ACCENDRA HEALTH INC/VA/

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

Note 1—Summary of Significant Accounting Policies

Basis of Presentation and Consolidation.** **The unaudited condensed consolidated financial statements include the accounts of Accendra Health, Inc. (f/k/a Owens & Minor, Inc.) and the subsidiaries it controls (collectively, the Company, we, us, or our) and contain all adjustments necessary to conform with U.S. generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. Our continuing operations’ business activities comprise a single operating and reporting segment. This determination is in accordance with ASC 280, Segment Reporting.

Reclassifications.** **Certain prior period amounts have been reclassified to conform to current year presentation.

Discontinued Operations. On February 28, 2025, we announced that we were actively engaged in discussions regarding the anticipated sale of our Products & Healthcare Services (P&HS) business. On October 7, 2025, we entered into an Equity Purchase Agreement (the Purchase Agreement) by and among the Company, Dominion Healthcare Acquisition Corporation, a Delaware corporation (the Purchaser), and Dominion Healthcare Holdings, L.P., a Delaware limited partnership (the Purchaser Parent) to sell the P&HS business, for an aggregate of$375 million in cash, subject to certain adjustments for cash, indebtedness, net working capital and transaction expenses. On December 31, 2025, we completed the sale of the P&HS business pursuant to the Purchase Agreement (the P&HS Sale). We retained a 5% equity interest in the P&HS business, which is reflected in other assets, net on our condensed consolidated balance sheets.

The P&HS business was initially classified as discontinued operations and assets held for sale as of June 30, 2025. In accordance with GAAP, the financial position and results of operations of the P&HS business are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. With the exception of Note 2, the Notes to Condensed Consolidated Financial Statements reflect the continuing operations of the Company unless otherwise noted. See Note 2 for additional information regarding discontinued operations.

Use of Estimates. The preparation of consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures. Significant estimates are used for, but are not limited to, variable consideration, depreciation and amortization, goodwill valuation, valuation of intangible assets and other long-lived assets, self-insurance liabilities, tax liabilities, defined benefit obligations, share-based compensation and other contingencies. Actual results may differ from these estimates.

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

Included in accounts receivable were earned but unbilled receivables of$31 million as of September 30, 2026 and$30 million as of December 31, 2025. Delays, ranging from a single day to several weeks, between the date of service and billing can occur due to delays in obtaining certain required payor-specific documentation from internal and external sources. Earned but unbilled receivables are aged from date of service and are considered in our analysis of historical performance and collectability.

Receivables Sale Program. On October 18, 2024, we entered into a Receivables Purchase Agreement (the Receivables Sale Program) with persons from time to time, as Purchasers, PNC Bank, National Association, as

Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent, pursuant to which accounts receivable with an aggregate outstanding amount not to exceed$450 million were sold, on a limited-recourse basis, to the Purchasers in exchange for cash. Transactions under this agreement were accounted for as sales in accordance with ASC 860,Transfers and Servicing, with the sold receivables removed from our condensed consolidated balance sheets. Under the Receivables Sale Program, we provided certain servicing and collection actions on behalf of the Purchasers; however, we did not maintain any beneficial interest in the accounts receivable sold.

Proceeds from the sales of accounts receivable were recorded as an increase to cash and cash equivalents and a reduction to accounts receivable, net in the condensed consolidated balance sheets. Cash received from the sales of accounts receivable is reflected in the change in accounts receivable, net within cash used for operating activities in the condensed consolidated statements of cash flows. Total accounts receivable sold and net cash proceeds under the Receivables Sale Program were $466 million and $1.3 billion during the three and nine months ended September 30, 2025, approximately $93 million and $261 million of which related to continuing operations. We collected $465 million and $1.2 billion of the sold accounts receivable during the three and nine months ended September 30, 2025, approximately $93 million and $234 million of which related to continuing operations. The losses on sales of accounts receivable of continuing operations, inclusive of professional fees incurred to establish the agreement, recorded in selling, general, and administrative expenses (SG&A) in the condensed consolidated statements of operations were $0.6 million and $1.6 million for the three and nine months ended September 30, 2025. In connection with the amendment to the Receivables Sale Program, as described below, any uncollected accounts receivable sold were settled on December 31, 2025.

Amended Receivables Sale Program. On December 31, 2025, Accendra Funding LLC (Accendra Funding) and Byram Healthcare Centers, Inc. (Byram), each a wholly owned subsidiary of the Company, entered into an Amended and Restated Receivables Purchase Agreement (the Amended Receivables Sale Program) with persons from time to time party thereto, as Purchasers, PNC Bank, as Administrative Agent, and PNC Capital Markets LLC, as Structuring Agent, pursuant to which accounts receivable are sold, on a limited-recourse basis, to the Purchasers in exchange for cashin an aggregate outstanding amount not to exceed $150 million. The Amended Receivables Sale Program amends and restates, in its entirety, the Receivables Sale Program dated as of October 18, 2024.

Transactions under this agreement are accounted for as sales in accordance with ASC 860,Transfers and Servicing, with the sold receivables removed from our condensed consolidated balance sheets. Under the Amended Receivables Sale Program, we provide certain servicing and collection actions on behalf of the Purchasers; however, we do not maintain any beneficial interest in the accounts receivable sold. The Amended Receivables Sale Program has a scheduled termination date of October 18, 2027.

Total accounts receivable sold under the Amended Receivables Sale Program were $229 million and $695 million during the three and nine months ended September 30, 2026. We collected $223 million and $693 million of the sold accounts receivable during the three and nine months ended September 30, 2026. The losses on sales of accounts receivable recorded in SG&A were $1.7 million and $5.0 million for the three and nine months ended September 30, 2026. As of September 30, 2026 and December 31, 2025, there was a total of $136 million and $134 million of uncollected accounts receivable sold and removed from our condensed consolidated balance sheets under the Amended Receivables Sale Program.

Retirement Plan. We have a frozen noncontributory, unfunded retirement plan for certain retirees in the U.S. (the U.S. Retirement Plan). As of September 30, 2026 and December 31, 2025, the accumulated benefit obligation of the U.S. Retirement Plan was$30 million and$31 million.

Revenue Recognition. Revenues are generated through fee-for-service and capitation arrangements with large government and commercial payors (each, a Payor and collectively Payors) for equipment, supplies, services and other items rented and sold to customers. Revenue for sales of products, including equipment and supplies, is recognized when control of the promised goods is transferred to customers and is presented net of applicable sales taxes. Revenue generated from equipment that we rent to customers is primarily recognized as earned on a straight-line basis over the non-cancellable rental period, typically one month, and commences on delivery of the equipment to the customers.

Certain revenues are recognized under arrangements with third-party payors for which we stand ready to provide all necessary healthcare services to members for the period of the stand ready obligation which generally extends beyond one year. These agreements are generally referred to as capitation arrangements. Revenue is recognized over the month that the members are entitled to healthcare services using the monthly contractual rate for each covered member. The actual number of covered members may vary each month. Capitation payments are typically received in the month members are entitled to healthcare services. Revenue for these agreements amounted to $3.5 million and $40 million for the three and nine months ended September 30, 2026 and $61 million and $182 million for the three and nine months ended September 30, 2025.

Fee-for-service arrangement revenues are recorded only to the extent it is probable that a significant reversal will not occur in the future as amounts may include implicit price concessions under reimbursement arrangements with third-party payors, including private insurers, prepaid health plans, Medicare, Medicaid and customers. Revenue is recognized under a portfolio approach, as we expect that this approach would not differ materially from considering each contract or performance obligation separately. We use the expected value method in determining the variable consideration as part of determining the sales transaction price using historical reimbursement experience, historical sales returns, and other operating trends. Payment terms and conditions vary by contract. Sales of equipment and supplies inclusive of amounts recognized under capitation arrangements were $472 million and $1.4 billion for the three and nine months ended September 30, 2026 and $528 million and $1.5 billion for the three and nine months ended September 30, 2025. Rental revenues inclusive of amounts recognized under capitation arrangements were $130 million and $408 million for the three and nine months ended September 30, 2026 and $169 million and $510 million for the three and nine months ended September 30, 2025.

The following table summarizes net revenue by product category for the three and nine months ended September 30, 2026 and 2025:

The following table summarizes net revenue by payor type for the three and nine months ended September 30, 2026 and 2025:

(1)* Commercial payors includes revenue from Medicare Advantage plans.*

Cost of Net Revenue. Cost of net revenue includes the cost of products sold, patient service equipment depreciation expense, and other costs which are primarily personnel costs related to the set-up and utilization of equipment. Cost of products sold includes non-cash expenses primarily for equipment converted from rental to sales in

the amount of $7.4 million and $26 million for the three and nine months ended September 30, 2026 and $11 million and $35 million for the three and nine months ended September 30, 2025.

The following table summarizes cost of net revenue for the three and nine months ended September 30, 2026 and 2025:

Transaction Breakage Fee. As previously disclosed, on July 22, 2024, we entered into an Agreement and Plan of Merger (the Merger Agreement) pursuant to which we agreed to acquire Rotech Healthcare Holdings Inc. (Rotech) subject to the terms and conditions within the Merger Agreement. On June 3, 2025, the Company, Rotech and Hitchcock Merger Sub Inc. (Merger Sub) mutually agreed to terminate the Merger Agreement and entered into a mutual termination agreement (the Termination Agreement). In accordance with the terms of the Termination Agreement, we incurred and made a cash payment to Rotech of $80 million during the nine months ended September 30, 2025.

Acquisition-Related Charges and Intangible Amortization. Acquisition-related charges consist primarily of one-time costs related to the terminated acquisition of Rotech, which consisted primarily of legal and professional fees. Acquisition-related charges and intangible amortization also include amortization of intangible assets established during acquisition method of accounting for business combinations. These amounts are highly dependent on the size and frequency of acquisitions. For the three and nine months ended September 30, 2026, we incurredno acquisition-related charges. For the nine months ended September 30, 2025, we incurred $22 million of acquisition-related charges.

Other Current Liabilities. Other current liabilities include $35 million and $16 million of accrued interest at September 30, 2026 and December 31, 2025.

Other Liabilities. As of September 30, 2026, other liabilities include $110 million of net principal recapture resulting from our Balance Sheet Optimization Transaction, as defined and described in Note 5. The principal recapture liability does not represent a cash settled obligation and will be amortized ratably through the life of the Secured Notes, as defined and described in Note 5, through interest expense, net.

Fair Value.* Fair value is determined based on assumptions that a market participant would use in pricing an asset or liability. The assumptions used are in accordance with a three-tier hierarchy, defined by GAAP, that draws a distinction between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the use of present value and other valuation techniques in the determination of fair value (Level 3).* **

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued payroll and related liabilities reported in the condensed consolidated balance sheets approximate fair value due to the short-term nature of these instruments. When a quantitative goodwill test is performed, the estimated fair value of our reporting unit is determined with the use of unobservable inputs (Level 3). As compared to the date of the most recent quantitative goodwill test, there have been adverse changes, including a decrease in our market capitalization and the fair value of our debt. If significant adverse changes occur, including a further decrease in our market capitalization and the fair value of our debt, an increase in the discount rate, a failure to meet our business plans or expected earnings and cash flows, and other unanticipated events and circumstances we may be required to record a material charge to earnings in our condensed consolidated financial statements during the period in which any impairment of our goodwill is determined, which could adversely affect our results of operations.

The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2). See Note 5 for the fair value of debt. The fair values of our derivative contracts are determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows. See Note 6 for the fair value of derivatives.

Note 2—Discontinued Operations

As described in Note 1, in accordance with GAAP, the financial position and results of operations of the P&HS business are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. The P&HS business was initially classified as discontinued operations and assets held for sale as of June 30, 2025. Accordingly, the results of operations from our P&HS business are reported in the accompanying condensed consolidated statements of operations as loss from discontinued operations, net of tax for the three and nine months ended September 30, 2026 and September 30, 2025. We have allocated interest expense, net to discontinued operations as a ratio of net assets and total debt in accordance with ASC 205,Presentation of Financial Statements.

On December 31, 2025, we received cash proceeds of $342 million and recorded a $20 million investment for a 5% retained equity interest, which was recorded in other assets, net on our condensed consolidated balance sheet as of December 31, 2025. Net proceeds of $324 million from the P&HS Sale, net of cash sold, reflect $342 million of cash proceeds received and $18 million of P&HS cash conveyed. The final purchase price was determined subsequent to the completion of the sale to reflect adjustments in accordance with the Purchase Agreement, including final net working capital adjustments. As of December 31, 2025, we estimated a purchase price adjustment receivable of approximately $12 million to $15 million, which was recorded within other current assets on our condensed consolidated balance sheet. Subsequent changes to the purchase price have been recorded within discontinued operations. As of September 30, 2026, the final purchase price adjustment receivable was approximately $5.0 million, which was recorded within other current assets on our condensed consolidated balance sheet.

We agreed to reimburse the Purchaser and its affiliates for 80% of certain costs incurred in connection with the separation of P&HS from the Company’s retained business, subject to an aggregate cap of $65 million. We are obligated to reimburse the Purchaser for any such costs incurred after December 31, 2025, except that such reimbursements did not and will not need to be paid: (1) in advance of April 1, 2026; (2) for amounts in excess of $15 million prior to October 1, 2026; or (3) for amounts in excess of $55 million prior to January 1, 2027. During the three and nine months ended September 30, 2026, we incurred $30 million and $65 million in separation costs to be reimbursed to the Purchaser which are recorded within exit and realignment charges, net on our condensed consolidated statement of operations and within accounts payable on our condensed consolidated balance sheet.

We and the Purchaser provide certain transition services to the other party pursuant to a certain customary transition services agreement (the TSA). Pursuant to the terms of the TSA, we have agreed that, in certain circumstances, we may be obligated to provide up to $115 million in credit support to the P&HS business through early 2027. To date, there have been no circumstances requiring us to provide such credit support. The TSA includes customary services including information technology support and is anticipated to be substantially completed withintwo years of the P&HS Sale, with some services being completed by December 31, 2026. During the three and nine months ended September 30, 2026, we have incurred $10 million and $26 million in net fees for services received and for services provided under the TSA which are recorded within SG&A on our condensed consolidated statement of operations. During the nine months ended September 30, 2026, we exited certain TSA activities and replaced them with internal capabilities. We expect to continue to exit certain TSA activities and replace with internal capabilities throughout the remainder of 2026.

The following table summarizes the financial results of our discontinued operations for the three and nine months ended September 30, 2026 and September 30, 2025:

Receivables Sale Program. Total accounts receivable sold and net cash proceeds under the Receivables Sale Program were $466 million and $1.3 billion during the three and nine months ended September 30, 2025, approximately $373 million and $1.0 billion of which related to discontinued operations. We collected $465 million and $1.2 billion of the sold accounts receivable during the three and nine months ended September 30, 2025, approximately $372 million and $935 million of which related to discontinued operations. The losses on sales of accounts receivable were $3.0 million and $8.2 million for the three and nine months ended September 30, 2025, $2.4 million and $6.5 million of which relate to losses recorded in other operating expense, net in the financial results from discontinued operations. As of December 31, 2025, there wasno uncollected accounts receivable sold and removed from our consolidated balance sheet related to discontinued operations.

Note 3—Goodwill and Intangible Assets, Net

At September 30, 2026 and December 31, 2025, we had goodwill of $1.2 billion, net of accumulated goodwill impairment of $307 million.

Intangible assets, net subject to amortization at September 30, 2026 and December 31, 2025 were as follows:

Amortization expense for intangible assets was $5.0 million and $63 million for the three and nine months ended September 30, 2026 and $29 million and $44 million for the three and nine months ended September 30, 2025. The change in amortization expense for the three and nine months ended September 30, 2026 as compared to the prior year was driven by the remaining useful life for an intangible asset being modified as of June 30, 2025, as a result of a notice of a contract termination with a commercial Payor. As of June 30, 2026, this customer relationship intangible asset had been fully amortized and removed from our condensed consolidated balance sheet.

As of September 30, 2026, based on the current carrying value of intangible assets subject to amortization and expected remaining useful life, estimated amortization expense was as follows:

Note 4—Exit and Realignment Charges, Net

We incur exit and realignment and other charges associated with optimizing our operations which include IT strategic initiatives and other strategic actions, professional fees, severance and other costs to streamline functions and enhance processes and separation costs. Separation costs primarily consist of professional fees including costs reimbursable to the Purchaser as described in Note 2 and other wind-down costs incurred after the sale of the P&HS business. These costs are not normal recurring, cash operating expenses necessary for the Company to operate its business on an ongoing basis. We may incur future material costs, which we are not able to reasonably estimate.

Exit and realignment charges, net were $5.5 million and $7.8 million for the three and nine months ended September 30, 2026 and $0.7 million and $17 million for the three and nine months ended September 30, 2025.

As a result of the sale of our P&HS business, we have incurred $30 million and $65 million in reimbursable separation costs during the three and nine months ended September 30, 2026. We have incurred the maximum $65 million in exit and realignment costs associated with reimbursement to the Purchaser for certain separation costs incurred by the Purchaser, as described in Note 2.

The following table summarizes the activity related to exit and realignment cost accruals, which are generally classified as other current liabilities or accounts payable in our condensed consolidated balance sheets, through September 30, 2026 and 2025:

In addition to the exit and realignment accruals in the preceding table, exit and realignment charges, net included (gains) and costs that were recognized as incurred including a $(33) million gain on the sale of a non-core asset during the three and nine months ended September 30, 2026, a $(51) million gain on sales of patient service equipment in connection with the contract termination with a commercial Payor and $4.2 million in expenses primarily related to P&HS Sale separation costs for the nine months ended September 30, 2026 and $0.1 million and $7.7 million of costs that were expensed as incurred for the three and nine months ended September 30, 2025, which primarily related to wind-down costs of Fusion5.

Note 5—Debt

Debt, net of unamortized deferred financing costs, as of September 30, 2026 and December 31, 2025 consisted of the following:

On March 29, 2022, we entered into a term loan credit agreement with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (the Credit Agreement) that provided fortwo credit facilities: (i) a $500 million Term Loan A facility (the Term Loan A), and (ii) a $600 million Term Loan B facility (the Term Loan B). The Term Loan A was extinguished on June 15, 2026 as described below. The interest rate on the Term Loan B is based on either the Term SOFR or the Base Rate plus an Applicable Rate, as defined in the Credit Agreement. The Term Loan B matures in March 2029 and has $511 million of principal outstanding excluding unamortized deferred financing costs as of September 30, 2026.

In June 2026, weexchanged and/or extended a substantial portion of our debt (the Balance Sheet Optimization Transaction). Pursuant to exchange offers (the Exchange Offers) for our outstanding 4.500% Senior Notes due 2029 (the 2029 Notes) and 6.625% Senior Notes due 2030 (the 2030 Notes and together with the 2029 Notes, the Unsecured Notes), we offered (i) newly issued 9.000% Senior Secured First Lien Notes due 2032 (the 2032 Notes) to holders that participated in the new money issuance of the 2032 Notes and (ii) newly issued 9.750% Senior Secured Second Lien Notes due 2033 (the 2033 Notes, and together with the 2032 Notes, the Secured Notes).

In connection with the Exchange Offers for the 2029 Notes, we offered $326 million in aggregate principal amount of the newly issued 2032 Notes for cash. The Secured Notes were issued and guaranteed on a senior secured basis by the Company’s existing and future wholly owned domestic subsidiaries (including each subsidiary guarantor of the Unsecured Notes), subject to certain exceptions. The 2032 Notes were used to extinguish the $326 million in outstanding principal on the Term Loan A.

At the expiration of the Exchange Offers, $478 million in aggregate principal amount of 2029 Notes were tendered and cancelled and $548 million in aggregate principal amount of 2030 Notes were tendered and cancelled, representing approximately 99.9% and 99.2% of the principal outstanding. Following such cancellation, and as of September 30, 2026, $0.3 million in aggregate principal amount of the 2029 Notes and $4.2 million in aggregate principal amount of the 2030 Notes remain outstanding. The Unsecured Notes are effectively subordinated to any of our secured indebtedness, including the Secured Notes and outstanding indebtedness under our credit agreements. The Exchange Offers of the Unsecured Notes for Secured Notes have been accounted for as a modification of debt in accordance with ASC 470,Debt.

The 2032 Notes bear interest at a rate of 9.000% per year, payable semi-annually in cash in arrears on June 15 and December 15 of each year, commencing December 15, 2026. We may redeem at any time and from time to time, all or part of the 2032 Notes, prior to June 15, 2029, at a price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, plus a “make-whole” premium, as described

in the First Lien Indenture. On and after June 15, 2029, we may redeem all or part of the 2032 Notes at the applicable redemption prices described in the First Lien Indenture.

The 2032 Notes will mature in June 2032 and have $539 million of principal outstanding excluding unamortized deferred financing costs as of September 30, 2026.

The 2033 Notes bear interest at a rate of 9.750% per year, payable semi-annually in cash in arrears on June 15 and December 15 of each year, commencing December 15, 2026. We may redeem at any time and from time to time, all or part of the 2033 Notes, prior to June 15, 2029, at a price equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, plus a “make-whole” premium, as described in the Second Lien Indenture. On and after June 15, 2029, we may redeem all or part of the 2033 Notes at the applicable redemption prices described in the Second Lien Indenture.

The 2033 Notes will mature in June 2033 and have $698 million of principal outstanding excluding unamortized deferred financing costs as of September 30, 2026.

The completion of the Balance Sheet Optimization Transaction resulted in a loss on modification and extinguishment of debt of $17 million, including $16 million debt modification third party fees and $0.8 million in recognition of previously deferred debt issuance costs during the nine months ended September 30, 2026.

On June 15, 2026, we entered into an amendment, extending the maturity date to January 2030 with potential springing maturities, the earliest being December 2028, to our revolving credit agreement, dated as of March 10, 2021 and with an administrative agent and collateral agent and a syndicate of financial institutions, as lenders (the Revolving Credit Agreement). The amendment decreased the aggregate revolving credit commitments under the Revolving Credit Agreement by $150 million, to an aggregate amount of $300 million.

At September 30, 2026 and December 31, 2025, we had $35 million and $204 million in outstanding borrowings on our Revolving Credit Agreement and letters of credit outstanding, which reduce Revolving Credit Agreement availability, totaling $27 million and $30 million, leaving $238 million and $217 million available for borrowing.

The Revolving Credit Agreement, the Credit Agreement, the 2032 Notes and the 2033 Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of any of the related agreements. The terms of the applicable credit agreements also require us to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition or divestiture. We were in compliance with our debt covenants at September 30, 2026.

As of September 30, 2026, future principal payments due under our debt agreements were as follows:

Current maturities at September 30, 2026 include $35 million in current borrowings on our Revolving Credit Agreement.

Note 6—Derivatives

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

We voluntarily terminated our interest rate swap in May 2026, which resulted in a cash receipt of $1.4 million, net of fees and the removal of the derivative asset from our condensed consolidated balance sheet. At the time of the termination, the total amount of gain deferred in accumulated other comprehensive income (AOCI) related to the terminated interest rate swap was $1.5 million which will be reclassified into earnings as an adjustment to interest expense, net when the originally hedged interest payments affect earnings. We expect the full AOCI derivative amount to be reclassified into earnings through March 2027.

The following table summarizes the terms and fair value of our outstanding cash flow hedge as of December 31, 2025:

The following table summarizes the effect of cash flow hedge accounting on our condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025:

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

Note 7—Income Taxes

The effective tax rate was 51.2% and 19.3% for the three and nine months ended September 30, 2026, compared to (54.3)% and 0.8% for the three and nine months ended September 30, 2025. The change in these rates was primarily from changes in results of operations, including the tax treatment associated with the Balance Sheet Optimization Transaction completed during the nine months ended September 30, 2026, and the tax treatment associated with the $80 million transaction breakage fee incurred during the nine months ended September 30, 2025.

The liability for unrecognized tax benefits was $33 million and $49 million at September 30, 2026 and December 31, 2025. Included in the liability at September 30, 2026 and December 31, 2025 wereno tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The deferred tax asset balance within other assets, net on our condensed consolidated balance sheets was $105 million and $78 million at September 30, 2026 and December 31, 2025.

On August 26, 2020, we received a Notice of Proposed Adjustment (NOPA) from the Internal Revenue Service (IRS) regarding our 2015 and 2016 consolidated income tax returns. On June 30, 2021, we received a NOPA from the IRS regarding our 2017 and 2018 consolidated income tax returns. Within the NOPAs, the IRS has asserted that our taxable income for the aforementioned years should be higher based on their assessment of the appropriate amount of taxable income that we should report in the U.S. in connection with the sourcing of products by our former foreign subsidiaries for sale in the U.S. by our former domestic subsidiaries. These former foreign and domestic subsidiaries were sold as part of the P&HS Sale. The transfer pricing methodology was consistently applied for all years subject to the NOPAs and 2019 into 2022, but is no longer employed.

In June 2024, the IRS and the relevant foreign taxing authority mutually agreed to proposed adjustments to our 2015 through 2018 consolidated tax returns. As a result, we remeasured the uncertain tax position for the 2015 through 2018 tax years, as well as the affected 2019 through 2022 tax years, to the amount expected to be paid upon a final agreement with the IRS. In June 2025, we received the final assessment from the IRS for the 2015 through 2018 tax years, including interest. The uncertain tax position for these years and related accrued interest have been remeasured to reflect the final amount to be paid. This matter does not impact any tax years subsequent to 2022. In March 2026, we paid $19 million to the IRS to settle the 2015 through 2018 audit years, inclusive of $5.8 million of accrued interest. As of September 30, 2026, the remaining amount owed associated with the transfer pricing matter was $16 million, which includes $5.3 million of interest accrued on the matter through September 30,2026. The balance sheet classification and amount owed may be subject to change depending on the timing of a final assessment from the IRS for the 2019 through 2022 audit years.

Note 8—Net Loss per Common Share

The following summarizes the calculation of net loss per common share attributable to common shareholders for the three and nine months ended September 30, 2026 and 2025:

Share-based awards of approximately 1.0 million and 1.1 million for the three and nine months ended September 30, 2026 and 2.3 million and 2.2 million for the three and nine months ended September 30, 2025 were excluded from the calculation of diluted loss per common share as the effect would be anti-dilutive.

Note 9—Shareholders’ Equity

On February 26, 2025, our Board of Directors authorized a share repurchase program of up to$100 million through February 2027. We do not intend to make use of the authorized repurchase program.

During the three and nine months ended September 30, 2026, we didnot repurchase any shares. During the period from February 26, 2025 (the date the share repurchase program was authorized) through December 31, 2025, we repurchased shares in open-market transactions and retired approximately 2.0 million shares of our common stock for an aggregate of$10 million, or a weighted average price per share of$5.19.

Note 10—Accumulated Other Comprehensive (Loss) Income

The following table shows the changes in accumulated other comprehensive (loss) income by component for the three and nine months ended September 30, 2026 and 2025:

We include amounts reclassified out of accumulated other comprehensive (loss) income related to defined benefit pension plans as a component of net periodic pension cost recorded in other expense, net.

Note 11—Segment Information

As described in Note 1, the P&HS Sale was completed on December 31, 2025, and we no longer report the P&HS business within continuing operations. The P&HS business was initially classified as discontinued operations and assets held for sale as of June 30, 2025. Our President and Chief Executive Officer is the chief operating decision maker (CODM). The CODM reviews financial information about the continuing operations business at an enterprise-wide consolidated level when allocating resources and assessing business performance. Accordingly, we have determined that our business activities comprise asingle operating and reporting segment. Income (loss) from continuing operations, net of tax is the profit or loss measure used by the CODM that is most consistent with GAAP and therefore is the required measure of profitability.

Note 12—Commitments, Contingent Liabilities, and Legal Proceedings

Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 for disclosure of other material contractual obligations.

We are party to various legal claims that are ordinary and incidental to our business, including claims related to commercial disputes, employment, workers’ compensation, product liability, regulatory and other matters. We maintain insurance coverage for employment, product liability, workers’ compensation and other personal injury litigation

matters, subject to policy limits, applicable deductibles and insurer solvency. We establish reserves from time to time based upon periodic assessment of the potential outcomes of pending matters.

Based on current knowledge and the advice of counsel, we believe that the accrual as of September 30, 2026 for currently pending matters considered probable of loss is sufficient. In addition, we believe that other currently pending matters are not reasonably possible to result in a material loss, as payment of the amounts claimed is remote, the claims are immaterial, individually and in the aggregate, or the claims are expected to be adequately covered by insurance, subject to policy limits, applicable deductibles, exclusions and insurer solvency.

Note 13—Recent Accounting Pronouncements

Refer to our Annual Report on Form 10-K for the year ended December 31, 2025 for disclosure of recent accounting pronouncements.

Note 14—Subsequent Events

On October 29, 2026, Accendra Funding and Byram entered into the Third Amendment to the Amended & Restated Receivables Purchase Agreement (the RPA Amendment), which amends the Amended Receivables Sale Program. The RPA Amendment extended the scheduled termination date from October 2027 until October 2029, with standard contingencies, and revises account control provisions and reporting obligations.