financial position, results of operations or cash flows. However, the ultimate outcome of disputes of this nature is uncertain, and if the IRS were to prevail on its assertions, the additional tax, interest, and any potential penalties could have a material adverse impact on our financial position, results of operations or cash flows.

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Note 10—Net Income (Loss) per Common Share

The following summarizes the calculation of net income (loss) per common share attributable to common shareholders for the three and nine months ended September 30, ~~2017~~2021 and ~~2016.~~2020:

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data) 2017 2016 2017 2016
Numerator:
Net income $ 10,871
$ 29,831
$ 49,796
$ 81,682
Less: income allocated to unvested restricted shares (279 ) (291 ) (738 ) (855 )
Net income attributable to common shareholders - basic 10,592
29,540
49,058
80,827
Add: undistributed income attributable to unvested restricted shares - basic —
80
16
216
Less: undistributed income attributable to unvested restricted shares - diluted —
(80 ) (16 ) (216 )
Net income attributable to common shareholders - diluted $ 10,592
$ 29,540
$ 49,058
$ 80,827
Denominator:
Weighted average shares outstanding - basic and diluted 59,849
61,015
60,010
61,405
Net income per share attributable to common shareholders:
Basic and diluted $ 0.18
$ 0.48
$ 0.82
$ 1.32


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2021		2020		2021		2020
Income from continuing operations, net of tax	$	44,129	$	46,081	$	179,614	$	37,332
Loss from discontinued operations, net of tax	—		—		—		(58,203)
Net income (loss)	$	44,129	$	46,081	$	179,614	$	(20,871)

Weighted average shares outstanding - basic	73,215		60,786		72,649		60,983
Dilutive shares	2,743		137		2,754		—
Weighted average shares outstanding - diluted	75,958		60,923		75,403		60,983

Basic income (loss) per common share:
Income from continuing operations	$	0.60	$	0.76	$	2.47	$	0.61
Loss from discontinued operations	—		—		—		(0.95)
Net income (loss)	$	0.60	$	0.76	$	2.47	$	(0.34)

Diluted income (loss) per common share:
Income from continuing operations	$	0.58	$	0.76	$	2.38	$	0.61
Loss from discontinued operations	—		—		—		(0.95)
Net income (loss)	$	0.58	$	0.76	$	2.38	$	(0.34)

Note 11—~~Shareholders’~~Shareholders' Equity

Our Board of Directors has authorized a share repurchase program of up to $100 million of our outstanding common stock to be executed at the discretion of management over a three-year period, expiring in December 2019. The timing of repurchases and the exact number of shares of common stock to be purchased will depend upon market conditions and other factors and may be suspended or discontinued at any time. Purchases under the share repurchase program are made either

In May 2020, we entered into an equity distribution agreement, pursuant to ~~10b5-1 plans entered into by the company~~which we may offer and sell, from time to time, and/or during the company’s scheduled quarterly trading windows for officers and directors. During the nine months ended September 30, 2017, we repurchased in open-market transactions and retired approximately 0.2 million shares of our common stock ~~for~~having an aggregate offering price of ~~$5.0 million,~~ up to $50.0 million. We intend to use the net proceeds from the sale of our securities offered by this program for the repayment of indebtedness and/or ~~an average price per share of $32.27.~~for general corporate and working capital purposes. As of September 30, ~~2017, we have approximately $94.0~~2021, no shares were issued and $50.0 million ~~remaining~~of common stock remained available under the ~~repurchase~~at-the-market equity financing program. ~~We have elected to allocate any excess of share repurchase price over par value to retained earnings.~~

Note 12—Accumulated Other Comprehensive ~~Income (Loss)~~Loss

The following table shows the changes in accumulated other comprehensive ~~income (loss)~~loss by component for the three and nine months ended September 30, ~~2017~~2021 and ~~2016:~~2020:

Retirement Plans
Currency
Translation
Adjustments
Other Total
Accumulated other comprehensive income (loss), June 30, 2017 $ (10,743 ) $ (28,348 ) $ 165
$ (38,926 )
Other comprehensive income (loss) before reclassifications —
12,254
94
12,348
Income tax —
—
—
—
Other comprehensive income (loss) before reclassifications, net of tax —
12,254
94
12,348
Amounts reclassified from accumulated other comprehensive income (loss) 456
—
—
456
Income tax (220 ) —
—
(220 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 236
—
—
—
236
Other comprehensive income (loss) 236
12,254
94
12,584
Accumulated other comprehensive income (loss), September 30, 2017 $ (10,507 ) $ (16,094 ) $ 259
$ (26,342 )

Accumulated other comprehensive income (loss), June 30, 2016 $ (9,999 ) $ (40,186 ) $ (78 ) $ (50,263 )
Other comprehensive income (loss) before reclassifications —
1,401
82
1,483
Income tax —
—
—
—
Other comprehensive income (loss) before reclassifications, net of tax —
1,401
82
1,483
Amounts reclassified from accumulated other comprehensive income (loss) 412
—
—
412
Income tax (194 ) —
—
(194 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 218
—
—
—
218
Other comprehensive income (loss) 218
1,401
82
1,701
Accumulated other comprehensive income (loss), September 30, 2016 $ (9,781 ) $ (38,785 ) $ 4
$ (48,562 )

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	Retirement Plans		Currency Translation Adjustments		Derivatives		Total
Accumulated other comprehensive loss, June 30, 2021	$	(18,290)	$	(14,728)	$	—	$	(33,018)
Other comprehensive loss before reclassifications	—		(12,014)		—		(12,014)
Income tax	—		—		—		—
Other comprehensive loss before reclassifications, net of tax	—		(12,014)		—		(12,014)
Amounts reclassified from accumulated other comprehensive loss	500		—		—		500
Income tax	(105)		—		—		(105)
Amounts reclassified from accumulated other comprehensive loss, net of tax	395		—		—		395
Other comprehensive income (loss)	395		(12,014)		—		(11,619)
Accumulated other comprehensive loss, September 30, 2021	$	(17,895)	$	(26,742)	$	—	$	(44,637)


	Retirement Plans		Currency Translation Adjustments		Derivatives		Total
Accumulated other comprehensive loss, June 30, 2020	$	(13,926)	$	(23,471)	$	(24,188)	$	(61,585)
Other comprehensive income (loss) before reclassifications	—		5,173		(516)		4,657
Income tax	—		—		40		40
Other comprehensive income (loss) before reclassifications, net of tax	—		5,173		(476)		4,697
Amounts reclassified from accumulated other comprehensive loss	214		—		3,028		3,242
Income tax	(47)		—		(871)		(918)
Amounts reclassified from accumulated other comprehensive loss, net of tax	167		—		2,157		2,324
Other comprehensive income	167		5,173		1,681		7,021
Accumulated other comprehensive loss, September 30, 2020	$	(13,759)	$	(18,298)	$	(22,507)	$	(54,564)


	Retirement Plans		Currency Translation Adjustments		Derivatives		Total
Accumulated other comprehensive loss, December 31, 2020	$	(18,447)	$	(18)	$	(20,044)	$	(38,509)
Other comprehensive (loss) income before reclassifications	—		(26,724)		2,426		(24,298)
Income tax	—		—		(611)		(611)
Other comprehensive (loss) income before reclassifications, net of tax	—		(26,724)		1,815		(24,909)
Amounts reclassified from accumulated other comprehensive loss	704		—		25,518		26,222
Income tax	(152)		—		(7,289)		(7,441)
Amounts reclassified from accumulated other comprehensive loss, net of tax	552		—		18,229		18,781
Other comprehensive income (loss)	552		(26,724)		20,044		(6,128)
Accumulated other comprehensive loss, September 30, 2021	$	(17,895)	$	(26,742)	$	—	$	(44,637)

Table of Contents

Retirement Plans
Currency
Translation
Adjustments
Other Total
Accumulated other comprehensive income (loss), December 31, 2016 $ (11,209 ) $ (56,245 ) $ (29 ) $ (67,483 )
Other comprehensive income (loss) before reclassifications

40,151
288
40,439
Income tax —
—
—
—
Other comprehensive income (loss) before reclassifications, net of tax —
40,151
288
40,439
Amounts reclassified from accumulated other comprehensive income (loss) 1,367
—
—
1,367
Income tax (665 ) —
—
(665 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 702
—
—
702
Other comprehensive income (loss) 702
40,151
288
41,141
Accumulated other comprehensive income (loss), September 30, 2017 $ (10,507 ) $ (16,094 ) $ 259
$ (26,342 )

Accumulated other comprehensive income (loss), December 31, 2015 $ (10,482 ) $ (41,228 ) $ (115 ) $ (51,825 )
Other comprehensive income (loss) before reclassifications —
2,443
119
2,562
Income tax —
—
—
—
Other comprehensive income (loss) before reclassifications, net of tax —
2,443
119
2,562
Amounts reclassified from accumulated other comprehensive income (loss) 1,233
—
—
1,233
Income tax (532 ) —
—
(532 )
Amounts reclassified from accumulated other comprehensive income (loss), net of tax 701
—
—
701
Other comprehensive income (loss) 701
2,443
119
3,263
Accumulated other comprehensive income (loss), September 30, 2016 $ (9,781 ) $ (38,785 ) $ 4
$ (48,562 )


	Retirement Plans		Currency Translation Adjustments		Derivatives		Total
Accumulated other comprehensive loss, December 31, 2019	$	(14,691)	$	(25,301)	$	(12,715)	$	(52,707)
Other comprehensive loss before reclassifications	—		(8,577)		(19,913)		(28,490)
Income tax	—		—		5,113		5,113
Other comprehensive loss before reclassifications, net of tax	—		(8,577)		(14,800)		(23,377)
Amounts reclassified from accumulated other comprehensive loss	1,067		15,580		6,889		23,536
Income tax	(135)		—		(1,881)		(2,016)
Amounts reclassified from accumulated other comprehensive loss, net of tax	932		15,580		5,008		21,520
Other comprehensive income (loss)	932		7,003		(9,792)		(1,857)
Accumulated other comprehensive loss, September 30, 2020	$	(13,759)	$	(18,298)	$	(22,507)	$	(54,564)

We include amounts reclassified out of accumulated other comprehensive ~~income~~loss related to defined benefit pension plans as a component of net periodic pension cost recorded in distribution, selling and administrative expenses. For the three and nine months ended September 30, 2017, we reclassified $0.5 million and $1.4 million of actuarial net losses. For the three and nine months ended September 30, 2016, we reclassified $0.4 million and $1.2 million of actuarial net losses.Other expense (income), net.

Note 13—Segment Information

We periodically evaluate our application of accounting guidance for reportable segments and disclose information about reportable segments based on the way management organizes the enterprise for making operating decisions and assessing performance. We report our business under ~~three~~2 segments: ~~Domestic, International~~Global Solutions and ~~Proprietary~~Global Products. The ~~Domestic~~Global Solutions segment includes our United States distribution businesses (Medical Distribution and Patient Direct), outsourced logistics and value-added services business. ~~Byram, acquired on August 1, 2017, is included in the Domestic segment. The International segment consists of~~Global Products manufactures and sources medical surgical products through our ~~European distribution, logistics~~production and ~~value-added services business. Proprietary Products provides product-related solutions, including surgical and procedural~~ kitting ~~and sourcing.~~operations.

We evaluate the performance of our segments based on their operating ~~earnings~~income excluding intangible amortization and acquisition-related and exit and realignment charges ~~certain purchase price fair value adjustments, and other substantive items~~ that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.

Segment assets exclude inter-segment account balances as we believe their inclusion would be misleading orand not meaningful. We believe all inter-segment sales are at prices that approximate market.

The following tables present financial information by segment:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net revenue:
Segment net revenue
Domestic $ 2,194,143
$ 2,287,233
$ 6,518,571
$ 6,954,687
International 96,661
83,751
287,555
255,861
Proprietary Products 124,542
132,705
392,654
409,022
Total segment net revenue $ 2,415,346
$ 2,503,689
$ 7,198,780
$ 7,619,570
Inter-segment revenue

Proprietary Products (81,385 ) (88,088 ) (270,339 ) (264,501 )
Total inter-segment revenue (81,385 ) (88,088 ) (270,339 ) (264,501 )
Consolidated net revenue $ 2,333,961
$ 2,415,601
$ 6,928,441
$ 7,355,069

Operating earnings (loss):
Domestic $ 36,056
$ 41,034
$ 102,812
$ 126,202
International (2,163 ) 1,382
(754 ) 3,402
Proprietary Products 9,102
14,340
26,040
41,866
Inter-segment eliminations 416
(449 ) (266 ) (905 )
Acquisition-related and exit and realignment charges (9,299 ) (2,739 ) (21,134 ) (19,974 )
Other⁽¹⁾
(4,441 ) —
(8,674 ) —
Consolidated operating earnings $ 29,671
$ 53,568
$ 98,024
$ 150,591

Depreciation and amortization:
Domestic $ 9,602
$ 7,360
$ 23,233
$ 22,399
International 4,304
4,259
12,072
13,125
Proprietary Products 1,947
2,218
5,755
6,658
Consolidated depreciation and amortization $ 15,853
$ 13,837
$ 41,060
$ 42,182

Capital expenditures:
Domestic $ 9,572
$ 3,071
$ 23,376
$ 10,274
International 3,206
3,223
11,659
8,053
Proprietary Products 718
1,009
2,754
2,436
Consolidated capital expenditures $ 13,496
$ 7,303
$ 37,789
$ 20,763

September 30, 2017 December 31, 2016
Total assets:
Domestic $ 2,416,079
$ 1,778,481
International 418,331
352,898
Proprietary Products 401,331
400,885
Segment assets 3,235,741
2,532,264
Cash and cash equivalents 98,415
185,488
Consolidated total assets $ 3,334,156
$ 2,717,752

⁽¹⁾ ~~Software as a Service (SaaS) implementation costs associated with the upgrading of our global IT platforms in connection with the redesign of our global information system strategy.~~

Table of Contents


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net revenue:
Segment net revenue
Global Solutions	$	2,022,919	$	1,865,182	$	5,850,007	$	5,261,415
Global Products	679,067		473,797		2,026,385		1,235,391
Total segment net revenue	2,701,986		2,338,979		7,876,392		6,496,806
Inter-segment revenue
Global Products	(199,811)		(151,051)		(558,223)		(378,466)
Total inter-segment revenue	(199,811)		(151,051)		(558,223)		(378,466)
Consolidated net revenue	$	2,502,175	$	2,187,928	$	7,318,169	$	6,118,340

Operating income:
Global Solutions	$	20,366	$	10,972	$	47,729	$	8,522
Global Products	51,327		89,923		310,242		160,268
Inter-segment eliminations	7,587		(8,718)		(475)		(10,322)
Intangible amortization	(10,025)		(10,242)		(30,077)		(31,463)
Acquisition-related and exit and realignment charges	(6,380)		(6,382)		(20,967)		(18,500)
Consolidated operating income	$	62,875	$	75,553	$	306,452	$	108,505

Depreciation and amortization:
Global Solutions	$	9,951	$	9,572	$	29,678	$	31,273
Global Products	12,691		11,118		38,464		38,221
Consolidated depreciation and amortization	$	22,642	$	20,690	$	68,142	$	69,494

Capital expenditures:
Global Solutions	$	5,752	$	3,582	$	14,776	$	7,545
Global Products	8,192		10,656		17,849		15,808
Discontinued operations	—		—		—		3,027
Consolidated capital expenditures	$	13,944	$	14,238	$	32,625	$	26,380


	September 30, 2021		December 31, 2020
Total assets:
Global Solutions	$	2,135,865	$	2,117,372
Global Products	1,408,495		1,135,209
Segment assets	3,544,360		3,252,581
Cash and cash equivalents	39,759		83,058
Consolidated total assets	$	3,584,119	$	3,335,639

The following table presents net revenue by geographic area, which were attributed based on the location from which we ship products or provide services.

Table of Contents


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net revenue:
United States	$	2,380,794	$	2,101,074	$	6,900,222	$	5,872,143
International	121,381		86,854		417,947		246,197
Consolidated net revenue	$	2,502,175	$	2,187,928	$	7,318,169	$	6,118,340

Note 14—~~Condensed Consolidating Financial Information~~

The following tables present condensed consolidating financial information for: Owens & Minor, Inc. (O&M); the guarantors of Owens & Minor, Inc.’s 2021 Notes and 2024 Notes, on a combined basis; and the non-guarantor subsidiaries of the 2021 Notes and 2024 Notes, on a combined basis. The guarantor subsidiaries are 100% owned by Owens & Minor, Inc. Separate financial statements of the guarantor subsidiaries are not presented because the guarantees by our guarantor subsidiaries are full and unconditional, as well as joint and several, and we believe the condensed consolidating financial information is more meaningful in understanding the financial position, results of operations and cash flows of the guarantor subsidiaries.

Three Months Ended September 30, 2017
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries
Eliminations Consolidated
Statements of Income
Net revenue $ —
$ 2,113,450
$ 264,765
$ (44,254 ) $ 2,333,961
Cost of goods sold —
1,919,049
157,439
(44,469 ) 2,032,019
Gross margin —
194,401
107,326
215
301,942
Distribution, selling and administrative expenses (117 ) 159,108
102,054
—
261,045
Acquisition-related and exit and realignment charges —
6,960
2,339
—
9,299
Other operating (income) expense, net —
448
1,479
—
1,927
Operating earnings (loss) 117
27,885
1,454
215
29,671
Interest expense (income), net 7,018
(1,184 ) 2,903
—
8,737
Income (loss) before income taxes (6,901 ) 29,069
(1,449 ) 215
20,934
Income tax (benefit) provision —
7,881
2,182
—
10,063
Equity in earnings of subsidiaries 17,772
—
—
(17,772 ) —
Net income (loss) 10,871
21,188
(3,631 ) (17,557 ) 10,871
Other comprehensive income (loss) 12,584
330
12,254
(12,584 ) 12,584
Comprehensive income (loss) $ 23,455
$ 21,518
$ 8,623
$ (30,141 ) $ 23,455

Three Months Ended September 30, 2016
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries
Eliminations Consolidated
Statements of Income
Net revenue $ —
$ 2,287,335
$ 168,216
$ (39,950 ) $ 2,415,601
Cost of goods sold —
2,070,639
89,192
(40,505 ) 2,119,326
Gross margin —
216,696
79,024
555
296,275
Distribution, selling and administrative expenses (52 ) 169,451
71,906
—
241,305
Acquisition-related and exit and realignment charges —
2,237
502
—
2,739
Other operating income, net —
(1,205 ) (132 ) —
(1,337 )
Operating earnings (loss) 52
46,213
6,748
555
53,568
Interest expense (income), net 7,403
(1,345 ) 712
—
6,770
Income (loss) before income taxes (7,351 ) 47,558
6,036
555
46,798
Income tax (benefit) provision —
14,131
2,836
—
16,967
Equity in earnings of subsidiaries 37,182
—
—
(37,182 ) —
Net income (loss) 29,831
33,427
3,200
(36,627 ) 29,831
Other comprehensive income (loss) 1,701
299
1,402
(1,701 ) 1,701
Comprehensive income (loss) $ 31,532
$ 33,726
$ 4,602
$ (38,328 ) $ 31,532

Nine Months Ended September 30, 2017 Owens &
Minor, Inc. Guarantor
Subsidiaries Non-guarantor
Subsidiaries Eliminations Consolidated
Statements of Income
Net revenue $ —
$ 6,436,599
$ 635,900
$ (144,058 ) $ 6,928,441
Cost of goods sold —
5,845,789
369,596
(143,598 ) 6,071,787
Gross margin —
590,810
266,304
(460 ) 856,654
Distribution, selling and administrative expenses 434
480,765
254,154
—
735,353
Acquisition-related and exit and realignment charges —
17,084
4,050
—
21,134
Other operating (income) expense, net —
1,481
662
—
2,143
Operating earnings (loss) (434 ) 91,480
7,438
(460 ) 98,024
Interest expense (income), net 20,756
(2,777 ) 4,239
—
22,218
Income (loss) before income taxes (21,190 ) 94,257
3,199
(460 ) 75,806
Income tax (benefit) provision —
23,303
2,707
—
26,010
Equity in earnings of subsidiaries 70,986
—
—
(70,986 ) —
Net income (loss) 49,796
70,954
492
(71,446 ) 49,796
Other comprehensive income (loss) 41,141
990
40,151
(41,141 ) 41,141
Comprehensive income (loss) $ 90,937
$ 71,944
$ 40,643
$ (112,587 ) $ 90,937

Nine Months Ended September 30, 2016 Owens &
Minor, Inc. Guarantor
Subsidiaries Non-guarantor
Subsidiaries Eliminations Consolidated
Statements of Income
Net revenue $ —
$ 6,954,983
$ 516,131
$ (116,045 ) $ 7,355,069
Cost of goods sold —
6,305,489
273,927
(116,677 ) 6,462,739
Gross margin —
649,494
242,204
632
892,330
Distribution, selling and administrative expenses 838
504,984
221,122
—
726,944
Acquisition-related and exit and realignment charges —
15,888
4,086
—
19,974
Other operating income, net —
(3,952 ) (1,227 ) —
(5,179 )
Operating earnings (loss) (838 ) 132,574
18,223
632
150,591
Interest expense (income), net 21,134
(2,808 ) 1,998
—
20,324
Income (loss) before income taxes (21,972 ) 135,382
16,225
632
130,267
Income tax (benefit) provision —
40,237
8,348
—
48,585
Equity in earnings of subsidiaries 103,654
—
—
(103,654 ) —
Net income (loss) 81,682
95,145
7,877
(103,022 ) 81,682
Other comprehensive income (loss) 3,263
821
2,442
(3,263 ) 3,263
Comprehensive income (loss) $ 84,945
$ 95,966
$ 10,319
$ (106,285 ) $ 84,945

September 30, 2017
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-
guarantor
Subsidiaries
Eliminations Consolidated
Balance Sheets
Assets
Current assets
Cash and cash equivalents $ 11,456
$ 1,145
$ 85,814
$ —
$ 98,415
Accounts receivable, net 30,770
595,202
114,563
(7,779 ) 732,756
Merchandise inventories —
909,406
82,065
(2,220 ) 989,251
Other current assets 193
117,403
193,903
—
311,499
Total current assets 42,419
1,623,156
476,345
(9,999 ) 2,131,921
Property and equipment, net —
103,765
99,822
—
203,587
Goodwill, net —
180,006
510,224
—
690,230
Intangible assets, net —
10,100
221,786
—
231,886
Due from O&M and subsidiaries —
645,264
—
(645,264 ) —
Advances to and investment in consolidated subsidiaries 2,094,759
—
—
(2,094,759 ) —
Other assets, net —
43,521
33,011
—
76,532
Total assets $ 2,137,178
$ 2,605,812
$ 1,341,188
$ (2,750,022 ) $ 3,334,156
Liabilities and equity
Current liabilities
Accounts payable $ —
$ 768,780
$ 114,644
$ (7,794 ) $ 875,630
Accrued payroll and related liabilities —
18,615
13,383
—
31,998
Other current liabilities 7,127
110,580
178,956
—
296,663
Total current liabilities 7,127
897,975
306,983
(7,794 ) 1,204,291
Long-term debt, excluding current portion 545,830
6,743
364,683
—
917,256
Due to O&M and subsidiaries 580,437
—
65,002
(645,439 ) —
Intercompany debt —
138,890
—
(138,890 ) —
Deferred income taxes —
69,722
67,817
—
137,539
Other liabilities —
61,142
10,144
—
71,286
Total liabilities 1,133,394
1,174,472
814,629
(792,123 ) 2,330,372
Equity
Common stock 122,499
—
—
—
122,499
Paid-in capital 224,183
174,613
583,872
(758,485 ) 224,183
Retained earnings (deficit) 683,444
1,267,294
(41,539 ) (1,225,755 ) 683,444
Accumulated other comprehensive income (loss) (26,342 ) (10,567 ) (15,774 ) 26,341
(26,342 )
Total equity 1,003,784
1,431,340
526,559
(1,957,899 ) 1,003,784
Total liabilities and equity $ 2,137,178
$ 2,605,812
$ 1,341,188
$ (2,750,022 ) $ 3,334,156

December 31, 2016 Owens &
Minor, Inc. Guarantor
Subsidiaries Non-guarantor
Subsidiaries Eliminations Consolidated
Balance Sheets
Assets
Current assets
Cash and cash equivalents $ 38,015
$ 61,266
$ 86,207
$ —
$ 185,488
Accounts receivable, net —
526,170
90,016
(10,102 ) 606,084
Merchandise inventories —
856,566
61,505
(1,760 ) 916,311
Other current assets 106
86,907
167,143
—
254,156
Total current assets 38,121
1,530,909
404,871
(11,862 ) 1,962,039
Property and equipment, net —
97,725
93,993
—
191,718
Goodwill, net —
180,006
234,930
—
414,936
Intangible assets, net —
11,655
70,856
—
82,511
Due from O&M and subsidiaries —
573,395
—
(573,395 ) —
Advances to and investments in consolidated subsidiaries 2,044,963
—
—
(2,044,963 ) —
Other assets, net —
49,887
16,661
—
66,548
Total assets $ 2,083,084
$ 2,443,577
$ 821,311
$ (2,630,220 ) $ 2,717,752
Liabilities and equity
Current liabilities
Accounts payable $ —
$ 683,189
$ 75,512
$ (7,951 ) $ 750,750
Accrued payroll and related liabilities —
32,814
12,237
—
45,051
Other current liabilities 7,106
93,327
138,404
—
238,837
Total current liabilities 7,106
809,330
226,153
(7,951 ) 1,034,638
Long-term debt, excluding current portion 544,838
3,219
16,526
—
564,583
Due to O&M and subsidiaries 571,102
—
48,044
(619,146 ) —
Intercompany debt —
138,890
—
(138,890 ) —
Deferred income taxes —
70,280
20,103
—
90,383
Other liabilities —
60,578
7,532
—
68,110
Total liabilities 1,123,046
1,082,297
318,358
(765,987 ) 1,757,714
Equity —
Common stock 122,062
—
—
—
122,062
Paid-in capital 219,955
174,614
583,872
(758,486 ) 219,955
Retained earnings (deficit) 685,504
1,196,341
(42,032 ) (1,154,309 ) 685,504
Accumulated other comprehensive income (loss) (67,483 ) (9,675 ) (38,887 ) 48,562
(67,483 )
Total equity 960,038
1,361,280
502,953
(1,864,233 ) 960,038
Total liabilities and equity $ 2,083,084
$ 2,443,577
$ 821,311
$ (2,630,220 ) $ 2,717,752

Nine Months Ended September 30, 2017
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries
Eliminations Consolidated
Statements of Cash Flows
Operating activities:
Net income (loss) $ 49,796
$ 70,954
$ 492
$ (71,446 ) $ 49,796
Adjustments to reconcile net income to cash provided by (used for) operating activities:
Equity in earnings of subsidiaries (70,986 ) —
—
70,986
—
Depreciation and amortization —
23,281
17,779
—
41,060
Share-based compensation expense —
8,592
—
—
8,592
Provision for losses on accounts receivable —
(377 ) 1,535
—
1,158
Deferred income tax expense (benefit) —
(1,208 ) (3,377 ) —
(4,585 )
Changes in operating assets and liabilities:
Accounts receivable —
(68,655 ) (8,047 ) (2,412 ) (79,114 )
Merchandise inventories —
(52,840 ) (3,753 ) 459
(56,134 )
Accounts payable —
85,591
(8,217 ) 2,413
79,787
Net change in other assets and liabilities (65 ) (25,431 ) (15,138 ) —
(40,634 )
Other, net (1 ) 5,716
4
—
5,719
Cash provided by (used for) operating activities (21,256 ) 45,623
(18,722 ) —
5,645
Investing activities:

Acquisitions, net of cash acquired —
—
(366,569 ) —
(366,569 )
Additions to property and equipment —
(17,884 ) (7,079 ) —
(24,963 )
Additions to computer software and intangible assets —
(5,333 ) (7,493 ) —
(12,826 )
Proceeds from the sale of property and equipment —
198
582
—
780
Cash used for investing activities —
(23,019 ) (380,559 ) —
(403,578 )
Financing activities:
Change in intercompany advances 50,452
(87,278 ) 36,826
—
—
Proceeds from debt issuance —
—
250,000
—
250,000
Borrowing under revolving credit facility —
6,013
111,187
—
117,200
Financing costs paid —
—
(1,798 ) —
(1,798 )
Cash dividends paid (47,316 ) —
—
—
(47,316 )
Repurchases of common stock (5,000 ) —
—
—
(5,000 )
Other, net (3,439 ) (1,460 ) (2,464 ) —
(7,363 )
Cash provided by (used for) financing activities (5,303 ) (82,725 ) 393,751
—
305,723
Effect of exchange rate changes on cash and cash equivalents
—
—
5,137
—
5,137
Net increase (decrease) in cash and cash equivalents (26,559 ) (60,121 ) (393 ) —
(87,073 )
Cash and cash equivalents at beginning of period 38,015
61,266
86,207
—
185,488
Cash and cash equivalents at end of period $ 11,456
$ 1,145
$ 85,814
$ —
$ 98,415

Nine Months Ended September 30, 2016
Owens &
Minor, Inc.

Guarantor
Subsidiaries

Non-guarantor
Subsidiaries
Eliminations Consolidated
Statements of Cash Flows
Operating activities:
Net income (loss) $ 81,682
$ 95,145
$ 7,877
$ (103,022 ) $ 81,682
Adjustments to reconcile net income to cash provided by (used for) operating activities:
Equity in earnings of subsidiaries (103,654 ) —
—
103,654
—
Depreciation and amortization —
22,497
19,685
—
42,182
Share-based compensation expense —
8,934
—
—
8,934
Provision for losses on accounts receivable —
(84 ) (132 ) —
(216 )
Deferred income tax expense (benefit) —
(3,233 ) —
—
(3,233 )
Changes in operating assets and liabilities:
Accounts receivable —
14,107
(9,385 ) 301
5,023
Merchandise inventories —
(3,662 ) (771 ) (633 ) (5,066 )
Accounts payable —
55,060
3,982
(300 ) 58,742
Net change in other assets and liabilities 2,277
(512 ) (46,668 ) —
(44,903 )
Other, net 1,321
319
(274 ) —
1,366
Cash provided by (used for) operating activities (18,374 ) 188,571
(25,686 ) —
144,511
Investing activities:
Additions to property and equipment —
(7,337 ) (6,345 ) —
(13,682 )
Additions to computer software and intangible assets —
(2,937 ) (4,144 ) —
(7,081 )
Proceeds from the sale of property and equipment —
78
4,419
—
4,497
Cash used for investing activities —
(10,196 ) (6,070 ) —
(16,266 )
Financing activities:
Change in intercompany advances 172,057
(162,206 ) (9,851 ) —
—
Change in bank overdraft —
—
21,753
—
21,753
Cash dividends paid (47,802 ) —
—
—
(47,802 )
Repurchases of common stock (48,654 ) —
—
—
(48,654 )
Other, net (4,027 ) (1,782 ) (2,309 ) —
(8,118 )
Cash provided by (used for) financing activities 71,574
(163,988 ) 9,593
—
(82,821 )
Effect of exchange rate changes on cash and cash equivalents
—
—
6,652
—
6,652
Net increase (decrease) in cash and cash equivalents 53,200
14,387
(15,511 ) —
52,076
Cash and cash equivalents at beginning of period 103,284
5,614
52,122
—
161,020
Cash and cash equivalents at end of period $ 156,484
$ 20,001
$ 36,611
$ —
$ 213,096

~~Note 15—~~Recent Accounting Pronouncements

~~On January 1, 2017, we~~In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We adopted ASU No. ~~2016-09,~~ 2019-12 effective beginning January 1, 2021. Its adoption did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.Our current debt agreements contemplate a transition from LIBOR to another benchmark rate in the event that LIBOR ceases to exist. We do not expect the transition to have a material impact on our consolidated financial statements.

In October 2020, the FASB issued ASU No. 2020-10, Codification Improvements, to ~~Employee Share-Based Payment Accounting.~~ improve consistency by amending the FASB Accounting Standards Codification (the Codification) to include all disclosure guidance in the appropriate disclosure sections. This ASU also clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The amendments in this ~~updated guidance included changes~~ASU do not change GAAP and, therefore, are not expected to simplify the Codification for several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Asresult in a ~~result of this adoption, we recognized $0.1 million and $0.3 million~~significant change in excess tax benefits in the income statement for the three and nine months ended September 30, 2017. In addition, we recorded these tax benefits related to stock based compensation for the nine month period in operating activities in the statements of cash flows and reclassified $0.7 million from financing activities in the prior period to conform to this presentation.

~~In May 2014, the FASB issued an~~practice. We adopted ASU ~~Revenue from Contracts with Customers~~. The amended guidance eliminates industry specific guidance and applies to all companies. Revenue will be recognized when an entity satisfies a performance obligation by transferring control of a promised good or service to a customer in an amount that reflects the consideration to which the entity expects to be entitled for that good or service. Revenue from a contract that contains multiple performance obligations is allocated to each performance obligation generally on a relative standalone selling price basis. Amended guidance was issued on: principal versus agent considerations, shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good, clarification on how an entity should evaluate the collectibility threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. The amended guidance also requires additional quantitative and qualitative disclosures. These amended standards are allNo. 2020-10 effective ~~for us~~ beginning January 1, ~~2018 and allow for either full retrospective~~2021. Its adoption ~~or modified retrospective adoption (cumulative effect). We~~did not have substantially completed our evaluation of the amended guidance, including identification of revenue streams and customer contract reviews. Our revenue is primarily distribution revenue, which we recognize at the time shipment is completed and title passes to the customer. Although we are continuing to assess the impact of the amended guidance, includinga material impact on our consolidated financial disclosures, we generally anticipate that the timing of recognition of distribution revenue will be substantially unchanged under the amended guidance. We intend to use the modified retrospective method of adoption. We are finalizing our evaluation of how the guidance may require changes to our business processes, systems and controls to support the additional required disclosures.statements.

There ~~has~~have been no ~~change~~further changes in our significant accounting policies from those contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

~~Note 16—Subsequent Events~~

On October 31, 2017, we entered into a Purchase Agreement to acquire the Surgical and Infection Prevention (“S&IP”) business of Halyard Health, Inc. ("Halyard") for $710 million in cash, subject to certain adjustments as provided in the Purchase Agreement. Halyard’s S&IP business is a leading global provider of medical supplies and solutions for the prevention of healthcare-associated infections across the acute and alternate site channels. The transaction, which has been approved by the boards of directors of both companies, is expected to close in the first quarter of 2018, subject to customary closing conditions and regulatory approvals, including Hart-Scott-Rodino.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis describes results of operations and material changes in the financial condition of Owens & Minor, Inc. and its subsidiaries since December 31, ~~2016.~~2020. 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, ~~2016.~~2020.

Overview

Owens & Minor, Inc., along with its subsidiaries, (we, us, or our) is a leading global healthcare solutions company. On June 18, 2020 (the Divestiture Date), we completed the divestiture of our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin, Ireland office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $133 million. The Divestiture provides us with a greater ability to focus on and invest in our differentiated products, services ~~company that connects the world of medical products to the point of care. We report under three business units: Domestic, International~~ and ~~Proprietary Products (formerly Clinical & Procedural Solutions (CPS) which has been renamed "Proprietary Products" effective January 1, 2017). Domestic is our~~ U.S. distribution ~~logistics and value-added services business. Byram, acquired on August 1, 2017, is included in~~businesses.

As a result of the Domestic segment. International is our European distribution, logistics and value-added services business. Proprietary Products provides product-related solutions, including surgical and procedural kitting and sourcing. Segment financial information is provided in Note 13 of Notes to Consolidated Financial Statements included in this quarterly report.

~~Financial highlights.~~ The following table provides a reconciliation of reported operating earnings, net income and net income per diluted common share to non-GAAP measures used by management. In the second quarter of 2017 we began to exclude acquisition-related intangible amortization from our non-GAAP measures, along with the previously excluded items. Intangible amortization 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 and~~Divestiture, the results of operations from our ~~peers. Prior period amounts have been recast on the same basis.~~

Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands except per share data) 2017 2016 2017 2016
Operating earnings, as reported (GAAP) $ 29,671
$ 53,568
$ 98,024
$ 150,591
Acquisition-related and exit and realignment charges ⁽¹⁾
9,299
2,739
21,134
19,974
Acquisition-related intangible amortization ⁽²⁾
5,071
2,489
9,737
7,552
Other ⁽³⁾
4,441
—
8,674
—
Operating earnings, adjusted (non-GAAP) (Adjusted Operating Earnings) $ 48,482
$ 58,796
$ 137,569
$ 178,117

Net income, as reported (GAAP) $ 10,871
$ 29,831
$ 49,796
$ 81,682
Acquisition-related and exit and realignment charges ⁽¹⁾
9,299
2,739
21,134
19,974
Income tax expense (benefit) ⁽⁴⁾
(2,854 ) (1,015 ) (7,367 ) (6,615 )
Acquisition-related intangible amortization ⁽²⁾
5,071
2,489
9,737
7,552
Income tax expense (benefit) ⁽⁴⁾
(1,601 ) (645 ) (2,993 ) (1,956 )
Other ⁽³⁾
4,441
—
8,674
—
Income tax expense (benefit) ⁽⁴⁾
(973 ) —
(2,465 ) —
Net income, adjusted (non-GAAP) (Adjusted Net Income) $ 24,254
$ 33,399
$ 76,516
$ 100,637

Net income per diluted common share, as reported (GAAP) $ 0.18
$ 0.48
$ 0.82
$ 1.32
Acquisition-related and exit and realignment charges, per diluted common share ⁽¹⁾
0.11
0.03
0.23
0.21
Acquisition-related intangible amortization, per diluted common share ⁽²⁾
0.06
0.03
0.11
$ 0.09
Other, per diluted common share ⁽³⁾
0.05
—
0.10
—
Net income per diluted common share, adjusted (non-GAAP)(Adjusted EPS) $ 0.40
$ 0.54
$ 1.26
$ 1.62

~~Net income per diluted share was $0.18 and $0.82~~Movianto business are reported as “Loss from discontinued operations, net of tax” for the three and nine months ended September 30, ~~2017, a decrease~~2020. See Note 3, “Discontinued Operations,” of ~~$0.30~~the Notes to Consolidated Financial Statements for further information. Unless otherwise indicated, the following information relates to continuing operations.

Income from continuing operations per diluted share was $0.58 and ~~$0.50 when compared to the same periods of 2016. Adjusted EPS (non-GAAP) was $0.40 and $1.26~~$2.38 for the three and nine months ended September 30, ~~2017, a decrease of $0.14 and $0.36~~2021 as compared to ~~prior year. Net income in~~$0.76 and $0.61 for the ~~year to date period of 2017 benefitted by $3.4 million or $0.06 per share from the release of an income tax valuation allowance in Europe during the second quarter. Domestic~~three and nine months ended September 30, 2020. Global Solutions segment operating ~~earnings were $36.1 million in the quarter and $102.8 million for the year to date period compared to $41.0~~income was $20.4 million and $126.2 million in the prior year comparative periods. The declines were largely a result of provider margin compression, the exit of a large customer in 2016 and lower income from manufacturer product price changes on a year to date basis. We expect the current trend of increased gross margin pressure to continue. The International segment operating losses were $2.2 million for the quarter and $0.8 million year to date, compared to operating earnings of $1.4 million and $3.4 million in the prior year. The change compared to prior year resulted primarily from increased costs to support new business. Proprietary Products operating earnings were $9.1 million and $26.0 million, reflecting decreases of $5.2 million and $15.8 million as a result of lower revenues compared to prior year and increased production costs.

~~Use of Non-GAAP Measures~~

Adjusted operating earnings, adjusted net income and adjusted EPS are an alternative view of performance used by management, and we believe that investors' understanding of our performance is enhanced by disclosing these performance measures. In general, the measures exclude items and charges that (i) management does not believe reflect our core business and relate more to strategic, multi-year corporate activities; or (ii) relate to activities or actions that may have occurred over multiple or in prior periods without predictable trends. Management uses these non-GAAP financial measures internally to evaluate our performance, evaluate the balance sheet, engage in financial and operational planning and determine incentive compensation.

Management provides these non-GAAP financial measures to investors as supplemental metrics to assist readers in assessing the effects of items and events on our financial and operating results and in comparing our performance to that of our

~~competitors. However, the non-GAAP financial measures used by us 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 us should not be considered a substitute 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 above should be carefully evaluated.

~~(1) Acquisition-related charges were $4.3 million and $6.3~~$47.7 million for the three and nine months ended September 30, ~~2017~~2021, compared to ~~$0.6~~$11.0 million and $0.9 million for the same periods of 2016. Current year charges were primarily transaction and transition costs associated with the acquisition of Byram and the upcoming Halyard S&IP transaction. The prior year amounts related primarily to costs incurred to settle certain obligations and address other on-going matters associated with the acquisitions of ArcRoyal and Medical Action.

~~Exit and realignment charges were $5.0 million and $14.8~~$8.5 million for the three and nine months ended September 30, ~~2017. Current year charges~~2020. These increases were ~~associated with severance from reduction in force~~a

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result of strong revenue growth, leveraging our fixed costs, and other employee costs associated with the establishment of our new client engagement centers, the write-down of information system assets which are no longer used and other IT restructuring charges. Expenses associated with the establishment of the client engagement center will continue to be recorded throughout 2017. Exit and realignment charges were $2.1operating efficiencies. Global Products segment operating income was $51.3 million and ~~$19.1~~$310 million for the three and nine months ended September 30, ~~2016. These included severance activities (including our voluntary employee separation program in the first quarter of 2016),~~2021, compared to $89.9 million and other costs associated with our strategic organizational realignment which include certain professional fees and costs to streamline administrative functions and processes in the United States and Europe. More information about these charges is provided in Note 6 of Notes to Consolidated Financial Statements included in this quarterly report.

~~(2) Acquisition-related intangible amortization includes amortization of certain intangible assets established during purchase accounting~~$160 million for business combinations. 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 and the results of our peers. We have begun to exclude these charges from our non-GAAP results in the second quarter of 2017 and thus prior year amounts have been recast on the same basis.

~~(3) Includes software as a service (SaaS) implementation costs associated with the upgrading of our global IT platforms in connection with the redesign of our global information system strategy.~~

(4) These charges have been tax effected in the preceding table by determining the income tax rate depending on the amount of charges incurred in different tax jurisdictions and the deductibility of those charges for income tax purposes.

~~Results of Operations~~

~~Net revenue.~~

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Domestic $ 2,194,143
$ 2,287,233
$ (93,090 ) (4.1 )%
International 96,661
83,751
12,910
15.4 %
Proprietary Products 124,542
132,705
(8,163 ) (6.2 )%
Inter-segment (81,385 ) (88,088 ) 6,703
(7.6 )%
Net revenue $ 2,333,961
$ 2,415,601
$ (81,640 ) (3.4 )%

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Domestic $ 6,518,571
$ 6,954,687
$ (436,116 ) (6.3 )%
International 287,555
255,861
31,694
12.4 %
Proprietary Products 392,654
409,022
(16,368 ) (4.0 )%
Inter-segment (270,339 ) (264,501 ) (5,838 ) 2.2 %
Net revenue $ 6,928,441
$ 7,355,069
$ (426,628 ) (5.8 )%

~~Consolidated net revenue declined for both~~ the three and nine months ended September 30, ~~2017,~~2020. The decrease for the three months ended September 30, 2021 was primarily the result of the timing of glove cost pass-through, accelerating inflationary pressures, including commodities, transportation, and labor, partially offset by revenue growth. The increase for the nine months ended September 30, 2021 was a result of higher personal protective equipment (PPE) sales, favorable timing of cost pass-through on gloves, productivity initiatives, favorable product mix, and improved fixed cost leverage, partially offset by higher commodity prices and rising transportation costs, compared to the prior year.

COVID-19 Update

We are closely monitoring the impact of the 2019 novel coronavirus (COVID-19), including the related Delta variant, on all aspects of our business, including how it impacts our customers, teammates, suppliers, vendors and distribution channels. We have taken actions to protect our teammates while maintaining business continuity as we respond to the needs from this global pandemic. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our teammates, customers, suppliers and shareholders.

Revenue for the nine months ended September 30, 2021 of $7.3 billion continues to be impacted by COVID-19 and includes the effective response to the ongoing recovery of elective procedures, higher sales of PPE, and pass-through of elevated glove costs.Operating income for the nine months ended September 30, 2021 also benefited from improved productivity and increased manufacturing output related to PPE, favorable product mix and operating efficiencies. In 2020, we expanded our PPE production operations and have taken measures to increase and improve our production such as retooling existing equipment, installing and optimizing new production lines and ramping up our new non-woven fabric machinery. We expect that we will continue servicing our customers' needs related to the heightened demand for our PPE as a result of various factors, including the ~~exit~~implementation of new regulations and healthcare protocols calling for increased use of PPE, healthcare professional preference for medical grade PPE, stockpile PPE demand and the creation of new channels for PPE demand in healthcare, non-healthcare and international markets.

In March 2020, under the Defense Production Act (DPA), we were awarded a ~~large domestic customer~~contract with the U.S. Department of Health and Human Services to produce N-95 respirator masks in ~~2016, lower~~an effort to replenish the Strategic National Stockpile. In April 2020, also under the DPA, the U.S. Department of Defense initiated a technology investment agreement with us involving up to $30.0 million of anticipated funding of assets to expand capacity to supply N-95 respirator masks. Through September 30, 2021, substantially all of the anticipated funding had been expended and reimbursed in accordance with this arrangement.

We are unable to predict the timing of the pandemic and the full impact that COVID-19 will have on our future operating results, financial position and cash flows due to numerous variables and continued uncertainties. Travel, transportation, and business operation restrictions arising from virus containment efforts of governments around the world have continued to impact our operations in certain locations, including within Asia. Essential activity exceptions from these restrictions have allowed us to continue to operate but virus containment efforts have resulted in additional direct costs from supply chain challenges. Although we have experienced growth ~~with existing domestic customers and one less~~in sales ~~day compared to prior year. Byram contributed $80.3 million in revenue to~~volumes for certain of our products (such as PPE) during the ~~Domestic segment for the quarter and year to date. The~~

~~increase in the International segment was driven by growth with existing customers and new business~~COVID-19 pandemic, as well as improved productivity and manufacturing output, there can be no assurance that such growth rates, increased sales volumes or other improvements will be maintained during or following the COVID-19 pandemic.

Results of Operations

Net revenue.


	Three Months Ended September 30,				Change
(Dollars in thousands)	2021		2020		$		%
Global Solutions	$	2,022,919	$	1,865,182	$	157,737	8.5	%
Global Products	679,067		473,797		205,270		43.3	%
Inter-segment	(199,811)		(151,051)		(48,760)		(32.3)	%
Net revenue	$	2,502,175	$	2,187,928	$	314,247	14.4	%

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	Nine Months Ended September 30,				Change
(Dollars in thousands)	2021		2020		$		%
Global Solutions	$	5,850,007	$	5,261,415	$	588,592	11.2	%
Global Products	2,026,385		1,235,391		790,994		64.0	%
Inter-segment	(558,223)		(378,466)		(179,757)		(47.5)	%
Net revenue	$	7,318,169	$	6,118,340	$	1,199,829	19.6	%

The change in net revenue for the three and nine months ended September 30, 2021 reflected our market share gains, the effective response to the ongoing recovery of elective procedures, higher sales of surgical & infection prevention (S&IP) products, pass-through of elevated glove costs, as well as continued strong performance in our Patient Direct business. Foreign currency translation had a favorable ~~foreign currency translation~~ impact on net revenue of ~~$2.8~~$1.8 million and $23.5 million for the ~~quarter but offset by an unfavorable impact of $12.4 million year to date. A decrease in sales of our sourced products contributed~~three and nine months ended September 30, 2021 as compared to the ~~year over year change in the Proprietary Products segment.~~prior year.

Cost of goods sold.

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Cost of goods sold $ 2,032,019
$ 2,119,326
$ (87,307 ) (4.1 )%


	Three Months Ended September 30,				Change
(Dollars in thousands)	2021		2020		$		%
Cost of goods sold	$	2,173,336	$	1,843,589	$	329,747	17.9	%

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Cost of goods sold $ 6,071,787
$ 6,462,739
$ (390,952 ) (6.0 )%


	Nine Months Ended September 30,				Change
(Dollars in thousands)	2021		2020		$		%
Cost of goods sold	$	6,146,511	$	5,236,035	$	910,476	17.4	%

Cost of goods sold includes the cost of the product (net of supplier incentives and cash discounts) and all costs incurred for shipments of products from manufacturers to our distribution centers for all customer arrangements where we are the primary obligor and bear risk of general and physical inventory ~~loss and carry all credit risk associated with sales.~~loss. These are sometimes referred to as distribution ~~including products sold through Byram, or buy/sell~~ contracts. Cost of goods sold also includes direct and certain indirect labor, material and overhead costs associated with our ~~Proprietary~~Global Products ~~business.~~segment. There is no cost of goods sold associated with our fee-for-service ~~business. As a result~~arrangements. Cost of ~~the decrease~~goods sold compared to prior year reflects changes in sales activity, ~~through our distribution business,~~including sales mix, and accelerating inflationary pressures.

Gross margin.


	Three Months Ended September 30,						Change
(Dollars in thousands)	2021			2020			$		%
Gross margin	$	328,839		$	344,339		$	(15,500)	(4.5)	%
As a % of net revenue	13.14		%	15.74		%


	Nine Months Ended September 30,						Change
(Dollars in thousands)	2021			2020			$		%
Gross margin	$	1,171,658		$	882,305		$	289,353	32.8	%
As a % of net revenue	16.01		%	14.42		%

Gross margin decrease in the three months ended September 30, 2021 was driven by the timing of glove cost pass-through and accelerating inflationary pressures, partially offset by revenue growth. Gross margin increase in the nine months ended September 30, 2021 was driven by revenue growth, market dynamics including timing of ~~goods sold decreased from prior year~~glove price and cost changes, an overall improved sales mix and operating efficiencies, partially offset by ~~$87.3~~accelerating inflationary pressures. Foreign

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currency translation had an unfavorable impact on gross margin of $6.2 million and ~~$391.0~~$0.8 million for the three and nine months ended September 30, ~~2017, respectively.~~2021 as compared to the prior year.

~~Gross margin.~~

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Gross margin $ 301,942
$ 296,275
$ 5,667
1.9 %
As a % of net revenue 12.94 % 12.27 %

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Gross margin $ 856,654
$ 892,330
$ (35,676 ) (4.0 )%
As a % of net revenue 12.36 % 12.13 %

Gross margin for the quarter included positive contribution from Byram and a change in revenue mix offset by the impact of overall lower revenues, a decline in provider margin and lower income from manufacturer product price changes (on a year to date basis). The impact of foreign currency translation was favorable for the quarter by $2.3 million and unfavorable by $6.1 million for the year to date. With increasing customer cost pressures and competitive dynamics in healthcare, we believe the current trend of increased gross margin pressure will continue.

Operating expenses.

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Distribution, selling and administrative expenses $ 261,045
$ 241,305
$ 19,740
8.2 %
As a % of net revenue 11.18 % 9.99 %

Other operating (income) expense, net $ 1,927
$ (1,337 ) $ 3,264
(244.1 )%


	Three Months Ended September 30,						Change
(Dollars in thousands)	2021			2020			$		%
Distribution, selling and administrative expenses	$	262,457		$	262,538		$	(81)	—	%
As a % of net revenue	10.49		%	12.00		%
Acquisition-related and exit and realignment charges	$	6,380		$	6,382		$	(2)	—	%
Other operating income, net	$	(2,873)		$	(134)		$	(2,739)	(2,044.0)	%


	Nine Months Ended September 30,						Change
(Dollars in thousands)	2021			2020			$		%
Distribution, selling and administrative expenses	$	849,255		$	758,320		$	90,935	12.0	%
As a % of net revenue	11.60		%	12.39		%
Acquisition-related and exit and realignment charges	$	20,967		$	18,500		$	2,467	13.3	%
Other operating income, net	$	(5,016)		$	(3,020)		$	(1,996)	(66.1)	%

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Distribution, selling and administrative expenses $ 735,353
$ 726,944
$ 8,409
1.2 %
As a % of net revenue 10.61 % 9.88 %
Other operating (income) expense, net $ 2,143
$ (5,179 ) $ 7,322
(141.4 )%

Distribution, selling and administrative (DS&A) expenses include labor and warehousing costs associated with our distribution and outsourced logistics services and all costs associated with our fee-for-service arrangements. Shipping and handling costs are primarily included in DS&A expenses and include costs to store, move, and prepare products for shipment, as well as costs to deliver products to customers. ~~The costs to convert new customers to our information systems are included~~Overall DS&A expenses were affected by revenue growth, changes in ~~DS&A~~incentive compensation, teammate benefits, accelerating inflationary pressures, and ~~are generally incurred prior to the recognition of revenues from the new customers.~~

~~Excluding Byram, DS&A as a percentage of revenue was 10.55% and 10.40%~~operational efficiencies for the three and nine months ended September 30, ~~2017. Overall~~2021. In addition, overall DS&A expenses ~~reflected decreased sales activity in~~were affected by charitable contributions for the ~~quarter and year to date, benefits of cost control and productivity initiatives, and a favorable~~nine months ended September 30, 2021. DS&A expenses also included an unfavorable impact for foreign currency translation ~~impact~~ of ~~$6.2~~$0.1 million ~~year to date. These were offset in part by increased costs to support new business~~ and ~~unfavorable foreign currency translation impacts of~~ $2.3 million for the three and nine months ended September 30, 2021.

Acquisition-related and exit and realignment charges presented in our consolidated statements of operations of $6.4 million and $21.0 million for the ~~quarter. As a percentage~~three and nine months ended September 30, 2021 consisted primarily of ~~net revenue, the increases~~wind-down costs related to Fusion5, leadership reorganization costs, IT restructuring charges, and other costs related to the ~~large customer loss in 2016.~~

~~The changes in other operating (income) expense, net were attributed primarily to software as a service implementation expenses which were not incurred in 2016.~~

~~A discussion~~reorganization of the U.S. operations. Acquisition-related charges within acquisition-related and exit and realignment charges ~~is included above~~presented in our consolidated statements of operations were $0.8 million and $8.9 million for the three and nine months ended September 30, 2020, which consisted primarily of transition costs for the Halyard acquisition. Exit and realignment charges were $5.6 million and $9.6 million for the three and nine months ended September 30, 2020 and consisted primarily of severance from reduction in force, post divestiture costs related to the Movianto business, and other costs related to the reorganization of the U.S. commercial, operations and executive teams.

The change in other operating income, net for the three and nine months ended September 30, 2021 includes the impact of higher foreign currency transaction gains as compared to the prior year.

Interest expense, net.


	Three Months Ended September 30,						Change
(Dollars in thousands)	2021			2020			$		%
Interest expense, net	$	11,572		$	20,975		$	(9,403)	(44.8)	%
Effective interest rate	4.17		%	5.64		%

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	Nine Months Ended September 30,						Change
(Dollars in thousands)	2021			2020			$		%
Interest expense, net	$	36,784		$	65,923		$	(29,139)	(44.2)	%
Effective interest rate	4.72		%	6.35		%

Interest expense, net and the effective interest rate for the three and nine months ended September 30, 2021 decreased primarily due to a reduction of debt and lower interest rates. See Note 6 in Notes to Consolidated Financial Statements.

Loss on extinguishment of debt.


	Three Months Ended September 30,				Change
(Dollars in thousands)	2021		2020		$		%
Loss on extinguishment of debt	$	—	$	308	$	(308)	(100.0)	%


	Nine Months Ended September 30,				Change
(Dollars in thousands)	2021		2020		$		%
Loss on extinguishment of debt	$	40,433	$	2,580	$	37,853	1,467.2	%

Loss on extinguishment of debt for the nine months ended September 30, 2021 includes the write-off of deferred financing costs and third party fees associated with the debt financing in March 2021 of $15.3 million and amounts reclassified from accumulated other comprehensive loss as a result of the termination of our interest rate swaps of $25.1 million. Loss on extinguishment of debt for the three and nine months ended September 30, 2020 primarily includes the write-off of deferred financing costs and third party fees, offset by the gain on extinguishment of debt related to the partial repurchase of our 2021 and 2024 Notes.

Other expense (income), net.


	Three Months Ended September 30,				Change
(Dollars in thousands)	2021		2020		$		%
Other expense (income), net	$	799	$	785	$	14	1.8	%


	Nine Months Ended September 30,				Change
(Dollars in thousands)	2021		2020		$		%
Other expense (income), net	$	2,397	$	(1,193)	$	3,590	300.9	%

Other expense (income), net for the three and nine months ended September 30, 2021 and 2020 represents interest cost and net actuarial losses related to our retirement plans. Other expense (income), net for the nine months ended September 30, 2020 includes a gain from the surrender of company-owned life insurance policies.

Income taxes.


	Three Months Ended September 30,						Change
(Dollars in thousands)	2021			2020			$		%
Income tax provision	$	6,375		$	7,404		$	(1,029)	(13.9)	%
Effective tax rate	12.6		%	13.8		%

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	Nine Months Ended September 30,						Change
(Dollars in thousands)	2021			2020			$		%
Income tax provision	$	47,224		$	3,863		$	43,361	1,122.5	%
Effective tax rate	20.8		%	9.4		%

The change in the ~~Overview section.~~

~~Interest expense, net.~~

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Interest expense, net $ 8,737
$ 6,770
$ 1,967
29.1 %
Effective interest rate 4.15 % 4.76 %

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Interest expense, net $ 22,218
$ 20,324
$ 1,894
9.3 %
Effective interest rate 4.52 % 4.79 %

~~The increase in interest expense and change in~~ effective ~~interest~~tax rate for the three and nine months ended September 30, ~~2017 were a result of the borrowings under our new Credit Agreement entered in July 2017.~~

~~Income taxes.~~

Three Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Income tax provision $ 10,063
$ 16,967
$ (6,904 ) (40.7 )%
Effective tax rate 48.1 % 36.3 %

Nine Months Ended September 30, Change
(Dollars in thousands) 2017 2016 $ %
Income tax provision $ 26,010
$ 48,585
$ (22,575 ) (46.5 )%
Effective tax rate 34.3 % 37.3 %

~~The changes in the effective tax rate~~2021 compared to ~~2016~~the same periods in 2020 resulted primarily from a change in income mix among different tax rate jurisdictions and the effect of certain acquisition-related costs which were not deductible for tax purposes offset on a year to date basis by the release of an income tax ~~valuation allowance~~benefit recorded in ~~Europe for $3.4 million during~~ the ~~second~~first quarter of ~~2017.~~2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act and in the third quarter of 2021 associated with the 2017 Tax Cuts and Jobs Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax benefit associated with the vesting of restricted stock.

Financial Condition, Liquidity and Capital Resources

Financial condition. We monitor operating working capital through days sales outstanding (DSO) and merchandise inventory ~~turnover.~~days. We estimate a hypothetical increase (decrease) in DSO of one day would result in a decrease (increase) in our cash balances, an increase (decrease) in borrowings against our revolving credit facility or Receivables Securitization Program, or a combination thereof of approximately ~~$25~~$27 million.

The majority of our cash and cash equivalents are held in cash depository accounts with major banks in the United States, Europe, and ~~Europe or invested in high-quality, short-term liquid investments.~~Asia. Changes in our working capital can vary in the normal course of business based upon the timing of inventory purchases, ~~collection~~collections of accounts receivable, and ~~payment~~payments to suppliers. ~~Changes in shipping terms with certain of our suppliers have contributed to increased inventory and accounts payable and had an unfavorable impact on inventory turnover.~~


	September 30, 2017		December 31, 2016				Change								September 30, 2021						December 31, 2020				Change
(Dollars in thousands)						$				%		(Dollars in thousands)								$					%
Cash and cash equivalents	$	98,415		$	185,488			$	(87,073	)		(46.9	)%	Cash and cash equivalents				$	39,759					$	83,058			$	(43,299)				(52.1)	%
Accounts and notes receivable, net of allowances	$	732,756	$	606,084			$	126,672			20.9	%
Accounts receivable, net of allowances													Accounts receivable, net of allowances			$	759,744					$	700,792			$	58,952			8.4		%
Consolidated DSO ⁽¹⁾	27.6		23.1										Consolidated DSO (1)		27.3						26.0
Merchandise inventories	$	989,251	$	916,311			$	72,940			8.0	%	Merchandise inventories		$	1,514,387					$	1,233,751			$	280,636			22.7		%
Consolidated inventory turnover ⁽²⁾	8.1		9.2
Inventory days (2)													Inventory days (2)		64.1						57.8
Accounts payable	$	875,630	$	750,750			$	124,880			16.6	%	Accounts payable		$	1,118,753					$	1,000,186			$	118,567			11.9		%

(1) Based on period end accounts receivable and net revenue for the ~~quarter~~quarters ended September 30, 2021 and December 31, 2020

(2) Based on ~~average annual inventory~~period end merchandise inventories and ~~annualized~~ cost of goods sold for the ~~quarter~~quarters ended September 30, ~~2017~~2021 and ~~year ended~~ December 31, ~~2016~~2020

Liquidity and capital expenditures. The following table summarizes our consolidated statements of cash flows for the nine months ended September 30, ~~2017~~2021 and ~~2016:~~

2020, which relates to continuing operations and discontinued operations:

(Dollars in thousands) 2017 2016
Net cash provided by (used for):
Operating activities $ 5,645
$ 144,511
Investing activities (403,578 ) (16,266 )
Financing activities 305,723
(82,821 )
Effect of exchange rate changes 5,137
6,652
Increase (decrease) in cash and cash equivalents $ (87,073 ) $ 52,076


(Dollars in thousands)	2021		2020
Net cash provided by (used for):
Operating activities	$	73,836	$	268,196
Investing activities	(32,584)		112,830
Financing activities	(117,222)		(244,955)
Effect of exchange rate changes	(2,454)		6,721
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(78,424)	$	142,792

Cash provided by operating activities ~~was $5.6 million~~ in the first nine months of ~~2017, compared to $144.5 million~~2021 and 2020 reflected fluctuations in ~~the same period of 2016. The decrease in cash from operating activities for the first nine months of 2017 compared to the same period in 2016 was primarily due to unfavorable~~net income along with changes in working ~~capital including inventory and accounts receivable balances.~~capital.

Cash used for investing activities ~~was $403.6 million~~ in the first nine months of ~~2017, compared to $16.3~~2021 and 2020 included capital expenditures of $32.6 million ~~in the same period of 2016. Investing activities in 2017~~ and ~~2016 related to capital expenditures~~$26.4 million for our strategic and operational efficiency initiatives ~~particularly initiatives relating to information technology enhancements~~associated with property and ~~optimizing our distribution network.~~equipment, investments for increased manufacturing capacity in the Americas, and capitalized software. Cash ~~used for~~provided by investing activities in ~~2017 also includes~~ the ~~acquisition~~first nine months of ~~Byram Healthcare~~2020 included cash consideration received of $133 million from the sale of Movianto and proceeds of $6.0 million from the surrender of company-owned life insurance policies.

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Cash used for ~~$367 million.~~

~~Cash provided by~~ financing activities in the first nine months of ~~2017 was $305.7~~2021 included dividend payments of $0.5 million and net repayments of $90.9 million under our revolving credit facility, compared to ~~cash used~~$0.5 million and $108 million for the same period of ~~$82.8~~2020. We also had proceeds from borrowings of $575 million related to the 2029 Unsecured Notes and Accounts Receivable Securitization Program for the first nine months of 2021, compared to $150 million related to the Accounts Receivable Securitization Program for the first nine months of 2020. Financing activities also included repayments of $553 million for the first nine months of 2021 on our term loans, 2021 and 2024 Notes, and Accounts Receivable Securitization Program, compared to $270 million in the same period of ~~2016. During~~2020 on our term loans and 2021 and 2024 Notes. We used $83.3 million of cash to repurchase $87.9 million aggregate principal amount of the 2021 and 2024 Notes during the first nine months of 2020. We also paid $13.9 million in financing costs in the first nine months of ~~2017,~~2021, as compared to $10.4 million in financing costs for the same period of 2020. In addition, we paid ~~dividends of $47.3~~$15.4 million ~~(compared~~ to ~~$47.8~~terminate the remaining $300 million in ~~2016), repurchased common~~notional value of interest rate swaps during the first nine months of 2021. Payments for taxes related to the vesting of restricted stock ~~under a share repurchase program~~awards were $19.3 million and $3.6million for ~~$5.0 million (compared to $48.7 million~~the first nine months of 2021 and 2020, which are included in ~~2016) and borrowed on our new Credit Agreement ($250 million term loan and $117.2 million on our revolving credit facility). There were no borrowings in the prior year period.~~Other, net.

Capital ~~resources.~~resources. Our sources of liquidity include cash and cash equivalents, ~~and~~ a revolving credit ~~facility. On July 27, 2017, we entered into a new Credit Agreement replacing the Amended~~facility under our Credit Agreement with ~~Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A.,~~ Bank of America, ~~N.A.~~N.A, as an administrative agent and collateral agent, and a syndicate of financial institutions, as lenders (the Credit Agreement)., and the Receivables Securitization Program. The Credit Agreement provides a revolving borrowing capacity of $600 million and a $250 million term loan. We make principal payments under the term loan on a quarterly basis with the remaining outstanding principal due in five years. The revolving credit facility has a five-year maturity. Under the Credit Agreement, we have the ability to request two one-year extensions and to request an increase in aggregate commitments by up to $200$300 million. The interest rate on our revolving credit facility is based on a spread over a benchmark rate (as described in the Credit Agreement). The Credit Agreement matures in March 2026.

At September 30, 2021 and December 31, 2020, we had borrowings of $12.3 million and $103 million, and letters of credit of $9.4 million and $13.9 million outstanding under our credit agreements. At September 30, 2021 and December 31, 2020, we had $278 million and $283 million, available for borrowing. We also had letters of credit and bank guarantees outstanding for $2.2 million and $1.6 million as of September 30, 2021 and December 31, 2020, which supports certain leased facilities as well as other normal business activities in the United States and Europe. These letters of credit and guarantees were issued outside of the revolving credit facility.

We entered into a Security and Pledge Agreement (the Security Agreement), dated March 10, 2021, pursuant to which we granted collateral on behalf of the holders of the 2024 Notes, and the parties secured under the Credit Agreement ~~which is~~(the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries, subject to certain customary exceptions, and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions.

~~adjustment quarterly,~~On March 10, 2021, we entered into an amendment to our accounts receivable securitization program (the Receivables Securitization Program). Pursuant to the amended Receivables Securitization Program, the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed$450 million outstanding at any time. The interest rate under the Receivables Securitization Program is based on a spread over a benchmark rate (as described in the ~~London Interbank Offered Rate (LIBOR),~~Third Amendment to the ~~Federal Funds Rate or~~Receivables Financing Agreement). Under the ~~Prime Rate, plus an adjustment based on the better~~Receivables Securitization Program, certain of our ~~debt ratings or leverage ratio (Credit Spread) as defined by~~subsidiaries sell substantially all of their accounts receivable balances to our wholly owned special purpose entity, O&M Funding LLC. The Receivables Securitization Program matures in March 2024.

The Credit Agreement, Receivables Securitization Program, 2024 Notes and 2029 Unsecured Notes contain cross-default provisions which could result in the ~~Credit Agreement. We are charged a commitment fee~~acceleration of ~~between 12.5 and 25.0 basis points on~~payments due in the ~~unused portion~~event of default of any of the ~~facility.~~related agreements. The terms of the Credit Agreement ~~limit the amount of indebtedness that we may incur and~~also require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an ~~acquisition.~~acquisition or divestiture. We ~~may utilize the revolving credit facility for long-term strategic growth, capital expenditures, working capital and general corporate purposes. If we~~ were ~~unable to access the revolving credit facility, it could impact~~in compliance with our ~~ability to fund these needs. Based on our leverage ratio~~debt covenants at September 30, ~~2017,~~2021.

In May 2020, we entered into an equity distribution agreement, pursuant to which we may offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $50.0 million. We intend to use the ~~interest rate under~~net proceeds from the ~~credit facility is LIBOR plus 1.375%.~~

~~At September 30, 2017, we had borrowings~~sale of ~~$117.2 million~~our securities offered by this program for the repayment of indebtedness and/or for general corporate and ~~letters of credit of approximately $5.1 million outstanding under the Credit Agreement, leaving $477.7 million available for borrowing. We also have a $1.3 million letter of credit outstanding as~~working capital purposes. As of September 30, ~~2017~~2021 no shares were issued and ~~December 31, 2016 which supports our facilities leased in Europe.~~$50.0 million of common stock remained available under the at-the-market equity financing program.

We ~~have $275 million~~regularly evaluate market conditions, our liquidity profile and various financing alternatives to enhance our capital structure. From time to time, we may enter into transactions to repay, repurchase or redeem our outstanding indebtedness (including by means of 3.875% senior notes due 2021 (the “2021 Notes”) and $275 million of 4.375% senior notes due 2024 (the “2024 Notes”). The 2021 Notes were sold at 99.5% of the principal amount with an effective yield of 3.951%. The 2024 Notes were sold at 99.6% of the principal amount with an effective yield of 4.422%. Interest on the 2021 Notes and 2024 Notes is payable semiannually in arrears, which commenced on March 15, 2015 and December 15, 2014, respectively. We have the option to redeem the 2021 Notes and 2024 Notes in partopen market purchases, privately negotiated repurchases, tender or ~~in whole prior to maturity at a redemption price equal~~exchange offers and/or repayments or redemptions pursuant to the ~~greater of 100% of the principal amount~~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 ~~present value~~terms of ~~the remaining scheduled payments discounted at the Treasury Rate plus 30 basis points.~~any such transaction.

~~In the~~The third quarter dividend of ~~2017, we paid cash dividends on our outstanding common stock at the rate of $0.2575~~$0.0025 per share ~~which represents a 1.0% increase over the rate of $0.255 per share~~was paid in ~~the third quarter of 2016. We anticipate continuing to pay quarterly cash dividends in the future. However, the~~September 2021. The payment of future dividends remains within the discretion of the Board of Directors and will depend upon our results of operations, financial condition, capital requirements, current and future limitations under our Credit Agreement and other factors.

~~In October 2016, the Board~~

Table of Directors authorized a share repurchase program of up to $100 million of our outstanding common stock to be executed at the discretion of management over a three-year period, expiring in December 2019. The program is intended to offset shares issued in conjunction with our stock incentive plan and return capital to shareholders, and may be suspended or discontinued at any time. During the first nine months of 2017, we repurchased approximately 0.2 million shares for $5.0 million under this program. At September 30, 2017, the remaining amount authorized for repurchase under this program was $94.0 million.Contents

We earn a portion of our operating earnings in foreign jurisdictions outside the U.S., which we consider to be indefinitely reinvested. Accordingly, no U.S. federal and state income taxes and withholding taxes have been provided on these earnings. Our cash, cash-equivalents, short-term investments, and marketable securities held by our foreign subsidiaries totaled $60.7 million and $82.1 million as of September 30, 2017 and December 31, 2016. We do not intend, nor do we foresee a need, to repatriate these funds or other assets held outside the U.S. In the future, should we require more capital to fund discretionary activities in the U.S. than is generated by our domestic operations and is available through our borrowings, we could elect to repatriate cash or other assets from foreign jurisdictions that have previously been considered to be indefinitely reinvested.

We believe available financing sources, including cash generated by operating activities and borrowings under the Credit Agreement and ~~other committed financing,~~Receivables Securitization Program, will be sufficient to fund our working capital needs, capital expenditures, long-term strategic growth, payments under long-term debt and lease arrangements, payments of quarterly cash dividends, ~~share~~debt repurchases and other cash requirements. While we believe that we will have the ability to meet our financing needs in the foreseeable future, changes in economic conditions may impact (i) the ability of financial institutions to meet their contractual commitments to us, (ii) the ability of our customers and suppliers to meet their obligations to us or (iii) our cost of borrowing.

We earn a portion of our operating income in foreign jurisdictions outside the United States. Our cash and cash equivalents held by our foreign subsidiaries totaled $28.7 million and $72.0 million at September 30, 2021 and December 31, 2020. We continue to remain permanently reinvested in our foreign subsidiaries, with the exception of a subsidiary in Thailand. We have no specific plans to indefinitely reinvest the unremitted earnings of our foreign subsidiary located in Thailand as of September 30, 2021. As such, we have recorded withholding tax liabilities that would be incurred upon future distribution to the U.S. There are no unrecognized deferred taxes as there is no outside basis difference unrelated to unremitted earnings for Thailand. We will continue to evaluate our foreign earnings repatriation policy in 2021 for all our foreign subsidiaries.

Guarantor and Collateral Group Summarized Financial Information

We are providing the following information in compliance with Rule 13-01, “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities” and Rule 13-02 of Regulation S-X, of with respect to our 2024 Notes. See Note 6 of the accompanying consolidated financial statements for additional information regarding the terms of the 2024 Notes.

The following tables present summarized financial information for Owens & Minor, Inc. and the guarantors of Owens & Minor, Inc.’s 2024 Notes (together, "the Guarantor Group"), on a combined basis with intercompany balances and transactions between entities in the Guarantor Group eliminated. The guarantor subsidiaries are 100% owned by Owens & Minor, Inc. Separate financial statements of the guarantor subsidiaries are not presented because the guarantees by our guarantor subsidiaries are full and unconditional, as well as joint and several.

Summarized financial information of the Guarantor Group is as follows:


Summarized Consolidated Statement of Operations - Guarantor Group	Nine Months Ended September 30, 2021
(Dollars in thousands)
Net revenue(1)	$	7,197,318
Gross margin	1,086,054
Operating income	265,888
Income from continuing operations, net of tax	158,735
Net income	158,735

(1)Includes $297 million in sales to non-guarantor subsidiaries for the nine months ended September 30, 2021.


Summarized Consolidated Balance Sheets - Guarantor Group	September 30, 2021		December 31, 2020
(Dollars in thousands)
Total current assets	$	1,428,986	$	1,559,248
Total assets	2,950,802		2,943,125
Current liabilities	1,456,508		1,374,800
Total liabilities	2,500,939		2,465,894

The following tables present summarized financial information for Owens & Minor, Inc. and the subsidiaries of Owens & Minor, Inc.’s 2024 Notes pledged that constitute a substantial portion of collateral (together, "the Collateral Group"), on a combined basis with intercompany balances and transactions between entities in the Collateral Group eliminated. The pledged subsidiaries are 100% owned by Owens & Minor, Inc. No trading market for the subsidiaries included in the Collateral Group exists.

Summarized financial information of the Collateral Group is as follows:

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Summarized Consolidated Balance Sheets - Collateral Group	September 30, 2021		December 31, 2020
(Dollars in thousands)
Total current assets	$	1,517,670	$	1,651,460
Total assets	2,703,556		2,851,226
Current liabilities	1,422,746		1,356,024
Total liabilities	2,498,158		2,480,953

The results of operations of the Collateral Group are not materially different from the corresponding amounts presented in our consolidated statements of operations.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 and Note 1514 in the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the ~~quarterly~~ period ended on September 30, ~~2017.~~2021.

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 unknown risks, including, but not limited to:

•our ability to achieve revenue and operating income goals may be affected by: COVID-19 related factors, risks and challenges, including among others, the length of time that the pandemic continues, and any worsening of the pandemic, including through any new variant strains of the underlying virus, or future pandemics, related governmental responses, the effectiveness, availability, and public acceptance of vaccines, a decrease in revenue ultimately resulting in less cash flow, longer duration in receivables collection, the need to expedite payments to important suppliers may grow, shifts in demand away from certain products we manufacture and distribute, reduced workforces which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government vaccine and other mandates, temporary production and distribution center and office closures due to reduced workforces or government vaccine and other mandates, availability of raw materials, potential resulting labor negotiations or disputes, changes in the types and numbers of businesses that compete with us, including non-traditional competitors, and the aggressiveness of that competition, impacts of the pandemic or future pandemics on other third parties with whom we conduct business, the healthcare industry, and the broader business environment, and trends in elective surgeries and other healthcare spending not directly associated with COVID-19;

•competitive pressures in the marketplace, including intense pricing pressure;

•our ability to retain existing and attract new customers in a market characterized by significant customer consolidation and intense cost-containment initiatives;

•our dependence on sales to certain customers or the loss or material reduction in purchases by key customers;

•our dependence on distribution of product of certain suppliers;

•our ability to successfully identify, manage or integrate acquisitions;

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

•uncertainties related to and our ability to adapt to changes in government regulations, including healthcare laws and ~~regulations (including the Affordable Care Act);~~regulations;

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

•uncertainties related to general economic, regulatory and business conditions;

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•our ability to successfully implement our strategic initiatives;

•the availability of and modifications to existing supplier funding programs and our ability to meet the terms to qualify for certain of these programs;

~~our ability to adapt to changes in product pricing and other terms of purchase by suppliers of product;~~

~~the ability of customers and suppliers to meet financial commitments due to us;~~

~~changes in manufacturer preferences between direct sales and wholesale distribution;~~

~~changing trends in customer profiles and ordering patterns and our ability to meet customer demand for additional value-added services;~~

~~our ability to manage operating expenses and improve operational efficiencies in response to changing customer profiles;~~

~~our ability to meet performance targets specified by customer contracts under contractual commitments;~~

~~availability of and our ability to access special inventory buying opportunities;~~

~~the ability of business partners and financial institutions to perform their contractual responsibilities;~~

•the effect of price volatility in the commodities markets, including fuel price fluctuations, on our operating costs and supplier product prices;

•our ability to adapt to changes in product pricing and other terms of purchase by suppliers of product;

•the ability of customers and suppliers to meet financial commitments due to us;

•changes in manufacturer preferences between direct sales and wholesale distribution;

•changing trends in customer profiles and ordering patterns and our ability to meet customer demand for additional value-added services;

•our ability to manage operating expenses and improve operational efficiencies in response to changing customer profiles;

•our ability to meet performance targets specified by customer contracts under contractual commitments;

•availability of and our ability to access special inventory buying opportunities;

•the ability of business partners and financial institutions to perform their contractual responsibilities;

•our ability to continue to obtain financing, obtain financing at reasonable rates and to manage financing costs and interest rate ~~risk;~~risk, and our ability to refinance, extend or repay our substantial indebtedness;

•the risk that information systems are interrupted or 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;

•the risk that a decline in business volume or profitability could result in an impairment of goodwill or other long-lived assets;

•our ability to timely or adequately respond to technological advances in the medical supply industry;

•the costs associated with and outcome of outstanding and any future litigation, including product and professional liability claims;

•adverse changes in U.S. and foreign tax laws and the outcome of outstanding tax contingencies and legislative and tax proposals;

•our ability to successfully implement the expense reduction and productivity and efficiency initiatives;

•our ability to continue to comply with the terms and conditions of Byram Healthcare’s Corporate Integrity Agreement; 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, ~~2016.~~2020, our Form 10-Q for the three months ended March 31, 2021, and our Form 10-Q for the three and six months ended June 30, 2021.

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

We are subject to price risk for our raw materials, the most significant of which relates to the cost of polypropylene and nitrile used in the manufacturing processes of our Global Products segment. Prices of the commodities underlying these raw materials are volatile and have fluctuated significantly in recent years and in the future may contribute to fluctuations in our results of operations.

In the normal course of business, we are exposed to foreign currency translation and transaction risks. Our business transactions outside of the United States are denominated in the euro, Malaysian ringgit, Mexican peso, Thai baht and other currencies. We may use foreign currency forwards, swaps and options, where possible, to manage our risk related to certain foreign currency fluctuations.

We are exposed to market risk from changes in interest rates related to our borrowing under our Credit Agreement and Receivables Securitization Program. We had $12.3 million in borrowings under our revolving credit ~~facility. We had $117.2~~facility, $197 million in ~~outstanding~~

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borrowings under our Receivables Securitization Program and ~~approximately $5.1~~$9.4 million in letters of credit under the ~~revolving credit facility~~Credit Agreement at September 30, ~~2017. A hypothetical~~2021. We estimate an increase in interest rates of 100 basis points would result in a potential reduction in future pre-tax earnings of approximately ~~$0.1~~$2.2 million per year ~~for every $10 million of~~based on our borrowings outstanding ~~borrowings under the revolving credit facility.~~at September 30, 2021.

Due to the nature and pricing of our ~~Domestic~~Global Solutions segment distribution services, we are exposed to potential volatility in fuel prices. Our strategies for helping to mitigate our exposure to changing domestic fuel prices ~~has~~have included ~~entering into leases for~~using trucks with improved fuel efficiency. We benchmark our domestic diesel fuel purchase prices against the U.S. Weekly Retail On-Highway Diesel Prices (benchmark) as quoted by the U.S. Energy Information Administration. The benchmark averaged $3.16 and $2.58 per gallon in the first nine months of ~~2017, a increase from $2.25 per gallon in the first nine months of 2016.~~2021 and 2020. Based on our fuel consumption in the first nine months of ~~2017,~~2021, we estimate that every 10 cents per gallon increase in the benchmark would reduce our ~~Domestic~~Global Solutions segment operating ~~earnings~~income by approximately ~~$0.3~~$0.2 million on an annualized basis.

In the normal course of business, we are exposed to foreign currency translation and transaction risks. Our business transactions outside of the United States are primarily denominated in the Euro and British Pound. We may use foreign currency forwards, swaps and options, where possible, to manage our risk related to certain foreign currency fluctuations. However, we believe that our foreign currency transaction risks are low since our revenues and expenses are typically denominated in the same currency.

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) 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, ~~2017.~~2021. There ~~has been~~was no change in our internal control over financial reporting that occurred during the ~~quarter ended September 30, 2017,~~period of this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

SEC guidance permits the exclusion of an evaluation of the effectiveness of a registrant's disclosure controls and procedures as they relate to the internal control over financial reporting for an acquired business during the year of an acquisition. In the third quarter of 2017, we acquired Byram Healthcare. This acquisition represented $477 million of total assets and $80.3 million of revenues as of and for the three months ended September 30, 2017. Management's evaluation and conclusion as to the effectiveness of the design and operation of the Company's disclosure controls and procedures as of and for the period covered by this report excludes any evaluation of the internal control over financial reporting of these acquisitions.

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, ~~2016.~~2020. Through September 30, ~~2017,~~2021, there have been no material developments in any legal proceedings reported in such Annual Report.

Item 1A. Risk Factors

~~Certain~~

The following description of risk factors ~~that we believe could affect~~updates and supplements risk factors associated with our business ~~and prospects are described~~previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016. Through September~~2020, our Form 10-Q for the three months ended March 31, 2021, and our Form 10-Q for the three and six months ended June 30, ~~2017, we have added the following risk factors. There have been no other material changes in the~~2021. These risk factors ~~described~~are in ~~such Annual Report.~~addition to those 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.

~~Table of Contents~~

We are subject to ~~stringent regulatory~~risks related to public health crises or future outbreaks of health crises or other adverse public health developments such as the global pandemic associated with the 2019 novel coronavirus (COVID-19).

As a global healthcare solutions company, we are impacted by public health crises such as the global pandemic associated with COVID-19. The outbreak has significantly increased uncertainty and ~~licensing requirements~~

~~We are~~unpredictability of global economic conditions and the demand for and supply of raw materials and finished goods required ~~to comply with extensive~~for our operations. In addition, public and complex laws and regulations at the federal, state and local government levels. Among these laws are the federal Anti-kickback Statute, the federal Stark Law, the False Claims Act and similar state laws relating to healthcare fraud and abuse. The requirements of these laws are complex and subject to varying interpretations, and it is possible that regulatory authorities could challenge ourprivate sector policies and ~~practices. If~~initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, the adoption of remote working and vaccination mandates, have impacted or may in the future impact our operations. In these challenging and dynamic circumstances, we ~~fail~~continue to ~~comply with these laws, we could be subject~~work to ~~federal or state government investigations or~~ ~~qui tam~~ ~~actions (false claims cases initiated by private parties purporting~~protect our teammates and the public, maintain business continuity and sustain our operations, including ensuring the safety and protection of the people who work in our production and distribution centers across the world, many of whom support the manufacturing and delivery of products that are critical in response to ~~act on behalf of federal or state governments), which could result in civil or criminal sanctions, including~~ the ~~loss of licenses or~~global pandemic. We may restrict the ~~ability to participate in Medicare, Medicaid and other federal and state healthcare programs. Such sanctions and damages could adversely affect our results of~~ operations ~~and financial condition.~~

Our Byram business is a Medicare-certified supplier and participates in state Medicaid programs. Failure to comply with applicable standards and regulations could result in civil or criminal sanctions, including the loss of our ~~ability to participate in Medicare, Medicaid~~production and ~~other federal and state healthcare programs.~~

~~We collect, handle and maintain patient-identifiable health information and other sensitive personal and financial information,~~distribution centers if we deem it necessary or if recommended or mandated by governmental authorities which are subject to federal, state and foreign laws that regulate the use and disclosure of such information. Regulations currently in place continue to evolve, and new laws in this area could further restrict our ability to collect, handle and maintain personal or patient information, or could require us to incur additional compliance costs, either of which couldwould have an adverse impact on us. There is a risk that revenues will decrease ultimately resulting in less cash flow, we may see longer duration in receivables collection, and the need to expedite payments to important suppliers may grow. COVID-19 has impacted and may further impact our ~~results~~supply chains relative to global demand for our facial protection, nitrile gloves, and protective apparel products. COVID-19 has also affected and may further affect the ability of ~~operations. Violations~~suppliers and vendors to provide products and services to us or to do so at acceptable quality levels or prices. Some of ~~federal, state~~these factors could increase the demand for our products, while others could decrease demand or ~~foreign laws concerning privacy and data protection could subject~~make it more difficult for us to ~~civil~~serve customers. For example, the significant reduction in elective surgical procedures, which began mid-March of 2020, resulted in a material negative impact on our revenue for 2020. Any worsening of the COVID-19 pandemic or ~~criminal penalties, breach~~future outbreaks could result in similar reductions in elective surgical procedures or otherwise

Table of ~~contract claims, costs~~Contents

reduce demand for ~~remediation and harm to~~ our ~~reputation.~~

~~Compliance with the terms and conditions~~products, any of ~~Byram’s Corporate Integrity Agreement requires significant resources and, if we fail to comply, we could be subject to penalties or excluded from participation in government healthcare programs,~~ which could ~~seriously harm~~have a material negative impact on our ~~results~~revenues and profit for future periods.

Although we have experienced significant growth in sales volumes for certain of ~~operations, liquidity~~our products (such as PPE) during the COVID-19 pandemic, as well as improved productivity and manufacturing output, there can be no assurance that such growth rates, increased sales volumes or other improvements will be maintained during or following the COVID-19 pandemic. We may also see a decline in such growth rates and sales volumes when the impact of the pandemic subsides and the healthcare system returns to a more normalized state. In particular, demand for such products may also decline as government-sponsored COVID-19 response stimulus, relief and production initiatives, such as those under the Defense Production Act (DPA) and the Coronavirus Aid, Relief and Economic Security (CARES) Act, expire. An accelerated shift of demand away from certain of our products and services could also adversely impact our revenues and profit margins.

Furthermore, COVID-19 has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial ~~results.~~

~~Prior~~and capital markets, foreign currency exchange rates, and interest rates. For example, the continued spread of COVID-19 has led to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital. Due to the speed with which the situation is developing and the uncertainty of its ~~acquisition by Owens & Minor, Byram entered into~~duration, any future outbreaks, similar pandemics, the timing of recovery, travel restrictions, business closures or business disruptions, a ~~five-year Corporate Integrity Agreement beginning April 2016 with~~recession, depression or other sustained adverse market event resulting from the ~~Office~~spread of ~~Inspector General~~the COVID-19 and the effectiveness of actions taken in the United States ~~Department~~and other countries to contain and treat the disease, we are not able at this time to predict the extent to which the COVID-19 pandemic, or any future outbreaks or similar pandemics, may have a material effect on our financial or operational results. However, the following adverse risks exist:

•Actions by the United States government or other foreign government could affect our business. These actions include purchasing products that we make or sell, imposing new product standards or allowing the use of ~~Health~~alternative products, instituting regulatory requirements to purchase only locally manufactured products, exercising control over manufacturing or distribution operations, including use of the DPA, taking trade actions including the imposition or removal of tariffs or import / export controls, subsidizing the supply of products, imposition of vaccine mandates or other actions;

•Quarantine decisions by public or private entities may influence our ability to operate or our ability to ship or receive products. For example, if shipping companies cease or reduce land or sea freight channels, raw material and ~~Human Services (“OIG”). The Corporate Integrity Agreement provides~~finished good deliveries may be slowed or stopped;

•Our customers may change their payment patterns or lose their ability to pay invoices, which could have a material adverse impact on our cash flow;

•Our suppliers may increase pricing or impose new purchasing requirements, such as minimum purchase quantities or pay-in-advance payment terms, which could have a material adverse impact on our cash flow;

•Raw materials or finished goods that ~~Byram shall,~~we require for our operations may not be available, or pricing for such items may increase beyond the willingness of our customers to pay;

•New competitors may enter our market, including both small and large scale manufacturers;

•COVID-19 illness among our workers in manufacturing or distribution operations could impact our operations or compel the closure of one or more facilities for an unknown period of time. Labor relations in our facilities related to COVID-19 could also negatively impact our operations;

•We may invest in additional manufacturing capacity for which demand slows in the future, which could have a material adverse impact on our cash flow; and

•Technology infrastructure failures could materially inhibit our operations that currently include a substantial portion of remote work. For example, voice or data line failures resulting from natural, manmade or cyber-attack could impair our ability to operate.

We have incurred additional costs to ensure we meet the needs of our customers, including increasing our workforce in order to produce or distribute certain essential products for our customers, providing personal protective equipment to our workforce, incremental shipping and transportation costs, incremental technology costs, and additional cleaning costs throughout our facilities. We expect to continue to incur additional costs, which may be significant as we continue to implement operational changes in response to this pandemic, any future outbreaks or similar pandemics. Further, our management is focused on mitigating COVID-19, which has required and will continue to require, a large investment of time and resources across our enterprise and will delay other ~~things, establish~~value added services and ~~maintain a compliance program,~~strategic initiatives. Additionally, some of our teammates are currently working remotely. An extended period of remote work arrangements, and any worsening of the COVID-19 pandemic, or future outbreaks, could strain our business continuity plans, introduce operational risk, including ~~a corporate compliance officer~~but not limited to cybersecurity risks, and committee, a code of conduct, comprehensive compliance policies and procedures, training and monitoring, a review process for certain arrangements between Byram and referral sources, a compliance hotline, an open door policy and a disciplinary process for compliance violations. The Corporate Integrity Agreement further provides that Byram shall provide periodic reportsimpair our ability to manage our business. If we do not respond appropriately to the ~~OIG, complete certain regular certifications~~pandemic, any future outbreaks or similar pandemics, or if customers do not perceive our response to be adequate for the United States or our international markets, we could suffer damage to our reputation and ~~engage an Independent Review Organization to perform reviews~~our brands, which could adversely affect our business.

Table of ~~certain arrangements between Byram and referral sources.~~ Contents

~~Failing to meet the Corporate Integrity Agreement obligations~~The impact of COVID-19 may also exacerbate other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K, any of which could have a material ~~adverse consequences for Byram including monetary penalties for each instance~~effect on us. This situation is changing rapidly and additional impacts may arise that we are not aware of non-compliance. In addition, in the event of an uncured material breach or deliberate violation of the Corporate Integrity Agreement, we could be excluded from participation in Federal healthcare programs, or other significant penalties, which could seriously harm our results of operations, liquidity and financial results.currently.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

In October 2016, our Board of Directors authorized a share repurchase program of up to $100 million of the company’s outstanding common stock to be executed at the discretion of management over a three-year period. The timing of repurchases and the exact number of shares of common stock to be purchased will depend upon market conditions and other factors and may be suspended or discontinued at any time. Purchases under the share repurchase program are made eitherMay 2020, we entered into an equity distribution agreement, pursuant to ~~10b5-1 plans entered into by the company~~which we may offer and sell, from time to time, ~~and/or during~~shares of our common stock having an aggregate offering price of up to $50.0 million. We intend to use the ~~company’s scheduled quarterly trading windows for officers and directors. We did not repurchase any shares~~net proceeds from the sale of our securities offered by this program for the ~~three months ended~~repayment of indebtedness and/or for general corporate and working capital purposes. As of September 30, ~~2017.~~2021, no shares were issued and $50.0 million of common stock remained available under the at-the-market equity financing program.

Item 6. Exhibits

(a)Exhibits


~~(a)~~3.1			~~Exhibits~~

Amended and Restated Bylaws of the Company effective April 29, 2021 (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 3.1, dated May 3, 2021)



~~31.1~~4.1						Indenture, dated March 10, 2021, among Owens & Minor, Inc., the guarantors named therein and Regions Bank, as Trustee (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.1, dated March 11, 2021)

4.2						Form of Global Note for the 4.500% Senior Notes due 2029 (included as Exhibit A to Exhibit 4.1 hereto) (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.2, dated March 11, 2021)

4.3						Sixth Supplemental Indenture, dated as of March 10, 2021, by and among Owens & Minor, Inc., the guarantors signatory thereto and U.S. Bank National Association, as trustee (incorporated herein by reference to the Company’s Current Report on Form 8-K, Exhibit 4.3, dated March 11, 2021).

10.1						Agreement of Resignation, Appointment, and Acceptance, dated as September 10, 2021, by and among Owens & Minor, Inc., U.S. Bank National Association, as Prior Trustee, and Regions Bank, as Successor Trustee

10.2						Form of Owens & Minor, Inc. Restricted Stock Agreement under the Company's 2018 Stock Incentive Plan

10.3						Form of Owens & Minor, Inc. Restricted Stock Unit Award Agreement under the Company's 2018 Stock Incentive Plan

22.1						List of Guarantor Subsidiaries (incorporated herein by reference to our Annual Report on Form 10-K, Exhibit 22.1, for the year ended December 31, 2020)

22.2						List of Subsidiaries Pledged as Collateral

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.

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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 inline XBRL 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.


			Owens & Minor, Inc.
			(Registrant)

Date:		November 3, 2021	~~Owens & Minor, Inc.~~/s/ Edward A. Pesicka
			~~(Registrant)~~Edward A. Pesicka
			President, Chief Executive Officer & Director
~~Date:~~		~~November 1, 2017~~	~~/s/ Paul C. Phipps~~
Date:		November 3, 2021	~~Paul C. Phipps~~/s/ Andrew G. Long
			Andrew G. Long
			Executive Vice President & Chief ~~Executive Officer~~

~~Date:~~	~~November 1, 2017~~	~~/s/ Richard A. Meier~~
		~~Richard A. Meier~~
		~~Executive Vice President, Chief~~ Financial Officer ~~& President, International~~



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

9120 Lockwood Boulevard ~~Mechanicsville, Virginia~~	Mechanicsville	Virginia	23116
(Address of principal executive offices)			(Zip Code)

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



Large accelerated filer	x☐	Accelerated filer	o☒
Non-accelerated filer	o☐ (Do not check if a smaller reporting company)	Smaller reporting company	o☐
Emerging growth company	o☐
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.			o☐



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



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


Part I. Financial Information				Page

~~Part I. Financial Information~~		~~Page~~

Item 1.	Financial Statements		3
		Consolidated Statements of ~~Income—~~Operations—Three and Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020		3
		Consolidated Statements of Comprehensive ~~Income—~~Income (Loss)—Three and Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020		4
		Consolidated Balance Sheets—September 30, ~~2017~~2021 and December 31, ~~2016~~2020		5
		Consolidated Statements of Cash Flows—Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020		6
		Consolidated Statements of Changes in Equity—Three and Nine Months Ended September 30, ~~2017~~2021 and ~~2016~~2020		7
		Notes to Consolidated Financial Statements		8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		2320
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		3129
Item 4.		Controls and Procedures		3130
Part II. Other Information

Item 1.		Legal Proceedings		3130
Item 1A.		Risk Factors		3130
Item 2.		Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities		32
Item 6.		Exhibits		~~Exhibits~~32	33



	Nine Months Ended September 30,
(in thousands)	2017			2016
Operating activities:
Net income	$	49,796		$	81,682
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	41,060			42,182
Share-based compensation expense	8,592			8,934
Provision for losses on accounts receivable	1,158			(216		)
Deferred income tax (benefit) expense	(4,585		)	(3,233		)
Changes in operating assets and liabilities:
Accounts receivable	(79,114		)	5,023
Merchandise inventories	(56,134		)	(5,066		)
Accounts payable	79,787			58,742
Net change in other assets and liabilities	(40,634		)	(44,903		)
Other, net	5,719			1,366
Cash provided by operating activities	5,645			144,511
Investing activities:
Acquisition, net of cash acquired	(366,569		)	—
Additions to property and equipment	(24,963		)	(13,682		)
Additions to computer software and intangible assets	(12,826		)	(7,081		)
Proceeds from sale of property and equipment	780			4,497
Cash used for investing activities	(403,578		)	(16,266		)
Financing activities:
Change in bank overdraft	—			21,753
Proceeds from debt issuance	250,000			—
Borrowing under revolving credit facility	117,200			—
Financing costs paid	(1,798		)	—
Cash dividends paid	(47,316		)	(47,802		)
Repurchases of common stock	(5,000		)	(48,654		)
Other, net	(7,363		)	(8,118		)
Cash provided by (used for) financing activities	305,723			(82,821		)
Effect of exchange rate changes on cash and cash equivalents	5,137			6,652
Net increase (decrease) in cash and cash equivalents	(87,073		)	52,076
Cash and cash equivalents at beginning of period	185,488			161,020
Cash and cash equivalents at end of period	$	98,415		$	213,096
Supplemental disclosure of cash flow information:
Income taxes paid, net	$	26,917		$	57,996
Interest paid	$	19,951		$	20,023




(in thousands, except per share data)	Common Shares Outstanding		Common Stock ($ 2 par value )			Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balance December 31, 2015	62,803		$	125,606		$	211,943	$	706,866		$	(51,825	)	$	992,590
Net income								81,682						81,682
Other comprehensive loss											3,263			3,263
Dividends declared ($0.765 per share)								(47,671		)				(47,671		)
Shares repurchased and retired	(1,378	)	(2,757		)			(45,896		)				(48,653		)
Share-based compensation expense, exercises and other	274		549			4,923								5,472
Balance September 30, 2016	61,699		$	123,398		$	216,866	$	694,981		$	(48,562	)	$	986,683

Balance December 31, 2016	61,031		$	122,062		$	219,955	$	685,504		$	(67,483	)	$	960,038
Net income								49,796						49,796
Other comprehensive income											41,141			41,141
Dividends declared ($0.7725 per share)								(47,169		)				(47,169		)
Shares repurchased and retired	(155	)	(310		)			(4,687		)				(4,997		)
Share-based compensation expense, exercises and other	373		747			4,228								4,975
Balance September 30, 2017	61,249		$	122,499		$	224,183	$	683,444		$	(26,342	)	$	1,003,784



	Preliminary Fair Value Estimated as of Acquisition Date
Assets acquired:
Current assets	$	62,902
Goodwill	263,155
Intangible assets	156,000
Noncurrent assets	3,615
Total assets	485,672
Liabilities assumed:
Current liabilities	72,397
Noncurrent liabilities	46,706
Total liabilities	119,103
Fair value of net assets acquired, net of cash	$	366,569



	Domestic		International		Proprietary Products		Consolidated
Carrying amount of goodwill, December 31, 2016	$	180,006	$	19,391	$	215,539	$	414,936
Acquisition (See Note 3)	263,155		—		—		263,155
Currency translation adjustments	—		10,001		2,138		12,139
Carrying amount of goodwill, September 30, 2017	$	443,161	$	29,392	$	217,677	$	690,230



	Lease Obligations			Severance and Other			Total
Accrued exit and realignment costs, December 31, 2016	$	—		$	2,238		$	2,238
Provision for exit and realignment activities	—			3,211			3,211
Change in estimate	—			(304		)	(304		)
Cash payments	—			(3,034		)	(3,034		)
Accrued exit and realignment costs, March 31, 2017	—			2,111			2,111
Provision for exit and realignment activities	—			1,382			1,382
Change in estimate	—			(18		)	(18		)
Cash payments	—			(667		)	(667		)
Accrued exit and realignment costs, June 30, 2017	—			2,808			2,808
Provision for exit and realignment activities	—			3,156			3,156
Cash payments	—			(423		)	(423		)
Accrued exit and realignment costs, September 30, 2017	$	—		$	5,541		$	5,541

Accrued exit and realignment costs, December 31, 2015	$	486		$	1,840		$	2,326
Provision for exit and realignment activities	—			9,895			9,895
Cash payments, net of sublease income	(486		)	(1,287		)	(1,773		)
Accrued exit and realignment costs, March 31, 2016	—			10,448			10,448
Provision for exit and realignment activities	—			1,254			1,254
Cash payments, net of sublease income	—			(7,087		)	(7,087		)
Accrued exit and realignment costs, June 30, 2016	—			4,615			4,615
Provision for exit and realignment activities	—			725			725
Change in Estimate	—			(268		)	(268		)
Cash payments, net of sublease income	—			(2,066		)	(2,066		)
Accrued exit and realignment costs, September 30, 2016	$	—		$	3,006		$	3,006



Three Months Ended September 30, 2017	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	2,113,450		$	264,765		$	(44,254	)	$	2,333,961
Cost of goods sold	—			1,919,049			157,439			(44,469		)	2,032,019
Gross margin	—			194,401			107,326			215			301,942
Distribution, selling and administrative expenses	(117		)	159,108			102,054			—			261,045
Acquisition-related and exit and realignment charges	—			6,960			2,339			—			9,299
Other operating (income) expense, net	—			448			1,479			—			1,927
Operating earnings (loss)	117			27,885			1,454			215			29,671
Interest expense (income), net	7,018			(1,184		)	2,903			—			8,737
Income (loss) before income taxes	(6,901		)	29,069			(1,449		)	215			20,934
Income tax (benefit) provision	—			7,881			2,182			—			10,063
Equity in earnings of subsidiaries	17,772			—			—			(17,772		)	—
Net income (loss)	10,871			21,188			(3,631		)	(17,557		)	10,871
Other comprehensive income (loss)	12,584			330			12,254			(12,584		)	12,584
Comprehensive income (loss)	$	23,455		$	21,518		$	8,623		$	(30,141	)	$	23,455



Three Months Ended September 30, 2016	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	2,287,335		$	168,216		$	(39,950	)	$	2,415,601
Cost of goods sold	—			2,070,639			89,192			(40,505		)	2,119,326
Gross margin	—			216,696			79,024			555			296,275
Distribution, selling and administrative expenses	(52		)	169,451			71,906			—			241,305
Acquisition-related and exit and realignment charges	—			2,237			502			—			2,739
Other operating income, net	—			(1,205		)	(132		)	—			(1,337		)
Operating earnings (loss)	52			46,213			6,748			555			53,568
Interest expense (income), net	7,403			(1,345		)	712			—			6,770
Income (loss) before income taxes	(7,351		)	47,558			6,036			555			46,798
Income tax (benefit) provision	—			14,131			2,836			—			16,967
Equity in earnings of subsidiaries	37,182			—			—			(37,182		)	—
Net income (loss)	29,831			33,427			3,200			(36,627		)	29,831
Other comprehensive income (loss)	1,701			299			1,402			(1,701		)	1,701
Comprehensive income (loss)	$	31,532		$	33,726		$	4,602		$	(38,328	)	$	31,532



Nine Months Ended September 30, 2017	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries		Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	6,436,599		$	635,900	$	(144,058	)	$	6,928,441
Cost of goods sold	—			5,845,789			369,596		(143,598		)	6,071,787
Gross margin	—			590,810			266,304		(460		)	856,654
Distribution, selling and administrative expenses	434			480,765			254,154		—			735,353
Acquisition-related and exit and realignment charges	—			17,084			4,050		—			21,134
Other operating (income) expense, net	—			1,481			662		—			2,143
Operating earnings (loss)	(434		)	91,480			7,438		(460		)	98,024
Interest expense (income), net	20,756			(2,777		)	4,239		—			22,218
Income (loss) before income taxes	(21,190		)	94,257			3,199		(460		)	75,806
Income tax (benefit) provision	—			23,303			2,707		—			26,010
Equity in earnings of subsidiaries	70,986			—			—		(70,986		)	—
Net income (loss)	49,796			70,954			492		(71,446		)	49,796
Other comprehensive income (loss)	41,141			990			40,151		(41,141		)	41,141
Comprehensive income (loss)	$	90,937		$	71,944		$	40,643	$	(112,587	)	$	90,937



Nine Months Ended September 30, 2016	Owens & Minor, Inc.			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
Statements of Income
Net revenue	$	—		$	6,954,983		$	516,131		$	(116,045	)	$	7,355,069
Cost of goods sold	—			6,305,489			273,927			(116,677		)	6,462,739
Gross margin	—			649,494			242,204			632			892,330
Distribution, selling and administrative expenses	838			504,984			221,122			—			726,944
Acquisition-related and exit and realignment charges	—			15,888			4,086			—			19,974
Other operating income, net	—			(3,952		)	(1,227		)	—			(5,179		)
Operating earnings (loss)	(838		)	132,574			18,223			632			150,591
Interest expense (income), net	21,134			(2,808		)	1,998			—			20,324
Income (loss) before income taxes	(21,972		)	135,382			16,225			632			130,267
Income tax (benefit) provision	—			40,237			8,348			—			48,585
Equity in earnings of subsidiaries	103,654			—			—			(103,654		)	—
Net income (loss)	81,682			95,145			7,877			(103,022		)	81,682
Other comprehensive income (loss)	3,263			821			2,442			(3,263		)	3,263
Comprehensive income (loss)	$	84,945		$	95,966		$	10,319		$	(106,285	)	$	84,945



	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands except per share data)	2017			2016			2017			2016
Operating earnings, as reported (GAAP)	$	29,671		$	53,568		$	98,024		$	150,591
Acquisition-related and exit and realignment charges ⁽¹⁾	9,299			2,739			21,134			19,974
Acquisition-related intangible amortization ⁽²⁾	5,071			2,489			9,737			7,552
Other ⁽³⁾	4,441			—			8,674			—
Operating earnings, adjusted (non-GAAP) (Adjusted Operating Earnings)	$	48,482		$	58,796		$	137,569		$	178,117

Net income, as reported (GAAP)	$	10,871		$	29,831		$	49,796		$	81,682
Acquisition-related and exit and realignment charges ⁽¹⁾	9,299			2,739			21,134			19,974
Income tax expense (benefit) ⁽⁴⁾	(2,854		)	(1,015		)	(7,367		)	(6,615		)
Acquisition-related intangible amortization ⁽²⁾	5,071			2,489			9,737			7,552
Income tax expense (benefit) ⁽⁴⁾	(1,601		)	(645		)	(2,993		)	(1,956		)
Other ⁽³⁾	4,441			—			8,674			—
Income tax expense (benefit) ⁽⁴⁾	(973		)	—			(2,465		)	—
Net income, adjusted (non-GAAP) (Adjusted Net Income)	$	24,254		$	33,399		$	76,516		$	100,637

Net income per diluted common share, as reported (GAAP)	$	0.18		$	0.48		$	0.82		$	1.32
Acquisition-related and exit and realignment charges, per diluted common share ⁽¹⁾	0.11			0.03			0.23			0.21
Acquisition-related intangible amortization, per diluted common share ⁽²⁾	0.06			0.03			0.11			$	0.09
Other, per diluted common share ⁽³⁾	0.05			—			0.10			—
Net income per diluted common share, adjusted (non-GAAP)(Adjusted EPS)	$	0.40		$	0.54		$	1.26		$	1.62