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Navient (NAVI) to Divest Healthcare Services Arm to CorroHealth
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Navient Corporation (NAVI - Free Report) entered into an agreement to divest its Healthcare Services business to CorroHealth — a leading health technology company. The move is a part of NAVI's ongoing plan to streamline its business operations.
The Healthcare Services business will be acquired for $365 million in cash consideration and is expected to be completed by the end of September, subject to customary adjustments.
Its healthcare revenue cycle management division, known as Xtend Healthcare, is based in Hendersonville, TN. CorroHealth will continue to run Xtend from its Hendersonville offices. As part of the agreement, about 950 staff will join CorroHealth.
This transaction is a significant milestone in NAVI’s initiative to explore strategic options for its Business Processing Solutions segment and strategic objectives to simplify the business, lower expense base and enhance flexibility.
Per CorroHealth's top management, the addition of Xtend will allow the company to offer an even more fully-rounded suite of solutions to customers, further strengthening their financial position and empowering them to focus on providing high-quality health care.
The final financial statement impact of the sale will be based on several factors, including net sale proceeds and book value at the time of closing. The size of the net gain from the sale has not yet been established. The Healthcare Services business had a book value of about $136 million as of Jun 30, 2024, which included acquired intangible assets and goodwill valued at $113 million.
Negotiations regarding the possible sale of Navient's Government Services division are still ongoing. At present, it is uncertain how the Government Services business process will affect financial statements and whether there will be a gain or loss. As of Jun 30, 2024, the Government Services business had a book value of about $192 million, which included acquired intangible assets and goodwill valued at $138 million.
Navient aims to improve operating efficiency by undertaking various cost-control initiatives. Its expenses declined at a compound annual growth rate of 4.9% over the last four years (ended 2023), with the declining trend continuing in the first half of 2024. Ongoing efforts by the company for expense reduction remain encouraging. In January 2024, it announced its plans to undertake strategic initiatives, including three major actions to reduce overall costs.
In line with this, NAVI entered into a servicing outsourcing agreement with MOHELA in April. Outsourcing is a key facilitator of its ability to achieve lasting expense reduction. Nearly 900 Navient employees have now transferred to MOHELA and its variable cost servicing model is in effect.
The company implemented a flatter organizational structure in the second quarter to achieve its strategic objectives, focusing on servicing and BPS transitions, expense reductions and preparing for an 80-90% decline in employee count. Such moves are likely to reduce its expense base, thereby aiding bottom-line growth.
Other Banks Taking Similar Steps
This month, Citigroup (C - Free Report) announced its plans to divest its trust business, a unit within its private banking operations, which manages trust and estate planning needs for its ultra-wealthy clients. Discussions about the deal, internally code-named ‘Project Mango,’ began almost a year ago. C identified a buyer for its trust business, though the identity of the buyer remains confidential. A previous bid of $70 million from another firm fell through. The agreement’s final details, including its worth, remain under wraps.
In July, Barclays (BCS - Free Report) announced the divestiture of its German consumer finance business, Consumer Bank Europe, to BAWAG P.S.K., a subsidiary of BAWAG Group AG. This strategic move aligns with BCS’ plan to streamline its operations as outlined in the Investor Update on Feb 20, 2024.
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Navient (NAVI) to Divest Healthcare Services Arm to CorroHealth
Navient Corporation (NAVI - Free Report) entered into an agreement to divest its Healthcare Services business to CorroHealth — a leading health technology company. The move is a part of NAVI's ongoing plan to streamline its business operations.
The Healthcare Services business will be acquired for $365 million in cash consideration and is expected to be completed by the end of September, subject to customary adjustments.
Its healthcare revenue cycle management division, known as Xtend Healthcare, is based in Hendersonville, TN. CorroHealth will continue to run Xtend from its Hendersonville offices. As part of the agreement, about 950 staff will join CorroHealth.
This transaction is a significant milestone in NAVI’s initiative to explore strategic options for its Business Processing Solutions segment and strategic objectives to simplify the business, lower expense base and enhance flexibility.
Per CorroHealth's top management, the addition of Xtend will allow the company to offer an even more fully-rounded suite of solutions to customers, further strengthening their financial position and empowering them to focus on providing high-quality health care.
The final financial statement impact of the sale will be based on several factors, including net sale proceeds and book value at the time of closing. The size of the net gain from the sale has not yet been established. The Healthcare Services business had a book value of about $136 million as of Jun 30, 2024, which included acquired intangible assets and goodwill valued at $113 million.
Negotiations regarding the possible sale of Navient's Government Services division are still ongoing. At present, it is uncertain how the Government Services business process will affect financial statements and whether there will be a gain or loss. As of Jun 30, 2024, the Government Services business had a book value of about $192 million, which included acquired intangible assets and goodwill valued at $138 million.
Navient aims to improve operating efficiency by undertaking various cost-control initiatives. Its expenses declined at a compound annual growth rate of 4.9% over the last four years (ended 2023), with the declining trend continuing in the first half of 2024. Ongoing efforts by the company for expense reduction remain encouraging. In January 2024, it announced its plans to undertake strategic initiatives, including three major actions to reduce overall costs.
In line with this, NAVI entered into a servicing outsourcing agreement with MOHELA in April. Outsourcing is a key facilitator of its ability to achieve lasting expense reduction. Nearly 900 Navient employees have now transferred to MOHELA and its variable cost servicing model is in effect.
The company implemented a flatter organizational structure in the second quarter to achieve its strategic objectives, focusing on servicing and BPS transitions, expense reductions and preparing for an 80-90% decline in employee count. Such moves are likely to reduce its expense base, thereby aiding bottom-line growth.
Other Banks Taking Similar Steps
This month, Citigroup (C - Free Report) announced its plans to divest its trust business, a unit within its private banking operations, which manages trust and estate planning needs for its ultra-wealthy clients. Discussions about the deal, internally code-named ‘Project Mango,’ began almost a year ago. C identified a buyer for its trust business, though the identity of the buyer remains confidential. A previous bid of $70 million from another firm fell through. The agreement’s final details, including its worth, remain under wraps.
In July, Barclays (BCS - Free Report) announced the divestiture of its German consumer finance business, Consumer Bank Europe, to BAWAG P.S.K., a subsidiary of BAWAG Group AG. This strategic move aligns with BCS’ plan to streamline its operations as outlined in the Investor Update on Feb 20, 2024.