EX-99.1 2 ef20035865_ex99-1.htm EXHIBIT 99.1
Exhibit 99.1

NAVIENT CORPORATION
 
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
On September 19, 2024, Navient Corporation (“Navient”) completed the sale of its equity interests in Xtend Healthcare, LLC, which comprised Navient’s Healthcare Services business in Navient’s Business Processing segment, to Coding Solutions Acquisition, Inc. (“CorroHealth”) for $369 million ($365 million of total consideration, plus an estimated $4 million of working capital and other adjustments to the contractual price) (the “Healthcare Services sale transaction”).
 
The following unaudited pro forma condensed consolidated balance sheet as of June 30, 2024, is presented as if the Healthcare Services sale transaction had occurred on June 30, 2024.
 
The unaudited pro forma condensed consolidated statements of income for the year ended December 31, 2023, and the six months ended June 30, 2024, are presented as if the Healthcare Services sale transaction had occurred on January 1, 2023. The estimated gain on sale in connection with the Healthcare Services sale transaction is reflected in the unaudited pro forma condensed consolidated balance sheet within equity. The estimated gain on sale of $216 million is not reflected in the unaudited pro forma condensed consolidated statements of income as it does not have a continuing impact on Navient’s results.
 
The unaudited pro forma condensed consolidated financial information has been prepared from Navient's historical accounting records and, in accordance with Article 11 of SEC Regulation S-X, is subject to the assumptions and adjustments described in the accompanying notes. These assumptions and adjustments are based on information presently available. Actual adjustments may differ materially from the information presented. The unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of Navient for each period presented and in the opinion of Navient management, all adjustments, and disclosures necessary for a fair presentation of the pro forma data have been made.
 
The unaudited pro forma condensed consolidated financial information includes pro forma adjustments which reflect transactions and events that (a) are directly attributable to the Healthcare Services sale transaction, (b) are factually supportable and (c) with respect to the statements of income, have a continuing impact on consolidated results. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated financial information does not reflect future events that may occur after the Healthcare Services sale transaction, including any potential future cost savings that may be achieved.
 
These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations or financial condition that would have been achieved had events reflected been completed as of the dates indicated or of the results that may be obtained in the future. These unaudited pro forma condensed consolidated financial statements and the notes thereto should be read together with Navient’s audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2023, and Management’s Discussion and Analysis included in Navient’s Annual Report on Form 10-K for the year ended December 31, 2023, as well as Navient’s unaudited consolidated financial statements and the notes thereto as of and for the six months ended June 30, 2024, and Management’s Discussion and Analysis included in Navient’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.

1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2024 (in millions)

   
As
    
Pro Forma
          
   
Reported
    
Adjustments
      
Pro Forma
  
Assets
                    
FFELP Loans
  
$
32,940
    
$
-
      
$
32,940
  
Private Education Loans
    
16,238
      
-
        
16,238
  
Investments
    
132
      
-
        
132
  
Cash and cash equivalents
    
1,088
      
362
  
 (A)
    
1,450
  
Restricted cash and cash equivalents
    
2,918
      
-
        
2,918
  
Goodwill and acquired intangible assets, net
    
690
      
(113
)
 (B)
    
577
  
Other assets
    
2,616
      
(41
)
 (B)
    
2,575
  
Total assets
  
$
56,622
    
$
208
      
$
56,830
  
                           
Liabilities
                          
Short-term borrowings
  
$
5,326
    
$
-
      
$
5,326
  
Long-term borrowings
    
47,545
      
-
        
47,545
  
Other liabilities
    
1,003
      
42
  
 (B) (C)
    
1,045
  
Total liabilities
    
53,874
      
42
        
53,916
  
                           
Equity
                          
Total equity
    
2,748
      
166
  
 (D)
    
2,914
  
                           
Total liabilities and equity
  
$
56,622
    
$
208
      
$
56,830
  

2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the year ended December 31, 2023 (in millions, except per share amounts)

   
As
    
Pro Forma
          
   
Reported
    
Adjustments
      
Pro Forma
  
Total interest income
  
$
4,419
    
$
-
      
$
4,419
  
Total interest expense
    
3,557
      
-
        
3,557
  
Net interest income
    
862
      
-
        
862
  
Less: provisions for loan losses
    
123
      
-
        
123
  
Net interest income after provisions for loan losses
    
739
      
-
        
739
  
 
                          
Other income (loss):
                          
Servicing revenue
    
64
      
-
        
64
  
Asset recovery and business processing revenue
    
321
      
(121
)
 (E)
    
200
  
Other income
    
21
      
-
        
21
  
Losses on debt repurchases
    
(8
)
    
-
        
(8
)
Gains (losses) on derivative and hedging activities, net
    
11
      
-
        
11
  
Total other income
    
409
      
(121
)
      
288
  
 
                          
Expenses:
                          
Salaries and benefits
    
401
      
(80
)
 (E)
    
321
  
Other operating expenses
    
399
      
(21
)
 (E)
    
378
  
Total operating expenses
     800
       (101
 )       699
  
Goodwill and acquired intangible asset impairment and amortization expense
    
10
      
(4
)
 (E)
    
6
  
Restructuring/other reorganization expenses
    
25
      
(2
)
 (E)
    
23
  
Total expenses
    
835
      
(107
)
      
728
  
Income before income tax expense
    
313
      
(14
)
      
299
  
Income tax expense
    
85
      
(3
)
 (F)
    
82
  
Net income
  
$
228
    
$
(11
)
    
$
217
  
 
                          
Per Share Amounts:
                          
 
                          
Basic earnings per common share
  
$
1.87
               
$
1.78
  
Average common shares outstanding
    
122
                
122
  
 
                          
Diluted earnings per common share
  
$
1.85
               
$
1.76
  
Average common and common equivalent shares outstanding
    
123
                
123
  

3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the six months ended June 30, 2024 (in millions, except per share amounts)

 
 
  
As
    
Pro Forma
          
 
  
Reported
    
Adjustments
      
Pro Forma
  
Total interest income
  
$
2,000
    
$
-
      
$
2,000
  
Total interest expense
    
1,718
      
-
        
1,718
  
Net interest income
    
282
      
-
        
282
  
Less: provisions for loan losses
    
26
      
-
        
26
  
Net interest income after provisions for loan losses
    
256
      
-
        
256
  
 
                          
Other income (loss):
                          
Servicing revenue
    
35
      
-
        
35
  
Asset recovery and business processing revenue
    
158
      
(60
)
 (E)
    
98
  
Other income
    
13
      
-
        
13
  
Gains (losses) on derivative and hedging activities, net
    
46
      
-
        
46
  
Total other income
    
252
      
(60
)
      
192
  
 
                          
Expenses:
                          
Salaries and benefits
    
188
      
(38
)
 (E)
    
150
  
Other operating expenses
    
162
      
(9
)
 (E)
    
153
  
Total operating expenses
     350
       (47
 )       303
  
Goodwill and acquired intangible asset impairment and amortization expense
    
5
      
(2
)
 (E)
    
3
  
Restructuring/other reorganization expenses
    
17
      
-
  
 (E)
    
17
  
Total expenses
    
372
      
(49
)
      
323
  
Income before income tax expense
    
136
      
(11
)
      
125
  
Income tax expense
    
27
      
(3
)
 (F)
    
24
  
Net income
  
$
109
    
$
(8
)
    
$
101
  
 
                          
Per Share Amounts:
                          
 
                          
Basic earnings per share
  
$
0.98
               
$
0.90
  
Average common shares outstanding
    
112
                
112
  
 
                          
Diluted earnings per share
  
$
0.97
               
$
0.89
  
Average common and common equivalent shares outstanding
    
113
                
113
  

4
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(A)  Adjustment represents the net cash received from the sale of our Healthcare Services business  ($369 million of cash consideration less $7 million of estimated cash costs directly associated with the transaction).

(B)  Adjustments represent the elimination of the assets and liabilities of our Healthcare Services business that was sold.

(C)  Adjustment represents an increase in current tax liabilities of $50 million as a result of the gain recognized on the sale of our Healthcare Services business offset by the elimination of $8 million of liabilities attributable to our Healthcare Services business.

(D)  Adjustments reflect the pretax gain on the sale of our HealthCare Services business of $216 million ($166 million net of tax) calculated as follows:
 
(in millions)
      
Cash received (net of selling and other expenses)
  
$
362
  
Less:  Carrying value in Healthcare Services business
    
146
  
Pro forma gain before income tax expense
    
216
  
Less:  Income tax expense
    
50
  
Pro forma net gain on sale of our Healthcare Services business
  
$
166
  

The pro forma net gain of $166 million is reflected as an adjustment to retained earnings. This amount is based on historical information as of June 30, 2024 for Navient Corporation's carrying value of its Healthcare Services business. The actual net gain will be based on Navient Corporation's carrying value in the Healthcare Services business as of September 19, 2024.

(E)  Adjustments reflect the elimination of revenues, costs and expenses directly attributable to our Healthcare Services business.  Adjustments do not include: (1) certain general corporate and segment overhead costs previously allocated to the Healthcare Services business that will have a continuing effect on Navient post-closing or (2) any potential future cost savings that may be achieved.

(F)  Adjustment reflects the estimated income tax effect of the pro forma adjustments at the statutory rate directly related to the Healthcare Services business.


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