Exhibit 23.1

Consent of Independent Auditor

We consent to the incorporation by reference in Registration Statements No. 333-238068 on Form S-3 and Registration Statements Nos. 333-32497, 333-203826, 333-217783, 333-224787, 333-231386, 333-238059, 333-251376, 333-264671, 333-271859, and 333-279297 on Form S-8 of Owens & Minor, Inc. of our report dated March 15, 2025, relating to the consolidated financial statements of Rotech Healthcare Inc., appearing in this Current Report on Form 8-K.

/s/ RSM US LLP

Orlando, Florida

March 26, 2025

Exhibit 99.1

Owens & Minor Announces Launch of Senior Secured Notes Offering

March 26, 2025

RICHMOND, Va.—(BUSINESS WIRE)— Owens & Minor, Inc. (NYSE:OMI) (the “Company”) announced today that it has launched a private offering (the “Offering”) of $600 million aggregate principal amount of senior secured notes due 2030 (the “Notes”), subject to customary and market conditions.

Unless the previously announced acquisition (the “Acquisition”) of Rotech Healthcare Holdings Inc. (“Rotech”) is consummated concurrently with or promptly following the closing of the Offering, the Company will deposit the gross proceeds from the Offering into a segregated escrow account until the date that certain escrow release conditions, including the consummation of the Acquisition, have been satisfied. The consummation of the Acquisition is subject to customary closing conditions.

The Notes will be fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by the Company and certain domestic subsidiaries of the Company that guarantee the Company’s existing term loan facility and revolving credit facility. If the issue date occurs prior to the closing of the Acquisition (and subject to applicable grace periods), the Notes will be secured only by a first-priority security interest in the escrow account and all funds on deposit therein. Following the completion of the Acquisition, the Notes and related guarantees will be secured on a first-priority basis by liens on the same assets that secure the Company’s existing term loan facility and revolving credit facility.

Upon the closing of the Offering or, if applicable, upon satisfaction of the escrow conditions, the Company intends to use the net proceeds of the Offering, together with cash on hand and expected borrowings under a new senior secured incremental term loan B facility to finance the consummation of the Acquisition and the other transactions contemplated by the related merger agreement, including the repayment of Rotech debt and to pay Acquisition related fees and expenses. Any remaining net proceeds will be used for working capital and general corporate purposes.

The Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), any state securities laws or the securities laws of any other jurisdiction, and may not be offered or sold in the United States, or for the benefit of U.S. persons, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities or blue sky laws. Accordingly, the Notes are being offered only to persons reasonably believed to be “qualified institutional buyers,” as that term is defined under Rule 144A of the Securities Act, or outside the United States to non-“U.S. persons” in accordance with Regulation S under the Securities Act.

A confidential offering memorandum for the Offering is being made available to such eligible persons. The Offering is being conducted in accordance with the terms and subject to the conditions set forth in such confidential offering memorandum.

This press release shall not constitute an offer to sell, a solicitation to buy or an offer to purchase or sell any securities. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any offer, or solicitation to buy, if at all, will be made only by means of a confidential offering memorandum. The Offering is not conditioned on the consummation of the Acquisition, which, if consummated, may occur subsequent to the closing of the Offering. This press release does not constitute a notice of repayment of any outstanding indebtedness of Rotech. The terms and conditions of the incremental term loan B facility have not been finalized and are therefore subject to change. The completion of the Offering is not conditioned upon our entering into the incremental term loan B facility, and our entering into such facility is not conditioned upon completion of the Offering.

About Owens & Minor

Owens & Minor, Inc. (NYSE: OMI) is a Fortune 500 global healthcare solutions company providing essential products and services that support care from the hospital to the home. For over 100 years, Owens & Minor and its affiliated brands, Apria ®, Byram® and HALYARD* , have helped to make each day better for the patients, providers, and communities we serve. Powered by more than 20,000 teammates worldwide, Owens & Minor delivers comfort and confidence behind the scenes so healthcare stays at the forefront. Owens & Minor exists because every day, everywhere, Life Takes Care™.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the Company’s expectations regarding the proposed Acquisition and the future performance and financial results of the Company’s business and other non-historical statements. Some of these statements can be identified by terms and phrases such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words, including statements relating to the Acquisition, the Offering and the related financing for the Acquisition. The Company cautions readers of this communication that such “forward looking statements,” wherever they occur in this press release or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the “forward-looking statements.”

Factors that could cause the Company’s actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to: the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the inability to complete the proposed Acquisition due to the failure to satisfy other conditions to completion of the proposed Acquisition, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed Acquisition; risks related to disruption of management’s attention from the Company’s ongoing business operations due to the proposed Acquisition; the effect of the announcement of the proposed Acquisition on the Company’s relationships with its customers, suppliers and other third parties, as well as its operating results and business generally; the risk that the proposed Acquisition will not be consummated in a timely manner; exceeding the expected costs of the proposed Acquisition; the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected; and the risk that the combined company may be unable to achieve expected synergies or that it may take longer than expected to achieve those synergies.

Additional factors that could cause the Company’s actual outcomes or results to differ materially from those described in these forward-looking statements can be found in the “Risk Factors” sections of the Company’s most recent Annual Report on Form 10-K for the period ended December 31, 2024, as such factors may be further updated from time to time in the Company’s other filings with the U.S. Securities and Exchange Commission (the “SEC”). These reports are or will be accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements included in this press release and in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF RHI

RHI and its subsidiaries are referred to as the “Company,” “our,” or “we,” in this section. The discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes as of and for each of the years ended December 31, 2024 and 2023. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from Rotech’s management’s expectations.

Overview

We are a leading provider of home medical equipment and related products and services (collectively referred to as “HME products and services”) in the United States. We offer a comprehensive range of HME products and services for home healthcare and delivery across six core business lines: (1) oxygen, (2) ventilators, (3) sleep therapy, (4) wound care, (5) diabetics and (6) durable medical equipment (“DME”). We enable the treatment of patients in their homes, including chronic patients, acute patients or patients with both chronic and acute needs. Our payor clients include commercial insurers, Medicare, Medicaid, the VA and private individuals. As of December 31, 2024, we had more than 1 million active patients through across over 300 service locations in 45 states, supported by approximately 4,000 FTE employees and we had more than 3,000 Payor plans in place, from large national to regional and local.

We aim to be the industry’s highest-quality provider of HME products and services, while maintaining our commitment to being a low-cost operator. We believe that we offer a compelling value proposition to patients, providers and payors by enabling patients to receive care and services in the comfort of their own homes while also reducing treatment costs as compared to in-patient settings. Our key HME products and services include stationary and portable home oxygen equipment, non-invasive and invasive ventilators, CPAP and BiPAP devices, NPWT pumps and supplies and other DME. Our revenues are generated primarily through fee-for-service arrangements with payors for equipment, supplies, services and other items we rent or sell to patients. With an expansive network of payor contracts, delivery technicians and therapists that is not readily replicated, we believe we are well positioned to provide home healthcare that require high-quality service, providing a bridge from the in-patient care setting to the home.

We believe key differentiators from our competitors are our national scale and footprint, our culture of disciplined and profitable growth, our relentless operational rigor and focus on cash collections, and our proprietary technology platform. We sit at the nexus of referring providers, payors, patients, and suppliers—all of whom share the goal of keeping patients as healthy as possible in the comfort of their homes. We have long-standing relationships with referral sources across the country that refer patients to us because of our end-to-end product and service offerings, national distribution footprint, and our reputation for delivering consistent, quality service. We enjoy deep and long-standing relationships with major payors, including government, national and regional insurers and MCOs, many of whom we have contracted with for over 15 years. We believe that payors and referral sources highly value our ability to reliably provide access to home healthcare and reduce unnecessary in-patient stays.

We believe that we are well positioned to continue to capitalize on our organic growth initiatives as well as acquisition opportunities. Coupled with scalable technology and centralized operations, including customer service and revenue cycle management, we believe we can continue to grow our patient base while maintaining operational efficiency in a cost-efficient manner. We focus on improving the operational efficiencies of our business through various new technology initiatives and data analytics capabilities. We believe we can continue to enhance our cash profile through continued focus on profitable products and services, disciplined management of capital expenditures and by controlling our costs. Our scalable platform and infrastructure allows us to continue to evaluate and add new products and services with high growth rates and attractive margins.

Trends and Factors Affecting our Future Performance

Significant trends and factors that we believe may affect our future performance include:

Furthermore, improved technology has enabled a wider variety of treatments to be available at home, simplified the use of equipment through user-friendly features such as touchscreens, as well as facilitated earlier patient discharge. As we expect these trends and technologies to improve, we also believe that both providers and patients will opt for home healthcare due to its convenience and cost advantages. Additionally, the recent COVID-19 pandemic has amplified the importance of home healthcare as the pandemic has prevented or increased the difficulty of frequent visits to healthcare facilities. This is amplified by the fact that patients face a higher risk of contracting COVID-19 outside of their homes, for example, if they need to visit a healthcare facility because their home care has been interrupted. Hence, in a post-COVID environment, we expect the shift towards home healthcare to accelerate as home healthcare set ups have become more economical, accessible and user-friendly by technological advancements.

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Components of Operating Results

Revenues. Revenues are principally derived from the rental and sale of HME products and services to customers (patients). The HME products and services are segregated into six core service lines: oxygen, ventilators, sleep therapy, wound care, diabetics and durable medical equipment.

Revenues are recognized when control of the promised goods and services are transferred to the customers in an amount that reflects the consideration that the Company expects to be entitled to receive from the patient or third-party payor. The contract with the customer is entered into when the Company accepts a written order from a physician. The Company routinely obtains assignment of (or are otherwise entitled to receive) benefits receivable under the health insurance programs, plans or policies of patients (e.g., government and commercial payors) and will bill those payors accordingly.

Rental Revenue

The Company’s rental arrangements generally provide for fixed monthly payments established by fee schedules for as long as the patient is using the equipment and medical necessity continues (subject to capped rentals which limit the rental payment period in some instances). Once initial delivery is made to the patient (initial setup), a monthly billing is established based on the initial setup service date. The Company recognizes rental arrangement revenues ratably over the monthly service period and defers revenue for the portion of the monthly bill which is unearned. No separate revenue is earned from the initial setup process. Fixed monthly payments that the Company receives from customers in advance of providing services represent contract liabilities. Such payments primarily relate to patients who are billed monthly in advance and are recognized over the period earned. During the rental period, the Company is responsible for providing oxygen refills for patients requiring portability and is responsible for servicing and maintaining the equipment based on manufacturers’ recommendations as part of the monthly fee.

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Sales Revenue

The performance obligation is met at a point in time once an item is delivered or shipped to the patient. The Company does not have any warranty obligations. The transaction price is determined based on contractually agreed- upon amounts adjusted for estimates of variable consideration such as implicit price concessions using the most likely amount method based on historical collection information and constraints as discussed below in the section titled “—Critical Accounting Policies and Estimates—Billing.”

Capitation Revenue

Capitation agreements provide for a fixed fee based on the number of members covered for each month. During each month the Company must provide services to the covered members. Revenues earned from capitation agreements are recognized over the period that the Company is obligated to stand ready to provide services to covered members, primarily a calendar month.

Cost of Revenues and Gross Margin.

Cost of Revenues. Cost of revenues include the costs of products and supplies sold to patients, patient service equipment depreciation and certain operating costs related to respiratory services and distribution expenses. Distribution expenses represents the cost incurred to coordinate and deliver products and services to the patients. Included in distribution expenses are (i) leasing, maintenance, licensing and fuel costs for our vehicle fleet; (ii) salaries, benefits and other costs related to drivers and dispatch personnel; and (iii) amounts paid to couriers and other third-party logistics and shipping vendors.

Gross Margin. Gross margin is gross profit expressed as a percentage of revenues. Our gross margin is impacted by payor and product mix, fluctuations in pricing of supplies, equipment and accessories, as well as changes in reimbursement rates.

Selling, General and Administrative. Selling, general and administrative expenses are comprised of expenses incurred in support of our operations and administrative functions and includes labor costs, such as salaries, bonuses, commissions, benefits and travel-related expenses for our employees, facilities rental costs, third-party revenue cycle management costs and corporate support costs including finance, information technology, legal, human resources, procurement, and other administrative costs.

Depreciation and amortization. Depreciation and amortization expense includes depreciation charges for capital assets other than patient equipment (which is included as part of the cost of net revenue) and amortization of intangible assets.

Income Tax (Benefit) Expense. Our provision for income taxes is based on income, permanent book/tax differences and statutory tax rates in the various jurisdictions in which we operate. Significant estimates and judgments are required in determining the provision for income taxes.

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Factors Affecting our Operating Results

Our operating results and financial performance are influenced by certain recurring and non-recurring events during the periods discussed herein, including the following:

Medicare 75/25 Blended Rate

The Medicare 75/25 blended rate reimbursement rate adjustment (“Medicare 75/25”), which was introduced in 2020, was discontinued as of January 1, 2024. The Medicare 75/25, named after its 75%/25% allocation model, aimed to protect access to medical equipment products and services in non-rural, non-competitive bid areas by temporarily increasing Medicare reimbursement rates for providers serving those areas, thereby providing rate relief. This legislation was designed to ensure that medical equipment suppliers could continue providing essential products and services even as the general Medicare reimbursement rates decreased. This blended rate approach was implemented to counter the decline in reimbursement rates experienced in the years prior to 2020. The discontinuance of Medicare 75/25 is still under legislative review, and Medicare 75/25 could return, but the cessation on January 1, 2024, has had, and is expected to continue to have, a negative impact on our revenue and operating results.

Acquisitions

We account for our stock acquisitions in accordance with FASB ASC Topic 805, Business Combinations, and the operations of the acquired entities are included in our historical results for the periods following the closing of the acquisition. During the year ended December 31, 2023, the Company acquired three complementary home medical equipment businesses for an aggregate total cost of $36.8 million, of which $30.6 million was paid in cash at closing. Additionally, the Company recorded $3.8 million of deferred obligations and $2.4 million of contingent consideration in connection with the acquisitions, which the Company is obligated to pay if certain annual performance targets are met over a one year period following the date of acquisition and have expired. Deferred obligations of $3.5 million and $0.3 million are included in the consolidated balance sheets within accrued expenses and other current liabilities and other long-term liabilities, respectively as of December 31, 2023. Contingent consideration of $2.4 million is included in the consolidated balance sheets within accrued expenses and other current liabilities as of December 31, 2023. There were no stock acquisitions in 2024.

These transactions were accounted for as business combinations and the results of operations of the acquired companies are included in the accompanying statements of operations from the dates of acquisition. The purchase prices with respect to each acquisition were allocated to various underlying tangible and intangible assets and liabilities on the basis of estimated fair value. Goodwill represents the expected growth, cost synergies, acquired assembled workforce and expected contribution to the Company’s overall strategy. The goodwill from these acquisitions is not expected to be deductible for tax purposes.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. We operate as one reporting unit. We performed our annual impairment review of goodwill and determined that it is not likely that a goodwill impairment exists as of December 31, 2024.

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Seasonality

Our business is sensitive to seasonal fluctuations. Our patients are generally responsible for a greater percentage of the cost of their treatment or therapy during the early months of the year due to co-insurance, co-payments and deductibles, and therefore may defer treatment and services of certain therapies until they have met their annual deductibles. In addition, changes to employer insurance coverage often go into effect at the beginning of each calendar year which may impact eligibility requirements and delay or defer treatment or recognition of revenues. These factors may lead to lower total revenues and cash flow in the early part of the year and higher total revenues and cash flow in the latter half of the year. Additionally, the increased incidence of respiratory infections during the winter season may result in initiation of additional respiratory services such as oxygen therapy for certain patient populations. Our quarterly operating results may fluctuate significantly in the future depending on these and other factors.

Philips Respironics Recall

In June 2021, one of our suppliers, Philips, announced a voluntary recall of its continuous and non-continuous ventilators (certain continuous positive airway pressure (“CPAP”), bilevel positive airway pressure and ventilator devices) related to polyurethane foam used in those devices, which the U.S. Food and Drug Administration (“FDA”) identified as a Class I recall, the most serious category of recall (the “June 2021 Recall”). In December 2022, Philips issued a subsequent voluntary recall related to deficiencies in repairs made to certain of the ventilators that had originally been recalled in June 2021 (together with the June 2021 recall, the “Recall”). In April 2024, Philips entered into a consent decree enjoining Philips from making and distributing non-medically necessary CPAP, bilevel positive airway pressure and ventilator devices at any of its Sleep and Respiratory Care Business facilities until the FDA determines that Philips has complied with the remediation and compliance activities set forth in the consent decree.

We have incurred significant costs coordinating the Recall. During 2024, we reached an agreement with Philips requiring Philips to pay us for recalled equipment returned to Philips. During the year ended December 31, 2024, we received $13.6 million from Philips which was recorded in the “proceeds on sale of equipment” line item within investing activities of the consolidated statements of cash flows. The corresponding benefit of $13.6 million on the returned equipment for the year ended December 31, 2024 is reflected in the ‘gain on sale of property and equipment’ line item within operating activities of the consolidated statements of cash flows.

While we believe the Recall matter with Philips has now been materially resolved and that we have access to a sufficient supply of CPAP, bilevel positive airway pressure and ventilator devices from other suppliers to service our home healthcare patients’ needs, other supply chain disruptions (including any future impact of the Recall and subsequent consent decree on our business) may have a material adverse effect on our financial condition or results of operations, cash flows and liquidity.

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Comparison of Years Ended December 31, 2024 and December 31, 2023

The following tables set forth our consolidated results of operations for the periods presented in dollars and as a percentage of our total revenue:

Revenues. Revenues for the year ended December 31, 2024 were $725.8 million, compared to $753.4 million for the year ended December 31, 2023, a decrease of $27.6 million or 3.7%. Our core services comprise total revenues as follows:

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Revenues for the year ended December 31, 2024 were $725.8 million, compared to $753.4 million for the year ended December 31, 2023, a decrease of $27.6 million or 3.7%. Revenues for the year ended December 31, 2024 decreased for the major product groups primarily due to a shift towards capitation revenue beginning in August 2023, the discontinuation of Medicare 75/25 as of January 1, 2024 and also due to the expiration of veterans integrated service networks contract in 2024 and the cessation of the related revenues.

Cost of Revenues and Gross Margin.

Our cost of revenues was as follows:

Cost of Revenues and Gross Margins. Cost of revenues for the year ended December 31, 2024 were $361.1 million, compared to $355.1 million for the year ended December 31, 2023, an increase of $6.0 million or 1.7%. Gross margins for the year ended December 31, 2024 were 50.2% compared to 52.9% for the year ended December 31, 2023, a decrease of 2.7%. The gross margin decrease was driven by higher patient service equipment depreciation due to more equipment being in service and inflationary pressures in operating expense, partially offset by lower product and supply costs due to the effective usage of volume purchase discounts.

Expenses.

Selling, General and Administrative. Selling, general and administrative expenses for the year ended December 31, 2024 were $331.3 million, compared to $325.4 million for the year ended December 31, 2023, an increase of $5.9 million or 1.8%. Selling, general and administrative expenses for the year ended December 31, 2024 were 45.7% of total revenues, compared to 43.2% of total revenues for the year ended December 31, 2023. The increase was primarily related to higher salaries, labor and benefits, automobile fleet maintenance costs, and professional and consulting fees.

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Depreciation and amortization. Depreciation and amortization for the year ended December 31, 2024 was $13.7 million, compared to $16.0 million for the year ended December 31, 2023, a decrease of $2.3 million or 14.6%. The decrease in depreciation and amortization for the year ended December 31, 2024 was primarily driven by assets becoming fully depreciated.

Transaction expense. Transaction expenses for the year ended December 31, 2024 were $7.4 million and were related to legal and other professional services fees, compared to none in the year ended December 31, 2023.

Interest expense. Interest expense for the year ended December 31, 2024 was $47.6 million, compared to $47.5 million for the year ended December 31, 2023, an increase of $0.2 million. The increase in interest expense for the year ended December 31, 2024 was primarily due to draws on the revolving credit facility in the latter half of the year ended December 31, 2023 and increasing interest rates on our variable interest rate debt.

Gain on sale of property and equipment. Gain on sale of property and equipment for the year ended December 31, 2024 was $13.9 million, compared to gain on sale of property and equipment of $4.3 million for the year ended December 31, 2023. During the year ended December 31, 2024, we recognized a gain on sale of patient service equipment in the amount of $13.6 million related to recalled equipment returned to Philips Respironics. During the year ended December 31, 2023, the gain on sale of property and equipment related to the sale of patient equipment and the sale of certain fleet vehicles.

Income tax expense. Income tax benefit for the year ended December 31, 2024 was $1.9 million compared to $5.0 million income tax expense for the year ended December 31, 2023, primarily due to loss before income taxes of $19.8 million in the year ended December 31, 2024 compared to income before income taxes of $14.0 million in the year ended December 31, 2023. For additional detail, see “Note 9—Income Taxes” to the Rotech Consolidated Financial Statements.

Liquidity and Capital Resources.

Sources of Liquidity.

Our principal source of liquidity is our operating cash flow, which is supplemented by extended payment terms from our suppliers and our Credit Facility (as defined below), which provides for (i) a $150.0 million revolving credit facility and (ii) a term loan in an initial aggregate principal amount of $525.0 million. As of December 31, 2024, we had $52.8 million of cash and cash equivalents and $72.5 million available for borrowing under our revolving credit facility in our Credit Facility. The Credit Facility is expected to be repaid and terminated in connection with the Rotech Acquisition. Our principal liquidity requirements are labor costs, including salaries, bonuses, benefits and travel-related expenses, product and supply costs, third-party customer service, billing and collections and logistics costs and patient equipment capital expenditures. Our future capital expenditure requirements will depend on many factors, including our revenue growth rates. Our capital expenditures are made in advance of patients beginning service. Certain operating costs are incurred at the beginning of the equipment rental period and during initial patient set up.

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Long-Term Debt. On March 31, 2022, we entered into a third amended and restated senior secured credit agreement (the “Credit Facility”), with Truist Bank, as administrative agent, and a syndicate of financial institutions and institutional lenders.

The Credit Facility permits the interest rate to be selected at our option at either Secured Overnight Financing Rate (“SOFR”) Rate or Base Rate plus their respective applicable margin. The Base Rate is the highest of (i) the administrative agent’s “Prime Rate”, (ii) the Federal Funds Effective Rate plus 0.5% per annum, (iii) daily SOFR plus 1.0% per annum, and (iv) the Floor (which is 0.0%).

The margin applied to the borrowings under the Credit Facility is determined based on the consolidated net leverage ratio. Consolidated net leverage ratio is defined as the ratio of: (a) consolidated total debt as of such date, less Qualified Cash as of such date; to (b) consolidated EBITDA (as defined in the credit agreement governing the Credit Facility) measured on a consolidated basis as of the last day of the period of four fiscal quarters most recently ended. “Qualified Cash” means cash and cash equivalents of the borrower and its domestic subsidiaries (a) in excess of $10,000,000 (b) that does not appear (or would not be required to appear) as “restricted” on a consolidated balance sheet of the borrower. The applicable margins and commitment fees under the Credit Facility, based on the consolidated net leverage ratio, range from 2.25% to 3.75% per annum for loans carrying SOFR Rates or 1.25% to 2.75% per annum for loans with Base Rates, and 0.30% to 0.40% per annum for commitment fees. As of December 31, 2024, there was $72.5 million outstanding under the revolving credit facility of the Credit Facility.

The table below sets forth margins applicable to loans made under the Credit Facility in relation to the consolidated net leverage ratio of the Company:

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The Credit Facility permits, subject to certain exceptions, an increase in the Credit Facility, as long as the consolidated net leverage ratio does not exceed 3.00:1.00. The credit agreement governing the Credit Facility requires mandatory prepayments upon the occurrence of certain events, such as dispositions and casualty events, subject to certain exceptions. The Credit Facility may be voluntarily prepaid at any time without any premium or penalty.

Rotech’s assets and equity interest of all of its present and future wholly owned direct domestic subsidiaries, with certain exceptions, are pledged as collateral to secure the obligations under Credit Facility. The credit agreement governing the Credit Facility also contains financial covenants requiring Rotech to maintain a total net leverage ratio not greater than 3.00:1.00 for the fiscal quarter ended June 30, 2022 and each fiscal quarter ending thereafter, and a consolidated fixed charge coverage ratio of not less than 1.25:1.00.

As of December 31, 2024, there were $472.2 million outstanding term loans, $5.0 million of outstanding letters of credit and $72.5 million outstanding on the revolving credit facility under the Credit Facility. Additional availability under the revolving credit facility, net of letters of credit outstanding, was $72.5 million. We were in compliance with all debt covenants set forth in the Credit Facility as of December 31, 2024.

In accordance with ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, we record origination and other expenses related to certain debt issuance cost as a direct deduction from the carrying amount of the debt liability. These expenses are deferred and amortized using the effective interest method. Amortization of deferred debt issuance costs are classified within interest expense in our consolidated statements of operations and was $0.7 million, and $0.6 million for the years ended December 31, 2024 and 2023, respectively. Interest expense, excluding deferred debt issuance costs discussed above, was $46.9 million and $46.9 million for the years ended December 31, 2024 and 2023, respectively.

Summary Statement of Cash Flows. The following table presents selected data from our consolidated statement of cash flows:

Comparison of the Years Ended December 31, 2024 and December 31, 2023

Net Cash Provided by Operating Activities.

Net cash provided by operating activities for the year ended December 31, 2024 was $146.4 million, compared to $145.0 million for the year ended December 31, 2023, an increase of $1.5 million. The increase in net cash provided by operating activities was driven by the impact of the following:

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Net Cash Provided by Investing Activities.

Net cash used in investing activities for the year ended December 31, 2024 was $67.1 million, compared to $128.3 million for the year ended December 31, 2023, a decrease of $61.2 million, or 47.7%. The decrease in net cash used in investing activities for the year ended December 31, 2024 was primarily driven by the reduction in purchases of property and equipment of $21.8 million and an increase of $10.3 million in proceeds on equipment sales. The year ended December 31, 2023 includes $29.1 million in cash spent on acquisitions of the home medical equipment businesses.

Net Cash Provided by Financing Activities.

Net cash used in financing activities for the year ended December 31, 2024 was $64.4 million, compared to net cash used in financing activities of $21.5 million for the year ended December 31, 2023, an increase of $42.9 million, or 200.1%. The increase in net cash used for financing activities for the year ended December 31, 2024 was primarily driven by the reduction in the borrowings on the revolving credit facility of $25.5, as well as an increase in payments on long-term borrowing in the amount of $16.7 million.

Contractual Obligations

As of December 31, 2024, our material contractual and other obligations in the next 12 months were primarily comprised of $77.1 million of principal and interest payable on borrowings under the Credit Facility, $29.0 million of payments under finance leases, $13.7 million of payments under operating leases, $2.8 million of extended vendor financing and $0.9 million of acquisition obligations. Additionally, as of December 31, 2024, our material contractual and other obligations due beyond the next 12 months comprised of $556.6 million of principal and interest and principal payable on borrowings under the Credit Facility, $31.5 million of payments under finance leases and $16.4 million of payments under operating leases.

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Commitments and Contingencies.

From time to time we enter into certain types of contracts that contingently require us to indemnify parties against third-party claims. The contracts primarily relate to: (i) certain asset purchase agreements, under which we may provide customary indemnification to the seller of the business being acquired; (ii) certain real estate leases, under which we may be required to indemnify property owners for environmental and other liabilities, and other claims arising from our use of the applicable premises; and (iii) certain agreements with our officers, directors and employees, under which we may be required to indemnify such persons for liabilities arising out of their relationship with us. In addition, we issued certain letters of credit under the Rotech Revolving Credit Facility as described under “—Liquidity and Capital Resources—Long-Term Debt” above.

The terms of such obligations vary by contract and in most instances a specific or maximum dollar amount is not explicitly stated therein. Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted. Consequently, no liabilities have been recorded for these obligations on our balance sheets for any of the periods presented.

Off-Balance Sheet Arrangements.

None.

Critical Accounting Policies and Estimates.

The discussion and analysis of our financial condition and results of operations is based upon the Rotech Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and the valuation of accounts receivable (implicit price concessions), reserves related to insurance and litigation, intangible assets, income taxes and contingencies. We base these estimates on our historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results experienced may vary materially and adversely from our estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations may be affected.

We consider the accounting policies that govern revenue recognition and the determination of the net realizable value of accounts receivable to be the most critical in relation to the Rotech Consolidated Financial Statements. These policies require the most complex and subjective judgments of management. Additionally, the accounting policies related to long-lived assets, income taxes and self-insurance reserves require significant judgment.

Revenue Recognition. Revenues are principally derived from the rental and sale of HME products and services to customers (patients). The HME products and services are segregated into six core service lines; oxygen, ventilators, sleep therapy, wound care, diabetics and DME.

Revenues are recognized when control of the promised goods and services are transferred to the customers in an amount that reflects the consideration that we expect to be entitled to receive from the patient or third-party payor. The contract with the customer is entered into when we accept a written order from a physician. We routinely obtain assignment of (or are otherwise entitled to receive) benefits receivable under the health insurance programs, plans or policies of patients (e.g., government and commercial payors) and will bill those payors accordingly. When evaluating the components of revenue, we use three portfolios: Government, Commercial, and Patient.

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Rental Revenues. Our rental arrangements generally provide for fixed monthly payments established by fee schedules for as long as the patient is using the equipment and medical necessity continues (subject to capped rentals which limit the rental payment period in some instances). Once initial delivery is made to the patient (initial set up), a monthly billing is established based on the initial set up service date. We recognize rental arrangement revenues ratably over the monthly service period and defers revenue for the portion of the monthly bill which is unearned. No separate revenue is earned from the initial set up process. Fixed monthly payments that we receive from customers in advance of providing services represent contract liabilities. Such payments primarily relate to patients who are billed monthly in advance and are recognized over the period earned. During the rental period, we are responsible for providing oxygen refills for patients requiring portability and are responsible for servicing and maintaining the equipment based on manufacturers’ recommendations as part of the monthly fee.

Sale Revenues. The performance obligation is met at a point in time once an item is delivered or shipped to the patient. We do not have any warranty obligations. The transaction price is determined based on contractually agreed-upon amounts adjusted for estimates of variable consideration such as implicit price concessions using the most likely amount method based on historical collection information and constraints as discussed below in the section titled “—Critical Accounting Policies and Estimates—Billing.”

Capitation Revenues. Capitation agreements provide for a fixed fee based on the number of members covered for each month. During each month we must provide services to the covered members. Revenues earned from capitation agreements are recognized over the period that we are obligated to stand ready to provide services to covered members, primarily a calendar month.

Billing. Revenues are recorded at an amount that reflects the consideration which we expect to receive from patients and third-party payors. Our billing system contains payor-specific price tables that reflect the fee schedule amounts, as available, in effect or contractually agreed upon by various government and commercial payors for each item of equipment, service or supply provided to a customer. Revenues are recorded based upon the applicable fee schedule adjusted for estimates of variable consideration.

We record variable consideration reduced by implicit price concessions based on a percentage of revenue using historical Company-specific data. The percentage and amounts used to record the implicit price concessions are supported by various methods including current and historical cash collections, as well as actual contractual adjustment experience. A constraint is applied to the variable consideration such that the revenue is recorded only to the extent that it is probable that a significant reversal in the amount will not occur in the future. This percentage, which is adjusted at least on an annual basis, has proven to be the best indicator of the consideration that we expect to receive. Historical collection and adjustment percentages serve as the basis for its estimates of implicit price concessions and consists of:

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Patients and payors are obligated to pay upon billing. We do not record any financing charges on balances due. Collection risk is incorporated in our estimates for implicit price concessions. We recognize revenue only when services have been provided and since we have performed under the contract, we have unconditional rights to the consideration recorded as contract assets and therefore classify those billed and unbilled contract assets as accounts receivable.

We closely monitor historical contractual adjustment rates, accounts receivable balances, economic conditions, as well as changes in applicable laws, rules and regulations and contract terms to help assure that estimates are made using the most accurate information it believes to be available. Significant future changes in payor mix, economic conditions or trends in federal and state governmental health care coverage could have a material adverse effect on the collection of accounts receivable, cash flows and results of operations.

Accounts Receivable. Accounts receivable are presented at net realizable values that reflects the consideration we expect to receive which is inclusive of adjustments for price concessions, as described above. If the payment amount received differs from the estimated net realizable amount, an adjustment is made to the net realizable amount in the period that these payment differences are determined.

Due to the nature of the industry and the reimbursement environment in which we operate, certain estimates are required in order to record revenues and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they may have to be revised or updated as additional information becomes available. It is possible that management’s estimates could change, which could have an impact on operations and cash flows. Specifically, the complexity of many third-party billing arrangements, patient qualification for medical necessity of equipment and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded.

We perform a periodic analysis to review the valuation of accounts receivable and collectability of outstanding balances. Such analysis takes into consideration factors including the age and composition of the outstanding amounts, historical bad debt experience, business and economic conditions, trends in health care coverage, and other specific receivable information. Receivables are considered past due when not collected by established due dates. Specific patient balances are written off after collection efforts have been followed and the account has been determined to be uncollectible. Revisions in reserve estimates are recorded as an adjustment to net revenue in the period of revision.

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Goodwill. Goodwill represents the portion of reorganization value not attributed to specific tangible and identified intangible assets under fresh-start reporting and the excess consideration transferred in a business combination after the fair values of identifiable tangible and intangible assets acquired and liabilities assumed have been recorded. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. We perform our annual impairment review of goodwill during the fourth quarter of each year. We first use the qualitative approach to assess whether the existence of events and circumstances to determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Qualitative factors include, but are not limited to, underperformance relative to historical or projected future operating results, significant changes in our overall business, significant negative industry or economic trends. If we determine that the threshold is met, then we apply a quantitative test to determine the fair value of our reporting units to their respective carrying amounts and record an impairment charge for the amount by which the carrying amounts exceeds the fair value. We operate as one reporting unit. We performed our annual impairment review of goodwill and determined that it is not likely that a goodwill impairment exists as of December 31, 2024.

Impairment of Long-Lived Assets. Periodically, when indicators of impairment are present, we evaluate the recoverability of the net carrying value of property and equipment and other amortizable intangible assets by comparing the carrying values to the estimated future undiscounted cash flows. A deficiency in these cash flows relative to the carrying amounts is an indication of the need for a write-down due to impairment. The amount of the impairment, if any, is recognized by the amount by which the carrying value exceeds the fair value. Among other variables, factors such as the effects of external changes to our business environment, competitive pressures, market erosion, technological and regulatory changes are considered factors which could provide indications of impairment. As of December 31, 2024, we determined that no impairment existed.

Income Taxes. We account for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes (ASC 740). As specified by ASC 740, the tax effects of an economic transaction are recognized only if it is “more-likely-than-not” to be sustained solely on its technical merits. The “more-likely-than-not” threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered “more-likely-than-not” to be sustained based solely on its technical merits, no benefits of the tax position are to be recognized.

Income taxes are recognized for the amount of taxes payable or refundable for the current period and deferred tax assets and liabilities are recognized for the future tax consequences of transactions that have been recognized in the Rotech consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities recognized in income in the period the rate change is enacted. A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. We evaluate all positive and negative evidence, including scheduled reversals of existing deferred tax liabilities, projected future taxable income and tax planning strategies.

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We recognize interest and penalties on taxes, if any, within income tax (benefit) expense in our consolidated statement of operations.

Recent Accounting Pronouncements.

Recently issued accounting pronouncements that may be relevant to our operations but have not yet been adopted are outlined in “Note 1—Recent Accounting Pronouncements” to the Rotech Consolidated Financial Statements.

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Exhibit 99.3

Risks Related to Rotech’s Business and Operations

In the following discussion of Risks Related to Rotech’s Business and Operations, the “Company,” “our,” or “we” refer to Rotech Healthcare Holdings Inc. and its subsidiaries.

We depend on reimbursements by payors, which can and do change fee schedules, contract terms, reimbursement rules and standards of care, which can lead to lower reimbursement rates, higher rate of denials and additional costs.

We receive a substantial portion of our payments for our products and services from payors, including national and regional insurers and MCOs, Medicare, Medicaid and the U.S. Department of Veterans Affairs (the “VA”).

The reimbursement process is complex and can involve lengthy delays. Payors continue their efforts to control expenditures for healthcare products and services, including proposals to revise reimbursement policies. While we generally recognize revenue on the date of in-person delivery of equipment or rental revenues on the date of shipment or monthly anniversary date through a third party to the patient, or as a result of entering into a contract in the case of capitation revenue on the basis of insured lives without regard to the actual services provided, there can be delays before we receive actual payment for these products and services. In addition, payors may disallow, in whole or in part, requests for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, that products or services provided were not medically necessary, or that additional supporting documentation is necessary, for one or more reasons, such as retroactive membership status change.

Recoupments and retroactive adjustments may change amounts realized from payors. For example, we may not immediately be made aware of certain patients who have been admitted to a hospital, moved into skilled nursing facility care or passed away and we may continue to inadvertently bill such patients, thus resulting in an increase in recoupments or adjustments from payors.

Certain payors have filing deadlines and will not pay claims submitted after such deadlines. We are subject to audits of our reimbursement claims under MCO Plans, Medicare, Medicaid, and other governmental programs and may be required to repay these agencies if they determine that we were incorrectly reimbursed. Government payors can and do in certain cases levy fines and other penalties related to any number of issues including overpayments, regulatory violations or other matters and in some cases even when the Company believes it followed appropriate regulatory guidelines. Delays and uncertainties in the reimbursement process may adversely affect our financial position or results and increase the overall costs of our collection efforts. The failure of our systems and billing and collection center employees to detect these errors, notify and convince the payors of their errors and to obtain the corrected reimbursements could negatively impact our business, results of operations or financial condition.

Our payor contracts, including those with organizations that represent a significant portion of our business, are subject to renegotiation or termination which could result in a decrease in our revenue and profits.

From time to time, our payor contracts are amended (sometimes through unilateral action by payors regarding payment policy), renegotiated, subjected to a bidding process with our competitors, or terminated altogether. Sometimes in the renegotiation process contracts in certain lines of business may not be renewed or a payor may enlarge its provider network or otherwise adversely change the way it conducts its business with us. In other cases, a payor may reduce its provider network in exchange for lower payment rates. Our revenue from a payor may also be adversely affected if the payor alters its utilization management expectations and/or administrative procedures for payments and audits, changes its order of preference among the providers to which it refers business or imposes a third-party administrator, network manager or other intermediary. Any reduction in our projected revenues as a result of these or other factors could also lead to impairment of the value of our intangible assets, which would result in a decrease in value of these assets on our balance sheet. We cannot assure you that our payor contracts will not be terminated or altered in ways that are unfavorable to us as a result of renegotiation or such administrative changes. Terminations or alterations of contracts, particularly those that are concentrated with organizations that represent a significant portion of our business, could have a material effect on our business, results of operations, financial condition, cash flow, capital resources and liquidity. Payors may also decide to refer business to their owned provider subsidiaries. Some payors have developed or acquired, or may in the future develop or acquire, an ownership interest in our competitors or administrative intermediaries. These activities could materially reduce our revenue from these payors.

We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with the provision of healthcare services, and the products that we source and sell which can be costly and disruptive to our business.

There is an inherent risk of liability in the provision of the services we provide and the medical products we sell. As participants in the healthcare industry, we are and expect to be periodically subject to lawsuits, some of which may involve large claims and significant costs to defend, such as mass tort or other class actions. A number of factors could result in an unsafe condition or injury to, or death of, a patient with respect to the products that we source or sell, including component failures, manufacturing flaws, design defects or inadequate disclosure of product-related risks or information. A successful claim in excess of, or not covered by, our insurance policies could have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity. Our insurance policies are also subject to annual renewal and our insurance premiums could be subject to material increases in the future.

In addition to product liability claims and litigation, an unsafe condition or injury to, or death of, a patient associated with our products could lead to a recall of, or issuance of a safety alert relating to, our products, or suspension or delay of regulatory product approvals or clearances, product seizures or detentions, governmental investigations, civil or criminal sanctions or injunctions to halt manufacturing and distribution of our products. Any one of these could result in significant costs and negative publicity resulting in reduced market acceptance and demand for our products and harm our reputation. In addition, a recall or injunction affecting our products could temporarily shut down production lines or place products on a shipping hold.

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All of the foregoing types of legal proceedings and regulatory actions are inherently unpredictable and, regardless of the outcome, could disrupt our business, result in substantial costs or the diversion of management attention and could have a material adverse effect on our results of operations, financial condition and cash flows.

Possible changes in the mix of patients and products and services provided, as well as payor mix and payment methodologies, could have a material adverse effect on our business, results of operations and financial condition.

Our revenues are determined by a number of factors, including our mix of patients, the rates of payment among payors and the mix of our products and services provided. A shift towards payors with lower prices, or from higher gross margin products to lower gross margin products, would reduce our gross margins. Changes in the mix of our patients, products and services provided, payment methodologies or the payor mix among commercial payors, Medicare, and Medicaid could have a material adverse effect on our business, results of operations and financial condition. If the market opportunities for our products and services and patient categories are smaller or not as profitable as we have estimated, we have difficulties in expanding our products and services and patient categories or we fail to capture cross-selling opportunities, we may not be able to continue to grow as profitably as we have expected, which may adversely affect our business, results of operations and financial condition.

Ventilator product line revenues may be negatively impacted by various actions taken by payors, our competitors and regulators.

Changes to the medical necessity criteria related to ventilators could increase the difficulty for patients who have been prescribed a ventilator to qualify under the Medicare rules. The Centers for Medicare & Medicaid Services (the “CMS”) defines “medically necessary” as services or supplies that: are proper and needed for the diagnosis or treatment of one’s medical condition; are provided for the diagnosis, direct care, and treatment of one’s medical condition; meet the standards of good medical practice in the local area; and are not mainly for the convenience of the patient or doctor. Changes to definition, or to the interpretation of good medical practice in local areas, could lead to a decline in the demand for our products and have a negative impact on our revenues.

If we are unable to provide consistently high quality of care at lower costs, our business will be adversely impacted.

Providing high quality patient care at lower cost is the cornerstone of our business. We believe that hospitals, physicians and other referral sources refer patients to us in large part because of our reputation for delivering high quality care at lower cost. Clinical quality is becoming increasingly important within our industry. Medicare imposes a financial penalty upon hospitals that have excessive rates of patient readmissions within 30 days from hospital discharge for patients with specific medical conditions. We believe this provides a competitive advantage to home healthcare providers who can differentiate themselves based upon quality, particularly by achieving low patient acute care hospitalization readmission rates and by implementing disease management programs designed to be responsive to the needs of patients served by referring hospitals.

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We are focused on improving our patient outcomes. If we should fail to attain our goals regarding patient acute care hospitalization readmission rates and other quality metrics, we expect our ability to generate referrals would be adversely impacted, which could have a material adverse effect on our business, results of operations and financial condition.

However, we may need to increase costs, including for clinical labor, to provide our services at appropriate quality levels, which could lead to lower margins, and result in decreased demand for our products and services from our patients and payors as they choose to conduct business with other lower cost home healthcare providers.

Our failure to successfully design, modify and implement technology and other process changes to maximize productivity and ensure compliance could ultimately have a significant negative impact on our business, results of operations and financial condition.

We are continuously evaluating where we can modify our operations and processes or systems in order to attain a higher level of productivity or ensure compliance with applicable laws and regulations. Additionally, Medicare and Medicaid often change their documentation requirements. CMS and other payors have taken steps to support electronic data interchange processes, as well as to implement electronic clinical templates and suggested clinical data elements for documenting face-to-face encounters, detailed written orders and written orders prior to delivery, and laboratory test results for certain durable medical equipment, prosthetics, orthotics and supplies (“DMEPOS”) items. Certain payors have complex and onerous rules which are a challenge and costly to follow, including prior authorization requirements. The standards and rules for healthcare transactions, code sets and unique identifiers also continue to evolve. Moreover, government programs and/or commercial payors may have difficulty administering new standards and rules for healthcare transactions, which may adversely affect timelines of payment or payment error rates. Our failure to successfully design and implement new systems or process modifications could have a significant impact on our business, results of operations and financial condition. The implementation of new standards and rules may require us to make substantial investments. Further, the implementation of these system or process changes could have a disruptive effect on related transaction processing and operations. If our implementation efforts related to systems development are unsuccessful, we may need to write off amounts that we have capitalized related to systems development projects. Additionally, if systems development implementations do not occur, we may need to incur additional costs to support our existing systems. Furthermore, mistakes can be made while processing claims which can cause those claims to be denied, leading to potential refunds, fines or other penalties.

Changes in governmental or private payor supply replenishment schedules could adversely affect our revenue, financial condition and results of operations.

We generated approximately 25% and 23% of our net revenue for the years ended December 31, 2024 and 2023, respectively, through the sale of masks, tubing and other ancillary products related to patients utilizing CPAP devices. Medicare, Medicaid and private payors limit the number of times per year that patients may purchase such supplies. To the extent that any governmental or private payor revises their resupply guidelines to reduce the number of times such supplies can be purchased, such reductions could adversely impact our revenue, financial condition and results of operations.

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The Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) provided for a temporary suspension of reduced rates for items and services provided by us. After December 31, 2023, the reimbursement rate has reverted to 100% of the Medicare fee schedule, adjusted to inflation. While we cannot predict what Medicare payment rates or coverage determinations will be in effect in future years, future changes to payment rates or benefit coverages may materially impact our financial condition and results of operations.

Changes made by payors to the way they cover products supplied by us could have an adverse impact on our revenue, financial condition and results of operations.

Payors that provide coverage for products supplied by us can make changes to their plans and benefit designs that can have an adverse impact on our revenue and operations. For example, some payors have shifted coverage for continuous glucose monitors (“CGMs”) from the medical benefit to the pharmacy benefit for their insureds. The impact of changing the benefit allocation can include changes to the types of providers that can provide CGMs, increased competition from pharmacies, changes to covered amounts, and changes to patient deductibles. Additionally, including CGMs under the pharmacy benefit could allow pharmacy benefit managers to attempt to restrict how beneficiaries obtain CGMs, including attempts to shift to specifically contracted providers with reduced reimbursement to the supplier or pharmacy.

Our failure to maintain controls and processes over billing and collections, including impacts from the outsourcing or offshoring of parts of our billing and collections activities, estimating the collectability of our accounts receivable or the deterioration of the financial condition of our payors, could have a significant negative impact on our business, results of operations and financial condition.

The collection of accounts receivable is one of our most significant challenges and requires constant focus, involvement by management and continuous enhancements to information systems and billing center operating procedures. Further, some of our patients and payors may experience financial difficulties, or may otherwise not pay accounts receivable when due, resulting in increased write-offs. Our payors also make errors in their reimbursements to us. The failure of our systems and billing and collection center employees to detect these errors, notify and convince the payors of their errors and to obtain the corrected reimbursements could negatively impact our business, results of operations and financial condition. There can be no assurance that we will be able to maintain our current levels of collectability in future periods or accurately estimate the collectability of accounts receivable. For instance, at the beginning of each billing cycle when patients may begin coverage under a new insurance carrier and deductibles reset, we routinely see patient collections decrease. If we are unable to properly bill and collect our accounts receivable, our business, results of operations and financial condition will be adversely affected. From time to time, we are involved in disputes with various parties, including payors and their intermediaries regarding their performance of various contractual or regulatory obligations. These disputes may lead to legal and other proceedings and may cause us to incur costs or experience delays in collections, increases in accounts receivable or loss of revenue.

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In addition, in the event such disputes are not resolved in our favor and/or result in the termination of our relationships with such parties, there may be an adverse impact on our business, results of operations and financial condition. Further, while we have made significant progress in the collection of our accounts receivable in recent years, we may not be able to further improve our net leverage ratios.

In addition, we have an outsourcing strategy in place with respect to certain administrative functions, disaster recovery services and other services. Where permitted, we utilize offshore and domestic business process and services firms to assist with implementing this strategy. There is significant competition for skilled technical professionals, and we expect that competition to increase, which could result in our outsourcing strategy not achieving its intended benefits. Operations in other parts of the world involve certain regional geopolitical risks that are different as compared to operating in the United States, including the possibility of civil unrest, terrorism and substantial regulation by the individual governments. These factors may cause disruptions in our business processes, which could have a material adverse effect on our business, results of operations and financial condition. We also may experience negative reactions from some patients, providers and payors, as a result of the actual or perceived disruption caused by the outsourcing of portions of our business operations. If we fail to maintain controls over our outsourced activities then such failure could have an adverse effect on our business, results of operations and financial condition.

Our reliance on relatively few vendors for the majority of our medical equipment and supplies and new excise taxes which are to be imposed on certain manufacturers of such items could adversely affect our ability to operate.

We currently rely on a relatively small number of vendors to provide us with the majority of our medical equipment and supplies, with five of our vendors providing approximately 66% of our total service equipment and supply purchases in the year ended December 31, 2024. These third-party vendors are not our employees, and except for remedies available to us under our agreements with such third-party vendors, we have limited ability to control the amount or timing of resources that any such third-party will devote to manufacturing our medical equipment and supplies. If these third-party vendors do not satisfactorily carry out their contractual duties or fail to meet expected deadlines, our products and services to our patients may be delayed or subject to increased costs. The third parties we rely on for these services may also have relationships with other entities, some of which may be our competitors. From time to time, we also enter into certain exclusive arrangements with a given vendor for the provision of medical equipment and supplies. Further, some of our supply agreements contain pricing scales that depend on meeting certain order volumes. Our inability to procure certain medical equipment and supplies, including as a result of failure to maintain and renew certain agreements and access arrangements, could have a materially adverse effect on our business, results of operations and financial condition. For example, in the event of a public health emergency, the government may limit our access to certain equipment by purchasing such equipment themselves due to public interest. This may lead to heavy reliance on a limited number of vendors, thus causing a shortage in our own equipment and supply inventory. We often use vendors selectively for quality and cost reasons. Significant price increases, or disruptions in the ability to obtain such equipment and supplies from existing vendors, may force us to increase our prices (which we may be unable to do) or reduce our margins, which would force us to use alternative vendors. As such, our reliance on relatively few vendors could have an adverse effect on our business, results of operations and financial condition.

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In addition, as a medical device distributor, we rely on third-party device manufacturers and suppliers to maintain compliance with all applicable regulatory requirements and to deliver products on schedule and in accordance with our expectations. There is a risk that a supplier or manufacturer fails to comply with applicable regulations, such as the FDA requirements including, but not limited to, pre- or post-approval inspections and current Good Manufacturing Practice (“cGMP”) requirements (e.g., violations that could render a product adulterated or misbranded), which could result in the FDA taking administrative or other legal action. An unfavorable resolution or outcome of any administrative, enforcement, or legal action against a manufacturer or supplier or any other matter that may arise out of any FDA inspection of their facilities or products could significantly and adversely affect our business. Failure by any such supplier to meet its contractual obligations or to comply with applicable laws or regulations could delay or prevent the manufacture, commercialization, or distribution of our products, and could also result in non-compliance or reputational harm. We do not conduct formal environmental, social or governance due diligence on our third-party vendors and may not be in a position to identify regulatory compliance issues in a timely manner.

If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties or do so on commercially reasonable terms. Any change in the existing vendors we use could cause delays in the delivery of products and possible losses in revenue, which could adversely affect our business, results of operations and financial condition. In addition, alternative vendors may not be available, or may not provide their products and services at similar or favorable prices. If we cannot obtain the medical equipment and supplies we currently use, or alternatives at similar or favorable prices, our ability to provide such products may be severely impacted, which could have an adverse effect on our business, results of operations, financial condition, cash flow, capital resources and liquidity.

We do not currently have invention assignment agreements with all of our employees. If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed.

Since we do not own or have a license or other rights under any patents that are material to our business, we rely on other proprietary rights, including protection of trade secrets, and other proprietary information that is not patentable or that we elect not to patent. However, trade secrets can be difficult to protect, and some courts are less willing or unwilling to protect trade secrets. To maintain the confidentiality of our trade secrets and proprietary information, we must obtain assignments of those proprietary rights from our employees or third-party contractors and include confidentiality provisions that we have in contracts with our employees, consultants, collaborators and others upon the commencement of their relationship with us. We do not currently have such assignments or confidentiality obligations in place with respect to all of our employees. We also cannot guarantee that we have entered into such agreements with other parties that may have or have had access to our trade secrets or proprietary technology and processes. Without having these agreements in place, there may be disputes around ownership of information that we consider ours or otherwise use in connection with our business, and we may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by such third parties.

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Even where we have agreements in place, these contracts may not provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information. There can be no assurance that such third parties will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors. Despite the protections we do place on our intellectual property or other proprietary rights, monitoring unauthorized use and disclosure of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property or other proprietary rights will be adequate.

We rely on, and in the future we may rely on, third-party contractors and components for certain of our technology, software, information systems and products and our disaster recovery plan.

We rely on, and in the future we may rely on, third parties for certain of our technology, software, information systems and product needs including our disaster recovery plan. If we are unable to obtain or maintain licenses to utilize such technology, software, information systems or products, we could incur unanticipated expenses, suffer disruptions in service, experience regulatory issues and lose revenue from the operation of our business. For example, some of our technology, software, information systems and products contain components or products that are developed by third parties. We may not be able to replace the functions provided by these third-party components or products if they become obsolete, defective or incompatible with future versions of our products or with our services and solutions, or if they are not adequately maintained or updated, which could adversely affect our competitive business position and harm our business prospects. Furthermore, in the future, should we be required to obtain licenses to any third-party technology, such licenses may not be available to us on commercially reasonable terms, or at all. If we are unable to obtain rights to required third-party technology or intellectual property rights or maintain the existing rights we have, we may be required to expend significant time and resources to replace such rights, which may not be feasible on a technical or commercial basis and may harm our business, results of operations and financial condition.

We believe we have all the necessary licenses from third parties to use technology, software and intellectual property assets used in our business that we do not own. A third party could, however, allege that we are infringing its rights, which may deter our ability to obtain licenses on commercially reasonable terms from the third party, if at all, or cause the third party to commence litigation against us. If we fail to comply with our obligations in any of our license agreements, the licensor may have the right to terminate the license and we may not be able to make use of the technology that was covered by the license, which may adversely impact our business.

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In addition, we may find it necessary to initiate litigation against a third party to protect our trade secrets, to enforce our intellectual property rights and to determine the scope and validity of any proprietary rights of others. Any such litigation, or the failure to obtain any necessary licenses or other rights, could cause us to incur significant expenses and could distract our management and other personnel from their normal responsibilities and could materially and adversely affect our business. Alternate sources for the technology, software, information systems and products currently provided by third parties to us may not be available to us in a timely manner, and may not provide us with the same functions as currently provided to us or may be more expensive than products we currently use or sell.

Further, the risk of intellectual property infringement claims against us may increase as we expand our business to include more third-party systems and products and continue to incorporate third-party components, software and/or other intellectual property into the products we sell. Also, individuals and firms have purchased intellectual property assets in order to assert claims of infringement against technology providers and customers that use such technology. Any infringement action brought against us or our providers could be costly to defend or lead to an expensive settlement or judgment against us and we may not have sufficient financial or other resources to conduct such litigation adequately. Any of the foregoing could harm our business, results of operations and financial condition.

We generate a significant portion of our revenue from the provision of sleep therapy equipment and supplies to patients, and our success is therefore highly dependent on our ability to furnish these items.

Approximately 33% and 33% of our net revenue for the years ended December 31, 2024 and 2023, respectively, was generated from the provision of sleep therapy equipment and supplies to patients. Our ability to execute our growth strategy therefore depends upon the adoption by patients, physicians and sleep centers, among others, of our sleep therapy equipment and supplies to treat their patients suffering from obstructive sleep apnea (“OSA”). There can be no assurance that our sleep therapy equipment and supplies will continue to maintain broad acceptance among physicians and patients. Any failure by us to satisfy physician or patient demand for our equipment and supplies or to maintain meaningful market acceptance may harm our business, results of operations and financial condition.

Changes in medical equipment technology and development of new treatments may cause our current equipment or services to become obsolete.

We evaluate changes in home medical equipment technology and treatments on an ongoing basis for purposes of determining the feasibility of replacing or supplementing items currently included in the patient service equipment inventory and services that we offer patients. Our selection of medical equipment and services is formulated on the basis of a variety of factors, including overall quality, functional reliability, availability of supply, payor reimbursement policies, product features, labor costs associated with the technology, acquisition, repair and ownership costs and overall patient and referral source demand, as well as patient therapeutic and lifestyle benefits. Manufacturers continue to invest in research and development to introduce new products to the marketplace. It is possible that major changes in available technology, payor benefit or coverage policies related to those changes or the preferences of patients and referral sources may cause our current product offerings to become less competitive or obsolete, and it will be necessary to adapt to those changes. Unanticipated changes could cause us to incur increased capital expenditures and accelerated equipment write-offs, and could force us to alter our sales, operations and marketing strategies.

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In addition, the development and commercialization of new drugs to address obesity and type 2 diabetes may limit the demand for our current equipment or services. A number of new glucagon-like peptide (GLP-1) receptor agonist drugs, including Mounjaro, Wegovy, and Ozempic, have entered the market. The long-term effect of these drugs on our business is uncertain. However, these drugs may have a significant impact on obesity rates over time, which may result in reduced demand for our current equipment or services and we may not be able to adapt to those changes to stay competitive.

Unexpected changes in vendor payment terms may weaken our financial position.

Certain of our suppliers and vendors provide extended payment terms, ranging from a period of 90 days to nine months. Changes in those terms could have a material impact on our cash flow and results of operations. We have had to historically renegotiate payment terms and other provisions in agreements with certain suppliers and vendors in order to improve our financial position. If we are required to renegotiate any of these agreements, and lose the advantage of extended payment terms, our business, results of operations and financial condition may be adversely affected.

In addition, some of our vendors provide us with capital leases on attractive terms. If our vendors tighten their credit limits on these capital leases, or decline to provide such capital leases, then we may be forced to seek alternative financing arrangements on less favorable terms. These arrangements may be at a higher cost to us and may have a negative impact on our business, results of operations and financial condition.

Our business is dependent on the protection of our intellectual property. If our intellectual property rights or our protection and enforcement of them is inadequate to protect our competitive advantage, our business, results of operations and financial condition could be adversely affected.

The success of our business depends in part on our ability to protect our intellectual property rights with respect to our technologies. We rely on certain unregistered intellectual property rights, including unpatented intellectual property embodied in the software we develop, to protect and prevent others from duplicating our proprietary technology. Such means may afford only limited protection of our intellectual property and may not: (i) prevent our competitors from duplicating our technology; (ii) prevent our competitors from gaining access to our proprietary information and technology; or (iii) permit us to gain or maintain a competitive advantage.

In addition, there can be no assurance that competitors and other third parties will not independently develop, or otherwise design around, our intellectual property protections related to our proprietary technology, in which case we would not be able to prevent such third parties from using developing similar technology.

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We use certain open source technology in our business. We may face claims from open source licensors claiming ownership of, or demanding the release of, the technology and any other intellectual property that we developed using or derived from such open-source technology.

We use open-source technology in our business and will continue to use open-source technology in the future. There is a risk that open-source technology licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to offer our products. Open source licensors may also decide to change the conditions on which they make their open-source technology available for our use. Additionally, we may face claims from open-source licensors claiming ownership of, or demanding the public release or free license of, the technology and any other intellectual property that we developed using or derived from such open source technology. These claims could result in litigation and could require that we make our technology freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant technology and product development resources, and we may not be able to complete the process successfully.

Our business depends on our information systems, including software licensed from or hosted by third parties, and any failure or significant disruption or effective cyber-attack on any of these systems, security breaches or improper disclosure of or loss of data could materially affect our business, results of operations and financial condition.

Our business depends on the proper functioning and availability of our computer systems and networks. We rely on an external service provider to provide continual maintenance, upgrading and enhancement of our primary information systems used for our operational needs. To the extent that our third-party providers fail to support, maintain and upgrade such software or systems, or if we lose our licenses with third-party providers, the efficiency of our operations could be disrupted or reduced.

The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. In addition, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information or other intellectual property. We or our third-party vendors may experience cybersecurity and other breach incidents, including such incidents that remain undetected for an extended period. A cybersecurity attack or other incident that bypasses our or our third-party vendors’ information systems security could cause a security breach that may lead to a material disruption to our information systems infrastructure or business and/or involve a significant loss of business or patient health or other protected data or information. If a cybersecurity attack or another unauthorized attempt to access our or our third-party vendors’ systems or facilities were to be successful, it could result in the theft, destruction, loss, misappropriation or release of confidential information or intellectual property, and could cause operational or business delays that may materially impact our ability to provide various healthcare services.

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Even when a security breach is detected, the full extent of the breach may not be determined immediately. If we experience a reduction in the performance, reliability, or availability of our information systems, our operations and ability to process transactions and produce timely and accurate reports could be materially adversely affected. If we experience difficulties with the transition and integration of information systems or are unable to implement, maintain, or expand our systems properly, we could suffer from, among other things, operational disruptions, delays, cessation of service, regulatory problems, increases in administrative expenses and other harm to our business and competitive position. For example, in February 2024, we learned that one of our third-party software providers who interfaces with UnitedHealth Group’s Change Healthcare (“Change Healthcare”) information technology systems in connection with our claims processing activity had a cybersecurity threat actor gain access to some of the Change Healthcare information technology systems. UnitedHealth Group isolated the impacted systems upon learning of this threat and Change Healthcare has suspended its claims processing activity with our third-party software provider. The full impact of this incident has yet to be determined but depending on the duration of the impact and the availability of alternative claims processing engines, it could have an adverse effect on our business and results of operations.

There can be no assurance that our and our third-party software providers’ safety and security measures and disaster recovery plans will prevent damage, interruption, breach of their information systems and operations or data loss. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect, our and our third-party software providers’ may be unable to anticipate these techniques or implement adequate preventive measures. In addition, hardware, software or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise the security of our information systems. Unauthorized parties may attempt to gain access to our systems or facilities, or those of third parties with whom we do business, including our confidential managed file transfer software providers, through fraud or other forms of deceiving our employees or contractors. Costs and potential problems and interruptions associated with any such unauthorized access or the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems and technology, including systems and technology intended to protect against unauthorized access, also could disrupt or reduce the efficiency of our operations.

Any successful cybersecurity attack or other unauthorized access to our, our third-party vendors’, or any of our or their acquisition targets’ systems, facilities or patient health information also could result in negative publicity, which could damage our reputation or brand with our patients, referral sources, payors or other third parties and could subject us to substantial penalties under the Health Insurance Portability and Accountability Act (“HIPAA”) and other federal, state and foreign data protection laws, in addition to costs and potential damages associated with private litigation related to those affected. Failure to maintain the security and functionality of our information systems and related software or to contract with third parties which do, or a failure to defend a cybersecurity attack or other attempt to gain unauthorized access to our, our third-party vendors’, or any of our or their acquisition targets’ systems, facilities or patient health information, could expose us to a number of adverse consequences, the vast majority of which are not insurable, including, but not limited to, disruptions in our operations, regulatory and other civil and criminal penalties, fines, investigations and enforcement actions (including, but not limited to, those arising from the FTC, the Office of Inspector General or state enforcement authorities), private litigation with those affected by the data breach, loss of customers, disputes with payors and increased operating expense, all or any of which could adversely impact our financial condition and results of operations.

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If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

We rely on our trademarks, service marks, domain names and logos to market our brands and to build and maintain brand loyalty and recognition. We rely on trademark protections to protect our business and our products and services. Our registered or unregistered trademarks, trade names or service marks may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. Effective trademark protection may not be available or may not be sought in every country in which our products are made available. Similarly, not every variation of a domain name may be available or be registered, even if available. We may not be able to protect our rights to these trademarks, domain names and trade names, which we need to build brand name recognition by potential patients or partners in our markets of interest. If that were to happen, we may be prevented from using our names, brands and trademarks unless we enter into appropriate royalty, license or coexistence agreements. Over the long term, if we are unable to establish name recognition based on our trademarks, service marks, domain names and trade names, then we may not be able to compete effectively, and our business could be adversely affected.

Our capitation arrangement may prove unprofitable if actual utilization rates exceed our assumptions.

We are party to one capitation arrangement with a commercial payor, pursuant to which they have agreed to pay us a fixed amount (on a per member per month basis for a defined patient population) without regard to the actual services provided. Capitation revenues represented approximately 7.0% of our total revenues for 2024. We negotiate the contractual rate in this arrangement with the payor based on assumptions regarding average expected utilization of services. If actual utilization rates exceed our assumptions, the profitability of this arrangement may be diminished. Moreover, we may be obligated to perform under such capitation arrangement even if the contractual reimbursement rates are insufficient to cover our costs based on actual levels of utilization.

Our current insurance program is expensive to maintain and may expose us to unexpected costs and negatively affect our business, financial condition and results of operations, particularly if we incur losses not covered by our insurance or if claims or losses differ from our estimates.

There is an inherent risk of liability in the provision of healthcare services. As participants in the healthcare industry, we may periodically be subject to lawsuits, some of which may involve large claims and significant costs to defend, such as mass tort or other class actions. Although our insurance coverage reflects deductibles, self-insured retentions, limits of liability and similar provisions that we believe are reasonable based on our operations, the coverage under our insurance programs may not be adequate to protect us in all circumstances.

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Our insurance policies contain exclusions and conditions that could have a materially adverse impact on our ability to receive indemnification thereunder, as well as customary sub-limits for particular types of losses. Additionally, insurance companies that currently insure companies in our industry may cease to do so, may change the coverage provided or may substantially increase premiums in the future. The incurrence of losses and liabilities that exceed our available coverage, therefore, could have a material adverse effect on our business, financial condition and results of operations.

We currently self-insure a significant portion of expected losses under our workers’ compensation, automobile liability and employee health insurance programs and, to offset negative insurance market trends, we may elect to increase our self-insurance coverage, accept higher deductibles or reduce the amount of coverage. Unanticipated changes in any applicable actuarial assumptions and management estimates underlying our liabilities for these losses could result in materially different expenses than expected under these programs, which could have a material adverse effect on our financial condition and results of operations. In addition, if we experience a greater number of these losses than we anticipate, it could have a material adverse effect on our business, financial condition and results of operations.

We are highly dependent upon senior management; our failure to attract and retain key members of senior management could have a material adverse effect on us.

We are highly dependent on the performance and continued efforts of our senior management team. Our future success is dependent on our ability to continue to attract and retain qualified executive officers and senior management. Any inability to manage our operations effectively could have a material adverse effect on our business, results of operations and financial condition.

Our business operations are labor intensive. Difficulty in hiring enough additional management and other employees, increasing costs of compensation or employee benefits, and the potential impact of unionization and organizing activities could have an adverse effect on our business, results of operations and financial condition.

The success of our business depends upon our ability to attract and retain highly motivated, well-qualified management and other employees. The payment of salaries and benefits to our employees is one of our most significant expenses. In addition, we face significant competition in the recruitment of qualified employees, which has in the past resulted in salary and wage increases for certain employee groups. In particular, continuously improving the quality of our sales force and marketing team with the technical expertise and supporting distribution capabilities to perform our services in each of the territories in which we may have approval to sell and market out products will be expensive, time-consuming and will require significant attention of our management. If we are unable to recruit or retain a sufficient number of qualified employees, or if the costs of compensation or employee benefits increase substantially, then our ability to deliver services effectively could suffer and our profitability would likely be adversely affected. For example, the increase in payments of unemployment benefits may impact the size of the labor pool that we have to choose from and proposed increases in the federal minimum wage may also negatively impact our costs of labor if such increases are enacted. In addition, union organizing activities may occur in the future, and the adverse impact of unionization and organizing activities on our costs and operating results could be substantial.

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Uncertainties about the effect of the Rotech Acquisition on our employees may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel until the Rotech Acquisition is completed. Retention of certain employees may be challenging during the pendency of the Rotech Acquisition, as employees may experience uncertainty about their future roles at the Company. If key employees depart because of issues relating to such uncertainty, difficulty integrating or a desire not to remain with the business, our business prior to and the combined company’s business following the Rotech Acquisition could be negatively impacted.

We may be required to take significant write-downs in connection with impairment of our intangible or other long-lived assets.

Intangible and other long-lived assets comprise a significant portion of our total assets. Intangible assets include trade names, payor relationships and accreditations with various agencies. An impairment review of indefinite-lived intangible assets is conducted at least once a year and if events or changes in circumstances indicate that their carrying value may not be recoverable, an impairment write-down may be required. Intangible assets with a finite life and other long-lived assets are tested for recoverability whenever changes in circumstances indicate that their carrying value may not be fully recoverable.

Depending on the future business performance of the Company and other events, we may be required to recognize increased levels of future intangible amortization, or incur further charges to recognize the impairment of our assets.

Our goodwill may become impaired, which would require us to record a significant impairment charge to earnings in accordance with generally accepted accounting principles.

U.S. GAAP requires us to test our goodwill for impairment on an annual basis, or more frequently if indicators for potential impairment exist. The testing required by GAAP involves estimates and judgments by management. Although we believe our assumptions and estimates are reasonable and appropriate, any significant adverse changes in one or a combination of key assumptions, including, but not limited to, a failure to meet our business plans or expected earnings and cash flows, unanticipated events and circumstances such as inflationary pressures and our planned efforts to mitigate such impacts, disruptions in the supply chain, an increase in the discount rate, a decrease in the terminal growth rate, increases in tax rates (including potential tax reform) or a significant change in industry or economic trends, may affect the accuracy or validity of such estimates and may result in goodwill impairment. No impairment charges to goodwill were recorded in 2024 or 2023. We may be required to record a material charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill is determined, which charge could adversely affect our results of operations.

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We have been negatively impacted by continued inflation, rising interest rates and the imposition of tariffs.

Current and future inflationary effects may be driven by, among other things, general inflationary cost increases, supply chain disruptions and governmental stimulus or fiscal policies. The cost to manufacture and distribute the equipment and products that we provide to patients is influenced by the cost of materials, labor, and transportation, including fuel costs. We continue to experience inflationary pressure and higher costs as a result of the increasing cost of materials, labor and transportation. The increase in the cost of equipment and products is due in part to a shortage in the availability of certain products, the higher cost of shipping, and general inflationary cost increases. Additionally, we generally are not able to pass increased costs onto customers to offset inflationary pressures. As a result, we expect that such increases in costs, as well as further increases in inflation will impact our costs for labor, equipment and products, and the margins we are able to realize on our products, and could also impact the overall demand for our products and services, all of which could have an impact on our business, financial position, results of operations and cash flows. In addition, future volatility of general price inflation and the impact of inflation on costs and availability of materials, costs for shipping and warehousing, workforce wage pressure, and other operational overhead could adversely affect our financial results. Although there have been recent increases in inflation, we cannot predict whether these trends will continue. Our primary mitigation efforts relating to these inflationary pressures include utilizing our purchasing power in negotiations with vendors and the increased use of technology to drive operating efficiencies and control costs, such as our digital platform for prescriptions, orders and delivery.

Current inflationary increases have resulted in higher interest rates, which in turn have resulted in higher interest expense related to our variable rate indebtedness. Future increases in inflation may result in higher interest rates which could increase interest expense related to our variable rate indebtedness and any borrowings we may undertake to refinance existing fixed rate indebtedness. Higher interest rates also impact the discount rate used in the valuation of intangible assets, including goodwill, and the impact on the discount rate could result in impairment charges for such assets.

The Trump Administration, during its first term from 2017 to 2021, imposed certain tariffs and retaliatory tariffs, as well as other trade restrictions on products and materials. President Trump again has signaled that his new Administration will impose tariffs and retaliatory tariffs against U.S. trading partners. On February 1, 2025, President Trump issued an Executive Order imposing tariffs at various levels on imports from Canada, Mexico and China. As a result of an increase in tariffs on metals imports, the cost of the oxygen tanks to us have increased. The newly imposed tariffs have also resulted in immediate threats of retaliatory tariffs against U.S. goods and resulted in discussions with the countries which have delayed many of the U.S. imposed tariffs while discussions with each trading partner continue. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition and results of operations. The impact of these , as well as any increases in existing tariffs or additional tariffs that may be imposed, tariffs on our financial condition and results of operations, if any, is subject to a number of factors that are not yet known, including any countermeasures that the target countries may take in response to such tariffs. We may not be able to take any mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any tariffs to some or all of our customers, particularly in light of the fact that payors control the fee schedules and reimbursement rules for our products and services. As a result, such measures could have a material adverse effect on our business, results of operations and financial condition.

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Natural disasters or other catastrophic events could materially disrupt and have a negative effect on our business, results of operations and financial condition.

Natural disasters, such as hurricanes or earthquakes, could disrupt our ability to do business. For example, such events could result in physical damage to one or more of our properties, the temporary closure of one or more of our locations, the temporary inability to process payroll or process claims, a negative effect in our ability to comply with certain licensing requirements, and/or a delay in the delivery of products and the provision of our service offerings. These events could also reduce demand for our products and service offerings, or make it difficult or impossible to receive products from suppliers. We may be required to suspend operations in some of our branch locations, which could have a material adverse effect on our business, results of operations and financial condition.

We experience competition from numerous other sleep therapy equipment, home respiratory, mobility equipment and diabetes medical devices and supplies providers, and this competition could adversely affect our revenues and our business.

The sleep therapy equipment, home respiratory, mobility equipment and diabetes medical devices and supplies markets are highly competitive and include a large number of providers, some of which are national providers, but most of which are either regional or local providers, including hospital systems, physician specialists and sleep labs. The primary competitive factors are quality considerations such as responsiveness, access to payor contracts, the technical ability of the professional staff and the ability to provide comprehensive services. These markets are very fragmented. Some of our competitors may now or in the future have greater financial resources or more effective sales and marketing activities. Our largest national home respiratory/home medical equipment provider competitors include Lincare Holdings Inc., Cardinal Health, Inc. and, prior to the completion of the Rotech Acquisition, Owens & Minor Inc. and Apria. The rest of the homecare market in the United States consists of regional providers and product-specific providers, as well as numerous local organizations. Hospitals and health systems are routinely looking to provide coverage and better control of post-acute healthcare services, including homecare services of the types we provide. These trends may continue as new payment models evolve, including bundled payment models, shared savings programs, value-based purchasing and other payment systems.

New entrants to the sleep therapy equipment, home respiratory/home medical equipment and diabetes medical devices and supplies markets could have a material adverse effect on our business, results of operations and financial condition. A number of manufacturers of home respiratory equipment currently provide equipment directly to patients on a limited basis. Such manufacturers have the ability to provide their equipment at prices below those charged by us, and there can be no assurance that such direct-to-patient sales efforts will not increase in the future or that such manufacturers will not seek reimbursement contracts directly with our third-party payors, who could seek to provide equipment directly to patients from the manufacturer. In addition, pharmacy benefit managers, including CVS Health Corporation and the OptumRx business of UnitedHealth Group Incorporated, could enter the HME products and services market and compete with us. Large technology companies, such as Amazon.com, Inc. and Alphabet Inc., have disrupted other supply businesses and have entered the healthcare market. In the event such companies enter the HME products and services market, we may experience a loss of referrals or revenue.

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We may be adversely affected by consolidation among health insurers and other industry participants.

In recent years, there has been a continuing trend of health insurers merging or increasing efforts to consolidate with other non-governmental payors. Insurers are also increasingly pursuing alignment initiatives with healthcare providers. Consolidation within the health insurance industry may result in insurers having increased negotiating leverage and competitive advantages, such as greater access to performance and pricing data. Our ability to negotiate prices and favorable terms with health insurers in certain markets could be affected negatively as a result of this consolidation. In addition, the shift toward value-based payment models could be accelerated if larger insurers, including those engaging in consolidation activities, find these models to be financially beneficial. There can be no assurance that we will be able to negotiate favorable terms with payors and otherwise respond effectively to the impact of increased consolidation in the payor industry or vertical integration efforts.

Political and economic conditions, including significant global or regional developments such as economic and political events, international conflicts (including the ongoing war in Ukraine and the Hamas-Israel conflict), natural disasters and public health crises that are out of our control, could adversely affect our revenue, financial condition and results of operations.

Our business can be affected by a number of factors that are beyond our control, such as general geopolitical, economic and business conditions, including slower economic growth, disruptions in financial markets, economic downturns in the form of either contained or widespread recessionary conditions, inflation, elevated unemployment levels, sluggish or uneven economic recovery, government actions impacting trade agreements including the imposition of trade restrictions such as tariffs and retaliatory counter measures, government deficit reduction, tax legislation increasing the federal corporate income tax rates, natural and other disasters, public health crises affecting our operations or our customers or suppliers, staffing shortages, production slowdowns or stoppages, raw material shortages and disruptions in delivery systems. We continue to monitor the worsening macroeconomic conditions, such as the war in Ukraine, the Hamas-Israel conflict and global geopolitical tension. Turmoil in the financial markets, including in the capital and credit markets, and any uncertainty over its breadth, depth and duration may put pressure on the global economy and could have a negative effect on our business. Further, if global financial markets experience extreme disruption, governments may take unprecedented actions intended to address extreme market conditions that may include severely restricted credit and declines in real estate values. If conditions in the global economy, U.S. economy or other key vertical or geographic markets are weak or uncertain, we could experience material adverse impacts on our revenue, financial condition and results of operations.

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Risks Related to the Healthcare Industry

In the following discussion of Risks Related to the Healthcare Industry, the “Company,” “our,” or “we” refer to the combined company and its subsidiaries.

Set forth below are certain risk factors that we currently believe could materially and adversely affect our business, financial condition, results of operations and cash flows. These risk factors are in addition to those mentioned in other parts of this offering memorandum and are not all of the risks that we may 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.

The healthcare sector remains inherently challenging and presents particular risks to investors.

The nature and scope of healthcare regulations are generally subject to political forces and market considerations. While investments in healthcare companies offer the opportunity for significant gains, such investments also involve a high degree of business and financial risk and can result in substantial or total loss. Healthcare reform continues to be a significant factor in the profitability of healthcare companies, particularly with the focus on coordinated and value-based care initiatives and departures from fee for service driven models. New laws, regulations, and judicial decisions, or new interpretations of existing laws, regulations and decisions that relate to healthcare availability, methods of delivery, or payment for products and services, or sales, marketing, or pricing, may have a material negative impact on the performance of our business. We cannot predict whether new legislation or regulations governing the healthcare industry will be enacted by legislative bodies or governmental agencies, or what effect such legislation or regulations might have.

In both the U.S. and foreign markets, sales of healthcare products and services, and the success of such platforms, frequently depend, in part, on the availability of reimbursement from payors. The levels of revenues and profitability of providers/suppliers of healthcare products and services may be affected by the continuing efforts of payors to contain or reduce the costs of healthcare. Significant uncertainty exists as to the reimbursement status of certain healthcare products and services. There can be no assurance that our proposed products or services will be considered cost-effective or that adequate third-party reimbursement will be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment.

Further, companies in the healthcare industry are often subject to significant risks related to litigation and liability for damages in connection with their operations, or products and services offered. The litigation and liability environment in the healthcare industry is constantly evolving, and new judicial decisions and legislative activity may increase exposure to any of these types of claims. Even if liability insurance is maintained by our business, it may not be adequate to cover potential liabilities, including as a result of warranty and product liability claims.

Healthcare companies may face intense competition, including competition from companies with greater financial resources, more extensive research and development, sales and marketing, customer services and support and other capabilities, and a larger number of qualified managerial and technical personnel.

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The manufacturing of healthcare products is a highly complex process, to which regulators apply stringent standards. From time to time, issues can arise in manufacturing that may result in a delay or suspension of a product, or even a recall of a product. An error may arise in the production process that results in the contamination of a product or batch, or more simply, a product batch being produced outside of approved specifications as a result of production variability. Corrective actions to such events can impact profitability and sometimes remove products from the market.

Healthcare companies, whether focused on or possessing healthcare technological components, often face specific risk which we may be exposed to. Such risks typically include: (1) rapidly changing science and technologies; (2) new competing products and improvements in existing products, which may quickly render existing products or technologies obsolete; (3) scarcity of management, technical, scientific, research, and marketing personnel with appropriate training; (4) the possibility of lawsuits related to patents and other intellectual property and their associated rights; and (5) rapidly changing investor sentiments and preferences with regard to technology sector investments.

We have concentration in and dependence on certain healthcare provider customers, GPOs, and Payors.

In 2024, although no single customer accounted for 5% of our consolidated net revenue, our top ten customers in the U.S. represented approximately 23% of our consolidated net revenue. In addition, in 2024, approximately 65% of our consolidated net revenue was from sales to member hospitals under contract with our largest GPOs: Vizient, Premier and HPG. We could lose a significant healthcare provider customer or GPO relationship if an existing contract expires without being replaced or is terminated by the customer or GPO prior to its expiration. Although the termination of our relationship with a given GPO would not necessarily result in the loss of the member hospitals as customers, any such termination of a GPO relationship, or a significant individual healthcare provider customer relationship or payor, could have a material adverse effect on our results of operations, financial condition and cash flows. In 2024, although no single payor accounted for 10% of our consolidated net revenue, the largest payor, with which we have multiple contracts, represented approximately 22% of our Patient Direct net revenue.

The medical products industry is subject to a multi-tiered costing structure, which can vary by manufacturer and/or product. Under this structure, certain institutions can obtain more favorable prices for medical products than we are able to obtain. The multi-tiered costing structure continues to expand as many large integrated healthcare providers and others with significant purchasing power, such as GPOs, demand more favorable pricing terms. Additionally, the formation of new provider networks and GPOs may shift purchasing decisions to entities or persons with whom we do not have a historical relationship. This may threaten our ability to compete effectively, which could in turn negatively impact our financial results. Although we are seeking to obtain similar terms from manufacturers to obtain access to lower prices demanded by GPO contracts or other contracts, and to develop relationships with provider networks and new GPOs, we cannot assure you that such terms will be obtained or contracts will be executed.

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Our failure to establish and maintain relationships with hospital and physician referral sources may cause our revenue to decline.

We do not have contracts or exclusive arrangements with most hospitals or physicians for our Patient Direct segment. Instead, we attempt to work closely with hospitals and physicians to accept discharges and referrals of their patients who require our services. Therefore, the success of our Patient Direct segment is significantly dependent on referrals from hospital and physician sources. If we are unable to successfully establish new referral sources and maintain strong relationships with our current referral sources, if there is an actual or perceived decrease in the quality of service and care levels we provide, or if efforts to increase the skill level and effectiveness of our sales force fail, our revenues may decline. In addition, our relationships with referral sources are subject to federal and state healthcare laws such as the U.S. federal Anti-kickback Statute and the U.S. federal Stark Law (“Stark Law”), and compliance with these laws limits the scope of our relationships with our referral sources.

Changing conditions in the U.S. healthcare industry may impact our results of operations and cash flows.

A large percentage of our revenue is derived in the U.S. We, along with our customers and suppliers, are subject to extensive federal and state regulations relating to healthcare as well as the policies and practices of the private healthcare insurance industry. As discussed in more detail below, in recent years, there have been a number of government and private initiatives to reduce healthcare costs and government spending. These changes have included an increased reliance on managed care; consolidation of competitors, suppliers and customers; a shift in healthcare provider venues from acute care settings to clinics, physician offices and home care; and the development of larger, more sophisticated purchasing groups. National and regional insurers and managed care organizations are regularly attempting to seek reductions in the prices we charge for our products and services to them and their members, including through direct contracts with healthcare providers, increased oversight and greater enrollment of patients in managed care programs and preferred provider organizations. We have faced, and expect to continue to face, pricing pressures due to reductions in provider reimbursement for our products and services. In addition, in recent years, the healthcare industry in the U.S. has experienced and continues to experience significant consolidation in response to cost containment legislation and general market pressures to reduce costs. This consolidation of our customers, health insurers and suppliers generally gives them greater bargaining power to reduce the pricing available to them. All of these changes place additional financial pressure on healthcare provider customers, who in turn seek to reduce the costs and pricing of products and services provided by us. We expect the healthcare industry to continue to change significantly and these potential changes, which may include a reduction in government support of healthcare services, adverse changes in legislation or regulations, and further reductions in healthcare reimbursement practices, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

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Specifically, to participate in and qualify for reimbursement under governmental reimbursement programs such as Medicare and Medicaid, we must comply with extensive conditions of participation imposed by federal and state authorities as well as third-parties administering such governmental reimbursement programs. If we were to violate the applicable regulations or requirements governing participation, we could be excluded from participation in federal and state healthcare programs and be subject to substantial administrative, civil and criminal penalties.

Demand for many of the existing and new medical devices and supplies dispensed to our customers is, and will continue to be, affected by the extent to which government healthcare programs and private health insurers reimburse us and our customers for their members’/beneficiaries’ medical expenses in the jurisdictions where we do business. Statutory and regulatory requirements for Medicare, Medicaid and other government healthcare programs govern provider reimbursement levels. From time to time, legislative changes are made to government healthcare programs that impact our business, and the federal and/or state governments may continue to enact measures in the future aimed at containing or reducing reimbursement levels for medical expenses paid for in whole or in part with government funds. The Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010 (collectively, “ACA”), the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”), the Deficit Reduction Act of 2005 (the “DRA”) and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), each contain provisions that have directly impacted reimbursement for the products we provide. Reimbursement from Payors varies and is dependent on contract negotiations and there is no guarantee that such contracts will be profitable, and failure to comply with these contracts may result in termination or financial liabilities. Efforts by Payors to reduce healthcare costs have intensified in recent years and will likely continue, which may result in reductions or slower growth in reimbursement for certain services provided by healthcare companies.

The MMA established a CBP for certain DMEPOS we provide. The DMEPOS CBP impacts the Medicare reimbursement amounts for suppliers of certain DMEPOS items, and in the past, included some DMEPOS items that we provide to our patients. Cumulatively, in previous competition rounds of the DMEPOS CBP in effect between 2011 and 2018, we were offered contracts for a substantial majority of the product categories for which we submitted bids. Competitive bidding contracts are expected to be re-bid at least every three years. While we cannot predict the outcome of the DMEPOS CBP on our business in the future nor the Medicare payment rates that will be in effect in future years, the program may materially adversely affect our financial condition, results of operations and cash flows.

State Medicaid programs implement reimbursement policies for the products and services we provide which can vary from state to state. We cannot predict whether states may consider adopting reimbursement reductions or whether any such changes could have a material adverse effect on our business.

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We are subject to stringent regulatory and licensing requirements, and we have been, are and could become the subject of federal and state investigations and compliance reviews.

The development, manufacture, marketing, sale, promotion and distribution of products, as well as the provision of logistics and services in the healthcare industry and provisions of our contracts with certain governmental agencies, are subject to comprehensive regulation by federal, state, local and foreign governments and agencies. Compliance with these laws and regulations is costly and materially affects our business. Among other effects, healthcare regulation substantially increases the time, difficulty and costs incurred in obtaining and maintaining approvals to market newly developed and existing products. We believe we are in material compliance with all statutes and regulations applicable to our operations. Notwithstanding this, violations of these laws and regulations may still occur, which could subject us to civil and criminal enforcement actions; licensure revocation, suspension, or non-renewal; severe fines and penalties; the repayment of amounts previously paid to us; and even the termination of our ability to provide services under certain government programs.

Healthcare is an industry of rapid regulatory change. Changes in the laws and regulations and new interpretations of or guidelines relating to existing laws and regulations may affect permissible activities and compliance requirements, licenses and approvals required to be held, the relative costs associated with doing business, and reimbursement amounts paid by Payors. We cannot predict the future of federal, state, local and foreign regulation or legislation, or possible changes in national healthcare policies. Future legislative and regulatory changes could have a material adverse effect on our financial condition, results of operations and cash flows.

We, and certain of our employees, also are required to hold permits and licenses and to comply with the operational and security standards of various governmental bodies and agencies. Any failure to comply with these laws and regulations or any failure to maintain the necessary permits, licenses or approvals, or to comply with the required standards, could disrupt our operations and/or adversely affect our results of operations, financial condition and cash flows. Additionally, if we fail to comply with these laws, we could be subject to federal or state government investigations or qui tam actions (false claims cases initiated by private parties purporting to act on behalf of federal or state governments), which could result in civil or criminal sanctions, including the loss of licenses or the ability to participate in Medicare, Medicaid and other federal and state healthcare programs. Such sanctions and damages could adversely affect our results of operations, financial condition and cash flows.

Of particular importance, each of which may be amended and updated from time to time, are:

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Federal and state agencies and health insurance carriers often conduct audits and request customer records and other documents to support claims submitted for payment of services rendered to customers. In response to an audit or inquiry, we are obligated to procure and submit the underlying medical records retained by various clinical providers, medical facilities and prescribers, which may be challenging. If a determination is made that our records or the patients’ medical records are insufficient to meet requirements for the claims, we could be subject to denials or overpayment demands for claims submitted for Medicare reimbursement. In the rare event that such an audit results in major discrepancies of claims records which lacked medical necessity, we may be subject to broader corrective measures, including extrapolation of audit results across a wider population of claims, submission of recoupment demands for claims other than those examined in the audit, or placing us on a full pre-payment review.

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

We collect, handle and maintain patient-identifiable health information and other sensitive personal and financial information, which are subject to federal, state and foreign laws that regulate the use and disclosure of such information. Regulations currently in place continue to evolve, and new laws in this area could further restrict our ability to collect, handle and maintain personal or patient information, or could require us to incur additional compliance costs, either of which could have an adverse impact on our results of operations and cash flows. Violations of federal (such as HIPAA), state or foreign laws (such as the European Union General Data Privacy Regulation (“GDPR”) or the U.K. GDPR) concerning privacy and data protection could subject us to civil or criminal penalties, breach of contract claims, costs for remediation and harm to our reputation.

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Our operations, including our billing practices and our arrangements with healthcare providers, are also subject to extensive federal and state laws and audits, inquiries and investigations from government agencies.

Applicable laws may be directed at payments for the products and services we provide, conduct of our operations, preventing fraud and abuse, and billing and reimbursement from government programs such as Medicare, Medicaid and from other payors. These laws may have related rules and regulations that are subject to interpretation and may not provide definitive guidance as to their application to our operations, including our arrangements with hospitals, physicians, and other healthcare providers.

Federal and state governments have contracted with private entities to audit and recover revenue resulting from payments made in excess of those permitted by federal and state benefit program rules. These entities include, but are not limited to, Recovery Audit Contractors that are responsible for auditing Medicare claims, Unified Program Integrity Contractors (“UPIC”) that are responsible for the identification of suspected fraud through medical record review and Medicaid Integrity Contractors, that are responsible for auditing Medicaid claims. We believe audits, inquiries, and investigations from these contractors and others will occur from time to time in the ordinary course of our business. We also may be subject to increased audits from payors and pursuant to federal, civil, and criminal statutes that relate to our billings to payors. Our efforts to be responsive to these audits, inquiries, and investigations may result in substantial costs and divert management’s time and attention away from the operation of our business. Moreover, an adverse outcome with respect to any audit, inquiry or investigation may result in damage to our reputation, or in fines, penalties or other sanctions imposed on us. Such pending or future audits, inquiries, or investigations, or the public disclosure of such matters, could have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity.

Federal and state laws are broadly worded and may be interpreted or applied by prosecutorial, regulatory, or judicial authorities in ways that we cannot predict. Additionally, in many instances, there are only limited publicly available guidelines and methodologies for determining errors with certain audits. As a result, there can be a significant lack of clarity regarding required documentation and audit methodology. The clarity and completeness of each patient medical file, some of which is the work product of physicians not employed by us, is essential to successfully challenging any payment denials.

Accordingly, our arrangements and business practices may be the subject of government scrutiny or be found to violate applicable laws. If federal or state government officials challenge our operations or arrangements with third parties that we have structured based upon our interpretation of these laws, rules, and regulations, such a challenge could potentially disrupt our business operations and we may incur substantial defense costs, even if we successfully defend our interpretation of these laws, rules, and regulations. If the government or third parties successfully challenge our interpretation, such a challenge may have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity.

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We are subject to stringent healthcare and patient privacy regulations.

Numerous federal and state laws and regulations, including HIPAA and HITECH, govern the collection, dissemination, security, use and confidentiality of PHI. HIPAA includes a number of requirements pertaining to the privacy and security of certain PHI, as well as the standard formatting of certain electronic health transactions. As part of the provision of, and billing for, healthcare equipment and services, our Patient Direct segment is required to collect and maintain PHI and as such, are subject to HIPAA as a covered entity. HIPAA also applies to business associates of covered entities, which are individuals and entities that provide services for or on behalf of those covered entities. Failure of our business associates to comply with HIPAA requirements can adversely impact our business. HIPAA imposes mandatory penalties for certain violations. Penalties for violations of HIPAA and its implementing regulations include civil monetary penalties of up to $71,162 per violation (updated annually), not to exceed approximately $2.1 million for violations of the same standard in a single calendar year (as of 2024, and subject to periodic adjustments for inflation). However, a single breach incident can result in violations of multiple standards, which could result in significant fines. A person who knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face a criminal penalty of up to $50,000 and up to one-year of imprisonment. The criminal penalties increase if the wrongful conduct involves false pretenses or the intent to sell, transfer, or use identifiable health information for commercial advantage, personal gain, or malicious harm. HIPAA also authorizes state attorneys general to file suit on behalf of their residents. While HIPAA does not create a private right of action allowing individuals to sue in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI. Numerous other federal and state laws that protect the confidentiality, privacy, availability, integrity and security of PHI and healthcare related data also apply to us. In many cases, these laws are more restrictive than, and not preempted by, the HIPAA and HITECH rules and requirements, and may be subject to varying interpretation by courts and government agencies, creating complex compliance issues for us and potentially exposing us to additional expenses, adverse publicity and liability.

Further, federal and state consumer laws are being applied increasingly by the FTC and state enforcement authorities, to regulate the collection, use and disclosure of personal information or PHI, and to ensure that businesses and organizations maintaining personal information about individuals implement appropriate data safeguards. For instance, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (collectively, the “CCPA”) provides California residents with certain individual privacy rights and imposes data privacy and cybersecurity obligations on covered companies. The CCPA requires covered companies to provide certain disclosures to California residents about such companies’ data collection, use, sharing and other processing practices and to provide California residents with ways to opt-out of certain sales or transfers of their personal information, and provides California residents with certain additional causes of action. Although there are limited exemptions for PHI and HIPAA regulated entities, and the CCPA’s implementation standards and enforcement practices are continuing to develop and remain uncertain for the foreseeable future, the CCPA may increase our compliance costs and potential liability. Numerous other states have also enacted, or are considering enacting, their own comprehensive laws relating to data privacy and cybersecurity.

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The FTC and HHS Office for Civil Rights (“OCR”) have interpreted that the information tracked by or obtained by tracking pixels may include health information and other forms of sensitive data and have indicated the use of tracking pixels without the proper disclosures and consents as a potential enforcement priority. Recent OCR guidance is subject to litigation and potential revisions. Any of our businesses using tracking technologies may be subject to tracking pixel legislation and regulation. Federal privacy laws are expected to continue to evolve.

New health information standards implemented on the federal and state level could have a significant effect on the manner in which we handle personal and healthcare-related data and communicate with payors, and the cost of complying with these standards could be significant. Failure to comply with existing or new laws and regulations (including the interpretations thereto) related to patient health information could subject us to criminal or civil sanctions.

Our businesses that involve medical devices are subject to the FDA and other federal regulation.

In the U.S., the Federal Food, Drug, and Cosmetic Act of 1938 (“FFDCA”), FDA regulations and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution and post-market surveillance. We must also comply with laws and regulations governing operations, storage, transportation, manufacturing, sales, safety and security standards for each of our manufacturing and distribution centers. This includes oversight by the FDA, the Centers for Medicare and Medicaid Services, the Drug Enforcement Agency, the Department of Transportation (the “DOT”), the Environmental Protection Agency, the Department of Homeland Security, the Occupational Safety and Health Administration, the Department of Labor, the Equal Employment Opportunity Commission, and state boards of pharmacy, or similar state licensing boards and regulatory agencies. For example, our locations that fill and distribute medical oxygen containers must register with the FDA as a medical gas manufacturer, and these registered locations are subject to extensive regulation. Among other requirements, the FDA’s cGMP regulations impose certain quality control, documentation and recordkeeping requirements on the receipt, processing and distribution of medical gas. Further, in each state in which we operate medical gas facilities, we are subject to regulation under varying state health and safety laws. The FDA and state authorities conduct periodic, unannounced inspections at our facilities to assess compliance with cGMP and other regulations. Failure to comply with applicable requirements can lead to a variety of administrative or legal sanctions, such as warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution. We expend significant resources to achieve compliance with federal and state law requirements at each of our facilities. There can be no assurance, however, that these efforts will be successful and that our facilities will achieve and maintain compliance with applicable federal, state and local law requirements. We are also subject to certain federal and state disclosure requirements regarding financial arrangements within the healthcare industry.

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Additionally, in the U.S., before we can market a new product, or a new use of, or claim for, or significant modification to, an existing product, we generally must first receive clearance or approval from the FDA and certain other regulatory authorities. Most major markets for medical products outside the U.S. also require clearance, approval or compliance with certain standards before a product can be commercially marketed. The process of obtaining regulatory clearances and approvals to market a medical product can be costly and time consuming, involve rigorous pre-clinical and clinical testing, require changes in products or result in limitations on the indicated uses of products. We cannot assure you that these clearances and approvals will be granted on a timely basis, or at all. In addition, once a medical product has been cleared or approved, a new clearance or approval may be required before it may be modified, its labeling changed or marketed for a different use. Medical products are cleared or approved for one or more specific intended uses and promoting a device for an off-label use could result in government enforcement action. Furthermore, a product approval or clearance can be withdrawn or limited due to unforeseen problems with the medical product or issues relating to its application. The regulatory clearance and approval process may result in, among other things, delayed, if at all, realization of product net sales, substantial additional costs and limitations on the types of products we may bring to market or their indicated uses, any one of which could have a material adverse effect on our results of operations, financial condition and cash flows.

We are subject to certain foreign healthcare regulations.

Our operations are subject to local, country and regional regulations, such as those promulgated by the European Medicines Agency, the Medical Devices Directive and the Medical Device Regulation. In addition, quality requirements are imposed by customers which audit our operations on a regular basis. Each of our manufacturing locations is licensed or registered with the appropriate local authority. We believe we are in material compliance with all applicable statutes and regulations, as well as prevailing industry best practices, in the conduct of our business operations outside of the U.S. However, failure to comply with such ex-U.S. regulations can have an adverse impact on our business.

We retain certain liabilities from the Apria Acquisition.

On December 18, 2020, prior to the completion of the Apria Acquisition, a federal judge approved a civil and administrative settlement between Apria and the U.S. and certain state Medicaid programs, in a complaint filed by three private individuals (“relators”) under the qui tam provisions of the FCA, 31 U.S.C. § 3729 et seq., as well as comparable state false claims laws, in connection with the rental of NIV. Apria also entered into separate settlements to resolve the relators’ claims brought on behalf of the states of California and Illinois related to NIVs covered by private insurers.

To resolve any potential liability regarding alleged improper use of NIVs, Apria agreed to enter a civil settlement agreement and to pay $40 million to the federal government and the states. Apria also agreed with the California Department of Insurance to pay $500,000 to resolve claims asserted by the relators under the California Insurance Frauds Prevention Act, Cal. Ins. Code § 1871 et seq. Apria separately agreed with the relators to settle all remaining claims from their complaint, including: (1) claims for retaliation in violation of federal and state laws; (2) claims for attorneys’ fees and costs available under federal and state law; and (3) claims under the Illinois Insurance Claims Fraud Prevention Act, 740 Ill. Comp. Stat. 92/1 et seq. Apria did not admit that any of its conduct was illegal or otherwise improper. All amounts were paid prior to the acquisition.

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As part of the settlement, Apria also entered into a five-year Corporate Integrity Agreement (“CIA”) with the HHS-OIG. The CIA requires Apria to maintain its ongoing corporate compliance program and implement a set of defined corporate integrity activities for a period of five years from the effective date of the CIA. Among other things, the CIA requires Apria to impose certain oversight obligations on Apria’s board of directors; provide certain management certifications; continue or implement, as applicable, certain compliance training and education; and engage an Independent Review Organization to perform certain reviews. The CIA also includes certain reporting, certification, record retention, and notification requirements. Failure to comply with the obligations under the CIA could have material consequences for us including monetary penalties or exclusion from participation in federal healthcare programs. In the event of a breach of the CIA, Apria could become liable for payment of certain stipulated penalties or could be excluded from participation in federal healthcare programs.

We must obtain clearance or approval from the appropriate regulatory authorities prior to introducing a new product or a modification to an existing product. The regulatory clearance process may result in substantial costs, delays and limitations on the types and uses of products we can bring to market, any of which could have a material adverse effect on our business.

Our failure to comply with regulatory requirements or receive regulatory clearances or approvals for our medical gas facilities, products or operations could adversely affect our business.

We have a number of medical gas facilities in several states. These facilities are subject to federal and state regulatory requirements. Our medical gas facilities and operations are subject to extensive regulation by the FDA and other federal and state authorities. The FDA regulates medical gases, including medical oxygen, pursuant to its authority under the FFDCA. Among other requirements, the FDA’s cGMP regulations impose certain quality control, documentation, and recordkeeping requirements on the receipt, processing, and distribution of medical gas. Further, in each state where we operate medical gas facilities, we are subject to regulation under state health and safety laws, which vary from state to state. The FDA and state authorities conduct periodic, unannounced inspections at medical gas facilities to assess compliance with the cGMP and other regulations. We expend significant time, money, and resources in an effort to achieve substantial compliance with the cGMP regulations and other federal and state law requirements at each of our medical gas facilities. There can be no assurance, however, that these efforts will be successful and that our medical gas facilities will achieve and maintain compliance with federal and state laws and regulations. Our failure to achieve and maintain regulatory compliance at our medical gas facilities could result in enforcement action, including warning letters, fines, product recalls or seizures, temporary or permanent injunctions, or suspensions in operations at one or more locations, as well as civil or criminal penalties, all of which could materially harm our business, financial condition, results of operations, cash flows, capital resources, and liquidity.

The medical gas products we manufacture and distribute and certain other products we distribute are subject to extensive regulation by the FDA and other federal and state governing authorities. Compliance with FDA, state, and other requirements regarding production, safety, quality, manufacturing, distribution and marketing is costly and time-consuming, and while we seek to be in full compliance, instances of non-compliance could arise from time to time. We cannot be assured that any of our medical gases will be certified by the FDA. We have applied for, and received, designated gas certifications for our medical gas products.

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We may not be successful in receiving certification in the future. Other potential product manufacturing-related risks include difficulties or delays in product manufacturing, sales, or marketing, which could affect future results through regulatory actions, shutdowns, approval delays, withdrawals, recalls, penalties, supply disruptions or shortages, reputational harm, product liability, and/or unanticipated costs.

Failure to comply with applicable regulatory requirements could result in administrative enforcement action by the FDA or state agencies, which may include any of the following: adverse publicity; warning or untitled letters; fines; injunctions; consent decrees; civil money penalties; recalls; termination of distribution or seizure of our products; operating restrictions or partial suspension or total shutdown of production; delays in the introduction of products into the market; withdrawals or suspensions of current medical gas certifications or drug approvals, resulting in prohibitions on sales of our products; and criminal prosecution. There is also a risk that we may not adequately implement sustainable processes and procedures to maintain regulatory compliance and to address future regulatory agency findings, should they occur. The FDA may change its policies, adopt additional regulations or revise existing regulations, each of which could prevent or delay certification of our medical gases, or could impact our ability to market a device that was previously certified or cleared by the FDA. Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity.

We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with the provision of healthcare services, and the products that we source, assemble, manufacture and sell which can be costly and disruptive to our business.

There is an inherent risk of liability in the provision of the services we provide and the design, assembly, manufacture and marketing of the medical products of the types we sell. As participants in the healthcare industry, we are and expect to be periodically subject to lawsuits, some of which may involve large claims and significant costs to defend, such as mass tort or other class actions. A number of factors could result in an unsafe condition or injury to, or death of, a patient with respect to the products that we source, assemble, manufacture or sell, including physician technique and experience in performing the relevant surgical procedure, component failures, manufacturing flaws, design defects or inadequate disclosure of product-related risks or information. A successful claim in excess of, or not covered by, our insurance policies could have a material adverse effect on our business, financial condition, results of operations, cash flows, capital resources and liquidity. Our insurance policies are also subject to annual renewal and our insurance premiums could be subject to material increases in the future.

In addition to product liability claims and litigation, an unsafe condition or injury to, or death of, a patient associated with our products could lead to a recall of, or issuance of a safety alert relating to, our products, or suspension or delay of regulatory product approvals or clearances, product seizures or detentions, governmental investigations, civil or criminal sanctions or injunctions to halt manufacturing and distribution of our products. Any one of these could result in significant costs and negative publicity resulting in reduced market acceptance and demand for our products and harm our reputation.

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In addition, a recall or injunction affecting our products could temporarily shut down production lines or place products on a shipping hold. In April 2023 the FDA recommended that consumers, healthcare providers and facilities not use certain models of O&M Halyard surgical N95 respirators when fluid resistance is required. While there was no injury or damage to any individuals, as a result of the recommendation we voluntarily stopped the sale in the U.S. of the affected respirators for a temporary period, until the FDA concluded testing and updated its recommendations for use. While the FDA recommendation did not materially affect our results of operations for 2023, there is no guarantee that future recommendations or sanctions will be resolved on the same timeline or favorably, if at all.

All of the foregoing types of legal proceedings and regulatory actions are inherently unpredictable and, regardless of the outcome, could disrupt our business, result in substantial costs or the diversion of management attention and could have a material adverse effect on our results of operations, financial condition and cash flows.

Healthcare research and innovation may negatively impact our business.

The healthcare industry spends heavily on research and development. Research findings (e.g., regarding side effects or comparative benefits of one or more particular treatments, services, or products) and technological innovation (together with patent expirations) may make any particular treatment, service, or product less attractive if previously unknown or underappreciated risks are revealed, or if a more effective, less costly or less risky solution is or becomes available. Any such development could have a material adverse effect on our business.

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Exhibit 99.4

ROTECH’S BUSINESS

The following discussion of the business of Rotech (referred to as the “Company,” “our,” or “we” in this discussion) and its subsidiaries should be read in conjunction with our audited consolidated financial statements and related notes as of and for the years ended December 31, 2024 and 2023. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from Rotech’s management’s expectations.

Overview

Rotech is a leading provider of HME products and services in the United States. We enable the treatment of patients in their homes, including chronic patients, acute patients or patients with both chronic and acute needs. We offer a comprehensive range of HME products and services for home healthcare and delivery across six core business lines: (1) oxygen, (2) ventilators, (3) sleep therapy, (4) wound care, (5) diabetics and (6) DME. Our Payor clients include commercial insurers, Medicare, Medicaid, the Department of Veterans Affairs and private individuals. As of December 31, 2024, we had more than 1 million active patients across over 300 service locations in 45 states, supported by approximately 4,000 FTE employees and we had more than 3,000 Payor plans in place, from large national to regional and local.

Rotech aims to be the industry’s highest-quality provider of HME products and services, while maintaining its commitment to being a low-cost operator. We believe that we offer a compelling value proposition to patients, providers and Payors by enabling patients to receive care and services in the comfort of their own homes while also reducing treatment costs as compared to in-patient settings. Our key HME products and services include stationary and portable home oxygen equipment, non-invasive and invasive ventilators, CPAP and BiPAP devices, NPWT pumps and supplies and other DME. Our revenues are generated primarily through fee-for-service arrangements with Payors for equipment, supplies, services and other items we rent or sell to patients. With an expansive network of Payor contracts, delivery technicians and therapists that is not readily replicated, we are well positioned to provide home healthcare that require high-quality service, providing a bridge from the in-patient care setting to the home.

We believe key differentiators from our competitors are our national scale and footprint, our culture of disciplined and profitable growth, our relentless operational rigor and focus on cash collections, and our proprietary technology platform. We sit at the nexus of referring providers, Payors, patients, and suppliers—all of whom share the goal of keeping patients as healthy as possible in the comfort of their homes. We have long-standing relationships with referral sources across the country that refer patients to us because of our end-to-end product and service offerings, national distribution footprint, and our reputation for delivering consistent, quality service. We enjoy deep and long-standing relationships with major Payors, including government, national and regional insurers and MCOs, many of whom we have contracted with for over 15 years. We believe that Payors and referral sources highly value our ability to reliably provide access to home healthcare and reduce unnecessary in-patient stays.

Coupled with scalable technology and centralized operations, including customer service and revenue cycle management, we continue to grow our patient base while maintaining operational efficiency in a cost-efficient manner. We focus on improving the operational efficiencies of our business through various new technology initiatives and data analytics capabilities. We believe we can continue to enhance our cash profile through continued focus on profitable products and services, disciplined management of capital expenditures and by controlling our costs. Our scalable platform and infrastructure allows us to continue to evaluate and add new products and services that we believe have the potential to deliver high growth rates and attractive margins.

Service Lines

We offer HME products and services for home healthcare in six core business lines: (1) Oxygen; (2) Ventilators; (3) Sleep Therapy; (4) Wound Care; (5) Diabetes and (6) DME. Through our offerings, we provide a broad range of HME products and services and provide patients with a variety of clinical and administrative support services and supplies, most of which are prescribed by a physician as part of a care plan. We provide substantial benefits to both patients and Payors by allowing patients to receive necessary care and services in the comfort of their own homes while reducing the cost of treatment at in-patient facilities. Our services include:

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Revenue Data

Rental and sale revenues are disaggregated by the following principal service categories:

Oxygen.

We are one of the largest providers of home oxygen therapies in the United States, which includes the supply of stationary and portable home oxygen equipment. Our key products include oxygen concentrators, portable oxygen concentrators, home fill systems, tanks and oxygen contents. These products are used to treat a variety of conditions, including COPD, emphysema and chronic bronchitis (collectively, the third leading cause of death in the United States). In particular, oxygen concentrators are devices that concentrate the oxygen in ambient room air by selectively removing nitrogen to supply a more highly oxygen-enriched gas product to patients who suffer from reduced oxygen saturation. We have a highly trained workforce of full-time professionals who monitor compliance with both state and federal regulatory requirements and Payor requirements, who deliver and set up home oxygen equipment and who educate and monitor our patients to ensure compliance with their physician prescription. In 2024, we served approximately 385,000 oxygen patients.

Ventilators.

We are a leading provider of both non-invasive and invasive ventilators for patients with neuromuscular disease, thoracic restrictive disease and chronic respiratory failure related to COPD. Ventilators provide breathing support to patients with chronic respiratory failure by assisting patients in the exchange of oxygen and carbon dioxide, provide positive pressure support to assist patients’ own breathing efforts and, when prescribed, can induce mechanical breathing independent of the patient’s effort. Non-invasive ventilation (“NIV”) delivers breathing support through a non-invasive method, such as a nasal mask, while invasive ventilators deliver breathing support through a tracheostomy. Ventilators help fully inflate the lungs, improving blood oxygen levels and reducing carbon dioxide levels. Ventilators can also help enhance the quality of sleep and alleviate symptoms resulting from low levels of oxygen or accumulated carbon dioxide like morning headaches, daytime fatigue and shortness of breath. In 2024, we served more than 21,800 patients on ventilator treatment.

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NIV is an effective form of therapy that can help maintain or improve quality of life, as well as reduce COPD exacerbation frequency, hospital admission rates and length-of-stay in hospitals, thereby reducing healthcare costs for patients suffering from chronic respiratory failure resulting from COPD exacerbations. Studies have shown that NIV reduces the need for intubation and complications in these patients while increasing survival rates.

We employ a nationwide clinical staff, including home respiratory therapists who perform patient assessments and set ups for highly complex clinical equipment and provide direct patient care, monitoring and 24-hour support services under physician-directed treatment plans and in accordance with our proprietary program.

Sleep Therapy.

We are one of the largest providers of OSA therapy devices, including PAP devices, of which CPAP is the most common, and patient support services in the United States. Our key products include CPAP, BiPAP and supplies such as face masks, humidifiers and tubing. CPAP devices provide continuous positive pressure to maintain an open airway during sleep. Obstructive sleep disorders are commonly occurring comorbid conditions with many diseases, including diabetes and obesity. Our sleep therapy products are primarily used to treat OSA in the home setting. In 2024, we served approximately 471,000 patients undergoing sleep therapy, including providing new equipment set up as well as resupplies.

In order to drive consistent, uninterrupted care, we have a strong re-supply program focused on driving sales of consumables pertaining to the PAP devices in compliance with Payor guidelines. The sale of supplies for our PAP devices represents an attractive “razor-razor blade” model that drives strong recurring revenues for this product line. Further, our CPAP-emergency medical technician (“EMT”) program for OSA utilizes modem-enabled CPAP machines to monitor records for documentation requirements. We employ a nationwide clinical staff, including respiratory therapists who set up PAP devices, provide patient education, monitor compliance and drive therapeutic adherence. In addition, we provide support services under physician-directed treatment plans and in accordance with our proprietary program.

Diabetes.

Due to high comorbidity rates and channel overlaps between diabetes and our core therapy markets and target patient populations, we are well positioned to gain share in the diabetes market. We made four significant acquisitions from October 2022 to July 2023 in the diabetes market, which is a key growth opportunity for the company. Our acquired businesses provide medical devices and supplies such as CGMs and insulin pumps to patients for the treatment of diabetes.

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Wound Care Products and Supplies.

We are one of the largest providers of wound care products and supplies in the United States. Our key products include NPWT equipment and wound care dressings and supplies. NPWT devices provide and distribute negative pressure evenly across a wound bed either through a foam or gauze dressing to stimulate blood flow and healing. These products are used to treat chronic wounds caused by skin breakdown and poor circulation, pressure ulcers, diabetic ulcers, post-surgical wounds, burns or other wounds developed as a result of traumatic injury. Chronic wounds are commonly occurring comorbid conditions with many diseases, including diabetes and obesity.

We provide NPWT pumps, supplies and dressings needed for patients’ individualized treatment. Our strength is enhanced by our exclusive distributor agreement with Smith and Nephew, a leading manufacturer of state-of-the-art NPWT pumps and wound care dressings and products. In order to facilitate a streamlined care transition from in-patient to at-home care, we leverage our leading technology platform to obtain insurance approval along with our national distribution network to deliver the initial kit either before the patient is transitioned from the hospital or shortly after they return home. We leverage our centralized distribution facility to provide supplies to the patient to ensure continued treatment as prescribed by their physician. After NPWT is discontinued, we are able to provide patients with the wound care dressings and supplies they need to fully heal their wounds through our Halo Wound Care Solutions division. We also provide wound care dressings and supplies to patients being treated by outpatient wound care clinics across the United States. In 2024, we served more than 32,400 patients with wound care needs.

Durable Medical Equipment.

We supply a wide range of DME products and supplies to help improve the quality of life for patients with home healthcare needs. Our products include walkers, wheelchairs, hospital beds and other mobility aids. Our integrated service approach allows patients, hospital and physician referral sources and MCOs accessing any of our service offerings to also access necessary DME products and services through a single source. In addition, patients are able to directly obtain non-prescription DME products and supplies through our ShopRotech website. In 2024, we served more than 314,000 patients on DME products and supplies.

Patients and Payors

Patients and Payors rely on the HME products and services, and consistent, high-quality of service that we provide in managing patients with chronic as well as acute conditions. Revenues were disaggregated by the following Payor sources as follows:

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Medicare and Medicaid. For the year ended December 31, 2024, approximately 30% of our revenue was from servicing patients with traditional Medicare and state Medicaid programs. The majority of our revenues are derived from rental income on rented equipment and related services provided to patients, as well as the sales of equipment, supplies, pharmaceuticals and other items we sell to patients for patient care under fee-for-service arrangements.

Veterans Administration. For over 20 years, we have provided home oxygen and DME services to veterans across the United States in multiple Veterans Integrated Service Networks. In 2017, the Company and a veteran-owned business partner entered into a Small Business Administration approved Mentor/Protégé Joint Venture (“JV”) relationship. This relationship was established, in part due, to a 2016 U.S. Supreme Court decision favoring veteran-owned small businesses. For the year ending December 31, 2024, approximately 4% of our revenue was derived from servicing VA patients through contracts held by us and our JV relationship.

Commercial Payors. National and regional insurers and MCOs, and third parties that administer on their behalf, continue to represent a significant portion of our business and we have long-standing relationships with most of our commercial Payors. For the year ended December 31, 2024, approximately 53.0% of our revenue was from commercial Payors (which includes all Payors, including Medicare advantage and other non-government Payors). Typically, our commercial Payor contracts are evergreen contracts with original terms of one to three years with automatic extensions unless terminated. Most of our commercial Payor contracts are based on price—we generally do not have contracted volume. We believe that our long-term relationships with national and regional insurers and MCOs provide considerable stability to our business. We had more than 3,000 Payor plans in place, from large national to regional and local.

Patients. We serve chronic as well as acute patients across a wide area of medical conditions by providing medical equipment and supplies across the following product categories: oxygen, ventilators, sleep therapy, wound care and DME. The majority of our patients have chronic conditions with multiple comorbidities that require HME products and services over an extended period of time. For example, for home oxygen, ventilators and sleep therapy equipment, we provide continued equipment servicing and supplies often over multiple years. A minority of our patients have acute conditions that require short-term equipment and/or supplies usage. For example, the length of care for wounds is typically longer than one month and often extends for multiple months. We bill and collect copayments and deductibles from our patients as well as from Payors on behalf of the patients. Starting at the patient’s initial admission and extending through the length of service, we collect the necessary paperwork and information needed for reimbursement from the Payor.

Sales and Marketing

Our sales and marketing strategy is multifaceted and deeply embedded across all functions of the organization. We have a sales-oriented culture and we strive to make all employees drive growth by aligning incentives appropriately. We recruit sales representatives who have substantial industry knowledge and referral relationships, and provide our sales professionals with the necessary clinical and technical training to represent our product and service offerings.

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We deploy a bespoke approach to sales and marketing and employ a dedicated team of sales and marketing professionals focused on managed care and referral relationships to drive our sales and marketing strategies. As of December 31, 2024, we have approximately 300 sales personnel, including account executives, business development professionals and dedicated managed care professionals.

Sales Strategies. We have multiple sales strategies to drive growth by geographic market, sales channel and product lines. These strategies include:

Marketing Initiatives. We have developed and implemented numerous marketing initiatives to enhance the awareness of our HME product and service offerings, including:

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Competition

The HME products and services market in which we operate is highly fragmented and highly competitive with thousands of providers. In each of our product lines, there are a limited number of national competitors, including AdaptHealth, LLC, Apria and Lincare Holdings Inc., as well as numerous regional and local competitors. Furthermore, other types of healthcare providers, including industrial gas manufacturers, home healthcare agencies and health maintenance organizations, have entered and may continue to enter the market to compete with our various product and service lines. The competitive environment further increases the importance of establishing relationships with new referral sources and maintaining long-standing relationships with existing sources that refer patients to us, including hospitals, outpatient facilities, physicians and sleep centers, and utilizing our preferred provider agreements and professional service agreements. The competitive factors that are most important in the referral process include the following: being in network, breadth of product offerings, ease of doing business, technology enabled connectivity, quality of service and relationships and reputation with referral sources. We differentiate our service from many of our competitors by having both the necessary personnel and equipment onsite at many healthcare facilities.

Government Regulation

We are subject to extensive government regulation, including numerous federal, state and local laws directed at regulating reimbursement of our products and services under various government programs and preventing fraud and abuse. We maintain certain safeguards intended to reduce the likelihood that we or our employees will engage in conduct or enter into arrangements in violation of these restrictions. Legal department personnel review and approve written contracts, such as agreements with physicians, in accordance with the applicable laws. We also maintain various educational and audit programs designed to keep our managers and employees updated and informed regarding developments on these topics and to reinforce to employees our policy of strict compliance in this area. Notwithstanding these measures, violations of these laws and regulations may still occur, which could subject us to civil and criminal enforcement actions, licensure revocation, suspension, or non-renewal, severe fines and penalties, the repayment of amounts previously paid to us and even the termination of our ability to provide products and services under certain government programs such as Medicare and Medicaid. See “Risk Factors—Risks Related to the Healthcare Industry” for more information.

For the year ended December 31, 2024, approximately 27% and 2% of our revenues were generated by the Medicare and state Medicaid programs, respectively. The majority of our revenues are derived from rental income on equipment rented and related services provided to patients, and the sales of equipment, supplies, pharmaceuticals and other items we sell to patients for patient care under fee-for-service arrangements.

Medicare Reimbursement. There are a number of historic and ongoing legislative and regulatory activities in Congress and at the CMS that affect or may affect Medicare reimbursement policies for products and services we provide. Specifically, a number of important legislative changes that affect our business were included in the MMA, the DRA and MIPPA. The MMA, DRA and MIPPA and their implementing regulations and guidelines contain numerous provisions that were significant to us when enacted and continue to have an impact on our operations today. In addition, legislation including the ACA, the Medicare Access and CHIP Reauthorization Act of 2015 (the “MACRA”), the 21st Century Cures Act (the “Cures Act”) and the Bipartisan Budget Act of 2018 has an ongoing effect on our business.

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DMEPOS Competitive Bidding. Regulatory activity affecting Medicare reimbursement includes the DMEPOS CBP, which was mandated by Congress through the MMA. The DMEPOS CBP impacts Medicare reimbursement amounts for suppliers of certain DMEPOS items, and in the past, included some DMEPOS items that we provide to our patients.

In general, when a DMEPOS CBP competition round becomes effective in a competitive bidding area (“CBA”), beneficiaries under the Medicare fee-for-service program must obtain competitively-bid DMEPOS items from a contract supplier. However, suppliers who are not awarded contracts through a DMEPOS CBP competition round, but who are furnishing competitively-bid DMEPOS items at the time a DMEPOS CBP competition round begins, may continue furnishing certain items to beneficiaries if the supplier chooses to become a “grandfathered” supplier. The decision to become a grandfathered supplier applies to all items within a DMEPOS CBP product category that the supplier furnished prior to implementation of the DMEPOS CBP competition round. There are specific payment and policy requirements for grandfathered suppliers under each category of DMEPOS (e.g., capped rental, inexpensive and routinely purchased, oxygen and oxygen equipment), as well as specific beneficiary transition rules that a non-contract supplier must comply with, depending on whether the non-contract supplier chooses to be a grandfathered supplier or not.

In March 2019, CMS announced that it would consolidate all rounds and areas of the DMEPOS CBP into a single round of competition effective January 1, 2021 (“Round 2021”). Round 2021 contracts were scheduled to become effective on January 1, 2021, and to extend through December 31, 2023. For each CBA included in Round 2021, providers submitted bids in September 2019 to CMS offering to supply certain covered items of DME in the CBA at certain prices. A number of products in our product lines originally were included on the list of products subject to Round 2021, including oxygen and oxygen equipment, CPAP devices and respiratory assist devices (“RADs”), nebulizers and NPWT pumps. Although NIVs were originally included in the list of products subject to Round 2021, on April 9, 2020, CMS announced that the NIV product category has been removed from Round 2021 due to the COVID-19 pandemic. By removing NIVs from Round 2021, any Medicare-enrolled DMEPOS supplier can furnish any of the types of ventilators covered under the Medicare program. On October 27, 2020, CMS announced further revisions to Round 2021 of the DMEPOS CBP. Namely, only two out of the original 16 product categories, off-the-shelf (“OTS”) back braces and OTS knee braces, are included in Round 2021 of the DMEPOS CBP. All other product categories were removed from Round 2021.

On May 25, 2023, CMS announced a temporary gap period for the CBP starting January 1, 2024, following the expiration of all Round 2021 contracts for OTS knee and back braces on December 31, 2023. The gap period commenced as anticipated and CMS has yet to announce when the temporary gap period for the CBP would end, but indicated that it would start bidding for the next CBP round after it completes the formal notice and comment rulemaking process and implements necessary changes to the CBP to establish sustainable process, save money for Medicare patients and taxpayers, help limit fraud, waste and abuse, and ensure patient access to quality items and services.

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During the temporary gap period, any Medicare-enrolled DMEPOS supplier may furnish DMEPOS items and services to patients, with payment in former CBAs based on 100% of the single payment amount for that CBA (increased by the projected percentage change in Consumer Price Index for All Urban Consumers), and payment in non-CBAs based on fully adjusted rates per the applicable methodology under 42 C.F.R. § 414.210(g).

Competitive bidding contracts are expected to be re-bid at least every three years. Although there is currently a gap period, we cannot guarantee that our products will be excluded from any subsequent rounds of the DMEPOS CBP. Further, the competitive bidding process has historically put downward pressure on the amount we are reimbursed in the markets in which we operate, as well as in areas that are not subject to the DMEPOS CBP. The rates required to win future competitive bids could continue to depress reimbursement rates. Rotech will continue to monitor developments regarding the DMEPOS CBP. While we cannot predict the outcome of the DMEPOS CBP on our business in the future nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding, the program may materially adversely affect our financial condition and results of operations.

CMS’s decision to cancel the Round 2021 CBP was a significant development for Rotech. On December 28, 2021, CMS permanently finalized the higher blended rates in rural and noncontiguous non-CBAs. Congress further extended a blended higher Medicare reimbursement rate in non-competitive bidding/non-rural areas through December 31, 2023. After December 31, 2023, the reimbursement rate has reverted to 100% of the Medicare fee schedule, adjusted to inflation.

Medicare Fee Schedule for DMEPOS. DMEPOS items that are not subject to the CBP are paid for under the Medicare DMEPOS fee schedule. The fee schedule amounts are calculated on a statewide basis.

The CARES Act provided for a temporary suspension of reduced rates for items and services provided by Rotech. Previously, CMS applied a blended payment rate for DME furnished in rural or noncontiguous non-CBAs. Pursuant to the CARES Act, through the end of the public health emergency, the blended rate was based on 50% of the adjusted fee schedule amount (adjusted based on competitively bid prices) and 50% of the unadjusted DMEPOS fee schedule amount. On December 28, 2021, CMS extended the temporary 50/50 blended rate for rural and noncontiguous non-competitive bidding areas after the public health emergency. This 50/50 blended rate was continued in the 2023 DMEPOS fee schedule.

The CARES Act introduced a new blended rate for DME furnished in non-rural or contiguous non-CBAs that is based on 75% of the adjusted fee schedule amount and 25% of the unadjusted fee schedule amount. The Consolidated Appropriations Act, 2023 further extended the 75/25 blended Medicare reimbursement rate in non-CBA/non-rural areas through December 31, 2023. After December 31, 2023, the reimbursement rate has reverted to 100% of the Medicare fee schedule, adjusted to inflation.

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While Rotech cannot predict what Medicare payment rates or coverage determinations will be in effect in future years, changes to payment rates or benefit coverages may materially impact its financial condition and results of operations.

Reimbursement for Capped Rentals and Oxygen Equipment. Medicare covers certain DMEPOS items, including CPAP and RAD under its category for “capped rentals.” In general, items in this category are rented to Medicare beneficiaries, and Medicare payment is based on a monthly rental payment that covers the cost of the base device and any necessary maintenance and service of the device. DMEPOS suppliers may bill Medicare separately for any related accessories (e.g., masks, filters, humidifiers) that are used with the capped rental device. The rental period for these items is limited to 13 months of continuous use, after which time the Medicare monthly payment for the base equipment ceases and the Medicare beneficiary takes ownership of the device. After the capped rental period ends, Medicare continues to pay for replacement of the accessories that are used with the beneficiary-owned device. At the end of the five-year useful life of the equipment, the beneficiary may obtain replacement equipment and, if he or she can be requalified for the Medicare benefit, a new maximum 13-month payment and five-year useful life cycle would begin.

Medicare reimbursement for oxygen and oxygen equipment is limited to a maximum of 36 months within a 60-month service period. The supplier that billed Medicare for the 36th month of service continues to be responsible for the beneficiary’s oxygen therapy needs for months 37 through 60, and there is generally no additional reimbursement for oxygen-generating portable equipment for these later months. CMS does not separately reimburse DMEPOS suppliers for any oxygen tubing, cannulas and supplies that may be required for the beneficiary. The DMEPOS supplier is required to keep the equipment provided in working order and, in some cases, CMS will provide reimbursement for repair costs. At the end of the five-year useful life of the equipment, the beneficiary may obtain replacement equipment and, if he or she can be requalified for the Medicare benefit, a new maximum 36-month payment cycle would begin for the next 60 months of service. Unlike capped rental items, the oxygen equipment always remains the property of the DMEPOS supplier. For 2019, CMS added a new oxygen payment class and set the rental payment for portable liquid oxygen equivalent to the rental payment made for portable concentrators and transfilling equipment. CMS also added a new payment class for high-flow portable liquid oxygen contents when a patient’s prescribed flow rate exceeds four liters per minute. This new high-flow oxygen content class allows for the continuation of high-flow oxygen volume adjustment payments beyond the initial 36 months of continuous use. CMS implemented these changes in a budget neutral manner.

Reimbursement for Non-Invasive Pressure Support Ventilators. For patients experiencing chronic respiratory failure, we offer NIV treatment where the beneficiary meets coverage criteria. Medicare pays for NIV treatment under the DME benefit category for items requiring frequent and substantial servicing, and payments may continue until treatment is no longer medically necessary (rather than being capped after a certain period of time). CMS and its contractors have expressed concerns about the recent substantial increase in Medicare billing for non-invasive pressure support ventilators. As described by the HHS-OIG in a September 2016 data brief, ventilator technology has evolved so that it is possible for a single device to treat numerous respiratory conditions by operating in several different modes.

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According to the HHS-OIG, this creates an opportunity for abuse if DMEPOS suppliers were to bill Medicare for the device as if it were being used as a ventilator, when use of a lower cost device (e.g., CPAP, RAD) is indicated based on the beneficiary’s medical condition. The HHS-OIG’s data brief examined the results of prepayment reviews conducted by two of the DME medical administrative contractors (“MACs”) that resulted in the denial of more than 90% of claims for NIVs. The primary reason cited for many of these denials was insufficient clinical documentation. Following the release of the HHS-OIG’s 2016 data brief, in which the HHS-OIG recommended that CMS monitor providers with the largest market shares of ventilator beneficiaries, CMS consolidated billing codes for ventilators effective January 1, 2016 and decreased the reimbursement amount for non-invasive pressure support ventilators.

Claims Auditing and Monitoring and Medical Necessity Documentation Requirements. As a Medicare provider, we are subject to extensive government regulation, including laws and regulations directed at ascertaining the appropriateness of reimbursement, preventing fraud and abuse, and otherwise regulating reimbursement under the Medicare program. The federal government has contracted with private entities to audit and recover revenue resulting from payments made in excess of those permitted by federal and state benefit program rules. These entities include but are not limited to comprehensive error rate testing program contractors that are responsible for measuring improper payments on Medicare fee-for-service claims and the UPIC that are responsible for the identification of suspected fraud through medical record review.

In order to ensure that Medicare beneficiaries only receive medically necessary items and services, the Medicare program has adopted a number of documentation requirements. Additionally, to ensure compliance with Medicare, the DME MACs conduct pre- and post-payment audits or other types of inquiries, and request patient records and other documentation, to support claims we submit for payment for services and products we render to Medicare beneficiaries. These audits typically involve a complex medical review, by Medicare, or its designated contractors and representatives, of documentation supporting the services and products provided. In connection with a Medicare request for supporting documentation, we are obligated to procure and submit the underlying medical records retained by various clinical providers, medical facilities and prescribers. Obtaining these medical records in connection with a claims audit may be challenging and, in any event, all of these records are subject to further examination, interpretation and dispute by the auditing authority. Under standard Medicare procedures, we are entitled to demonstrate the sufficiency of documentation and the establishment of medical necessity, and we have the right to appeal any adverse determinations. If a determination is made that our records or the patients’ medical records are insufficient to meet medical necessity or Medicare coverage or reimbursement requirements for the claims, we could be subject to denials or overpayment demands for claims submitted for Medicare reimbursement. In the rare event that such an audit results in major discrepancies of claims records which lacked medical necessity, Medicare may be entitled to take additional corrective measures, including extrapolation of audit results across a wider population of claims, submission of recoupment demands for claims other than those examined in the audit, or placing the provider on a full pre-payment review.

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Face-to-Face Provisions for DMEPOS. In November 2012, CMS issued a final rule that implemented a provision of the SSA establishing requirements for a face-to-face encounter and written orders prior to delivery for certain items of DMEPOS. As written, the final rule would have required a physician to document that the physician, or a nurse practitioner, physician assistant or clinical nurse specialist, had a face-to-face encounter with the beneficiary prior to issuing a written order to the beneficiary for certain DMEPOS items. The MACRA eliminated this face-to-face requirement as originally written, and revised the requirement to be that a physician, nurse practitioner, physician assistant or clinical nurse specialist must document they have written an order for a DMEPOS item pursuant to a face-to-face encounter with the beneficiary, but that encounter could have occurred anytime within the six months before the order was written for the DMEPOS item.

Prior Authorization Rules for DMEPOS. In December 2015, CMS issued a final rule to require prior authorization (“PA”) by Medicare for certain DMEPOS items that the agency characterizes as frequently subject to unnecessary utilization. The final rule specifies a master list of DMEPOS items that potentially could be subject to PA and CMS will update this master list annually. The first two DMEPOS items requiring PA are two types of power wheelchairs (single and multiple power options) and in March 2017 the DME MACs began accepting PA requests for these items. The PA final rule did not create any new clinical documentation requirements; instead, the same information necessary to support Medicare payment was required, but simply prior to the DMEPOS item being furnished to the Medicare beneficiary.

CMS has established a list of DMEPOS items frequently subject to unnecessary utilization. Items on this list could be subject to PA as a condition of Medicare payment. Since 2012, CMS also has maintained a list of categories of DMEPOS items that require face-to-face encounters with practitioners and written orders before the DMEPOS supplier may furnish the items to Medicare beneficiaries. In a final rule published in November 2019, CMS combined these two lists to create a single, unified “master list” that CMS will use to identify DMEPOS items for which face-to-face encounters, written orders prior to delivery, and/or PA will be required. This expanded master list increases the number of DMEPOS items potentially eligible to be subject to prior authorization, face-to-face encounters, and written order prior to delivery requirements as a condition of payment.

While the current list of DMEPOS items requiring PA does not affect any of our products other than support surfaces, oxygen concentrators and home ventilators, CMS may include products from our product lines on the required PA list in future phases of the PA process. If any of our products are ultimately subject to PA, it could reduce the number of our patients qualified to come on service using their Medicare benefits, it could delay the start of those patients’ service while we wait for PA to be received, and/or it could decrease our sales productivity. As a result, this could adversely affect our business, financial condition, results of operations, cash flow, capital resources and liquidity.

Reimbursement Under Medicare Part C (Medicare Advantage). We maintain contracts to provide HME products and services to a significant number of managed care companies that maintain Medicare Advantage plans nationwide. While Medicare Advantage plans are required to cover all benefits to which beneficiaries are entitled under the Medicare Parts A and B programs, these plans have flexibility to negotiate and set payment rates that differ from the Medicare rates. Further, the DMEPOS CBP only applies to the Medicare fee-for-service program and therefore does not apply to Medicare Advantage plans. Enrollment in Medicare Advantage plans continues to grow and these plans are likely to continue to be attractive alternatives to traditional Medicare fee-for-service for those beneficiaries who choose them and we intend to continue to contract with these plans.

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We cannot estimate the combined possible impact of all legislative, regulatory, and contemplated reimbursement changes that could have a material adverse effect on our business, financial condition and results of operations. Moreover, our estimates of the impact of certain of these changes appearing in this “Government Regulation” section are based on a number of assumptions and there can be no assurance that the actual impact was not or will not be different from our estimates.

Medicaid Reimbursement. State Medicaid programs implement reimbursement policies for the products and services we provide. Such policies may or may not be similar to those of the Medicare program. Budget pressures on state Medicaid programs often result in pricing and coverage changes that may have a detrimental impact on our operations. States sometimes have adopted alternative pricing methods for HME products and services under their Medicaid programs that reduce the level of reimbursement received by us, without a corresponding offset or increase to compensate for the service costs incurred.

The Cures Act accelerated the implementation of the omnibus spending bill passed in December 2015 that requires state Medicaid agencies to match Medicare reimbursement rates for certain DME items, including oxygen, to be effective beginning January 1, 2018. Through passage of the Cures Act, Congress added section 1903(i)(27) to the SSA, which prohibits federal Medicaid reimbursement to states for certain DME expenditures that are, in the aggregate, in excess of what Medicare would have paid for such items. As such, a state’s Medicaid expenditures for DME items that are subject to this provision will be determined in the aggregate and any expenditures in excess of what Medicare would have paid for such items in the aggregate, either on a fee schedule basis or under its competitive bidding process, are not eligible for federal financial participation. CMS issued guidance through a federal register notice published on November 28, 2017 and in a state Medicaid director letter dated December 27, 2017 regarding state implementation of this Medicaid program requirement. Unfortunately, most states did not take the appropriate action and this became effective on January 1, 2018. States then worked to enact changes to their fee schedules. In addition, states considered whether to make such changes retroactive to January 1, 2018. The impact of this Medicaid program requirement has varied by state, depending on how much the state’s Medicaid fee-for-service rate differs from the applicable Medicare rate.

During the COVID-19 Pandemic, Medicaid rolls increased between February 2020 and March 2023 as enrollment barriers were relaxed and beneficiaries were permitted to stay on Medicaid, referred to as the “continuous enrollment” provision, which ended on March 31, 2023. Subsequently, more than 25 million Medicaid enrollees were disenrolled and now are potentially uninsured or underinsured. The loss of coverage for these individuals impacts the Company’s ability to provide services to them.

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We continuously evaluate the possibility of discontinuing or reducing, as permitted, our Medicaid business in certain states with reimbursement policies that make it difficult for us to conduct our operations profitably. We cannot currently predict the adverse impact, if any, that any such reduction in our Medicaid business might have on our business, financial condition and results of operations, but such impact could be material. In addition, we cannot predict whether states may consider adopting additional reimbursement reductions or whether any such changes could have a material adverse effect on our business, financial condition and results of operations.

HIPAA / HITECH / Federal and State Consumer Protection and Privacy and Security Requirements. HIPAA applies to covered entities (health care providers that engage in electronic standard transactions, health plans, and health care clearinghouses) and their business associates (persons that provide services for or on behalf of covered entities) involving the creation, receipt, maintenance, and/or transmission of PHI. HIPAA is comprised of a number of obligations and individual rights pertaining to the privacy and security of certain PHI, security measures that must be implemented in connection with protecting PHI and related systems, as well as the standard formatting of certain electronic health transactions. HITECH further regulates how covered entities and business associates may use and disclose PHI. In addition, HIPAA requires covered entities to use the electronic standard transactions, operating rules, code sets and unique identifiers that have been adopted through regulation by the Secretary. We are subject to HIPAA as a covered entity. We enter into contracts with our business associates to require those business associates to safeguard PHI in accordance with the requirements of HIPAA and HITECH; we also sometimes enter into contracts as the business associate of another covered entity.

Under the Cures Act, Congress authorized the Office of the National Coordinator for Health Information Technology (“ONC”) to engage in rulemaking that would drive interoperability and provide timely access to health information through standardized application programming interfaces to seamlessly coordinate care, improve outcomes and reduce the cost of care, known as the “Information Blocking Rules.” CMS also published new regulations under their authority to regulate managed care plans and healthcare providers participating in Medicare and Medicaid programs that enable better patient access to their health information and reduce the burden on Payors and providers. The Information Blocking Rules became effective on April 5, 2021. We may be considered an “actor” subject to the Information Blocking Rules or may participate in a health information exchange or network under the ONC and CMS Interoperability Rules. As such, we will likely be required to comply with the new regulatory framework that is emerging around value-based payments and patient-centered care.

Numerous other federal and state laws that protect the confidentiality, privacy, availability, integrity and security of PHI and healthcare related data also apply to us. In many cases, these laws are more restrictive than, and not preempted by, the HIPAA and HITECH rules and requirements, and may be subject to varying interpretation by courts and government agencies, creating complex compliance issues for us and potentially exposing us to additional expenses, adverse publicity and liability.

Further, federal and state consumer laws are being applied increasingly by the FTC and state enforcement authorities, to regulate the collection, use and disclosure of personal information or PHI, and to ensure that businesses and organizations maintaining personal information about individuals implement appropriate data safeguards. For example, the CCPA provides California residents with certain individual privacy rights and imposes data privacy and cybersecurity obligations on covered companies.

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The CCPA requires covered companies to provide certain disclosures to California residents about such companies’ data collection, use, sharing and other processing practices and to provide California residents with ways to opt-out of certain sales or transfers of their personal information, and provides California residents with certain additional causes of action. Although there are limited exemptions for PHI and HIPAA regulated entities, and the CCPA’s implementation standards and enforcement practices are continuing to develop and remain uncertain for the foreseeable future, the CCPA may increase our compliance costs and potential liability. Numerous other states have also enacted, or are considering enacting, their own comprehensive laws relating to data privacy and cybersecurity. Courts also may adopt the standards for fair information practices promulgated by the FTC that concern consumer notice, choice, security and access.

New information standards, whether implemented pursuant to federal or state laws, could have a significant effect on the manner in which we must handle healthcare related data, and the cost of complying with such standards could be significant. We have implemented various compliance measures in connection with the HIPAA, HITECH and the Cures Act rules and requirements, and other federal and state privacy and security rules and requirements, but we may be required to take additional steps, including costly system purchases and modifications, to comply with these rules and requirements as they may evolve over time. We face potential administrative, civil and criminal sanctions if we do not comply with the existing or new laws and regulations dealing with the privacy and security of PHI and patient information. Imposition of any such sanctions could have a material adverse effect on our operations. Similarly, if we, or any of our business associates, experience a breach of PHI or other personal information, the breach reporting requirements required by HIPAA and state laws could result in substantial financial liability and reputational harm.

Enforcement of Healthcare Fraud and Abuse Laws. We understand the federal government, federal agencies and various state counterparts, have made policy decisions to continue increasing the financial resources allocated to enforcing healthcare fraud and abuse laws. Commercial Payors also have increased their level of scrutiny of healthcare claims (often through a “special investigations unit,” which will sometimes allow the Payor to have a much lengthier “lookback” period on questioning claims), in an effort to identify and pursue allegedly fraudulent and abusive practices in the healthcare industry. Violation of these federal and state laws can result in the imposition of criminal and civil monetary penalties as well as exclusion from participation in federal and state healthcare programs. Exclusion for a minimum of five years is mandatory for a felony conviction under certain circumstances (including for a healthcare fraud offense), and the presence of aggravating circumstances in a case can lead to an even longer period of exclusion. The federal government also has the discretion to exclude providers for certain conduct even absent a criminal conviction or when the conduct is unrelated to fraud or abuse. Exclusion may be warranted when a company participates in a fraud scheme, pays or receives kickbacks and/or fails to provide services of a quality that meets professionally recognized standards. The HHS-OIG also has authority under certain circumstances to suspend or terminate Medicare billing privileges during the course of an investigation, or to issue civil monetary penalties. See SSA Section 1128(b)(7) for exclusion criteria.

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We seek to structure our business operations, our financial relationships with referral sources, our billing and documentation practices, and other practices to comply with applicable laws. However, we cannot ensure that a federal or state agency charged with enforcement of these various laws might not assert a contrary position or that new federal or state laws might not be enacted that would cause these arrangements to become illegal or result in the imposition of penalties on us or certain of our facilities and operations. In addition, a relator may file FCA cases, even when the government does not intervene or elect to pursue us for conduct such relators may allege. If any of those allegations were successfully asserted against us or even if there is an assertion of a potential violation, there could be a material adverse effect on our business, financial condition, results of operations, cash flow, capital resources and liquidity.

Anti-Kickback Prohibitions. As a provider of services under the Medicare and Medicaid programs, we must comply with the AKS. The AKS prohibits the offer or receipt of any bribe, kickback, or rebate in return for the referral of patients, products, or services covered by federal healthcare programs. Federal healthcare programs have been defined to include plans and programs that provide healthcare benefits funded by the United States government, including Medicare, Medicaid and TRICARE (formerly known as the Civilian Health and Medical Program of the Uniformed Services), among others. The AKS covers any arrangement where even “one purpose” of the remuneration is to influence referrals. Violations of the AKS may result in civil and criminal penalties and exclusion from participation in federal healthcare programs, as well as trigger liability under the FCA.

Despite the breadth of the AKS’s prohibitions, there are only a limited number of statutory exceptions that protect various common business transactions and arrangements from prosecution. In addition, the HHS-OIG has published safe harbor regulations that outline other types of arrangements that also are deemed protected from prosecution under the AKS, provided all applicable criteria are met. In 2020, the HHS-OIG published a final rule, “Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements,” that implements seven new safe harbors, modifies four existing safe harbors and codifies one new exception. The failure to meet all of the applicable safe harbor criteria does not necessarily mean that the particular arrangement in question violates the AKS; rather, these arrangements could be subject to greater scrutiny by enforcement agencies. A determination that a financial arrangement violates the AKS could subject us to liability under the SSA, including civil and criminal penalties, as well as exclusion from participation in federal healthcare programs such as Medicare and Medicaid.

In order to obtain additional clarification on the AKS, a provider can obtain written interpretative advisory opinions from the HHS-OIG regarding existing or contemplated transactions. Advisory opinions are binding as to HHS but only with respect to the requesting party or parties. The advisory opinions are not binding as to other governmental agencies (e.g., the DOJ) and certain matters (e.g., whether certain payments made in conjunction with conduct seeking to meet certain safe harbor protections are at fair market value) are not within the purview of an advisory opinion.

Certain states in which we operate have enacted statutes and regulations similar to the AKS that prohibit some direct or indirect payments if those payments are designed to induce or encourage the referral of patients to a particular provider. Most states have anti-kickback statutes that prohibit kickbacks relating to the state’s Medicaid program, but some state anti-kickback statutes are broader and apply not only to the federal and state healthcare programs but also to other Payor sources (e.g., national and regional insurers and MCOs).

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These state laws (referred to sometimes as “all-payor anti-kickback statutes”) may contain exceptions and/or safe harbors that are different from those at the federal level and may vary widely from state to state. A number of states in which we operate also have laws that prohibit fee-splitting arrangements between healthcare providers, if such arrangements are designed to induce or encourage the referral of patients to a particular provider. Possible sanctions for violations of these laws include exclusion from state-funded healthcare programs, loss of licensure and civil and criminal penalties. These laws vary from state to state, often are vague and often have been subject to only limited court and/or regulatory agency interpretation.

Physician Self-Referral Prohibitions. The Stark Law, prohibits a physician (and certain other healthcare professionals) from making referrals for certain designated health services (“DHS”) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies. The Stark Law also prohibits the entity from presenting, or causing to be presented, claims to Medicare (or billing another individual, entity, or third-party Payor) for those referred services, again, unless an exception applies. DHS includes several services commonly performed or supplied by us, including DME and certain pharmacy items and services. In addition, the term “financial relationship” is broadly defined to include any ownership or investment interest, or compensation arrangement, pursuant to which a physician receives remuneration from the entity at issue. The Stark Law prohibition applies regardless of the reasons for the financial relationship and the referral; and, therefore, unlike the AKS, an intent to violate the prohibition generally is not required. Billing for services where an exception to the Stark Law is not met may result in loss of Medicare and Medicaid reimbursement, civil penalties and exclusion from participation in the Medicare and Medicaid programs. There is also a potential for FCA liability if there is an overpayment associated with Medicare payments made despite a financial relationship that did not meet a Stark Law exception. The Stark Law contains a number of statutory and regulatory exceptions intended to protect certain types of transactions and business arrangements from penalty. In order to qualify an arrangement under a particular Stark Law exception, compliance with all of the exception’s requirements is necessary. Since the Stark Law was enacted in 1989, there have continued to be ongoing changes and clarifications to a number of the provisions in the legislation and regulations. In addition, in 2020, CMS issued a final rule, “Modernizing and Clarifying the Physician Self-Referral Regulations,” which creates new permanent exceptions to the Stark Law for value-based arrangements as well as provides additional guidance on several key requirements that must be met in order for physicians and healthcare providers to comply with the Stark Law. For example, compensation provided to a physician by another healthcare provider generally must be at fair market value, and the final rule provides guidance on how to determine if compensation meets this requirement. The Stark Law has also been subject to varying, and sometimes contradictory, decisions by the courts.

In addition, a number of the states in which we operate have similar prohibitions against physician self-referrals, which are not limited to just the federal healthcare program. These state prohibitions may differ from the Stark Law’s prohibitions and exceptions may apply to a broader or narrower range of services, arrangements and financial relationships and may apply to other healthcare professionals in addition to physicians. Violations of these state laws may result in prohibition of payment for services rendered, loss of licenses, fines and criminal penalties. State statutes and regulations also may require physicians and/or other healthcare professionals to disclose to patients any financial relationships the physicians and/or healthcare professionals have with healthcare providers who are recommended to patients. These laws vary from state to state, often are vague, and in many cases, have not been interpreted by courts or regulatory agencies.

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False Claims Act. The FCA imposes civil liability on individuals or entities that submit or cause others to submit false or fraudulent claims for payment to the government. Violations of the FCA may result in treble damages, civil penalties, attorneys’ fees and expenses and interest payments. In addition, the DOJ (which litigates FCA cases) has the discretion to refer any FCA matter to the HHS-OIG for evaluation for potential exclusion from Medicare, Medicaid and other federally funded healthcare programs. If certain criteria are satisfied, the FCA allows a relator to bring a qui tam suit on behalf of the government and, if the case is successful, to share in any recovery. FCA suits brought directly by the government or private individuals against healthcare providers, like us, are increasingly common and are expected to increase, even when the government elects not to intervene in the case. For those individuals or entities that are presently subject to FCA qui tam suits, audits, denials of claims or other audit or enforcement actions based exclusively on allegations of noncompliance with guidance documents, a 2020 HHS final rule, titled “Good Guidance Practices,” provides further authority to resolve these allegations.

The federal government has used the FCA to pursue a wide variety of alleged false claims and other frauds allegedly perpetrated against Medicare, Medicaid and other federal and state funded healthcare programs. In addition, violation of other statutes (such as the AKS or the Stark Law) can be considered to trigger violations of the FCA.

In addition to federal enforcement of the FCA, a number of states have enacted false claims acts that are similar to the FCA. Generally, these state laws allow for the recovery of money that was fraudulently obtained by a healthcare provider from the state, such as Medicaid funds provided by the state, or in some cases, from private Payors, and to assess multiples of damages, fines and penalties.

60 Day Refund Rule. Significant changes to the compliance landscape relate to various requirements for the reporting and returning of self-identified overpayments or risk potential FCA liability, Civil Monetary Penalties Law liability, and exclusion from federal health care programs for failure to report and return such overpayments. The ACA introduced section 1128J(d) of the SSA, which requires a person who has received an overpayment to report and return the overpayment to the Secretary, the state, an intermediary, a carrier, or a contractor, as appropriate, at the correct address, and to notify the Secretary, state, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment. The overpayment should be reported and returned by suppliers like us, by the date which is 60 days after the date on which the overpayment was identified. CMS believes that it should take no more than six months to conclude the inquiry into a potential overpayment, though it acknowledges that particularly complex matters (like a Stark Law inquiry) may take longer.

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Other Fraud and Abuse Laws. In addition to the laws described above, various other laws and regulations prohibit fraud and abuse in the healthcare industry and provide for significant penalties. For example, the knowing and willful defrauding of, or attempt to defraud, a healthcare benefit program, including both governmental and private healthcare programs and plans, may result in criminal penalties. Further, the payment of inducements to Medicare and Medicaid beneficiaries intended to influence those beneficiaries to order or receive services from a particular provider or practitioner may result in civil penalties. Examples of challenged practices include the routine waiver of coinsurance or deductibles otherwise owed by beneficiaries to induce beneficiaries to work with the company. Federal enforcement officials have numerous enforcement mechanisms to combat fraud and abuse, including an incentive program under which individuals can receive up to $1,000 for providing information on Medicare fraud and abuse that leads to the recovery of at least $100 of Medicare funds. In addition, federal enforcement officials have the ability to exclude from Medicare and Medicaid any investors, officers and managing employees associated with business entities that have committed healthcare fraud.

There have also been new statutes enacted to prevent fraud and abuse in healthcare, and the government continues to use existing statutes in new ways to target alleged healthcare fraud. For example, in recent years the DOJ has started using the Travel Act of 1961 as a basis for prosecuting healthcare fraud defendants based on violations of state anti-kickback or anti-bribery laws, even if various safe harbors or exceptions are met. In addition, other federal statutes criminalize healthcare fraud (e.g., 18 U.S.C. § 1347), making false statements to the government (e.g., 18 U.S.C. §§ 287, 1001) or aggravated identify theft (e.g., 18 U.S.C. § 1028A). In 2024, the DOJ announced a whistleblower rewards program for reporting original information on several types of criminal conduct, including fraud against private or other non-public health care benefit programs, potentially increasing scrutiny of health care suppliers’ conduct beyond the traditional focus on governmental payors.

Marketing Laws. Because of the products and services that we provide to patients, we are subject to certain federal and state laws and regulations regarding our marketing activities and the nature of our interactions with physicians and other healthcare providers. These laws may require us to comply with certain codes of conduct, limit or report certain marketing expenses and disclose certain physician and other provider arrangements. Violations of these laws and regulations, to the extent they are applicable, could subject us to civil and criminal fines and penalties, as well as possible exclusion from participation in federal healthcare programs, such as Medicare and Medicaid. From time to time, we may be the subject of investigations or audits, or be a party to litigation which alleges violations of these laws and regulations. If any of those allegations were successfully asserted against us, there could be a material adverse effect on our business, financial condition and results of operations.

Corporate Compliance Program. We have developed a corporate compliance program in an effort to monitor compliance with federal and state laws and regulations applicable to healthcare organizations and to implement policies, procedures and processes designed to ensure that our employees act in compliance with all applicable laws, regulations and company policies. The HHS-OIG has issued a series of compliance program guidance documents in which it has set out the elements of an effective compliance program, including a 1999 guidance for DMEPOS suppliers. The HHS-OIG has published guidance, stating that in resolving investigations relating to healthcare offenses, the agency will consider a company’s effective ethics and compliance program, where the program is reasonably designed, implemented and enforced such that it is generally effective in preventing and detecting criminal conduct. The HHS-OIG also encourages and will evaluate whether corporations take certain steps such as periodic monitoring and responding appropriately to detected criminal conduct. In 2023, the OIG published a General Compliance Program Guidance that updated and consolidated its voluntary guidance on general compliance risks and compliance programs.

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Our compliance program has been structured to include these elements. The primary compliance program components recommended by the HHS-OIG, all of which we have endeavored to implement, include: formal policies and written procedures; designation of a compliance officer; education and training programs; auditing, monitoring and risk assessments; a process for responding appropriately to detected misconduct; open lines of communication; and discipline and accountability. We conduct routine compliance auditing and monitoring, including checks of relevant governmental exclusion and debarment lists, and we audit compliance with our corporate compliance program on a regular basis. From time to time, issues identified through our compliance program may trigger internal or external reviews related to our compliance with federal and state healthcare laws and regulations. These internal and external reviews may result in changes to our coding, billing and claims adjudication process for our claims, or in self-disclosures where guidelines, rules or regulations so warrant.

While we have endeavored to develop our corporate compliance program to be consistent with these guidelines, we cannot be certain that a court, or the HHS-OIG, would agree. Although we believe our approach to compliance reflects a reasonable and accepted approach for an entity doing business in the healthcare industry, we cannot assure you that our corporate compliance program will prevent, detect and/or rectify all compliance issues in all markets we serve and in all applicable time periods. If we fail to prevent, detect and/or rectify such issues, depending on the nature and scope of such issues, we could face future claims for recoupment of overpayments, civil fines and other penalties, or other material adverse consequences. For further information, see “—Enforcement of Healthcare Fraud and Abuse Laws—False Claims Act” above.

Facility and Clinician Licensure. Various federal and state authorities and clinical practice boards regulate the licensure of our facilities and clinical specialists working for us, either directly as employees or on a per diem or contractual basis. Regulations and requirements vary from state to state. We are committed to complying with all applicable licensing requirements and maintain centralized functions to manage over 1,500 facility licenses and permits that are required to operate our business. State licensing laws are often ambiguous as to whether they apply to our services, and interpretation of these laws can change without notice. If our facilities and practitioners were found to be operating without proper licensure, it could have a material adverse effect on our results of operations and financial condition.

Healthcare Reform. Economic, political and regulatory influences are continuously causing fundamental changes in the healthcare industry in the United States. In 2010, the U.S. Congress enacted and President Obama signed into law, significant reforms to the U.S. healthcare system. These reforms significantly altered the U.S. healthcare system by authorizing, among many other things: (i) increased access to health insurance benefits for the uninsured and under-insured populations; (ii) new facilitators and providers of health insurance, as well as new health insurance purchasing access points (i.e., exchanges); (iii) incentives for certain employer groups to purchase health insurance for their employees; (iv) opportunities for subsidies to certain qualifying individuals to help defray the cost of premiums and other out-of-pocket costs associated with the purchase of health insurance, and over the longer term; and (v) mechanisms to foster alternative payment and reimbursement methodologies focused on outcomes, quality and care coordination.

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In addition, certain states in which we operate are periodically considering various healthcare reform proposals.

Since their passage in 2010, the Patient Protection and Affordable Care Act of 2010 and Health Care Education and Reconciliation Act of 2010 (collectively, the “Health Reform Laws”) have triggered many changes to the U.S. healthcare system, some of which took effect (e.g., the subsequently eliminated individual mandate penalty) while others have continued to be delayed and subsequently repealed (e.g., the medical device tax). The Health Reform Laws also have faced several challenges and remain subject to ongoing efforts to repeal or modify the laws or delay the implementation of certain aspects of these laws. The outcome of the U.S. Presidential election could lead to renewed efforts to repeal and replace the Health Reform Laws or make further changes to the regulatory environment surrounding these laws and the additional access to coverage for our patients.

In light of the ongoing efforts to alter the Health Reform Laws, we are unable at this time to predict the full impact that potential changes will have on our business, including provisions in the Health Reform Laws related to Medicare payments, mechanisms to foster alternative payment and reimbursement methodologies focused on outcomes, quality and care coordination, Medicare enrollment and claims submission requirements and revisions to other federal healthcare laws such as the AKS, the Stark Law and the FCA. We anticipate, however, that federal and state governments will continue to review and assess alternative healthcare delivery systems and payment methodologies, and that public debate regarding these issues will continue in the future. Changes in the law or new interpretations of existing laws can have a substantial effect on permissible activities, the relative costs associated with doing business in the healthcare industry, and the amount of reimbursement available from government and other Payors. If the Health Reform Laws are repealed or modified, or if implementation of certain aspects of the Health Reform Laws continues to be delayed, such repeal, modification, or delay may materially adversely impact our business, financial condition, results of operations, cash flow, capital resources and liquidity. In addition, the potential proposals for alternative legislation to replace the Health Reform Laws may have an adverse impact on our business.

The FDA. Rotech is governed by various regulations that affect the manufacture, distribution, importation, marketing and sale of medical gases and related oxygen medical devices and supplies. Our medical gas facilities and operations are subject to extensive regulation by the FDA and other federal and state authorities. The FDA regulates medical gases, including medical oxygen, pursuant to its authority under the FFDCA. Among other requirements, the FDA’s cGMP regulations impose certain quality control, documentation and recordkeeping requirements on the receipt, processing and distribution of medical gas. Further, in each state where we operate medical gas facilities, we are subject to regulation under state health and safety laws, which vary from state to state. The FDA and state authorities conduct periodic, unannounced inspections at medical gas facilities to assess compliance with cGMP and other regulations. We expend significant time, money and resources in an effort to achieve substantial compliance with cGMP regulations and other federal and state law requirements at each of our medical gas facilities.

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There can be no assurance, however, that these efforts will be successful and that our medical gas facilities will achieve and maintain compliance with federal and state laws and regulations. Our failure to achieve and maintain regulatory compliance at our medical gas facilities could result in enforcement action, including warning letters, untitled letters, and Form 483s, fines, product recalls or seizures, temporary or permanent injunctions, or suspensions in operations at one or more locations, as well as civil or criminal penalties, all of which could have a material adverse effect on our business, financial condition and results of operations.

Our facilities must comply with applicable federal and state laws, regulations and licensing standards. For example, all of our locations that fill and distribute medical oxygen containers must register with the FDA as a medical gas manufacturer, and these registered locations must comply with all applicable Company and cGMP policies and practices. Regulations are subject to change as a result of legislative, administrative or judicial action, which may further increase our costs or reduce sales. From time to time, we may undertake field corrective actions to correct product issues that may arise. These actions are necessary to ensure the products we distribute adhere to high standards of quality and safety. Additionally, we have policies and procedures in place that address the process for taking field corrective actions should we become aware of any issue related to the medical oxygen products that we fill and distribute. We continue to operate these programs to ensure compliance with applicable regulations and actively monitor proposed changes in the FDA’s regulation of medical gases and related products, particularly those which could have a material adverse effect on the products we manufacture or distribute, or our business as a whole.

We have facilities in certain states that manufacture medical gases, including medical oxygen. In the United States, medical gases, which are products that are recognized by an official pharmacopoeia or formulary, or intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease, are regulated as finished pharmaceuticals (drugs). The production, distribution and sale of medical gases and medical devices are regulated by the U.S. federal government under the FFDCA as well as by various state and local laws and other regulations. Before a medical gas can be marketed in the United States, the FDA must approve a request to certify the product as a “designated medical gas.” The FDA reviews requests for certification to confirm that the gas to which the request applies is a designated medical gas and contains the information required by regulation. Certification of a designated medical gas has the effect of a drug approval under section 505 of the FFDCA (for gases intended for human use). If changes are made to the original certification request, such as information about the requestor or the formulation of a medical gas, an amendment may be submitted to the FDA explaining the change. Rotech has obtained this certification, and in accordance with cGMP regulations, we verify the reliability of the medical gas supplier’s analytical methodology to ensure the bulk oxygen we receive has been tested in conformance with cGMP requirements. In addition, all bulk oxygen deliveries must be accompanied with a certificate of analysis that meets cGMP specifications. Each delivery of bulk oxygen provided to our bulk stand tanks must be tested by trained Rotech personnel in accordance with the mandated analytical methodology defined by cGMP regulations. We also conduct primary source verification of the FDA registration and state licensure held by each medical gas supplier that provides bulk oxygen to any of our facilities.

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The FDA requires entities that manufacture or engage in certain processing operations related to medical gases (e.g., combining gases or transfilling a gas from one container to another) to comply with all establishment and drug registration and listing requirements and to follow cGMP regulations regarding quality, personnel, facilities, equipment design and calibration, production, testing processes, container and closure specifications, labeling requirements and records and complaint management. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP regulations, which impose extensive procedural and record-keeping requirements. While the FDA temporarily paused on-site routine surveillance inspections starting in March 2020 due to the COVID-19 pandemic, in a guidance issued in August 2020, the FDA explained that it resumed prioritized domestic inspections, such as pre-approval and surveillance inspections, as of July 2020, and that, for the foreseeable future, such prioritized domestic inspections would be pre-announced. The FDA has continued, on a case-by case basis, to conduct “mission-critical” inspections based on its evaluation of a number of factors related to the public health benefit of U.S. patients having access to the product subject to inspection (e.g., whether the product may have received breakthrough therapy designation or is used to diagnose, treat or prevent a serious disease or medical condition for which there is no other appropriate substitute). In May 2021, the FDA issued a report outlining the FDA’s inspectional activities during the COVID-19 pandemic and a detailed plan, including the FDA’s priorities going forward. Within this plan, the FDA stated that its priority is to inspect higher-risk establishments; there will be a longer interval between inspections for less high-risk facilities as the FDA adjusts to the impact of the COVID-19 pandemic, and postponed inspections will be prioritized based on risk and conducted over a longer period of time. We currently have 36 facilities subject to periodic inspection by the FDA and we are not aware of any pre-announced scheduled inspections. Quality control and manufacturing procedures must continue to conform to cGMP regulations after certification as a designated medical gas. Additionally, under the FDA’s regulations, we are subject to ongoing post-market requirements. For example, drug manufacturers must report adverse reactions (any undesirable experience associated with the use of a drug, including serious drug side effects, product use errors, product quality problems and therapeutic failures), provide updated safety and efficacy information and comply with requirements concerning advertising and promotional materials and activities. Any post-market regulatory obligations, and the cost of complying with such obligations, could expand in the future.

As a medical device distributor, we must rely on device manufacturers and suppliers to comply with regulatory requirements and adhere to the FDA’s cGMP and other quality requirements. We cannot predict whether any issues may arise out of any FDA inspection of their sites or regulation of their operations.

In the United States, the FFDCA, FDA regulations and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution and post-market surveillance. Failure to comply with applicable requirements may subject a company to a variety of administrative or legal sanctions, such as untitled letters, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution. Unlike manufacturers of medical devices, distributors are generally only required to comply with certain post-market requirements for medical devices, including maintaining records of complaints and adverse events related to device malfunctions, serious injuries or deaths associated with the medical device.

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We distribute an array of “legend devices” or medical devices that are regulated by the FDA and which can only be dispensed pursuant to a valid prescription from an appropriately licensed healthcare provider or restricted to use by a prescribing healthcare provider. Examples of such legend devices include CPAPs, ventilators and concentrators. These legend devices are commercially available finished medical devices and are not manufactured to our particular specifications. From time to time, for business and competitive reasons, we have entered into primary source agreements with manufacturers of these legend devices. Generally, we do not believe that such agreements pose a material risk that we will be unable to obtain needed devices in the event the manufacturer is disabled from providing a device or in the event we are prohibited from distributing devices in its inventory due to regulatory issues encountered by the manufacturer. However, these potential risks, and the resulting shortages of product that may occur, can interfere with our business.

Transportation Laws. We are subject to various laws and regulations related to the operation of commercial motor vehicles and drivers and the transportation of hazardous materials. These laws and regulations, which are administered by the DOT and its agencies, including the Federal Motor Carrier Safety Administration and Pipeline and Hazardous Materials Safety Administration, as well as various state agencies, govern matters including but not limited to authorization to engage in motor carrier service, equipment safety and operation, training, record keeping, insurance, and driver qualifications and conduct. These laws and regulations also govern the transportation and handling of hazardous materials, including but not limited to medical gas products and compressed or liquid oxygen.

We are audited periodically by the DOT and our vehicles and drivers may be periodically subject to inspection, to ensure compliance with applicable laws and regulations. If we were found to be out of compliance with applicable laws or regulations, these agencies could restrict or otherwise impact our operations. Our failure to comply with any applicable laws or regulations, whether actual or alleged, could also expose us to significant fines, penalties, or potential litigation liabilities, including costs, settlements, and judgments. Further, the DOT and its agencies could institute new laws, rules or regulations, or issue interpretation changes to existing regulations at any time. The short and long-term impacts of changes in legislation or regulations are difficult to predict and could materially and adversely affect our earnings and results of operations.

Our operations are subject to the many hazards inherent in the storage, transportation and provision of medical gas products and compressed and liquid oxygen, including ruptures, leaks and fires. These risks could result in substantial losses due to personal injury or loss of life, damage to and destruction of property and equipment, and pollution or other environmental damage. If a significant accident or event occurs, it could adversely affect our business, financial position and results of operations. Additionally, corrective action plans, fines or other sanctions may be levied by government agencies that regulate the storage, transportation and provision of hazardous materials.

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Fair Debt Collection Practices Act. Some of our operations may be subject to compliance with certain provisions of the Fair Debt Collection Practices Act of 1978 (the “FDCP”) and comparable statutes in many states. Under the FDCP, a third-party collection company is restricted in the methods it uses to contact consumer debtors and elicit payments with respect to placed accounts. Requirements under state collection agency statutes vary, with most requiring compliance similar to that required under the FDCP. We believe we are in substantial compliance with the FDCP and comparable state statutes where applicable. If our collection practices are viewed as inconsistent with these standards, we may be subject to damages and penalties.

Federal CAN-SPAM Act, Telephone Consumer Protection Act and Telemarketing Sales Rule. Some of our operations may be subject to compliance with certain provisions of the Federal CAN-SPAM Act, the Telephone Consumer Protection Act of 1991 (“TCPA”) and the Telemarketing Sales Rule and Medicare regulations. Under such regulations, companies are restricted in the methods used to contact consumers by email, telephone and text and through the use of automated “auto-dialer” type devices. Numerous class-action suits under federal and state laws have been filed in recent years against companies that conduct SMS texting programs, with many resulting in multimillion-dollar settlements to the plaintiffs. Requirements under state telephone contact laws will vary, with most requiring compliance similar to that required under the TCPA. We believe we are in substantial compliance with the federal regulations we are subject to, as well as comparable state equivalents where applicable. The scope and interpretation of the laws that are or may be applicable to the delivery of consumer phone calls, emails and text messages are continuously evolving and developing. The Medicare program has also imposed certain other requirements limiting the ability of a DMEPOS supplier to market to beneficiaries. If we do not comply with these laws or regulations or if we become liable under these laws or regulations, we could face direct liability, could be required to change some portions of our business model, could face negative publicity and our business, financial condition and results of operations could be adversely affected.

Antitrust Laws. The federal government and most states have enacted antitrust laws that prohibit certain types of conduct deemed to be anti-competitive. These laws prohibit price fixing, market allocation, bid-rigging, concerted refusal to deal, market monopolization, price discrimination, tying arrangements, acquisitions of competitors and other practices that have, or may have, an adverse effect on competition. Violations of federal or state antitrust laws can result in various sanctions, including criminal and civil penalties. Antitrust enforcement in the healthcare sector is currently a priority of the FTC and the DOJ. We believe we are in compliance with such federal and state laws, but courts or regulatory authorities may reach a determination in the future that could adversely affect our operations. Antitrust violations may result in civil or criminal liability and could have a material adverse effect on our results of operations and financial condition.

State Material Change Transaction Review Laws. Currently, at least 15 U.S. states have implemented notice or approval processes, requiring certain buyers and sellers of healthcare companies to provide notice or obtain approval from state governmental authorities, typically within or related to the applicable state’s Office of the Attorney General. Some states only require notification of certain healthcare transactions or affiliations 30 days prior to the closing of such arrangements while other states require covered parties to make a filing 180 days before the closing of certain transactions which may result in state regulators imposing conditions or restrictions on the transaction.

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In some cases, these laws may materially delay certain expansion efforts and may allow certain state regulators to block our transactions. Other states may consider similar laws. These new laws, if enacted, may significantly impair operations or expansion efforts in states with such laws. U.S. states or the U.S. federal government could impose additional requirements or prohibitions concerning private equity backed investments in healthcare, which could restrict the Company from pursuing desired investments or entering into certain transactions.

On April 18, 2024, FTC, DOJ, and HHS unveiled HealthyCompetition.gov, which allows anyone to submit a complaint for these agencies to review and investigate healthcare fairness and competition concerns. Additionally, on May 9, 2024, DOJ announced the formation of the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (“HCMC”). The stated purpose of HCMC is to guide the division’s enforcement strategy and policy approach in health care, including by facilitating policy advocacy, investigations and, where warranted, civil and criminal enforcement in health care markets. Certain transactions that we may intend to enter into could be challenged by U.S. federal and/or state regulators, and there is no guarantee that the transactions will be allowed to proceed, and if they are allowed to proceed, there is no guarantee that they will do so unchallenged or unadulterated.

Environmental Matters. We are subject to federal, state and local laws and regulations relating to hazardous materials, pollution and the protection of the environment. Such regulations include those governing emissions to air, discharges to water, storage, treatment and disposal of wastes, including medical waste, remediation of contaminated sites and protection of worker health and safety. These laws and regulations frequently change and have become increasingly stringent over time. Non-compliance with these laws and regulations may result in significant fines or penalties or limitations on our operations or claims for remediation costs, as well as alleged personal injury or property damages. We believe our current operations are in substantial compliance with all applicable environmental, health and safety requirements and that we maintain all material permits required to operate our business.

Certain environmental laws and regulations impose strict and, under certain circumstances, joint and several liability for investigation and remediation of the release of regulated substances into the environment. Such liability can be imposed on current or former owners or operators of contaminated sites, or on persons who dispose or arrange for disposal of wastes at a contaminated site. Based on available information, we do not believe that any known compliance obligations, releases or investigations under environmental laws or regulations will have a material adverse effect on our business, financial condition and results of operations. However, there can be no guarantee that these releases or newly-discovered information, more stringent enforcement of or changes in environmental requirements, or our inability to enforce available indemnification agreements will not result in significant costs.

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Organization and Operations

Organization. We have over 300 branch locations in 46 states in most major U.S. markets which provide a comprehensive range of HME products and services for home healthcare and delivery across six core business lines. Each branch location is responsible for its operations and financial performance and is supported by its own delivery drivers, customer services representatives and other employees that report to the location manager. The location managers report to the area managers, who in turn report to the regional managers and the CEO. To support our national scale, we have centralized functions including intake support, billing and collections, distribution and repair centers, purchasing, IT and other corporate support. We engage third-party providers for certain administrative services and information systems.

Operating Systems and Controls. We have systems and controls in place that allow us to monitor our operations and manage our performance. Our information systems, policies and procedures for contract administration, order entry and pricing, billing and collections, inventory management and patient equipment management protocols enable us to monitor our operational performance. We ensure that our IT policies, procedures and functions are compliant with government regulations and Payor requirements. We have invested in technologically optimizing our paperless mobility system, in order to eliminate paper forms, optimize delivery routes and ensure all patient paperwork is completed and signed before our delivery drivers leave the patient’s home. Our paperless mobility system has led to an increase in efficiency, reduction in errors and audit failures and lowered costs.

Compliance and Ethics. As a leader in the home healthcare industry, we have a robust compliance program that is designed to further our commitment to providing quality HME products and services while maintaining high standards of ethical and legal conduct. Our focus on investing in our organizational infrastructure and information technology platform are fundamental to driving our strong culture of disciplined regulatory compliance.

The compliance program also includes a written code of ethical business conduct that employees receive as part of their initial orientation process and continued education and training and which management reviews through periodic reviews and attestation processes. The compliance program also includes a confidential disclosure program with a telephone hotline, written policy guidelines, excluded party verifications, frequent reinforcement, compliance audits, a formal disciplinary component and other programs. All of our employees are required to adhere to strict policies related to confidentiality of patient health data and other information, privacy practices and email usage.

Compliance oversight is provided by our compliance and ethics committee, which meets quarterly and consists of senior and mid-level management personnel from several departments. Periodic compliance updates are provided to the board of directors for review and discussion. The committee investigates and evaluates every internal and outside compliance-related allegation to arrive at a compliance finding and recommendation regarding how to proceed. Additionally, the committee works with our internal compliance team to review coverage denials and correspondence to identify denial trends with a focus on federal reimbursement programs. The committee also reviews and refines workflows and audit processes and recommends system enhancements, training or other corrective actions to reduce error rates.

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Receivables Management and Cash Collections. We are subject to complex regulatory requirements governing billing and reimbursement for our HME products and services and have ongoing initiatives focused specifically on accounts receivables management. We are continuing to improve our proprietary technology platform, including the use of mobile apps, web portals, electronic ordering, patient payments, electronic claims submission and electronic funds transfer with government and commercial Payors. We submit substantially all of our claims electronically. We have invested and continue to invest actively in technological improvements to enhance our receivables management.

Suppliers. Substantially all HME products and services used in our business are purchased from third parties. We have many key supplier relationships and we believe that we are not wholly dependent upon any single product manufacturer or supplier. All of our product needs can be met by several similar suppliers if any one supplier became unable to continue our current business relationship. Our sourcing strategy leverages relationships with industry-leading suppliers but also maintains competition and standardization that allows us to source from leading suppliers in any given category. Further, supplier diversity is an integral component of our business practice, allowing us to facilitate and encourage strong, mutually beneficial relationships with large, small and diverse businesses in the communities we serve.

Nationwide Accreditation. All of our operations, including our branch locations, are accredited by The Joint Commission. As the home healthcare industry has grown and accreditation has become a mandatory requirement for Medicare DMEPOS providers, the need for objective quality measurements has increased. Accreditation by The Joint Commission entails a lengthy voluntary review process that is conducted every three years. Accreditation is also widely considered a prerequisite for entering into contracts with MCOs. We undergo regular inspections and evaluations and have met The Joint Commission’s rigorous accreditation standards for delivering consistent, high-quality and safe care since 1997. We share The Joint Commission’s commitment to continuous improvement and providing the highest quality patient care at the best value.

Legal Proceedings

On October 18, 2023, a “Jane Doe” plaintiff, though one known to Rotech, filed a pro se complaint in the United States District Court for the Eastern District of Wisconsin against Rotech and several other entities under the Americans with Disabilities Act of 1990 (“ADA”) seeking compensatory and punitive damages. The complaint alleges that Rotech has refused to provide oxygen therapy for Plaintiff and has refused to provide reasonable accommodations for Plaintiff. The case was transferred to the United States District Court for the Western District of Wisconsin as Case No. 3:23-CV-00812-JDP. The Court screened the case and rejected Plaintiff’s ADA claim, but permitted the case to continue as a claim under the Rehabilitation Act of 1973 (the “Rehabilitation Act”). On February 12, 2024, Rotech moved to dismiss the case on the grounds that the Rehabilitation Act does not apply to Rotech because: (1) Rotech is not the direct recipient of federal financial assistance; and (2) Plaintiff has not plausibly alleged actionable discrimination or retaliation by Rotech, which canceled Plaintiff’s oxygen therapy services only after Plaintiff refused to participate in required testing and failed to comply with Rotech’s safety and compliance related requirements for such services. The briefing on Rotech’s motion (as well as the other defendants’ motions) is complete and the Court has not yet ruled. The court held a telephonic status conference on March 28, 2024, and set a trial date of August 25, 2025. Rotech believes that the allegations against it are meritless and that it has a strong motion to dismiss.

29

In May 2022, the U.S. Attorney’s Office for the Southern District of New York served a Civil Investigative Demand (“CID”) on Rotech. The CID describes the investigation as concerning sales, marketing, patient services and billing practices in relation to the rental of respiratory devices (including CPAPs, BiPAPs, Oxygen, Afflovests and Non-Invasive Ventilators) that may violate the FCA or the AKS. More specifically, the matter is an investigation of the oxygen supply industry’s alleged failure to confirm customers have a continued need to use the devices prior to billing payors, and Rotech is one of several companies served. Rotech has been responding to the CID, cooperating with the investigation, engaging in discussions with the U.S. Attorney’s Office and producing documents. At this time, any liability is unknown and the likelihood of a material outcome unfavorable to Rotech also is unknown.

Intellectual Property

We have registered the Rotech trademark and numerous other trademarks and related trade names. We also hold numerous trademarks and copyrights which are not material in nature. We do not own any registered intellectual property covering the intellectual property in the software we develop and instead rely on certain unregistered intellectual property rights to protect our software. We do not own or have a license or other rights under any patents that are material to our business, but we license certain technology and software that is material to our business from third parties.

Properties

We lease our headquarters, located in Orlando, Florida, which consists of approximately 30,000 square feet of office space. We have leased this location since 2023 and our current lease expires on October 31, 2031.

We have over 300 branch locations in 46 states, including most major markets, as well as regional distribution and repair centers, customer service and billing centers, a national distribution facility and a biomedical center for the repair, maintenance and distribution of patient equipment. The regional facilities are typically located in light industrial areas and generally range from 1,500 to 30,000 square feet. The typical branch location facility is a combination warehouse and office and can range from 1,000 to 30,000 square feet. We lease most of our facilities with lease terms of three years or less. We believe our current facilities and office space are sufficient to meet our current needs as well as anticipated growth.

Human Capital Resources

As of December 31, 2024, we had approximately 4,000 FTEs. Our human capital resources objectives include attracting and retaining highly motivated, well-qualified employees. Our compensation program is designed to attract, retain and motivate highly qualified employees and executives. We use a mix of competitive salaries and other benefits to attract and retain employees and executives. None of our employees are covered by collective bargaining agreements. We believe that our employee relations are good, and we are committed to inclusion and policies and procedures to maintain a safe work environment.

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Exhibit 99.5

OWENS & MINOR, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On July 22, 2024, Owens & Minor, Inc., a Virginia corporation (“Owens & Minor”, the “Company”, “we”, “our”), entered into an Agreement and Plan of Merger (the “Acquisition Agreement”) by and among the Company, Rotech Healthcare Holdings Inc., a Delaware corporation (“Rotech”), Hitchcock Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”) and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of the equity holders of Rotech. The Acquisition Agreement provides, among other things, that, upon the terms and subject to the conditions set forth therein, Merger Sub will be merged with and into Rotech (the “Rotech Acquisition”) with Rotech surviving the Rotech Acquisition as an indirect, wholly owned subsidiary of the Company. In connection with the Rotech Acquisition, we intend to (i) enter into an incremental term loan B facility under the Company’s existing Credit Agreement, dated March 29, 2022, in an aggregate principal amount anticipated to be $800 million (the “Incremental Term Facility”), and (ii) offer and sell $600 million aggregate principal amount of new senior secured notes (the “notes”). We intend to use the net proceeds from the notes offering, together with cash on hand and proceeds from expected borrowings under the new term loan B facility, to (i) pay the consideration in connection with the Rotech Acquisition, including to repay the outstanding obligations under the Third Amended and Restated Credit Agreement, dated as of March 31, 2022, by and among Rotech Healthcare Inc., Rotech Intermediate Holdings LLC, the other guarantors named therein, the lenders named therein and Truist Bank, as administrative agent (as amended, restated, amended and restated, supplemented or otherwise modified from time to time) (“Rotech Credit Agreement”), (ii) to pay the Transaction costs and (iii) the remainder, if any, for working capital and general corporate purposes. The term “Transactions” as used herein refers to the transactions contemplated by the Rotech Acquisition and the transactions contemplated by the Acquisition Agreement, the amendment of the Term Loan Credit Agreement to provide for the Incremental Term Facility and the borrowings thereunder, the offering of notes and the application of the net proceeds as described in the previous sentence.

The unaudited pro forma condensed combined financial statements are based on our historical consolidated financial statements and Rotech’s consolidated historical financial statements as adjusted to give effect to the Transactions. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2024 give effect to the Transactions as if they had occurred on January 1, 2024. The unaudited pro forma condensed combined balance sheet at December 31, 2024 gives effect to the Transactions as if they had occurred on December 31, 2024.

The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of SEC Regulation S-X. The pro forma adjustments reflecting the completion of the Transactions are based upon the acquisition method of accounting in accordance with generally accepted accounting principles in the United States (U.S. GAAP), and upon the assumptions set forth in the notes to the unaudited pro forma condensed combined financial statements.

We have made significant assumptions and estimates in determining the preliminary estimated purchase price consideration and the preliminary allocation of the estimated purchase price in the unaudited pro forma condensed combined financial statements. These preliminary estimates and assumptions are subject to change during the estimated purchase price allocation period (not to exceed one year from the pending Rotech Acquisition date) as we finalize the valuations of the net tangible assets and intangible assets. Differences between these preliminary estimates and the final acquisition accounting could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and the combined company’s future results of operations and financial position. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of preparing unaudited pro forma condensed combined financial statements.

1

The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of the consolidated results of operations or financial position that would have been reported had the Transactions been completed as of the dates presented and should not be taken as representative of the future consolidated results of operations or financial position of the combined company following the Transactions. The pro forma financial statements are based upon available information and certain assumptions that management believes are reasonable.

The unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with:

2

OWENS & MINOR, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2024

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

3

OWENS & MINOR, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AT DECEMBER 31, 2024

See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

4

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Description of the Transaction

On July 22, 2024, Owens & Minor entered into the Acquisition Agreement to acquire Rotech for $1.36 billion in cash, subject to customary adjustments for cash, debt, net working capital and transaction expenses.

Basis of Presentation

The unaudited pro forma condensed combined financial statements are based on Owens & Minor’s historical consolidated financial statements and Rotech’s historical consolidated financial statements as adjusted to give effect to the Transactions. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024 gives effect to the Transactions as if they had occurred on January 1, 2024. The unaudited pro forma condensed combined balance sheet at December 31, 2024 gives effect to the Transactions as if they had occurred on December 31, 2024.

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting based on the historical financial information of Owens & Minor and the historical financial statements of Rotech. The acquisition method of accounting in accordance with ASC 805, Business Combinations (ASC 805) requires, among other things, that assets acquired, and liabilities assumed in a business combination be recognized at their fair value as of the acquisition date, as defined in ASC 820, Fair Value Measurement (ASC 820). The historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the Transaction, (2) factually supportable, and (3) with respect to the unaudited pro forma condensed combined statement of operations, expected to have a continuing impact on the consolidated results.

5

Under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred, or if related to the issuance of debt, recorded as debt issuance costs. Acquisition-related transaction costs expected to be incurred as part of the Rotech Acquisition include estimated fees related to advisory, legal and accounting fees inclusive of professional fees associated with the Federal Trade Commission review of the Rotech Acquisition. Fees will also be incurred related to the issuance of long-term debt to finance the transaction which have been reflected as deferred financing costs and will be amortized into interest expense.

The unaudited pro forma condensed combined financial statements have been compiled using the significant accounting policies as set forth in the Company’s Annual Report. During the preparation of the unaudited pro forma condensed combined financial statements, our management performed a preliminary analysis of the accounting policies of Rotech and is not aware of any differences that could have a material impact on the unaudited pro forma condensed combined financial statements.

Certain reclassifications have been made on a preliminary basis to the historical presentation of the statement of operations and balance sheet of Rotech included within the unaudited condensed combined pro forma financial statements to conform to the financial statement presentation of Owens & Minor. Subsequent to the Rotech Acquisition, Owens & Minor will perform a full and detailed review of Rotech’s accounting policies and financial statements. As a result of that review, Owens & Minor may identify additional differences between the accounting policies and financial statement presentation of the two companies that, when conformed, could have a material impact on the consolidated financial statements of the combined company. The following tables indicate the reclassifications made for the purpose of unaudited pro forma condensed combined financial statements included in this filing:

Statement of operations reconciliation

For the year ended December 31, 2024

6

Balance sheet reconciliation

As of December 31, 2024

7

The following items represent certain reclassifications of the historical Rotech financial statement line items to conform to the expected financial statement line items of the combined company including:

Statement of operations items (dollars in thousands):

Balance sheet items (dollars in thousands):

8

The preliminary purchase price is based on a purchase price of approximately $1.36 billion, which is subject to adjustment as described below as well as adjustments for cash, indebtedness, net working capital and transaction expenses.

The preliminary purchase price allocation and the estimated fair value of the assets acquired, and liabilities assumed is based on management’s best estimates of fair value. The final allocation of the purchase consideration will be determined after completion of a thorough analysis to determine the fair value of all assets acquired and liabilities assumed but in no event later than one year following completion of the Rotech Acquisition. Accordingly, the final acquisition accounting adjustments could differ materially from the unaudited pro forma adjustments presented herein. Any increase or decrease in the fair value of the assets acquired or liabilities assumed, as compared to the information shown herein, could also change the portion of the purchase price consideration allocated to goodwill and could impact the operating results of the Company following the acquisition due to differences in depreciation and amortization.

Preliminary Allocation of Estimated Purchase Price to Assets Acquired and Liabilities Assumed

The following represents the preliminary allocation of the purchase consideration to the assets acquired and the liabilities assumed in the Rotech Acquisition.

Preliminary Allocation

9

(a) Net tangible assets —Represents all acquired tangible assets, including cash and cash equivalents, accounts receivable, merchandise inventories, other current assets, property and equipment, operating lease assets, equity method investment and other noncurrent assets. Liabilities assumed are comprised of accounts payable, accrued payroll and related liabilities, other current liabilities, operating lease liabilities, deferred income taxes, net and other noncurrent liabilities.

(b) Intangible assets —As of the effective date of the acquisition, identified intangible assets are required to be measured at fair value. For purposes of these unaudited pro forma condensed combined financial statements, it is assumed that all assets will be used and that all assets will be used in the manner that represents the highest and best use of those assets. The definite-lived intangible assets include capitated relationships, payor relationships, trade names, proprietary technology, and customer list and other.

The fair value and useful lives assigned to the identifiable intangible assets have been estimated based on various valuation methods, including the income and cost approach, using several significant unobservable inputs including, but not limited to projected cash flows and a discount rate, as well as a review of publicly available data for transactions involving companies deemed comparable to the Patient Direct segment of the Company. These estimated fair values and useful lives are considered preliminary and are subject to change at the closing date of the Rotech Acquisition. Any change in the amount of the final purchase price allocated to amortizable, definite-lived intangible assets could materially affect the carrying amount and related amortization expense of such assets. The definite-lived acquired intangibles have an estimated weighted-average useful life of approximately nine years and will be amortized using the straight-line method. Refer to Note 4(d) within the Pro Forma Adjustments to the unaudited pro forma condensed combined statement of operations and Note 5(c) within the Pro Forma Adjustments to the unaudited pro forma condensed combined balance sheet sections for additional information on the intangible assets adjustment.

We plan to finance the Rotech Acquisition with the Incremental Term Facility, the notes, and approximately $47 million in cash.

Sources & Uses

Interest Expense, Net Adjustment - Debt

10

Historical Rotech interest expense, which includes historical amortization of debt issuance costs, of $44 million associated with Rotech’s historical indebtedness to be repaid in connection with the Rotech Acquisition is eliminated in the unaudited pro forma condensed combined statement of operations as a transaction adjustment.

The statutory tax rate was applied, as appropriate, to the unaudited pro forma condensed combined statement of operations as an adjustment based on the jurisdiction in which the adjustment was expected to occur.

The adjustment reflects the impact on the unaudited pro forma condensed combined statement of operations from the pro forma adjustment utilizing the marginal tax rate of 26%.

Although not reflected in the unaudited pro forma condensed combined financial statements, the effective tax rate of Owens & Minor could be significantly different depending on post-acquisition activities, such as geographical mix of taxable income affecting state taxes, among other factors.

We expect to incur approximately $40 million in non-recurring transaction costs associated with the Rotech Acquisition subsequent to December 31, 2024. We do not expect these costs to affect our consolidated statement of operations beyond 12 months after the acquisition date.

Represents the adjustment to record the incremental intangible asset amortization expense, as well as incremental depreciation expense associated with the conveyed property and equipment. The adjustment for incremental intangible asset amortization is as follows:

Identifiable Intangibles and Amortization Adjustment