☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 31, 2022,~~May 2, 2023, there were approximately ~~102,904,024~~103,647,164 shares of the registrant’s Class A common stock outstanding.

The accompanying notes are an integral part of these condensed consolidated financial statements.

4.. Long-Term Debt Obligations

The Company’s debt obligations consisted of the following (in thousands):


	September 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Secured Debt
Term Loan A - tranche one due March 2024	$	145,926		$	149,195
Term Loan A - tranche two due August 2024		1,615,067			1,636,797
Accounts receivable financing agreement due October 2024		400,000			400,000
Term A Facility due November 2027							$	1,350,000		$	1,350,000
Revolver due November 2027								120,993			120,993
Accounts receivable financing agreement due October 2025								550,000			550,000
Total secured debt		2,160,993			2,185,992			2,020,993			2,020,993
Unsecured Debt
Senior notes due January 2029 (the “Notes”)		600,000			600,000			600,000			600,000
Total debt obligations		2,760,993			2,785,992			2,620,993			2,620,993
Less: Term loan original issuance discount		(1,564	)		(2,228	)		(3,157	)		(3,322	)
Less: Unamortized deferred issuance costs		(6,959	)		(8,043	)		(6,256	)		(6,505	)
Total long-term debt	$	2,752,470		$	2,775,721		$	2,611,580		$	2,611,166

Credit Agreement

The Company is party to ~~a credit agreement (as amended, the “Credit~~an Amended & Restated Credit Agreement (“A&R Credit Agreement”) that matures in November 2027 and includes a ~~Term Loan~~$1.35 billion term loan A facility (“Term ~~Loan A”~~A Facility”) ~~that has two tranches (as detailed in the table above),~~ and a $~~600.0~~1.00 ~~million~~billion revolving credit facility ~~that matures on August 1, 2024~~ (the “Revolver”). ~~During the three months ended September 30, 2022, the Company made $25.0~~ million of voluntary prepayments against Term Loan A that were applied to future mandatory principal payments due. As a result of these and previous voluntary prepayments, the Company is not required to make a mandatory payment against the principal balance of Term Loan A until January 2024. In connection with these prepayments, the Company recorded a $~~0.1~~ ~~million loss on extinguishment of debt during the three months ended September 30, 2022.~~ As of ~~September 30, 2022,~~March 31, 2023, the interest rate on the Term ~~Loan~~ A Facility was ~~4.37~~6.16%.

Revolver and Letters of Credit

The Revolver includes letters of credit (“LOCs”) with a sublimit of $150.0 million. As of ~~September 30, 2022,~~March 31, 2023, there were $no121.0 million of outstanding borrowings under the Revolver ~~borrowings~~ and $~~13.9~~14.2 million of LOCs outstanding, leaving $~~586.1~~864.8 million of available borrowings under the Revolver, including $~~136.1~~135.8 million available for LOCs. As of March 31, 2023, the interest rate on the Revolver was 6.15%.

The Notes

The Notes bear interest at a rate of ~~3.625%~~3.625% per annum, payable semi-annually in arrears that began on July 15, 2021, and will mature on January 15, 2029.

~~Table of Contents~~

Accounts Receivable Financing Agreement

The Company has an accounts receivable financing agreement ~~(as amended)~~(the “Receivables Financing Agreement”) with a termination date of October ~~2024,~~2025, unless terminated earlier pursuant to its terms. As of ~~September 30, 2022,~~March 31, 2023, the Company had $~~400.0~~550.0 million of outstanding borrowings under this agreement, which were recorded in long-term debt on the accompanying condensed consolidated balance sheet. There was no remaining borrowing capacity available under this agreement as of ~~September 30, 2022.~~March 31, 2023. As of ~~September 30, 2022,~~March 31, 2023, the interest rate on the accounts receivable financing agreement was ~~4.06~~5.81%.
.

~~On October 3, 2022, the Company amended its accounts receivable financing agreement to increase the amount it can borrow from $~~11

~~400.0~~Table of Contents

~~million to $550.0~~ ~~million, and drew down the additional $150.0~~ ~~million. At the same time, the Company made voluntary prepayments on its Term Loan A totaling $150.0~~ ~~million; therefore, there was no incremental impact on the Company’s debt balance.~~

Maturities of Debt Obligations

As of ~~September 30, 2022,~~March 31, 2023, the contractual maturities of the Company’s debt obligations (excluding finance leases) were as follows (in thousands):


	Principal			Principal
Remainder of 2022	$	—
2023		—
Remainder of 2023				$	—
2024		2,160,993			33,750
2025		—			617,500
2026		—			67,500
2027 and thereafter		600,000
2027					1,302,243
2028 and thereafter					600,000
Less: Term loan original issuance discount		(1,564	)		(3,157	)
Less: Unamortized deferred issuance costs		(6,959	)		(6,256	)
Total	$	2,752,470		$	2,611,580

5.4. Derivatives

Interest Rate Swaps

The Company has entered into various interest rate swaps to mitigate its exposure to changes in interest rates on its variable rate debt. In March 2020, the Company entered into interest rate swaps with multiple counterparties. The interest rate swaps had an initial aggregate notional value of $549.2 million that increased to $1.42 billion on June 30, 2021, an effective date of March 31, 2020, and expired on March 31, 2023.

In March 2023, the Company entered into interest rate swaps with multiple counterparties. The interest rate swaps had an initial aggregate notional value of $650.0 million, an effective date of March 31, 2023, and will expire on March 31, ~~2023. As of September 30, 2022, the notional value of these interest rate swaps was $~~2026.~~1.03~~ ~~billion.~~

~~Foreign Exchange Forward~~

On October 30, 2020, the Company entered into a foreign exchange forward in order to minimize monthly foreign currency remeasurement gains or losses on non-functional currency monetary balances. The foreign exchange forward notional value may be adjusted each month as the exposure balance changes. The Company did not designate the derivative as a hedge. All changes in the fair value of the foreign exchange forward are recorded in earnings every month to other (income) expense, net in the accompanying condensed consolidated statements of income. The Company recognized $~~2.6~~ ~~million and $10.0~~ ~~million of realized losses during the three and nine months ended September 30, 2022, respectively, and $2.0~~ ~~million and $0.5~~ ~~million of realized losses during the three and nine months ended September 30, 2021, respectively, related to this foreign exchange forward. As of September 30, 2022, the notional value was~~ ~~zero~~ ~~as the Company discontinued the use of this foreign exchange forward during the three months ended September 30, 2022.~~

~~Table of Contents~~

Fair Values

The fair values of the Company’s derivative financial instruments and the line items on the accompanying condensed consolidated balance sheets to which they were recorded were as follows (in thousands):


	Balance Sheet Classification	September 30, 2022		December 31, 2021		Balance Sheet Classification	March 31, 2023		December 31, 2022
Interest rate swaps - current	Prepaid expenses and other current assets	$	17,829	$	—	Prepaid expenses and other current assets	$	5,082	$	10,073
Interest rate swaps - non-current	Other long-term assets		—		948
Fair value of derivative assets		$	17,829	$	948		$	5,082	$	10,073

Interest rate swaps - current	Accrued expenses	$	—	$	1,827
Interest rate swaps - non-current						Other long-term liabilities	$	7,567	$	—
Fair value of derivative liabilities		$	—	$	1,827		$	7,567	$	—

6.5. Fair Value Measurements

Assets and Liabilities Carried at Fair Value

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company’s financial assets and liabilities carried at fair value included cash and cash equivalents, restricted cash, trading securities, accounts receivable, unbilled services (including contract assets), accounts payable, accrued expenses, deferred revenue, contingent obligations, liabilities under the accounts receivable financing agreement, and derivative instruments.

Table of Contents

The fair values of cash and cash equivalents, restricted cash, accounts receivable, unbilled services (including contract assets), accounts payable, accrued expenses, deferred revenue, and the liabilities under the accounts receivable financing agreement approximate their respective carrying amounts because of the liquidity and short-term nature of these financial instruments.

Financial Instruments Subject to Recurring Fair Value Measurements

As of ~~September 30,~~March 31, 2023, the fair values of the major classes of the Company’s assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):


	Level 1		Level 2		Level 3		Investments Measured at Net Asset Value		Total
Assets:
Trading securities (a)	$	21,895	$	—	$	—	$	—	$	21,895
Partnership interests (b)		—		—		—		14,930		14,930
Derivative instruments (c)		—		5,082		—		—		5,082
Total assets	$	21,895	$	5,082	$	—	$	14,930	$	41,907

Liabilities:
Derivative instruments (c)	$	—	$	7,567	$	—	$	—	$	7,567
Contingent obligations related to acquisitions (d)		—		—		16,100		—		16,100
Total liabilities	$	—	$	7,567	$	16,100	$	—	$	23,667

As of December 31, 2022, the fair values of the major classes of the Company’s assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):

Level 1

Level 2

Level 3

Investments
Measured
at Net
Asset Value

Total

Assets:

Trading securities (a)

$
19,347

$
—

$
—

$
—

$
19,347

Partnership interests (b)

—

—

—

12,906

12,906

Derivative instruments (c)

—

17,829

—

—

17,829

Total assets

$
19,347

$
17,829

$
—

$
12,906

$
50,082

Liabilities:

Contingent obligations related to acquisitions (d)

$
—

$
—

$
16,100

$
—

$
16,100

Total liabilities

$
—

$
—

$
16,100

$
—

$
16,100

~~Table of Contents~~

~~As of December 31, 2021, the fair values of the major classes of the Company’s assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):~~


	Level 1		Level 2		Level 3		Investments Measured at Net Asset Value		Total		Level 1		Level 2		Level 3		Investments Measured at Net Asset Value		Total
Assets:
Trading securities (a)	$	24,775	$	—	$	—	$	—	$	24,775	$	20,465	$	—	$	—	$	—	$	20,465
Partnership interests (b)		—		—		—		11,176		11,176		—		—		—		15,367		15,367
Derivative instruments (c)		—		948		—		—		948		—		10,073		—		—		10,073
Total assets	$	24,775	$	948	$	—	$	11,176	$	36,899	$	20,465	$	10,073	$	—	$	15,367	$	45,905

Liabilities:
Derivative instruments (c)	$	—	$	1,827	$	—	$	—	$	1,827
Contingent obligations related to acquisitions (d)		—		—		17,997		—		17,997		—		—		16,100		—		16,100
Total liabilities	$	—	$	1,827	$	17,997	$	—	$	19,824	$	—	$	—	$	16,100	$	—	$	16,100

(a) Represents the fair value of investments in mutual funds based on quoted market prices that are used to fund the liability associated with the Company’s deferred compensation plan.

(b) The Company has committed to invest $21.5 million as a limited partner in two private equity funds. The private equity funds invest in opportunities in the healthcare and life sciences industry. As of ~~September 30, 2022,~~March 31, 2023, the Company’s remaining unfunded commitment in the private equity funds was $~~9.7~~6.9 million. The Company holds minor ownership interests (less than 3%) in each of the private equity funds and has determined that it does not exercise significant influence over the private equity funds’ operating and finance activities. As the private equity funds do not have readily determinable fair values, the Company has estimated the fair values using each fund’s Net Asset Value, the amount by which the value of all assets exceeds all debt and liabilities, in accordance with Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies.

(d) Represents the fair value of contingent consideration obligations related to acquisitions. The fair values of these liabilities are determined based on the Company’s best estimate of the probable timing and amount of settlement.

Table of Contents

The following table presents a reconciliation of changes in the carrying amount of contingent obligations classified as Level 3 for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 (in thousands):


Balance as of December 31, 2021	$	17,997
Balance as of December 31, 2022				$	16,100
Additions ~~(a)~~		1,500			—
Changes in fair value recognized in earnings		(315	)		—
Payments ~~(b)~~		(3,082	)		—
Balance as of September 30, 2022	$	16,100
Balance as of March 31, 2023				$	16,100

~~(a) Represents obligations in connection with an insignificant acquisition completed during~~During the three months ended ~~September 30, 2022.~~

~~(b) The Company made payments to fully settle the obligations in connection with the insignificant acquisition completed during the third quarter of 2021.~~

~~During the nine months ended September 30, 2022,~~March 31, 2023, there were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 fair value measurements.

~~Table of Contents~~

Financial Instruments Subject to Non-Recurring Fair Value Measurements

Certain assets, including goodwill and identifiable intangible assets, are carried on the accompanying condensed consolidated balance sheets at cost and, subsequent to initial recognition, are measured at fair value on a non-recurring basis when certain identified events or changes in circumstances that may have a significant adverse effect on the carrying values of these assets occur. These assets are classified as Level 3 fair value measurements within the fair value hierarchy. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate a triggering event has occurred. Intangible assets are tested for impairment upon the occurrence of certain triggering events. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, assets carried on the accompanying condensed consolidated balance sheets and not remeasured to fair value on a recurring basis totaled $~~5.57~~5.56 billion and $~~5.83~~5.59 billion, respectively.

Fair Value Disclosures for Financial Instruments Not Carried at Fair Value

The estimated fair values of the ~~term loan (based on tranche)~~Term A Facility and the Notes are determined based on the price that the Company would have had to pay to settle the liabilities. As these liabilities are not actively traded, they are classified as Level 2 fair value measurements. The estimated fair values of the Company’s ~~term loan (based on tranche)~~Term A Facility and the Notes were as follows (in thousands):

September 30, 2022

December 31, 2021

Carrying
Value (a)

Estimated
Fair Value

Carrying
Value (a)

Estimated
Fair Value

Term Loan A - tranche one due March 2024

$
145,797

$
143,737

$
149,008

$
148,945

Term Loan A - tranche two due August 2024

1,613,632

1,590,841

1,634,756

1,635,138

Senior notes due January 2029

600,000

486,000

600,000

595,500


	March 31, 2023				December 31, 2022
	Carrying Value (a)		Estimated Fair Value		Carrying Value (a)		Estimated Fair Value
Term A Facility due November 2027	$	1,346,843	$	1,329,750	$	1,346,678	$	1,329,750
Senior notes due January 2029		600,000		501,000		600,000		484,500

(a) The carrying value of the ~~term loan debt~~Term A Facility is shown net of original issue discounts.

7.6. Restructuring and Other Costs

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company incurred employee severance and benefit costs, leased facility closure and ~~lease termination~~related costs, and other costs related to its restructuring activities. ~~These~~The costs incurred during the current year were primarily related to the Company's real estate optimization initiative to close or reduce office space that is no longer being utilized. This includes $54.7 million of accelerated amortization of operating lease right-of-use assets and $18.0 million of accelerated depreciation of property and equipment, both of which are non-cash expenses. The costs incurred during the prior year were primarily related to the Company’s ~~ForwardBound~~margin enhancement ~~initiative. We expect~~initiatives and specific actions focused on streamlining the operations of its Clinical Solutions segment to optimize efficiency and enhance the delivery of customer projects. The Company expects to continue to incur costs related to its business transformation initiatives, including the ~~restructuring~~potential outsourcing of ~~our operations~~certain administrative functions, during ~~2022~~the remainder of 2023 and beyond as ~~we continue~~the Company continues the ongoing evaluations of ~~our~~its global workforce and facilities infrastructure needs to improve customer engagement, increase innovation, and ~~in light~~achieve operating efficiencies.

Table of ~~changing market conditions and customer requirements.~~Contents

Restructuring and other costs consisted of the following (in thousands):

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Employee severance and benefit costs

$
7,402

$
3,438

$
24,590

$
11,815

Facility and lease termination costs

1,325

3,760

4,677

6,530

Other costs

—

11

4,000

58

Total restructuring and other costs

$
8,727

$
7,209

$
33,267

$
18,403

~~Table of Contents~~


	Three Months Ended March 31,
	2023		2022
Employee severance and benefit costs	$	10,180	$	14,820
Leased facility closure and related costs		74,313		(319	)
Other costs		194		1,056
Total restructuring and other costs	$	84,687	$	15,557

Accrued Restructuring Liabilities

The following table summarizes activity related to employee severance and benefit costs within accrued restructuring liabilities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 (in thousands):


Balance as of December 31, 2021	$	6,657
Balance as of December 31, 2022				$	12,804
Expenses incurred (a)		24,590			10,180
Payments		(18,443	)		(10,002	)
Balance as of September 30, 2022	$	12,804
Balance as of March 31, 2023				$	12,982

(a) The amount of expenses incurred for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 excludes $~~4.0~~0.2 million of other costs that ~~are included in~~were paid through accounts payable and $~~4.7~~74.3 million of leased facility ~~lease~~ closure and ~~lease termination~~related costs that are primarily reflected as reductions of operating lease right-of-use assets ~~current portion of operating lease obligations,~~ and ~~operating lease long-term obligations under ASC Topic 842,~~ ~~Leases,~~property and equipment, net on the accompanying condensed consolidated balance sheet.

The Company expects the employee severance and benefit costs accrued as of ~~September 30, 2022~~March 31, 2023 will be paid within the next twelve months and are included within accrued expenses on the accompanying condensed consolidated balance sheet.

8.7. Shareholders’ Equity

Shares Outstanding

Shares of Class A common stock outstanding were as follows (in thousands):

Three Months Ended
September 30,

Nine Months Ended
September 30,

2022

2021

2022

2021

Common stock shares, beginning balance

102,647

103,473

103,764

103,935

Repurchases of common stock

—

—

(1,929
)

(1,500
)
Issuances of common stock

248

215

1,060

1,253

Common stock shares, ending balance

102,895

103,688

102,895

103,688


	Three Months Ended March 31,
	2023		2022
Class A common stock shares, beginning balance		102,911		103,764
Repurchases of Class A common stock		—		(1,929	)
Issuances of Class A common stock		730		723
Class A common stock shares, ending balance		103,641		102,558

Stock Repurchase Programs

On ~~November 17, 2020,~~May 25, 2022, the Company’s Board of Directors (the “Board”) authorized the repurchase of up to an aggregate of $~~300.0~~350.0 million of the Company’s Class A common stock, par value $0.01 per share, to be executed from time to time in open market transactions effected through a broker at prevailing market prices, in block trades, or through privately negotiated transactions through December 31, ~~2022~~2024 (the ~~“2021~~“2022 Stock Repurchase Program”). The ~~2021~~2022 Stock Repurchase Program replaced a prior repurchase program approved on November 17, 2020, that took effect on January 1, 2021.

On May 25, 2022, the Board approved a new stock repurchase program (the “2022 Stock Repurchase Program”) that took effect immediately and replaced the 2021 Stock Repurchase Program. The 2022 Stock Repurchase Program authorizes the Company to repurchase up to $~~350.0~~ ~~million of the Company’s Class A common stock, par value $0.01, and will expire on December 31, 2024.~~

1715

Table of Contents

The 2022 Stock Repurchase Program does not obligate the Company to repurchase any particular amount of the Company’s Class A common stock, and may be modified, extended, suspended, or discontinued at any time. The timing and amount of repurchases will be determined by the Company’s management based on a variety of factors such as the market price of the Company’s Class A common stock, the Company’s corporate cash requirements, and overall market conditions. The 2022 Stock Repurchase Program is subject to applicable legal requirements, including federal and state securities laws and applicable Nasdaq rules. The Company may also repurchase shares of its Class A common stock pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit shares of the Company’s Class A common stock to be repurchased when the Company might otherwise be precluded from doing so by law.

During the three months ended ~~September 30, 2022,~~March 31, 2023, there were no repurchases under the 2022 Stock Repurchase Program.

~~The following table sets forth repurchase activity under the 2021 Stock Repurchase Program from inception through the program’s termination on May 25, 2022:~~

Total number of
shares purchased

Average price
paid per share

Approximate
dollar value of
shares purchased
(in thousands)

March 2021

600,000

$
74.18

$
44,505

May 2021

400,000

81.04

32,416

June 2021

500,000

81.20

40,600

February 2022

515,003

78.52

40,439

March 2022

1,413,920

77.46

109,522

Total

3,428,923

$
267,482

The Company immediately retired all of the repurchased common stock and charged the par value of the shares to common stock. The excess of the repurchase price over the par value was applied on a pro rata basis against additional paid-in capital, with the remainder applied to retained earnings (accumulated deficit).

As of ~~September 30, 2022,~~March 31, 2023, the Company had remaining authorization to repurchase up to $350.0 million of shares of its Class A common stock under the 2022 Stock Repurchase Program.

9.8. (Loss) Earnings Per Share

The following table provides a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2022		2021		2022		2021		2023			2022
Numerator:
Net income	$	87,049	$	78,243	$	210,969	$	158,872
Net (loss) income									$	(72,149	)	$	46,176
Denominator:
Basic weighted average common shares outstanding		102,731		103,562		102,997		103,924		103,326			103,665
Effect of dilutive securities:
Stock options and other awards under deferred share-based compensation programs		475		1,223		566		1,163		—			745
Diluted weighted average common shares outstanding		103,206		104,785		103,563		105,087		103,326			104,410
Earnings per share:
(Loss) earnings per share:
Basic	$	0.85	$	0.76	$	2.05	$	1.53	$	(0.70	)	$	0.45
Diluted	$	0.84	$	0.75	$	2.04	$	1.51	$	(0.70	)	$	0.44

~~Table of Contents~~

Potential common shares outstanding that are considered anti-dilutive are excluded from the computation of diluted (loss) earnings per share. Potential common shares related to stock options and other awards under share-based compensation programs may be determined to be anti-dilutive based on the application of the treasury stock method. Potential common shares are also considered anti-dilutive in periods when the Company incurs a net loss.

The number of potential shares outstanding that were anti-dilutive and therefore excluded from the computation of diluted (loss) earnings per share, weighted for the portion of the period they were outstanding, were as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Anti-dilutive stock options and other awards		1,311		165
Anti-dilutive stock options and other awards under share-based compensation programs excluded based on reporting a net loss for the period		438		—
Total Class A common stock equivalents excluded from diluted (loss) earnings per share		1,749		165

Table of Contents

9~~838,177~~, ~~128,894~~, ~~592,541, and~~ ~~146,339~~ ~~for the three and nine months ended September 30, 2022 and 2021, respectively.~~

~~10.~~. Income Taxes

Income Tax (Benefit) Expense

For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company recorded an income tax ~~expense~~benefit of $~~29.6~~3.0 million ~~and $62.9~~ ~~million, respectively, compared to~~on a pre-tax ~~income~~loss of $~~116.7~~75.2 ~~million and $273.9~~ ~~million, respectively.~~million. Income tax ~~expense~~benefit for the three months ended ~~September 30, 2022~~March 31, 2023 included discrete tax expense of $~~3.1~~5.6 million, primarily related to ~~unrecognized~~ tax ~~benefits. Income tax expense for the nine months ended September 30, 2022 included net discrete tax benefits of $3.3~~ ~~million, primarily related to excess tax benefits~~shortfalls from share-based ~~compensation partially offset by unrecognized tax benefits related to prior year tax positions.~~compensation. The effective tax ~~rates~~rate for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, excluding discrete items, varied from the United States (“U.S.”) federal statutory income tax rate of 21.0% primarily due to ~~state and local taxes on U.S. income,~~foreign tax credits, foreign income inclusions such as the Global Intangible Low-Taxed Income (“GILTI”) provisions, and ~~foreign tax~~research and development credits.

For the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the Company recorded income tax expense of $~~22.2~~7.3 million ~~and $39.6~~ ~~million, respectively, compared to~~on pre-tax income of $~~100.4~~53.5 ~~million and $198.5~~ ~~million, respectively.~~million. Income tax expense for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 included a discrete tax ~~benefits~~benefit of $~~0.7~~6.1 million, ~~and $6.5~~ ~~million, respectively,~~ primarily related to excess tax benefits from share-based compensation. The effective tax ~~rates~~rate for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, excluding discrete items, varied from the U.S. federal statutory income tax rate of 21.0% primarily due to foreign ~~tax credits, foreign~~ income inclusions such as the GILTI provisions, ~~and~~ state and local taxes on U.S. ~~income.~~income, and research and development credits.

Unrecognized Tax Benefits

The Company’s gross unrecognized tax benefits, exclusive of associated interest and penalties, were $~~14.3~~19.4 million and $~~12.1~~16.8 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The increase of $~~2.2~~2.6 million was primarily due to ~~changes in~~new positions related to prior ~~year positions.~~years. The Company believes it is reasonably possible that its unrecognized tax benefits may decrease by approximately $~~1.3~~3.4 million within the next 12 months as a result of lapses in statutes of limitations.

Tax Returns under Audit

The Company is not currently under any U.S. federal income tax audits, however, income tax returns are under examination by tax authorities in several state and foreign jurisdictions. The Company’s federal and state tax filings are open to investigations in numerous years due to net operating loss carryforwards. Additionally, the Company currently has an ongoing examination for tax years 2014 to 2020 in the United Kingdom. The United Kingdom is the jurisdiction with the Company’s largest foreign operations. The Company believes that its reserve for uncertain tax positions is adequate to cover existing risks or exposures related to all open tax years and jurisdictions.

~~Table of Contents~~

~~11.~~10. Revenue from Contracts with Customers

Unsatisfied Performance Obligations

As of ~~September 30, 2022,~~March 31, 2023, the total aggregate transaction price allocated to the unsatisfied performance obligations under contracts with contract terms greater than one year and that are not accounted for as a series pursuant to ASC Topic 606, Revenue from Contracts with Customers and all the related amendments was $~~6.32~~5.68 billion. This amount includes revenue associated with reimbursable out-of-pocket expenses. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from one to five years. The amount of unsatisfied performance obligations is presented net of any constraints and, as a result, is lower than the potential contractual revenue. The contracts excluded due to constraints include contracts that do not commence within a certain period of time or that require the Company to undertake numerous activities to fulfill these performance obligations, including various activities that are outside of the Company’s control.

Table of Contents

Timing of Billing and Performance

During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company recognized approximately $~~363.8~~382.6 million ~~and $599.5~~ ~~million, respectively,~~ of revenue that was included in the deferred revenue balance at the beginning of the respective ~~periods.~~period. During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, there were reductions of approximately $~~19.7~~19.6 million ~~and $1.0~~ ~~million, respectively,~~ in the Company’s revenue recognized related to performance obligations partially satisfied in previous periods. The gross and net amounts of revenue recognized solely from changes in estimates were not material.

~~12.~~11. Segment Information

The Company is managed through two reportable segments: Clinical Solutions and Commercial Solutions. Each reportable segment consists of multiple service offerings that, when combined, create a leading fully integrated biopharmaceutical ~~services~~solutions organization. built to accelerate customer success. The Company translates unique clinical, medical affairs and commercial insights into outcomes to address modern market realities. Clinical Solutions offers comprehensive global services for the development of diagnostics, drugs, biologics, devices, and digital therapeutics that span ~~Phases~~ Phase I to IV of clinical development. The segment is organized around clinical pharmacology and bioanalytical services, workforce deployment, full-service clinical studies, real world evidence, and consulting. This segment offers individual services including ~~product development and~~ regulatory consulting, project management, protocol development, investigational site recruitment, clinical monitoring, technology-enabled patient recruitment and engagement, clinical home health services, clinical trial diversity, biometrics, and regulatory affairs; all across a comprehensive range of therapeutic areas. Commercial Solutions provides the pharmaceutical, biotechnology, and healthcare industries with commercialization services, including deployment solutions, ~~communication~~communications solutions (public relations, advertising, and medical communications), and consulting services.

The Company’s Chief Operating Decision Maker (the “CODM”) reviews segment performance and allocates resources based upon segment revenue and (loss) income from operations. Inter-segment revenue is eliminated from the segment reporting provided to the CODM and is not included in the segment revenue presented in the table below. Certain costs are not allocated to the Company’s reportable segments and are reported as general corporate expenses. These costs primarily consist of share-based compensation, general operating expenses associated with the Board and the Company’s senior leadership, finance, investor relations, and internal audit functions, and transaction, integration-related, and ~~integration-related~~other expenses. The Company does not allocate depreciation, amortization, asset impairment charges, or restructuring and other costs to its segments. ~~Prior period segment results have been recast to conform to insignificant changes to management reporting in 2022.~~ Additionally, the CODM reviews the Company’s assets on a consolidated basis and does not allocate assets to its reportable segments for purposes of assessing segment performance or allocating resources.

2018

Table of Contents

Information about reportable segment operating results was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2022		2021		2022		2021		2023			2022
Revenue:
Clinical Solutions	$	1,003,253	$	1,040,067	$	3,047,338	$	2,972,570	$	1,013,665		$	1,018,370
Commercial Solutions		332,970		308,163		985,877		867,016		343,135			317,883
Total revenue		1,336,223		1,348,230		4,033,215		3,839,586		1,356,800			1,336,253
Segment direct costs:
Clinical Solutions		734,934		779,270		2,263,053		2,248,796		787,388			774,668
Commercial Solutions		274,714		244,201		809,257		695,284		290,639			260,965
Total segment direct costs		1,009,648		1,023,471		3,072,310		2,944,080		1,078,027			1,035,633
Segment selling, general, and administrative expenses:
Clinical Solutions		88,823		87,907		267,588		264,742		87,561			89,902
Commercial Solutions		21,117		20,875		63,946		62,164		22,124			21,735
Total segment selling, general, and administrative expenses		109,940		108,782		331,534		326,906		109,685			111,637
Segment operating income:
Clinical Solutions		179,496		172,890		516,697		459,032		138,716			153,800
Commercial Solutions		37,139		43,087		112,674		109,568		30,372			35,183
Total segment operating income		216,635		215,977		629,371		568,600		169,088			188,983
Direct costs and operating expenses not allocated to segments:
Share-based compensation included in direct costs		8,136		8,416		24,803		25,638		10,522			8,799
Share-based compensation included in selling, general, and administrative expenses		4,839		6,683		21,696		23,253		8,170			8,534
Corporate selling, general, and administrative expenses		15,576		24,059		56,331		71,348		43,662			19,995
Restructuring and other costs		8,727		7,209		33,267		18,403		84,687			15,557
Depreciation and amortization		61,514		56,254		184,937		171,903		61,587			62,202
Total income from operations	$	117,843	$	113,356	$	308,337	$	258,055
Total (loss) income from operations									$	(39,540	)	$	73,896

~~13.~~12. Operations by Geographic Location

The following table summarizes total revenue by geographic area (in thousands, all intercompany transactions have been eliminated):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2022		2021		2022		2021		2023		2022
Revenue:
North America (a)	$	816,378	$	821,700	$	2,404,672	$	2,334,929	$	834,785	$	781,654
Europe, Middle East, and Africa		309,940		324,816		1,005,917		969,887		320,999		355,593
Asia-Pacific		173,204		159,078		506,972		429,768		164,987		160,803
Latin America		36,701		42,636		115,654		105,002		36,029		38,203
Total revenue	$	1,336,223	$	1,348,230	$	4,033,215	$	3,839,586	$	1,356,800	$	1,336,253

(a) Revenue for the North America region includes revenue attributable to the U.S. of $~~766.0~~785.8 million and $~~775.7~~736.4 million, or ~~57.3~~57.9% and ~~57.5~~55.1% of total revenue, for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively. Revenue for the North America region includes revenue attributable to the U.S. of $2,257.2~~ ~~million and $2,192.4~~ ~~million, or~~ ~~56.0% and~~ ~~57.1% of total revenue, for the nine months ended September 30, 2022 and 2021,~~ respectively. No other country represented more than 10% of total revenue for any period.

2119

Table of Contents

The following table summarizes long-lived assets by geographic area (in thousands, all intercompany transactions have been eliminated):


	September 30, 2022		December 31, 2021		March 31, 2023		December 31, 2022
Property and equipment, net:
North America (a)	$	196,637	$	165,446	$	192,992	$	202,645
Europe, Middle East, and Africa		31,119		37,004		30,303		33,827
Asia-Pacific		20,488		13,615		17,454		21,360
Latin America		7,505		6,592		4,923		6,463
Total property and equipment, net	$	255,749	$	222,657	$	245,672	$	264,295

(a) Long-lived assets for the North America region include property and equipment, net attributable to the U.S. of $~~190.0~~186.4 million and $~~160.0~~196.4 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

~~14.~~13. Concentration of Credit Risk

Financial assets that subject the Company to credit risk primarily consist of cash and cash equivalents, accounts receivable, and unbilled services (including contract assets). The Company’s cash and cash equivalents consist principally of cash and are maintained at several financial institutions with reputable credit ratings. The Company's deposits at certain of these institutions exceed insured limits. The Company maintains cash depository accounts with several financial institutions worldwide and is exposed to credit risk related to the potential inability to access liquidity in financial institutions where its cash and cash equivalents are concentrated. In the event of failure of any of the financial institutions where the Company maintains its cash and cash equivalents, there can be no assurance that the Company will be able to access uninsured funds in a timely manner or at all. The Company has not historically incurred any losses with respect to these balances and believes that ~~they bear~~it bears minimal credit risk.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, substantially all of the Company’s cash and cash equivalents were held within the U.S.

No single customer accounted for greater than 10% of the Company’s revenue for the three ~~and nine~~ months ended ~~September 30, 2022 or 2021.~~March 31, 2023 and 2022.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, no single customer accounted for greater than 10% of the Company’s accounts receivable and unbilled services (including contract assets) balances.

~~15.~~14. Related-Party Transactions

For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company had combined revenue of $~~3.4~~2.3 million ~~and $7.0~~ ~~million, respectively,~~ from ~~six~~four customers whose board of directors each included a member who was also a member of the Company’s Board. As of ~~September 30, 2022,~~March 31, 2023, the Company had combined receivables of $~~0.6~~2.4 million from ~~three~~four customers whose board of directors included a member who was also a member of the Company’s Board.

On February 8, 2022, the Company completed an insignificant acquisition, which was associated with the 2021 acquisition of RxDataScience, Inc., through an arm’s-length transaction. A member of the Company’s management was a minority shareholder of the acquired company. ~~For additional information, refer to “Note 2 – Financial Statements Details – Goodwill.”~~

For the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the Company had combined revenue of $~~0.9~~ ~~million and $2.8~~ ~~million, respectively, and, as of September 30, 2021, combined receivables of $1.5~~1.3 million from ~~two~~three customers whose board of directors each included a member who was also a member of the Company’s Board. As of March 31, 2022, the Company had receivables of $0.3 million from one customer whose board of directors included a member who was also a member of the Company’s Board.

2220

Table of Contents

~~16.~~15. Commitments and Contingencies

Legal Proceedings

In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, other than Vaitkuvienë v. Syneos Health, Inc., et al, No. 18-0029 (E.D.N.C.) (the “Vaitkuvienë action”), if decided adversely, is not expected to have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows. There have been no updates from the description of the Vaitkuvienë action included in “Note 17 – Commitments and Contingencies” to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” in the ~~2021~~2022 Form 10-K.

2316. Subsequent Event

On May 10, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Star Parent, Inc., an affiliated entity of Elliott Investment Management, Patient Square Capital and Veritas Capital (“Parent”), and Star Merger Sub, Inc., a wholly owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides that, at closing (the “Effective Time”), Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent. At closing, each share of Class A common stock of the Company issued and outstanding immediately prior to the Effective Time will be cancelled and extinguished and, except for limited exceptions, automatically converted into the right to receive $43.00 in cash (the “Merger Consideration”).

The Board has unanimously approved the Merger Agreement and directed that the Merger Agreement be submitted to the stockholders of the Company for their adoption. The closing of the Merger is subject to customary closing conditions as described in the Company’s Current Report on Form 8-K filed on May 10, 2023, including adoption of the Merger Agreement by the Company’s stockholders and receipt of required regulatory approvals. The closing of the Merger is expected to be completed during the second half of 2023.

If the Merger is consummated, the Company’s shares of Class A common stock will no longer trade on the Nasdaq Stock Market LLC and will be deregistered under the Securities Exchange Act of 1934, as amended. As a result, the Company will become a private company.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 (our ~~“2021~~“2022 Form 10-K”).

In addition to historical condensed consolidated financial information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, among other things, our current expectations and anticipated results of operations, all of which are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements, market trends, or industry results to differ materially from those expressed or implied by such forward-looking statements. Therefore, any statements contained herein that are not statements of historical fact may be forward-looking statements and should be evaluated as such, including statements regarding the structure, timing and completion of the proposed Merger (as defined below); any anticipated effects of the announcement, pendency or completion of the proposed Merger on the value of our Class A common stock; ability to obtain any required regulatory approvals in connection with the proposed Merger; expenses related to the proposed Merger and any potential future costs; future financial and operational results, our business strategy, the future impact of macroeconomic trends, such as inflation and increased interest rates, and the ongoing COVID-19 pandemic on our business, financial results, and financial condition, benefits of acquisitions, and planned capital expenditures. Without limiting the foregoing, the words “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “projects,” “should,” “would,” “targets,” “will” and the negative thereof and similar words and expressions are intended to identify forward-looking statements. Unless legally required, we assume no obligation to update any such forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.

We caution you that any such forward-looking statements are further qualified by important factors that could cause our actual operating results to differ materially from those in the forward-looking statements, including without limitation, regional, national, or global political, economic, business, competitive, market, and regulatory conditions and the following: risks related to the proposed Merger, including that the Merger may not be consummated at all or in the anticipated timeframe; the potential for securities class action and derivative lawsuits and other legal or regulatory proceedings in connection with the Merger; restrictions on our business during the pendency of the Merger that could affect our ability to pursue business opportunities or strategic transactions; uncertainties relating to the pendency of the Merger relating to our relationships with our employees and third-party business partners; our potential failure to generate a large number of new business awards and the risk of delay, termination, reduction in scope, or failure to go to contract of our business awards; our potential failure to convert backlog to revenue; ~~risks associated with the COVID-19 pandemic;~~ fluctuations in our operating results and effective income tax rate; risks associated with the ongoing COVID-19 pandemic; concentration of our customers or therapeutic areas; our potential failure to successfully increase our market share, grow our business, and execute our growth strategies; the impact of potentially underpricing our contracts, overrunning our cost estimates, or failing to receive approval for or experiencing delays with documentation of change orders; cyber-security and other risks associated with our information systems infrastructure; changes and costs of compliance with regulations related to data privacy; ~~concentration of our customers or therapeutic areas;~~ the risks associated with doing business internationally, including risks related to the war in Ukraine; challenges by tax authorities of our intercompany transfer pricing policies; our ~~potential failure to successfully increase our market share, grow our business, and execute our growth strategies; our~~ ability to effectively upgrade our information systems; failure to meet objectives of internal business transformation initiatives and dependence on third parties for outsourcing; our failure to perform our services in accordance with contractual requirements, regulatory standards, and ethical considerations; risks related to the management of clinical trials; the need to hire, develop, and retain key personnel; the impact of unfavorable economic conditions, including the uncertain international economic environment and

Table of Contents

changes in foreign currency exchange rates; ~~effective income tax rate fluctuations;~~ our ability to protect our intellectual property; risks related to our acquisition strategy, including our ability to realize synergies; risks related to stockholder activism; our relationships with customers who are in competition with each other; any failure to realize the full value of our goodwill and intangible assets; ~~risks related to restructuring;~~ our compliance with anti-corruption and anti-bribery laws; our dependence on third parties; potential employment liability; the increasing focus on environmental sustainability and social ~~initiatives;~~initiatives and impacts on our operations from climate change; our ability to utilize net operating loss carryforwards and other tax attributes; downgrades of our credit ratings; competition in the biopharmaceutical services industry; outsourcing trends and changes in aggregate spending and research and development budgets; the impact of, including changes in, government regulations and healthcare reform; intense competition faced by our customers from lower cost generic products and other competing products; our ability to keep pace with rapid technological

~~Table of Contents~~

change; the cost of and our ability to service our substantial indebtedness; and other risks related to ownership of our Class A common stock. For a further discussion of the risks relating to our business, refer to Part I, Item 1A, “Risk Factors” in our ~~2021~~2022 Form 10-K.

As used in this report, the terms “Syneos Health, Inc.,” “Company,” “we,” “us,” and “our” mean Syneos Health, Inc. and its subsidiaries unless the context indicates otherwise.

Overview of Our Business and Services

We are ~~the only~~a leading fully integrated biopharmaceutical solutions organization ~~purpose-built~~built to accelerate customer success. We ~~lead with a product development mindset, strategically blending~~translate unique clinical, ~~development,~~ medical affairs and commercial ~~capabilities~~insights into outcomes to address modern market realities for customers in the biopharmaceutical, biotechnology, and healthcare industries. We offer both stand-alone and integrated biopharmaceutical product development solutions ranging from early phase (Phase I) clinical trials to the full commercialization of biopharmaceutical products, with the goal of increasing the likelihood of regulatory approval and commercial success.realities.

Our operations are divided into two reportable segments, Clinical Solutions and Commercial Solutions. Our Clinical Solutions segment offers comprehensive global services for the development of diagnostics, drugs, biologics, devices, and digital therapeutics that span Phases I to IV of clinical development. ~~The segment is organized around clinical pharmacology and bioanalytical services, workforce deployment, full-service clinical studies, real world evidence, and consulting.~~ Our Commercial Solutions segment provides commercialization services, including deployment solutions, ~~communication solutions~~communications services (public relations, advertising, and medical communications), and consulting services. We integrate our clinical and commercial capabilities into customized solutions by sharing knowledge, data, and insights. This collaboration across the development and commercialization continuum facilitates unique insights into patient populations, therapeutic environments, product timelines, and the competitive landscape. For a further discussion, refer to “Note 11 – Segment Information” to our unaudited condensed consolidated financial statements in Part I, Item 1 ~~“Business” in our 2021~~of this Quarterly Report on Form ~~10-K.~~10-Q.

~~The~~In our Clinical Solutions segment, we have experienced lower flow of requests for proposals. In the small to mid-sized (“SMID”) market, requests for proposals have continued to improve over the past six months. For larger pharmaceutical companies, we continue to experience lower flow of requests for proposals. In our Commercial Solutions segment, we have experienced lower flow of requests for proposals from both the SMID market and larger pharmaceutical companies. Additionally, net new business awards, backlog, and revenue have been, and we expect will continue to be affected by the broad effects of the current macroeconomic ~~conditions, which include~~environment on the global economy and major financial markets, including but not limited to interest rate increases, inflation, and the ongoing COVID-19 ~~pandemic, among others,~~pandemic.

Table of Contents

We are pursuing business transformation initiatives to improve customer engagement, increase innovation, and achieve operating efficiencies. These initiatives include enhancing customer engagement and infusing innovation and insights throughout our operations, integrating artificial intelligence and predictive analytics to drive faster data insights and patient outcomes, leveraging tools and automation to simplify processes and improve real-time visibility, optimizing our operational footprint, and streamlining the organization and outsourcing where we believe appropriate. We also seek to improve our productivity, flexibility, quality, functionality, and cost savings by investing in the development and implementation of global platforms and integration of our business processes and functions to achieve economies of scale. These various initiatives, in particular Project Velocity, are expected to ~~continue~~incur material costs over the medium- to long-term and may not yield their intended improvements, or be completed in a timely manner, which may impact our business and our operations. We have experienced increased delays in award decisions from the small to mid-sized ("SMID") market and lower flow of requests for proposals in our Clinical Solutions segment. Within our Commercial Solutions segment, we have also experienced lower flow of requests for proposals from the SMID market. This reduced demand for our services, which stems from both current macroeconomic conditionscompetitiveness and our ability to ~~win repeat business, among other factors, has resulted,~~meet our growth objectives and, ~~may continue to result in lower net new business awards, backlog and revenue. Additionally, we continue to experience lower reimbursable out-of-pocket expenses~~ as a ~~percentage of revenue relative to pre-pandemic levels in both of~~result, materially and adversely affect our ~~segments due to reduced travel as the ongoing COVID-19 pandemic accelerated adoption of virtual engagement with sites~~business, operating results, and ~~patients.~~financial condition. For a further discussion of these and other risks relating to our business, refer to Part I, Item 1A, “Risk Factors” in our ~~2021~~2022 Form ~~10-K~~10-K.

Proposed Merger

On May 10, 2023, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Star Parent, Inc., an affiliated entity of Elliott Investment Management, Patient Square Capital and Veritas Capital (“Parent”), and Star Merger Sub, Inc., pursuant to which, at closing (the “Effective Time”), the Company will become a wholly owned subsidiary of Parent and each share of Class A common stock of the Company issued and outstanding immediately prior to the Effective Time will be cancelled and extinguished and, except for limited exceptions, be entitled to receive $43.00 in cash (the “Merger”). If the Merger is consummated, our shares of Class A common stock will no longer trade on the Nasdaq Stock Market LLC and will be deregistered under the Securities Exchange Act of 1934, as amended. As a result, we will become a private company. The closing of the Merger is expected to be completed during the second half of 2023.

We have incurred approximately $5.2 million as of March 31, 2023, and will continue to incur significant costs and expenses, including fees for professional services and other transaction costs, in connection with the Merger.

For additional information regarding the terms of the proposed Merger, see “Note 16 – Subsequent Event” to our unaudited condensed consolidated financial statements in Part ~~II,~~I, Item ~~1A “Risk Factors”~~1 of this Quarterly Report on Form 10-Q and Part II, Item 1A – Risk Factors of this Quarterly Report on Form 10-Q.

~~Prior period segment results have~~ The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, which has been ~~recast~~filed as Exhibit 2.1 to ~~conform to insignificant changes to management reporting in 2022.~~the Current Report on Form 8-K that we filed with the SEC on May 10, 2023. There is no guarantee that the Merger will be consummated.

~~Table of Contents~~

New Business Awards and Backlog

We add new business awards to backlog when we enter into a contract or when we receive a written commitment from the customer selecting us as a service provider, provided that:

•

collection of the award value is probable;

•

the project or projects are expected to commence within a certain period of time from the end of the quarter in which the award was granted;

•

project contingencies such as the outcome of other clinical trials, funding approvals, or other events, are not anticipated to prevent the project or projects from commencing in accordance with the expected timeline;

Table of Contents

•

the customer has entered or intends to enter into a comprehensive contract as soon as practicable; and

•

for awards related to deployment solutions and functional service provider offerings, a maximum of twelve months of services are included in the award value.

In addition, we continually evaluate our backlog to determine if any of the previously awarded work is no longer expected to be performed, regardless of whether we have received formal cancellation notice from the customer. If we determine that any previously awarded work is no longer probable of being performed, we remove the value from our backlog based on the risk of cancellation. We recognize revenue from these awards as services are performed, provided we have received proper authorization from the customer.

We report new business awards for our Clinical Solutions and Commercial Solutions segments on a trailing twelve months (“TTM”) basis. Our total backlog represents backlog for our Clinical Solutions segment and the deployment solutions offering within our Commercial Solutions segment. We do not report backlog for the remaining service offerings in the Commercial Solutions segment.

Backlog

Our backlog consists of anticipated future revenue from business awards that either have not started, or that are in process and have not been completed. Our backlog also reflects any cancellation or adjustment activity related to these awards. The average duration of our contracts will fluctuate from period to period based on the contracts comprising our backlog at any given time. The majority of our contracts contain early termination provisions that typically require notice periods ranging from 30 to 90 days.

Our backlog as of ~~September 30~~March 31 was as follows (in millions):


	2022		2021		Change					2023		2022		Change
Clinical Solutions	$	9,746.7	$	11,284.7	$	(1,538.0	)	(13.6	)%	$	8,977.5	$	10,772.3	$	(1,794.8	)	(16.7	)%
Commercial Solutions - Deployment Solutions		784.0		732.8		51.2		7.0	%		855.6		861.8		(6.2	)	(0.7	)%
Total backlog	$	10,530.7	$	12,017.5	$	(1,486.8	)	(12.4	)%	$	9,833.1	$	11,634.1	$	(1,801.0	)	(15.5	)%

We expect approximately ~~$1.18~~$3.31 billion of our backlog as of ~~September 30, 2022~~March 31, 2023 will be recognized as revenue during the remainder of ~~2022.~~2023. We adjust the amount of our backlog each quarter for the effects of fluctuations in foreign currency exchange rates.

~~Table of Contents~~

Net New Business Awards

New business awards, net of cancellations, for the TTM ~~periods~~period ended ~~September 30~~March 31 were as follows (in millions):


	2022		2021		2023		2022
Clinical Solutions	$	2,729.7	$	5,333.3	$	2,313.3	$	4,392.9
Commercial Solutions		1,399.9		1,320.0		1,385.0		1,399.6
Total net new business awards	$	4,129.6	$	6,653.3	$	3,698.3	$	5,792.5

New business awards have varied and may continue to vary significantly from quarter to quarter. Fluctuations in our net new business award levels often result from the fact that we may receive a small number of relatively large orders in any given reporting period. Because of these large orders, our backlog and net new business awards in a reporting period may reach levels that are not sustainable in subsequent reporting periods.

~~In our Clinical Solutions segment, we have experienced increased delays in award decisions from the SMID market and lower flow~~25

Table of requests for proposals. These factors have resulted and may continue to result in lower net new business awards and backlog. Additionally, net new business awards and backlog have been, and we expect will continue to be affected by the broad effects of the current macroeconomic environment on the global economy and major financial markets, including but not limited to interest rate increases, inflation, and the ongoing COVID-19 pandemic. We have also started to experience lower flow of requests for proposals from the SMID market in our Commercial Solutions segment, attributable to current macroeconomic conditions, which may negatively impact future net new business awards and backlog in the segment.Contents

We believe that our backlog and net new business awards might not be consistent indicators of future revenue for a variety of reasons, including, but not limited to, ~~the variable size and duration of projects,~~ changes to the scope of work during the course of projects, including the variable size and duration of projects, and our ability to win repeat business. Additionally, projects may be canceled or delayed by the customer or regulatory authorities. We generally do not have a contractual right to the full amount of the awards reflected in our backlog. If a customer cancels an award, we might be reimbursed for the costs we have incurred. As we increasingly compete for and enter into large contracts that are more global in nature, ~~we expect that~~ the rate at which our backlog and net new business awards convert into revenue ~~is likely to~~may decrease, and the duration of projects and the period over which related revenue is recognized tomay lengthen. For more information about risks related to our net new business awards and backlog see Part I, Item 1A, ~~“Risk~~“Risk Factors – Risks Related to Our Business – Our backlog might not be indicative of our future revenues, and we might not realize all of the anticipated future revenue reflected in our backlog” ~~in our 2021 Form 10-K~~ and ~~“--If~~“ – If we do not generate a ~~large~~sufficient number of new business awards, or if new business awards are delayed, terminated, reduced in scope, or fail to go to contract, our business, financial condition, results of operations, or cash flows may be materially adversely affected” in ~~Part II, Item 1A “Risk Factors” of this Quarterly Report on~~our 2022 Form ~~10-Q.~~10-K.

~~Table of Contents~~

Results of Operations

The following table sets forth amounts from our condensed consolidated statements of ~~income~~operations along with dollar and percentage changes (in thousands, except percentages):


	Three Months Ended September 30,									Three Months Ended March 31,
	2022		2021		Change					2023			2022		Change
Revenue	$	1,336,223	$	1,348,230	$	(12,007	)	(0.9	)%	$	1,356,800		$	1,336,253	$	20,547			1.5	%
Costs and operating expenses:
Direct costs (exclusive of depreciation and amortization)		1,017,784		1,031,887		(14,103	)	(1.4	)%		1,088,549			1,044,432		44,117			4.2	%
Selling, general, and administrative expenses		130,355		139,524		(9,169	)	(6.6	)%		161,517			140,166		21,351			15.2	%
Restructuring and other costs		8,727		7,209		1,518		21.1	%		84,687			15,557		69,130			444.4	%
Depreciation and amortization		61,514		56,254		5,260		9.4	%		61,587			62,202		(615	)		(1.0	)%
Total operating expenses		1,218,380		1,234,874		(16,494	)	(1.3	)%		1,396,340			1,262,357		133,983			10.6	%
Income from operations		117,843		113,356		4,487		4.0	%
(Loss) income from operations											(39,540	)		73,896		(113,436	)	n/m
Total other expense, net		1,158		12,947		(11,789	)	(91.1	)%		35,622			20,404		15,218			74.6	%
Income before provision for income taxes		116,685		100,409		16,276		16.2	%
Income tax expense		29,636		22,166		7,470		33.7	%
Net income	$	87,049	$	78,243	$	8,806		11.3	%

	Nine Months Ended September 30,
	2022		2021		Change
Revenue	$	4,033,215	$	3,839,586	$	193,629		5.0	%
Costs and operating expenses:
Direct costs (exclusive of depreciation and amortization)		3,097,113		2,969,718		127,395		4.3	%
Selling, general, and administrative expenses		409,561		421,507		(11,946	)	(2.8	)%
Restructuring and other costs		33,267		18,403		14,864		80.8	%
Depreciation and amortization		184,937		171,903		13,034		7.6	%
Total operating expenses		3,724,878		3,581,531		143,347		4.0	%
Income from operations		308,337		258,055		50,282		19.5	%
Total other expense, net		34,476		59,596		(25,120	)	(42.2	)%
Income before provision for income taxes		273,861		198,459		75,402		38.0	%
Income tax expense		62,892		39,587		23,305		58.9	%
Net income	$	210,969	$	158,872	$	52,097		32.8	%
(Loss) income before provision for income taxes											(75,162	)		53,492		(128,654	)	n/m
Income tax (benefit) expense											(3,013	)		7,316		(10,329	)	n/m
Net (loss) income										$	(72,149	)	$	46,176	$	(118,325	)	n/m

Revenue

For the three months ended ~~September 30, 2022,~~March 31, 2023, our revenue ~~decreased~~increased by ~~$12.0~~$20.5 million, or ~~0.9%~~1.5%, to ~~$1,336.2~~$1,356.8 million from ~~$1,348.2~~$1,336.3 million for the three months ended ~~September 30, 2021.~~March 31, 2022. This ~~decrease is~~increase was primarily driven by ~~lower~~higher reimbursable out-of-pocket expenses, ~~in our Clinical Solutions segment and~~partially offset by negative impacts from fluctuations in foreign currency exchange rates partially offset by growth from increased project start-ups in both our Clinical Solutions and Commercial Solutions segments. For the nine months ended September 30, 2022, our revenue increased by $193.6 million, or 5.0%, to $4,033.2 million from $3,839.6 million for the nine months ended September 30, 2021. This increase is primarily driven by growth from increased project start-ups in both our Clinical Solutions and Commercial Solutions segments partially offset by lower reimbursable out-of-pocket expenses in our Clinical Solutions segment.of $11.1 million.

No single customer accounted for greater than 10% of our total consolidated revenue for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 or ~~2021.~~2022. Revenue from our top five customers accounted for approximately 24% and 23% of revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and 23% and 22% of revenue for the three and nine months ended September 30, 2021,~~ respectively.

~~Table of Contents~~

Revenue for each of our segments was as follows (dollars in thousands):


	Three Months Ended September 30,															Three Months Ended March 31,
	2022		% of total			2021		% of total			Change					2023		% of total			2022		% of total			Change
Clinical Solutions	$	1,003,253		75.1	%	$	1,040,067		77.1	%	$	(36,814	)	(3.5	)%	$	1,013,665		74.7	%	$	1,018,370		76.2	%	$	(4,705	)	(0.5	)%
Commercial Solutions		332,970		24.9	%		308,163		22.9	%		24,807		8.0	%		343,135		25.3	%		317,883		23.8	%		25,252		7.9	%
Total revenue	$	1,336,223				$	1,348,230				$	(12,007	)	(0.9	)%	$	1,356,800				$	1,336,253				$	20,547		1.5	%

	Nine Months Ended September 30,
	2022		% of total			2021		% of total			Change
Clinical Solutions	$	3,047,338		75.6	%	$	2,972,570		77.4	%	$	74,768		2.5	%
Commercial Solutions		985,877		24.4	%		867,016		22.6	%		118,861		13.7	%
Total revenue	$	4,033,215				$	3,839,586				$	193,629		5.0	%

Table of Contents

Clinical Solutions

For the three months ended ~~September 30, 2022,~~March 31, 2023, revenue attributable to our Clinical Solutions segment decreased compared to the same period in the prior year primarily driven by ~~decreases~~decreased project start-ups and negative impacts from fluctuations in ~~revenue from projects related to COVID-19, which generally experience~~foreign currency exchange rates of $6.6 million, partially offset by higher reimbursable out-of-pocket ~~expenses, partially offset by increased project start-ups related to large pharmaceutical customers.~~ expenses.

Commercial Solutions

For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, revenue attributable to our ~~Clinical~~Commercial Solutions segment increased compared to the same period in the prior year primarily driven by ~~increased project start-ups related to large pharmaceutical customers and, to a lesser extent, the acquisitions of StudyKIK Corporation (“StudyKIK”) and RxDataScience, Inc. This increase was~~higher reimbursable out-of-pocket expenses, partially offset by ~~decreases in revenue from projects related to COVID-19. For the three and nine months ended September 30, 2022, revenue was negatively impacted by $34.4 million and $69.1 million, respectively,~~negative impacts from fluctuations in foreign currency ~~exchange~~exchanges rates ~~compared to the same periods in the prior year.~~

~~We have experienced increased delays in award decisions from the SMID market and lower flow~~ of requests for proposals. This reduced demand for our services, which stems from both current macroeconomic conditions and our ability to win repeat business, among other factors, has resulted, and may continue to result in lower net new business awards, backlog, and revenue. Additionally, we also continue to experience lower reimbursable out-of-pocket expenses as a percentage of revenue relative to pre-pandemic levels due to reduced travel as the ongoing COVID-19 pandemic accelerated adoption of virtual engagement with sites and patients.

The war in Ukraine has not had a material impact on our revenue; however, that could change depending on the magnitude of the conflict and the imposition of additional sanctions by the United States (“U.S.”) and other countries. We continue to adapt our strategic approach as the crisis persists and we are continuing our risk assessments in neighboring countries to be proactive about potential future challenges. Banking and economic sanctions imposed on Russia continue to present challenges to clinical trials. We are monitoring these sanctions to ensure we are in compliance and we are adapting our operations to address both the sanctions and the increasing logistical challenges of conducting trials in Russia. At this time, we are continuing to service patients in Ukraine and Russia in existing trials where possible. Any impacts to our revenue are expected to be temporary in nature as we work with customers to explore alternate sources of recruiting new patients, including potentially activating sites in other regions.$4.5 million.

~~Table of Contents~~

~~Commercial Solutions~~

For the three and nine months ended September 30, 2022, revenue attributable to our Commercial Solutions segment increased compared to the same periods in the prior year, primarily driven by increased project start-ups, including new deployments of field teams, and higher reimbursable out-of-pocket expenses. For the three and nine months ended September 30, 2022, revenue was negatively impacted by $7.9 million and $15.4 million, respectively, from fluctuations in foreign currency exchange rates compared to the same periods in the prior year.

We have started to experience lower flow of requests for proposals from the SMID market attributable to current macroeconomic conditions, which may negatively impact future net new business awards, backlog, and revenue. Additionally, we continue to experience lower reimbursable out-of-pocket expenses as a percentage of revenue relative to pre-pandemic levels related to declines in field team visits to healthcare providers and increased virtual investigator meetings.

Direct Costs

Direct costs consist principally of compensation expense and benefits associated with our employees and other employee-related costs, and reimbursable out-of-pocket expenses directly related to delivering on our projects. While we have some ability to manage the majority of these costs relative to the amount of contracted services we have during any given period, direct costs as a percentage of revenue can vary from period to period. Such fluctuations are due to a variety of factors, including, among others: (i) the level of staff utilization on our projects; (ii) adjustments to the timing of work on specific customer contracts; (iii) the experience mix of personnel assigned to projects; (iv) the service mix and pricing of our contracts; and (v) the timing of the incurrence of reimbursable out-of-pocket expenses. Relative to pre-pandemic levels, we continue to experience reduced travel and other reimbursable out-of-pocket expenses related to lower physical monitoring visits for Clinical Solutions, as well as fewer field team visits to healthcare providers and investigator meetings for Commercial Solutions. As discussed above, we expect reimbursable out-of-pocket expenses to remain lower relative to pre-pandemic levels.

Direct costs were as follows (dollars in thousands):


	Three Months Ended September 30,											Three Months Ended March 31,
	2022			2021			Change					2023			2022			Change
Direct costs (exclusive of depreciation and amortization)	$	1,017,784		$	1,031,887		$	(14,103	)	(1.4	)%	$	1,088,549		$	1,044,432		$	44,117	4.2	%
% of revenue		76.2	%		76.5	%							80.2	%		78.2	%
Gross margin %		23.8	%		23.5	%							19.8	%		21.8	%

	Nine Months Ended September 30,
	2022			2021			Change
Direct costs (exclusive of depreciation and amortization)	$	3,097,113		$	2,969,718		$	127,395		4.3	%
% of revenue		76.8	%		77.3	%
Gross margin %		23.2	%		22.7	%

For the three months ended ~~September 30, 2022,~~March 31, 2023, our direct costs ~~decreased~~increased by ~~$14.1~~$44.1 million, or ~~1.4%~~4.2%, compared to the three months ended ~~September 30, 2021. For the nine months ended September 30, 2022, our direct costs increased by $127.4 million, or 4.3%, compared to the nine months ended September 30, 2021.~~March 31, 2022.

~~Table of Contents~~

Clinical Solutions

Direct costs for our Clinical Solutions segment, excluding share-based compensation expense, were as follows (dollars in thousands):


	Three Months Ended September 30,											Three Months Ended March 31,
	2022			2021			Change					2023			2022			Change
Direct costs	$	734,934		$	779,270		$	(44,336	)	(5.7	)%	$	787,388		$	774,668		$	12,720	1.6	%
% of segment revenue		73.3	%		74.9	%							77.7	%		76.1	%
Segment gross margin %		26.7	%		25.1	%							22.3	%		23.9	%

	Nine Months Ended September 30,
	2022			2021			Change
Direct costs	$	2,263,053		$	2,248,796		$	14,257		0.6	%
% of segment revenue		74.3	%		75.7	%
Segment gross margin %		25.7	%		24.3	%

For the three months ended September 30, 2022, our Clinical Solutions segment direct costs decreased by $44.3 million, or 5.7%, compared to the three months ended September 30, 2021. This decrease was primarily driven by lower reimbursable out-of-pocket expenses related to COVID-19 projects and positive impacts from fluctuations in foreign currency exchange rates, partially offset by increased billable headcount. For the nine months ended September 30, 2022,March 31, 2023, our Clinical Solutions segment direct costs increased by ~~$14.3~~$12.7 million, or ~~0.6%~~1.6%, compared to the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. This increase was primarily driven by ~~increased billable headcount to support revenue growth,~~higher reimbursable out-of-pocket expenses and personnel costs, partially offset by positive impacts from fluctuations in foreign currency exchange ~~rates, lower reimbursable out-of-pocket expenses related to COVID-19 projects, and our~~ rates.

~~ForwardBound~~27

Table of Contents

~~margin enhancement initiative.~~

Gross margins for our Clinical Solutions segment were ~~26.7%~~22.3% and ~~25.1%~~23.9% for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and 25.7% and 24.3% for the nine months ended September 30, 2022 and 2021,~~ respectively. Gross ~~margins were higher~~margin was lower during the current year ~~periods~~period as compared to the same ~~periods~~period in the prior year primarily due to ~~lower~~increased personnel costs and higher reimbursable out-of-pocket expenses, ~~and~~partially offset by positive impacts from fluctuations in foreign currency exchange ~~rates, partially offset by increased billable headcount costs and a larger proportion of contract labor.~~rates.

~~Table of Contents~~

Commercial Solutions

Direct costs for our Commercial Solutions segment, excluding share-based compensation expense, were as follows (dollars in thousands):


	Three Months Ended September 30,										Three Months Ended March 31,
	2022			2021			Change				2023			2022			Change
Direct costs	$	274,714		$	244,201		$	30,513	12.5	%	$	290,639		$	260,965		$	29,674	11.4	%
% of segment revenue		82.5	%		79.2	%						84.7	%		82.1	%
Segment gross margin %		17.5	%		20.8	%						15.3	%		17.9	%

	Nine Months Ended September 30,
	2022			2021			Change
Direct costs	$	809,257		$	695,284		$	113,973	16.4	%
% of segment revenue		82.1	%		80.2	%
Segment gross margin %		17.9	%		19.8	%

For the three months ended ~~September 30, 2022,~~March 31, 2023, our Commercial Solutions segment direct costs increased by ~~$30.5~~$29.7 million, or ~~12.5%~~11.4%, compared to the three months ended September 30, 2021. For the nine months ended September 30, 2022, our Commercial Solutions segment direct costs increased by $114.0 million, or 16.4%, compared to the nine months ended September 30, 2021. These increases wereMarch 31, 2022. This increase was primarily driven by ~~increased billable headcount to support revenue growth and~~ higher reimbursable out-of-pocket expenses.

Gross margins for our Commercial Solutions segment were ~~17.5%~~15.3% and ~~20.8%~~17.9% for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and 17.9% and 19.8% for the nine months ended September 30, 2022 and 2021,~~ respectively. Gross ~~margins were~~margin was lower during the current year ~~periods~~period as compared to the same ~~periods~~period in the prior year primarily due to higher reimbursable out-of-pocket expenses and a less favorable revenue ~~mix.~~mix, driven by new deployments of field teams.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were as follows (dollars in thousands):


	Three Months Ended September 30,											Three Months Ended March 31,
	2022			2021			Change					2023			2022			Change
Selling, general, and administrative expenses	$	130,355		$	139,524		$	(9,169	)	(6.6	)%	$	161,517		$	140,166		$	21,351	15.2	%
% of total revenue		9.8	%		10.3	%							11.9	%		10.5	%

	Nine Months Ended September 30,
	2022			2021			Change
Selling, general, and administrative expenses	$	409,561		$	421,507		$	(11,946	)	(2.8	)%
% of total revenue		10.2	%		11.0	%

Selling, general, and administrative expenses for the three ~~and nine~~ months ended ~~September 30, 2022 decreased~~March 31, 2023 increased compared to the same ~~periods~~period in ~~2021~~2022 primarily due to ~~lower~~higher transaction, integration-related, and other ~~expenses. These decreases were partially offset by increased headcount. Selling, general, and administrative~~ expenses ~~for the three and nine months ended September 30, 2022 included costs resulting from the war in Ukraine, including incremental costs~~ related to ~~impacted employees and ongoing assessment of imposed sanctions.~~our business transformation initiatives.

~~Table of Contents~~

Restructuring and Other Costs

Restructuring and other costs were ~~$8.7~~$84.7 million and ~~$7.2~~$15.6 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $33.3 million and $18.4 million for the nine months ended September 30, 2022 and 2021,~~ respectively. The costs incurred during the current year were primarily related to our real estate optimization initiative to close or reduce office space that is no longer being utilized. This includes $54.7 million of accelerated amortization of operating lease right-of-use assets and $18.0 million of accelerated depreciation of property and equipment, both of which are non-cash expenses.

~~ForwardBound~~28

Table of Contents

margin enhancement initiative as we continue the ongoing evaluations of our global workforce and facilities infrastructure needs in an effort to streamline the structure of our global operations and processes. During 2022, these ~~ForwardBound~~ initiatives included specific actions primarily focused on 1) streamlining the operations of our Clinical Solutions segment to optimize efficiency and enhance the delivery of customer projects and 2) reducing overcapacity in response to changing market conditions and customer requirements.

Restructuring and other costs consisted of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2022		2021		2022		2021		2023		2022
Employee severance and benefit costs	$	7,402	$	3,438	$	24,590	$	11,815	$	10,180	$	14,820
Facility and lease termination costs		1,325		3,760		4,677		6,530
Leased facility closure and related costs										74,313		(319	)
Other costs		—		11		4,000		58		194		1,056
Total restructuring and other costs	$	8,727	$	7,209	$	33,267	$	18,403	$	84,687	$	15,557

We expect to continue to incur costs related to our ~~ForwardBound~~ ~~initiative,~~business transformation initiatives, including the ~~restructuring~~potential outsourcing of ~~our operations~~certain administrative functions during ~~2022~~the remainder of 2023 and beyond as we continue the ongoing evaluations of our global workforce and facilities infrastructure needs to improve customer engagement, increase innovation, and ~~in light of changing market conditions and customer requirements.~~achieve operating efficiencies.

Depreciation and Amortization Expense

Total depreciation and amortization expense was ~~$61.5~~$61.6 million and ~~$56.3~~$62.2 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $184.9 million and $171.9 million for the nine months ended September 30, 2022 and 2021,~~ respectively. The ~~increases were~~decrease in total depreciation and amortization expense in the current year period compared to the prior year period was primarily due to ~~vehicle fleet leases, internal-use software, and~~fully amortized intangible assets from prior acquisitions, ~~completed in the second half of 2021.~~partially offset by amortization expense from internal-use software.

Total Other Expense, Net

Total other expense, net consisted of the following (dollars in thousands):


	Three Months Ended September 30,												Three Months Ended March 31,
	2022			2021			Change						2023			2022			Change
Interest income	$	(303	)	$	76		$	(379	)	n/m			$	(528	)	$	(3	)	$	(525	)	(17500.0	)%
Interest expense		22,131			16,698			5,433			32.5	%		26,787			15,765			11,022		69.9	%
Loss on extinguishment of debt		67			—			67			100.0	%
Other income, net		(20,737	)		(3,827	)		(16,910	)		(441.9	)%
Other expense, net														9,363			4,642			4,721		101.7	%
Total other expense, net	$	1,158		$	12,947		$	(11,789	)		(91.1	)%	$	35,622		$	20,404		$	15,218		74.6	%

	Nine Months Ended September 30,
	2022			2021			Change
Interest income	$	(342	)	$	5		$	(347	)	n/m
Interest expense		55,998			62,645			(6,647	)		(10.6	)%
Loss on extinguishment of debt		67			2,802			(2,735	)		(97.6	)%
Other income, net		(21,247	)		(5,856	)		(15,391	)		(262.8	)%
Total other expense, net	$	34,476		$	59,596		$	(25,120	)		(42.2	)%

~~Table of Contents~~

Total other expense, net was ~~$1.2~~$35.6 million and ~~$12.9~~$20.4 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $34.5 million and $59.6 million for the nine months ended September 30, 2022 and 2021,~~ respectively. The increase in ~~interest~~total other expense, ~~for the three months ended September 30, 2022 compared to the same period~~net in the ~~prior year~~current period was driven by an increase in interest expense primarily due to increased interest rates on variable rate ~~debt. The decrease in interest expense for the nine months ended September 30, 2022~~debt as compared to the ~~same period in the~~ prior year ~~was primarily due to reductions in our higher interest rate debt as a result of debt prepayments and refinancing transactions.~~period. Other ~~(income)~~ expense, net primarily consists of foreign currency gains and losses that result from exchange rate fluctuations on our monetary asset balances denominated in currencies other than our functional currency and other gains and losses related to ~~investments, and contingent consideration related~~investments. Due to ~~divested businesses.~~higher variable interest rates, we expect to experience higher interest expense during 2023.

Income Tax (Benefit) Expense

For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, we recorded an income tax ~~expense~~benefit of ~~$29.6~~$3.0 million ~~and $62.9 million, respectively, compared to~~on a pre-tax ~~income~~loss of ~~$116.7 million and $273.9 million, respectively.~~$75.2 million. Income tax ~~expense~~benefit for the three months ended ~~September 30, 2022~~March 31, 2023 included discrete tax expense of ~~$3.1~~$5.6 million, primarily related to ~~unrecognized~~ tax ~~benefits. Income tax expense for the nine months ended September 30, 2022 included net discrete tax benefits of $3.3 million, primarily related to excess tax benefits~~shortfalls from share-based ~~compensation partially offset by unrecognized tax benefits related to prior year tax positions.~~compensation. The effective tax ~~rates~~rate for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, excluding discrete items, varied from the United States (“U.S.”) federal statutory income tax rate of 21.0% primarily due to ~~state and local taxes on U.S. income,~~foreign tax credits, foreign income inclusions such as the Global Intangible Low-Taxed Income (“GILTI”) provisions, and research and development credits.

Table of Contents

For the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, we recorded income tax expense of ~~$22.2~~$7.3 million ~~and $39.6 million, respectively, compared to~~on pre-tax income of ~~$100.4 million and $198.5 million, respectively.~~$53.5 million. Income tax expense for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 included a discrete tax ~~benefits~~benefit of ~~$0.7~~$6.1 million, ~~and $6.5 million, respectively,~~ primarily related to excess tax benefits from share-based compensation. The effective tax ~~rates~~rate for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, excluding discrete items, varied from the U.S. federal statutory income tax rate of 21.0% primarily due to foreign ~~tax credits, foreign~~ income inclusions such as the GILTI provisions, ~~and~~ state and local taxes on U.S. ~~income.~~income, and research and development credits.

We currently maintain a valuation allowance against a portion of our state deferred tax assets and a portion of our foreign deferred tax assets as of ~~September 30, 2022.~~March 31, 2023. We intend to continue to maintain a valuation allowance on these deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

Liquidity and Capital Resources

Key measures of our liquidity were as follows (in thousands):

September 30, 2022

December 31, 2021

Balance sheet statistics:

Cash and cash equivalents

$
169,995

$
106,363

Restricted cash

105

112

Working capital (excluding restricted cash)

239,761

112,228

~~Table of Contents~~


	March 31, 2023		December 31, 2022
Balance sheet statistics:
Cash and cash equivalents	$	110,940	$	111,893
Restricted cash		115		111
Working capital (excluding restricted cash)		258,263		219,134

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$170.1~~$111.1 million of cash, cash equivalents, and restricted cash. As of ~~September 30, 2022,~~March 31, 2023, substantially all of our cash, cash equivalents, and restricted cash was held within the U.S. In addition, we had ~~$586.1~~$864.8 million (net of ~~$13.9~~$14.2 million in outstanding letters of credit (“LOCs”)) available for borrowing under our revolving credit facility (the “Revolver”), of which ~~$136.1~~$135.8 million was available for LOCs.

We have historically funded our operations and growth, including acquisitions, primarily with our working capital, cash flow from operations, and funds available through various borrowing arrangements. Our principal liquidity requirements are to fund our debt service obligations, capital expenditures, expansion of service offerings, possible acquisitions, integration and restructuring costs, geographic expansion, stock repurchases, working capital, and other general corporate expenses. Cash flow from operations also could be affected by the broad effects of the current macroeconomic environment on the global economy and major financial markets, including but not limited to interest rate increases, inflation, and the ongoing COVID-19 pandemic, as well as various other risks and uncertainties detailed in Part I, Item 1A, “Risk Factors” in our ~~2021~~2022 Form ~~10-K and in Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q.~~10-K. Based on past performance and current expectations, we believe our cash and cash equivalents, cash generated from operations, and funds available under the Revolver will be sufficient to meet our working capital needs, capital expenditures, scheduled debt and interest payments, income tax obligations, and other currently anticipated liquidity requirements for at least the next 12 months.

We may seek to raise additional capital, particularly in the event of a sustained market deterioration, which could be in the form of bonds, convertible debt, or equity. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain any refinancing or additional financing we may seek on favorable terms or at all.

Table of Contents

Indebtedness

As of ~~September 30, 2022,~~March 31, 2023, we had approximately ~~$2.84~~$2.68 billion of total principal indebtedness (including ~~$75.5~~$60.2 million in finance lease obligations), consisting of ~~$1.76~~a $1.35 billion in term loan ~~debt (collectively, “Term Loan A”),~~A facility, $121.0 million under the Revolver, $600.0 million of senior notes, ~~(the “Notes”),~~ and ~~$400.0~~$550.0 million in borrowings against our accounts receivable financing agreement. During April 2023, we borrowed an additional $20.0 million on the Revolver. See “Note 43 – Long-Term Debt Obligations” of our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q as well as Part II, Item 7 of our ~~2021~~2022 Form 10-K for additional details regarding our long-term debt arrangements.

During the three months ended September 30, 2022, we made $25.0 million of voluntary prepayments against Term Loan A that were applied to future mandatory principal payments due. As a result of these and previous voluntary prepayments, we are not required to make a mandatory payment against the principal balance of Term Loan A until January 2024. In connection with these prepayments, we recorded a $0.1 million loss on extinguishment of debt during the three months ended September 30, 2022.

On October 3, 2022, we amended our accounts receivable financing agreement to increase the amount we can borrow from $400.0 million to $550.0 million, and drew down the additional $150.0 million. At the same time, we made voluntary prepayments on our term loans totaling $150.0 million; therefore, there was no incremental impact on our debt balance.

Our long-term debt arrangements contain customary restrictive covenants and, as of ~~September 30, 2022,~~March 31, 2023, we were in compliance with all applicable debt covenants.

Interest Rates

In March 2023, we entered into interest rate swaps with multiple counterparties. The interest rate swaps had an initial aggregate notional value of $650.0 million, an effective date of March 31, 2023, and will expire on March 31, 2026.

We have entered into ~~various~~these interest rate swaps to mitigate our exposure to changes in interest rates on our variable rate debt. As of ~~September 30, 2022,~~March 31, 2023, the percentage of our total principal debt (excluding finance leases) that is subject to fixed interest rates was approximately ~~59%~~48%. Each quarter-point increase or decrease in the applicable floating interest rate as of ~~September 30, 2022~~March 31, 2023 would change our annual interest expense by approximately ~~$2.8~~$3.4 million.

~~Table of Contents~~

Stock Repurchase ~~Programs~~Program

~~During the three months ended September 30, 2022, there were no share repurchases under our~~Our repurchase program ~~that~~ authorizes us to repurchase up to an aggregate of $350.0 million of our Class A common stock, par value $0.01 ~~and will expire on~~per share, through December 31, 2024 (the “2022 Stock Repurchase Program”). During the three months ended March 31, 2023, there were no repurchases under the 2022 Stock Repurchase Program. As of March 31, 2023, we had remaining authorization to repurchase up to $350.0 million of shares of our Class A common stock under the 2022 Stock Repurchase Program. See “Note 87 – Shareholders’ Equity” of our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

~~As of September 30, 2022, we had remaining authorization to repurchase up to $350.0 million of shares of our common stock under the 2022 Stock Repurchase Program.~~

Cash, Cash Equivalents and Restricted Cash

Our cash flows from operating, investing, and financing activities were as follows (in thousands):


	Nine Months Ended September 30,									Three Months Ended March 31,
	2022			2021			Change			2023			2022			Change
Net cash provided by operating activities	$	303,164		$	264,299		$	38,865		$	30,424		$	70,887		$	(40,463	)
Net cash used in investing activities		(79,547	)		(260,182	)		180,635			(27,622	)		(25,497	)		(2,125	)
Net cash used in financing activities		(189,487	)		(155,483	)		(34,004	)
Net cash provided by (used in) financing activities											199			(36,572	)		36,771

Table of Contents

Cash Flows from Operating Activities

Cash flows provided by operating activities ~~increased~~decreased by ~~$38.9~~$40.5 million during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 compared to the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The ~~increase~~decrease was primarily due to ~~higher~~lower cash-related net income, partially offset by ~~negative~~positive changes in operating assets and liabilities relative to the prior year period. Fluctuations in accounts receivable, unbilled services (including contract assets), and deferred revenue occur on a regular basis as we perform services, achieve milestones or other billing criteria, send invoices to customers, and collect outstanding accounts receivable. This activity varies by individual customer and contract. We attempt to negotiate payment terms that provide for payment of services prior to or soon after the provision of services, but the levels of accounts receivable, unbilled services (including contract assets), and deferred revenue can vary significantly from period to period.

Cash Flows from Investing Activities

For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we used ~~$79.5~~$27.6 million in cash for investing activities, which included ~~$69.8~~$27.5 million for purchases of property and equipment. We continue to closely monitor our capital expenditures while making strategic investments in the development of our information technology infrastructure to meet the needs of our workforce, enable efficiencies, reduce business continuity risks, and conform to changes in governing rules and regulations.

For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we used ~~$260.2~~$25.5 million in cash for investing activities, which ~~consisted of $226.3 million of payments related to acquisitions, including the acquisition of StudyKIK, $29.9~~included $23.5 million for purchases of property and ~~equipment, and $8.9 million of net investments in unconsolidated affiliates, partially offset by proceeds of $5.0 million from notes receivable from a divestiture.~~equipment.

Cash Flows from Financing Activities

For the ~~nine~~three months ended ~~September 30,~~March 31, 2023, cash flows provided by financing activities were $0.2 million, which consisted primarily of proceeds from our employee stock purchase plan, partially offset by payments related to tax withholdings for share-based compensation and finance leases.

For the three months ended March 31, 2022, we used ~~$189.5~~$36.6 million in cash for financing activities, which consisted primarily of repurchases of our Class A common stock ~~voluntary prepayments of long-term debt,~~ and payments related to tax withholdings for share-based compensation. These payments were partially ~~offset by proceeds from exercises of stock options.~~

~~Table of Contents~~

For the nine months ended September 30, 2021, we used $155.5 million in cash for financing activities, which consisted primarily of repurchases of our common stock, net repayments of long-term debt, and payments related to tax withholdings for share-based compensation. These payments were partially offsetfunded by proceeds from our ~~accounts receivable financing agreement, our Revolver, and exercises of stock options.~~Revolver.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses during the period, as well as disclosures of contingent assets and liabilities at the date of the financial statements. We evaluate our estimates on an ongoing basis, including those related to revenue recognition, valuation of goodwill and identifiable intangibles, and tax-related contingencies and valuation allowances. These estimates are based on the information available to management at the time these estimates, judgments, and assumptions are made. Actual results may differ materially from these estimates. There have been no significant changes to our critical accounting policies and estimates from those disclosed in our ~~2021~~2022 Form 10-K. For additional information on all of our critical accounting policies and estimates, refer to Part II – Item 7 – Management’s Discussion and Analysis included in our ~~2021~~2022 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to our quantitative and qualitative disclosures about market risk as compared to the quantitative and qualitative disclosures about market risk described in our ~~2021~~2022 Form 10-K.

Table of Contents

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our ~~CEO~~Chief Executive Officer (“CEO”) and ~~CFO,~~Interim Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our CEO and Interim CFO have concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are party to legal proceedings incidental to our business. While our management currently believes the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our consolidated financial statements, litigation is subject to inherent uncertainties. Were an unfavorable ruling to occur, there exists the possibility of a material adverse impact on our financial condition and results of operations.

Please refer to “Note 15 – Commitments and Contingencies” of our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional material developments to legal proceedings included in our 2022 Form 10-K.

Table of Contents

Item 1A. Risk Factors.

Other than the following, ~~risk factor,~~ there have been no material changes from the risk factors previously disclosed in our ~~Annual Report on~~2022 Form ~~10-K for the year ended December 31, 2021. Refer to “Risk Factors” in Part 1, Item 1A of that report for~~10-K. For a detailed discussion of risk factors affecting ~~us.~~us, refer to Part I, Item 1A, “Risk Factors” in that report.

~~If we do not generate a large number of new business awards, or if new business awards are delayed, terminated, reduced in scope, or fail~~Risks Related to ~~go to contract, our business, financial condition, results of operations, or cash flows may be materially adversely affected.~~the Proposed Merger

Our business is dependent on our ability to generate new business awards from new and existing customers and maintain existing customer contracts. Our inability to generate new business awards on a timely basis and subsequently enter into contracts for such awards could have a material adverse effect on our business, financial condition, results of operations or cash flows. For example, in our Clinical Solutions segment, we have experienced lower net new business awards, increased delays in award decisions fromThe Merger, the ~~SMID market, and lower flow of requests for proposals. These headwinds have been caused by the current macroeconomic conditions and our ability to win repeat business, among other factors.~~

There is risk of cancelability in both the clinical and commercial businesses. The time between when a clinical study is awarded and when it goes to contract is typically several months, and prior to a new business award going to contract, our customer can cancel the award without notice. Once an award goes to contract, the majority of our customers can terminate the contract without cause with a notice period that generally ranges from 30 to 90 days. Our contracts may be delayed or terminated by our customers or reduced in scope for a variety of reasons, including factors beyond our control, including but not limited to:

•

~~decisions to forego or terminate a particular trial;~~

•

~~budgetary limits or changing priorities;~~

•

~~macroeconomic conditions, including but not limited to interest rate increases and inflation;~~

•

~~actions by regulatory authorities;~~

•

~~production problems resulting in shortages~~pendency of the ~~candidate drug being tested;~~

•

Merger or our failure ~~of products being tested~~ to ~~satisfy safety requirements or efficacy criteria;~~

•

~~unexpected or undesired clinical results for products;~~

•

~~insufficient patient enrollment in a trial;~~

•

~~insufficient principal investigator recruitment;~~

•

~~production problems resulting in shortages of~~consummate the ~~product being tested;~~

•

~~the customers’ decision to terminate or scale back the development or commercialization of a product or to end a particular project;~~

~~Table of Contents~~

•

~~shift of business to a competitor or internal resources; or~~

•

~~product withdrawal following market launch.~~

Our commercial services contracts typically have a significantly shorter wind down period than clinical contracts, particularly within our Deployment Solutions offerings. Furthermore, many of our communications services and consulting services projects are tied to a customer’s annual marketing budget or ad hoc service requests, which can lead to seasonal variability in revenue and less predictability in future revenues. In addition, many of our biopharmaceutical Deployment Solutions service contracts provide our customers with the opportunity to internalize the resources provided under the contract and terminate all or a portion of the services we provide under the contract. Our customers may also decide to shift their business to a competitor. Each of these factors results in less visibility to future revenue and may result in high volatility in future revenue.

Contract terminations, delays and modifications are a regular part of our business across each of our segments. Our full-service offering within our Clinical Solutions business has been, and may continue to be, negatively impacted by project delays, which impact near term revenue disproportionately. In addition, project delays, downsizings and cancellations, particularly within our Deployment Solutions and communications offerings, which are part of our Commercial Solutions business, have impacted our results in the past and might impact them in the future. The loss, reduction in scope or delay of a large project or of multiple projectsMerger could have a material adverse effect on our business, results of operations, financial condition and ~~financial condition. In addition, we might not realize~~ the ~~full benefits~~price of our ~~backlog if our customers cancel, delay, or reduce their commitments to us.~~Class A common stock.

InWe have entered into the ~~event~~Merger Agreement pursuant to which we have agreed to merge with Parent. The completion of ~~termination,~~the Merger is subject to certain closing conditions, including approval of the Merger Agreement by our ~~contracts often provide~~stockholders, receipt of regulatory approvals and such other conditions to completion as set forth in the Merger Agreement. There is no assurance that all of the various conditions will be satisfied, or that the Merger will be completed on the proposed terms, within the expected timeframe, or at all. Our ongoing business may be materially adversely affected by the announcement or the pendency of the Merger, and we would be subject to a number of risks, including the following:

•

we may experience negative publicity, which could have an adverse effect on our ongoing operations including, but not limited to, retaining and attracting employees and maintaining our relationships with existing customers and obtaining potential new customers;

•

we will be required to pay certain significant costs relating to the Merger, regardless of if the Merger is consummated, such as for example legal, accounting, financial advisory, regulatory, printing and other professional services fees, ~~for winding down~~which may relate to activities that we would not have undertaken other than in connection with the ~~project,~~Merger;

•

we are unable to solicit other acquisition proposals during the pendency of the Merger;

•

while the Merger Agreement is in effect, we are subject to restrictions on our business activities, including, among other things, restrictions on our ability to engage in certain kinds of material transactions, or incurring certain indebtedness, which ~~include both fees incurred~~could prevent us from pursuing strategic business opportunities, taking actions with respect to the business that we may consider advantageous and ~~actual~~responding effectively and/or timely to competitive pressures and ~~non-cancellable expenditures~~industry developments, and may ~~include~~as a ~~fee to cover a percentage of the remaining professional fees on the project. These fees might not be sufficient for us to maintain~~result materially adversely affect our margins, and termination may result in lower resource utilization rates and therefore lower operating margins. In addition, cancellation of a contract or project for the reasons noted above may result in the unwillingness or inability of our customer to satisfy its existing obligations to us such as payments of accounts receivable, which may in turn result in a material impact to ourbusiness, results of operations and financial condition;

•

matters relating to the Merger require substantial commitments of time and resources by our management, which could result in the distraction of management from ongoing business operations and pursuing other opportunities that could have been beneficial to us; and

•

we may commit significant time and resources to defending against litigation (from our stockholders or otherwise) related to the Merger.

If the Merger is not consummated, the risks described above may materialize or be worsened, and they may have a material adverse effect on our business, results of operations, financial condition and the price of our common stock, particularly to the extent that the current market price of our Class A common stock reflects an assumption that the Merger will be completed. If the Merger is not consummated, investor confidence could decline, stockholder litigation could be brought against us, our directors and/or officers, relationships with existing and prospective customers, service providers, investors, lenders and other business partners may be adversely impacted, we may be unable to attract or retain key personnel, our employees could be distracted and their productivity decline and profitability may be adversely impacted due to costs incurred in connection with the pending Merger. We may experience negative reactions from the financial markets, including negative impacts on our stock price, and it is uncertain when, if ever, the price of our shares would return to the prices at which our shares traded prior to the failure of the proposed Merger. If the Merger is not consummated, including as a result of our

Table of Contents

stockholders failing to approve the Merger, our stockholders will not receive any payment for their shares of our Class A common stock in connection with the Merger. Instead, we will remain a public company, our Class A common stock will continue to be listed and traded on The Nasdaq Stock Market and registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and we will be required to continue to file periodic reports with the SEC.

Even if successfully completed, there are certain risks to our stockholders from the Merger, including:

•

the amount of cash ~~flow. Historically, cancellations~~to be paid per share under the Merger Agreement is fixed and ~~delays have negatively impacted~~will not be adjusted for changes in our business, assets, liabilities, prospects, outlook, financial condition or operating results or in the event of any change in the market price of, analyst estimates of, or projections relating to, our Class A common stock;

•

the fact that receipt of the all-cash per share consideration under the Merger Agreement is taxable to stockholders that are treated as U.S. holders for U.S. federal income tax purposes; and

•

the fact that, if the Merger is completed, our stockholders will not participate in any future growth potential or benefit from any future increase in the value of the Company.

The proposed Merger is subject to approval of our stockholders as well as the satisfaction of other closing conditions, including government consents and ~~they might again.~~approvals, some or all of which may not be satisfied or completed within the expected timeframe, or at all.

The proposed Merger may not be completed within the expected timeframe, or at all, as a result of various factors and conditions, some of which are beyond our control. Completion of the Merger is subject to a number of closing conditions, including, among others, (i) the approval of the Merger by the affirmative vote of the holders of a majority of the outstanding shares of our Class A common stock entitled to vote on the Merger; and (ii) the approval by certain regulatory authorities in and out of the United States, which are not within our control. We can provide no assurance that all required consents and approvals will be obtained or that all closing conditions will otherwise be satisfied (or waived, if applicable), and, even if all required consents and approvals can be obtained and all closing conditions are satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such consents and approvals or the timing of the completion of the Merger. Many of the conditions to completion of the Merger are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, if applicable). Other developments beyond our control, including, but not limited to, changes in domestic or global economic, political or industry conditions may affect the timing or success of the Merger. Additionally, under circumstances specified in the Merger Agreement, we or Parent may terminate the Merger Agreement. Any adverse consequence of the pending Merger could be exacerbated by any delays in completion of the Merger or by the termination of the Merger Agreement.

The obligation of each party to the Merger Agreement to consummate the Merger is also subject to the accuracy of the representations and warranties of the other party (subject to customary materiality qualifications) and compliance in all material respects with the covenants and agreements contained in the Merger Agreement as of the closing of the Merger, including, with respect to us, covenants to conduct our business in the ordinary course and to not engage in certain kinds of material transactions prior to closing of the Merger. In addition, ~~we might~~the Merger Agreement may be terminated under certain specified circumstances, including, but not ~~realize~~limited to, in connection with a change in the ~~full benefits~~recommendation of our ~~backlog~~Board of Directors to enter into an agreement for a Superior Proposal (as defined in the Merger Agreement) or in the case of an Intervening Event (as defined in the Merger Agreement). As a result, we cannot assure you that the Merger will be completed, even if our ~~customers cancel, delay,~~stockholders approve the Merger, or ~~reduce their commitments~~that, if completed, it will be exactly on the terms set forth in the Merger Agreement or within the expected timeframe.

Table of Contents

We will be subject to ~~us,~~various uncertainties while the Merger is pending that may cause disruption and may make it more difficult to maintain relationships with our employees and third-party business partners.

Our efforts to complete the Merger could cause substantial disruptions in, and create uncertainty surrounding, our business, which may ~~occur if, among other things, a customer decides~~materially adversely affect our business, results of operations and financial condition. Uncertainty as to ~~shift its business~~whether the Merger will be completed may affect our ability to ~~a competitor~~recruit prospective employees or ~~revoke~~to retain and motivate existing employees. Employee retention may be particularly challenging while the Merger is pending because employees may experience uncertainty about their roles following the Merger. A substantial amount of our ~~status~~management’s and employees’ attention will be directed toward the completion of the Merger and thus be diverted from our day-to-day operations.

Uncertainty as ~~a preferred provider. Thus,~~to the ~~loss or delay of a large business award or the loss or delay of multiple awards~~future could adversely affect our ~~revenues~~business and ~~profitability. Additionally,~~our relationship with third parties. For example, certain of our customers may decide not to work with us anymore as a ~~change~~result of the proposed Merger, which could result in a permanent loss of such customers even if the Merger is not consummated. Changes to or termination of existing business relationships could adversely affect our revenue, earnings and financial condition, as well as the market price of our Class A common stock. The adverse effects of the pendency of the Merger could be exacerbated by any delays in completion of the Merger or by the termination of the Merger Agreement.

While the Merger is pending and the Merger Agreement is in effect, we are subject to restrictions on our business activities.

While the Merger is pending and the Merger Agreement is in effect, we are generally required to conduct our business in the ~~timing~~ordinary course. Pursuant to the terms of the Merger Agreement, we are restricted from taking certain specified actions without Parent’s prior consent, which is not to be unreasonably withheld, conditioned or delayed. These limitations including, among other things, certain restrictions on our ability to amend our organizational documents; acquire other businesses and assets; make certain investments; repurchase, reclassify or issue securities; make loans; pay dividends; incur indebtedness; enter into certain contracts; change accounting policies or procedures; settle certain litigation; change tax classifications and elections; or take certain actions relating to intellectual property of the Company. These restrictions could prevent us from pursuing strategic business opportunities and taking actions with respect to our business that we may consider advantageous and may, as a ~~new~~result, materially and adversely affect our business, ~~award~~results of operations and financial condition.Adverse effects arising from these restrictions during the pendency of the Merger could be exacerbated by any delays in consummation of the Merger or termination of the Merger Agreement.

In certain instances, the Merger Agreement requires us to pay a termination fee to Parent, which could affect the ~~period over~~decisions of a third party considering making an alternative acquisition proposal.

In certain specified circumstances further described in the Merger Agreement, in connection with the termination of the Merger Agreement, we will be required to pay Parent a termination fee of $115.0 million (the “Company Termination Payment”), including if Parent terminates the Merger Agreement after the Company Board changes its recommendation to the stockholders or if the Company terminates the Merger Agreement to enter into an alternative acquisition agreement with respect to a Superior Proposal or due to an Intervening Event. This payment could affect the structure, pricing and terms proposed by a third party seeking to acquire or merge with us and could discourage a third party from making a competing acquisition proposal or inquiry, including a proposal that would be more favorable to our stockholders than the Merger. For these and other reasons, termination of the Merger Agreement could materially and adversely affect our business, results of operations and financial condition, which ~~we recognize revenue~~in turn could materially and ~~reduce~~adversely affect the price of our ~~revenue~~Class A common stock.

Table of Contents

We may be the target of securities class action and derivative lawsuits and other legal or regulatory proceedings, which could result in substantial costs and may delay or prevent the Merger from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if such lawsuits or other legal or regulatory proceedings are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment in any ~~one quarter.~~such lawsuits or proceedings could result in monetary damages payable by the Company, which could have a negative impact on our liquidity, results of operations and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the proposed Merger, then that injunction may delay or prevent the proposed Merger from being completed, which may exacerbate the other risks described herein and adversely affect our business, results of operation and financial condition.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.

Recent Sales of Unregistered Securities

Not applicable.

Purchases of Equity Securities by the Issuer

On ~~November 17, 2020,~~May 25, 2022, our Board authorized the repurchase of up to an aggregate of ~~$300.0~~$350.0 million of our Class A common stock, par value $0.01 per share, to be executed from time to time in open market transactions effected through a broker at prevailing market prices, in block trades, or through privately negotiated transactions through December 31, ~~2022 (the “2021 Stock Repurchase Program”). The 2021 Stock Repurchase Program took effect on January 1, 2021.~~

~~Table of Contents~~

~~On May 25, 2022, our Board approved a new stock repurchase program~~2024 (the “2022 Stock Repurchase Program”) that took effect immediately and replaced the 2021 Stock Repurchase Program. The 2022 Stock Repurchase Program authorizes the repurchase of up to an aggregate of $350.0 million of our Class A common stock, par value $0.01, and will expire on December 31, 2024. .

Share repurchases are funded primarily with our working capital, cash flow from operations, and funds available through various borrowing arrangements.

The 2022 Stock Repurchase Program does not obligate us to repurchase any particular amount of our Class A common stock, and may be modified, extended, suspended, or discontinued at any time. The timing and amount of repurchases will be determined by our management based on a variety of factors such as the market price of our Class A common stock, our corporate cash requirements, and overall market conditions. The 2022 Stock Repurchase Program is subject to applicable legal requirements, including federal and state securities laws and applicable Nasdaq rules. We may also repurchase shares of our Class A common stock pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit shares of our Class A common stock to be repurchased when we might otherwise be precluded from doing so by law.

During the three months ended ~~September 30, 2022,~~March 31, 2023, there were no share repurchases under the 2022 Stock Repurchase Program. As of ~~September 30, 2022,~~March 31, 2023, we have remaining authorization to repurchase up to $350.0 million of shares of our Class A common stock under the 2022 Stock Repurchase Program.

Item 5. Other Information.

Not applicable.

4037

Table of Contents

Item 6. Exhibits


		Incorporated by Reference (Unless Otherwise Indicated)
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date
2.1*	Merger Agreement	8-K	001-36730	4.1	May 10, 2023
4.1	Sixth Supplemental Indenture, dated as of February 24, 2023, among the Guaranteeing Subsidiaries, the Company, the other Guarantors, and Wells Fargo Bank, National Association, as trustee.	—	—	—	Filed herewith
10.1	Separation Agreement and General Release of Claims between Jason Meggs and Syneos Health, Inc., dated January 5, 2023.	8-K	001-36730	10.1	January 9, 2023
10.2	Consulting Agreement between Jason Meggs and Syneos Health, Inc., dated January 5, 2023.	8-K	001-36730	10.2	January 9, 2023
10.3	Letter from Syneos Health, Inc. to Stanford Rudnick, dated March 29, 2023.	8-K	001-36730	10.1	March 30,2023
10.4	Executive Service Agreement, by and between Syneos Health UK Limited and Christian Tucat, dated February 14, 2023.	10-K	001-36730	10.7	February 16, 2023
10.5.1	Form of Global Restricted Stock Unit Award Agreement under Syneos Health, Inc. 2018 Equity Incentive Plan (U.S. Participants) (2023).	—	—	—	Filed herewith
10.5.2	Form of Global Restricted Stock Unit Award Agreement under Syneos Health, Inc. 2018 Equity Incentive Plan (Non-U.S. Participants) (2023).	—	—	—	Filed herewith
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	—	—	—	Filed herewith
31.2	Certification of Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	—	—	—	Filed herewith
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—	—	Furnished herewith
32.2	Certification of Interim Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—	—	Furnished herewith
101.INS	Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.	—	—	—	Filed herewith
101.SCH	Inline XBRL Taxonomy Extension Schema Document.	—	—	—	Filed herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	—	—	—	Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	—	—	—	Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	—	—	—	Filed herewith
101.PRE	Inline Taxonomy Extension Presentation Linkbase Document.	—	—	—	Filed herewith

Table of Contents


		~~Incorporated by Reference~~ ~~(Unless Otherwise Indicated)~~
~~Exhibit~~ ~~Number~~	~~Exhibit Description~~	~~Form~~	~~File No.~~	~~Exhibit~~	~~Filing Date~~
~~4.1~~	~~Fifth Supplemental Indenture, dated as of October 3, 2022, among the Guaranteeing Subsidiaries, the Company, the other Guarantors, and Wells Fargo Bank, National Association, as trustee.~~	—	—	—	~~Filed herewith~~
~~10.1~~	~~Separation Agreement and General Release of Claims between Syneos Health, Inc. and Paul Colvin.~~	—	—	—	~~Filed herewith~~
~~10.2~~	~~Supplemental Release between Syneos Health, Inc. and Paul Colvin.~~	—	—	—	~~Filed herewith~~
~~10.3~~	Twelfth Amendment to the Receivables Financing Agreement, dated as of October 3, 2022, by and among Syneos Health Receivables LLC, as borrower, Syneos Health, LLC, as initial servicer, Regions Bank, as lender, and PNC Bank, National Association, as administrative agent and as a lender.	—	—	—	~~Filed herewith~~
~~31.1~~	~~Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~	—	—	—	~~Filed herewith~~
~~31.2~~	~~Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~	—	—	—	~~Filed herewith~~
~~32.1~~	~~Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~	—	—	—	~~Furnished herewith~~
~~32.2~~	~~Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~	—	—	—	~~Furnished herewith~~
~~101.INS~~	~~Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.~~	—	—	—	~~Filed herewith~~
~~101.SCH~~	~~Inline XBRL Taxonomy Extension Schema Document.~~	—	—	—	~~Filed herewith~~
~~101.CAL~~	~~Inline XBRL Taxonomy Extension Calculation Linkbase Document.~~	—	—	—	~~Filed herewith~~
~~101.DEF~~	~~Inline XBRL Taxonomy Extension Definition Linkbase Document.~~	—	—	—	~~Filed herewith~~
~~101.LAB~~	~~Inline XBRL Taxonomy Extension Label Linkbase Document.~~	—	—	—	~~Filed herewith~~
~~101.PRE~~	~~Inline Taxonomy Extension Presentation Linkbase Document.~~	—	—	—	~~Filed herewith~~
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	—	—	—	Filed herewith

* Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the Securities and Exchange Commission upon request.

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		SYNEOS HEALTH, INC.


Date: ~~November 3, 2022~~May 10, 2023	BY:	~~/s/ Jason Meggs~~/s/ Stanford Rudnick
		~~Jason Meggs~~Stanford Rudnick
		Interim Chief Financial Officer (Principal Financial Officer)

4240


Delaware	27-3403111
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	SYNH	The Nasdaq Stock Market LLC


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(in thousands)
Net income	$	87,049		$	78,243		$	210,969		$	158,872
Unrealized (loss) gain on derivative instruments, net of income tax (benefit) expense of ($128), $317, $4,899, and $3,926, respectively		(360	)		936			13,808			11,581
Foreign currency translation adjustments, net of income tax expense (benefit) of $200, ($1,102), ($766), and ($1,260), respectively		(85,511	)		(23,687	)		(172,723	)		(19,172	)
Comprehensive income	$	1,178		$	55,492		$	52,054		$	151,281


	Three Months Ended March 31,
	2023			2022
	(in thousands)
Net (loss) income	$	(72,149	)	$	46,176
Unrealized (loss) gain on derivative instruments, net of income tax (benefit) expense of $(3,118) and $3,420, respectively		(9,439	)		9,640
Foreign currency translation adjustments, net of income tax benefit of $(9) and $(2,711), respectively		18,589			(17,386	)
Comprehensive (loss) income	$	(62,999	)	$	38,430


	September 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
	(in thousands, except par value)						(in thousands, except par value)
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	170,100		$	106,475		$	111,055		$	112,004
Accounts receivable and unbilled services, net		1,647,461			1,524,890			1,650,903			1,645,162
Prepaid expenses and other current assets		145,645			135,091			184,320			186,770
Total current assets		1,963,206			1,766,456			1,946,278			1,943,936
Property and equipment, net		255,749			222,657			245,672			264,295
Operating lease right-of-use assets		185,727			209,408			110,947			172,794
Goodwill		4,850,457			4,956,015			4,907,070			4,897,518
Intangible assets, net		710,637			854,067			644,843			680,863
Deferred income tax assets		30,622			35,387			48,183			50,677
Other long-term assets		201,385			193,103			195,783			189,135
Total assets	$	8,197,783		$	8,237,093		$	8,098,776		$	8,199,218

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	118,952		$	107,535		$	145,967		$	118,621
Accrued expenses		653,199			614,441			618,091			614,200
Deferred revenue		885,013			868,455			859,381			923,875
Current portion of operating lease obligations		41,123			43,058			42,718			43,984
Current portion of finance lease obligations		25,053			20,627			21,743			24,011
Total current liabilities		1,723,340			1,654,116			1,687,900			1,724,691
Long-term debt		2,752,470			2,775,721			2,611,580			2,611,166
Operating lease long-term obligations		180,169			205,798			165,554			175,568
Finance lease long-term obligations		50,463			34,181			38,421			44,124
Deferred income tax liabilities		82,284			78,062			74,903			92,155
Other long-term liabilities		54,996			76,660			65,947			56,513
Total liabilities		4,843,722			4,824,538			4,644,305			4,704,217

Commitments and contingencies (Note 16)
Commitments and contingencies (Note 15)

Shareholders’ equity:
Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
Common stock, $0.01 par value; 600,000 shares authorized, 102,895 and 103,764 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1,029			1,038
Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022								—			—
Class A common stock, $0.01 par value; 600,000 shares authorized, 103,641 and 102,911 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively								1,036			1,029
Additional paid-in capital		3,449,399			3,474,088			3,482,614			3,460,152
Accumulated other comprehensive loss, net of taxes		(208,533	)		(49,618	)		(124,724	)		(133,874	)
Retained earnings (accumulated deficit)		112,166			(12,953	)
Retained earnings								95,545			167,694
Total shareholders’ equity		3,354,061			3,412,555			3,454,471			3,495,001
Total liabilities and shareholders’ equity	$	8,197,783		$	8,237,093		$	8,098,776		$	8,199,218


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


	PART I - FINANCIAL INFORMATION

		Page

Item 1.	Financial Statements	3

	Condensed Consolidated Statements of ~~Income~~Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (unaudited)	3

	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (unaudited)	4

	Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (unaudited)	6

	Condensed Consolidated Statements of Shareholders’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (unaudited)	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2422

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3732

Item 4.	Controls and Procedures	3733

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	3833

Item 1A.	Risk Factors	3834

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	3937

Item 5.	Other Information	4037

Item 6.	Exhibits	4138

	Signature	4240


	September 30, 2022			December 31, 2021
Gross cash position	$	194,166		$	179,160
Less: cash borrowings		(194,713	)		(167,507	)
Net cash position	$	(547	)	$	11,653


	Clinical Solutions (a)			Commercial Solutions (a)			Total
Balance as of December 31, 2021	$	3,448,699		$	1,507,316		$	4,956,015
Acquisitions (b)		1,903			2,924			4,827
Impact of foreign currency translation		(79,351	)		(31,034	)		(110,385	)
Balance as of September 30, 2022	$	3,371,251		$	1,479,206		$	4,850,457


	Total number of shares purchased		Average price paid per share		Approximate dollar value of shares purchased (in thousands)
March 2021		600,000	$	74.18	$	44,505
May 2021		400,000		81.04		32,416
June 2021		500,000		81.20		40,600
February 2022		515,003		78.52		40,439
March 2022		1,413,920		77.46		109,522
Total		3,428,923			$	267,482