Note 2—Discontinued Operations

As described in Note 1, in accordance with GAAP, the financial position and results of operations of the P&HS business are presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. The P&HS business was initially classified as discontinued operations and assets held for sale as of June 30, 2025. Accordingly, the results of operations from our P&HS business are reported in the accompanying condensed consolidated statements of operations as loss from discontinued operations, net of tax for the three and six months ended June 30, 2025. We have allocated interest expense, net to discontinued operations as a ratio of net assets and total debt in accordance with ASC 205, Presentation of Financial Statements.

On December 31, 2025, we received cash proceeds of $342 million and recorded a $20 million investment for a 5% retained equity interest, which was recorded in other assets, net on our condensed consolidated balance sheet as of December 31, 2025. Net proceeds of $324 million from the P&HS Sale, net of cash sold, reflect $342 million of cash proceeds received and $18 million of P&HS cash conveyed. The final purchase price will be determined subsequent to the completion of the sale to reflect adjustments in accordance with the Purchase Agreement, including final net working capital adjustments. As of December 31, 2025, we estimated a purchase price adjustment receivable of approximately $12 million to $15 million, which was recorded within other current assets on our condensed consolidated balance sheet. Subsequent changes in fair value will be recorded within discontinued operations.

We have agreed to reimburse the Purchaser and its affiliates for 80% of certain costs incurred in connection with the separation of P&HS from the Company’s retained business, subject to an aggregate cap of $65 million. We will be obligated to reimburse the Purchaser for any such costs incurred after December 31, 2025, except that such reimbursements did not and will not need to be paid: (1) in advance of April 1, 2026; (2) for amounts in excess of $15 million prior to October 1, 2026, or (3) for amounts in excess of $55 million prior to January 1, 2027. During the three and six months ended June 30, 2026, we incurred $17 million and $35 million in separation costs to be reimbursed to the Purchaser which are recorded within exit and realignment charges, net on our condensed consolidated statement of operations and within accounts payable and other current liabilities on our condensed consolidated balance sheet.

We and the Purchaser provide certain transition services to the other party pursuant to a certain customary transition services agreement (TSA). Pursuant to the terms of the TSA, we have agreed that, in certain circumstances, we may be obligated to provide up to $115 million in credit support to the P&HS business. The TSA includes customary services including information technology support and is anticipated to be substantially completed within two years of the P&HS Sale, with some services being completed by December 31, 2026. During the three and six months ended June 30, 2026, we have incurred $7.7 million and $16 million in net fees for services received and for services provided under the TSA which are recorded within SG&A on our condensed consolidated statement of operations. During the six months ended June 30, 2026, we exited certain TSA activities and replaced them with internal capabilities. We expect to continue to exit certain TSA activities and replace with internal capabilities throughout the remainder of 2026.

The following table summarizes the financial results of our discontinued operations for the three and six months ended June 30, 2025:

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Total accounts receivable sold and net cash proceeds under the Receivables Sale Program were $496 million and $840 million during the three and six months ended June 30, 2025, approximately $397 million and $672 million of which related to discontinued operations. We collected $495 million and $704 million of the sold accounts receivable during the three and six months ended June 30, 2025, approximately $396 million and $563 million of which related to discontinued operations. The losses on sales of accounts receivable were $3.1 million and $5.2 million for the three and six months ended June 30, 2025, $2.5 million and $4.1 million of which relate to losses recorded in other operating expense, net in the financial results from discontinued operations. As of December 31, 2025, there was no uncollected accounts receivable sold and removed from our consolidated balance sheet related to discontinued operations.