Charleston software developer Blackbaud Inc. could book a $415 million writedown against its fourth-quarter earnings to reflect the declining value of a company it bought three years ago.
The company disclosed the estimated “impairment charge” for assets within its struggling Everfi subsidiary to shareholders last week in a filing with the Securities and Exchange Commission. It described the projected noncash accounting expense, equal to 55 percent of the original purchase price, as “material” and said that more writedowns are possible.
“The company is currently in the process of measuring the impairment and the actual amount of the impairment charge could differ materially from this estimate,” according to the Dec. 12 filing.
The final figure will be included in the fourth-quarter and full-year financial results, which typically are released by mid-February.
Daniel Island-based Blackbaud paid $750 million for the online learning business in late 2021, projecting it would deliver annual revenue gains of 20 percent. But Everfi has struggled to gain traction and has been a drag on the balance sheet, with sales down 17 percent to $67 million as of Sept. 30.
Blackbaud is now considering a possible sale of the business. It hired Wall Street investment bank Goldman Sachs in October to help evaluate “a range of options.”
“The impairment charge was determined to be necessary as part of this process,” Blackbaud said.
Started in Washington D.C., Everfi is Blackbaud’s biggest acquisition to date. The company specializes in creating standard digital learning products for K-12 students, while also helping big businesses meet their “environmental, social and governance” goals, or ESG, by providing them with online content ranging from financial wellness to racial equity and workplace diversity.
Earlier this year, Blackbaud CEO Mike Gianoni told investors that Everfi was hurt by a pullback in spending on “corporate social responsibility” programs.
“Everfi remains well-positioned to support its customers,” the company said in its filing Thursday. “We will continue to provide updates as progress is made on this initiative.”
Blackbaud added that its “core business remains strong.”
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