CHICAGO – Alight, Inc. (NYSE: ALIT), a prominent provider of cloud-based human capital technology and services, has completed the sale of its Payroll & Professional Services business to an affiliate of H.I.G. Capital, the company announced today.

The deal, which was previously disclosed, includes a transaction value of up to $1.2 billion, comprising $1 billion in upfront cash and up to $200 million in seller notes, with $150 million contingent on the newly named Strada meeting certain financial targets by 2025.

The sale is expected to significantly reduce Alight’s debt, with anticipated net leverage ratio falling below three times. Proceeds from the sale are slated for debt reduction, share repurchases, and general corporate use.

Stephan Scholl, CEO of Alight, described the sale as a strategic milestone that enhances the company’s transformation into a more focused platform dedicated to employee wellbeing and benefits. William P. Foley, II, Chair of the Board, echoed these sentiments, stating that the transaction unlocks potential for Alight to drive sustainable, profitable growth and shareholder value.

Alight plans to reveal its historic pro forma results for the continuing business on July 18, 2024, followed by a webcast discussing the transaction’s closure.

Strada emerges from the sale as an independent entity, continuing to offer comprehensive human capital management and payroll technology and services globally. It boasts over 8,000 employees and delivers mission-critical solutions to enterprise clients in 185 countries.

The press release also contained forward-looking statements regarding the expected benefits of the sale, including financial objectives and anticipated future performance. However, the company cautioned that these statements are subject to risks and uncertainties, which could cause actual results to differ materially.

This news article is based on a press release statement from Alight, Inc.

In other recent news, Alight Solutions has been actively making strategic moves. The company has entered into an accelerated share repurchase agreement with Barclays Bank PLC to buy back $75 million of its common stock, a decision that underscores its confidence in its business performance.

Simultaneously, Alight’s first-quarter results fell slightly short of revenue and earnings expectations, prompting financial services firm DA Davidson to lower its price target for the company from $14.00 to $12.00, while maintaining a Buy recommendation.

In addition to these developments, Alight is planning a divestiture, which has led the company to focus on its mid-term outlook rather than reaffirming its previous guidance for 2024. This outlook anticipates an annual revenue growth of 4%-6%, with an increase in adjusted EBITDA margins to 28%, and a net leverage ratio staying below 3.0 times.

Moreover, Alight has announced major leadership changes, including the appointment of Jeremy Heaton as CFO and Greg Goff as President. The company has also reported a 22% increase in high-growth BPaaS revenue and expects to see a stronger performance in the second half of 2024, coinciding with the completion of its cloud migration. These recent developments highlight Alight’s strategic focus on growth and profitability, even as it navigates a period of significant change.

InvestingPro Insights

Following the strategic divestiture of its Payroll & Professional Services business, Alight, Inc. (NYSE: ALIT) stands poised to reshape its financial structure and market positioning. The transaction is set to bolster Alight’s focus on its core offerings, potentially leading to a more streamlined and efficient operation.

An analysis of recent data from InvestingPro shows Alight with a market capitalization of approximately $3.96 billion. This valuation comes at a time when the company’s net income is expected to grow this year, according to an InvestingPro Tip. Moreover, Alight’s liquid assets have been reported to exceed short-term obligations, indicating a solid liquidity position which could be reassuring to investors considering the company’s transformation.

Despite not having turned a profit over the last twelve months, analysts are optimistic, predicting profitability for Alight within the year, as per another InvestingPro Tip. However, it’s worth noting that the company is trading at a high EBIT valuation multiple and does not pay a dividend to shareholders, which might be a consideration for income-focused investors.

InvestingPro Data further reveals a revenue growth of 13.03% for the last twelve months as of Q1 2024, although the most recent quarterly comparison shows a slight decline of 4.61%. The gross profit margin remains strong at 36.09%, with an operating income margin of 1.39%, underscoring the efficiency of Alight’s operations despite the broader financial picture.

Investors and potential shareholders can find additional insights and metrics on Alight, including a total of 7 InvestingPro Tips, by visiting InvestingPro’s dedicated company page. Moreover, those interested in a deeper dive into the company’s financials can benefit from a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

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