Discontinued Operations

4. Discontinued Operations

As disclosed in Note 1, “Basis of Presentation and Nature of Business”, on July 12, 2024, the Company closed on the 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% which is expected to mature in July 2030. 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 would provide certain reimbursable post-closing services to support the business on a transitional basis for an initial period of up to 18 months, with the option to extend for an additional six months. As of March 31, 2026, the Company is no longer providing the majority of services originally agreed upon in the TSA.

TSA services income was immaterial and $10 million for the three months ended March 31, 2026 and 2025, respectively, which 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).

Pass-through costs of approximately $2 million and $15 million for the three months ended March 31, 2026 and 2025, respectively, were incurred under the TSA, which were netted against the equal and offsetting reimbursement amounts due from the Divested Business.

Revenue earned from customer care commercial services provided to the Divested Business was $9 million and $12 million for the three months ended March 31, 2026 and 2025, respectively.

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,
		2026		2025
Revenue		$	3	$	24
Cost of services, exclusive of depreciation and amortization		3		24
Depreciation and amortization		—		—
Gross Profit		—		—

Operating Expenses
Selling, general and administrative		—		—
Depreciation and intangible amortization		—		—

Total Operating Expenses		—		—
Income (loss) from Discontinued Operations		—		—

Other (income) expense, net		—		—
Income (Loss) from Discontinued Operations Before Income Taxes		—		—
(Gain) Loss on sale of disposition, net of tax		—		7
Income tax expense (benefit)		—		1
Net Income (Loss) from Discontinued Operations, Net of Tax		$	—	$	(8)

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, 2026. As such, the Company determined it was the principal for these services and, therefore, the Company recorded $3 million and $24 million for the three months ended March 31, 2026 and 2025, respectively, 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.