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Termination of Walmart Partnership
 9 Months Ended
Sep. 30, 2023
Restructuring and Related Activities [Abstract]  
Restructuring, Impairment, and Other Activities Disclosure Termination of Walmart Partnership
On July 20, 2023, the Company received a notice of non-renewal from Walmart Inc. (“Walmart”) of the Management & Services Agreement by and between NVI and Walmart, dated as of May 1, 2012 (as amended, supplemented or otherwise modified from time to time, the “Walmart MSA”). In accordance with the terms of the Walmart MSA and the notice, the agreement will terminate as of February 23, 2024, unless an alternate date is agreed by the parties (the “Termination Date”). In connection with the termination of the Walmart MSA, the Amended and Restated Supplier Agreement between NVI and Walmart, dated as of January 17, 2017 (the “Walmart Supplier Agreement”), and certain other related agreements will also terminate as of the Termination Date. The Walmart MSA includes provisions governing the transition period and post-termination obligations of the parties.
In connection with the termination of the Walmart MSA, the agreement between FirstSight Vision Services, Inc. (“FirstSight”), a wholly-owned subsidiary of the Company, and Walmart, which arranges for the provision by FirstSight of optometric services at optometric offices next to certain Walmart stores throughout California, will also terminate as of the Termination Date. Additionally, another wholly-owned subsidiary of the Company, Arlington Contacts Lens Service, Inc. (“AC Lens”), has delivered notices of non-renewal of the agreements it has with Walmart and its affiliate Sam’s Club regarding wholesale contact lenses distribution and related services, such that these agreements will terminate as of June 30, 2024, unless an earlier date is agreed by the parties. The Company will also wind down its remaining AC Lens operations, including the closure of its Ohio distribution center, which largely supported the wholesale distribution and e-commerce contact lens services that the Company provided to Walmart and Sam’s Club.
The following table details charges recognized in the periods shown. We may incur other exit-related costs, which may be material.

In thousands
Three Months Ended
September 30, 2023		Nine Months Ended
September 30, 2023
Impairment charges
$79,360 $79,360 
Employee compensation benefits
$1,958 $1,958 
Professional fees
$178 $178 

The table below summarized the Company’s Other payables and accrued expenses balance related to the termination of the Walmart Partnership.
In thousands
Employee Compensation Benefits
Balance at December 31, 2022
$— 
Expenses recognized during the period
1,958 
Balance at September 30, 2023
$1,958 

Impairment charges
We determined that the various impending terminations of agreements described above as well as the subsequent decision to consolidate our distribution network and close the distribution center in Ohio constituted triggering events, and accordingly, performed impairment tests during the quarter ended September 30, 2023 on assets related to the Walmart partnership. We used the discounted cash flow method of the income approach in our analyses and considered projected cash flows for the remaining terms of the various agreements and other costs related to ending the Walmart partnership, and used discount rates between 7.8% and 10.0% depending on the asset or asset group being valued. A decrease in the estimated cash flows would lead to a lower fair value measurement, as would an increase in the discount rate. These non-recurring fair value measurements are classified as Level 3 measurements in the fair value hierarchy. The impairment charges recognized during the three and nine months ended September 30, 2023 resulting from the impending Walmart partnership termination include $60.1 million related to goodwill of the Legacy segment, $9.1 million related to the Walmart contracts and relationship intangible asset, and $10.2 million related to property and equipment at Walmart stores and associated with our AC Lens business. These expenses were recognized in Corporate/Other, and the impairment charges are reflected in Asset impairment in the Condensed Consolidated Statements of Operations and Comprehensive Income. The estimated remaining fair value of the assets impaired during the three and nine months ended September 30, 2023 as a result of the termination of the Walmart partnership was $1.5 million. We adjusted the useful lives of the impaired intangible and fixed assets to be aligned
with the respective contract termination dates. The impairment testing date for (i) goodwill related to the Legacy segment, (ii) the Walmart contract and relationships intangible asset and (iii) property and equipment located in Walmart stores was contemporaneous with the date that we received notice of non-renewal from Walmart. We did not impair certain assets that we believe can be sold or used in other stores in our Owned & Host segment after the Termination Date. We determined that all long-lived Walmart and AC Lens assets were held and used as of September 30, 2023 and were not available for immediate sale.
Aggregate intangible asset amortization expense is included in Depreciation and amortization in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income. Aggregate future estimated intangible asset amortization expense, including remaining carrying value of $0.2 million related to the Walmart contracts and relationship intangible asset as of September 30, 2023, is shown in the following table:
Fiscal YearIn thousands
2023 - remainder of fiscal year
$542 
20241,675 
20251,563 
20261,525 
20271,525 
Thereafter13,984 
$20,814 
Refer to the Note 1. “Description of Business and Basis of Presentation” for more details on our impairment testing.
Employee compensation benefits
During the three and nine months ended September 30, 2023, we recognized $0.3 million in Costs of services and plans and $1.7 million in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income, in the Corporate/Other category, related to retention bonus programs implemented for certain associates to ensure continuity of business until the Termination Date, as well as termination benefits for certain associates that are probable to occur within the next 12 months. The liability for employee compensation benefits is recorded in Other payables and accrued expenses in the Condensed Consolidated Balance Sheets.
Professional Fees
During the three and nine months ended September 30, 2023, we recognized $0.2 million in Selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income, in the Corporate/Other category, related to professional fees, including advisory fees to assist with the exit.