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Business Combinations, Goodwill and Acquired Intangible | 12 Months Ended
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Dec. 31, 2023
Business Combinations [Abstract] |
Business Combinations, Goodwill and Acquired Intangible | 5. Business Combinations, Goodwill and Acquired Intangible Goodwill The following table summarizes our goodwill for our reporting units and reportable segments.
|  | As of December 31, |
(Dollars in millions) |  | 2023 |  |  | 2022 |
Federal Education Loans reportable segment: |  |  |  |  |  |
FFELP Loans |  | $ | 227 |  |  | $ | 227 |
Federal Education Loan Servicing |  |  | 5 |  |  |  | 5 |
Total |  |  | 232 |  |  |  | 232 |
Consumer Lending reportable segment: |  |  |  |  |  |
Private Education Legacy In-School Loans |  |  | 106 |  |  |  | 106 |
Private Education Refinance Loans |  |  | 77 |  |  |  | 77 |
Private Education Recent In-School Loans |  |  | 13 |  |  |  | 13 |
Total |  |  | 196 |  |  |  | 196 |
Business Processing reportable segment: |  |  |  |  |  |
Government Services |  |  | 136 |  |  |  | 136 |
Healthcare Services |  |  | 106 |  |  |  | 106 |
Total |  |  | 242 |  |  |  | 242 |
Total goodwill |  | $ | 670 |  |  | $ | 670 |
Annual Goodwill Impairment Testing – October 1, 2023 We perform our goodwill impairment testing annually in the fourth quarter as of October 1. As part of the 2023 annual impairment testing for each of our reporting units with goodwill, we assessed relevant qualitative factors to determine whether it is “more-likely-than-not” that the fair value of an individual reporting unit is less than it’s carrying value. We considered the amount of excess fair value for our FFELP Loans, Federal Education Loan Servicing, Private Education Legacy In-School Loans, Private Education Recent In-School Loans, and Private Education Refinance Loans reporting units over their carrying values as of October 1, 2022 when we last performed a quantitative goodwill impairment test by engaging an independent appraiser to estimate the fair values of these reporting units since the fair values of these reporting units were substantially in excess of their carrying amounts. The current outlook and cash flows for the FFELP Loans, Federal Education Loan Servicing and Private Education Legacy In-School Loans reporting units have not changed significantly since our 2022 assessment. The cash flows for these reporting units continue to decline consistent with our expectations as the underlying portfolios amortize. The negative macroeconomic conditions, primarily the high interest rate environment in 2023, have not significantly impacted these estimates. For the Private Education Refinance Loans reporting unit, we considered the performance of the current portfolio, which continues to maintain high credit quality, future origination volume, which is expected to increase in 2024 given the expectation of a declining interest rate environment, and Navient’s strong liquidity position with its ability to issue Private Education Loan ABS comprised entirely of the reporting unit’s refinance loans. For the Private Education Recent In-School Loans reporting unit, we considered the increase in brand awareness in 2023 of Earnest, a wholly owned subsidiary of Navient, through development and rollout of new programs and product offerings and Navient’s continued success utilizing its Going Merry platform to enable students to match to and apply for scholarships, institutional aid and government grants. Strong in-school origination growth is expected in 2024 with sustained growth expected in the future. No goodwill was deemed impaired for these reporting units as of October 1, 2023 after assessing these relevant qualitative factors. For the FFELP Loans reporting unit, due to the runoff nature of the portfolio and the passage of time, our current projections of future cash flows would result in goodwill being partially impaired in 2025. This is based on estimated cash flows and, as a result, this future impairment date may change. 5. Business Combinations, Goodwill and Acquired Intangible Assets As part of our annual impairment testing associated with our Government Services and Healthcare Services reporting units, we also considered the amount of excess fair value over the carrying values of these reporting units as of October 1, 2022 when we last performed a quantitative goodwill impairment test by engaging an independent appraiser to estimate the fair values of these reporting units since the fair values of these reporting units were substantially in excess of their carrying values. The outlook and long-term cash flow projections for these reporting units remain favorable and have not changed significantly since our 2022 quantitative impairment assessment despite the expected wind down of significant contracts acquired in 2020 and 2021 to implement and administer programs under the CARES act and perform contact tracing and vaccine administration services during the COVID-19 pandemic. In 2023 there was a $9 million aggregate decrease in revenue from 2022, as expected and forecasted for the Business Processing reporting units. This decline was the result of an $83 million aggregate reduction in revenue from the wind-down of the pandemic-related contracts; however, this reduction was largely offset by a $74 million aggregate increase in revenue from services for our traditional clients. The cash flows from traditional service offerings increased significantly, returning to and in some instances exceeding pre-pandemic levels despite inflationary pressures in certain sectors. These reporting units also acquired new contracts in 2023, which are expected to yield significant benefit in future periods. No goodwill was deemed impaired for these reporting units after assessing these relevant qualitative factors. For each of our reporting units, we also considered the current regulatory and legislative environment, the current economic environment, our 2023 earnings, 2024 expected earnings, market expectations regarding our stock price, and our market capitalization in relation to book equity and concluded that no goodwill associated with our reporting units was impaired. Although our market capitalization was less than our book equity at October 1 and December 31, 2023, we have concluded that our market capitalization in relation to our book equity does not indicate impairment of our reporting units’ respective goodwill at October 1 and December 31, 2023. Our market capitalization is not indicative of the value of our reporting units with goodwill on a standalone basis. Additionally, the implied control premium at October 1 and December 31, 2023 is a reasonable control premium above the then current stock price. If the regulatory environment changes such that it negatively impacts our reporting units or future economic conditions are significantly worse than what was assumed as a part of our annual impairment testing for each of our reporting units, goodwill attributed to our reporting units could be impaired in future periods. Acquired Intangible Assets Acquired intangible assets include the following:
|  | As of December 31, 2023 |  |  | As of December 31, 2022 |
(Dollars in millions) |  | Cost Basis |  |  | Accumulated Impairment and Amortization(2)(3) |  |  | Net |  |  | Cost Basis(2) |  |  | Accumulated Impairment and Amortization(2)(3) |  |  | Net |
Customer, services and lending relationships(1) |  | $ | 218 |  |  | $ | (212 | ) |  | $ | 6 |  |  | $ | 218 |  |  | $ | (207 | ) |  | $ | 11 |
Software and technology |  |  | 119 |  |  |  | (110 | ) |  |  | 9 |  |  |  | 119 |  |  |  | (108 | ) |  |  | 11 |
Trade names and trademarks |  |  | 40 |  |  |  | (30 | ) |  |  | 10 |  |  |  | 40 |  |  |  | (27 | ) |  |  | 13 |
Total acquired intangible assets |  | $ | 377 |  |  | $ | (352 | ) |  | $ | 25 |  |  | $ | 377 |  |  | $ | (342 | ) |  | $ | 35 |
(1) (1) In 2022 we impaired a customer relationship asset in the Business Processing reportable segment for $6 million as a result of exiting a line of business. (2) Accumulated impairment and amortization include impairment amounts only if the acquired intangible asset has been deemed partially impaired. When an acquired intangible asset is considered fully impaired and no longer in use, the cost basis and any accumulated amortization related to the asset is written off. (3) We recorded amortization of acquired intangible assets of $10 million, $14 million and $19 million in 2023, 2022 and 2021, respectively. We will continue to amortize our intangible assets with definite useful lives over their remaining estimated useful lives. We estimate amortization expense associated with these intangible assets will be $9 million, $6 million, $5 million, $3 million and $1 million in 2024, 2025, 2026, 2027 and after 2027, respectively.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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