Note 4—Exit and Realignment Charges, Net

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

Exit and realignment charges, net were $26 million and $2.2 million for the three and six months ended June 30, 2026 and $2.5 million and $16 million for the three and six months ended June 30, 2025. During the three and six months ended June 30, 2026 exit and realignment charges, net included a $0.6 million loss and $(51) million gain on

sales of patient service equipment in connection with the contract termination with a commercial Payor and P&HS Sale separation costs. During the six months ended June 30, 2025 exit and realignment charges, net also include a provision to accounts receivable related to our Fusion5 business which was in the process of being wound down.

As a result of the sale of our P&HS business, we have incurred $17 million and $35 million in reimbursable separation costs during the three and six months ended June 30, 2026. We expect to incur up to $65 million in exit and realignment costs associated with reimbursement to the Purchaser for certain future separation costs incurred by the Purchaser, as described in Note 2. 

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

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In addition to the exit and realignment accruals in the preceding table and the $0.6 million loss and $(51) million gain on sales of patient service equipment, we also incurred $0.2 million and $4.2 million of costs that were expensed as incurred during the three and six months ended June 30, 2026, which primarily related to P&HS Sale separation costs and $0.4 million and $7.6 million of costs that were expensed as incurred for the three and six months ended June 30, 2025, which primarily related to wind-down costs of Fusion5.