UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

FORM 10-Q

________________________________________________


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

For the quarterly period ended September 30, ~~2020~~2021


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

For the transition period from to

Commission file number 1-9810

Owens & Minor, Inc.

(Exact name of Registrant as specified in its charter)


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

9120 Lockwood Boulevard	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)

Registrant’s telephone number, including area code (804) 723-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $2 par value per share

OMI

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “larger accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☒☐
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Owens & Minor, Inc.’s common stock outstanding as of October ~~29, 2020,~~31, 2021, was ~~73,512,279~~75,455,760 shares.

Table of Contents

Owens & Minor, Inc. and Subsidiaries

Index


Part I. Financial Information		Page

Item 1.	Financial Statements	3
	Consolidated Statements of Operations—Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	3
	Consolidated Statements of Comprehensive Income (~~Loss~~)(Loss)—Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	4
	Consolidated Balance Sheets—September 30, ~~2020~~2021 and December 31, ~~2019~~2020	5
	Consolidated Statements of Cash Flows—Ni neNine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	6
	Consolidated Statements of Changes in Equity—Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2220
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3129
Item 4.	Controls and Procedures	3230
Part II. Other Information

Item 1.	Legal Proceedings	3230
Item 1A.	Risk Factors	3230
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	32
Item 6.	Exhibits	32

Table of Contents

Part I. Financial Information

Item 1. Financial Statements

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2021		2020		2021		2020
Net revenue	Net revenue	$	2,187,928	$	2,292,752	$	6,118,340	$	7,020,296	Net revenue	$	2,502,175	$	2,187,928	$	7,318,169	$	6,118,340
Cost of goods sold	Cost of goods sold	1,843,589		2,012,130		5,236,035		6,176,537		Cost of goods sold	2,173,336		1,843,589		6,146,511		5,236,035
Gross margin	Gross margin	344,339		280,622		882,305		843,759		Gross margin	328,839		344,339		1,171,658		882,305
Distribution, selling and administrative expenses	Distribution, selling and administrative expenses	262,538		248,661		758,320		767,986		Distribution, selling and administrative expenses	262,457		262,538		849,255		758,320
Acquisition-related and exit and realignment charges	Acquisition-related and exit and realignment charges	6,382		4,522		18,500		14,776		Acquisition-related and exit and realignment charges	6,380		6,382		20,967		18,500
Other operating (income) expense, net		(134)		1,329		(3,020)		2,385
Other operating income, net										Other operating income, net	(2,873)		(134)		(5,016)		(3,020)
Operating income	Operating income	75,553		26,110		108,505		58,612		Operating income	62,875		75,553		306,452		108,505
Interest expense, net	Interest expense, net	20,975		24,050		65,923		75,557		Interest expense, net	11,572		20,975		36,784		65,923
Other expense, net		1,093		550		1,387		4,014
Income (loss) from continuing operations before income taxes		53,485		1,510		41,195		(20,959)
Income tax provision (benefit)		7,404		(1,910)		3,863		(3,726)
Income (loss) from continuing operations, net of tax		46,081		3,420		37,332		(17,233)
Loss on extinguishment of debt										Loss on extinguishment of debt	—		308		40,433		2,580
Other expense (income), net										Other expense (income), net	799		785		2,397		(1,193)
Income from continuing operations before income taxes										Income from continuing operations before income taxes	50,504		53,485		226,838		41,195
Income tax provision										Income tax provision	6,375		7,404		47,224		3,863
Income from continuing operations, net of tax										Income from continuing operations, net of tax	44,129		46,081		179,614		37,332
Loss from discontinued operations, net of tax	Loss from discontinued operations, net of tax	0		(2,196)		(58,203)		(6,115)		Loss from discontinued operations, net of tax	—		—		—		(58,203)
Net income (loss)	Net income (loss)	$	46,081	$	1,224	$	(20,871)	$	(23,348)	Net income (loss)	$	44,129	$	46,081	$	179,614	$	(20,871)

Income (loss) from continuing operations per common share: basic and diluted		$	0.76	$	0.06	$	0.61	$	(0.28)
Loss from discontinued operations per common share: basic and diluted		0		(0.04)		(0.95)		(0.11)
Net income (loss) per common share: basic and diluted		$	0.76	$	0.02	$	(0.34)	$	(0.39)
Basic income (loss) per common share:										Basic income (loss) per common share:
Income from continuing operations										Income from continuing operations	$	0.60	$	0.76	$	2.47	$	0.61
Loss from discontinued operations										Loss from discontinued operations	—		—		—		(0.95)
Net income (loss)										Net income (loss)	$	0.60	$	0.76	$	2.47	$	(0.34)
Diluted income (loss) per common share:										Diluted income (loss) per common share:
Income from continuing operations										Income from continuing operations	$	0.58	$	0.76	$	2.38	$	0.61
Loss from discontinued operations										Loss from discontinued operations	—		—		—		(0.95)
Net income (loss)										Net income (loss)	$	0.58	$	0.76	$	2.38	$	(0.34)

See accompanying notes to consolidated financial statements.

Table of Contents

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2021		2020		2021		2020
Net income (loss)	Net income (loss)	$	46,081	$	1,224	$	(20,871)	$	(23,348)	Net income (loss)	$	44,129	$	46,081	$	179,614	$	(20,871)
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Currency translation adjustments (net of income tax of $0 in 2020 and 2019)		5,173		(9,038)		7,003		(5,793)
Change in unrecognized net periodic pension costs (net of income tax of $47 and $135 in 2020, and $61 and $187 in 2019)		167		199		932		593
Net unrealized gain (loss) on derivative instruments (net of income tax of $831 and income tax benefit of $3,232 in 2020, and $1,225 and $4,866 in 2019)		1,681		(1,789)		(9,792)		(9,464)
Currency translation adjustments										Currency translation adjustments	(12,014)		5,173		(26,724)		7,003
Change in unrecognized net periodic pension costs										Change in unrecognized net periodic pension costs	395		167		552		932
Change in gains and losses on derivative instruments										Change in gains and losses on derivative instruments	—		1,681		20,044		(9,792)
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	7,021		(10,628)		(1,857)		(14,664)		Total other comprehensive income (loss), net of tax	(11,619)		7,021		(6,128)		(1,857)
Comprehensive income (loss)	Comprehensive income (loss)	$	53,102	$	(9,404)	$	(22,728)	$	(38,012)	Comprehensive income (loss)	$	32,510	$	53,102	$	173,486	$	(22,728)

See accompanying notes to consolidated financial statements.

Table of Contents

Owens & Minor, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)


		September 30,		December 31,			September 30,		December 31,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		(in thousands, except per share data)	2021		2020
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	77,256	$	67,030	Cash and cash equivalents	$	39,759	$	83,058
Accounts receivable, net of allowances of $20,135 and $21,015		688,884		674,706
Accounts receivable, net of allowances of $19,273 and $19,087						Accounts receivable, net of allowances of $19,273 and $19,087	759,744		700,792
Merchandise inventories	Merchandise inventories	1,095,410		1,146,192		Merchandise inventories	1,514,387		1,233,751
Other current assets	Other current assets	235,983		79,372		Other current assets	84,335		118,264
Current assets of discontinued operations		0		439,983
Total current assets	Total current assets	2,097,533		2,407,283		Total current assets	2,398,225		2,135,865
Property and equipment, net of accumulated depreciation of $273,403 and $245,718		301,299		315,427
Property and equipment, net of accumulated depreciation of $320,389 and $284,126						Property and equipment, net of accumulated depreciation of $320,389 and $284,126	308,463		315,662
Operating lease assets	Operating lease assets	143,362		142,219		Operating lease assets	184,554		144,755
Goodwill	Goodwill	390,395		393,181		Goodwill	386,693		394,086
Intangible assets, net	Intangible assets, net	251,615		285,018		Intangible assets, net	209,789		243,351
Other assets, net	Other assets, net	112,911		99,956		Other assets, net	96,395		101,920
Total assets	Total assets	$	3,297,115	$	3,643,084	Total assets	$	3,584,119	$	3,335,639
Liabilities and equity	Liabilities and equity					Liabilities and equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	946,116	$	808,035	Accounts payable	$	1,118,753	$	1,000,186
Accrued payroll and related liabilities	Accrued payroll and related liabilities	71,406		53,584		Accrued payroll and related liabilities	100,171		109,447
Other current liabilities	Other current liabilities	412,483		231,029		Other current liabilities	206,094		236,094
Current liabilities of discontinued operations		0		323,511
Total current liabilities	Total current liabilities	1,430,005		1,416,159		Total current liabilities	1,425,018		1,345,727
Long-term debt, excluding current portion	Long-term debt, excluding current portion	1,099,645		1,508,415		Long-term debt, excluding current portion	959,485		986,018
Operating lease liabilities, excluding current portion	Operating lease liabilities, excluding current portion	120,025		117,080		Operating lease liabilities, excluding current portion	154,009		119,932
Deferred income taxes	Deferred income taxes	75,009		40,550		Deferred income taxes	37,093		50,641
Other liabilities	Other liabilities	121,096		98,726		Other liabilities	121,509		121,267
Total liabilities	Total liabilities	2,845,780		3,180,930		Total liabilities	2,697,114		2,623,585
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Equity	Equity					Equity
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 63,716 shares and 62,843 shares		127,432		125,686
Common stock, par value $2 per share; authorized - 200,000 shares; issued and outstanding - 75,429 shares and 73,472 shares						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	Paid-in capital	262,002		251,401		Paid-in capital	434,952		436,597
Retained earnings	Retained earnings	116,465		137,774		Retained earnings	345,832		167,022
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(54,564)		(52,707)		Accumulated other comprehensive loss	(44,637)		(38,509)
Total equity	Total equity	451,335		462,154		Total equity	887,005		712,054
Total liabilities and equity	Total liabilities and equity	$	3,297,115	$	3,643,084	Total liabilities and equity	$	3,584,119	$	3,335,639

See accompanying notes to consolidated financial statements.

Table of Contents

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020
Operating activities:	Operating activities:					Operating activities:
Net loss		$	(20,871)	$	(23,348)
Adjustments to reconcile net loss to cash provided by operating activities:
Net income (loss)						Net income (loss)	$	179,614	$	(20,871)
Adjustments to reconcile net income (loss) to cash provided by operating activities:						Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	69,494		88,204		Depreciation and amortization	68,142		69,494
Share-based compensation expense	Share-based compensation expense	15,275		12,057		Share-based compensation expense	19,078		15,275
Loss on divestiture	Loss on divestiture	65,472		0		Loss on divestiture	—		65,472
Loss on extinguishment of debt						Loss on extinguishment of debt	40,433		2,580
Provision for losses on accounts receivable	Provision for losses on accounts receivable	9,583		9,759		Provision for losses on accounts receivable	19,270		9,583
Deferred income tax expense (benefit)		25,017		(11,989)
Deferred income tax (benefit) expense						Deferred income tax (benefit) expense	(18,286)		25,017
Changes in operating lease right-of-use assets and lease liabilities	Changes in operating lease right-of-use assets and lease liabilities	(1,328)		(1,280)		Changes in operating lease right-of-use assets and lease liabilities	1,190		(1,328)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(20,173)		73,986		Accounts receivable	(84,381)		(20,173)
Merchandise inventories	Merchandise inventories	52,605		136,021		Merchandise inventories	(284,188)		52,605
Accounts payable	Accounts payable	136,156		(221,381)		Accounts payable	120,821		136,156
Net change in other assets and liabilities	Net change in other assets and liabilities	(69,117)		69,756		Net change in other assets and liabilities	(8,341)		(69,117)
Other, net	Other, net	6,083		7,320		Other, net	20,484		3,503
Cash provided by operating activities	Cash provided by operating activities	268,196		139,105		Cash provided by operating activities	73,836		268,196
Investing activities:	Investing activities:					Investing activities:
Proceeds from divestiture	Proceeds from divestiture	133,000		0		Proceeds from divestiture	—		133,000
Additions to property and equipment	Additions to property and equipment	(21,678)		(31,224)		Additions to property and equipment	(26,446)		(21,678)
Additions to computer software	Additions to computer software	(4,702)		(6,928)		Additions to computer software	(6,179)		(4,702)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	178		220		Proceeds from sale of property and equipment	41		178
Proceeds from cash surrender value of life insurance policies	Proceeds from cash surrender value of life insurance policies	6,032		0		Proceeds from cash surrender value of life insurance policies	—		6,032
Cash provided by (used for) investing activities		112,830		(37,932)
Cash (used for) provided by investing activities						Cash (used for) provided by investing activities	(32,584)		112,830
Financing activities:	Financing activities:					Financing activities:
Proceeds from issuance of debt	Proceeds from issuance of debt	150,000		0		Proceeds from issuance of debt	574,900		150,000
Repayments under revolving credit facility		(107,900)		(36,100)
Repayments under revolving credit facility, net						Repayments under revolving credit facility, net	(90,900)		(107,900)
Repayments of debt	Repayments of debt	(270,399)		(40,700)		Repayments of debt	(553,140)		(270,399)
Financing costs paid	Financing costs paid	(10,367)		(4,313)		Financing costs paid	(13,912)		(10,367)
Cash dividends paid	Cash dividends paid	(467)		(5,072)		Cash dividends paid	(548)		(467)
Payment for termination of interest rate swaps						Payment for termination of interest rate swaps	(15,434)		—
Other, net	Other, net	(5,822)		(3,109)		Other, net	(18,188)		(5,822)
Cash used for financing activities	Cash used for financing activities	(244,955)		(89,294)		Cash used for financing activities	(117,222)		(244,955)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	6,721		(2,243)		Effect of exchange rate changes on cash and cash equivalents	(2,454)		6,721
Net increase in cash, cash equivalents and restricted cash		142,792		9,636
Net (decrease) increase in cash, cash equivalents and restricted cash						Net (decrease) increase in cash, cash equivalents and restricted cash	(78,424)		142,792
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	84,687		103,367		Cash, cash equivalents and restricted cash at beginning of period	134,506		84,687
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	227,479	$	113,003	Cash, cash equivalents and restricted cash at end of period	$	56,082	$	227,479
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Income taxes received, net of payments		$	(1,892)	$	(12,085)
Income taxes paid (received), net of refunds						Income taxes paid (received), net of refunds	$	83,606	$	(1,892)
Interest paid	Interest paid	$	61,271	$	76,470	Interest paid	$	32,035	$	61,271

See accompanying notes to consolidated financial statements.

Table of Contents

Owens & Minor, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(unaudited)


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

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

Balance, December 31, 2018		62,294	$	124,588	$	238,773	$	200,670	$	(45,612)	$	518,419
Net loss							(14,096)				(14,096)
Other comprehensive loss									(6,423)		(6,423)
Dividends declared ($0.0025 per share)							(119)				(119)
Share-based compensation expense, exercises and other		642	1,284		2,774						4,058
Balance, March 31, 2019		62,936	125,872		241,547		186,455		(52,035)		501,839
Net loss							(10,476)				(10,476)
Other comprehensive income									2,387		2,387
Dividends declared ($0.0025 per share)							(114)				(114)
Share-based compensation expense, exercises and other		28	56		3,209						3,265
Balance, June 30, 2019		62,964	125,928		244,756		175,865		(49,648)		496,901
Net income							1,224				1,224
Other comprehensive loss									(10,628)		(10,628)
Dividends declared ($0.0025 per share)							(175)				(175)
Share-based compensation expense, exercises and other		(102)	(204)		4,160						3,956
Balance, September 30, 2019		62,862	$	125,724	$	248,916	$	176,914	$	(60,276)	$	491,278

See accompanying notes to consolidated financial statements.

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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—Summary of 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 business ~~represents~~represented a component that met accounting requirements to be classified as discontinued operations ~~and held-for-sale beginning December 31, 2019.~~for the nine months ended September 30, 2020. In accordance with GAAP, the results of operations ~~and financial position~~ 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 ~~all periods presented.~~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.

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 current assets represents cash held in a designated account as of September 30, 2020 as required by the Fifth Amendment to the Credit Agreement, which stipulates that the cash held within this account is to be used to repay the 2021 Notes or the Term Loans. Restricted cash included in Other assets, net as of September 30, ~~2020~~2021 represents cashheld in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) ~~Advanced Program.~~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, 2020 December 31, 2019
Cash and cash equivalents $ 77,256 $ 67,030
Restricted cash included in Other current assets 133,899 0
Restricted cash included in Other assets, net 16,324 16,261
Cash of discontinued operations 0 1,396
Total cash, cash equivalents and restricted cash $ 227,479 $ 84,687


	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 and accounts payable 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 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 6 for the fair value of debt. The fair value of ~~interest rate swaps and~~ foreign currency contracts is determined based on the present value of expected future cash flows considering the risks involved,

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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 8 for the fair value of derivatives.

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Note 3—Discontinued Operations

On June 18, 2020, we completed the ~~previously announced~~ divestiture of 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 ~~as of December 31, 2019 and~~ through the Divestiture Date, as the intention to sell represented a strategic shift and the criteria for held-for-sale were met. Movianto was previously reported in the Global Solutions segment.

Accordingly, the results of operations from the Movianto business are reported in the accompanying consolidated statements of operations as Loss from discontinued operations, net of tax for the three and nine months ended September 30, 2020 and 2019, and the related assets and liabilities are classified as held-for-sale as of December 31, 2019 in the accompanying balance sheet. We are working with the Buyer on a final working capital adjustment that could result in a benefit in an amount up to $42 million. There is no benefit of any such adjustment reflected in our consolidated financial statements as of September 30, 2020.

The following table summarizes the financial results of our discontinued operations for the three and nine months ended September 30, ~~2020 and 2019:~~2020:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net revenue $ 0 $ 106,265 $ 226,759 $ 324,308
Cost of goods sold 0 24,399 53,923 78,729
Gross margin 0 81,866 172,836 245,579
Distribution, selling, and administrative expenses 0 81,565 157,512 245,562
Loss on divestiture 0 0 65,472 0
Acquisition-related and exit and realignment charges 0 383 4,825 774
Other operating income, net 0 (20) (388) (492)
Operating loss 0 (62) (54,585) (265)
Interest expense, net 0 1,887 3,144 5,162
Loss from discontinued operations before income taxes 0 (1,949) (57,729) (5,427)
Income tax provision from discontinued operations 0 247 474 688
Loss from discontinued operations, net of tax $ 0 $ (2,196) $ (58,203) $ (6,115)


	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.

~~All revenue and expense included in discontinued operations during the nine months ended September 30, 2020 relates to activity through the Divestiture Date.~~ 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 Buyer, pursuant to which we and 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, ~~2020. These amounts~~2021 and 2020 and were immaterial for the ~~three and nine months ended~~periods presented. These arrangements were substantially completed as of September 30, ~~2020.~~2021.

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~~The~~We had no assets and liabilities of the discontinued Movianto business reflected on the consolidated balance ~~sheet~~sheets at September 30, 2021 and December 31, ~~2019 were as follows:~~2020.


	~~December 31, 2019~~
~~Assets of discontinued operations~~
~~Cash and cash equivalents~~	$	~~1,396~~
~~Accounts receivable, net~~	~~78,643~~
~~Merchandise inventories~~	~~16,058~~
~~Other current assets~~	~~188,853~~
~~Current assets of discontinued operations~~	~~284,950~~
~~Property and equipment, net~~	~~65,710~~
~~Intangible assets, net~~	~~6,579~~
~~Other assets, net~~	~~27,431~~
~~Operating lease assets~~	~~87,425~~
~~Valuation allowance on disposal group classified as held-for-sale~~	~~(32,112)~~
~~Total assets of discontinued operations~~	$	~~439,983~~
~~Liabilities of discontinued operations~~
~~Accounts payable~~	$	~~53,981~~
~~Other current liabilities~~	~~182,980~~
~~Current liabilities of discontinued operations~~	~~236,961~~
~~Long-term debt, excluding current portion~~	~~5,523~~
~~Operating lease liabilities, excluding current portion~~	~~76,270~~
~~Other liabilities~~	~~4,757~~
~~Total liabilities of discontinued operations~~	$	~~323,511~~

~~Assets and liabilities held-for-sale as of December 31, 2019 were classified as current since we expected the Divestiture to be completed within one year of the balance sheet date.~~

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

September 30, 2020 September 30, 2019
Operating Activities:
Depreciation and amortization $ 0 $ 15,466
Loss on divestiture 65,472 0
Investing Activities:
Capital expenditures 3,027 17,298


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

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Note 4—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, ~~2020:~~

Global Solutions Global Products Consolidated
Carrying amount of goodwill, December 31, 2019 $ 283,905 $ 109,276 $ 393,181
Currency translation adjustments 0 (2,786) (2,786)
Carrying amount of goodwill, September 30, 2020 $ 283,905 $ 106,490 $ 390,395

102021:


	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

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Intangible assets at September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were as follows:

September 30, 2020 December 31, 2019
Customer
Relationships Tradenames Other
Intangibles Customer
Relationships Tradenames Other
Intangibles
Gross intangible assets $ 268,179 $ 90,000 $ 43,238 $ 270,693 $ 90,000 $ 43,055
Accumulated amortization (113,999) (22,791) (13,012) (92,947) (16,520) (9,263)
Net intangible assets $ 154,180 $ 67,209 $ 30,226 $ 177,746 $ 73,480 $ 33,792
Weighted average useful life 10 years 11 years 8 years 10 years 11 years 8 years


	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, ~~2020, $67.2~~2021, $51.1 million in net intangible assets were held in the Global Solutions segment and ~~$184.4~~$159 million were held in the Global Products segment.Amortization expense for intangible assets was ~~$10.2~~$10.0 million and ~~$10.6~~$10.2 million for the three months ended September 30, 2021 and 2020, and ~~2019, respectively,~~$30.1 million and $31.5 ~~million and $33.4~~ million for the nine months ended September 30, ~~2020~~2021 and ~~2019, respectively.~~2020.

Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is ~~$10.4~~approximately $10 million for the remainder of ~~2020, $39.8 million for~~ 2021, ~~$38.9~~$39 million for 2022, ~~$38.7~~$39 million for 2023, ~~$33.9~~$34 million for 2024, ~~and $28.2~~$28 million for ~~2025.~~2025 and $27 million for 2026.

Note 5—Exit and Realignment 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, our client engagement center and 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, ~~2020~~2021 and ~~2019~~2020 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Global Solutions segment $ 2,714 $ 969 $ 6,255 $ 3,149
Global Products segment 2,877 11 3,364 252
Total exit and realignment charges $ 5,591 $ 980 $ 9,619 $ 3,401


	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

1110

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The following table summarizes the activity related to exit and realignment cost accruals through September 30, ~~2020~~2021 and ~~2019:~~2020:


				Total
Accrued exit and realignment costs, December 31, ~~2019~~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	~~183~~202
Other			~~255~~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	~~671~~ 219
Other				~~720~~ 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	77848
Other			~~3,564~~2,716
Cash payments				(7,083)
Accrued exit and realignment costs, September 30, 2020		$	2,828


~~Accrued exit and realignment costs, December 31, 2018~~				$	~~7,477~~
~~Provision for exit and realignment activities:~~
~~Severance~~				~~360~~
~~Information system restructuring costs~~				~~261~~
~~Other~~				83
~~Cash payments~~				~~(2,206)~~
~~Accrued exit and realignment costs, March 31, 2019~~				~~5,975~~
~~Provision for exit and realignment activities:~~
~~Severance~~				~~1,008~~
~~Information system restructuring costs~~				~~705~~
~~Other~~				4

~~Cash payments~~				~~(2,301)~~
~~Accrued exit and realignment costs, June 30, 2019~~				~~5,391~~
~~Provision for exit and realignment activities:~~
~~Severance~~				~~305~~
~~Information system restructuring costs~~				~~664~~
~~Other~~				11

~~Cash payments~~				~~(2,586)~~
~~Accrued exit and realignment costs, September 30, 2019~~				$	~~3,785~~

~~Acquisition-related~~

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In addition to the exit and realignment accruals in the preceding table, we also incurred $1.6 million and $11.6 million of costs that were expensed as incurred for the three and nine months ended September 30, 2021, which primarily includes $1.5 million and $9.6 million of wind-down costs related to Fusion5 for the three and nine months ended September 30, 2021.

There were no acquisition-related charges included within acquisition-related and exit and realignment charges presented in our consolidated statements of operations ~~includes~~for the three and nine months ended September 30, 2021. Acquisition-related charges within acquisition-related and 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, ~~and $3.5 million and $11.4 million for the three and nine months ended September 30, 2019, respectively, and~~which consisted primarily of transition costs for the Halyard acquisition.

12We may incur additional charges in 2021 for wind-down costs related to Fusion5.

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Note 6—Debt

Debt consists of the following:


		September 30, 2020				December 31, 2019					September 30, 2021				December 31, 2020
		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
3.875% Senior Notes, due September 2021		$	178,485	$	180,307	$	236,234	$	229,356
Term Loan A-2										Term Loan A-2	$	—	$	—	$	33,865	$	34,390
Term Loan B										Term Loan B	—		—		477,525		486,614
Receivables Securitization Program										Receivables Securitization Program	196,683		200,000		152,929		155,100
4.375% Senior Notes, due December 2024	4.375% Senior Notes, due December 2024	244,697		245,122		273,978		212,086		4.375% Senior Notes, due December 2024	245,011		261,329		244,780		253,241
Term A Loans, due July 2022		196,489		199,619		377,420		383,050
Term B Loan, due April 2025		478,127		475,913		480,337		442,217
Revolver	Revolver	70,000		70,000		177,900		177,900		Revolver	12,300		12,300		103,200		103,200
Receivables Securitization Program		147,580		150,000		0		0
4.500% Senior Notes, due March 2029										4.500% Senior Notes, due March 2029	491,430		507,075		—		—
Finance leases and other	Finance leases and other	13,371		13,371		13,783		13,783		Finance leases and other	15,677		15,677		13,668		13,668
Total debt	Total debt	1,328,749		1,334,332		1,559,652		1,458,392		Total debt	961,101		996,381		1,025,967		1,046,213
Less current maturities	Less current maturities	(229,104)		(230,784)		(51,237)		(51,237)		Less current maturities	(1,616)		(1,616)		(39,949)		(40,453)
Long-term debt	Long-term debt	$	1,099,645	$	1,103,548	$	1,508,415	$	1,407,155	Long-term debt	$	959,485	$	994,765	$	986,018	$	1,005,760

We have ~~$178~~$246 million, ~~of 3.875% senior notes due in 2021 (the 2021 Notes)~~excluding deferred financing costs and ~~$245 million~~third party fees, of 4.375% senior notes due in 2024 (the 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 ~~plus 25 basis points for the 2021 Notes and the applicable Benchmark Treasury Rate~~(as defined) plus 30 basis ~~points for the 2024 Notes.~~ points.

In ~~June 2020,~~March 2021, we ~~announced cash tender offers for up to $240~~issued $500 million, ~~aggregate principal amount~~excluding deferred financing costs and third party fees, of ~~our outstanding 2021~~4.500% senior unsecured notes due in 2029 (the 2029 Unsecured Notes), with interest payable semi-annually (the Notes ~~and 2024 Notes. As of the Early Settlement Date of June 22, 2020, $54.1 million of the 2021 Notes and $29.0 million of the 2024~~Offering). The 2029 Unsecured Notes were ~~repaid. On the Early Settlement Date, the 2021 Notes were redeemed~~sold at 100% of ~~par,~~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 ~~the 2024 Notes were redeemed at 90%~~borrowings under our revolving credit facility. In connection with these repayments, we recorded $15.3 million in write-offs of ~~par, resulting in a net gain~~deferred financing costs and third party fees within loss on extinguishment of debt for the nine months ended September 30, 2021. No write-offs of ~~$2.9 million. The tender offers remained open through July 2, 2020,~~deferred financing costs and ~~an additional $0.1 million~~third party fees were recorded for the three months ended September 30, 2021. We may redeem all or part of the 2029 Unsecured Notes 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 ~~were redeemed~~ at the ~~Base Consideration price~~applicable redemption prices described in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date. We may also redeem up to 40% of ~~95% of par by~~ the ~~time the offers closed. Including the tender offer, we used $83.3 million of cash to repurchase $87.9 million~~ aggregate principal amount of the ~~2021~~2029 Unsecured Notes ~~and~~at any time prior to March 31, 2024, ~~Notes during~~at a redemption price equal to 104.5% with an amount equal to or less than the ~~first nine months of 2020. Consistent with the terms of the Fifth Amendment to the Credit Agreement, we used $54.1 million of the~~net cash proceeds from certain equity offerings, plus accrued and unpaid interest, if any, to, but excluding, the ~~sale~~redemption date.

On 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 with Bank of ~~Movianto to fund the repayment~~America, N.A. and a syndicate of ~~the 2021 Notes, which were retired in the second quarter as part of the tender offer. As required by the Fifth Amendment to the~~lenders (the Credit Agreement, the remaining $78.9 million of proceeds from the sale of Movianto were placed in a designated account and will be used to repurchase a portion of the outstanding 2021 Notes within 210 days of the Divestiture Date or repay a portion of our Term Loans.

~~We have a Credit Agreement (last amended February 13, 2020)~~Agreement) with a ~~$400~~$300 million revolving credit ~~facility and $675 million in outstanding term loans.~~facility. The interest rate on our revolving credit facility ~~and Term A Loans~~ is based on ~~1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage which varies depending on Consolidated Total Leverage Ratio (each as defined~~a spread over a benchmark rate (as described in the Credit Agreement). Our credit spread on the revolving credit facility and Term A Loans at September 30, 2020 was Eurocurrency Rate plus 4.25%. Our Term B Loan accrues interest based on 1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage of 3.50% per annum for Base Rate Loans and 4.50% per annum for Eurocurrency Rate Loans (each as defined in the Credit Agreement). Our credit spread on the Term B Loan at September 30, 2020 was Eurocurrency Rate plus 4.50%. We are charged a commitment fee of between 12.5 and 25.0 basis points on the unused portion of the revolving credit facility. OurThe Credit Agreement ~~has a “springing maturity date” with respect to the revolving credit facility, the Term A Loans, and the Term B Loan. If the outstanding balance of the 2021 Notes has not been paid~~matures in full as of the date 91 days prior to the maturity date of the 2021 Notes, then the Termination Date (as defined in the Credit Agreement) of the revolving credit facility, the Term A Loans, and the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2021 Notes. Likewise, if the outstanding balance of the 2024 Notes has not been paid in full as of the date 91 days prior to the maturity date of the 2024 Notes, the Termination Date of the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2024 Notes.March 2026.

At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had borrowings of ~~$70.0~~$12.3 million and ~~$177.9~~$103 million ~~respectively, under the revolver~~ and letters of credit of $9.4 million and $13.9 million ~~and $11.7 million, respectively,~~ outstanding under ~~the Credit Agreement.~~our revolving credit facilities. At September 30, ~~2020~~2021 and December

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31, ~~2019,~~2020, we had ~~$316.1~~$278 million and ~~$209.3~~$283 million ~~respectively,~~ available for borrowing. The December 31, 2019 availability reflected letters of credit associated with discontinued operations of $1.1 million. There were no letters of credit associated with discontinued operations as of September 30, 2020. We also had letters of credit and bank guarantees outstanding for ~~$2.4 million, of which $0.8 million are in process of being transferred to~~

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~~the buyer of Movianto, and $1.6~~$2.2 million and ~~$1.5~~$1.6 million as of September 30, ~~2020~~2021 and December 31, ~~2019, respectively,~~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 ~~independent~~outside of the ~~Credit Agreement.~~revolving credit facility.

We ~~also have~~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 2021 Notes,~~ the holders of the 2024 Notes, and the parties secured under the Credit Agreement (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, ~~of each Credit Party~~subject to certain customary exceptions, and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions. The Fifth Amendment to the Credit Agreement included additional collateral requirements if the Credit Parties, including an obligation to pledge our owned U.S. real estate and the remaining equity interests in foreign subsidiaries.

On ~~February 19, 2020,~~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 ~~$325~~$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) dependent on~~Third Amendment to the ~~tranche period thereto and any breakage fees accrued.~~Receivables Financing Agreement). Under the Receivables Securitization Program, certain of our 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 ~~on February 17, 2023. Our Receivables Securitization Program has a “springing maturity date” with respect to the Term A Loans.If the outstanding balance of the Term A loans have not been paid~~ in full as of the date 91 days prior to the maturity date of the Term A Loans, then the Scheduled Termination Date (as defined in the Receivables Financing Agreement) of the Receivables Securitization Program shall be the date that is 91 days prior to the maturity date of the Term A Loans. In February 2020, we drew $150 million from the Receivables Securitization Program to repay portions of the Term A Loans, consistent with the terms of the Fifth Amendment to the Credit Agreement. The Fifth Amendment to the Credit Agreement requires that any additional draws on the Receivables Securitization Program are restricted for use to repay the 2021 Notes or Term A loans to the extent those instruments are outstanding.March 2024.

The Credit Agreement, Receivables Securitization Program, 2024 Notes and ~~Senior~~2029 Unsecured Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of ~~either agreement.~~any of the related agreements. The terms of the Credit Agreement also require ~~the company~~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, ~~2020.~~2021.

As of September 30, ~~2020,~~2021, scheduled future principal payments of debt, excluding finance leases and other, were ~~$12.4 million in 2020, $228.5 million in 2021, $218.8 million in 2022, $155.0 million in 2023, $251.0~~$446 million in 2024, $12.3 million in 2026, and ~~$468.8~~$500 million ~~thereafter.~~ in 2029. Current maturities at September 30, 2021 include ~~scheduled principal payments within the next 12 months of $44.6 million and $5.0 million for our Term A and Term B Loans, respectively, $1.0~~$1.6 million in ~~short-term~~current portion of finance ~~leases, and $178.5 million related to our 2021 Notes.~~leases.

Note 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 ~~employees.~~teammates.

The components of net periodic benefit cost for the three and nine months ended September 30, ~~2020~~2021 and ~~2019, respectively,~~2020 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Service cost $ 362 $ 332 $ 1,073 $ 991
Interest cost 498 601 1,488 1,801
Recognized net actuarial loss 214 260 642 780
Net periodic benefit cost $ 1,074 $ 1,193 $ 3,203 $ 3,572


	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.

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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 pay interest under our Credit Agreement and Receivables Securitization Program, which fluctuate based on changes in our benchmark interest rates. In order to mitigate the risk of increases in benchmark rates, we enter into interest rate swaps whereby we agree to exchange with the counterparty, at specified intervals, the difference between fixed and variable amounts calculated by reference to the notional amount. The interest rate swaps were designated as cash flow hedges. Cash flows related to the interest rate swap agreements are included in interest expense.

We determine the fair value of our foreign currency derivatives ~~and our interest rate swaps~~ 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 ~~net~~ 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, ~~2020:~~2021:

Derivative Assets

Derivative Liabilities

Derivative Assets

Derivative Liabilities

Notional Amount

Maturity Date

Classification

Fair Value

Classification

Fair Value

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

19,807

Economic (non-designated) hedges

Foreign currency contracts

28,900

October 2020

Other assets, net

149

Other liabilities

Foreign currency contracts

14,400

October 2021

Other current assets

Other current liabilities

—

WeIn 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 on September 30, 2020.~~swaps. The remaining balance of the fair value adjustments of ~~$10.7~~$25.1 million, which related to these terminated interest rate swaps, within ~~accumulated~~Accumulated other comprehensive loss ~~will be recognized in interest expense ratably over~~was reclassified to Loss on extinguishment of debt within our consolidated statements of operations for the ~~remaining life of the Term B Loan.~~

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, ~~2019:~~2020:

Derivative Assets Derivative Liabilities
Notional Amount Maturity Date Classification Fair Value Classification Fair Value
Cash flow hedges
Interest rate swaps $ 450,000 May 2022 and May 2025 Other assets, net $ 0 Other liabilities $ 17,436

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				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, ~~2020:~~2021:

Amount of Gain/(Loss) Recognized in Other Comprehensive Income (Loss) Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Gain/(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)


	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, ~~2019:~~2020:

Amount of Gain/(Loss) Recognized in Other Comprehensive Loss Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Interest rate swaps $ (3,356) $ (15,933) Interest expense, net $ (24,050) $ (75,557) $ (632) $ (1,314)
Foreign currency contracts $ (28) $ 608 Cost of goods sold $ (2,012,130) $ (6,176,537) $ 262 $ 319

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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, ~~2020,~~2021 we recognized losses of $0.9 million and ~~$2.3~~$2.5 million ~~respectively,~~ associated with our economic (non-designated) foreign currency contracts. For the three and nine months ended September 30, ~~2019,~~2020 we recognized ~~gains~~losses of ~~$0.1~~$0.9 million and ~~$1.1~~$2.3 million ~~respectively,~~ 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) expense,~~income, net for our foreign exchange contracts.

Note 9—Income Taxes

The effective tax rate was ~~13.8%~~12.6% and ~~9.4%~~20.8% for the three and nine months ended September 30, ~~2020,~~2021, compared to ~~(126.5)%~~13.8% and ~~17.8%~~9.4% in the same periods of ~~2019.~~2020. The change in these rates resulted primarily from an income tax benefit recorded in the first ~~and third quarters~~quarter of 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 ~~expense~~benefit associated with the vesting of restricted stock. In addition, the provision for income taxes reflects an increase in our reserve for uncertain tax positions for the three and nine months ended September 30, 2020 in connection with the IRS’ audit of our 2015 and 2016 consolidated income tax returns described in the subsequent paragraph. The liability for unrecognized tax benefits was ~~$22.5~~$23.0 million at September 30, ~~2020~~2021 and ~~$11.5~~$20.8 million at December 31, ~~2019.~~2020. Included in the liability at September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$1.9~~$2.7 million ~~and $3.1 million, respectively,~~ 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.~~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 ~~NOPA,~~NOPAs, the IRS has asserted that our taxable income for ~~2015 and 2016~~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

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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, ~~2020~~2021 and ~~2019:~~2020:

Three Months Ended September 30, Nine Months Ended
September 30,
(in thousands, except per share data) 2020 2019 2020 2019
Weighted average shares outstanding - basic 60,786 60,030 60,983 60,498
Dilutive shares 137 0 0 0
Weighted average shares outstanding - diluted 60,923 60,030 60,983 60,498
Income (loss) from continuing operations $ 46,081 $ 3,420 $ 37,332 $ (17,233)
Basic and diluted per share $ 0.76 $ 0.06 $ 0.61 $ (0.28)
Loss from discontinued operations $ 0 $ (2,196) $ (58,203) $ (6,115)
Basic and diluted per share $ 0 $ (0.04) $ (0.95) $ (0.11)
Net income (loss) $ 46,081 $ 1,224 $ (20,871) $ (23,348)
Basic and diluted per share $ 0.76 $ 0.02 $ (0.34) $ (0.39)


	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' Equity

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~~$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 for general corporate and working capital purposes. As of September 30, ~~2020, 0~~2021, no shares were issued and ~~$50~~$50.0 million of common stock remained available under the at-the-market equity financing program.

~~On October 6, 2020, we completed a follow-on equity offering as further described in Note 15 - Subsequent Events.~~

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Note 12—Accumulated Other Comprehensive Loss

The following table shows the changes in accumulated other comprehensive loss by component for the three and nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:

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 0 5,173 (516) 4,657
Income tax 0 0 40 40
Other comprehensive income (loss) before reclassifications, net of tax 0 5,173 (476) 4,697
Amounts reclassified from accumulated other comprehensive loss 214 0 3,028 3,242
Income tax (47) 0 (871) (918)
Amounts reclassified from accumulated other comprehensive loss, net of tax 167 0 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, June 30, 2019 $ (7,752) $ (29,306) $ (12,590) $ (49,648)
Other comprehensive loss before reclassifications 0 (9,038) (3,384) (12,422)
Income tax 0 0 1,314 1,314
Other comprehensive loss before reclassifications, net of tax 0 (9,038) (2,070) (11,108)
Amounts reclassified from accumulated other comprehensive loss 260 0 370 630
Income tax (61) 0 (89) (150)
Amounts reclassified from accumulated other comprehensive loss, net of tax 199 0 281 480
Other comprehensive income (loss) 199 (9,038) (1,789) (10,628)
Accumulated other comprehensive loss, September 30, 2019 $ (7,553) $ (38,344) $ (14,379) $ (60,276)

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 0 (8,577) (19,913) (28,490)
Income tax 0 0 5,113 5,113
Other comprehensive loss before reclassifications, net of tax 0 (8,577) (14,800) (23,377)
Amounts reclassified from accumulated other comprehensive loss 1,067 15,580 6,889 23,536
Income tax (135) 0 (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)

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		Retirement Plans		Currency Translation Adjustments		Derivatives		Total			Retirement Plans		Currency Translation Adjustments		Derivatives		Total
Accumulated other comprehensive loss, December 31, 2018		$	(8,146)	$	(32,551)	$	(4,915)	$	(45,612)
Accumulated other comprehensive loss, June 30, 2021										Accumulated other comprehensive loss, June 30, 2021	$	(18,290)	$	(14,728)	$	—	$	(33,018)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	0		(5,793)		(15,325)		(21,118)		Other comprehensive loss before reclassifications	—		(12,014)		—		(12,014)
Income tax	Income tax	0		0		5,204		5,204		Income tax	—		—		—		—
Other comprehensive loss before reclassifications, net of tax	Other comprehensive loss before reclassifications, net of tax	0		(5,793)		(10,121)		(15,914)		Other comprehensive loss before reclassifications, net of tax	—		(12,014)		—		(12,014)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	780		0		995		1,775		Amounts reclassified from accumulated other comprehensive loss	500		—		—		500
Income tax	Income tax	(187)		0		(338)		(525)		Income tax	(105)		—		—		(105)
Amounts reclassified from accumulated other comprehensive loss, net of tax	Amounts reclassified from accumulated other comprehensive loss, net of tax	593		0		657		1,250		Amounts reclassified from accumulated other comprehensive loss, net of tax	395		—		—		395
Other comprehensive income (loss)	Other comprehensive income (loss)	593		(5,793)		(9,464)		(14,664)		Other comprehensive income (loss)	395		(12,014)		—		(11,619)
Accumulated other comprehensive loss, September 30, 2019		$	(7,553)	$	(38,344)	$	(14,379)	$	(60,276)
Accumulated other comprehensive loss, September 30, 2021										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)

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	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 loss related to defined benefit pension plans as a component of net periodic pension cost recorded in Other expense (income), net. ~~For the three and nine months ended September 30, 2020, we reclassified~~$0.2 million and $1.1 million, which included $0.4 million as a result of the Divestiture, respectively, of actuarial net losses. Amounts reclassified from accumulated other comprehensive loss for the nine months ended September 30, 2020 include currency translation adjustments released as a result of the Divestiture. For the three and nine months ended September 30, 2019, we reclassified $0.3 million and $0.8 million, respectively, of actuarial net losses.

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 2 segments: Global Solutions and Global Products. The Global Solutions segment includes our United States distribution businesses (Medical Distribution and Patient Direct), outsourced logistics and value-added services business. Global Products manufactures and sources medical surgical products through our production and kitting operations.

We evaluate the performance of our segments based on their operating 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 and not meaningful. We believe all inter-segment sales are at prices that approximate market.

The following tables present financial information by segment:

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~~The following tables present financial information by segment:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Net revenue:
Global Solutions $ 1,865,182 $ 2,047,379 $ 5,261,415 $ 6,305,448
Global Products 473,797 359,835 1,235,391 1,070,808
Total segment net revenue 2,338,979 2,407,214 6,496,806 7,376,256
Inter-segment revenue
Global Products (151,051) (114,462) (378,466) (355,960)
Total inter-segment revenue (151,051) (114,462) (378,466) (355,960)
Consolidated net revenue $ 2,187,928 $ 2,292,752 $ 6,118,340 $ 7,020,296
Operating income:
Global Solutions $ 10,972 $ 24,916 $ 8,522 $ 64,292
Global Products 89,923 16,897 160,268 42,570
Inter-segment eliminations (8,718) (243) (10,322) 774
Intangible amortization (10,242) (10,614) (31,463) (33,395)
Acquisition-related and exit and realignment charges (6,382) (4,522) (18,500) (14,776)
Other (1)
0 (324) 0 (853)
Consolidated operating income $ 75,553 $ 26,110 $ 108,505 $ 58,612
Depreciation and amortization:
Global Solutions $ 9,572 $ 11,477 $ 31,273 $ 31,756
Global Products 11,118 13,128 38,221 40,982
Discontinued operations 0 4,697 0 15,466
Consolidated depreciation and amortization $ 20,690 $ 29,302 $ 69,494 $ 88,204
Capital expenditures:
Global Solutions $ 3,582 $ 2,743 $ 7,545 $ 7,280
Global Products 10,656 6,791 15,808 13,574
Discontinued operations 0 3,087 3,027 17,298
Consolidated capital expenditures $ 14,238 $ 12,621 $ 26,380 $ 38,152

~~(1)~~ 2019 included interest cost and net actuarial losses related to the U.S. Retirement Plan as well as 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.


	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

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September 30, 2020 December 31, 2019
Total assets:
Global Solutions $ 2,161,158 $ 2,205,134
Global Products 1,058,701 930,937
Segment assets 3,219,859 3,136,071
Discontinued operations 0 439,983
Cash and cash equivalents 77,256 67,030
Consolidated total assets $ 3,297,115 $ 3,643,084

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

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net revenue:
United States $ 2,101,074 $ 2,200,284 $ 5,872,143 $ 6,774,965
International 86,854 92,468 246,197 245,331
Consolidated net revenue $ 2,187,928 $ 2,292,752 $ 6,118,340 $ 7,020,296

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	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—Recent Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. This ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). We adopted ASU No. 2018-13 effective beginning January 1, 2020. Its adoption did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant for companies with defined benefit retirement plans. The amendments in ASU No. 2018-14 are effective for fiscal years ending after December 15, 2020 and we do not expect this to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other (Topic 350): Internal-Use Software. This standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted ASU No. 2018-15 effective beginning January 1, 2020. Its adoption did not have a material impact on our consolidated financial statements.

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. ~~ASU No. 2019-12 is effective for fiscal years beginning after December 15, 2020.~~ 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 ~~do not expect this to have a material impact on our consolidated financial statements.~~

In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. The Standard is part of FASB’s ongoing project to improve and clarify its Accounting Standards Codification and avoid unintended application. The items addressed are not expected to significantly affect current practice or create a significant administrative cost for most entities. The amendment is divided into issues 1 to 7 with different effective dates as follows: The amendments related to Issue 1, Issue 2, Issue 4, and Issue 5 are conforming amendments. The amendments are effective upon issuance of this update. The amendment related to Issue 3 is a conforming amendment that affects the guidance related to the amendments in ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and

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Financial Liabilities. The effective date of this update for the amendments to ASU No. 2016-01 is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments related to Issue 6 and Issue 7 affect the guidance in the amendments in ASU No. 2016-13, Financial 5 Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. For entities that have not yet adopted the amendments related to ASU No. 2016-13, the effective dates and the transition requirements for these amendments are the same as the effective date and transition requirements in ASU No. 2016-13, which will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We adopted ASU No. ~~2020-03~~2019-12 effective beginning January 1, ~~2020 for Issues 1 through 5.~~2021. Its adoption did not have a material impact on our consolidated financial statements. ~~We are currently evaluating the potential impact of adopting this guidance for Issues 6 and 7 on our consolidated financial statements and disclosures.~~

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 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 ASU do not change GAAP and, therefore, are not expected to result in a significant change in practice. We adopted ASU No. 2020-10 effective beginning January 1, 2021. Its adoption did not have a material impact on our consolidated financial statements.

There have been no further changes in our significant accounting policies from those contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

~~Note 15—Subsequent Events~~

On October 6, 2020, we completed a follow-on equity offering wherein we sold an aggregate of 8,475,000 shares of our common stock at an offering price of $20.50, resulting in net proceeds to us of approximately $165 million, after deducting expenses relating to the follow-on equity offering, including the underwriters’ discounts and commissions. Pursuant to the underwriting agreement, we granted the underwriters an option to purchase up to an additional 1,271,250 shares of our common stock, which the underwriters exercised in full. Inclusive of this exercised option, net proceeds to us were approximately $190 million, after deducting expenses relating to the follow-on equity offering, including the underwriters’ discounts and commissions.

We used the proceeds from the follow-on equity offering to repay the remaining $109 million outstanding balance of Term Loan A-1 at par on October 8, 2020, to repay $52 million of our Term Loan A-2 at par on October 15, 2020, and to repay $30 million of borrowings under the revolving credit facility.

On October 30, 2020, we issued a notice of redemption to redeem all of our outstanding 2021 Notes on November 30, 2020 (the “Redemption Date”). The redemption price will include accrued and unpaid interest to, but not including, the Redemption Date, and a redemption premium, equal to the greater of (i) 100% of the principal amount of the 2021 Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon (exclusive of interest accrued to the Redemption Date) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points.

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, ~~2019.~~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, ~~2019.~~2020.

Overview ~~and Divestiture of Movianto~~

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 ~~previously announced~~ 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 and U.S. distribution businesses. ~~A portion of the net proceeds was used to repurchase~~ ~~$54.1 million~~ ~~of our 2021 Notes through a tender offer (see Note 6, “Debt”).~~ ~~We recorded a loss of $65.5 million in connection with the Divestiture for the nine months ended September 30, 2020.~~

~~We have entered into transition services agreements with a subsidiary of the Buyer, pursuant to which we and a subsidiary of the Buyer will provide to each other various transitional services.Transition service expenses and reimbursements were immaterial for the three and nine months ended September 30, 2020.~~

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As a result of the Divestiture, the results of operations from our Movianto business are reported as “Loss from discontinued operations, net of tax” ~~through~~for the ~~Divestiture Date~~three and ~~the related assets and liabilities were classified as “held-for-sale” in the consolidated balance sheet as of December 31, 2019.~~nine months ended September 30, 2020. See Note 3, “Discontinued Operations,” of the Notes to Consolidated Financial Statements for further information. Unless otherwise indicated, the following information relates to continuing operations.

Income ~~(loss)~~ from continuing operations per diluted share was $0.58 and $2.38 for the three and nine months ended September 30, 2021 as compared to $0.76 and $0.61 for the three and nine months ended September 30, ~~2020, respectively, as compared to $0.06~~2020. Global Solutions segment operating income was $20.4 million and ~~$(0.28)~~$47.7 million for the three and nine months ended September 30, ~~2019, respectively. Global Solutions segment operating income was~~2021, compared to $11.0 million and $8.5 million for the three and nine months ended September 30, ~~2020, respectively, compared to $24.9~~2020. These increases were a

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result of strong revenue growth, leveraging our fixed costs, and operating efficiencies. Global Products segment operating income was $51.3 million and ~~$64.3~~$310 million for the three and nine months ended September 30, ~~2019, respectively. The declines were a result of lower revenues in part from a reduction in elective surgeries as~~2021, compared to ~~prior year. Global Products segment operating income was~~ $89.9 million and ~~$160.3~~$160 million for the three and nine months ended September 30, ~~2020, respectively, compared to $16.9 million and $42.6 million~~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, ~~2019, respectively. The increases were~~2021 was a result of higher ~~revenues from greater market demand for~~ personal protective equipment ~~and~~(PPE) sales, favorable timing of cost pass-through on gloves, productivity initiatives, favorable product mix, ~~combined with continued operating efficiencies~~and improved fixed cost leverage, partially offset by higher commodity prices and rising transportation costs, compared to ~~2019.~~the prior year.

COVID-19 Update

We are closely monitoring the impact of ~~COVID-19~~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 infor the ~~first~~ nine months ended September 30, 2021 of ~~2020 of $6.1~~$7.3 billion continues to be impacted by COVID-19 and includes ~~a significant overall impact from COVID-19 related~~the effective response to the ~~reduction~~ongoing recovery of ~~surgical~~elective procedures, ~~beginning in mid-March, which was partially offset by a greater demand~~higher sales of PPE, and pass-through of elevated glove costs.Operating income for ~~personal protective equipment (PPE). Operating income~~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. ~~We have~~In 2020, we expanded our PPE production operations ~~to 24 hours a day, 7 days a week,~~ 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 have delivered nearly 11 billion units of PPE, of which approximately 4 billion units were produced with materials manufactured in our American factories or Owens & Minor owned facilities, since January 2020. 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 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.

~~We are evaluating various government-sponsored COVID-response stimulus, relief, and production initiatives such as~~In March 2020, under the Defense Production Act (DPA), we were awarded a contract with the U.S. Department of Health and ~~recent Coronavirus Aid, Relief and Economic Security (CARES) Act.~~Human Services to produce N-95 respirator masks in 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~~$30.0 million of anticipated funding of assets to expand capacity to supply N-95 respirator ~~masks to the U.S. government. The~~

~~nature of the agreement provides a program of expedited partial funding to begin expansion while final terms are completed.~~masks. Through September 30, ~~2020, approximately $20.4 million~~2021, substantially all of the anticipated funding had been expended and reimbursed in accordance with this arrangement. In addition, as allowed under the CARES Act, we filed for $13.0 million and $17.6 million income tax refunds with the Internal Revenue Service (IRS) related to the carryback of net operating losses (NOL) incurred in 2018 and 2019, respectively. As of September 30, 2020, the $13.0 million refund was received and the $17.6 million refund was included in other current assets on our consolidated balance sheet. In connection with these NOL carryback items, we recorded a $7.0 million and $12.2 million benefit to the income tax benefit for the three and nine months ended September 30, 2020.

We are unable to predict the ~~length~~timing of the pandemic and the full impact that COVID-19 will have on our future operating results, financial position and ~~operating results~~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 in sales volumes for certain of 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.

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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~~Results of Operations~~

~~Net revenue.~~

Three Months Ended September 30, Change
(Dollars in thousands) 2020 2019 $ %
Global Solutions $ 1,865,182 $ 2,047,379 $ (182,197) (8.9) %
Global Products 473,797 359,835 113,962 31.7 %
Inter-segment (151,051) (114,462) (36,589) (32.0) %
Net revenue $ 2,187,928 $ 2,292,752 $ (104,824) (4.6) %


		Nine Months Ended September 30,				Change					Nine Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2020		2019		$		%		(Dollars in thousands)	2021		2020		$		%
Global Solutions	Global Solutions	$	5,261,415	$	6,305,448	$	(1,044,033)	(16.6)	%	Global Solutions	$	5,850,007	$	5,261,415	$	588,592	11.2	%
Global Products	Global Products	1,235,391		1,070,808		164,583		15.4	%	Global Products	2,026,385		1,235,391		790,994		64.0	%
Inter-segment	Inter-segment	(378,466)		(355,960)		(22,506)		(6.3)	%	Inter-segment	(558,223)		(378,466)		(179,757)		(47.5)	%
Net revenue	Net revenue	$	6,118,340	$	7,020,296	$	(901,956)	(12.8)	%	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, ~~2020~~2021 reflected our market share gains, the ~~impact of a reduction in elective surgical procedures, primarily due~~effective response to the ~~impact~~ongoing recovery of ~~COVID-19, and lower distribution revenues~~elective procedures, higher sales of surgical & infection prevention (S&IP) products, pass-through of elevated glove costs, as ~~a result of customer non-renewals that occurred~~well as continued strong performance in ~~2019. These were partially offset by revenue growth in Global Products from increased demand for PPE and growth in Byram,~~ our ~~Home Healthcare~~Patient Direct business. Foreign currency translation had a favorable impact on net revenue of ~~$1.9~~$1.8 million and $23.5 million for the three ~~months ended September 30, 2020~~ and ~~an unfavorable impact on net revenue of $1.7 million for the~~ nine months ended September 30, ~~2020,~~2021 as compared to the prior year.

Cost of goods sold.

Three Months Ended September 30, Change
(Dollars in thousands) 2020 2019 $ %
Cost of goods sold $ 1,843,589 $ 2,012,130 $ (168,541) (8.4) %


		Nine Months Ended September 30,				Change					Three Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2020		2019		$		%		(Dollars in thousands)	2021		2020		$		%
Cost of goods sold	Cost of goods sold	$	5,236,035	$	6,176,537	$	(940,502)	(15.2)	%	Cost of goods sold	$	2,173,336	$	1,843,589	$	329,747	17.9	%


	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. These are sometimes referred to as distribution contracts. Cost of goods sold also includes direct and certain indirect labor, material and overhead costs associated with our Global Products ~~business.~~segment. There is no cost of goods sold associated with our fee-for-service arrangements. Cost of goods sold compared to prior year reflects changes in sales activity, including sales ~~mix.~~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 glove price and cost changes, an overall improved sales mix and operating efficiencies, partially offset by accelerating inflationary pressures. Foreign

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Three Months Ended September 30, Change
(Dollars in thousands) 2020 2019 $ %
Gross margin $ 344,339 $ 280,622 $ 63,717 22.7 %
As a % of net revenue 15.74 % 12.24 %

Nine Months Ended September 30, Change
(Dollars in thousands) 2020 2019 $ %
Gross margin $ 882,305 $ 843,759 $ 38,546 4.6 %
As a % of net revenue 14.42 % 12.02 %

~~Gross~~currency translation had an unfavorable impact on gross margin inof $6.2 million and $0.8 million for the three and nine months ended September 30, 2020 were impacted by improved sales mix and productivity, operating efficiencies in Global Products and a favorable impact from foreign currency translation of $5.4 million and $1.1 million, respectively.2021 as compared to the prior year.

Operating expenses.

Three Months Ended September 30, Change
(Dollars in thousands) 2020 2019 $ %
Distribution, selling and administrative expenses $ 262,538 $ 248,661 $ 13,877 5.6 %
As a % of net revenue 12.00 % 10.85 %
Acquisition-related and exit and realignment charges $ 6,382 $ 4,522 $ 1,860 41.1 %
Other operating (income) expense, net $ (134) $ 1,329 $ (1,463) (110.1) %


		Nine Months Ended September 30,						Change					Three Months Ended September 30,						Change
(Dollars in thousands)	(Dollars in thousands)	2020			2019			$		%		(Dollars in thousands)	2021			2020			$		%
Distribution, selling and administrative expenses	Distribution, selling and administrative expenses	$	758,320		$	767,986		$	(9,666)	(1.3)	%	Distribution, selling and administrative expenses	$	262,457		$	262,538		$	(81)	—	%
As a % of net revenue	As a % of net revenue	12.39		%	10.94		%					As a % of net revenue	10.49		%	12.00		%
Acquisition-related and exit and realignment charges	Acquisition-related and exit and realignment charges	$	18,500		$	14,776		$	3,724	25.2	%	Acquisition-related and exit and realignment charges	$	6,380		$	6,382		$	(2)	—	%
Other operating (income) expense, net		$	(3,020)		$	2,385		$	(5,405)	(226.6)	%
Other operating income, net												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)	%

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.

Overall DS&A expenses were affected by revenue growth, changes in incentive compensation, teammate benefits, accelerating inflationary pressures, and operational efficiencies for the ~~revenue decline~~three and ~~change in mix and investments in~~nine months ended September 30, 2021. In addition, overall DS&A expenses were affected by charitable contributions for the ~~business, partially offset by operational efficiencies.~~nine months ended September 30, 2021. DS&A expenses also included an unfavorable impact for foreign currency translation of ~~$0.3~~$0.1 million and $2.3 million for the three ~~months ended September 30, 2020~~ and ~~a favorable impact for foreign currency translation of $0.3 million for the~~ nine months ended September 30, ~~2020.~~

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 three and nine months ended September 30, 2021 consisted primarily of wind-down costs related to Fusion5, leadership reorganization costs, IT restructuring charges, and other costs related to the reorganization of the U.S. operations. Acquisition-related charges within acquisition-related and 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, ~~compared to $3.5 million and $11.4 million for the same periods of 2019. Acquisition-related charges in 2020 and 2019 consist~~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 ~~compared to $1.0 million~~ and ~~$3.4 million for the same periods~~consisted primarily of ~~2019. Amounts in 2020 were associated with~~ 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. ~~Amounts~~

The change in ~~2019 were associated with severance costs,~~other operating income, net for the ~~establishment~~three and nine months ended September 30, 2021 includes the impact of ~~our client engagement center, and IT restructuring charges.~~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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The change in other operating (income) expense, net was attributed primarily to higher foreign currency transaction gains compared to prior year, gain on legal settlement, and lower software as a service implementation expenses due to the adoption of ASU No. 2018-15 as of January 1, 2020. See Note 14 in Notes to Consolidated Financial Statements.


	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 fo.

Three Months Ended September 30, Change
(Dollars in thousands) 2020 2019 $ %
Interest expense, net $ 20,975 $ 24,050 $ (3,075) (12.8) %
Effective interest rate 5.64 % 6.04 %

Nine Months Ended September 30, Change
(Dollars in thousands) 2020 2019 $ %
Interest expense, net $ 65,923 $ 75,557 $ (9,634) (12.8) %
Effective interest rate 6.35 % 7.38 %

~~Interest expense, net for~~r the three and nine months ended September 30, ~~2020~~2021 decreased primarily due to a reduction inof debt and ~~a decrease in our effective~~lower interest ~~rate, which were partially offset by the amortization of additional deferred financing costs as a result of the Fifth Amendment to the Credit Agreement in February 2020.~~rates. See Note 6 in Notes to Consolidated Financial Statements.

~~Other expense, net~~.Loss on extinguishment of debt.

Three Months Ended September 30, Change
(Dollars in thousands) 2020 2019 $ %
Other expense, net $ 1,093 $ 550 $ 543 98.7 %


		Nine Months Ended September 30,				Change					Three Months Ended September 30,				Change
(Dollars in thousands)	(Dollars in thousands)	2020		2019		$		%		(Dollars in thousands)	2021		2020		$		%
Other expense, net		$	1,387	$	4,014	$	(2,627)	(65.4)	%
Loss on extinguishment of debt										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	%

Other expense, net for the three months ended September 30, 2020 and September 30, 2019 primarily relate to interest cost and net actuarial losses related to the U.S. Retirement Plan. Other expense, netLoss on extinguishment of debt for the nine months ended September 30, ~~2020~~2021 includes the write-off of deferred financing costs and third party fees ~~incurred,~~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 ~~cost~~rate swaps of $25.1 million. Loss on extinguishment of debt for the three and ~~net actuarial losses related to~~nine months ended September 30, 2020 primarily includes the ~~U.S. Retirement Plan,~~write-off of deferred financing costs and third party fees, offset by ~~a gain from~~ the ~~surrender of company-owned life insurance policies and~~ 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, ~~2019 includes~~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 ~~U.S. Retirement Plan, the write-off~~surrender of deferred financing costs associated with the revolving credit facility as a result of the Fourth Amendment to the Credit Agreement in February 2019, and gain on extinguishment of debt related to the partial repurchase of our 2021 Notes.company-owned life insurance policies.

Income taxes.


		Three Months Ended September 30,						Change					Three Months Ended September 30,						Change
(Dollars in thousands)	(Dollars in thousands)	2020			2019			$		%		(Dollars in thousands)	2021			2020			$		%
Income tax provision (benefit)		$	7,404		$	(1,910)		$	9,314	487.6	%
Income tax provision												Income tax provision	$	6,375		$	7,404		$	(1,029)	(13.9)	%
Effective tax rate	Effective tax rate	13.8		%	-126.5		%					Effective tax rate	12.6		%	13.8		%

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		Nine Months Ended September 30,					Change					Nine Months Ended September 30,						Change
(Dollars in thousands)	(Dollars in thousands)	2020			2019		$		%		(Dollars in thousands)	2021			2020			$		%
Income tax provision (benefit)		$	3,863		(3,726)		$	7,589	203.7	%
Income tax provision											Income tax provision	$	47,224		$	3,863		$	43,361	1,122.5	%
Effective tax rate	Effective tax rate	9.4		%	17.8	%					Effective tax rate	20.8		%	9.4		%

The change in the effective tax ~~rates~~rate for the three and nine months ended September 30, 2021 compared to ~~2019~~the same periods in 2020 resulted primarily from an income tax benefit recorded in the first ~~and third quarters~~quarter of 2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act ~~year over year changes~~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 ~~expense~~benefit associated with the vesting of restricted stock. In addition, the provision for income taxes reflects an increase in our reserve for uncertain tax positions for the three and nine months ended September 30, 2020 in connection with the IRS’ audit of our 2015 and 2016 consolidated income tax returns described in Note 9 in the Notes to Consolidated Financial Statements.

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 ~~$24~~$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 Asia. Changes in our working capital can vary in the normal course of business based upon the timing of inventory purchases, collections of accounts receivable, and payments to suppliers.


		September 30, 2020		December 31, 2019				Change							September 30, 2021				December 31, 2020		Change
(Dollars in thousands)	(Dollars in thousands)					$				%		(Dollars in thousands)					$				%
Cash and cash equivalents	Cash and cash equivalents	$	77,256			$	67,030			$	10,226			15.3			%	Cash and cash equivalents	$	39,759	$	83,058	$	(43,299)		(52.1)	%
Accounts receivable, net of allowances	Accounts receivable, net of allowances	$	688,884	$	674,706			$	14,178			2.1	%	Accounts receivable, net of allowances	$	759,744			$	700,792	$	58,952	8.4		%
Consolidated DSO (1)	Consolidated DSO (1)	27.7		27.1										Consolidated DSO (1)	27.3				26.0
Merchandise inventories	Merchandise inventories	$	1,095,410	$	1,146,192			$	(50,782)			(4.4)	%	Merchandise inventories	$	1,514,387			$	1,233,751	$	280,636	22.7		%
Consolidated inventory turnover (2)		6.8		6.6
Inventory days (2)														Inventory days (2)	64.1				57.8
Accounts payable	Accounts payable	$	946,116	$	808,035			$	138,081			17.1	%	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 inventory~~period end merchandise inventories and ~~annualized costs~~cost of goods sold for the ~~quarter~~quarters ended September 30, ~~2020~~2021 and ~~year ended~~ December 31, ~~2019~~2020

Liquidity and capital expenditures. The following table summarizes our consolidated statements of cash flows for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, which relates to continuing operations and discontinued operations:

(Dollars in thousands) 2020 2019
Net cash provided by (used for):
Operating activities $ 268,196 $ 139,105
Investing activities 112,830 (37,932)
Financing activities (244,955) (89,294)
Effect of exchange rate changes 6,721 (2,243)
Net increase in cash, cash equivalents and restricted cash $ 142,792 $ 9,636


(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 in the first nine months of 2021 and 2020 reflected fluctuations in net income along with ~~favorable~~ changes in working capital.

Cash ~~provided by~~used for investing activities in the first nine months of 2021 and 2020 included ~~cash consideration received of $133.0 million from the sale of Movianto, proceeds of $6.0 million from the surrender of company-owned life insurance policies, and~~ capital expenditures of $32.6 million and $26.4 million for our strategic and operational efficiency initiatives associated with property and equipment, investments for increased manufacturing capacity in the Americas, and capitalized software. Cash ~~used for~~provided by investing activities in ~~2019~~the first nine months of 2020 included ~~capital expenditures for our strategic~~cash consideration received of $133 million from the sale of Movianto and ~~operational efficiency initiatives associated with property and equipment and capitalized software.~~proceeds of $6.0 million from the surrender of company-owned life insurance policies.

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~~Cash~~Cash used for financing activities in the first nine months of ~~2020~~2021 included dividend payments of $0.5 million and net repayments of ~~$107.9~~$90.9 million under our revolving credit facility, compared to ~~$5.1~~$0.5 million and ~~$36.1~~$108 million ~~respectively,~~ for the same period of ~~2019.~~2020. We also had proceeds from borrowings of ~~$150.0~~$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 infor the first nine months of 2020. Financing activities also included repayments of ~~$270.4~~$553 million infor the first nine months of ~~2020~~2021 on our term loans, 2021 and 2024 Notes, and Accounts Receivable Securitization Program, compared to ~~$40.7~~$270 million in the same period of ~~2019~~ 2020 on our term loans ~~(under the Credit Agreement)~~ 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 2021, as compared to $10.4 million in financing costs for the same period of 2020. In addition, we paid $15.4 million to terminate the remaining $300 million in notional value of interest rate swaps during the first nine months of 2021. Payments for taxes related to the ~~February~~vesting of restricted stock awards were $19.3 million and $3.6million for the first nine months of 2021 and 2020, ~~Accounts Receivable Securitization Program and the February 2020 Fifth Amendment to the Credit Agreement, as compared to $4.3 million~~which are included in ~~financing costs related to the February 2019 Fourth Amendment to the Credit Agreement.~~Other, net.

Capital resources. Our sources of liquidity include cash and cash equivalents, a revolving credit facility under our Credit Agreement with Bank of America, N.A, ~~JPMorgan Chase Bank, N.A., Wells Fargo Bank, 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 ~~$400~~$300 million. The interest rate on our revolving credit facility ~~and Term A Loans~~ is based on ~~1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage which varies depending on Consolidated Total Leverage Ratio (each as defined~~a spread over a benchmark rate (as described in the Credit Agreement). Our credit spread on the revolving credit facility and Term A Loans at September 30, 2020 was Eurocurrency Rate plus 4.25%. Our Term B Loan accrues interest based on 1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage of 3.50% per annum for Base Rate Loans, and 4.50% per annum for Eurocurrency Rate Loans (each as defined in the Credit Agreement). ~~Our credit spread on the Term B Loan at September 30, 2020 was Eurocurrency Rate plus 4.50%~~. ~~We are charged a commitment fee of between 12.5~~ ~~and~~ ~~25.0basis points on the unused portion of the revolving credit facility.~~The Credit Agreement matures in March 2026.

At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had borrowings of ~~$70.0~~$12.3 million and ~~$177.9~~$103 million, ~~respectively, under the revolver~~ and letters of credit of $9.4 million and $13.9 million ~~and $11.7 million, respectively,~~ outstanding under ~~the Credit Agreement.~~our credit agreements. At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had ~~$316.1~~$278 million and ~~$209.3~~$283 million, ~~respectively,~~ available for borrowing. ~~The December 31, 2019 availability reflected letters of credit associated with discontinued operations of $1.1 million.~~ ~~There were no letters of credit associated with discontinued operations as of September 30, 2020.~~ We also had letters of credit and bank guarantees outstanding for ~~$2.4 million, of which $0.8 million are in process of being transferred to the buyer of Movianto, and $1.6~~$2.2 million and ~~$1.5~~$1.6 million as of September 30, ~~2020~~2021 and December 31, ~~2019, respectively,~~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 ~~independent~~outside of the ~~Credit Agreement~~.revolving credit facility.

Our Credit Agreement has a “springing maturity date” with respect to the revolving credit facility, the Term A Loans, and the Term B Loan. If the outstanding balance of the 2021 Notes has not been paid in full as of the date 91 days prior to the maturity date of the 2021 Notes, then the Termination Date (as defined in the Credit Agreement) of the revolving credit facility, the Term A Loans, and the Term B Loan shall be the date that is ~~91 days~~ ~~prior to the maturity date of the 2021 Notes. Likewise, if the outstanding balance of the 2024 Notes has not been paid in full as of the date~~ ~~91 days~~ ~~prior to the maturity date of the 2024 Notes, the Termination Date of the Term B Loan shall be the date that is~~ ~~91 days~~ ~~prior to the maturity date of the 2024 Notes.~~

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Credit Agreement requires that any additional draws on the Receivables Securitization Program are restricted for use to repay the 2021 Notes or Term A loans to the extent those instruments are outstanding.

Current maturities include scheduled principal payments within the next 12 months of $44.6 million and $5.0 million for our Term A and Term B Loans, respectively, $1.0 million in short-term finance leases, and $178.5 million related to our 2021 Notes.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~~$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 for general corporate and working capital purposes. As of September 30, ~~2020~~2021 no shares were issued and ~~$50~~$50.0 million of common stock remained available under the at-the-market equity financing program.

~~On October 6, 2020, we completed a follow-on equity offering wherein we sold an aggregate of 8,475,000 shares of~~We regularly evaluate market conditions, our ~~common stock at an offering price of $20.50, resulting in net proceeds~~liquidity profile and various financing alternatives to us of approximately $165 million, after deducting expenses relating to the follow-on equity offering, including the underwriters’ discounts and commissions. Pursuant to the underwriting agreement, we granted the underwriters an option to purchase up to an additional 1,271,250 shares ofenhance our common stock, which the underwriters exercised in full. Inclusive of this exercised option, net proceeds to us were approximately $190 million, after deducting expenses relating to the follow-on equity offering, including the underwriters’ discounts and commissions.

capital structure. From time to time, we may enter into transactions to repay, repurchase or redeem our outstanding indebtedness (including by means of open market purchases, privately negotiated repurchases, tender or exchange offers and/or repayments or redemptions pursuant to the debt’s terms). Our ability to consummate any such transaction will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. We cannot provide any assurance as to if or when we will consummate any such transactions or the terms of any such transaction.

The third quarter dividend of $0.0025 per share was paid in September ~~2020.~~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 ~~(as amended)~~ and other factors.

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We believe available financing sources, including cash generated by operating activities and borrowings under the Credit Agreement and 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, 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 ~~$32.0~~$28.7 million and ~~$52.9~~$72.0 million at September 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~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, ~~2020.~~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 ~~2020~~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, ~~2019~~2020 and Note 14 in the Notes to Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for the ~~quarterly~~ period ended on September 30, ~~2020.~~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, or 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;

•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;

•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;

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•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, 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 ~~increasing~~ initiatives;

•our ability to continue to comply with the terms and conditions of Byram Healthcare’s Corporate Integrity Agreement;

•~~the potentially adverse impact of the United Kingdom’s withdrawal from the European Union;~~ 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, ~~2019, as updated and supplemented by Item 8.01 of~~2020, our ~~Current Report on Form 8-K filed with the SEC on March 27, 2020 and our Quarterly Report on~~ Form 10-Q for the ~~quarterly period~~three months ended March 31, ~~2020.~~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. ~~The ability to hedge these commodity prices is limited.~~

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 inin the ~~Euro,~~euro, Malaysian ringgit, Mexican peso, Thai baht and ~~Mexican Peso.~~other currencies. We may use foreign currency forwards, swaps and options, where possible, to manage our risk related to certain foreign ~~currency~~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. ~~However, we enter into interest rate swap agreements to manage our exposure to interest rate changes.~~ We had ~~$675 million in borrowings under our term loans, $70~~ $12.3 million in borrowings under our revolving credit facility, ~~$148~~$197 million in

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borrowings under our Receivables Securitization Program and ~~$14~~$9.4 million in letters of credit under the Credit Agreement at September 30, ~~2020. After considering the effects of interest rate swap agreements outstanding as of September 30, 2020, we~~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 $6$2.2 million per year based on our borrowings outstanding at September 30, ~~2020.~~2021.

Due to the nature and pricing of our 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 have included 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 ~~$2.58~~$3.16 and ~~$3.06~~$2.58 per gallon in the first nine months of ~~2020~~2021 and ~~2019, respectively.~~2020. Based on our fuel consumption in the first

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nine months of ~~2020,~~2021, we estimate that every 10 cents per gallon increase in the benchmark would reduce our Global Solutions segment operating income by approximately $0.2 million on an annualized basis.

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, ~~2020.~~2021. There was no change in our internal control over financial reporting that occurred during the period of this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

Certain legal proceedings pending against us are described in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Through September 30, ~~2020,~~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, ~~2019 and~~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. These risk factors are in 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.

We are subject to 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 unpredictability of global economic conditions and the demand for and supply of raw materials and finished goods required for our operations. In addition, public and private sector policies and 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 continue to work to 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 the global pandemic. We may restrict the operations of our production and distribution centers if we deem it necessary or if recommended or mandated by governmental authorities which would 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 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 suppliers and vendors to provide products and services to us or to do so at acceptable quality levels or prices. Some of these factors could increase the demand for our products, while others could decrease demand or make it more difficult for us to 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. ~~Through September~~ Any worsening of the COVID-19 pandemic or future outbreaks could result in similar reductions in elective surgical procedures or otherwise

30 ~~2020,~~

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reduce demand for our products, any of which could have a material negative impact on our revenues and profit for future periods.

Although we have experienced significant growth in sales volumes for certain of 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 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 duration, any future outbreaks, similar pandemics, the timing of recovery, travel restrictions, business closures or business disruptions, a recession, depression or other sustained adverse market event resulting from the spread of the COVID-19 and the effectiveness of actions taken in the United States 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 ~~been no~~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 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 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 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 value added services and 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, ~~factors described~~including but not limited to cybersecurity risks, and impair our ability to manage our business. If we do not respond appropriately to the 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 our brands, which could adversely affect our business.

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The impact of COVID-19 may also exacerbate other risks discussed in ~~such~~Item 1A. Risk Factors in our Annual Report on Form 10-K, any of which could have a material effect on us. This situation is changing rapidly and ~~also no material changes in the risk factors described in the First Quarter 2020 Form 10-Q quarterly report.~~additional impacts may arise that we are not aware of currently.

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

On October 6, 2020, we completed a follow-on equity offering wherein we sold an aggregate of 8,475,000 shares of our common stock at an offering price of $20.50, resulting in net proceeds to us of approximately $165 million, after deducting expenses relating to the follow-on equity offering, including the underwriters’ discounts and commissions. Pursuant to the underwriting agreement, we granted the underwriters an option to purchase up to an additional 1,271,250 shares of our common stock, which the underwriters exercised in full. Inclusive of this exercised option, net proceeds to us were approximately $190 million after deducting expenses relating to the follow-on equity offering, including the underwriters’ discounts and commissions.

Item 6. Exhibits

(a)Exhibits

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3.1						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)

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						~~First Amendment to the Receivables Financing~~ Agreement of Resignation, Appointment, and Acceptance, dated as ~~of May 19, 2020,~~September 10, 2021, by and among Owens & Minor, ~~Medical,~~ Inc., ~~as the initial servicer, O&M Funding LLC, as borrower, the lenders from time to time party thereto, PNC~~U.S. Bank National Association, as ~~administrative agent,~~Prior Trustee, and ~~PNC Capital Markets LLC,~~Regions Bank, as ~~structuring agent.~~Successor Trustee

10.2						~~Second Amendment to the Receivables Financing Agreement, dated as~~Form of ~~July 1, 2020, by and among~~ Owens & Minor, ~~Medical,~~ 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 the initial servicer, O&M Funding LLC, as borrower, the lenders from time to time party thereto, PNC Bank, National Association, as administrative agent, and PNC Capital Markets LLC, as structuring agent.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)

						* Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We hereby undertake to furnish copies of such omitted materials supplementally upon request by the SEC.
						** Management contract or compensatory plan or arrangement

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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 ~~2, 2020~~3, 2021	/s/ Edward A. Pesicka
		Edward A. Pesicka
		President, & Chief Executive Officer & Director

Date:	November ~~2, 2020~~3, 2021	/s/ Andrew G. Long
		Andrew G. Long
		Executive Vice President & Chief Financial Officer


	September 30, 2020		September 30, 2019
Operating Activities:
Depreciation and amortization	$	0	$	15,466
Loss on divestiture	65,472		0
Investing Activities:
Capital expenditures	3,027		17,298


	Amount of Gain/(Loss) Recognized in Other Comprehensive Income (Loss)				Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded				Amount of Gain/(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)