Discontinued Operations

3 Months Ended

Mar. 31, 2025

Discontinued Operations and Disposal Groups [Abstract]

4. Discontinued Operations

As disclosed in Note 1 “Basis of Presentation and Nature of Business”, on July 12, 2024, the Company closed on its previously announced sale of the Divested Business. Under the terms of the Purchase Agreement, the Buyer agreed to acquire the Divested Business for total consideration of up to $1.2 billion, in the form of (1) $1.0 billion in cash (the “Closing Cash Consideration”) payable at the closing of the transactions (the “Closing”) contemplated by the Purchase Agreement, (2) a note with an aggregate principal amount of $50 million and a fair value of $35 million as of July 12, 2024 issued at Closing (the “Seller Note”) by an indirect parent of Buyer (the “Note Issuer”) and (3) contingent upon the financial performance of the Divested Business for the 2025 fiscal year, a note with an aggregate principal amount of up to $150 million (the “Additional Seller Note”) and an initial fair value of $43 million as of July 12, 2024 to be issued by the Note Issuer. The Seller Note has a stated interest rate of 8.0%. The Seller Note was measured at fair value as of July 12, 2024 on a nonrecurring basis, by calculating the interest of the Seller Note which is expected to be paid-in-kind, and discounting the principal and interest by applying a discount rate based on the Divested Business's estimated cost of debt.

In conjunction with the Divestiture the Company entered into a Transition Services Agreement (the "TSA") with the Buyer. The TSA outlines the terms under which the Company provides certain reimbursable post-closing services to support the business on a transitional basis and are anticipated to be provided for an initial period of up to 18 months, with the option to extend for an additional six months. As part of the TSA agreement, $15 million of the Closing Cash Consideration payable at closing was accounted for as a prepayment to the Company for services provided under the TSA.

During the three months ended March 31, 2025, TSA services income of $10 million was recognized in Other (income) expense, net, with the corresponding expenses recorded in Cost of services and Selling, general and administrative expense in the Condensed Consolidated Statement of Comprehensive Income (Loss).

During the three months ended March 31, 2025, pass-through costs of approximately $15 million were incurred under the TSA, which were netted against the equal and offsetting reimbursement amounts due from the Divested Business.

Revenue earned during the three months ended March 31, 2025 from customer care commercial services provided to the Divested Business was $12 million.

An additional loss on sale of the Divested Business of $7 million, net of tax, was recorded for the three months ended March 31, 2025 upon customary post closing selling price adjustments of the sale and reflects the impact of net proceeds received less cost to sell relative to the carrying value of the Divested Business net assets. Post-closing selling price adjustments and completion of other Purchase Agreement provisions in connection with the sale could result in further adjustments to the loss on sale amount which could be material.

The following table presents the results as reported in Income (Loss) from Discontinued Operations, Net of Tax, within our Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions):


	Three Months Ended March 31,
		2025		2024
Revenue		$	24	$	257
Cost of services, exclusive of depreciation and amortization		24		187
Depreciation and amortization		—		3
Gross Profit		—		67

Operating Expenses
Selling, general and administrative		—		37
Depreciation and intangible amortization		—		8
Goodwill Impairment		—		—
Total Operating Expenses		—		45
Income (loss) from Discontinued Operations		—		22
Interest expense		—		—
Other (income) expense, net		—		2
Income (Loss) from Discontinued Operations Before Income Taxes		—		20
Loss on sale of disposition, net of tax		7		—
Income tax expense (benefit)		1		15
Net Income (Loss) from Discontinued Operations, Net of Tax		$	(8)	$	5

The Company concluded that it controlled a portion of the Divested Business services subsequent to separation as a result of certain shared contractual relationships that had not been legally assigned as of March 31, 2025. As such, the Company determined it was the principal for these services and, therefore, during the three months ended March 31, 2025, the Company recorded $24 million of Revenue and Cost of services on a gross basis within discontinued operations in the accompanying Condensed Consolidated Statements of Comprehensive Income (Loss).

The expense amounts reflected above represent only the direct costs attributable to the Divested Business and excludes allocations of corporate costs retained following the sale.