Risk Factors Update Summary

• Discontinuing discretionary credits program had significant costs. Costs will not be recovered, impacting financial performance.
• Customer relationships intangible assets increased from $135 million to $181 million.
• Accrued Health Insurance Costs changed from $32 million to $31 million, $18 million to $19 million, and $20 million to $19 million.
• Net income increased by 6% from $355M to $375M, with adjusted net income up 19% to $448M.
• Insurance costs remained slightly below expectations in 2023, impacting results due to volume.
• The company's net income increased from $272 million to $355 million, and comprehensive income increased from $276 million to $351 million.
• In September 2023, the company drew down $200 million from the revolver to fund share repurchases.
• Stock repurchases increased from $1,112 million to $519 million, with 6.4 million shares repurchased.
• Compensation increased by $12 million to support higher WSEs and HRIS cloud services.
• The Chamberlain Plan now allows the sale of up to 2,875 shares, an increase from the previous 33% cap.
• Working capital decreased by 52% from $338M to $141M, impacting financial stability.
• Increased insurance costs resulted in a 10% decrease in operating income from $499M to $455M.
• Property and equipment, net decreased from $24 million to $17 million, including an impairment.
• Adjusted EBITDA increased by $129 million to $697 million, with a margin increase to 14.2%.
• Goodwill balance remained at $462 million, with additions of $168 million in 2022 and 2023.
• Total assets increased by 7% from $3.31B to $3.69B, with debt rising by 34% to $1.2B.
• Long-term debt and revolving credit agreement borrowings increased from $496 million to $495 million.
• Experienced higher than expected rates of client attrition due to stopping discretionary credits.
• The 2021 Credit Agreement now includes covenants related to the 2029 Notes and 2031 Notes.
• The Chamberlain Plan's end date extended to November 10, 2024, for a duration of approximately one year.
• Total revenues increased by 8% from $4.54B to $4.92B, driven by inflationary rate increases.
• Medical Cost Trend rates were adjusted from +3.0% to +2.0%, -3.0% to -2.0%, and -0.75% to -0.50%.
• Net income increased from $272 million to $375 million, with basic EPS increasing from $4.03 to $6.61.
• Developed technology intangible assets decreased from $65 million to $46 million.
• Experienced elevated sales force attrition due to changes in industry focus and compensation structure.
• The term "deductible" was changed to "Deductible" in the 2023 Form 10-K.
• The company refined estimates over a one-year measurement period, affecting asset values on the balance sheets.
• Total WSEs increased by approximately 4,500 for December 31, 2023, impacting Average WSEs.
• The non-GAAP effective tax rate was 25.6% for 2023, slightly up from 25.5% in 2022.
• Average WSEs decreased by 5% from 331,423 to 323,672, impacting insurance costs.
• The Stockholder Agreement amendment eliminates Atairos' ability to vote separately from other stockholders.
• Average WSEs decreased by 5% in 2023 due to lower hiring and net client attrition.
• Upgraded and released a new ERP system in 2023, focusing on modernization and automation.
• Insurance Cost Ratio decreased to 84% in 2023 due to higher health insurance costs.
• Devoted resources to decoupling and modernizing PEO and HRIS platforms, aiming for faster time to market.
• Operating Income increased by $124 million, driven by higher revenues and compensation expenses.
• Increased health benefits utilization and medical claims in 2023 compared to 2022.
• Financing activities saw a net cash decrease of $95 million in 2023 due to stock repurchases.