UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q
(Mark One)
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,September 30, 2019
or
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            .
Commission File Number: 001-36730
SYNEOS HEALTH, INC.
(Exact name of registrant as specified in its charter)
Delaware27-3403111
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1030 Sync Street, Morrisville, North Carolina 27560-5468
(Address of principal executive offices and Zip Code)
(919) 876-9300
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
                Class A Common Stock, $0.01 par value per shareSYNHThe Nasdaq Stock Market LLC
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.    YesýNo¨
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).    YesýNo¨
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. (Check one): 
Large accelerated filerxAccelerated filer
¨

Non-accelerated filer
¨
Smaller reporting company¨
Emerging growth company
¨

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 ¨Noý
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 par value per shareSYNHThe Nasdaq Stock Market LLC
As of April 30,October 24, 2019, there were approximately 103,755,391103,796,489 shares of the registrant’s common stock outstanding.














SYNEOS HEALTH, INC.
FORM 10-Q


TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.



2










PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.

SYNEOS HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
(In thousands, except per share data) 
Revenue$1,177,028  $1,114,918  $3,462,861  $3,244,644  
Costs and operating expenses:
Direct costs (exclusive of depreciation and amortization)913,674  872,214  2,718,005  2,560,502  
Selling, general, and administrative expenses109,864  96,943  333,860  296,420  
Restructuring and other costs13,456  19,349  39,751  41,647  
Transaction and integration-related expenses10,454  18,561  34,766  61,804  
Depreciation18,844  17,639  57,663  53,224  
Amortization41,293  50,395  124,423  150,333  
Total operating expenses1,107,585  1,075,101  3,308,468  3,163,930  
Income from operations69,443  39,817  154,393  80,714  
Other income (expense), net:
Interest income2,426  1,004  6,061  3,498  
Interest expense(32,607) (33,097) (101,500) (97,727) 
Loss on extinguishment of debt—  (1,789) (4,355) (3,914) 
Other income (expense), net30,713  (4,346) 29,365  15,101  
Total other income (expense), net532  (38,228) (70,429) (83,042) 
Income (loss) before provision for income taxes69,975  1,589  83,964  (2,328) 
Income tax expense(11,055) (11,983) (43,756) (19,058) 
Net income (loss)$58,920  $(10,394) $40,208  $(21,386) 
Earnings (loss) per share:
Basic$0.57  $(0.10) $0.39  $(0.21) 
Diluted$0.56  $(0.10) $0.38  $(0.21) 
Weighted average common shares outstanding:
Basic103,594  103,012  103,553  103,453  
Diluted105,021  103,012  104,881  103,453  
 Three Months Ended March 31,
 2019 2018
 (In thousands, except per share data)
Revenue$1,119,006
 $1,057,196
    
Costs and operating expenses:   
Direct costs (exclusive of depreciation and amortization)886,802
 840,823
Selling, general, and administrative expenses113,117
 99,259
Restructuring and other costs14,413
 13,707
Transaction and integration-related expenses16,658
 25,211
Depreciation19,571
 18,028
Amortization41,629
 49,993
Total operating expenses1,092,190
 1,047,021
Income from operations26,816
 10,175
    
Other expense, net:   
Interest income1,502
 839
Interest expense(34,630) (31,736)
Loss on extinguishment of debt(4,355) (248)
Other expense, net(8,921) (12,554)
Total other expense, net(46,404) (43,699)
Loss before provision for income taxes(19,588) (33,524)
Income tax (expense) benefit(10,416) 8,972
Net loss$(30,004) $(24,552)
    
Loss per share:   
Basic$(0.29) $(0.24)
Diluted$(0.29) $(0.24)
Weighted average common shares outstanding:   
Basic103,365
 104,449
Diluted103,365
 104,449


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

3










SYNEOS HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)


Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
(In thousands) 
Net income (loss)$58,920  $(10,394) $40,208  $(21,386) 
Unrealized gain (loss) on derivative instruments, net of income tax (expense) benefit of $0, $(475), $332 and $(475), respectively74  2,624  (13,104) 1,341  
Foreign currency translation adjustments, net of income tax benefit of $0, $2,868, $0 and $0, respectively(34,421) (1,295) (25,736) (36,541) 
Comprehensive income (loss)$24,573  $(9,065) $1,368  $(56,586) 
 Three Months Ended March 31,
 2019 2018
 (In thousands)
Net loss$(30,004) $(24,552)
Unrealized gain (loss) on derivative instruments, net of income tax benefit (expense) of $95 and $0, respectively(4,216) 434
Foreign currency translation adjustments, net of income tax benefit (expense) of $0 and $(2,868), respectively20,604
 33,923
Comprehensive income (loss)$(13,616) $9,805


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





4










SYNEOS HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 2019December 31, 2018
(in thousands, except par value)
ASSETS  
Current assets:  
Cash, cash equivalents, and restricted cash$129,204  $155,932  
Accounts receivable and unbilled services, net1,295,089  1,256,731  
Prepaid expenses and other current assets68,219  79,299  
Total current assets1,492,512  1,491,962  
Property and equipment, net201,122  183,486  
Operating lease right-of-use assets220,346  —  
Goodwill4,322,183  4,333,159  
Intangible assets, net1,004,576  1,133,612  
Deferred income tax assets5,502  9,317  
Other long-term assets131,072  103,373  
Total assets$7,377,313  $7,254,909  
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities:      
Accounts payable$82,838  $98,624  
Accrued expenses587,895  563,527  
Deferred revenue703,916  777,141  
Current portion of operating lease obligations30,390  —  
Current portion of finance lease obligations17,945  13,806  
Current portion of long-term debt28,750  50,100  
Total current liabilities1,451,734  1,503,198  
Long-term debt2,680,111  2,737,019  
Operating lease long-term obligations222,199  —  
Finance lease long-term obligations36,676  26,759  
Deferred income tax liabilities33,500  25,120  
Other long-term liabilities85,577  106,669  
Total liabilities4,509,797  4,398,765  
Commitments and contingencies (Note 17)
Shareholders' equity:      
Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding at September 30, 2019 and December 31, 2018—  —  
Common stock, $0.01 par value; 600,000 shares authorized, 103,793 and 103,372 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively1,038  1,034  
Additional paid-in capital3,425,826  3,402,638  
Accumulated other comprehensive loss, net of tax(127,035) (88,195) 
Accumulated deficit(432,313) (459,333) 
Total shareholders' equity2,867,516  2,856,144  
Total liabilities and shareholders' equity$7,377,313  $7,254,909  
 March 31, 2019 December 31, 2018
 (in thousands, except par value)
ASSETS   
Current assets:   
Cash, cash equivalents, and restricted cash$107,921
 $155,932
Accounts receivable and unbilled services, net1,221,660
 1,256,731
Prepaid expenses and other current assets78,179
 79,299
Total current assets1,407,760
 1,491,962
Property and equipment, net175,990
 183,486
Operating lease right-of-use assets239,391
 
Goodwill4,344,744
 4,333,159
Intangible assets, net1,096,619
 1,133,612
Deferred income tax assets9,153
 9,317
Other long-term assets113,873
 103,373
Total assets$7,387,530
 $7,254,909
    
LIABILITIES AND SHAREHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$94,278
 $98,624
Accrued expenses535,521
 563,527
Deferred revenue713,313
 777,141
Current portion of operating lease obligations28,792
 
Current portion of finance lease obligations11,808
 13,806
Current portion of long-term debt
 50,100
Total current liabilities1,383,712
 1,503,198
Long-term debt2,785,658
 2,737,019
Operating lease long-term obligations236,905
 
Finance lease long-term obligations27,144
 26,759
Deferred income tax liabilities26,823
 25,120
Other long-term liabilities88,918
 106,669
Total liabilities4,549,160
 4,398,765
    
Commitments and contingencies (Note 18)
 
    
Shareholders' equity:   
Preferred stock, $0.01 par value; 30,000 shares authorized, 0 shares issued and outstanding at March 31, 2019 and December 31, 2018
 
Common stock, $0.01 par value; 600,000 shares authorized, 103,753 and 103,372 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively1,038
 1,034
Additional paid-in capital3,402,953
 3,402,638
Accumulated other comprehensive loss, net of tax(71,807) (88,195)
Accumulated deficit(493,814) (459,333)
Total shareholders' equity2,838,370
 2,856,144
Total liabilities and shareholders' equity$7,387,530
 $7,254,909


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

5





SYNEOS HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
20192018
(In thousands)
Cash flows from operating activities:
Net income (loss)$40,208  $(21,386) 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization182,086  203,557  
Share-based compensation40,864  26,045  
Provision for doubtful accounts948  (3,453) 
Provision for (benefit from) deferred income taxes13,091  (721) 
Foreign currency transaction adjustments(6,090) (14,927) 
Fair value adjustment of contingent obligations(571) 3,582  
Loss on extinguishment of debt4,355  3,914  
Other non-cash items1,177  3,169  
Changes in operating assets and liabilities, net of effect of business combinations:
Accounts receivable, unbilled services, and deferred revenue(110,083) (48,802) 
Accounts payable and accrued expenses12,337  5,371  
Other assets and liabilities(20,389) 34,651  
Net cash provided by operating activities157,933  191,000  
Cash flows from investing activities:
Payments associated with business combinations, net of cash acquired—  (90,890) 
Purchases of property and equipment(50,645) (42,963) 
Investments in unconsolidated affiliates(9,227) —  
Net cash used in investing activities(59,872) (133,853) 
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of discount183,195  —  
Payments of debt financing costs(2,593) (3,062) 
Repayments of long-term debt(370,936) (354,396) 
Proceeds from accounts receivable financing agreement128,000  183,600  
Repayments of accounts receivable financing agreement(22,400) —  
Payments of contingent consideration related to business combinations(178) —  
Payments of finance leases(9,429) (12,664) 
Payments for repurchase of common stock(56,716) (74,985) 
Proceeds from exercise of stock options39,675  18,042  
Payments related to tax withholding for share-based compensation(12,503) (3,212) 
Net cash used in financing activities(123,885) (246,677) 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(904) 2,158  
Net change in cash, cash equivalents, and restricted cash(26,728) (187,372) 
Cash, cash equivalents, and restricted cash - beginning of period155,932  321,976  
Cash, cash equivalents, and restricted cash - end of period$129,204  $134,604  
 Three Months Ended March 31,
 2019 2018
 (In thousands)
Cash flows from operating activities:   
Net loss$(30,004) $(24,552)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization61,200
 68,021
Amortization of Senior Notes premium, net of capitalized loan fees and original issue discount(169) (34)
Share-based compensation14,267
 7,879
Provision for doubtful accounts1,302
 171
Provision for (benefit from) deferred income taxes1,544
 (10,735)
Foreign currency transaction adjustments(77) 6,364
Fair value adjustment of contingent obligations724
 1,194
Loss on extinguishment of debt4,355
 248
Other non-cash items(474) 1,796
Changes in operating assets and liabilities, net of effect of business combinations:   
Accounts receivable, unbilled services, and deferred revenue(25,471) (90,617)
Accounts payable and accrued expenses(26,682) (14,241)
Other assets and liabilities(13,821) 7,521
Net cash used in operating activities(13,306) (46,985)
Cash flows from investing activities:   
Purchases of property and equipment(11,445) (21,286)
Net cash used in investing activities(11,445) (21,286)
Cash flows from financing activities:   
Proceeds from issuance of long-term debt, net of discount183,195
 
Payments of debt financing costs(184) 
Repayments of long-term debt(216,136) (31,250)
Proceeds from accounts receivable financing agreement26,500
 
Payments of contingent consideration related to business combinations(8) 
Payments of finance leases(1,274) (4,479)
Payments for repurchase of common stock(26,616) (37,493)
Proceeds from exercise of stock options19,724
 5,668
Payments related to tax withholding for share-based compensation(11,539) (2,323)
Net cash used in financing activities(26,338) (69,877)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash3,078
 5,127
Net change in cash, cash equivalents, and restricted cash(48,011) (133,021)
Cash, cash equivalents, and restricted cash - beginning of period155,932
 321,976
Cash, cash equivalents, and restricted cash - end of period$107,921
 $188,955


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

6





SYNEOS HEALTH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
(in thousands)
Shareholders' equity, beginning balance$2,823,899  $2,822,672  $2,856,144  $3,022,579  
Impact from adoption of ASU 2014-09—  —  —  (98,815) 
Shareholders' equity, adjusted beginning balance2,823,899  2,822,672  2,856,144  2,923,764  
Common stock:
Beginning balance1,035  1,029  1,034  1,044  
Stock repurchase(1) —  (13) (19) 
RSU distributions net of shares for tax withholding—  —    
Stock option exercises  13   
Ending balance1,038  1,032  1,038  1,032  
Additional paid-in capital:
Beginning balance3,404,389  3,371,316  3,402,638  3,414,389  
Stock repurchase(4,648) —  (43,515) (64,482) 
RSU distributions net of shares for tax withholding(1,073) (829) (12,851) (3,213) 
Stock option exercises14,355  10,456  38,690  17,995  
Share-based compensation12,803  9,791  40,864  26,045  
Ending balance3,425,826  3,390,734  3,425,826  3,390,734  
Accumulated other comprehensive (loss) income:
Beginning balance(92,688) (55,064) (88,195) (22,385) 
Impact from adoption of ASU 2018-02—  —  —  3,850  
Adjusted beginning balance(92,688) (55,064) (88,195) (18,535) 
Unrealized gain (loss) on derivative instruments, net of taxes74  2,624  (13,104) 1,341  
Foreign currency translation adjustment, net of taxes(34,421) (1,295) (25,736) (36,541) 
Ending balance(127,035) (53,735) (127,035) (53,735) 
Accumulated deficit:
Beginning balance(488,837) (494,609) (459,333) (370,469) 
Impact from adoption of ASU 2014-09—  —  —  (98,815) 
Impact from adoption of ASU 2018-02—  —  —  (3,850) 
Adjusted beginning balance(488,837) (494,609) (459,333) (473,134) 
Stock repurchase(2,396) —  (13,188) (10,483) 
Net income (loss)58,920  (10,394) 40,208  (21,386) 
Ending balance(432,313) (505,003) (432,313) (505,003) 
Shareholders' equity, ending balance$2,867,516  $2,833,028  $2,867,516  $2,833,028  
 Three Months Ended March 31, 2019
 (in thousands)
 Common Stock Additional
Paid-in
Capital
 Accumulated
Other
Comprehensive
(Loss) Income
 Accumulated
Deficit
 Total
Shareholders'
Equity
 Shares Amount    
Balance at December 31, 2018103,372
 $1,034
 $3,402,638
 $(88,195) $(459,333) $2,856,144
Stock repurchase(673) (7) (22,132) 
 (4,477) (26,616)
RSU distributions net of shares for tax withholding380
 4
 (11,537) 
 
 (11,533)
Stock option exercises674
 7
 19,717
 
 
 19,724
Share-based compensation
 
 14,267
 
 
 14,267
Net loss
 
 
 
 (30,004) (30,004)
Unrealized loss on derivative instruments, net of taxes
 
 
 (4,216) 
 (4,216)
Foreign currency translation adjustment, net of taxes
 
 
 20,604
 
 20,604
Balance at March 31, 2019103,753
 $1,038
 $3,402,953
 $(71,807) $(493,814) $2,838,370
 Three Months Ended March 31, 2018
 (in thousands)
 Common Stock Additional
Paid-in
Capital
 Accumulated
Other
Comprehensive
(Loss) Income
 Accumulated
Deficit
 Total
Shareholders'
Equity
 Shares Amount    
Balance at December 31, 2017104,436
 $1,044
 $3,414,389
 $(22,385) $(370,469) $3,022,579
Impact from adoption of ASU 2014-09
 
 
 
 (98,815) (98,815)
Impact from adoption of ASU 2018-02
 
 
 3,850
 (3,850) 
Balance at January 1, 2018104,436
 1,044
 3,414,389
 (18,535) (473,134) 2,923,764
Stock repurchase(948) (9) (30,982) 
 (6,501) (37,492)
RSU distributions net of shares for tax withholding100
 1
 (2,324) 
 
 (2,323)
Stock option exercises216
 2
 5,624
 
 
 5,626
Share-based compensation
 
 7,879
 
 
 7,879
Net loss
 
 
 
 (24,552) (24,552)
Unrealized gain on derivative instruments, net of taxes
 
 
 434
 
 434
Foreign currency translation adjustment, net of taxes
 
 
 33,923
 
 33,923
Balance at March 31, 2018103,804
 $1,038
 $3,394,586
 $15,822
 $(504,187) $2,907,259

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



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SYNEOS HEALTH, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Basis of Presentation and Changes in Significant Accounting Policies
Nature of Operations
Syneos Health, Inc. (the “Company”) is a global provider of end-to-end biopharmaceutical outsourcing solutions. The Company operates under two2 reportable segments, Clinical Solutions and Commercial Solutions, and derives its revenue through a suite of services designed to enhance its customers’ ability to successfully develop, launch, and market their products. The Company offers its solutions on both a standalone and integrated basis with biopharmaceutical development and commercialization services ranging from Phase I-IVI to Phase IV clinical trial services to services associated with the commercialization of biopharmaceutical products. The Company’s customers include small, mid-sized, and large companies in the pharmaceutical, biotechnology, and medical device industries.
Unaudited Interim Financial Information
The Company prepared the accompanying unaudited condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. The significant accounting policies followed by the Company for interim financial reporting are consistent with the accounting policies followed for annual financial reporting.
The unaudited condensed consolidated financial statements, in management’s opinion, include all adjustments of a normal recurring nature necessary for a fair presentation. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission (“SEC”) on March 18, 2019. The results of operations for the three and nine months endedMarch 31,September 30, 2019 are not necessarily indicative of the results to be expected for the full year ending December 31, 2019 or any other future period. The unaudited condensed consolidated balance sheet at December 31, 2018 is derived from the amounts in the audited consolidated balance sheet included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
Allowance for Doubtful Accounts
The Company maintains a credit approval process and makes judgments in connection with assessing its customers’ ability to pay throughout the contractual obligation period. Generally, the Company has the ability to limit credit exposure by discontinuing services in the event of non-payment. The Company has certain customers that may depend on the ability to continue to raise capital in order to complete the development or commercialization of their products. The Company monitors its customers’ credit worthiness and applies judgment in establishing a provision for estimated credit losses based on historical experience, current receivables aging, and identified customer-specific circumstances that would affect the customers’ ability to meet their obligation. Despite this assessment, from time to time, customers are unable to meet their payment obligations, which could impact the Company’s results of operations.
Recently Adopted Accounting Standards
Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases (Topic 842), as further amended, to increase transparency and comparability among organizations by requiring the recognition of, at the lease commencement date, a lease liability for the obligation to make lease payments, and a right-of-use ("ROU") asset for the right to use the underlying asset, on the balance sheet. The Company adopted ASU 2016-02, and all related amendments, collectively “ASC 842”, as of January 1, 2019, using the modified retrospective approach. Results for reporting periods beginning on January 1, 2019 are presented under ASC 842, while prior
8


period amounts continue to be reported and disclosed in accordance with the Company’s historical accounting treatment under Accounting Standards Codification 840, Leases (“ASC 840”). In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, does not require the Company to reassess if a contract is or contains a lease and allows the Company to carry forward the historical lease classifications and historical initial direct costs. The Company made an accounting policy election under ASC 842 not to recognize ROU assets and lease liabilities for leases with a term of 12 months or less. Lease payments for these leases are recognized as lease costs on a straight-line basis over the lease term. The Company also elected to account for lease components and the associated non-lease components in the contracts as a single lease component for all classes of underlying assets.

8



Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities, mainly related to operating leases, of approximately $214.0 million, as of January 1, 2019. The Company’s accounting for finance leases (previously classified as capital leases under ASC 840) remained substantially unchanged.
2. Financial Statement Details
Cash, and Cash Equivalents, and Restricted Cash
Certain of the Company’s subsidiaries participate in a notional cash pooling arrangement to manage global liquidity requirements. The participants combine their cash balances in pooling accounts at the same financial institution with the ability to offset bank overdrafts of one participant against positive cash account balances held by another participant. The net cash balance related to this pooling arrangement is included in Cash,cash, cash equivalents, and restricted cash in the unaudited condensed consolidated balance sheets.
Accounts Receivable and Unbilled Services, net
Accounts receivable and unbilled services, net of allowance for doubtful accounts, consisted of the following (in thousands):
March 31, 2019 December 31, 2018September 30, 2019December 31, 2018
Accounts receivable billed$729,727
 $733,142
Accounts receivable billed$774,309  $733,142  
Less allowance for doubtful accounts(5,882) (4,587)
Less: Allowance for doubtful accountsLess: Allowance for doubtful accounts(4,974) (4,587) 
Accounts receivable billed, net723,845
 728,555
Accounts receivable billed, net769,335  728,555  
Accounts receivable unbilled392,810
 422,860
Accounts receivable unbilled416,211  422,860  
Contract assets105,005
 105,316
Contract assets109,543  105,316  
Accounts receivable billed and unbilled services, net$1,221,660
 $1,256,731
Accounts receivable and unbilled services, netAccounts receivable and unbilled services, net$1,295,089  $1,256,731  
Accounts Receivable Factoring Arrangement
In May 2017, the Company entered into an accounts receivable factoring agreement to sell certain eligible unsecured trade accounts receivable, without recourse, to an unrelated third-party financial institution for cash. For the threenine months ended March 31,September 30, 2019 and March 31, 2018, the Company factored $73.8$162.0 million and $45.4$197.4 million, respectively, of trade accounts receivable on a non-recourse basis and received $73.2$160.8 million and $45.2$196.4 million, respectively, in cash proceeds from the sale. The fees associated with these transactions were insignificant.

9




Goodwill
The changes in the carrying amount of goodwill by segment for the threenine months ended March 31,September 30, 2019 were as follows (in thousands):
Clinical
Solutions (a)
Commercial
Solutions (b)
Total
Balance as of December 31, 2018$2,772,803  $1,560,356  $4,333,159  
Business combinations (c)—  (204) (204) 
Impact of foreign currency translation(9,087) (1,685) (10,772) 
Balance as of September 30, 2019$2,763,716  $1,558,467  $4,322,183  
 Total Clinical
Solutions
��Commercial
Solutions
Balance at December 31, 2018:     
Gross carrying amount$4,349,325
 $2,780,945
 $1,568,380
Accumulated impairment losses (a)
(16,166) (8,142) (8,024)
Goodwill, net of accumulated impairment losses4,333,159
 2,772,803
 1,560,356
2019 Activity:     
Impact of foreign currency translation11,585
 8,616
 2,969
Balance at March 31, 2019:     
Gross carrying amount4,360,910
 2,789,561
 1,571,349
Accumulated impairment losses (a)
(16,166) (8,142) (8,024)
Goodwill, net of accumulated impairment losses$4,344,744
 $2,781,419
 $1,563,325
(a) Accumulated impairment losses of $8.1 million associated with the Clinical Solutions segment were recorded prior to 20192016 and related to the former Phase I Services segment, now a component of the Clinical Solutions segment. NaN impairment of goodwill was recorded for the nine months ended September 30, 2019.
(b) Accumulated impairment losses of $8.0 million associated with the Commercial Solutions segment were recorded prior to 20192015 and related to the former Global Consulting segment, now a component of the Commercial Solutions segment. NoNaN impairment of goodwill was recorded for the threenine months ended March 31,September 30, 2019.
(c) Amount represents measurement period adjustments to goodwill recognized in connection with the acquisition of Kinapse Topco Limited (“Kinapse”).

Transaction and Integration-Related Expenses
Transaction and integration-related expenses consisted of the following (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
Professional fees$7,108  $14,851  $26,632  $40,624  
Debt modification and related expenses1,582  409  5,555  1,726  
Integration and personnel retention-related costs1,394  2,107  3,150  15,847  
Fair value adjustments to contingent obligations370  1,194  (571) 3,582  
Other—  —  —  25  
Total transaction and integration-related expenses$10,454  $18,561  $34,766  $61,804  



10
 Three Months Ended March 31,
 2019 2018
Professional fees$12,846
 $14,700
Debt modification and related expenses2,241
 
Integration and personnel retention-related costs847
 9,293
Fair value adjustments to contingent obligations724
 1,194
Other
 24
Total transaction and integration-related expenses$16,658
 $25,211


Accumulated Other Comprehensive Loss, Net of Tax

Accumulated other comprehensive loss, net of tax, consisted of the following (in thousands):

 March 31, 2019 December 31, 2018
Foreign currency translation adjustments$(60,351) $(80,955)
Unrealized gain (loss) on derivative instruments(11,456) (7,240)
Accumulated other comprehensive loss$(71,807) $(88,195)
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
Beginning balance$(92,688) $(55,064) $(88,195) $(22,385) 
Foreign Currency Translation:
  Beginning balance(72,270) (55,166) (80,955) (23,514) 
    Impact from adoption of ASU 2018-02—  —  —  3,594  
  Adjusted beginning balance(72,270) (55,166) (80,955) (19,920) 
    Other comprehensive loss before reclassifications(34,421) (1,295) (25,736) (36,541) 
    Reclassification adjustments—  —  —  —  
  Ending balance(106,691) (56,461) (106,691) (56,461) 
Derivative Instruments:
  Beginning balance(20,418) 102  (7,240) 1,129  
    Impact from adoption of ASU 2018-02—  —  —  256  
  Adjusted beginning balance(20,418) 102  (7,240) 1,385  
    Other comprehensive (loss) income before reclassifications(1,105) 2,397  (15,351) 1,712  
    Reclassification adjustments1,179  227  2,247  (371) 
  Ending balance(20,344) 2,726  (20,344) 2,726  
Ending balance$(127,035) $(53,735) $(127,035) $(53,735) 


10




Changes in accumulated other comprehensive loss netconsisted of tax, for the three months ended March 31, 2019 were as followsfollowing (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
Foreign currency translation adjustments:
    Foreign currency translation adjustments, before tax$(34,421) $(4,163) $(25,736) $(36,541) 
    Income tax benefit—  2,868  —  —  
  Foreign currency translation adjustments, net of tax(34,421) (1,295) (25,736) (36,541) 
Unrealized gain (loss) on derivative instruments:
    Unrealized (loss) gain during period, before tax(1,144) 2,863  (15,760) 2,178  
    Income tax benefit (expense)39  (466) 409  (466) 
  Unrealized (loss) gain during period, net of tax(1,105) 2,397  (15,351) 1,712  
    Reclassification adjustment, before tax1,218  236  2,324  (362) 
    Income tax expense(39) (9) (77) (9) 
  Reclassification adjustment, net of tax1,179  227  2,247  (371) 
  Total unrealized gain (loss) on derivative instruments, net of tax74  2,624  (13,104) 1,341  
Total other comprehensive (loss) income, net of tax$(34,347) $1,329  $(38,840) $(35,200) 

11
 Unrealized gain (loss) on derivative instruments Foreign currency translation adjustments Total
Balance at December 31, 2018$(7,240) $(80,955) $(88,195)
Other comprehensive gain (loss) before reclassifications(3,729) 20,604
 16,875
Amount of gain reclassified from accumulated other comprehensive loss into the statement of operations(487) 
 (487)
Net current period other comprehensive gain (loss), net of tax(4,216) 20,604
 16,388
Balance at March 31, 2019$(11,456) $(60,351) $(71,807)



 Before-Tax Amount Tax Benefit Net-of-Tax Amount
Foreign currency translation adjustments$20,604
 $
 $20,604
Unrealized loss on derivative instruments:     
Unrealized loss arising during period(3,805) 76
 (3,729)
Reclassification adjustment of realized gains to net income (loss)(506) 19
 (487)
Net unrealized loss on derivative instruments(4,311) 95
 (4,216)
Other comprehensive income (loss)$16,293
 $95
 $16,388

The tax effects allocated to each component of other comprehensive income (loss) for the three months ended March 31, 2018 were as follows (in thousands):

 Before-Tax Amount Tax Benefit Net-of-Tax Amount
Foreign currency translation adjustments$36,791
 $(2,868) $33,923
Unrealized gain on derivative instruments:     
Unrealized gain arising during the period711
 
 711
Reclassification adjustment of realized gains to net loss(277) 
 (277)
Net unrealized gain on derivative instruments434
 
 434
Other comprehensive income (loss)$37,225
 $(2,868) $34,357
Other Expense,Income (Expense), Net
Other expense,income (expense), net consisted of the following (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
Net realized foreign currency gain$26,762  $1,978  $25,631  $2,146  
Net unrealized foreign currency gain (loss)5,131  (4,706) 6,090  14,927  
Other, net(1,180) (1,618) (2,356) (1,972) 
Total other income (expense), net$30,713  $(4,346) $29,365  $15,101  
  Three Months Ended March 31,
  2019 2018
Net realized foreign currency gain (loss) $(8,406) $(5,517)
Net unrealized foreign currency gain (loss) 77
 (6,364)
Other, net (592) (673)
Total other expense, net $(8,921) $(12,554)


11



3. Business Combinations
inVentiv Health Merger
On August 1, 2017, (the “Merger Date”), the Company completed a merger (the “Merger”) with Double Eagle Parent, Inc. (“inVentiv”), the parent company of inVentiv Health, Inc., with the Company surviving as the accounting and legal entity acquirer. The Merger was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The goodwill in connection with the Merger is primarily attributable to the assembled workforce of inVentiv and the expected synergies of the Merger.
In connection with the Merger, the Company assumed certain contingent tax-sharing obligations of inVentiv. The fair value of the contingent tax-sharing liability is remeasured at the end of each reporting period, with changes in the estimated fair value reflected in earnings until the liability is fully settled. The estimated fair value of the contingent tax-sharing obligations liability was $16.4$14.9 million and $15.7 million as of March 31,September 30, 2019 and December 31, 2018, respectively. The liability is included in accrued expenses and other long-term liabilities on the accompanying unaudited condensed consolidated balance sheets.
Kinapse Limited Acquisition
In August 2018, the Company completed its acquisition of Kinapse, Topco Limited (“Kinapse”), a provider of advisory and operational solutions to the global life sciences industry. The total purchase consideration was $100.1 million plus assumed debt, and included cash acquired of $4.9 million. The Company recognized $74.8$74.5 million of goodwill and $57.3 million of intangible assets, principally customer relationships, as a result of the acquisition. The goodwill is not0t deductible for income tax purposes. The Company’s assessment of fair value and the purchase price allocation related to this acquisition is preliminary and further adjustments may be necessary as additional information relatedhas been allocated to the fair values oftangible assets and identifiable intangible assets acquired and liabilities assumed is assessed duringbased upon their fair values. The excess of the measurement period (up to one year frompurchase price over the acquisition date).tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The operating results from the Kinapse acquisition have been included in the Company’s Commercial Solutions segment from the date of acquisition.
12


4. Long-Term Debt Obligations
The Company’s debt obligations consisted of the following (in thousands):
March 31, 2019 December 31, 2018September 30, 2019December 31, 2018
Secured Debt   Secured Debt
Term Loan A due March 2024$1,150,000
 $975,000
Term Loan A due March 2024$1,150,000  $975,000  
Term Loan B due August 20241,017,364
 1,221,000
Term Loan B due August 2024862,564  1,221,000  
Accounts receivable financing agreement due June 2020195,900
 169,400
Accounts receivable financing agreement due September 2021Accounts receivable financing agreement due September 2021275,000  169,400  
Total secured debt2,363,264
 2,365,400
Total secured debt2,287,564  2,365,400  
Unsecured Debt   Unsecured Debt
7.5% Senior Unsecured Notes due 2024403,000
 403,000
7.5% Senior Unsecured Notes due 2024 (the "Senior Notes")7.5% Senior Unsecured Notes due 2024 (the "Senior Notes")403,000  403,000  
Total debt obligations2,766,264
 2,768,400
Total debt obligations2,690,564  2,768,400  
Add: unamortized Senior Notes premium, net of term loan original issuance discount29,305
 32,303
Add: unamortized Senior Notes premium, net of term loan original issuance discount27,178  32,303  
Less: unamortized deferred issuance costs(9,911) (13,584)Less: unamortized deferred issuance costs(8,881) (13,584) 
Less: current portion of debt
 (50,100)Less: current portion of debt(28,750) (50,100) 
Total debt obligations, non-current portion$2,785,658
 $2,737,019
Total debt obligations, non-current portion$2,680,111  $2,737,019  

12



Concurrent with the completion of the Merger on August 1, 2017, the Company entered into a credit agreement (as amended, the "Credit Agreement") for: (i) a $1.0 billion Term Loan A facility that would mature on August 1, 2022 (the “Term Loan A”); (ii) a $1.6 billion Term Loan B facility that would mature on August 1, 2024 (the “Term Loan B”); and (iii) a five-yearfive-year $500.0 million revolving credit facility (the “Revolver”) that would mature on August 1, 2022.
On May 4, 2018, the Company entered into Amendment No. 1 to the Credit Agreement, which, among other things, modified the terms of the Credit Agreement to reduce by 0.25% overall the applicable margins for alternate base rateAlternate Base Rate (as defined in the Credit Agreement) loans and Adjusted Eurocurrency Rate (as defined in the Credit Agreement) loans with respect to both the Term Loan A and Term Loan B facilities.
In FebruaryDuring the nine months ended September 30, 2019, the Company voluntarily prepaid $25.0$179.8 million towards reducing its outstanding Term Loan B balance, which was applied against the regularly-scheduled quarterly principal payments. As a result of these and previous voluntary prepayments, the Company is not required to make a mandatory principal payment against the Term Loan B principal balance until maturity in August 2024. Additionally, during the threenine months ended March 31,September 30, 2019, the Company made mandatory principal repayments of $12.5 milliontowards its Term Loan A.
Amendment No. 2 to the Credit Agreement
On March 26, 2019, the Company entered into Amendment No. 2 to the Credit Agreement (“the Second(the "Second Amendment”). The Second Amendment, among other things, modifies the terms of the Credit Agreement to refinance the existing Term Loan A facility and the Revolver as follows:
(a) to increase the existing Term Loan A facility by $587.5 million to $1.55 billion. $187.5 million of such increase was applied at closing to repay a portion of the Company’s existing Term Loan B facility and the fees and expenses incurred in connection with the Second Amendment, and the remaining $400.0 million will be available to be funded in multiple draws within 9nine months of closing and applied to further prepay loans under the Term Loan B facility and/or redeem, repay, defease or discharge all or a portion of the Company’s Senior Unsecured Notes due 2024;closing;
(b) to increase the existing Revolver commitments available by $100.0 million to $600.0 million, and reduce the margin spread by 0.25% overall, resulting in (i) for Adjusted Eurocurrency Rate loans, a margin spread of 1.50% and (ii) for alternate base rateAlternate Base Rate loans, a margin spread of 0.50%, with a single 0.25% step-down based on the achievement of certain leverage ratios; and
(c) to extend the maturity such thatof the Term Loan A facility and the Revolver will mature 5 years fromto March 26, 2019.2024.
13


The Term Loan A facility and the Revolver will continue to be subject to the same affirmative covenants and negative covenants. The financial covenant will be set at a First Lien Leverage Ratio (as defined in the Credit Agreement) of 5.00:1.00 with a single step-down to 4.50:1.00 commencing with the fiscal quarter ending March 31, 2020. The Company was in compliance with all covenants of the Credit Agreement as of March 31,September 30, 2019.
In connection with the Second Amendment, during the three months ended March 31, 2019, the Company recorded a $4.4 million loss on extinguishment of debt, mainly due to the write-off of the deferred issuance costs and debt discount.
The funded amount of the Term Loan A facility was issued net of a discount and debt issuance costs totaling $2.8 million. These costs are being accreted as a component of interest expense using the effective interest rate method over the term of this facility.
The Company recorded debt issuance costs and related fees in connection with the Revolver and the unfunded amount of the Term Loan A facility of approximately $3.5 million, which are included in other long-term assets in the unaudited condensed consolidated balance sheet. These costs are amortized as a component of interest expense on a straight-line basis over the related terms.

Redemption of Senior Notes
13



the Senior Notes for $403.0 million and pay a $15.1 million premium related to the early redemption.
Covenant Restrictions under our Lease Agreement
The lease agreement for the Company’s new corporate headquarters in Morrisville, North Carolina includes a provision that requires the Company to issue a letter of credit in certain amounts to the landlord based on the Company’s debt rating issued by Moody’s Investors Service (or other nationally-recognized debt rating agency). As of March 31,September 30, 2019 (and through the date of this filing), the Company’s credit rating was Ba3. As such, no letter of credit was required through the date of this filing. Any letters of credit issued in accordance with the aforementioned requirements wouldcould be issued under the Revolver, and, if issued under the Revolver, would reduce its available borrowing capacity by the same amount.
As of March 31,September 30, 2019, the Company had $580.5580.2 million (net of $19.5$19.8 million in outstanding letters of credit) of available borrowings for working capital and other purposes under the Revolver and $0.8$0.7 million of letters of credit that were not secured byissued under the Revolver.
Accounts Receivable Financing Agreement
On June 29, 2018, the Company entered into an accounts receivable financing agreement (as amended)with a termination date of June 29, 2020,September 30, 2021, unless terminated earlier pursuant to its terms. Under this agreement, certain of the Company’s consolidated subsidiaries will sell accounts receivable and unbilled services (including contract assets) balances to a wholly-owned, bankruptcy-remote special purpose entity (“SPE”). TheOn September 30, 2019, the Company entered into an amendment that increased the amount the SPE can borrow up to $250.0 million from a third-party lender from $250.0 million to $275.0 million, secured by liens on certain receivables and other assets of the SPE. The Company has guaranteed the performance of the obligations of existing and future subsidiaries that sell and service the accounts receivable under this agreement. The available borrowing capacity varies monthly according to the levels of the Company’s eligible accounts receivable and unbilled receivables. Loans under this agreement will accrue interest at a reserve-adjusted LIBOR rate or a base rate equal to the higher of (i) the applicable lender’s prime rate and (ii) the federal funds rate plus 0.50%. The Company may prepay loans upon one business day’s prior notice and may terminate or reduce the facility limit of the accounts receivable financing agreement with 15 days’ prior notice. The aforementioned amendment entered into on September 30, 2019 also extended the termination date as stated above from June 29, 2020 to September 30, 2021.
14


As of March 31,September 30, 2019, the Company had $195.9$275.0 million of outstanding borrowings under the accounts receivable financing agreement, which isare recorded in long termlong-term debt on the accompanying unaudited condensed consolidated balance sheet. TheThere was 0 remaining maximumborrowing capacity available for borrowing under this agreement was $54.1 million as of March 31,September 30, 2019.
Maturities of Debt Obligations
As of March 31,September 30, 2019, the contractual maturities of the Company’s debt obligations were as follows (in thousands):
Principal InterestPrincipalInterest
2019$
 $100,123
2019$—  $32,004  
2020239,024
 128,807
202043,125  126,606  
202179,063
 122,189
2021354,063  120,732  
2022107,813
 118,252
2022107,813  111,147  
2023115,000
 112,726
2023115,000  106,493  
2024 and thereafter2,225,364
 57,441
2024 and thereafter2,070,563  53,970  
Less: deferred issuance costs(9,911)  Less: deferred issuance costs(8,881) 
Unamortized Senior Notes premium, net of term loan original issuance discount29,305
  Unamortized Senior Notes premium, net of term loan original issuance discount27,178  
Total$2,785,658
 $639,538
Total$2,708,861  $550,952  


14



5. Leases
The Company’s operating leases are primarily related to its office facilities. The Company’s finance leases are related to vehicles that the Company leases for certain sales representatives in its Commercial Solutions segment. TheseThe Company's leases have remaining lease terms of less than 1one year to 13 years, some of which include options to extend the term or terminate the lease. These options to extend or terminate a lease are included in the lease terms when it is reasonably certain that the Company will exercise that option.
ROU assets and lease liabilities are recognized based on the present value of the fixed lease payments over the lease term at the commencement date. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date, and are reduced by lease incentives. The Company uses its incremental borrowing rate as the discount rate to determine the present value of the lease payments for leases that do not have a readily determinable implicit discount rate. The Company’s incremental borrowing rate is the rate of interest that it would have to borrow on a collateralized basis over a similar term and amount in a similar economic environment. The Company determines the incremental borrowing rates for its leases by adjusting the local risk free interest rate with a credit risk premium corresponding to the Company’s credit rating.
The Company records rent expense for its operating leases on a straight-line basis from the lease commencement date until the end of the lease term. The Company records finance lease cost as a combination of the amortization expense for the ROU assets and interest expense for the outstanding lease liabilities using the discount rate discussed above. Variable lease payments for operating leases are related to the office facilities and include but are not limited to common area maintenance, parking, electricity, and management fees. The variable lease payments for finance leases are related to maintenance programs for leased vehicles. Variable lease payments are based on occurrence or based on usage; therefore, they are not included as part of the initial calculations of the ROU assets and liabilities’ calculation.liabilities.
15


The components of lease cost were as follows for the three and nine months ended September 30, 2019 (in thousands):
 Three Months Ended
ClassificationMarch 31, 2019Three Months Ended September 30, 2019Nine Months Ended September 30, 2019
Operating leases: 
Operating leases:
Fixed lease costsSelling, general, and administrative expenses$17,140
Fixed lease costsSelling, general, and administrative expenses$15,720  $49,825  
Short-term lease costsSelling, general, and administrative expenses379
Short-term lease costsSelling, general, and administrative expenses630  1,204  
Variable lease costsSelling, general, and administrative expenses7,790
Variable lease costsSelling, general, and administrative expenses8,580  25,234  
Total operating lease costs $25,309
Total operating lease costs$24,930  $76,263  
Finance leases:  Finance leases:
Amortization of right-of-use assetsDepreciation$4,319
Amortization of right-of-use assetsDepreciation$3,677  $11,987  
Interest on lease liabilitiesInterest expense394
Interest on lease liabilitiesInterest expense502  1,309  
Variable lease costsSelling, general, and administrative expenses1,827
Variable lease costsSelling, general, and administrative expenses2,138  5,769  
Total finance lease costs $6,540
Total finance lease costs$6,317  $19,065  

15






Supplemental balance sheet information related to finance leases was as follows as of September 30, 2019 (in thousands):
Finance leases:March 31, 2019
Property and equipment, gross$53,545
Accumulated depreciation(19,932)
Property and equipment, net$33,613
  
Current portion of finance lease obligations$11,808
Finance lease long-term obligations27,144
Total finance lease liabilities$38,952
Property and equipment, gross$66,875 
Accumulated depreciation(18,513)
Property and equipment, net$48,362 
Current portion of finance lease obligations$17,945 
Finance lease long-term obligations36,676 
Total finance lease liabilities$54,621 
Supplemental cash flow information related to leases was as follows for the nine months ended September 30, 2019 (in thousands):
 Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash flows for operating leases$(16,238)
Operating cash flows for finance leases(394)
Financing cash flows for finance leases(1,274)
  
Right-of-use assets obtained in exchange for lease obligations: 
Operating leases$39,002
Finance leases1,171
Weighted average remainingCash paid for amounts included in the measurement of lease termliabilities:March 31, 2019
Operating cash flows for operating leases8 years$(12,115)
Operating cash flows for finance leases(1,309)
Financing cash flows for finance leases(9,429)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$48,548 
Finance leases3 years30,525 
Lease obligations closed out in exchange for right-of-use assets:
Operating leases$(634)

16


Weighted average remaining lease term as of September 30, 2019:
Operating leases8 years
Finance leases3 years

Weighted average discount rate as of September 30, 2019:March 31, 2019
Operating leases4.9%
Finance leases3.23.3 %
As of March 31,September 30, 2019, maturities of lease liabilities were as follows (in thousands):
Operating LeasesFinance LeasesTotal
Operating Leases Finance Leases Total
2019 (remaining 9 months)$27,533
 $12,853
 $40,386
20192019$2,816  $5,530  $8,346  
202050,350
 13,447
 63,797
202052,426  18,918  71,344  
202144,824
 9,922
 54,746
202146,974  16,952  63,926  
202239,255
 5,476
 44,731
202240,717  12,762  53,479  
202335,678
 37
 35,715
202335,723  4,366  40,089  
2024 and thereafter131,452
 
 131,452
2024 and thereafter131,233  —  131,233  
Total lease payments329,092
 41,735
 $370,827
Total lease payments309,889  58,528  $368,417  
Less: management fee  (559)   Less: management fee(768) 
Less: imputed interest(63,395) (2,224)   Less: imputed interest(57,300) (3,139) 
Total lease liabilities$265,697
 $38,952
  Total lease liabilities$252,589  $54,621  
Under ASC 840, as of December 31, 2018, the Company had total capital lease assets of $55.3 million and accumulated depreciation of $17.6 million, which are included within property and equipment, net, on

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the unaudited condensed consolidated balance sheet. The related capital lease obligations totaled $40.6 million as of December 31, 2018. For the three and nine months ended March 31,September 30, 2018, the Company recorded rent expense of $16.7$15.1 million and $48.4 million, respectively, for operating leases.
6. Derivatives
In May 2016, the Company entered into interest rate swaps with a combined notional value of $300.0 million in an effort to limit its exposure to variable interest rates on its term loans. The swaps became effective on June 30, 2016 and a portion of the interest rate swaps expired on June 30, 2018, with the remainder expiring on May 14, 2020. As of March 31,September 30, 2019, the remaining notional value of these interest rate swaps was $100.0 million. In June 2018, the Company entered into an interest rate swap with an aggregate notional value of $1.01 billion that became effective on December 31, 2018 and that will expire on June 30, 2021. The significant terms of these derivatives are substantially the same as those contained within the Credit Agreement, including monthly settlements with the swap counterparties. Interest rate swaps are designated as hedging instruments. During the three and nine months ended March 31,September 30, 2019, the amount of loss recognized in other income (expense), net with respect to these contracts was inconsequential.
As a result of an acquisition that occurred during the third quarter of 2018, the Company became a party to certain foreign currency exchange rate forward contracts. These contracts that have expirationexpired on various dates through April 2019. During the three and nine months ended March 31,September 30, 2019, the amount of loss recognized in other expense,income (expense), net with respect to these contracts was inconsequential.
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The fair values of the Company’s derivative financial instruments and the line items on the accompanying unaudited condensed consolidated balance sheets to which they were recorded arewere as follows (in thousands):
Balance Sheet Classification March 31, 2019 December 31, 2018Balance Sheet ClassificationSeptember 30, 2019December 31, 2018
Interest rate swaps - currentPrepaid expenses and other current assets $1,132
 $1,355
Interest rate swaps - currentPrepaid expenses and other current assets$306  $1,355  
Interest rate swaps - non-currentOther long-term assets 111
 441
Interest rate swaps - non-currentOther long-term assets—  441  
Foreign currency exchange rate swaps - currentAccrued expenses 
 (138)Foreign currency exchange rate swaps - currentAccrued expenses—  (138) 
Interest rate swaps - currentAccrued expenses (4,328) (3,031)Interest rate swaps - currentAccrued expenses(11,083) (3,031) 
Interest rate swaps - non-currentOther long-term liabilities (8,832) (6,201)Interest rate swaps - non-currentOther long-term liabilities(10,241) (6,201) 

7. Fair Value Measurements
Assets and Liabilities Carried at Fair Value
As of March 31,September 30, 2019 and December 31, 2018, the Company’s financial assets and liabilities carried at fair value included cash and cash equivalents, restricted cash, trading securities, billed and unbilled accounts receivable (including contract assets), accounts payable, accrued expenses, deferred revenue, assumed contingent obligations, finance leases, liabilities under the accounts receivable financing agreement, and derivative instruments.
The fair values of cash and cash equivalents, restricted cash, billed and unbilled accounts receivable (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.

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Financial Instruments Subject to Recurring Fair Value Measurements

As of March 31,September 30, 2019, 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 1Level 2Level 3Investments Measured
at Net Asset Value
Total
Assets:
Trading securities (a)$21,026  $—  $—  $—  $21,026  
Partnership interest (b)—  —  —  6,227  6,227  
Derivative instruments (c)—  306  —  —  306  
Total assets$21,026  $306  $—  $6,227  $27,559  
Liabilities:
Derivative instruments (c)$—  $21,324  $—  $—  $21,324  
Contingent obligations related to business combinations (d)—  —  19,200 ��$—  19,200  
Total liabilities$—  $21,324  $19,200  $—  $40,524  
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 Level 1 Level 2 Level 3 Total
Assets:       
Trading securities(a)
$20,674
 $
 $
 $20,674
Derivative instruments(b)

 1,243
 
 1,243
Total assets$20,674
 $1,243
 $
 $21,917
        
Liabilities:       
Derivative instruments(b)
$
 $13,160
 $
 $13,160
Contingent obligations related to business combinations(c)

 
 20,966
 20,966
Total liabilities$
 $13,160
 $20,966
 $34,126
As of December 31, 2018, 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 TotalLevel 1Level 2Level 3Total
Assets:       Assets:
Trading securities(a)
$14,945
 $
 $
 $14,945
Trading securities (a)$14,945  $—  $—  $14,945  
Derivative instruments(b)

 1,796
 
 1,796
Derivative instruments (e)Derivative instruments (e)—  1,796  —  1,796  
Total assets$14,945
 $1,796
 $
 $16,741
Total assets$14,945  $1,796  $—  $16,741  
       
Liabilities:       Liabilities:
Derivative instruments(b)
$

$9,370

$

$9,370
Contingent consideration obligations related to business combinations(c)




20,127

20,127
Derivative instruments (e)Derivative instruments (e)$—  $9,370  $—  $9,370  
Contingent obligations related to business combinations (d)Contingent obligations related to business combinations (d)—  —  20,127  20,127  
Total liabilities$
 $9,370
 $20,127
 $29,497
Total liabilities$—  $9,370  $20,127  $29,497  
(a) Represents fair value of investments in mutual funds based on quoted market prices whichthat are used to fund the liability associated with the deferred compensation plan.

(b) The Company has committed to invest $20.0 million as a limited partner in the NovaQuest Pharma Opportunities Fund V, LP (the "Fund”). As of September 30, 2019, the Company’s remaining unfunded commitment was $14.1 million. The Company has determined that it does not exercise significant influence over the Fund’s operating and finance activities. As the Fund does not have a readily determinable fair value, the Company has estimated fair value using the Fund’s Net Asset Value, the amount by which the value of the assets exceeds debt and liabilities, in accordance with ASC Topic 946, Financial Services – Investment Companies.
(b) (c) Represents fair value of interest rate swap and foreign currency exchange rate forward contract arrangements (see "Note 6 - Derivatives" for further information).

(c) (d) Represents fair value of contingent consideration obligations related to business combinations (see "Note 3 - Business Combinations" for further information). The fair value of these liabilities are determined based on the Company’s best estimate of the probable timing and amount of settlement.

(e) Represents fair value of interest rate swap and foreign currency exchange rate forward contract arrangements (see "Note 6 - Derivatives" for further information).

The following table presents changes in the carrying amount of contingent obligations related to business combinations classified as Level 3 category within the fair value hierarchy for the threenine months ended March 31,September 30, 2019 (in thousands):
Balance at December 31, 2018$20,127
Additions
Accretion recognized in earnings839
Balance at March 31, 2019$20,966
Balance at December 31, 2018$20,127 
Additions— 
Changes in fair value recognized in earnings(749)
Payments(178)
Balance at September 30, 2019$19,200 
During the threenine months ended March 31,September 30, 2019, there were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 fair value measurements.

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Financial Instruments Subject to Non-Recurring Fair Value Measurements
Certain assets, including goodwill and identifiable intangible assets, are carried on the 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 March 31,September 30, 2019 and December 31, 2018, assets subject to non-recurring fair value measurements totaled $5.44$5.33 billion and $5.47 billion, respectively.
Fair Value Disclosures for Financial Instruments Not Carried at Fair Value
The estimated fair value of the outstanding term loans and the Senior Unsecured Notes is determined based on the price that the Company would have 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 outstanding term loans and Senior Unsecured Notes were as follows (in thousands):
March 31, 2019 December 31, 2018September 30, 2019December 31, 2018
Carrying Value (a)
 Estimated Fair Value 
Carrying Value (a)
 Estimated Fair ValueCarrying Value (a)Estimated Fair Value  Carrying Value (a)Estimated Fair Value  
Term Loan A due March 2024$1,146,253
 $1,150,000
 $973,218
 $975,000
Term Loan A due March 2024$1,146,656  $1,150,000  $973,218  $975,000  
Term Loan B due August 20241,016,371
 1,017,364
 1,219,755
 1,221,000
Term Loan B due August 2024861,673  862,564  1,219,755  1,221,000  
7.5% Senior Unsecured Notes due 2024437,045
 426,173
 438,330
 423,150
7.5% Senior Unsecured Notes due 2024434,413  418,133  438,330  423,150  
(a) The carrying value of the term loan debt is shown net of original issue debt discounts. The carrying value of the Senior Notes is inclusive of unamortized premiums.
8. Restructuring and Other Costs
Merger-Related Restructuring
In connection with the Merger, the Company established a restructuring plan to eliminate redundant positions and reduce its facility footprint worldwide. The Company expects to continue the ongoing evaluations of its workforce and facilities infrastructure needs through 2020 in an effort to optimize its resources. During the threenine months ended March 31,September 30, 2019, the Company recognized approximately: (i) $6.3$14.6 million of employee severance and benefits related costs; and (ii) $2.0$10.7 million of facility closure and lease termination costs. Over the next several years, theThe Company expects to continue to incur significant costs related to the restructuring of its operations in order to achieve targeted synergies as a result of the Merger. However, the timing and the amount of these costs depend on various factors, including, but not limited to, identifying and realizing synergy opportunities and executing the integration of the Company’s operations.
Non-Merger Restructuring and Other Costs
During the threenine months ended March 31,September 30, 2019, the Company incurred $0.2$3.4 million of facility closure and lease termination costs related to the Company’s pre-Merger activities aimed at optimizing its resources worldwide. Additionally, during the threenine months ended March 31,September 30, 2019, the Company recognized approximately $6.0$11.1 million of employee severance and benefits related costs.

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Accrued Restructuring Liabilities
The following table summarizes activity related to the liabilities associated with restructuring and other costs during the threenine months ended March 31,September 30, 2019 (in thousands):
Employee
Severance Costs
Facility Closure and Lease Termination CostsOther CostsTotal
Balance at December 31, 2018$7,474  $16,761  $52  $24,287  
Adoption of ASC 842 (a)—  (16,761) —  (16,761) 
Expenses incurred (b)25,607  —  273  25,880  
Cash payments made(22,513) —  (303) (22,816) 
Balance at September 30, 2019$10,568  $—  $22  $10,590  
 Employee Severance Costs, Including Executive Transition Costs Facility Closure and Lease Termination Costs Other Costs Total
Balance at December 31, 2018$7,474
 $16,761
 $52
 $24,287
Adoption of ASC 842 (a)


(16,761)

 (16,761)
Expenses incurred (b)
12,232
 
 8
 12,240
Cash payments made(4,071) 
 (38) (4,109)
Balance at March 31, 2019$15,635
 $
 $22
 $15,657
(a) As a result of the adoption of ASC 842, accrued expenses related to facility closure and lease termination costs are now reflected within the current portion of operating lease obligations and operating lease long-term obligations on the unaudited condensed consolidated balance sheetsheets as of March 31,September 30, 2019. These facility costs will be paid over the remaining terms of exited facilities, which range from 2019 through 2027.
(b)The amount of expenses incurred for the threenine months ended March 31,September 30, 2019 excludes $2.2$4.8 million of non-cash restructuring and other expenses, because these expenses were not subject to accrual prior to the period in which they were incurred, and $9.0 million of facility lease closure and lease termination costs. Under ASC 842, these costs are reflected as a reduction of operating lease right-of-use assets on the unaudited condensed consolidated balance sheet.sheets.
The Company expects that substantially all of the employee severance costs accrued as of March 31,September 30, 2019 will be paid within the next twelve months. Liabilities associated with these costs are included in accrued expenses on the accompanying unaudited condensed consolidated balance sheets. Restructuring and other costs included in net lossincome for the three and nine months ended March 31,September 30, 2019 are presented in the restructuring and other costs in the unaudited condensed consolidated statements of operations.
9. Shareholders' Equity
Shares Outstanding
Shares of common stock outstanding were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
Common stock shares, beginning balance103,460  102,871  103,372  104,436  
   Stock repurchase(141) —  (1,323) (1,973) 
   RSU distributions net of shares for tax withholding33  32  423  134  
   Stock option exercises441  320  1,321  626  
Common stock shares, ending balance103,793  103,223  103,793  103,223  
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2018 Stock Repurchase Program
On February 26, 2018, the Company’s Board of Directors authorized the repurchase of up to an aggregate of $250.0 million of the Company’s common stock, 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 (“2018 stock repurchase program”). The 2018 stock repurchase program commenced on March 1, 2018 and will end no later than December 31, 2019. The Company intends to use cash on hand and future operating cash flow to fund the 2018 stock repurchase program.
The 2018 stock repurchase program does not obligate the Company to repurchase any particular amount of the Company’s 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 common stock, the Company’s corporate requirements for cash, and overall market conditions. The 2018 stock repurchase program will beis subject to applicable legal requirements, including federal and state securities laws and the applicable Nasdaq rules. The Company may also repurchase shares of its 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 common stock to be repurchased when the Company might otherwise be precluded from doing so by law.
In March 2018, the Company repurchased 948,100 shares of its common stock in open market transactions at an average price of $39.55 per share, resulting in a total purchase price of approximately $37.5 million. TheIn April 2018, the Company immediately retired allrepurchased 1,024,400 shares of the repurchasedits common stock and charged the par valuein open market transactions at an average price of the shares to common stock. The excess$36.60 per share, resulting in a total purchase price of the repurchase price over par was applied on a pro rata basis against additional paid-in-capital, with the remainder applied to accumulated deficit.

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approximately $37.5 million. In January 2019, the Company repurchased 552,100 shares of its common stock in open market transactions at an average price of $39.16 per share, resulting in a total purchase price of approximately $21.6 million. In February 2019, the Company repurchased 120,600shares of its common stock in open market transactions at an average price of $41.40 per share, resulting in a total purchase price of approximately $5.0 million. In June 2019, the Company repurchased 509,100 shares of its common stock in open market transactions at an average price of $45.29 per share, resulting in a total purchase price of approximately $23.1 million. In August 2019, the Company repurchased 141,100 shares of its common stock in open market transactions at an average price of $49.93 per share, resulting in a total purchase price of approximately $7.0 million. 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,paid-in capital, with the remainder applied to accumulated deficit.
As of March 31,September 30, 2019, the Company hashad remaining authorization to repurchase up to approximately $148.4$118.3 million of shares of its common stock under the 2018 stock repurchase program.
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10. Share-Based Compensation
2019 Performance-Based RSU Awards
During 2019, the Compensation Committee of the Company’s Board of Directors granted performance-based RSU awards (“PRSUs”) to certain executive officers. The total target number of PRSUs granted was 159,490, which will vest in a percentage ranging from 0% to 150% depending on the level of achievement of the performance targets. Each award is scheduled to cliff-vest approximately three years from the grant date and is conditioned upon: (i) the attainment of performance targets related to the Company’s adjusted earnings per share (“adjusted EPS”) for each of the fiscal years 2019, 2020, and 2021; (ii) the three-year return on invested capital (“ROIC”) (tax-adjusted earnings before interest and taxes divided by average invested capital); and (iii) the continued employment and service of the employee from the grant date through the date when determination of the target attainment level for the last performance period is made. The vesting eligibility of the PRSUs granted will be split evenly between the adjusted EPS performance goals, which have three equal tranches, and the ROIC performance goal. The Company recognizes share-based compensation expense for PRSUs when attainment of each performance target becomes probable.

11. Earnings (Loss) Per Share
The following table provides a reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share computations (in thousands, except per share data):
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
2019 20182019201820192018
Numerator:   Numerator:
Net loss$(30,004) $(24,552)
Net income (loss)Net income (loss)$58,920  $(10,394) $40,208  $(21,386) 
Denominator:   Denominator:
Basic weighted average common shares outstanding103,365
 104,449
Basic weighted average common shares outstanding103,594  103,012  103,553  103,453  
Effect of dilutive securities:   Effect of dilutive securities:
Stock options and other awards under deferred share-based compensation programs
 
Stock options and other awards under deferred share-based compensation programs1,427  —  1,328  —  
Diluted weighted average common shares outstanding103,365
 104,449
Diluted weighted average common shares outstanding105,021  103,012  104,881  103,453  
Loss per share:   
Earnings (loss) per share:Earnings (loss) per share:
Basic$(0.29) $(0.24)Basic$0.57  $(0.10) $0.39  $(0.21) 
Diluted$(0.29) $(0.24)Diluted$0.56  $(0.10) $0.38  $(0.21) 
Potential common shares outstanding that are considered anti-dilutive are excluded from the computation of diluted earnings (loss) per share. Potential common shares related to stock options and other awards under deferred 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 the event of a net loss.

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The number of potential shares outstanding that were considered anti-dilutive using the treasury stock method and therefore excluded from the computation of diluted earnings (loss) per share, weighted for the portion of the period they were outstanding arewere as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
Anti-dilutive stock options and other awards220  335  296  1,224  
Anti-dilutive stock options and other awards under share-based compensation programs excluded based on reporting a net loss for the period—  1,621  —  1,208  
Total common stock equivalents excluded from diluted loss per share220  1,956  296  2,432  

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 Three Months Ended March 31,
 2019 2018
Anti-dilutive stock options and other awards294
 1,097
Anti-dilutive stock options and other awards under share-based compensation programs excluded based on reporting a net loss for the period1,438
 898
Total common stock equivalents excluded from diluted loss per share1,732
 1,995
12.11. Income Taxes
Income Tax Expense
For the three and nine months ended March 31,September 30, 2019, the Company recorded income tax expense of $10.4$11.1 million and $43.8 million, respectively, compared to pre-tax lossincome of $19.6 million.$70.0 million and $84.0 million, respectively. The effective tax rate for the three and nine months ended March 31,September 30, 2019 varied from the U.S. federal statutory income tax rate of 21.0% primarily due to: (i) base erosion and anti-abuse minimum tax (“BEAT”), (ii) foreign income inclusions such as the Global Intangible Low-Taxed Income provisions, (“GILTI”), and (iii) a valuation allowance change on domestic deferred tax assets.
For the three and nine months ended March 31,September 30, 2018, the Company recorded an income tax benefitexpense of $9.0$12.0 million and $19.1 million, respectively, compared to pre-tax income of $1.6 million and pre-tax loss of $33.5 million.$2.3 million, respectively. The Company’s effective tax rate for the three and nine months ended March 31,September 30, 2018 varied from the U.S. federal statutory income tax rate of 21.0% primarily due to: (i) research tax credits inthe recognition of unfavorable discrete adjustments related to foreign jurisdictions;currency exchange; (ii) a decrease in unrecognized tax benefits;the geographical split of pre-tax income; and (iii) a valuation allowance changedeferred expense related to hanging credits on domestic deferred tax assets.indefinite-lived intangibles.
BEAT
The Tax Cuts and Jobs Act of 2017 introduced a new tax on U.S. corporations that derive tax benefits from deductible payments to non-USnon-U.S. affiliates called the base erosion and anti-abuse tax (“BEAT”).BEAT. BEAT applies when base eroding payments are in excess of three percent of the Company’s total deductible payments and also where BEAT exceeds regular USU.S. taxable income, similar to an alternate minimum tax. Changes to the Company’s contractual arrangements, operating structure, and/or final regulations that modify the application of this provision could have a material impact on the Company’s tax provision.
Unrecognized Tax Benefits
The Company's gross unrecognized tax benefits, exclusive of associated interest and penalties, were $19.6$19.9 million and $19.2 million as of March 31,September 30, 2019 and December 31, 2018, respectively. The increase of $0.4$0.7 million was primarily due to an unrecognized tax benefitbenefits in a foreign jurisdiction.jurisdictions.
Tax Returns Under Audit
During the first quarter ended March 31,of 2019, the Company was notified by the Internal Revenue Service that the legacy inVentiv federal income tax return was under audit for the tax year beginning November 10, 2016 and ending December 31, 2016. The examination commenced on May 8, 2019.
13.12. Revenue from Contracts with Customers
Unsatisfied Performance Obligations
As of March 31,September 30, 2019, the total aggregate transaction price allocated to the unsatisfied performance obligations under contracts with contract terms greater than one year and which are not accounted for as

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a series pursuant to ASU No. 2014-09, Revenue from Contracts with Customers (“ASC 606”) was $5.94$5.34 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. Specifically, contracts that do not commence within a certain period of time require the Company to undertake numerous activities to fulfill these performance obligations, including various activities that are outside of the Company’s control. Accordingly, such contracts have been excluded from the unsatisfied performance obligations balance presented above.
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Timing of Billing and Performance
During the three and nine months ended March 31,September 30, 2019, the Company recognized approximately $364.7$340.8 million and $556.2 million, respectively, of revenue that was included in the deferred revenue balance at the beginning of the period.periods. During the three and nine months ended March 31,September 30, 2019, approximately $13.2 $19.1 million and $40.1 million, respectively, of the Company’s revenue recognized was allocated to performance obligations partially satisfied in previous periods and predominately related to changes in scope and estimates in full service clinical studies. Changes in the contract assets and deferred revenue balances during the three and nine months ended March 31,September 30, 2019 were not materially impacted by any other factors.
14.13. Segment Information
The Company has two2 reportable segments: Clinical Solutions and Commercial Solutions. Each reportable business segment comprises multiple similar service offerings that, when combined, create a fully integrated biopharmaceutical outsourcing solutions organization. Clinical Solutions offers a variety of services spanning Phase I to Phase IV of clinical development, including full-service global studies, as well as individual service offerings such as clinical monitoring, investigator recruitment, patient recruitment, data management, and study startup to assist customers with their drug development process. Commercial Solutions provides commercialization services to the pharmaceutical, biotechnology, and healthcare industries, which include deployment solutions (formerly selling solutions,solutions), communication solutions (public relations and advertising), and consulting related services.

The Company’s Chief Operating Decision Maker (“CODM”) reviews segment performance and allocates resources based upon segment revenue and income from operations. Inter-segment revenue is eliminated from the segment reporting presented 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 and general operating expenses associated with the Company’s senior leadership, finance, Board of Directors, investor relations, and internal audit functions. The Company does not allocate depreciation, amortization, restructuring, or transaction and integration-related costs to its segments. Additionally, the CODM reviews the Company’s assets on a consolidated basis and the Company does not allocate assets to its reportable segments as they are not included in the review performed by the CODM for purposes of assessing segment performance or allocating resources.



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Information about reportable segment operating results iswas as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
Revenue:
Clinical Solutions$867,427  $819,203  $2,522,307  $2,389,955  
Commercial Solutions309,601  295,715  940,554  854,689  
Total consolidated revenue1,177,028  1,114,918  3,462,861  3,244,644  
Segment direct costs:
Clinical Solutions655,851  633,258  1,936,021  1,857,623  
Commercial Solutions250,904  233,740  759,591  688,339  
Total segment direct costs906,755  866,998  2,695,612  2,545,962  
Segment selling, general, and administrative expenses:
Clinical Solutions68,659  63,707  205,986  197,764  
Commercial Solutions21,416  22,182  69,671  63,368  
Total segment selling, general, and administrative expenses90,075  85,889  275,657  261,132  
Segment operating income:
Clinical Solutions142,917  122,238  380,300  334,568  
Commercial Solutions37,281  39,793  111,292  102,982  
Total segment operating income180,198  162,031  491,592  437,550  
Direct costs and operating expenses not allocated to segments:
Corporate selling, general, and administrative expenses13,905  6,479  39,732  23,874  
Share-based compensation included in direct costs6,919  5,216  22,393  14,540  
Share-based compensation included in selling, general, and administrative expenses5,884  4,575  18,471  11,414  
Restructuring and other costs13,456  19,349  39,751  41,647  
Transaction and integration-related expenses10,454  18,561  34,766  61,804  
Depreciation and amortization60,137  68,034  182,086  203,557  
Total consolidated income from operations$69,443  $39,817  $154,393  $80,714  

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  Three Months Ended March 31,
  2019 2018
Revenue:    
Clinical Solutions revenue $804,958
 $786,839
Commercial Solutions revenue 314,048
 270,357
Total consolidated revenue 1,119,006
 1,057,196
Segment direct costs:    
Clinical Solutions 625,767
 615,371
Commercial Solutions 252,873
 221,700
Total segment direct costs 878,640
 837,071
Segment selling, general, and administrative expenses:    
Clinical Solutions 69,702
 65,946
Commercial Solutions 26,053
 19,518
Total segment selling, general, and administrative expenses 95,755
 85,464
Segment operating income:    
Clinical Solutions 109,489
 105,522
Commercial Solutions 35,122
 29,139
Total segment operating income 144,611
 134,661
Direct costs and operating expenses not allocated to segments:    
Corporate selling, general, and administrative expenses 11,257
 9,759
Share-based compensation included in direct costs 8,162
 3,752
Share-based compensation included in selling, general, and administrative expenses 6,105
 4,036
Restructuring and other costs 14,413
 13,707
Transaction and integration-related expenses 16,658
 25,211
Depreciation and amortization 61,200
 68,021
Total consolidated income from operations $26,816
 $10,175
15.14. Operations by Geographic Location
The following table summarizes information about revenue by geographic area (in thousands and with all intercompany transactions eliminated):
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
2019 20182019201820192018
Revenue:   Revenue:
North America (a)
$727,698
 $731,766
North America (a)$780,460  $761,414  $2,299,439  $2,219,725  
Europe, Middle East, and Africa258,347
 228,837
Europe, Middle East, and Africa251,519  232,916  768,653  693,874  
Asia-Pacific111,566
 77,980
Asia-Pacific119,268  97,726  325,129  269,353  
Latin America21,395
 18,613
Latin America25,781  22,862  69,640  61,692  
Total revenue$1,119,006
 $1,057,196
Total revenue$1,177,028  $1,114,918  $3,462,861  $3,244,644  
(a)Revenue for the North America region includes revenue attributable to the United States of $704.1$745.6 million and $696.4$718.0 million, or 62.9%63.3% and 65.9%64.4% of total revenue, for the three months ended March 31,September 30, 2019 and March 31,2018, respectively. Revenue for the North America region includes revenue attributable to the United States of $2,190.9 million and $2,104.8 million, or 63.3% and 64.9% of total revenue, for the nine months ended September 30, 2019 and September 30, 2018, respectively. No other country represented more than 10% of revenue for any period.

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Long-lived assets by geographic area for each period were as followsfollows (in thousands and all intercompany transactions have been eliminated):
September 30, 2019December 31, 2018
Property and equipment, net:  
North America (a)$156,460  $133,593  
Europe, Middle East, and Africa28,006  33,053  
Asia-Pacific13,726  13,328  
Latin America2,930  3,512  
  Total property and equipment, net$201,122  $183,486  
 March 31, 2019 December 31, 2018
Property and equipment, net:   
North America (a)
$128,432
 $133,593
Europe, Middle East and Africa31,497
 33,053
Asia-Pacific12,701
 13,328
Latin America3,360
 3,512
Total property and equipment, net$175,990
 $183,486
(a) Long-lived assets for the North America region include property and equipment, net attributable to the United States of $123.0$151.0 million and $128.3 million as of March 31,September 30, 2019 and December 31, 2018, respectively.
16.15. Concentration of Credit Risk
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. The Company has not historically incurred any losses with respect to these balances and believes that they bear minimal credit risk.
As of December 31, 2018, the amount of cash and cash equivalents held outside the United States by the Company’s foreign subsidiaries was $43.6 million, or approximately 28% of the total consolidated cash and cash equivalents balance. As of March 31,September 30, 2019, substantially all of the Company’s cash and cash equivalents were held within the United States.
DuringNo single customer accounted for greater than 10% of the Company’s revenue for the three months ended March 31,September 30, 2019. During the nine months ended September 30, 2019, one customer accounted for approximately 10% of the Company’s revenue. During the three and nine months ended March 31,September 30, 2018, one customer accounted for 12% and 11%, respectively, of the Company’s revenue. 

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As of March 31,September 30, 2019, no single customer accounted for greater than 10% of the Company’s billed accounts receivable, unbilled accounts receivable, and contract assets balances. As of December 31, 2018, one customer accounted for approximately 12% and 13%, respectively, of the Company’s billed accounts receivable, unbilled accounts receivable, and contract assets balances.
17.16. Related-Party Transactions
For the threenine months ended March 31,September 30, 2019, the Company incurred reimbursable out-of-pocket expenses of $1.1 million for professional services obtained from a provider whose member of the Board of Directors was also a member of the Company’s Board of Directors. Additionally, at March 31, 2019, the Company had liabilities of $0.8 million included in accounts payable and accruedNaN related party expenses on the unaudited condensed consolidated balance sheets associated with this related party. Forwere recorded for the three months ended March 31,September 30, 2019.
For the three and nine months ended September 30, 2018, the Company incurred reimbursable out-of-pocket expenses of $0.2$1.6 million and $2.8 million, respectively, for professional services obtained from a provider2 providers, one whose significant shareholder was also a significant shareholder of the Company.Company and the other whose member of the Board of Directors was also a member of the Company’s Board of Directors. Additionally, at September 30, 2018 the Company had related party liabilities of $1.0 million included in Accounts Payable and Accrued Expenses on the unaudited condensed consolidated balance sheets.
No material related-party revenue was recorded for the three and nine months ended March 31,September 30, 2019 or 2018. 
18.17. Commitments and Contingencies
Legal Proceedings
The Company is involved in various claims and legal actions arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does

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not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, other than the specific matters described below, 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.
On December 1, 2017, the first of two2 virtually identical actions alleging federal securities law claims was filed against the Company and certain of its officers on behalf of a putative class of its shareholders. The first action, captioned Bermudez v. INC Research, Inc., et al, No. 17-09457 (S.D.N.Y.), names as defendants the Company, Michael Bell, Alistair MacDonald, Michael Gilbertini, and Gregory S. Rush (the "Bermudez action"), and the second action, Vaitkuvienë v. Syneos Health, Inc., et al, No. 18-0029 (E.D.N.C.), filed on January 25, 2018 (the “Vaitkuvienë action"), names as defendants the Company, Alistair MacDonald, and Gregory S. Rush (the "Vaitkuvienë action""Initial Defendants"). Both complaints allege similar claims under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of purchasers of the Company's common stock between May 10, 2017 and November 8, 2017 and November 9, 2017. The complaints allege that the Company published inaccurate or incomplete information regarding, among other things, the financial performance and business outlook for inVentiv’s business prior to the Merger and with respect to the combined company following the Merger. On January 30, 2018, two2 alleged shareholders separately filed motions seeking to be appointed lead plaintiff and approving the selection of lead counsel. These motions remain pending. On March 30, 2018, Plaintiff Bermudez filed a notice of voluntary dismissal of the Bermudez action, without prejudice, and as to all defendants. On May 29, 2018, the Court in the Vaitkuvienë action appointed the San Antonio Fire & Police Pension Fund and El Paso Firemen & Policemen’s Pension Fund as Lead Plaintiffs and, on June 7, 2018, the Court entered a schedule providing for, among other things, Lead Plaintiffs to file an amended complaint by July 23, 2018 (later extended to July 30, 2018). Lead Plaintiffs filed their amended complaint on July 30, 2018, which also includes a claim against the same defendants listed above,Initial Defendants, as well as each member of the board of directors at the time of the INC Research - inVentiv Health merger vote in July 2017 (the “Defendants”), contending that the inVentiv merger proxy was misleading under Section 14(a) of the Act. Lead Plaintiffs seek, among
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other things, orders (i) declaring that the lawsuit is a proper class action and (ii) awarding compensatory damages in an amount to be proven at trial, including interest thereon, and reasonable costs and expenses incurred in this action, including attorneys’ fees and expertexperts' fees, to Lead Plaintiffs and other class members. Defendants filed a Motion to Dismiss Plaintiffs’ Amended Complaint on September 20, 2018. Lead Plaintiffs filed a Response in Opposition to such motion on November 21, 2018, and Defendants filed a Reply to such response on December 5, 2018. On May 23, 2019, Lead Plaintiffs filed a Notice of Filings in Related Case regarding the New Jersey shareholder action filed on March 1, 2019 described below, and Defendants filed their response on May 31, 2019. On September 26, 2019, the Court ordered, among other things, that this action is stayed in light of the litigation filed on March 1, 2019 and described below, pending before the United States District Court for the District of New Jersey. The Company and the other defendants deny the allegations in these complaints and intend to defend vigorously against these claims. In the Company's opinion, the ultimate outcome of this matter is not expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows.
On September 24, 2018, the Court unsealed a civil complaint captioned United States, et. al vs. AstraZeneca PLC, et. al, No. 2:17-cv-01328-RSL (W.D. Wa.) against inVentiv Health, Inc. and other co-defendants. The complaint alleges that the Company and co-defendants violated the Federal False Claims Act (and various state analogues) and Anti-Kickback Statute through the provision of clinical education services. On December 17, 2018, the United States moved to dismiss this lawsuit, as well as other similar lawsuits supported by the relator in this action. A hearing on such motion is scheduled for October 30, 2019. The Company denies the allegations in the complaint and intends to defend vigorously against these claims. In the Company’s opinion, the ultimate outcome of this matter is not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows. 
On February 21, 2019, the SEC notified the Company that it hashad commenced an investigation into itsthe Company’s revenue accounting policies, internal controls and related matters, and requested that the Company retain certain documents for the periods beginning with January 1, 2017. matters. On March 22,August 26, 2019, the SEC subpoenaed certain documents in connection withnotified the Company that it had concluded its investigation.investigation and does not intend to recommend an enforcement action against the Company at this time.

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On March 1, 2019, a complaint was filed in the United States District CourtCourt for the District of New Jersey on behalf of a putative class of shareholders who purchased the Company's common stock during the period between May 10, 2017 and February 27, 2019. The complaintaction, captioned Murakami v. Syneos Health, Inc. et al, No. 19-7377 (D.N.J.), names the Company and certain of its executive officers as defendants and allegealleges violations of the Securities Exchange Act of 1934, as amended, based on allegedly false or misleading statements about its business, operations, and prospects. The plaintiffs seek awards of compensatory damages, among other relief, and their costs and attorneys’ and experts’ fees. On March 28, 2019, Lead Plaintiffs in the Vaitkuvienë action filed a motion to intervene and to transfer this action to the Eastern District of North Carolina, and the Company filed its response on April 22, 2019. On April 30, 2019, a shareholder filed a motion seeking to be appointed lead plaintiff and approving the selection of lead counsel. On October 16, 2019, the Court ordered that Plaintiff, by November 8, 2019, file proof of service of the Complaint in Compliance with Rule 4, or otherwise show cause why the action should not be dismissed for failure to properly serve Defendants (the "Order to Show Cause"). The Court further ordered that the action is stayed and that both motions are administratively terminated pending the Court's resolution of the Order to Show Cause. The Company and the other defendants deny the allegations in the complaint and intend to defend vigorously against these claims. In the Company's opinion, the ultimate outcome of this matter is not expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows.
The Company is presently unable to predict the duration, scope, or result of the SEC’s investigation, the relatedforegoing putative class action,actions, or any other related lawsuit or investigation.lawsuit. As such, the Company is presently unable to develop a reasonable estimate of a possible loss or range of losses, if any, related to these matters. The SEC has a broad range of civil sanctions available should it commence an enforcement action, including injunctive relief, disgorgement, fines, penalties, or an order to take remedial action. The Company could incur additional expenses related to fines or to remedial measures. Furthermore, whileWhile the Company intends to defend the putative class action litigation vigorously, the outcome of such litigation or any other litigation is necessarily uncertain. The Company could be forced to expend significant resources in the defense of this lawsuitthese lawsuits or future ones, and it may not prevail. As such, these matters could have a material adverse effect on the Company's business, annual, or interim results of operations, cash flows, or its financial condition.
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Self-Insurance Reserves
The Company is self-insured for certain losses relating to health insurance claims for the majority of its employees located within the United States. Additionally, the Company maintains certain self-insurance retention limits related to automobile and workers’ compensation insurance.
Assumed Contingent Tax-Sharing Obligations
As a result of the Merger, the Company assumed contingent tax-sharing obligations arising from inVentiv’s 2016 merger with Double Eagle Parent, Inc. As of March 31,September 30, 2019 and December 31, 2018, the estimated fair value of the assumed contingent tax-sharing obligations was $16.4$14.9 million and $15.7 million, respectively.
Contingent Earn-out Liability
In connection with the Kinapse acquisition, the Company recorded a contingent earn outearn-out liability to be paid based on Kinapse meeting revenue targets as of March 31, 2021. The fair value of the earn outearn-out liability is remeasured at the end of each reporting period, with changes in the estimated fair value reflected in earnings until the liability is settled. The estimated fair value of the contingent earn outearn-out liability was $4.5$4.3 million and $4.4 million as of March 31,September 30, 2019 and December 31, 2018, respectively, and is included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets.

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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, 2018.
In addition to historical condensed consolidated financial information, the following discussionthis 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.such, including statements regarding our anticipated results of operations, our business strategy and planned capital expenditures, and our expectations regarding the resolution of our material weaknesses. Without limiting the foregoing, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “should,” “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: the need to hire, develop, and retain key personnel; the impact of unfavorable economic conditions, including the uncertain international economic environment, changes in exchange rates, and effective income tax rate fluctuations; 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; any adverse effects from customer or therapeutic area concentration; 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; fluctuations in our operating results and effective income tax rate; the cyber-security and other risks associated with our information systems infrastructure; risks associated with the integration of our business with the business of inVentivDouble Eagle Parent, Inc. (“inVentiv”) and our operation of the combined business following the closing of the Merger;merger with inVentiv (the “Merger”); the risks associated with doing business internationally; risks related to the U.K.’s planned withdrawal from the European Union; impact of the Tax Cuts and Jobs Act; 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; our failure to perform our services in accordance with contractual requirements, regulatory standards, and ethical considerations; the risk of litigation and personal injury claims; risks related to the management of clinical trials; failure of our insurance to cover our indemnification obligations and other liabilities; risks related to marketing drugs for biopharmaceutical companies; our ability to protect our intellectual property; the risks associated with potential future acquisitions or investments in our customers’ businesses or drugs; 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; downgrades of our credit ratings; outsourcing trends and changes in aggregate spending and research and development budgets; the impact of, including changes in, government regulations and healthcare reform; our ability to keep pace with rapid technological change; the cost of and our ability to service our substantial indebtedness; and other risks related to ownership of our common stock. For a further discussion of the risks relating to our business, refer to “Risk
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“Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

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Overview of Our Business and Services
Syneos Health, Inc. (the “Company,” “we,” “us,” and “our”) is a leading global biopharmaceutical solutions organization providing a full suite of clinical and commercial services to customers in the biopharmaceutical, biotechnology, and medical device industries. We offer both standalone and integrated biopharmaceutical product development solutions through our Contract Research Organization (“CRO”) and Contract Commercial Organization (“CCO”), 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 launch success for our customers.
Our operations are divided into two2 reportable segments, Clinical Solutions and Commercial Solutions. Our Clinical Solutions segment offers a variety of services spanning Phase I to Phase IV of clinical development, including full-service global studies, as well as individual service offerings such as clinical monitoring, investigator recruitment, patient recruitment, data management, and study startup to assist customers with their drug development process. Our Commercial Solutions segment provides the pharmaceutical, biotechnology, and healthcare industries with commercialization services, including sellingdeployment solutions, communication solutions (public relations and advertising), and consulting services. For further discussion, refer to “Note 1413 - Segment Information” toof our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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:
the customer has received appropriate internal funding approval and collection of the award value is probable;
the project or projects are not contingent upon completion of another clinical trial or event that would place the project or projects at material risk of not commencing in accordance with the expected timeline;
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;
the customer has entered or intends to enter into a comprehensive contract as soon as practicable; and
for awards related to our deployment solutions and Functional Service Provider ("FSP") offering,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 entered into a contractual commitment with the customer.
Beginning in 2019, we now 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 sellingdeployment solutions service offering within our Commercial Solutions segment. We do not report backlog for the remaining service offerings in the Commercial Solutions segment. New business awards and backlog include reimbursable out-of-pocket expenses for all periods presented.
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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

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adjustment activity related to these awards. The average duration of our contracts will fluctuate from period to period in the future based on the contracts comprising our backlog at any given time. The majority of our contracts can be terminated by the customer with a 30-day notice.
Our backlog was as follows as of March 31,September 30, 2019 and 2018 (in millions):
20192018Change
Clinical SolutionsClinical Solutions$7,781.8  $7,263.5  $518.3  7.1 %
Commercial Solutions - Deployment SolutionsCommercial Solutions - Deployment Solutions597.5  603.7  (6.2) (1.0)%
Total backlogTotal backlog$8,379.3  $7,867.2  $512.1  6.5 %
2019 2018 Change
Clinical Solutions$7,612.9
 $6,728.9
 $884.0
13.1%
Commercial Solutions - selling solutions690.2
 604.6
 85.6
14.2%
Total backlog$8,303.1
 $7,333.5
 $969.6
13.2%
We expect that approximately $2.94$0.98 billion of our backlog as of March 31,September 30, 2019 will be recognized as revenue during the remainder of 2019. We adjust the amount of our backlog each quarter for the effects of fluctuations in foreign currency exchange rates.
Net new business awards
New business awards, net of cancellations, were as follows for the TTM period ended March 31September 30, 2019 (in millions):
 2019
Clinical Solutions$4,193.5
Commercial Solutions1,324.6
    Total net new business awards$5,518.1
Clinical Solutions$3,911.9 
Commercial Solutions - Deployment Solutions1,260.1 
    Total net new business awards$5,172.0 
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.
We believe that our backlog and net new business awards might not be consistent indicators of future revenue because they have been, and likely will continue to be, affected by a number of factors, including the variable size and duration of projects, many of which are performed over several years, and cancellations and changes to the scope of work during the course of projects. 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 decrease, and the duration of projects and the period over which related revenue is recognized to lengthen. For more information about risks related to our backlog see Part I, Item 1A "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" included in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

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Results of Operations
The following table sets forth amounts from our unaudited condensed consolidated financial statements of operations along with thedollar and percentage changes (in thousands, except percentages):
Three Months Ended 
 March 31,
    Three Months Ended 
September 30,
2019 2018 Change20192018Change
Revenue$1,119,006
 $1,057,196
 $61,810
 5.8 %Revenue$1,177,028  $1,114,918  $62,110  5.6 %
Costs and operating expenses: 
  
  
  
Costs and operating expenses:            
Direct costs (exclusive of depreciation and amortization)886,802
 840,823
 45,979
 5.5 %Direct costs (exclusive of depreciation and amortization)913,674  872,214  41,460  4.8 %
Selling, general, and administrative expenses113,117
 99,259
 13,858
 14.0 %Selling, general, and administrative expenses109,864  96,943  12,921  13.3 %
Restructuring and other costs14,413
 13,707
 706
 5.2 %Restructuring and other costs13,456  19,349  (5,893) (30.5)%
Transaction and integration-related expenses16,658
 25,211
 (8,553) (33.9)%Transaction and integration-related expenses10,454  18,561  (8,107) (43.7)%
Depreciation and amortization61,200
 68,021
 (6,821) (10.0)%Depreciation and amortization60,137  68,034  (7,897) (11.6)%
Total operating expenses1,092,190
 1,047,021
 45,169
 4.3 %Total operating expenses1,107,585  1,075,101  32,484  3.0 %
Income from operations26,816
 10,175
 16,641
 (163.5)%Income from operations69,443  39,817  29,626  74.4 %
Total other expense, net(46,404) (43,699) (2,705) (6.2)%
Loss before provision for income taxes(19,588) (33,524) 13,936
 41.6 %
Income tax (expense) benefit(10,416) 8,972
 (19,388) 216.1 %
Net loss$(30,004) $(24,552) $(5,452) (22.2)%
Total other income (expense), netTotal other income (expense), net532  (38,228) 38,760  n/m  
Income before provision for income taxesIncome before provision for income taxes69,975  1,589  68,386  n/m  
Income tax expenseIncome tax expense(11,055) (11,983) 928  7.7 %
Net income (loss)Net income (loss)$58,920  $(10,394) $69,314  n/m  

Nine Months Ended 
September 30,
20192018Change
Revenue$3,462,861  $3,244,644  $218,217  6.7 %
Costs and operating expenses:            
Direct costs (exclusive of depreciation and amortization)2,718,005  2,560,502  157,503  6.2 %
Selling, general, and administrative expenses333,860  296,420  37,440  12.6 %
Restructuring and other costs39,751  41,647  (1,896) (4.6)%
Transaction and integration-related expenses34,766  61,804  (27,038) (43.7)%
Depreciation and amortization182,086  203,557  (21,471) (10.5)%
Total operating expenses3,308,468  3,163,930  144,538  4.6 %
Income from operations154,393  80,714  73,679  91.3 %
Total other income (expense), net(70,429) (83,042) 12,613  15.2 %
Income (loss) before provision for income taxes83,964  (2,328) 86,292  n/m  
Income tax expense(43,756) (19,058) (24,698) (129.6)%
Net income (loss)$40,208  $(21,386) $61,594  n/m  

Revenue
Our
For the three months ended September 30, 2019, our revenue increased by $61.8$62.1 million, or 5.8%5.6%, to $1.12$1.18 billion from $1.11 billion for the three months ended March 31,September 30, 2018. For the nine months ended September 30, 2019, our revenue increased by $218.2 million, or 6.7%, to $3.46 billion from $1.06$3.24 billion for the nine months ended September 30, 2018. The increases were primarily driven by growth in both our Clinical Solutions and Commercial Solutions segments as discussed below.

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No single customer accounted for greater than 10% of the Company’s revenue for the three months ended March 31, 2018. The increase was primarily driven by revenue growth in bothSeptember 30, 2019. During the nine months ended September 30, 2019, one customer accounted for approximately 10% of our Commercial Solutions and Clinical Solutions segments as discussed below.
revenue. During the three and nine months ended March 31, 2019,September 30, 2018, one customer accounted for approximately 10% of our revenue. During the three months ended March 31, 2018, one customer accounted for12% and 11%, respectively, of our revenue. Revenue from our top five customers accounted for approximatelyapproximately 22% and 24%25% of total revenue for the three months ended March 31,September 30, 2019 and 2018, respectively, and 23% and 25% of revenue for the nine months ended September 30, 2019 and 2018, respectively.

Revenue for each of our segments was as follows (dollars in thousands):
 Three Months Ended March 31,    
 2019 % of total 2018 % of total Change
Clinical Solutions$804,958
 71.9% $786,839
 74.4% $18,119
 2.3%
Commercial Solutions314,048
 28.1% 270,357
 25.6% 43,691
 16.2%
Total revenue$1,119,006
   $1,057,196
   $61,810
 5.8%

Three Months Ended September 30,
2019% of total  2018% of total  Change
Clinical Solutions$867,427  73.7 %$819,203  73.5 %$48,224  5.9 %
Commercial Solutions309,601  26.3 %295,715  26.5 %13,886  4.7 %
Total revenue$1,177,028  $1,114,918  $62,110  5.6 %

Nine Months Ended September 30,
2019% of total  2018% of total  Change
Clinical Solutions$2,522,307  72.8 %$2,389,955  73.7 %$132,352  5.5 %
Commercial Solutions940,554  27.2 %854,689  26.3 %85,865  10.0 %
Total revenue$3,462,861  $3,244,644  $218,217  6.7 %

Clinical Solutions

For the three and nine months ended March 31,September 30, 2019, revenue attributable to theour Clinical Solutions segment increased compared to the same periodperiods in the prior year primarily due to net new business growthawards resulting in higher backlog as we entered each period, the period,startup of new work in backlog, and growth in reimbursable out-of-pocket expenses, partially offset by the negative impact of fluctuations in foreign currency exchange rates of $8.5 million and contractual currency adjustment provisions of $14.1 million. Revenue growth was also partially offset by an unfavorable revenue mix and delays in$32.4 million for the startup of projects, particularly from awards under certain new strategic relationships with large pharmaceutical customers.respective periods.

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Commercial Solutions

For the three and nine months ended March 31,September 30, 2019, revenue attributable to our Commercial Solutions revenuesegment increased compared to the same periodperiods in the prior year due to net new business growth whichawards that resulted in higher backlog as we entered theeach period, a favorable revenue mix, as well as revenue from the Company’our acquisition of Kinapse Topco Limited (“Kinapse”), which was acquired during the third quarter of 2018. These revenue increases were partially offset by a decline in medication adherence services revenue due to project delays and cancellations and the negative impact of fluctuations in foreign currency exchange fluctuationsrates of $2.1 million.$1.1 million and $5.0 million for the respective periods.
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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 contractscontracts; and (v) the timing of the incurrence of reimbursable out-of-pocket expenses, particularly on our Clinical Solutions projects. In addition, as global projects wind down or as delays and cancellations occur, staffing levels in certain countries or functional areas can become misaligned with the current business volume.
Direct costs consisted of the following (dollars in thousands):
Three Months Ended September 30,
20192018Change
Direct costs (exclusive of depreciation and amortization)$913,674  $872,214  $41,460  4.8 %
% of revenue77.6 %78.2 %
Gross margin %22.4 %21.8 %
 Three Months Ended March 31,    
 2019 2018 Change
Direct costs (exclusive of depreciation and amortization)$886,802

$840,823
 $45,979
 5.5%
% of revenue79.2% 79.5%    
Gross margin %20.8% 20.5%    

Nine Months Ended September 30,
20192018Change
Direct costs (exclusive of depreciation and amortization)$2,718,005  $2,560,502  $157,503  6.2 %
% of revenue78.5 %78.9 %
Gross margin %21.5 %21.1 %
For the three months ended March 31,September 30, 2019, our direct costs increased by $46.0$41.5 million, or 5.5%4.8%, compared to $886.8 million from $840.8 million for the three months ended March 31,September 30, 2018. For the nine months ended September 30, 2019, our direct costs increased by $157.5 million, or 6.2%, compared to the nine months ended September 30, 2018. The increase wasincreases were primarily driven by an increase in compensation and related costs (including shared-basedshare-based compensation), reimbursedreimbursable out-of-pocket expenses, as well as direct costs from Kinapse, which was acquired in the third quarter of 2018.
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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,
20192018Change
Direct costs$655,851  $633,258  $22,593  3.6 %
% of segment revenue75.6 %77.3 %
Segment gross margin %24.4 %22.7 %
 Three Months Ended March 31,  
 2019 2018 Change
Direct costs$625,767

$615,371
 $10,396
 1.7%
% of segment revenue77.7% 78.2%    
Segment gross margin %22.3% 21.8%    

Nine Months Ended September 30,
20192018Change
Direct costs$1,936,021  $1,857,623  $78,398  4.2 %
% of segment revenue76.8 %77.7 %
Segment gross margin %23.2 %22.3 %
For the three months ended March 31,September 30, 2019, our Clinical Solutions segment direct costs increased by $10.4$22.6 million, or 1.7%3.6%, as compared to the three months ended March 31,September 30, 2018. The increase wasFor the nine months ended September 30, 2019, our Clinical Solutions segment direct costs increased by $78.4 million, or 4.2%, compared to the nine months ended September 30, 2018. These increases were primarily due to higher reimbursable out-of-pocket expenses and an increase in compensation and related costs relateddue to higher billable headcount to support revenue growth.
Gross margin for theour Clinical Solutions segment was 22.3%24.4% for the three months ended March 31,September 30, 2019, compared to 21.8%22.7% for the three months ended March 31,September 30, 2018. Segment grossGross margin as a percentage

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of revenuefor our Clinical Solutions segment was 23.2% for the nine months ended September 30, 2019, compared to 22.3% for the nine months ended September 30, 2018. Gross margins were higher during the three months ended March 31, 2019current year periods as compared to the same periodperiods in 2018 primarily due to revenue growth and favorable revenue mix, net realized cost synergies, and a favorable impact from foreign currency exchange rate fluctuations, partially offset by costs associated with certain new strategic relationships with large pharmaceutical customers.
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,
20192018Change
Direct costs$250,904  $233,740  $17,164  7.3 %
% of segment revenue81.0 %79.0 %
Segment gross margin %19.0 %21.0 %

Nine Months Ended September 30,
20192018Change
Direct costs$759,591  $688,339  $71,252  10.4 %
% of segment revenue80.8 %80.5 %
Segment gross margin %19.2 %19.5 %
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 Three Months Ended March 31,  
 2019 2018 Change
Direct costs$252,873
 $221,700
 $31,173
 14.1%
% of segment revenue80.5% 82.0%    
Segment gross margin %19.5% 18.0%    



For the three months ended March 31,September 30, 2019, our Commercial Solutions segment direct costs increased by $31.2$17.2 million, or 14.1%7.3%, as compared to the three months ended March 31,September 30, 2018. The increase wasFor the nine months ended September 30, 2019, our Commercial Solutions segment direct costs increased by $71.3 million, or 10.4%, compared to the nine months ended September 30, 2018. These increases were primarily duerelated to an increase in compensation and related costs relateddue to higher billable headcount to support revenue growth, an increase in reimbursed out-of-pocket expenses, as well as direct costs from Kinapse, which was acquired in the third quarter of 2018. Direct costs for the nine months ended September 30, 2019 were also negatively impacted by higher reimbursable out-of-pocket expenses.
Gross margin for theour Commercial Solutions segment was 19.5%19.0% for the three months ended March 31,September 30, 2019, compared to 18.0%21.0% for the three months ended March 31,September 30, 2018. Segment grossGross margin as a percentage of revenuefor our Commercial Solutions segment was higher19.2% for the nine months ended September 30, 2019, compared to 19.5% for the nine months ended September 30, 2018. Gross margins were lower during the three months ended March 31, 2019current year periods compared to the same periodperiods in 2018 primarily due to an unfavorable revenue mix and a favorable revenue mix.negative impact from foreign currency exchange rate fluctuations.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses were as follows (dollars in thousands):
Three Months Ended September 30,
20192018Change
Selling, general, and administrative expenses$109,864  $96,943  $12,921  13.3 %
% of total revenue9.3 %8.7 %
 Three Months Ended March 31,    
 2019 2018 Change
Selling, general, and administrative expenses$113,117
 $99,259
 $13,858
 14.0%
% of total revenue10.1% 9.4%    

Nine Months Ended September 30,
20192018Change
Selling, general, and administrative expenses$333,860  $296,420  $37,440  12.6 %
% of total revenue9.6 %9.1 %
The increaseincreases in selling, general, and administrative expenses for the three and nine months ended March 31,September 30, 2019 wasas compared to the same periods in 2018 were primarily caused by higher compensation-related expenses (including share-based and incentive compensation), incremental costs from Kinapse, which was acquired during the third quarter of 2018, as well as higher compensation related expenses (including share-based compensation).and incremental costs from a strategic partnership agreement entered into during the fourth quarter of 2018.
Restructuring and Other Costs
Restructuring and other costs were $14.4$13.5 million and $13.7$19.3 million for the three months ended March 31,September 30, 2019 and March 31,September 30, 2018, respectively, and $39.8 million and $41.6 million for the nine months ended September 30, 2019 and 2018, respectively. During 2017, in connection with the Merger, we established a restructuring plan to eliminate redundant positions and reduce our facility footprint worldwide. We expect to continue the ongoing evaluations of our workforce and facilities infrastructure needs through 2020 and beyond in an effort to optimize our resources. Additionally, for the three and nine months ended March 31,September 30, 2019 and March 31, 2018, we incurred employee severance costs and facility closure costs for non-Merger related restructuring activities.

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Restructuring and other costs consisted of the following (in thousands):
Three Months Ended March 31,Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2019 20182019201820192018
Merger-related restructuring and other costs:   Merger-related restructuring and other costs:
Employee severance and benefit costs$6,272
 $8,400
Employee severance and benefit costs$2,288  $1,936  $14,537  $13,229  
Facility and lease termination costs1,954
 2,213
Facility and lease termination costs2,283  15,794  10,741  20,592  
Other merger-related costs
 300
Other merger-related costs—  33  —  548  
Non-merger related restructuring and other costs:   Non-merger related restructuring and other costs:
Employee severance and benefit costs5,960
 200
Employee severance and benefit costs5,797  713  11,070  1,690  
Facility and lease termination costs219
 800
Facility and lease termination costs2,855  —  3,130  1,438  
Consulting fees
 1,694
Consulting fees—  695  —  3,176  
Other costs8
 100
Other costs233  178  273  974  
Total restructuring and other costs$14,413
 $13,707
Total restructuring and other costs$13,456  $19,349  $39,751  $41,647  
We expect to continue to incur significant costs related to the restructuring of our operations in order to achieve theour targeted synergies as a result of the Merger over the next several years.Merger. However, the timing and the amount of these costs depends on various factors, including, but not limited to, identifying and realizing synergy opportunities and executing the integration of our combined operations.
Transaction and Integration-Related Expenses
Transaction and integration-related expenses consisted of the following (in thousands):
Three Months Ended March 31,Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2019 20182019201820192018
Professional fees$12,846
 $14,700
Professional fees$7,108  $14,851  $26,632  $40,624  
Debt modification and related expenses2,241
 
Debt modification and related expenses1,582  409  5,555  1,726  
Integration and personnel retention-related costs847
 9,293
Integration and personnel retention-related costs1,394  2,107  3,150  15,847  
Fair value adjustments to contingent obligations724
 1,194
Fair value adjustments to contingent obligations370  1,194  (571) 3,582  
Other
 24
Other—  —  —  25  
Total transaction and integration-related expenses$16,658
 $25,211
Total transaction and integration-related expenses$10,454  $18,561  $34,766  $61,804  
We expect to incur additional integration-related expenses associated with the Merger. The timing and amount of these expenses will depend on the identification of synergy opportunities and the timing and execution of our integration activities.
Depreciation and Amortization Expense
Total depreciation and amortization expense was $61.2$60.1 million and $68.0 million for the three months ended March 31,September 30, 2019 and 2018, respectively, and $182.1 million and $203.6 million for the nine months ended September 30, 2019 and 2018, respectively. The decline wasdecreases in total depreciation and amortization expense were primarily due to a decrease in amortization expense from intangible assets resulting from business combinations completed in prior periods, partially offset by an increase in depreciation expense from continued investment in information technology and facilities to support growth in our operational capabilities and optimization of our infrastructure.

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Other Expense, Net
Other expense, net consisted of the following (dollars in thousands):
Three Months Ended September 30,
20192018Change
Interest income$2,426  $1,004  $1,422  141.6 %
Interest expense(32,607) (33,097) 490  1.5 %
Loss on extinguishment of debt—  (1,789) 1,789  100.0 %
Other income (expense), net30,713  (4,346) 35,059  n/m  
Total other income (expense), net$532  $(38,228) $38,760  n/m  
 Three Months Ended March 31,    
 2019 2018 Change
Interest income$1,502
 $839
 $663
 79.0 %
Interest expense(34,630) (31,736) (2,894) (9.1)%
Loss on extinguishment of debt(4,355) (248) (4,107) n/m
Other expense, net(8,921) (12,554) 3,633
 28.9 %
Total other expense, net$(46,404) $(43,699) $(2,705) (6.2)%

Nine Months Ended September 30,
20192018Change
Interest income$6,061  $3,498  $2,563  73.3 %
Interest expense(101,500) (97,727) (3,773) (3.9)%
Loss on extinguishment of debt(4,355) (3,914) (441) (11.3)%
Other income, net29,365  15,101  14,264  94.5 %
Total other income (expense), net$(70,429) $(83,042) $12,613  15.2 %
Total other expense,income (expense), net was $46.4$0.5 million and $43.7$(38.2) million for the three months ended March 31,September 30, 2019 and 2018, respectively, and $(70.4) million and $(83.0) million for the nine months ended September 30, 2019 and 2018, respectively. The increase wasThese changes were primarily due to higher other income, net, in the increase in interest expensecurrent periods as a result of higher average interest rates on our variable rate debt andcompared to the higher loss on extinguishment of debt associated with the debt refinancing transaction completed during the first quarter of 2019. Partially offsetting these increases was lower other expense, net,prior periods, which primarily consists of foreign currency gains and losses that result from exchange rate fluctuations on our monetary asset balances denominated in currencies other than theour functional currency.
Income Tax Expense
For the three and nine months ended March 31,September 30, 2019, we recorded income tax expense of $10.4$11.1 million on aand $43.8 million, respectively, compared to pre-tax lossincome of $19.6 million. Variances between the$70.0 million and $84.0 million, respectively. The effective income tax rate for the three and nine months ended September 30, 2019 varied from the U.S. federal statutory income tax rate of 21.0% for the three months ended March 31, 2019 were primarily due to: (i) base erosion and anti-abuse minimum tax, (ii) foreign income inclusions such as GILTI,the Global Intangible Low-Taxed Income provisions, and (iii) a valuation allowance change on domestic deferred tax assets.
For the three and nine months ended March 31,September 30, 2018, we recorded an income tax benefitexpense of $9.0$12.0 million on aand $19.1 million, respectively, compared to pre-tax income of $1.6 million and pre-tax loss of $33.5 million. Variances between our$2.3 million, respectively. The effective income tax rate for the three and nine months ended September 30, 2018 varied from the U.S. federal statutory income tax rate of 21.0% for the three months ended March 31, 2018 were primarily due to: (i) research taxthe recognition of unfavorable discrete adjustments related to foreign currency exchange; (ii) the geographical split of pre-tax income; and (iii) deferred expense related to hanging credits in foreign jurisdictions; (ii) a decrease in unrecognized tax benefits; and (iii)on domestic indefinite-lived intangibles.
We currently maintain a valuation allowance change onagainst a material portion of our domestic deferred tax assets.assets and a portion of our foreign deferred tax assets as of September 30, 2019. 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. However, given our recent earnings and anticipated future earnings, we believe that there is a reasonable possibility that, within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that approximately $50.0 million to $70.0 million of our valuation allowance against our domestic deferred tax assets will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense in the period the release is recorded. However, the exact timing and amount of any valuation allowance release are subject to change on the basis of the level of profitability that we are able to achieve.

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Liquidity and Capital Resources
Key measures of our liquidity arewere as follows (in thousands):
March 31, 2019 December 31, 2018September 30, 2019December 31, 2018
Balance sheet statistics:   Balance sheet statistics:
Cash and cash equivalents$105,859
 $153,863
Cash and cash equivalents$127,368  $153,863  
Restricted cash2,062
 2,069
Restricted cash1,836  2,069  
Working capital (excluding restricted cash)21,986
 (13,305)Working capital (excluding restricted cash)38,942  (13,305) 
As of March 31,September 30, 2019, we had $107.9$129.2 million of cash, cash equivalents, and restricted cash. As of March 31,September 30, 2019, substantially all of our cash, cash equivalents, and restricted cash arewas held within the United States. In addition, we had $580.5$580.2 million (net of $19.5$19.8 million in outstanding letters of credit) available for borrowing under our $600.0 million Revolver facility.
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

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repurchases, working capital, and other general corporate expenses. Based on past performance and current expectations, we believe our cash and cash equivalents, cash generated from operations, and funds available under our revolving credit facility 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.
Indebtedness
At March 31,As of September 30, 2019, we had approximately $2.8$2.75 billion of total principal indebtedness, comprised of $2,167.4 million$2.01 billion in term loan debt, $403.0 million in 7.5% Senior Unsecured Notes due 2024 and $195.9(the “Senior Notes”), $275.0 million in borrowings against the accounts receivable financing agreement.agreement and $54.6 million in current and non-current finance lease obligations. In addition, as of March 31,September 30, 2019 we had $580.5$580.2 million (net of $19.5$19.8 million in outstanding letters of credit) of available borrowings for working capital and other purposes under the Revolver, and $0.8$0.7 million of letters of credit that were not secured by the Revolver. In FebruaryDuring the nine months ended September 30, 2019, we made voluntary prepayments of $25.0$179.8 million, which were applied against the regularly-scheduled quarterly principal payments of the Term Loan B. As a result of these and previous voluntary prepayments, we are not required to make a mandatory payment against the Term Loan B principal balance until maturity in August 2024. Additionally, during the threenine months ended March 31,September 30, 2019, we made mandatory principal payments of $12.5 million towards our Term Loan A.
Amendment No. 2 to the Credit Agreement
On March 26, 2019, we entered into Amendment No. 2 to the Credit Agreement (“the Second Amendment”). The Second Amendment, among other things, modifies the terms of the Credit Agreement to refinance the existing Term Loan A facility and the Revolver as follows:
(a) to increase the existing Term Loan A facility by $587.5 million to $1.55 billion. $187.5 million of such increase was applied at closing to repay a portion of our existing Term Loan B facility and the fees and expenses incurred in connection with the Second Amendment, and the remaining $400.0 million will be available to be funded in multiple draws within 9nine months of closing and applied to further prepay loans under the Term Loan B facility and/or redeem, repay, defease or discharge all or a portion of our Senior Unsecured Notes due 2024;closing;
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(b) to increase the existing Revolver commitments available by $100.0 million to $600.0 million, and reduce the margin spread by 0.25% overall, resulting in (i) for Adjusted Eurocurrency Rate (as defined in the Credit Agreement) loans, a margin spread of 1.50% and (ii) for alternate base rateAlternate Base Rate (as defined in the Credit Agreement) loans, a margin spread of 0.50%, with a single 0.25% step-down based on the achievement of certain leverage ratios; and
(c) to extend the maturity such thatof the Term Loan A facility and the Revolver will mature five years fromto March 26, 2019.

2024.
The Term Loan A facility and the Revolver will continue to be subject to the same affirmative covenants and negative covenants. The financial covenant will be set at a First Lien Leverage Ratio (as defined in the Credit Agreement) of 5.00:1.00 with a single step-down to 4.50:1.00 commencing with the fiscal quarter ending March 31, 2020. We were in compliance with all covenants of the Credit Agreement as of March 31,September 30, 2019.

In connection with the Second Amendment, during the three months ended March 31, 2019, we recorded a $4.4 million loss on extinguishment of debt, mainly due to the write-off of the deferred issuance costs and debt discount.

The funded amount of the Term Loan A facility was issued net of a discount and debt issuance costs totaling $2.8 million. These costs are being accreted as a component of interest expense using the effective interest rate method over the term of this facility.

We recorded debt issuance costs and related fees in connection with the Revolver and the unfunded amount of the Term Loan A facility of approximately $3.5 million, which are included in other assets in the unaudited condensed consolidated balance sheet. These costs are amortized as a component of interest expense on a straight-line basis over the related terms.

Redemption of Senior Notes
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TableOn October 2, 2019, we drew down the $400.0 million Term Loan A balance and used the proceeds and cash on hand to redeem all of Contents



the Senior Notes for $403.0 million and paid a $15.1 million premium related to the early redemption.
Interest Rates
In June 2018, we entered into an interest rate swap that has an aggregate notional value of $1.01 billion, has an effective date of December 31, 2018, and that expires on June 30, 2021. As a result, as of September 30, 2019, the percentage of our total principal debt (excluding leases) that is subject to fixed interest rates was approximately 54.5% at March 31, 2019.53.7%. Each quarter-point increase or decrease in the applicable interest rate at March 31,September 30, 2019 would change our annual interest expense by approximately $3.1 million.
Covenant Restrictions under our Lease Agreement
The lease agreement for our new corporate headquarters in Morrisville, North Carolina includes a provision that requires us to issue a letter of credit in certain amounts to the landlord based on our debt rating issued by Moody’s Investors Service (or other nationally-recognized debt rating agency). As of March 31,September 30, 2019 (and through the date of this filing), our credit rating was Ba3. As such, no letter of credit was required through the date of this filing. Any letters of credit issued in accordance with the aforementioned requirements wouldcould be issued under our Revolver, and, if issued under our Revolver, would reduce its available borrowing capacity by the same amount.
Our ability to make payments on our indebtedness and to fund planned capital expenditures and necessary working capital will depend on our ability to generate cash in the future. Our ability to meet our cash needs through cash flows from operations will depend on the demand for our services, as well as general economic, financial, competitive, and other factors, many of which are beyond our control. Our business may not generate cash flow in an amount sufficient to enable us to pay the principal of, or interest on, our indebtedness, or to fund our other liquidity needs, including working capital, capital
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expenditures, acquisitions, investments, and other general corporate requirements. If we cannot fund our liquidity needs, we will have to take actions such as reducing or delaying capital expenditures, acquisitions or investments, selling assets, restructuring or refinancing our debt, reducing the scope of our operations and growth plans, or seeking additional capital. We cannot assure you that any of these remedies could, if necessary, be affected on commercially reasonable terms, or at all, or that they would permit us to meet our scheduled debt service obligations. Our Credit Agreement contains covenant restrictions that limit our ability to direct the use of proceeds from any disposition of assets and, as a result, we may not be allowed to use the proceeds from any such dispositions to satisfy all current debt service obligations.
Accounts Receivable Financing Agreement
On June 29, 2018, we entered into an accounts receivable financing agreement (as amended) with aan original termination date of June 29, 2020, unless terminated earlier pursuant to its terms. Under this agreement, we cancould previously borrow up to $250.0 million from a third-party lender, secured by liens on certain receivables and other assets. On September 30, 2019, we entered into an amendment that increased the amount we can borrow from $250.0 million to $275.0 million and extended the termination date to September 30, 2021. As of March 31,September 30, 2019, we had $195.9$275.0 million of outstanding borrowings under this agreement with a maximumno remaining borrowing capacity available of $54.1 million, which is limited by a periodic calculation of our available borrowing base.available.
2018 Stock Repurchase Program
On February 26, 2018, our Board of Directors authorized the repurchase of up to an aggregate of $250.0 million of our 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 privately negotiated transactions.transactions (“2018 stock repurchase program”). The 2018 stock repurchase program commenced on March 1, 2018 and will end no later than December 31, 2019. We intend to use cash on hand and future free cash flow to fund the 2018 stock repurchase program.
In January 2019, we repurchased 552,100 shares of our common stock in open market transactions at an average price of $39.16 per share, resulting in a total purchase price of approximately $21.6 million. In February 2019, we repurchased 120,600shares of our common stock in open market transactions at an average price of $41.40 per share, resulting in a total purchase price of approximately $5.0 million. In June 2019, we repurchased 509,100 shares of our common stock in open market transactions at an average price of $45.29 per share, resulting in a total purchase price of approximately $23.1 million. In August 2019, we repurchased 141,100 shares of its common stock in open market transactions at an average price of $49.93 per share, resulting in a total purchase price of approximately $7.0 million. We immediately retired all of the repurchased common stock and charged the par value of the shares to

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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 accumulated deficit. As of March 31,September 30, 2019, we had remaining authorization to repurchase up to approximately $148.4$118.3 million of shares of our common stock under the 2018 stock repurchase program.
We are not obligated to repurchase any particular amount of our common stock, and the 2018 stock repurchase program may be modified, extended, suspended, or discontinued at any time. The timing and amount of repurchases is determined by our management based on a variety of factors such as our corporate requirements for cash, overall market conditions, and the market price of our common stock. The stock repurchase program will beis subject to applicable legal requirements, including federal and state securities laws and applicable Nasdaq rules.
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Cash, and Cash Equivalents and Restricted Cash
Our cash flows from operating, investing, and financing activities were as follows (in thousands):
Nine Months Ended September 30,
Three Months Ended  20192018Change
March 31, 2019 March 31, 2018 Change
Net cash used in operating activities$(13,306) $(46,985) $33,679
Net cash provided by operating activitiesNet cash provided by operating activities$157,933  $191,000  $(33,067) 
Net cash used in investing activities(11,445) (21,286) 9,841
Net cash used in investing activities(59,872) (133,853) 73,981  
Net cash used in financing activities(26,338) (69,877) 43,539
Net cash used in financing activities(123,885) (246,677) 122,792  
Cash Flows from Operating Activities
Cash flows used in operationsprovided by operating activities decreased by $33.7$33.1 million during the threenine months ended March 31,September 30, 2019, compared to the threenine months ended March 31, 2018,September 30, 2018. The decrease is primarily due to the year-over-year decrease in net loss of $5.5 million and an increase in non-cash items of $7.8 million largely due to deferred income taxes and share based compensation, partially offset by lower depreciation and amortization. Also contributing was a decrease in cash used in operating assets and liabilities of $31.4 million compared to the prior year period. The changes in operating assets and liabilities result primarily from thepartially offset by higher cash-related net changeincome. Fluctuations in billed and unbilled accounts receivable, unbilled services, contract assets, and deferred revenue coupled with changes in accounts payable, accrued expenses, and other long-term assets and liabilities. Fluctuations in billed and unbilled receivables, contract assets and deferred revenueliabilities 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, contract assets and deferred revenue can vary significantly from period to period.
As a result of our integration activities associated with the Merger and our acquisition activity, we have incurred substantial expenses that have negatively impacted our cash flow from operations.operating activities. For example, during the threenine months ended March 31,September 30, 2019, we incurred $15.9$35.3 million of expenses that impacted our operating cash flows in the current period or will impact operating cash flows in the future. We anticipate that we will continue to incur similar costs related to our integration efforts for the next 12 to18 months.through 2020.
Cash Flows from Investing Activities
For the threenine months ended March 31,September 30, 2019, we used $11.4$59.9 million in cash for investing activities, primarilywhich consisted of $50.6 million for the purchasepurchases of property and equipment. equipment and $9.2 million for investments in unconsolidated affiliates.
For the threenine months ended March 31,September 30, 2018, we used $21.3$133.9 million in cash for investing activities. In particular, we paid $90.9 million, net of cash acquired for an acquisition and $43.0 million for investing activities, primarily for the purchasepurchases of property and equipment.
Cash Flows from Financing Activities
For the threenine months ended March 31,September 30, 2019, our financing activitieswe used $26.3$123.9 million in cash consistingfor financing activities, which consisted primarily of: (i)of net repayments of long-termon term loan debt of $216.1 million, including voluntary prepayments of $25.0 million through February 2019 against the principal balance of our Term Loan B, (ii)and payments of $26.6

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million for the repurchase of our common stock. These payments were partially offset by net proceeds from our accounts receivable financing agreement and proceeds received from the exercise of stock underoptions.
For the nine months ended September 30, 2018, we used $246.7 million in cash for financing activities, which consisted primarily of repayments of term loan debt and payments for the repurchase program; and (iii) payments related to tax withholding for share-based compensation of $11.5 million.our common stock. These payments were partially offset by proceeds from: (i) issuance of long-term debt, net of discount, of $183.2 million; (ii) $26.5 million from our accounts receivable financing agreement;agreement and (iii) $19.7 millionproceeds received from the exercise of stock options. For the three months ended March 31, 2018, our financing activities used $69.9 million in cash, consisting primarily of: (i) payments of $37.5 million for the repurchase of our common stock under the 2018 repurchase program; and (ii) repayments of long-term debt of $31.3 million.
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Contractual Obligations and Commitments
There have been no material changes during the three months ended September 30, 2019, outside of the ordinary course of business, to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, except as described below.
In March 2019, we entered into Amendment No. 2 to the Credit Agreement, which, among other things, modified the terms of the Credit Agreement to refinance the existing Term Loan A facility and the Revolver. Please refer to “Note 4 - Long-Term Debt Obligations” for information regarding changes in the maturities of our contractual obligation related to principal balances and interest on our long-term debt.
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 and 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, share-based compensation, valuation of goodwill and identifiable intangibles, tax-related contingencies and valuation allowances, allowance for doubtful accounts, and litigation contingencies, among others. 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. 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
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 Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and 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, or 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 CFO have concluded that as of such date, our disclosure controls and procedures were not 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
Other than the remediation efforts described below, 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.
In connection with management’s assessment of the Company’sour internal control over financial reporting as of December 31, 2018, management concluded that material weaknesses existed in the design and operating effectiveness of internal controls within the Clinical Solutions segment in connection with the revenue recognition process under ASU 2014-09 “Revenue from Contracts with Customers” (ASC 606), which the Companywe adopted on January 1, 2018. These material weaknesses were not fully remediated as of March 31, 2019.
The following components of internal control over financial reporting were impacted: (i) control environment - the training process associated with ASC 606 was not sufficient in all cases to support the development of estimates of the costs necessary to complete the performance of contracts and related supporting documentation; (ii) risk assessment - the Company’sour risk assessment process did not effectively evaluate risks resulting from changes in the external environment or business operations at a sufficient level of precision to identify errors; (iii) control activities - the Companywe did not have effective control activities related to the operation of process-level controls over revenue recognition; and (iv) monitoring - the Companywe did not have effective monitoring activities to assess the operation of internal controls, including the continued appropriateness of internal controls.
Remediation of the Material Weaknesses in Internal Control over Financial Reporting
Management is actively engaged in the implementation of remediation efforts to address the material weaknesses. The remediation plan includes: (i) the modification of certain internal controls designed to evaluate the appropriateness of revenue recognition in our Clinical Solutions segment; (ii) implementing new internal controls over recording revenue transactions; and (iii) additional training for staff involved in the related processes. During the first quarter ofnine months ended September 30, 2019, management made progresshas substantially completed its remediation activities in all three areas described above. Completion of ongoing testing of the remediation plan described above. Remediation efforts are ongoing.
Management believes the measures described abovedesign and othersoperational effectiveness of modified and new controls is necessary to validate that may be implemented will remediate the material weaknesses. weaknesses have been fully remediated.
As management continues to evaluatetest and improve internal control over financial reporting, we may decide to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the planned remediation measures. Subsequent testing of the operational effectiveness of any modified or new controls will be necessary to validate that the material weaknesses have been fully remediated.

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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.
On December 1, 2017, the first of two virtually identical actions alleging federal securities law claims was filed against us and certain of our officers on behalf of a putative class of our shareholders. The first action, captioned Bermudez v. INC Research, Inc., et al, No. 17-09457 (S.D.N.Y.), names as defendants us, Michael Bell, Alistair MacDonald, Michael Gilbertini, and Gregory S. Rush (the "Bermudez action"), and the second action, Vaitkuvienë v. Syneos Health, Inc., et al, No. 18-0029 (E.D.N.C.), filed on January 25, 2018 (the "Vaitkuvienë action"), names as defendants us, Alistair MacDonald, and Gregory S. Rush (the "Vaitkuvienë action""Initial Defendants"). Both complaints allege similar claims under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of purchasers of our common stock between May 10, 2017 and November 8, 2017 and November 9, 2017. The complaints allege that we published inaccurate or incomplete information regarding, among other things, the financial performance and business outlook for inVentiv’s business prior to the Merger and with respect to the combined company following the Merger. On January 30, 2018, two alleged shareholders separately filed motions seeking to be appointed lead plaintiff and approving the selection of lead counsel. These motions remain pending. On March 30, 2018, Plaintiff Bermudez filed a notice of voluntary dismissal of the Bermudez action, without prejudice, and as to all defendants. On May 29, 2018, the Court in the Vaitkuvienë action appointed the San Antonio Fire & Police Pension Fund and El Paso Firemen & Policemen’s Pension Fund as Lead Plaintiffs and, on June 7, 2018, the Court entered a schedule providing for, among other things, Lead Plaintiffs to file an amended complaint by July 23, 2018 (later extended to July 30, 2018). Lead Plaintiffs filed their amended complaint on July 30, 2018, which also includes a claim against the same defendants listed above,Initial Defendants, as well as each member of the board of directors at the time of the INC Research - inVentiv Health merger vote in July 2017 (the “Defendants”), contending that the inVentiv merger proxy was misleading under Section 14(a) of the Act. Lead Plaintiffs seek, among other things, orders (i) declaring that the lawsuit is a proper class action and (ii) awarding compensatory damages in an amount to be proven at trial, including interest thereon, and reasonable costs and expenses incurred in this action, including attorneys’ fees and expertexperts' fees, to Lead Plaintiffs and other class members. Defendants filed a Motion to Dismiss Plaintiffs’ Amended Complaint on September 20, 2018. Lead Plaintiffs filed a Response in Opposition to such motion on November 21, 2018, and Defendants filed a Reply to such response on December 5, 2018. On May 23, 2019, Lead Plaintiffs filed a Notice of Filings in Related Case regarding the New Jersey shareholder action filed on March 1, 2019 described below, and Defendants filed their response on May 31, 2019. On September 26, 2019, the Court ordered, among other things, that this action is stayed in light of the litigation filed on March 1, 2019 and described below, pending before the United States District Court for the District of New Jersey. We and the other defendants deny the allegations in these complaints and intend to defend vigorously against these claims. In the Company'sour opinion, the ultimate outcome of this matter is not expected to have a material adverse effect on the Company'sour financial position, results of operations, or cash flows.
On September 24, 2018, the Court unsealed a civil complaint captioned United States, et. al vs. AstraZeneca PLC, et. al, No. 2:17-cv-01328-RSL (W.D. Wa.) against inVentiv Health, Inc. and other co-defendants. The complaint alleges that the Companywe and co-defendants violated the Federal False Claims Act (and various state analogues) and Anti-Kickback Statute through the provision of clinical education services. On December 17, 2018, the United States moved to dismiss this lawsuit, as well as other similar lawsuits supported by the relator in this action. The Company deniesA hearing on such motion is scheduled for October 30, 2019. We deny the allegations in the complaint intendsand intend to defend vigorously against these claims. In the Company’sour opinion, the ultimate outcome of this matter is not expected to have a material adverse effect on the Company’sour financial position, results of operations, or cash flows. 
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On February 21, 2019, the SECSecurities and Exchange Commission (“SEC”) notified the Companyus that it hashad commenced an investigation into our revenue accounting policies, internal controls, and related matters, and requested that we retain certain documents for the periods beginning with January 1, 2017. The Audit Committee of our Board of Directors subsequently initiated an independent review of our revenue accounting policies, internal controls and

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related matters with the assistance of outside counsel and accounting advisors, which is now complete. matters. On March 22,August 26, 2019, the SEC subpoenaed certain documents in connection withnotified us that it had concluded its investigation.investigation and does not intend to recommend an enforcement action against us at this time.
On March 1, 2019, a complaint was filed in the United States District Court for the District of New Jersey on behalf of a putative class of shareholders who purchased our common stock during the period between May 10, 2017 and February 27, 2019. The complaintaction, captioned Murakami v. Syneos Health, Inc. et al, No. 19-7377 (D.N.J.), names us and certain of our executive officers as defendants and allegealleges violations of the Securities Exchange Act of 1934, as amended, based on allegedly false or misleading statements about our business, operations, and prospects. The plaintiffs seek awards of compensatory damages, among other relief, and their costs and attorneys’ and experts’ fees. On March 28, 2019, Lead Plaintiffs in the Vaitkuvienë action filed a motion to intervene and to transfer this action to the Eastern District of North Carolina, and we filed our response on April 22, 2019. On April 30, 2019, a shareholder filed a motion seeking to be appointed lead plaintiff and approving the selection of lead counsel. On October 16, 2019, the Court ordered that Plantiff, by November 8, 2019, file proof of service of the Complaint in Compliance with Rule 4, or otherwise show cause why the action should not be dismissed for failure to properly serve Defendants (the "Order to Show Cause"). The Court further ordered that the action is stayed and that both motions are administratively terminated pending the Court's resolution of the Order to Show Cause. We and the other defendants deny the allegations in the complaint and intend to defend vigorously against these claims. In our opinion, the ultimate outcome of this matter is not expected to have a material adverse effect on our financial position, results of operations, or cash flows.
We are presently unable to predict the duration, scope, or result of the SEC’s investigation, the relatedforegoing putative class actionactions or any other related lawsuit or investigation.lawsuit.
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Item 1A. Risk Factors.
There have been no significant changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018. Refer to “Risk Factors” in Part 1, Item 1A of that report for a detailed discussion of risk factors affecting the Company.us.
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
During the three months ended March 31,September 30, 2019, we repurchased 672,700141,100 shares of our Class A common stock under our previously announced stock repurchase program described below, for a total of approximately $26.6$7.0 million. As of March 31,September 30, 2019, we have remaining authorization to repurchase up to approximately $148.4$118.3 million of shares of our Class A common stock under the stock repurchase program.
PeriodTotal number of shares purchasedAverage price paid per shareTotal number of shares purchased as part of publicly announced plans or programs (1)Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)
July 1, 2019 - July 31, 2019—  $—  —  $125,344  
August 1, 2019 - August 31, 2019141,100$49.93  141,100  $118,299  
September 1, 2019 - September 30, 2019—  $—  —  $118,299  
  Total141,100  141,100  
Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)
January 1, 2019 - January 31, 2019 552,100
 $39.16
 552,100
 $153,395
February 1, 2019 - February 28, 2019 120,600
 $41.40
 120,600
 $148,402
March 1, 2019 - March 31, 2019 
 $
 
 $148,402
Total 672,700
   672,700
  

(1)On February 26, 2018, the Board authorized the repurchase of up to an aggregate of $250.0 million of our Class A common stock, par value $0.01 per share, from time to time in open market transactions effected through a broker at prevailing market prices, in block trades, or privately negotiated transactions. The stock repurchase program commenced on March 1, 2018 and will end no later than December 31, 2019. We intend to use cash on hand and future free cash flow to fund the stock repurchase program. The 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 is determined by our management based on a variety of factors such as the market price of our Class A common stock, our corporate requirements, and overall market conditions. The stock repurchase program is subject to applicable legal requirements, including federal and

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state securities laws. 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.
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,paid-in capital, with the remainder applied to accumulated deficit.
Item 5. Other Information.
Not applicable.

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Item 6. Exhibits
Incorporated by Reference (Unless Otherwise Indicated)
Exhibit Number   Exhibit DescriptionFormFile No.ExhibitFiling Date    
10.1— — — Filed herewith
31.1— — — Filed herewith
31.2— — — Filed herewith
32.1— — — Furnished herewith
32.2— — — Furnished herewith
101.INSInline 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.SCHInline XBRL Taxonomy Extension Schema Document.— — — Filed herewith
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.— — — Filed herewith
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.— — — Filed herewith
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.— — — Filed herewith
101.PREInline Taxonomy Extension Presentation Linkbase Document.— — — Filed herewith
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).— — — Filed herewith


   Incorporated by Reference (Unless Otherwise Indicated)
Exhibit Number    Exhibit DescriptionForm    File No.    Exhibit    Filing Date    
10.1 8-K001-3673010.1March 28, 2019
31.1 Filed herewith
31.2 Filed herewith
32.1 Furnished herewith
32.2 Furnished herewith
101.INS XBRL Instance Document.Filed herewith
101.SCH XBRL Taxonomy Extension Schema Document.Filed herewith
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.Filed herewith
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.Filed herewith
101.LAB XBRL Taxonomy Extension Label Linkbase Document.Filed herewith
101.PRE Taxonomy Extension Presentation Linkbase Document.Filed herewith



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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 .authorized.
 
SYNEOS HEALTH, INC.
Date: May 8,October 30, 2019BY:/s/ Jason Meggs
Jason Meggs
Chief Financial Officer (Principal
(Principal
 Financial Officer)





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