Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36732 | |
Entity Registrant Name | PRA Health Sciences, Inc. | |
Entity Central Index Key | 0001613859 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-3640387 | |
Entity Address, Address Line One | 4130 ParkLake Avenue | |
Entity Address, Address Line Two | Suite 400 | |
Entity Address, City or Town | Raleigh | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 27612 | |
City Area Code | 919 | |
Local Phone Number | 786-8200 | |
Title of 12(b) Security | Common Stock $0.01 par value | |
Security Exchange Name | NASDAQ | |
Trading Symbol | PRAH | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 64,149,626 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 336,228 | $ 236,232 |
Restricted cash | 0 | 38 |
Accounts receivable and unbilled services, net of allowance for credit losses of $3,236 at September 30, 2020 | 708,810 | 658,517 |
Other current assets | 89,261 | 90,780 |
Total current assets | 1,134,299 | 985,567 |
Fixed assets, net | 191,798 | 180,716 |
Operating lease right-of-use assets | 178,514 | 186,343 |
Goodwill | 1,672,409 | 1,502,756 |
Intangible assets, net | 613,023 | 638,577 |
Other assets | 49,171 | 50,471 |
Total assets | 3,839,214 | 3,544,430 |
Current liabilities: | ||
Current portion of borrowings under credit facilities | 0 | 88,800 |
Current portion of long-term debt | 25,000 | 25,000 |
Accounts payable | 31,873 | 55,293 |
Accrued expenses and other current liabilities | 324,082 | 304,799 |
Current portion of operating lease liabilities | 38,627 | 37,603 |
Advanced billings | 580,158 | 505,714 |
Total current liabilities | 999,740 | 1,017,209 |
Long-term debt, net | 1,255,969 | 1,140,178 |
Long-term portion of operating lease liabilities | 161,309 | 172,370 |
Deferred tax liabilities | 47,794 | 78,511 |
Other long-term liabilities | 49,136 | 46,171 |
Total liabilities | 2,513,948 | 2,454,439 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Preferred stock (100,000,000 authorized shares; $0.01 par value) | 0 | 0 |
Common stock (1,000,000,000 authorized shares; $0.01 par value) | 641 | 635 |
Additional paid-in capital | 1,089,115 | 1,006,182 |
Accumulated other comprehensive loss | (153,558) | (160,108) |
Retained earnings | 389,068 | 243,282 |
Total stockholders' equity | 1,325,266 | 1,089,991 |
Total liabilities and stockholders' equity | $ 3,839,214 | $ 3,544,430 |
CONSOLIDATED CONDENSED BALANC_2
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ 3,236 | $ 2,738 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued | 64,100,349 | 63,491,550 |
Common stock, shares outstanding | 64,100,349 | 63,491,550 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 796,307 | $ 780,691 | $ 2,309,907 | $ 2,266,022 |
Operating expenses: | ||||
Selling, general and administrative expenses | 115,409 | 95,542 | 332,346 | 291,439 |
Transaction-related costs | (45,074) | 572 | (44,465) | 572 |
Depreciation and amortization expense | 33,315 | 29,264 | 98,078 | 85,462 |
Loss on disposal of fixed assets, net | 32 | 256 | 207 | 900 |
Income from operations | 124,160 | 95,788 | 230,966 | 262,526 |
Interest expense, net | (10,721) | (12,974) | (36,102) | (37,834) |
Loss on modification or extinguishment of debt | 0 | (1,855) | 0 | (1,855) |
Foreign currency (losses) gains, net | (9,128) | 5,408 | (12,036) | 1,864 |
Other (expense) income, net | (1) | 15 | (1) | (66) |
Income before income taxes | 104,310 | 86,382 | 182,827 | 224,635 |
Provision for income taxes | 13,058 | 3,375 | 37,041 | 56,317 |
Net income | 91,252 | 83,007 | 145,786 | 168,318 |
Net income attributable to noncontrolling interest | 0 | 0 | 0 | (99) |
Net income attributable to PRA Health Sciences, Inc. | $ 91,252 | $ 83,007 | $ 145,786 | $ 168,219 |
Net income per share attributable to common stockholders: | ||||
Basic (in dollars per share) | $ 1.44 | $ 1.28 | $ 2.31 | $ 2.58 |
Diluted (in dollars per share) | $ 1.41 | $ 1.25 | $ 2.26 | $ 2.53 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 63,447 | 64,771 | 63,184 | 65,096 |
Diluted (in shares) | 64,874 | 66,213 | 64,558 | 66,607 |
Direct costs (exclusive of depreciation and amortization) | ||||
Operating expenses: | ||||
Cost of revenues | $ 412,076 | $ 389,304 | $ 1,211,278 | $ 1,153,441 |
Reimbursable expenses | ||||
Operating expenses: | ||||
Cost of revenues | $ 156,389 | $ 169,965 | $ 481,497 | $ 471,682 |
CONSOLIDATED CONDENSED STATEM_2
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 91,252 | $ 83,007 | $ 145,786 | $ 168,318 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, net of income tax of $(2,581), $2,183, $1,699 and $2,447 | 33,050 | (27,582) | 2,076 | (26,692) |
Unrealized losses on derivative instruments, net of income tax of $(5), $(13), $(1,433) and $(1,624) | (16) | (254) | (3,659) | (4,567) |
Reclassification adjustments: | ||||
Losses on derivatives included in net income, net of income taxes of $1,163, $398, $3,099 and $1,056 | 3,193 | 1,213 | 8,133 | 2,972 |
Comprehensive income | 127,479 | 56,384 | 152,336 | 140,031 |
Comprehensive income attributable to noncontrolling interest | 0 | 0 | 0 | (175) |
Comprehensive income attributable to PRA Health Sciences, Inc. | $ 127,479 | $ 56,384 | $ 152,336 | $ 139,856 |
CONSOLIDATED CONDENSED STATEM_3
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustments, tax | $ (2,581) | $ 2,183 | $ 1,699 | $ 2,447 |
Unrealized losses on derivative instruments, tax | (5) | (13) | (1,433) | (1,624) |
Losses on derivatives included in net income, tax | $ 1,163 | $ 398 | $ 3,099 | $ 1,056 |
CONSOLIDATED CONDENSED STATEM_4
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss (Note 15) | Retained Earnings | Non-controlling Interest | AdjustmentAccumulated Other Comprehensive Loss (Note 15) | AdjustmentRetained Earnings | Adjusted Balance | Adjusted BalanceCommon Stock | Adjusted BalanceAdditional Paid-in Capital | Adjusted BalanceAccumulated Other Comprehensive Loss (Note 15) | Adjusted BalanceRetained Earnings | Adjusted BalanceNon-controlling Interest |
Balance at beginning of period (in shares) at Dec. 31, 2018 | 65,395,000 | |||||||||||||
Balance at beginning of period at Dec. 31, 2018 | $ 1,051,420 | $ 654 | $ 960,535 | $ (170,659) | $ 254,500 | $ 6,390 | $ 1,419 | $ (1,419) | $ 1,051,420 | $ 654 | $ 960,535 | $ (169,240) | $ 253,081 | $ 6,390 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercise of common stock options and other (in shares) | 219,000 | |||||||||||||
Exercise of common stock options and other | 10,670 | $ 2 | 10,668 | |||||||||||
Stock-based compensation (in shares) | 33,000 | |||||||||||||
Stock-based compensation | 9,247 | 9,247 | ||||||||||||
Net income (loss) | 44,256 | 44,084 | 172 | |||||||||||
Other comprehensive income (loss), net of tax | (429) | (384) | (45) | |||||||||||
Balance at end of period (in shares) at Mar. 31, 2019 | 65,647,000 | |||||||||||||
Balance at end of period at Mar. 31, 2019 | 1,115,164 | $ 656 | 980,450 | (169,624) | 297,165 | 6,517 | ||||||||
Balance at beginning of period (in shares) at Dec. 31, 2018 | 65,395,000 | |||||||||||||
Balance at beginning of period at Dec. 31, 2018 | 1,051,420 | $ 654 | 960,535 | (170,659) | 254,500 | 6,390 | $ 1,419 | $ (1,419) | $ 1,051,420 | $ 654 | $ 960,535 | $ (169,240) | $ 253,081 | $ 6,390 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net income (loss) | 168,318 | |||||||||||||
Balance at end of period (in shares) at Sep. 30, 2019 | 63,241,000 | |||||||||||||
Balance at end of period at Sep. 30, 2019 | 946,743 | $ 632 | 975,233 | (197,603) | 168,481 | 0 | ||||||||
Balance at beginning of period (in shares) at Mar. 31, 2019 | 65,647,000 | |||||||||||||
Balance at beginning of period at Mar. 31, 2019 | 1,115,164 | $ 656 | 980,450 | (169,624) | 297,165 | 6,517 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercise of common stock options and other (in shares) | 84,000 | |||||||||||||
Exercise of common stock options and other | 4,075 | $ 1 | 4,074 | |||||||||||
Stock-based compensation (in shares) | 5,000 | |||||||||||||
Stock-based compensation | 9,916 | 9,916 | ||||||||||||
Acquisition of noncontrolling interest | (5,275) | 1,290 | (6,565) | |||||||||||
Net income (loss) | 41,055 | 41,128 | (73) | |||||||||||
Other comprehensive income (loss), net of tax | (1,235) | (1,356) | 121 | |||||||||||
Balance at end of period (in shares) at Jun. 30, 2019 | 65,736,000 | |||||||||||||
Balance at end of period at Jun. 30, 2019 | 1,163,700 | $ 657 | 995,730 | (170,980) | 338,293 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercise of common stock options and other (in shares) | 328,000 | |||||||||||||
Exercise of common stock options and other | 15,415 | $ 6 | 15,409 | |||||||||||
Stock-based compensation (in shares) | 257,000 | |||||||||||||
Stock-based compensation | 11,244 | 11,244 | ||||||||||||
Repurchase and retirement of common stock (in shares) | (3,080,000) | |||||||||||||
Repurchase and retirement of common stock | (300,000) | $ (31) | (47,150) | (252,819) | ||||||||||
Net income (loss) | 83,007 | 83,007 | ||||||||||||
Other comprehensive income (loss), net of tax | (26,623) | (26,623) | ||||||||||||
Balance at end of period (in shares) at Sep. 30, 2019 | 63,241,000 | |||||||||||||
Balance at end of period at Sep. 30, 2019 | 946,743 | $ 632 | 975,233 | (197,603) | 168,481 | 0 | ||||||||
Balance at beginning of period (in shares) at Dec. 31, 2019 | 63,492,000 | |||||||||||||
Balance at beginning of period at Dec. 31, 2019 | 1,089,991 | $ 635 | 1,006,182 | (160,108) | 243,282 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercise of common stock options and other (in shares) | 90,000 | |||||||||||||
Exercise of common stock options and other | 2,908 | $ 1 | 2,907 | |||||||||||
Stock-based compensation | 15,425 | 15,425 | ||||||||||||
Net income (loss) | 40,660 | 40,660 | ||||||||||||
Issuance of restricted stock for acquisition (in shares) | 44,000 | |||||||||||||
Issuance of restricted stock for acquisition | 2,585 | 2,585 | ||||||||||||
Other comprehensive income (loss), net of tax | (44,152) | (44,152) | ||||||||||||
Balance at end of period (in shares) at Mar. 31, 2020 | 63,626,000 | |||||||||||||
Balance at end of period at Mar. 31, 2020 | 1,107,417 | $ 636 | 1,027,099 | (204,260) | 283,942 | 0 | ||||||||
Balance at beginning of period (in shares) at Dec. 31, 2019 | 63,492,000 | |||||||||||||
Balance at beginning of period at Dec. 31, 2019 | $ 1,089,991 | $ 635 | 1,006,182 | (160,108) | 243,282 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercise of common stock options and other (in shares) | 376,904 | |||||||||||||
Net income (loss) | $ 145,786 | |||||||||||||
Balance at end of period (in shares) at Sep. 30, 2020 | 64,100,000 | |||||||||||||
Balance at end of period at Sep. 30, 2020 | 1,325,266 | $ 641 | 1,089,115 | (153,558) | 389,068 | 0 | ||||||||
Balance at beginning of period (in shares) at Mar. 31, 2020 | 63,626,000 | |||||||||||||
Balance at beginning of period at Mar. 31, 2020 | 1,107,417 | $ 636 | 1,027,099 | (204,260) | 283,942 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercise of common stock options and other (in shares) | 323,000 | |||||||||||||
Exercise of common stock options and other | 15,789 | $ 3 | 15,786 | |||||||||||
Stock-based compensation | 15,845 | 15,845 | ||||||||||||
Net income (loss) | 13,874 | 13,874 | ||||||||||||
Other comprehensive income (loss), net of tax | 14,475 | 14,475 | ||||||||||||
Balance at end of period (in shares) at Jun. 30, 2020 | 63,949,000 | |||||||||||||
Balance at end of period at Jun. 30, 2020 | 1,167,400 | $ 639 | 1,058,730 | (189,785) | 297,816 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Exercise of common stock options and other (in shares) | 151,000 | |||||||||||||
Exercise of common stock options and other | 11,044 | $ 2 | 11,042 | |||||||||||
Stock-based compensation | 19,343 | 19,343 | ||||||||||||
Net income (loss) | 91,252 | 91,252 | ||||||||||||
Other comprehensive income (loss), net of tax | 36,227 | 36,227 | ||||||||||||
Balance at end of period (in shares) at Sep. 30, 2020 | 64,100,000 | |||||||||||||
Balance at end of period at Sep. 30, 2020 | $ 1,325,266 | $ 641 | $ 1,089,115 | $ (153,558) | $ 389,068 | $ 0 |
CONSOLIDATED CONDENSED STATEM_5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 145,786 | $ 168,318 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 98,078 | 85,462 |
Amortization of debt issuance costs | 1,266 | 1,364 |
Amortization of terminated interest rate swaps | 4,559 | 4,960 |
Stock-based compensation expense | 50,613 | 30,407 |
Change in fair value of acquisition-related contingent consideration | (44,500) | 0 |
Unrealized foreign currency losses (gains), net | 17,413 | (7,773) |
Deferred income tax benefit | (32,067) | (25,408) |
Other reconciling items | 8,221 | 792 |
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | ||
Accounts receivable, unbilled services and advanced billings | 20,890 | (104,589) |
Other operating assets and liabilities | (3,156) | (4,289) |
Payment of acquisition-related contingent consideration | 0 | (83,249) |
Net cash provided by operating activities | 267,103 | 65,995 |
Cash flows from investing activities: | ||
Purchase of fixed assets | (54,024) | (61,210) |
(Cash paid) proceeds received for interest on interest rate swap, net | (6,414) | 1,076 |
Distributions from unconsolidated joint ventures | 0 | 418 |
Proceeds from the sale of fixed assets | 29 | 26 |
Acquisition of Care Innovations, Inc., net of cash acquired | (158,824) | 0 |
Net cash used in investing activities | (219,233) | (59,690) |
Cash flows from financing activities: | ||
Repurchase and retirement of common stock | 0 | (300,000) |
Borrowings on accounts receivable financing agreement | 0 | 30,000 |
Borrowings on line of credit | 100,000 | 40,000 |
Proceeds from issuance of long-term debt | 0 | 300,000 |
Repayments of line of credit | (55,000) | (40,000) |
Repayments of long-term debt | (18,750) | (25,000) |
Acquisition of noncontrolling interest | 0 | (4,138) |
Proceeds from stock issued under employee stock purchase plan and stock option exercises | 29,741 | 30,180 |
Payments for debt issuance costs | (470) | 0 |
Net cash provided by financing activities | 55,521 | 31,042 |
Effects of foreign exchange changes on cash, cash equivalents, and restricted cash | (3,433) | (266) |
Change in cash, cash equivalents, and restricted cash | 99,958 | 37,081 |
Cash, cash equivalents, and restricted cash, beginning of period | 236,270 | 144,709 |
Cash, cash equivalents, and restricted cash, end of period | $ 336,228 | $ 181,790 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The Company PRA Health Sciences, Inc. and its subsidiaries, or the Company, is a full-service global contract research organization providing a broad range of product development and data solution services to pharmaceutical and biotechnology companies around the world. The Company’s integrated services include data management, statistical analysis, clinical trial management, and regulatory and drug development consulting. Unaudited Interim Financial Information The interim consolidated condensed financial statements include the accounts of the Company and variable interest entities where the Company is the primary beneficiary. These financial statements are prepared in conformity with U.S. generally accepted accounting principles, or GAAP, and are unaudited. In the opinion of the Company’s management, all adjustments of a normal recurring nature necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. The accompanying interim consolidated condensed financial statements and related notes should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The preparation of the interim consolidated condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated condensed financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates. Recently Implemented Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted this standard effective January 1, 2020 and the application of ASU 2016-13 did not have a material impact on the Company's consolidated condensed financial statements. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order to simplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted this standard effective January 1, 2020 and the application of ASU 2017-04 did not have a material impact on the Company's consolidated condensed financial statements. In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The Company adopted this standard effective January 1, 2020 and the application of ASU 2018-15 did not have a material impact on the Company's consolidated condensed financial statements. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes". The provisions of ASU 2019-12 include eliminating certain exceptions related to the approach for intra-period tax allocation, the |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Significant accounting policies are detailed in "Note 3: Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2019. Cash, Cash Equivalents, and Restricted Cash The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows (in thousands): September 30, December 31, 2020 2019 2019 2018 Cash and cash equivalents $ 336,228 $ 181,767 $ 236,232 $ 144,221 Restricted cash — 23 38 488 Total cash, cash equivalents, and restricted cash $ 336,228 $ 181,790 $ 236,270 $ 144,709 |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations Care Innovations, Inc. In January 2020, the Company acquired all of the outstanding equity interests of Care Innovations, Inc., or Care Innovations, an entity that provides digital health services. The purchase price was $208.6 million, which consisted of $161.5 million of cash, $2.6 million of restricted stock and $44.5 million of estimated contingent consideration in the form of a potential earn-out payment. With this acquisition, the Company expects to expand its ability to serve customers with technologies that deliver enhancements to the Company’s mobile health platform and provide expanded remote patient monitoring support to expand the Company's ability to deliver virtual and decentralized trials. The earn-out payment, which is capped at $50.0 million, is contingent on the achievement of two 2020 financial targets. The fair value of the contingent consideration was based on significant inputs not observed in the market and thus represented a Level 3 fair value measurement. During the third quarter of 2020, as a result of changes in market conditions within the earn-out period, the Company determined that the two 2020 financial targets would not be met; therefore the Company released the $45.1 million contingent consideration liability, which is recorded within transaction-related costs in the consolidation condensed statements of operations. The acquisition of Care Innovations was accounted for as a business combination and, accordingly, the assets acquired and the liabilities assumed have been recorded at their respective fair values as of the acquisition date. The consideration paid was allocated as follows: (i) $33.5 million to definite-lived intangible assets primarily consisting of developed technology with a weighted average amortization period of five years, (ii) $174.1 million to goodwill and (iii) $1.0 million to other net assets. The acquisition costs are included in transaction-related costs in the consolidated condensed statement of operations and were immaterial. Since the acquisition date, goodwill decreased by $0.2 million, primarily as a result of adjustments to acquired income tax balances. The Company has not disclosed post-acquisition or pro-forma revenue and earnings attributable to Care Innovations as they did not have a material effect on the Company’s consolidated results. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, contract assets, accounts payable and advanced billings, approximate fair value due to the short maturities of these instruments. Recurring Fair Value Measurements The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of September 30, 2020 (in thousands): Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ — $ — Interest rate swaps — 1,395 — 1,395 Total $ — $ 1,395 $ — $ 1,395 The Company values contingent consideration using models that include significant unobservable Level 3 inputs, such as projected market performance over the earn-out period along with estimates for market volatility and the discount rate applicable to potential cash payments. Interest rate swaps are measured at fair value using a market approach valuation technique. The valuation is based on an estimate of the net present value of the expected cash flows using relevant mid-market observable data inputs and based on the assumption of no unusual market conditions or forced liquidation. Changes in Level 3 financial liabilities measured on a recurring basis are as follows (in thousands): Contingent Consideration Balance at December 31, 2019 $ — Initial estimate of Care Innovations contingent consideration 44,500 Change in fair value recognized in transaction-related costs (44,500) Balance at September 30, 2020 $ — The fair value of the Care Innovations earn-out payments as of the acquisition date was $44.5 million, which was valued using a Monte Carlo simulation. It is based on the achievement of certain 2020 financial targets. As the fair value was based on significant inputs not observed in the market, it represented a Level 3 measurement. During the third quarter of 2020, the Company determined that the 2020 financial targets would not be met; therefore the Company released the contingent consideration liability. Specifically, the revenue and earnings before interest, taxes, depreciation, and amortization of the acquired business are expected to be lower than initial forecasts. The initial growth estimates for the service offering were negatively impacted by changes in market conditions, which negatively impacted Care Innovations’ ability to contract and deliver services on new commercial opportunities within the one-year earn-out period. Refer to "Note 3 - Business Combinations" for additional information regarding the Care Innovations acquisition. Non-recurring Fair Value Measurements Certain assets and liabilities are carried on the accompanying consolidated condensed balance sheets at cost and are not remeasured to fair value on a recurring basis. These assets include finite-lived intangible assets that are tested for impairment when a triggering event occurs and goodwill and identifiable indefinite-lived intangible assets that are tested for impairment annually on October 1 or when a triggering event occurs. As of September 30, 2020, assets carried on the balance sheet and not remeasured to fair value on a recurring basis totaled approximately $2,285.4 million and are identified as Level 3 assets. These assets are comprised of goodwill of $1,672.4 million and identifiable intangible assets, net of $613.0 million. Refer to "Note 9 - Revolving Credit Facilities and Long-Term Debt" for additional information regarding the fair value of long-term debt balances. |
Concentration of Credit Risk an
Concentration of Credit Risk and Expected Credit Losses | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk and Expected Credit Losses | Concentration of Credit Risk and Expected Credit Losses Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, accounts receivable, unbilled services, and derivatives. As of September 30, 2020, substantially all of the Company’s cash and cash equivalents and derivatives were held in or invested with large financial institutions. Accounts receivable primarily include amounts due from pharmaceutical and biotechnology companies under credit terms that generally do not extend beyond 90 days. The Company maintains an allowance for expected credit losses resulting from the inability of its customers to make required payments. The Company performs credit reviews of each customer, monitors collections and payments from customers, and determines the allowance based upon historical experience and specific customer collection issues. The Company ages billed accounts receivable and assesses exposure by customer type, by aged category, and by specific identification. After all attempts to collect a receivable have failed, the receivable is written off against the allowance or, to the extent unreserved, to bad debt expense within selling, general and administrative expenses in the consolidated condensed statements of operations. There were no material changes in the provision for credit loss in the nine months ended September 30, 2020. Accounts receivable and unbilled services from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled services at the respective dates were as follows: September 30, December 31, 2020 2019 Customer A 11.6 % 11.2 % Customer B 10.4 % 15.6 % Customer C 11.2 % * * Less than 10% |
Accounts Receivable, Unbilled S
Accounts Receivable, Unbilled Services and Advanced Billings | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Accounts Receivable, Unbilled Services and Advanced Billings | Accounts Receivable, Unbilled Services and Advanced Billings Accounts receivable and unbilled services were as follows (in thousands): September 30, December 31, 2020 2019 Accounts receivable $ 537,414 $ 512,061 Unbilled services 174,632 149,194 Total accounts receivable and unbilled services 712,046 661,255 Less allowance for credit losses (3,236) (2,738) Total accounts receivable and unbilled services, net $ 708,810 $ 658,517 Unbilled services as of September 30, 2020 and December 31, 2019 includes $91.8 million and $76.0 million, respectively, of contract assets where the Company’s right to bill is conditioned on criteria other than the passage of time. Impairment losses on contract assets were immaterial in the three and nine months ended September 30, 2020 and 2019. Advanced billings were as follows (in thousands): September 30, December 31, 2020 2019 Advanced billings $ 580,158 $ 505,714 The $74.4 million increase in advanced billings from December 31, 2019 to September 30, 2020 was primarily due to the timing of billings to customers. During the nine months ended September 30, 2020 and 2019, the Company recognized revenue of $455.2 million and $398.4 million related to advanced billings recorded as of January 1, 2020 and 2019, respectively. Performance Obligations Revenue recognized from reimbursable expenses and services completed in prior periods was $13.3 million and $30.9 million for the three and nine months ended September 30, 2020, respectively, and $14.8 million and $65.2 million for the three and nine months ended September 30, 2019, respectively. This primarily relates to adjustments attributable to changes in estimates such as estimated total contract costs, and from contract modifications on long-term fixed price contracts executed in the current period, which results in changes to the transaction price. one |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company’s material lease obligations are operating leases for office and other facilities in which the Company conducts business. The facility leases generally provide an initial lease term ranging from three The components of lease cost were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Lease cost: Operating lease cost $ 11,305 $ 9,788 $ 33,639 $ 28,583 Short-term lease cost 283 725 1,134 2,033 Variable lease cost 1,837 2,175 5,486 5,796 Lease income (49) (47) (142) (130) Net lease cost $ 13,376 $ 12,641 $ 40,117 $ 36,282 Supplemental cash flow information related to leases was as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows $ 11,954 $ 9,772 $ 33,709 $ 28,262 Right-of-use assets obtained in exchange for lease obligations 3,568 5,100 18,917 26,148 Other supplemental information related to leases was as follows: As of September 30, As of December 31, 2020 2019 Weighted average remaining lease term 8.1 years 7.7 years Weighted average discount rate 4.2% 4.3% Maturities of operating lease liabilities were as follows as of September 30, 2020 (in thousands): 2020 (remaining) $ 9,659 2021 46,342 2022 38,072 2023 30,237 2024 20,731 Thereafter 89,713 Total lease payments 234,754 Less imputed interest (34,818) Total $ 199,936 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands): Clinical Research Data Solutions Consolidated Balance at December 31, 2019 $ 1,025,897 $ 476,859 $ 1,502,756 Acquisition of Care Innovations, Inc. 174,115 — 174,115 Currency translation (4,462) — (4,462) Balance at September 30, 2020 $ 1,195,550 $ 476,859 $ 1,672,409 There are no accumulated impairment charges as of September 30, 2020 and December 31, 2019. Goodwill recorded in connection with the acquisition of Care Innovations was assigned to the Clinical Research segment and is not deductible for income tax purposes. The goodwill is attributable to the workforce of Care Innovations and expected synergies with the Company’s existing Product Registration business unit's operations. Intangible Assets Intangible assets consist of the following (in thousands): September 30, 2020 December 31, 2019 Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Customer relationships $ 559,518 $ (162,622) $ 396,896 $ 559,768 $ (137,728) $ 422,040 Trade names (finite-lived) 29,877 (18,860) 11,017 28,536 (16,582) 11,954 Developed technology and other intangibles 74,174 (43,479) 30,695 44,474 (35,654) 8,820 Database 137,100 (80,695) 56,405 137,100 (59,347) 77,753 Total finite-lived intangible assets 800,669 (305,656) 495,013 769,878 (249,311) 520,567 Trade names (indefinite-lived) 118,010 — 118,010 118,010 — 118,010 Total intangible assets $ 918,679 $ (305,656) $ 613,023 $ 887,888 $ (249,311) $ 638,577 Amortization expense was $19.0 million and $57.2 million for the three and nine months ended September 30, 2020, respectively, and $17.1 million and $51.4 million for the three and nine months ended September 30, 2019, respectively. The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands): 2020 (remaining) $ 19,022 2021 70,718 2022 56,094 2023 43,881 2024 34,686 2025 and thereafter 270,612 Total $ 495,013 |
Revolving Credit Facilities and
Revolving Credit Facilities and Long-Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Revolving Credit Facilities and Long-Term Debt | Revolving Credit Facilities and Long-Term Debt The Company had the following debt outstanding as of September 30, 2020 and December 31, 2019 (in thousands): Principal amount Interest rate as of September 30, December 31, September 30, 2020 2020 2019 Maturity Date Senior Secured Credit Facility: First Lien Term Loan 1.66 % $ 981,250 $ 1,000,000 October 2024 Revolver 1.66 % 133,800 88,800 October 2024 Accounts Receivable Financing Agreement (1) 1.41 % 170,000 170,000 May 2021 Total debt 1,285,050 1,258,800 Less current portion of Revolver (2) — (88,800) Less current portion of long-term debt (25,000) (25,000) Total long-term debt 1,260,050 1,145,000 Less debt issuance costs (4,081) (4,822) Total long-term debt, net $ 1,255,969 $ 1,140,178 (1) The Company has excluded its Accounts Receivable Financing Agreement from current liabilities at September 30, 2020 as the Company has the intent and ability to refinance the obligation on a long-term basis prior to its maturity date of May 31, 2021 as supported by the available capacity under the Revolver. (2) The Company assesses its ability and intent to repay the outstanding borrowings on the Revolver at the end of each reporting period in order to determine the proper balance sheet classification. Outstanding borrowings on the Revolver that the Company intends to repay in less than 12 months are classified as current. As of September 30, 2020, the contractual maturities of the Company's debt obligations were as follows (in thousands): Current maturities of long-term debt: 2020 (remaining) $ 6,250 2021 195,000 2022 25,000 2023 25,000 2024 and thereafter 1,033,800 Total $ 1,285,050 The Company's primary financing arrangements are its senior secured credit facility (the "Senior Secured Credit Facility"), which consists of a first lien term loan ("First Lien Term Loan") and a revolving credit facility (the "Revolver"), and its Accounts Receivable Financing Agreement. Senior Secured Credit Facility The overall capacity of the Senior Secured Credit Facility is $1.75 billion (consisting of a $1.0 billion First Lien Term Loan and a $750.0 million Revolver). As collateral for borrowings under the Senior Secured Credit Facility, the Company granted a pledge on primarily all of its assets, the interests of wholly-owned U.S. restricted subsidiaries, and a portion of the interests of wholly-owned non-U.S. restricted subsidiaries. The Company is subject to certain financial covenants, which require the Company to maintain certain debt-to-EBITDA and interest expense-to-EBITDA ratios. The Senior Secured Credit Facilities also contain covenants that, among other things, restrict the Company’s ability to create any liens, make investments and acquisitions, incur or guarantee additional indebtedness, enter into mergers or consolidations and other fundamental changes, conduct sales and other dispositions of property or assets, enter into sale-leaseback transactions or hedge agreements, prepay subordinated debt, pay dividends or make other payments in respect of capital stock, change the line of business, enter into transactions with affiliates, enter into burdensome agreements with negative pledge clauses, and make subsidiary distributions. After giving effect to the applicable restrictions on the payment of dividends under the Senior Secured Credit Facilities, subject to compliance with applicable law, as of September 30, 2020 and December 31, 2019, all amounts in retained earnings were free of restriction and were available for the payment of dividends. The Senior Secured Credit Facility also contains customary representations, warranties, affirmative covenants, and events of default. The variable interest rate is a rate equal to the London Interbank Offered Rate, or LIBOR, or the adjusted base rate, or ABR, at the election of the Company, plus a margin based on the ratio of total indebtedness to EBITDA. The margin ranges from 1.0% to 2.0%, in the case of LIBOR loans, and 0.0% to 1.0%, in the case of ABR loans. The Company has the option of one two three The First Lien Term Loan requires the Company to repay 2.5% of the original aggregate principal amount per annum in equal quarterly installments through September 30, 2024, with the remaining balance due at maturity. There are no voluntary prepayment penalties and prepayment is required upon the issuance of certain debt or asset sales or other events. The Revolver requires the Company to pay to the lenders a commitment fee for unused commitments of 0.15% to 0.35% based on the Company’s debt-to-EBITDA ratio. Principal amounts are due and payable in full at maturity. In addition, at September 30, 2020 and December 31, 2019, the Company had $5.8 million and $5.4 million, respectively, in letters of credit outstanding, which are secured by the Revolver. Accounts Receivable Financing Agreement Loans under the Accounts Receivable Financing Agreement accrue interest at either a reserve-adjusted LIBOR or a base rate, plus 1.25%. The Company may prepay loans upon one The Accounts Receivable Financing Agreement contains various customary representations and warranties and covenants, and default provisions that provide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness. At September 30, 2020 and December 31, 2019, there was $30.0 million of remaining capacity available under the Accounts Receivable Financing Agreement. Fair Value of Debt The estimated fair value of the Company’s debt and outstanding borrowings under its revolving credit facilities was $1,281.7 million and $1,255.8 million at September 30, 2020 and December 31, 2019, respectively. The fair values of the term loans, borrowings under credit facilities, and accounts receivable financing agreement were determined based on Level 2 inputs, which are primarily based on rates at which the debt is traded among financial institutions adjusted for the Company's credit standing. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Authorized Shares The Company is authorized to issue up to one billion shares of common stock, with a par value of $0.01. The Company is authorized to issue up to one hundred million shares of preferred stock, with a par value of $0.01. Share Repurchase Program On August 30, 2019, the Company's Board of Directors, or the Board, approved a share repurchase program, or the Repurchase Program, authorizing the repurchase of up to $500.0 million of the Company's common stock in open market purchases, privately-negotiated transactions, secondary offerings, block trades or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Repurchase Program does not obligate the Company to repurchase any particular amount of its common stock, and it may be modified, suspended or terminated at any time at the Board's discretion. The Repurchase Program expires on December 31, 2021. As of September 30, 2020, the Company has remaining authorization to repurchase up to $200.0 million of its common stock under the Repurchase Program. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock Option and RSA/RSU Activity The 2020 Stock Incentive Plan, or the 2020 Plan, was approved by stockholders at the annual meeting on May 18, 2020. The 2020 Plan allows for the issuance of stock options, stock appreciation rights, restricted shares and restricted stock units, other stock-based awards, and performance compensation awards as permitted by applicable laws. The 2020 Plan authorized the issuance of 2,500,000 shares of common stock plus all shares that remained available under the prior plan on May 18, 2020. The Company granted 528,740 service-based options and 401,095 restricted stock awards and units, or RSAs/RSUs, with a total grant date fair value of $19.2 million and $38.7 million, respectively, during the nine months ended September 30, 2020. Aggregated information regarding the Company’s option plans is summarized below: Options Wtd. Average Exercise Price Wtd. Average Remaining Contractual Life (in years) Intrinsic Value (millions) Outstanding at December 31, 2019 4,861,606 $ 72.45 7.5 $ 188.3 Granted 528,740 103.15 Exercised (376,904) 57.52 Expired or forfeited (289,066) 95.76 Outstanding at September 30, 2020 4,724,376 $ 75.65 7.0 $ 125.3 Exercisable at September 30, 2020 2,518,446 $ 58.75 5.9 $ 108.4 The Company’s RSAs/RSUs activity in 2020 is as follows: Awards Wtd. Average Grant-Date Fair Value Intrinsic Value (millions) Unvested at December 31, 2019 632,436 $ 91.07 $ 70.3 Granted 401,095 96.39 Forfeited (41,780) 91.46 Vested (257,787) 81.53 Unvested at September 30, 2020 733,964 $ 97.31 $ 74.5 Employee Stock Purchase Plan In April 2017, the Board approved the PRA Health Sciences, Inc. 2017 Employee Stock Purchase Plan, or ESPP, which was approved by the Company’s shareholders on June 1, 2017. The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages to be applied toward the purchase of shares of the Company’s common stock on the last trading day of any offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the NASDAQ Global Select Market (i) on the first trading day of the offering period or (ii) the last trading day of any offering period. Offering periods under the ESPP will generally be in six month Stock-based Compensation Expense Stock-based compensation expense related to employee stock plans are summarized below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Direct costs $ 4,824 $ 3,685 $ 11,873 $ 9,780 Selling, general and administrative 14,519 7,559 38,740 20,627 Total stock-based compensation expense $ 19,343 $ 11,244 $ 50,613 $ 30,407 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective income tax rate was 20.3% and 25.1% for the nine months ended September 30, 2020 and 2019, respectively. The variation between the Company’s effective income tax rate and the U.S. statutory rate of 21% for the nine months ended September 30, 2020 is primarily due to (i) geographic distribution of global pre-tax income, (ii) the U.S. inclusion of amounts related to the estimated tax on global intangible low-taxed income, or GILTI, and (iii) the U.S. inclusion of amounts related to Foreign-Derived Intangible Income. The effective tax rate for the nine months ended September 30, 2020 included the effect of a decrease in the fair value of the earn-out liability related to the stock acquisition of Care Innovations, which was not included in taxable income, but instead decreased the tax basis. Significant judgment is required related to the application of the recent U.S. tax reform, or the Act, particularly with respect to GILTI and BEAT provisions. If changes occur in the Company’s tax structure, the structure of its arrangements, interpretations, or regulations that clarify these or other provisions of the Act, these changes could have a material effect on the Company’s tax provision. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings The Company is involved in legal proceedings from time to time in the ordinary course of its business, including employment claims and claims related to other business transactions. Although the outcome of such claims is uncertain, management believes that these legal proceedings will not have a material adverse effect on the financial condition or results of future operations of the Company. |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives The Company is exposed to certain risks relating to its ongoing business operations. The primary risk that the Company seeks to manage by using derivative instruments is interest rate risk arising from movement in market interest rates. Accordingly, the Company has instituted an interest rate hedging program that uses interest rate swaps designated as cash flow hedges to mitigate interest rate volatility. The Company swaps the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. The Company’s interest rate contracts are designated as hedging instruments. The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Balance Sheet Classification Notional Liability Notional Liability Accrued expenses and other current liabilities $ 375,000 $ (1,395) $ 625,000 $ (2,976) $ 375,000 $ (1,395) $ 625,000 $ (2,976) An interest rate swap with a notional amount of $250.0 million matured on September 6, 2020. The Company records the change in the fair value of derivatives designated as hedging instruments under ASC 815 to accumulated other comprehensive loss in the Company's consolidated condensed balance sheet, net of deferred taxes, and will later reclassify into earnings, including the associated tax impact, when the hedged item affects earnings or is no longer expected to occur. For other derivative contracts that do not qualify or no longer qualify for hedge accounting, changes in the fair value of the derivatives are recognized in earnings each period. The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps) 2020 2019 2020 2019 Amount of pre-tax loss recognized in other comprehensive income (loss) $ (21) $ (266) $ (5,092) $ (6,190) Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net (4,356) (1,611) (11,232) (4,028) The Company expects that $1.4 million of unrealized losses will be reclassified out of accumulated other comprehensive loss and into interest expense, net over the next 12 months. The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three and nine months ended September 30, 2020 and 2019, respectively, is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Interest expense, net $ (10,721) $ (12,974) $ (36,102) $ (37,834) Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts): Loss reclassified from accumulated other comprehensive loss into interest expense, net (4,356) (1,611) (11,232) (4,028) |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Below is a summary of the components of accumulated other comprehensive loss (in thousands): Foreign Derivative Total Balance at December 31, 2019 $ (149,342) $ (10,766) $ (160,108) Other comprehensive income (loss) before reclassifications 2,076 (3,659) (1,583) Reclassification adjustments — 8,133 8,133 Balance at September 30, 2020 $ (147,266) $ (6,292) $ (153,558) Foreign Currency Translation The change in the Company's foreign currency translation adjustment was due primarily to the movements in the British pound (GBP), Euro (EUR), Canadian dollar (CAD) and Russian ruble (RUB) exchange rates against the U.S. dollar. The U.S. dollar strengthened by 2.4%, 2.6%, and 20.7% versus the GBP, CAD, and RUB, respectively, and weakened by 4.5% versus the EUR, respectively, between December 31, 2019 and September 30, 2020. The movement in the GBP, CAD and RUB contributed to a $5.8 million, $1.1 million, and $7.2 million increase in other comprehensive loss, respectively, which was offset by the movement in the EUR which contributed to a decrease of $17.4 million in other comprehensive loss during the nine months ended September 30, 2020. Derivative Instruments See "Note 14 - Derivatives" for further information on changes to accumulated other comprehensive loss related to the derivative instruments. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per Share Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the applicable period. Diluted net income per share is calculated after adjusting the denominator of the basic net income per share calculation for the effect of all potentially dilutive common shares, which, in the Company’s case, includes shares issuable under the stock option and incentive award plans. The following table reconciles the basic to diluted weighted average shares outstanding (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Basic weighted average common shares outstanding 63,447 64,771 63,184 65,096 Effect of dilutive stock options and other awards under share-based compensation programs 1,427 1,442 1,374 1,511 Diluted weighted average common shares outstanding 64,874 66,213 64,558 66,607 Anti-dilutive shares 2,467 2,150 2,450 1,914 The dilutive and anti-dilutive shares disclosed above were calculated using the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of RSAs/RSUs, reduced by the |
Segments
Segments | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segments | Segments The Company is managed through two reportable segments: (i) the Clinical Research segment and (ii) the Data Solutions segment. In accordance with the provisions of ASC 280, "Segment Reporting", the Company's chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. • Clinical Research Segment: The Clinical Research segment, which primarily serves biopharmaceutical clients, provides outsourced clinical research and clinical trial related services. • Data Solutions Segment: The Data Solutions segment provides data and analytics, technology solutions and real-world insights and services primarily to the Company’s life science customers. The Company's chief operating decision-maker uses segment profit as the primary measure of each segment's operating results in order to allocate resources and in assessing the Company's performance. Asset information by segment is not presented, as this measure is not used by the chief operating decision-maker to assess the Company's performance. The Company’s reportable segment information is presented below (in thousands): Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Clinical Research Data Solutions Total Clinical Research Data Solutions Total Revenue $ 732,126 $ 64,181 $ 796,307 $ 719,005 $ 61,686 $ 780,691 Direct costs (exclusive of depreciation and amortization) 364,558 47,518 412,076 342,695 46,609 389,304 Reimbursable expenses 156,382 7 156,389 169,965 — 169,965 Segment profit 211,186 16,656 227,842 206,345 15,077 221,422 Less expenses not allocated to segments: Selling, general and administrative expenses 115,409 95,542 Transaction-related costs (45,074) 572 Depreciation and amortization expense 33,315 29,264 Loss on disposal of fixed assets, net 32 256 Income from operations 124,160 95,788 Interest expense, net (10,721) (12,974) Loss on modification or extinguishment of debt — (1,855) Foreign currency (losses) gains, net (9,128) 5,408 Other (expense) income, net (1) 15 Income before income taxes $ 104,310 $ 86,382 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Clinical Research Data Solutions Total Clinical Research Data Solutions Total Revenue $ 2,125,510 $ 184,397 $ 2,309,907 $ 2,087,863 $ 178,159 $ 2,266,022 Direct costs (exclusive of depreciation and amortization) 1,066,150 145,128 1,211,278 1,022,329 131,112 1,153,441 Reimbursable expenses 481,369 128 481,497 471,682 — 471,682 Segment profit 577,991 39,141 617,132 593,852 47,047 640,899 Less expenses not allocated to segments: Selling, general and administrative expenses 332,346 291,439 Transaction-related costs (44,465) 572 Depreciation and amortization expense 98,078 85,462 Loss on disposal of fixed assets, net 207 900 Income from operations 230,966 262,526 Interest expense, net (36,102) (37,834) Loss on modification or extinguishment of debt — (1,855) Foreign currency (losses) gains, net (12,036) 1,864 Other expense, net (1) (66) Income before income taxes $ 182,827 $ 224,635 Revenue by geographic location for each segment is as follows (in thousands): Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Clinical Research Data Solutions Total Clinical Research Data Solutions Total Revenue Americas: United States $ 471,460 $ 64,181 $ 535,641 $ 467,096 $ 61,686 $ 528,782 Other 5,102 — 5,102 12,255 — 12,255 Total Americas 476,562 64,181 540,743 479,351 61,686 541,037 Europe, Africa, and Asia-Pacific United Kingdom 213,567 — 213,567 191,994 — 191,994 Netherlands 23,889 — 23,889 30,144 — 30,144 Other 18,108 — 18,108 17,516 — 17,516 Total Europe, Africa, and Asia-Pacific 255,564 — 255,564 239,654 — 239,654 Total revenue $ 732,126 $ 64,181 $ 796,307 $ 719,005 $ 61,686 $ 780,691 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Clinical Research Data Solutions Total Clinical Research Data Solutions Total Revenue Americas: United States $ 1,380,964 $ 184,397 $ 1,565,361 $ 1,368,344 $ 178,159 $ 1,546,503 Other 20,721 — 20,721 37,268 — 37,268 Total Americas 1,401,685 184,397 1,586,082 1,405,612 178,159 1,583,771 Europe, Africa, and Asia-Pacific United Kingdom 607,305 — 607,305 551,460 — 551,460 Netherlands 63,000 — 63,000 82,839 — 82,839 Other 53,520 — 53,520 47,952 — 47,952 Total Europe, Africa, and Asia-Pacific 723,825 — 723,825 682,251 — 682,251 Total revenue $ 2,125,510 $ 184,397 $ 2,309,907 $ 2,087,863 $ 178,159 $ 2,266,022 |
Overview of the Impact of the C
Overview of the Impact of the COVID-19 Pandemic | 9 Months Ended |
Sep. 30, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Overview of the Impact of the COVID-19 Pandemic | Overview of the Impact of the COVID-19 PandemicA novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, during the second half of March 2020 and the entirety of the second and third quarters of 2020, the Company experienced disruptions in its global operations as the COVID-19 virus continued to spread and impact countries in which the Company operates. During the three months ended September 30, 2020, the Company's operations continued to be impacted by limited accessibility to investigator sites and limited ability to screen and enroll patients due to travel restrictions. The full extent of the COVID-19 outbreak in 2020 and its impact on the Company's operations remains uncertain. A prolonged outbreak could continue to interrupt the operations of the Company and its customers and suppliers. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Recently Implemented and Recently Issued Accounting Pronouncements | Recently Implemented Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted this standard effective January 1, 2020 and the application of ASU 2016-13 did not have a material impact on the Company's consolidated condensed financial statements. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment,” in order to simplify the subsequent measurement of goodwill by eliminating the Step 2 goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company adopted this standard effective January 1, 2020 and the application of ASU 2017-04 did not have a material impact on the Company's consolidated condensed financial statements. In August 2018, the FASB issued ASU No. 2018-15, "Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," in order to expand on the FASB's guidance of capitalized costs incurred in a cloud computing arrangement. The amendments in this update require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The Company adopted this standard effective January 1, 2020 and the application of ASU 2018-15 did not have a material impact on the Company's consolidated condensed financial statements. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes". The provisions of ASU 2019-12 include eliminating certain exceptions related to the approach for intra-period tax allocation, the |
Fair Value Measurements | The Company records certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is described below. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: • Level 1 — Quoted prices in active markets for identical assets or liabilities. • Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Unobservable inputs that are supported by little or no market activity. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Reconciliation of cash, cash equivalents, and restricted cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows (in thousands): September 30, December 31, 2020 2019 2019 2018 Cash and cash equivalents $ 336,228 $ 181,767 $ 236,232 $ 144,221 Restricted cash — 23 38 488 Total cash, cash equivalents, and restricted cash $ 336,228 $ 181,790 $ 236,270 $ 144,709 |
Reconciliation of cash, cash equivalents, and restricted cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts shown in the consolidated condensed statements of cash flows (in thousands): September 30, December 31, 2020 2019 2019 2018 Cash and cash equivalents $ 336,228 $ 181,767 $ 236,232 $ 144,221 Restricted cash — 23 38 488 Total cash, cash equivalents, and restricted cash $ 336,228 $ 181,790 $ 236,270 $ 144,709 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of the fair value of financial assets and liabilities measured on a recurring basis | The following table summarizes the fair value of the Company’s financial liabilities that are measured on a recurring basis as of September 30, 2020 (in thousands): Level 1 Level 2 Level 3 Total Liabilities: Contingent consideration $ — $ — $ — $ — Interest rate swaps — 1,395 — 1,395 Total $ — $ 1,395 $ — $ 1,395 |
Summary of changes in Level 3 financial liabilities | Changes in Level 3 financial liabilities measured on a recurring basis are as follows (in thousands): Contingent Consideration Balance at December 31, 2019 $ — Initial estimate of Care Innovations contingent consideration 44,500 Change in fair value recognized in transaction-related costs (44,500) Balance at September 30, 2020 $ — |
Concentration of Credit Risk _2
Concentration of Credit Risk and Expected Credit Losses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Schedule of concentration of risk by risk factor | Accounts receivable and unbilled services from individual customers that were equal to or greater than 10% of consolidated accounts receivable and unbilled services at the respective dates were as follows: September 30, December 31, 2020 2019 Customer A 11.6 % 11.2 % Customer B 10.4 % 15.6 % Customer C 11.2 % * * Less than 10% |
Accounts Receivable, Unbilled_2
Accounts Receivable, Unbilled Services and Advanced Billings (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable and unbilled services | Accounts receivable and unbilled services were as follows (in thousands): September 30, December 31, 2020 2019 Accounts receivable $ 537,414 $ 512,061 Unbilled services 174,632 149,194 Total accounts receivable and unbilled services 712,046 661,255 Less allowance for credit losses (3,236) (2,738) Total accounts receivable and unbilled services, net $ 708,810 $ 658,517 |
Schedule of advanced billings | Advanced billings were as follows (in thousands): September 30, December 31, 2020 2019 Advanced billings $ 580,158 $ 505,714 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Components of lease cost | The components of lease cost were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Lease cost: Operating lease cost $ 11,305 $ 9,788 $ 33,639 $ 28,583 Short-term lease cost 283 725 1,134 2,033 Variable lease cost 1,837 2,175 5,486 5,796 Lease income (49) (47) (142) (130) Net lease cost $ 13,376 $ 12,641 $ 40,117 $ 36,282 Supplemental cash flow information related to leases was as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows $ 11,954 $ 9,772 $ 33,709 $ 28,262 Right-of-use assets obtained in exchange for lease obligations 3,568 5,100 18,917 26,148 Other supplemental information related to leases was as follows: As of September 30, As of December 31, 2020 2019 Weighted average remaining lease term 8.1 years 7.7 years Weighted average discount rate 4.2% 4.3% |
Schedule of maturities of lease liabilities | Maturities of operating lease liabilities were as follows as of September 30, 2020 (in thousands): 2020 (remaining) $ 9,659 2021 46,342 2022 38,072 2023 30,237 2024 20,731 Thereafter 89,713 Total lease payments 234,754 Less imputed interest (34,818) Total $ 199,936 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill by reportable segment are as follows (in thousands): Clinical Research Data Solutions Consolidated Balance at December 31, 2019 $ 1,025,897 $ 476,859 $ 1,502,756 Acquisition of Care Innovations, Inc. 174,115 — 174,115 Currency translation (4,462) — (4,462) Balance at September 30, 2020 $ 1,195,550 $ 476,859 $ 1,672,409 |
Schedule of intangible assets | Intangible assets consist of the following (in thousands): September 30, 2020 December 31, 2019 Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Customer relationships $ 559,518 $ (162,622) $ 396,896 $ 559,768 $ (137,728) $ 422,040 Trade names (finite-lived) 29,877 (18,860) 11,017 28,536 (16,582) 11,954 Developed technology and other intangibles 74,174 (43,479) 30,695 44,474 (35,654) 8,820 Database 137,100 (80,695) 56,405 137,100 (59,347) 77,753 Total finite-lived intangible assets 800,669 (305,656) 495,013 769,878 (249,311) 520,567 Trade names (indefinite-lived) 118,010 — 118,010 118,010 — 118,010 Total intangible assets $ 918,679 $ (305,656) $ 613,023 $ 887,888 $ (249,311) $ 638,577 |
Schedule of estimated future amortization expense | The estimated future amortization expense of finite-lived intangible assets is expected to be as follows (in thousands): 2020 (remaining) $ 19,022 2021 70,718 2022 56,094 2023 43,881 2024 34,686 2025 and thereafter 270,612 Total $ 495,013 |
Revolving Credit Facilities a_2
Revolving Credit Facilities and Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The Company had the following debt outstanding as of September 30, 2020 and December 31, 2019 (in thousands): Principal amount Interest rate as of September 30, December 31, September 30, 2020 2020 2019 Maturity Date Senior Secured Credit Facility: First Lien Term Loan 1.66 % $ 981,250 $ 1,000,000 October 2024 Revolver 1.66 % 133,800 88,800 October 2024 Accounts Receivable Financing Agreement (1) 1.41 % 170,000 170,000 May 2021 Total debt 1,285,050 1,258,800 Less current portion of Revolver (2) — (88,800) Less current portion of long-term debt (25,000) (25,000) Total long-term debt 1,260,050 1,145,000 Less debt issuance costs (4,081) (4,822) Total long-term debt, net $ 1,255,969 $ 1,140,178 (1) The Company has excluded its Accounts Receivable Financing Agreement from current liabilities at September 30, 2020 as the Company has the intent and ability to refinance the obligation on a long-term basis prior to its maturity date of May 31, 2021 as supported by the available capacity under the Revolver. |
Schedule of principal payments on long-term debt due | As of September 30, 2020, the contractual maturities of the Company's debt obligations were as follows (in thousands): Current maturities of long-term debt: 2020 (remaining) $ 6,250 2021 195,000 2022 25,000 2023 25,000 2024 and thereafter 1,033,800 Total $ 1,285,050 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of stock option activity | Aggregated information regarding the Company’s option plans is summarized below: Options Wtd. Average Exercise Price Wtd. Average Remaining Contractual Life (in years) Intrinsic Value (millions) Outstanding at December 31, 2019 4,861,606 $ 72.45 7.5 $ 188.3 Granted 528,740 103.15 Exercised (376,904) 57.52 Expired or forfeited (289,066) 95.76 Outstanding at September 30, 2020 4,724,376 $ 75.65 7.0 $ 125.3 Exercisable at September 30, 2020 2,518,446 $ 58.75 5.9 $ 108.4 |
Schedule of RSA/RSU activity | The Company’s RSAs/RSUs activity in 2020 is as follows: Awards Wtd. Average Grant-Date Fair Value Intrinsic Value (millions) Unvested at December 31, 2019 632,436 $ 91.07 $ 70.3 Granted 401,095 96.39 Forfeited (41,780) 91.46 Vested (257,787) 81.53 Unvested at September 30, 2020 733,964 $ 97.31 $ 74.5 |
Schedule of stock-based compensation expense | Stock-based compensation expense related to employee stock plans are summarized below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Direct costs $ 4,824 $ 3,685 $ 11,873 $ 9,780 Selling, general and administrative 14,519 7,559 38,740 20,627 Total stock-based compensation expense $ 19,343 $ 11,244 $ 50,613 $ 30,407 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of notional amounts and fair values (determined using level 2 inputs) of derivatives | The following table presents the notional amounts and fair values (determined using Level 2 inputs) of the Company’s derivatives as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Balance Sheet Classification Notional Liability Notional Liability Accrued expenses and other current liabilities $ 375,000 $ (1,395) $ 625,000 $ (2,976) $ 375,000 $ (1,395) $ 625,000 $ (2,976) |
Schedule of the effect of derivatives on the condensed consolidated statements of operations and comprehensive (loss) income | The table below presents the effect of the Company's derivatives on the consolidated condensed statements of operations and comprehensive income for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps) 2020 2019 2020 2019 Amount of pre-tax loss recognized in other comprehensive income (loss) $ (21) $ (266) $ (5,092) $ (6,190) Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net (4,356) (1,611) (11,232) (4,028) The effect of cash flow hedge accounting on the consolidated condensed statements of operations for the three and nine months ended September 30, 2020 and 2019, respectively, is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Interest expense, net $ (10,721) $ (12,974) $ (36,102) $ (37,834) Loss on cash flow hedging relationships in Subtopic 815-20 (interest contracts): Loss reclassified from accumulated other comprehensive loss into interest expense, net (4,356) (1,611) (11,232) (4,028) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Summary of components of accumulated other comprehensive loss | Below is a summary of the components of accumulated other comprehensive loss (in thousands): Foreign Derivative Total Balance at December 31, 2019 $ (149,342) $ (10,766) $ (160,108) Other comprehensive income (loss) before reclassifications 2,076 (3,659) (1,583) Reclassification adjustments — 8,133 8,133 Balance at September 30, 2020 $ (147,266) $ (6,292) $ (153,558) |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of weighted average basic and diluted common shares | The following table reconciles the basic to diluted weighted average shares outstanding (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Basic weighted average common shares outstanding 63,447 64,771 63,184 65,096 Effect of dilutive stock options and other awards under share-based compensation programs 1,427 1,442 1,374 1,511 Diluted weighted average common shares outstanding 64,874 66,213 64,558 66,607 Anti-dilutive shares 2,467 2,150 2,450 1,914 |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | The Company’s reportable segment information is presented below (in thousands): Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Clinical Research Data Solutions Total Clinical Research Data Solutions Total Revenue $ 732,126 $ 64,181 $ 796,307 $ 719,005 $ 61,686 $ 780,691 Direct costs (exclusive of depreciation and amortization) 364,558 47,518 412,076 342,695 46,609 389,304 Reimbursable expenses 156,382 7 156,389 169,965 — 169,965 Segment profit 211,186 16,656 227,842 206,345 15,077 221,422 Less expenses not allocated to segments: Selling, general and administrative expenses 115,409 95,542 Transaction-related costs (45,074) 572 Depreciation and amortization expense 33,315 29,264 Loss on disposal of fixed assets, net 32 256 Income from operations 124,160 95,788 Interest expense, net (10,721) (12,974) Loss on modification or extinguishment of debt — (1,855) Foreign currency (losses) gains, net (9,128) 5,408 Other (expense) income, net (1) 15 Income before income taxes $ 104,310 $ 86,382 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Clinical Research Data Solutions Total Clinical Research Data Solutions Total Revenue $ 2,125,510 $ 184,397 $ 2,309,907 $ 2,087,863 $ 178,159 $ 2,266,022 Direct costs (exclusive of depreciation and amortization) 1,066,150 145,128 1,211,278 1,022,329 131,112 1,153,441 Reimbursable expenses 481,369 128 481,497 471,682 — 471,682 Segment profit 577,991 39,141 617,132 593,852 47,047 640,899 Less expenses not allocated to segments: Selling, general and administrative expenses 332,346 291,439 Transaction-related costs (44,465) 572 Depreciation and amortization expense 98,078 85,462 Loss on disposal of fixed assets, net 207 900 Income from operations 230,966 262,526 Interest expense, net (36,102) (37,834) Loss on modification or extinguishment of debt — (1,855) Foreign currency (losses) gains, net (12,036) 1,864 Other expense, net (1) (66) Income before income taxes $ 182,827 $ 224,635 |
Schedule of segment revenue by geographic location | Revenue by geographic location for each segment is as follows (in thousands): Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Clinical Research Data Solutions Total Clinical Research Data Solutions Total Revenue Americas: United States $ 471,460 $ 64,181 $ 535,641 $ 467,096 $ 61,686 $ 528,782 Other 5,102 — 5,102 12,255 — 12,255 Total Americas 476,562 64,181 540,743 479,351 61,686 541,037 Europe, Africa, and Asia-Pacific United Kingdom 213,567 — 213,567 191,994 — 191,994 Netherlands 23,889 — 23,889 30,144 — 30,144 Other 18,108 — 18,108 17,516 — 17,516 Total Europe, Africa, and Asia-Pacific 255,564 — 255,564 239,654 — 239,654 Total revenue $ 732,126 $ 64,181 $ 796,307 $ 719,005 $ 61,686 $ 780,691 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Clinical Research Data Solutions Total Clinical Research Data Solutions Total Revenue Americas: United States $ 1,380,964 $ 184,397 $ 1,565,361 $ 1,368,344 $ 178,159 $ 1,546,503 Other 20,721 — 20,721 37,268 — 37,268 Total Americas 1,401,685 184,397 1,586,082 1,405,612 178,159 1,583,771 Europe, Africa, and Asia-Pacific United Kingdom 607,305 — 607,305 551,460 — 551,460 Netherlands 63,000 — 63,000 82,839 — 82,839 Other 53,520 — 53,520 47,952 — 47,952 Total Europe, Africa, and Asia-Pacific 723,825 — 723,825 682,251 — 682,251 Total revenue $ 2,125,510 $ 184,397 $ 2,309,907 $ 2,087,863 $ 178,159 $ 2,266,022 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 336,228 | $ 236,232 | $ 181,767 | $ 144,221 |
Restricted cash | 0 | 38 | 23 | 488 |
Total cash, cash equivalents, and restricted cash | $ 336,228 | $ 236,270 | $ 181,790 | $ 144,709 |
Business Combinations (Details)
Business Combinations (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jan. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Business Combination | |||||
Change in fair value of acquisition-related contingent consideration | $ (44,500) | $ 0 | |||
Goodwill | $ 1,672,409 | 1,672,409 | $ 1,502,756 | ||
Care Innovations | |||||
Business Combination | |||||
Purchase price | $ 208,600 | ||||
Purchase price, cash paid | 161,500 | ||||
Purchase price, restricted stock | 2,600 | ||||
Contingent consideration | 44,500 | ||||
Potential earn-out payment, up to | 50,000 | ||||
Change in fair value of acquisition-related contingent consideration | $ (45,100) | ||||
Definite-lived intangible assets | $ 33,500 | ||||
Weighted average useful life | 5 years | ||||
Goodwill | $ 174,100 | ||||
Other net assets | $ 1,000 | ||||
Goodwill decrease | $ 200 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of the fair value of financial assets and liabilities measured on a recurring basis (Details) - Recurring $ in Thousands | Sep. 30, 2020USD ($) |
Liabilities: | |
Contingent consideration | $ 0 |
Interest rate swaps | 1,395 |
Total | 1,395 |
Level 1 | |
Liabilities: | |
Contingent consideration | 0 |
Interest rate swaps | 0 |
Total | 0 |
Level 2 | |
Liabilities: | |
Contingent consideration | 0 |
Interest rate swaps | 1,395 |
Total | 1,395 |
Level 3 | |
Liabilities: | |
Contingent consideration | 0 |
Interest rate swaps | 0 |
Total | $ 0 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of changes in Level 3 financial liabilities (Details) - Level 3 - Recurring $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 0 |
Initial estimate of Care Innovations contingent consideration | 44,500 |
Change in fair value recognized in transaction-related costs | (44,500) |
Ending balance | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jan. 31, 2020 |
Care Innovations | ||
Assets fair value measurements | ||
Contingent consideration | $ 44,500 | |
Recurring | ||
Assets fair value measurements | ||
Contingent consideration | $ 0 | |
Recurring | Level 3 | ||
Assets fair value measurements | ||
Contingent consideration | 0 | |
Nonrecurring | Level 3 | ||
Assets fair value measurements | ||
Assets fair value | 2,285,400 | |
Goodwill | 1,672,400 | |
Identifiable intangible assets | $ 613,000 |
Concentration of Credit Risk _3
Concentration of Credit Risk and Expected Credit Losses (Details) - Customer Concentration Risk - Accounts receivable and unbilled receivables | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Customer A | ||
Concentration risk | ||
Concentration risk percentage | 11.60% | 11.20% |
Customer B | ||
Concentration risk | ||
Concentration risk percentage | 10.40% | 15.60% |
Customer C | ||
Concentration risk | ||
Concentration risk percentage | 11.20% |
Accounts Receivable, Unbilled_3
Accounts Receivable, Unbilled Services and Advanced Billings - Schedules (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Accounts receivable | $ 537,414 | $ 512,061 |
Unbilled services | 174,632 | 149,194 |
Total accounts receivable and unbilled services | 712,046 | 661,255 |
Less allowance for credit losses | (3,236) | (2,738) |
Total accounts receivable and unbilled services, net | 708,810 | 658,517 |
Advanced billings | $ 580,158 | $ 505,714 |
Accounts Receivable, Unbilled_4
Accounts Receivable, Unbilled Services and Advanced Billings - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Contract with customer, asset, not past due | $ 91.8 | $ 91.8 | $ 76 | ||
Increase in advanced billings | 74.4 | ||||
Revenue related to contract liabilities | 455.2 | $ 398.4 | |||
Performance obligation satisfied in previous period | 13.3 | $ 14.8 | $ 30.9 | $ 65.2 | |
Performance obligation, description of timing | The Company does not disclose the value of the transaction price allocated to unsatisfied performance obligations on contracts that have an original contract term of less than one year. | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Remaining performance obligation, amount | $ 5,500 | $ 5,500 | |||
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Remaining performance obligation, expected timing of satisfaction, period | 1 year | 1 year | |||
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Remaining performance obligation, expected timing of satisfaction, period | 5 years | 5 years |
Leases - Narrative (Details)
Leases - Narrative (Details) | Sep. 30, 2020 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, initial term of contract | 3 years |
Operating lease, remaining term of contract | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease, initial term of contract | 20 years |
Operating lease, remaining term of contract | 20 years |
Leases - Components of lease co
Leases - Components of lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Lease cost: | |||||
Operating lease cost | $ 11,305 | $ 9,788 | $ 33,639 | $ 28,583 | |
Short-term lease cost | 283 | 725 | 1,134 | 2,033 | |
Variable lease cost | 1,837 | 2,175 | 5,486 | 5,796 | |
Lease income | (49) | (47) | (142) | (130) | |
Net lease cost | 13,376 | 12,641 | 40,117 | 36,282 | |
Cash paid for amounts included in the measurements of lease liabilities, all included in operating cash flows | 11,954 | 9,772 | 33,709 | 28,262 | |
Right-of-use assets obtained in exchange for lease obligations | $ 3,568 | $ 5,100 | $ 18,917 | $ 26,148 | |
Weighted average remaining lease term | 8 years 1 month 6 days | 8 years 1 month 6 days | 7 years 8 months 12 days | ||
Weighted average discount rate | 4.20% | 4.20% | 4.30% |
Leases - Schedule of maturities
Leases - Schedule of maturities of lease liabilities (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Leases [Abstract] | |
2020 (remaining) | $ 9,659 |
2021 | 46,342 |
2022 | 38,072 |
2023 | 30,237 |
2024 | 20,731 |
Thereafter | 89,713 |
Total lease payments | 234,754 |
Less imputed interest | (34,818) |
Operating lease liability | $ 199,936 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Changes in the Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Changes in carrying amount of goodwill | |
Balance at beginning of period | $ 1,502,756 |
Acquisition of Care Innovations, Inc. | 174,115 |
Currency translation | (4,462) |
Balance at end of period | 1,672,409 |
Clinical Research | |
Changes in carrying amount of goodwill | |
Balance at beginning of period | 1,025,897 |
Acquisition of Care Innovations, Inc. | 174,115 |
Currency translation | (4,462) |
Balance at end of period | 1,195,550 |
Data Solutions | |
Changes in carrying amount of goodwill | |
Balance at beginning of period | 476,859 |
Acquisition of Care Innovations, Inc. | 0 |
Currency translation | 0 |
Balance at end of period | $ 476,859 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Accumulated impairment charges | $ 0 | $ 0 | $ 0 | ||
Amortization expense | $ 19,000,000 | $ 17,100,000 | $ 57,200,000 | $ 51,400,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill And Intangible Assets | ||
Total finite-lived intangible assets, gross | $ 800,669 | $ 769,878 |
Accumulated Amortization | (305,656) | (249,311) |
Net Amount | 495,013 | 520,567 |
Trade names (indefinite-lived) | 118,010 | 118,010 |
Total intangible assets, gross | 918,679 | 887,888 |
Total intangible assets, net | 613,023 | 638,577 |
Customer relationships | ||
Goodwill And Intangible Assets | ||
Total finite-lived intangible assets, gross | 559,518 | 559,768 |
Accumulated Amortization | (162,622) | (137,728) |
Net Amount | 396,896 | 422,040 |
Trade names (finite-lived) | ||
Goodwill And Intangible Assets | ||
Total finite-lived intangible assets, gross | 29,877 | 28,536 |
Accumulated Amortization | (18,860) | (16,582) |
Net Amount | 11,017 | 11,954 |
Developed technology and other intangibles | ||
Goodwill And Intangible Assets | ||
Total finite-lived intangible assets, gross | 74,174 | 44,474 |
Accumulated Amortization | (43,479) | (35,654) |
Net Amount | 30,695 | 8,820 |
Database | ||
Goodwill And Intangible Assets | ||
Total finite-lived intangible assets, gross | 137,100 | 137,100 |
Accumulated Amortization | (80,695) | (59,347) |
Net Amount | $ 56,405 | $ 77,753 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense of Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
2020 (remaining) | $ 19,022 | |
2021 | 70,718 | |
2022 | 56,094 | |
2023 | 43,881 | |
2024 | 34,686 | |
2025 and thereafter | 270,612 | |
Net Amount | $ 495,013 | $ 520,567 |
Revolving Credit Facilities a_3
Revolving Credit Facilities and Long-Term Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Long-term debt | ||
Total debt | $ 1,285,050 | $ 1,258,800 |
Less current portion of Revolver | 0 | (88,800) |
Total long-term debt | 1,260,050 | 1,145,000 |
Less debt issuance costs | (4,081) | (4,822) |
Total long-term debt, net | 1,255,969 | 1,140,178 |
Senior Secured Credit Facility | ||
Long-term debt | ||
Less current portion of long-term debt | $ (25,000) | (25,000) |
First Lien Term Loan | Senior Secured Credit Facility | ||
Long-term debt | ||
Interest rate | 1.66% | |
Total debt | $ 981,250 | 1,000,000 |
Accounts Receivable Financing Agreement | Secured debt | ||
Long-term debt | ||
Interest rate | 1.41% | |
Total debt | $ 170,000 | 170,000 |
Revolver | Senior Secured Credit Facility | ||
Long-term debt | ||
Interest rate | 1.66% | |
Total debt | $ 133,800 | $ 88,800 |
Revolving Credit Facilities a_4
Revolving Credit Facilities and Long-Term Debt - Schedule of Future Principal Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current maturities of long-term debt: | ||
2020 | $ 6,250 | |
2021 | 195,000 | |
2022 | 25,000 | |
2023 | 25,000 | |
2024 and thereafter | 1,033,800 | |
Total debt | $ 1,285,050 | $ 1,258,800 |
Revolving Credit Facilities a_5
Revolving Credit Facilities and Long-Term Debt - Senior Secured Credit Facility (Details) - Senior Secured Credit Facility - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Long-term debt | ||
Maximum borrowing capacity | $ 1,750,000,000 | |
Interest period, option one | 1 month | |
Interest period, option two | 2 months | |
Interest period, option three | 3 months | |
Interest period, option four | 6 months | |
LIBOR | Minimum | ||
Long-term debt | ||
Applicable margin on variable rate basis | 1.00% | |
LIBOR | Maximum | ||
Long-term debt | ||
Applicable margin on variable rate basis | 2.00% | |
ABR | Minimum | ||
Long-term debt | ||
Applicable margin on variable rate basis | 0.00% | |
ABR | Maximum | ||
Long-term debt | ||
Applicable margin on variable rate basis | 1.00% | |
Revolver | ||
Long-term debt | ||
Maximum borrowing capacity | $ 750,000,000 | |
Outstanding letters of credit | $ 5,800,000 | $ 5,400,000 |
Revolver | Minimum | ||
Long-term debt | ||
Commitment fee | 0.15% | |
Revolver | Maximum | ||
Long-term debt | ||
Commitment fee | 0.35% | |
First Lien Term Loan | ||
Long-term debt | ||
Maximum borrowing capacity | $ 1,000,000,000 | |
Percent of original principal | 2.50% | |
Prepayment penalties | $ 0 |
Revolving Credit Facilities a_6
Revolving Credit Facilities and Long-Term Debt - Accounts Receivable Financing Agreement and Fair Value of Debt (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Long-term debt | ||
Estimated fair value of long-term debt | $ 1,281.7 | $ 1,255.8 |
Accounts Receivable Financing Agreement | Secured debt | ||
Long-term debt | ||
Notice period for prepayment of loans | 1 day | |
Notice period required for termination of agreement | 15 days | |
Remaining borrowing capacity | $ 30 | $ 30 |
Accounts Receivable Financing Agreement | Secured debt | LIBOR | ||
Long-term debt | ||
Applicable margin on variable rate basis | 1.25% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Aug. 30, 2019 |
Stockholders' Equity Note [Abstract] | |||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Share Repurchase Program, authorized amount | $ 500,000,000 | ||
Share Repurchase Program, remaining authorized amount | $ 200,000,000 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option and RSA/RSU Activity (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | May 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock issuance authorized (in shares) | 2,500,000 | |
Options granted (in shares) | 528,740 | |
Restricted Stock Awards (RSAs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awards granted in period (in shares) | 401,095 | |
Total grant date fair value of awards granted | $ 38.7 | |
Employee stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total grant date fair value of awards granted | $ 19.2 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Option Summary (Details) $ / shares in Units, $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | |
Options | ||
Outstanding at beginning of period (in shares) | shares | 4,861,606 | |
Granted (in shares) | shares | 528,740 | |
Exercised (in shares) | shares | (376,904) | |
Expired or forfeited (in shares) | shares | (289,066) | |
Outstanding at end of period (in shares) | shares | 4,724,376 | 4,861,606 |
Exercisable (in shares) | shares | 2,518,446 | |
Wtd. Average Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 72.45 | |
Granted (in dollars per share) | $ / shares | 103.15 | |
Exercised (in dollars per share) | $ / shares | 57.52 | |
Expired or forfeited (in dollars per share) | $ / shares | 95.76 | |
Outstanding at end of period (in dollars per share) | $ / shares | 75.65 | $ 72.45 |
Exercisable (in dollars per share) | $ / shares | $ 58.75 | |
Wtd. Average Remaining Contractual Life (in years) | ||
Outstanding | 7 years | 7 years 6 months |
Exercisable at end of period | 5 years 10 months 24 days | |
Intrinsic Value (millions) | ||
Outstanding | $ | $ 125.3 | $ 188.3 |
Exercisable at end of period | $ | $ 108.4 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Awards and Units (Details) - RSAs and RSUs - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Awards | ||
Outstanding at beginning of period (in shares) | 632,436 | |
Granted (in shares) | 401,095 | |
Forfeited (in shares) | (41,780) | |
Vested (in shares) | (257,787) | |
Outstanding at end of period (in shares) | 733,964 | |
Wtd. Average Grant-Date Fair Value | ||
Outstanding at beginning of period (in dollars per share) | $ 91.07 | |
Granted (in dollars per share) | 96.39 | |
Forfeited (in dollars per share) | 91.46 | |
Vested (in dollars per share) | 81.53 | |
Outstanding at end of period (in dollars per share) | $ 97.31 | |
Intrinsic Value | ||
Outstanding | $ 74.5 | $ 70.3 |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Employee Stock Purchase Plan | ||||
Compensation expense | $ 19,343 | $ 11,244 | $ 50,613 | $ 30,407 |
Employee Stock Purchase Plan | ||||
Employee Stock Purchase Plan | ||||
Offering period increments | 6 months | |||
Compensation expense | $ 4,600 | $ 3,000 | ||
Shares issued | 396,775 | |||
Shares reserved | 2,603,225 | 2,603,225 | ||
Employee Stock Purchase Plan | Maximum | ||||
Employee Stock Purchase Plan | ||||
Payroll deduction, as a percentage of base wages, an employee may authorize to be applied toward the purchase of common stock under the ESPP | 15.00% | |||
Percentage of discount on the purchase price of common stock during the offering period under the ESPP | 15.00% |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stock-based compensation | ||||
Total stock-based compensation expense | $ 19,343 | $ 11,244 | $ 50,613 | $ 30,407 |
Direct costs | ||||
Stock-based compensation | ||||
Total stock-based compensation expense | 4,824 | 3,685 | 11,873 | 9,780 |
Selling, general and administrative | ||||
Stock-based compensation | ||||
Total stock-based compensation expense | $ 14,519 | $ 7,559 | $ 38,740 | $ 20,627 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 20.30% | 25.10% |
U.S. statutory rate | 21.00% |
Derivatives - Hedging Instrumen
Derivatives - Hedging Instruments (Details) - Interest rate swap - Designated as hedging instruments - USD ($) | Sep. 30, 2020 | Sep. 06, 2020 | Dec. 31, 2019 |
Notional and Fair Value of Derivatives | |||
Notional amount | $ 250,000,000 | ||
Level 2 | |||
Notional and Fair Value of Derivatives | |||
Notional amount | $ 375,000,000 | $ 625,000,000 | |
Liability | (1,395,000) | (2,976,000) | |
Level 2 | Accrued expenses and other current liabilities | |||
Notional and Fair Value of Derivatives | |||
Notional amount | 375,000,000 | 625,000,000 | |
Liability | $ (1,395,000) | $ (2,976,000) |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - Interest rate swap - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 06, 2020 | |
Designated as hedging instruments | ||
Derivative [Line Items] | ||
Notional amount | $ 250,000,000 | |
Cash flow hedging | ||
Derivative [Line Items] | ||
Unrealized losses expected to be reclassified out of accumulated other comprehensive loss into interest expense over the next 12 months | $ 1,400,000 |
Derivatives - Cash Flow Hedging
Derivatives - Cash Flow Hedging Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Effect of derivatives on the consolidated statements of operations and comprehensive income (loss) | ||||
Interest expense, net | $ (10,721) | $ (12,974) | $ (36,102) | $ (37,834) |
Cash flow hedging | Interest rate swap | ||||
Effect of derivatives on the consolidated statements of operations and comprehensive income (loss) | ||||
Amount of pre-tax loss recognized in other comprehensive income (loss) | (21) | (266) | (5,092) | (6,190) |
Amount of loss reclassified from accumulated other comprehensive loss into interest expense, net | $ (4,356) | $ (1,611) | $ (11,232) | $ (4,028) |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Components (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Balance at beginning of period | $ 1,089,991 |
Other comprehensive income (loss) before reclassifications | (1,583) |
Reclassification adjustments | 8,133 |
Balance at end of period | 1,325,266 |
Total | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Balance at beginning of period | (160,108) |
Balance at end of period | (153,558) |
Foreign Currency Translation, Net of Tax | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Balance at beginning of period | (149,342) |
Other comprehensive income (loss) before reclassifications | 2,076 |
Reclassification adjustments | 0 |
Balance at end of period | (147,266) |
Derivative Instruments, Net of Tax | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | |
Balance at beginning of period | (10,766) |
Other comprehensive income (loss) before reclassifications | (3,659) |
Reclassification adjustments | 8,133 |
Balance at end of period | $ (6,292) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Narrative (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Increase (decrease) in other comprehensive loss before reclassifications | $ 1,583 |
Foreign currency translation | GBP | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Change in valuation of U.S. Dollar during the period | (2.40%) |
Increase (decrease) in other comprehensive loss before reclassifications | $ 5,800 |
Foreign currency translation | CAD | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Change in valuation of U.S. Dollar during the period | (2.60%) |
Increase (decrease) in other comprehensive loss before reclassifications | $ 1,100 |
Foreign currency translation | RUB | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Change in valuation of U.S. Dollar during the period | (20.70%) |
Increase (decrease) in other comprehensive loss before reclassifications | $ 7,200 |
Foreign currency translation | EUR | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Change in valuation of U.S. Dollar during the period | 4.50% |
Increase (decrease) in other comprehensive loss before reclassifications | $ (17,400) |
Net Income Per Share (Details)
Net Income Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Reconciliation of basic to diluted weighted average shares outstanding | ||||
Basic weighted average common shares outstanding | 63,447 | 64,771 | 63,184 | 65,096 |
Effect of dilutive stock options and other awards under share-based compensation programs (in shares) | 1,427 | 1,442 | 1,374 | 1,511 |
Diluted weighted average common shares outstanding | 64,874 | 66,213 | 64,558 | 66,607 |
Anti-dilutive shares | 2,467 | 2,150 | 2,450 | 1,914 |
Segments - Segment Reporting In
Segments - Segment Reporting Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Reportable segments | segment | 2 | |||
Revenue | $ 796,307 | $ 780,691 | $ 2,309,907 | $ 2,266,022 |
Selling, general and administrative expenses | 115,409 | 95,542 | 332,346 | 291,439 |
Transaction-related costs | (45,074) | 572 | (44,465) | 572 |
Depreciation and amortization expense | 33,315 | 29,264 | 98,078 | 85,462 |
Loss on disposal of fixed assets, net | 32 | 256 | 207 | 900 |
Income from operations | 124,160 | 95,788 | 230,966 | 262,526 |
Interest expense, net | (10,721) | (12,974) | (36,102) | (37,834) |
Loss on modification or extinguishment of debt | 0 | (1,855) | 0 | (1,855) |
Foreign currency (losses) gains, net | (9,128) | 5,408 | (12,036) | 1,864 |
Other (expense) income, net | (1) | 15 | (1) | (66) |
Income before income taxes | 104,310 | 86,382 | 182,827 | 224,635 |
Direct costs (exclusive of depreciation and amortization) | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenues | 412,076 | 389,304 | 1,211,278 | 1,153,441 |
Reimbursable expenses | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenues | 156,389 | 169,965 | 481,497 | 471,682 |
Clinical Research | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 732,126 | 719,005 | 2,125,510 | 2,087,863 |
Data Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 64,181 | 61,686 | 184,397 | 178,159 |
Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 796,307 | 780,691 | 2,309,907 | 2,266,022 |
Segment profit | 227,842 | 221,422 | 617,132 | 640,899 |
Operating segments | Direct costs (exclusive of depreciation and amortization) | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenues | 412,076 | 389,304 | 1,211,278 | 1,153,441 |
Operating segments | Reimbursable expenses | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenues | 156,389 | 169,965 | 481,497 | 471,682 |
Operating segments | Clinical Research | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 732,126 | 719,005 | 2,125,510 | 2,087,863 |
Segment profit | 211,186 | 206,345 | 577,991 | 593,852 |
Operating segments | Clinical Research | Direct costs (exclusive of depreciation and amortization) | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenues | 364,558 | 342,695 | 1,066,150 | 1,022,329 |
Operating segments | Clinical Research | Reimbursable expenses | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenues | 156,382 | 169,965 | 481,369 | 471,682 |
Operating segments | Data Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 64,181 | 61,686 | 184,397 | 178,159 |
Segment profit | 16,656 | 15,077 | 39,141 | 47,047 |
Operating segments | Data Solutions | Direct costs (exclusive of depreciation and amortization) | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenues | 47,518 | 46,609 | 145,128 | 131,112 |
Operating segments | Data Solutions | Reimbursable expenses | ||||
Segment Reporting Information [Line Items] | ||||
Cost of revenues | 7 | 0 | 128 | 0 |
Segment Reconciling Items | ||||
Segment Reporting Information [Line Items] | ||||
Selling, general and administrative expenses | 115,409 | 95,542 | 332,346 | 291,439 |
Transaction-related costs | (45,074) | 572 | (44,465) | 572 |
Depreciation and amortization expense | 33,315 | 29,264 | 98,078 | 85,462 |
Loss on disposal of fixed assets, net | 32 | 256 | 207 | 900 |
Income from operations | 124,160 | 95,788 | 230,966 | 262,526 |
Interest expense, net | (10,721) | (12,974) | (36,102) | (37,834) |
Loss on modification or extinguishment of debt | 0 | (1,855) | 0 | (1,855) |
Foreign currency (losses) gains, net | (9,128) | 5,408 | (12,036) | 1,864 |
Other (expense) income, net | $ (1) | $ 15 | $ (1) | $ (66) |
Segments - Segment Revenue by G
Segments - Segment Revenue by Geographic Location (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | $ 796,307 | $ 780,691 | $ 2,309,907 | $ 2,266,022 |
Total Americas | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 540,743 | 541,037 | 1,586,082 | 1,583,771 |
United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 535,641 | 528,782 | 1,565,361 | 1,546,503 |
Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 5,102 | 12,255 | 20,721 | 37,268 |
Europe, Africa, and Asia-Pacific | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 255,564 | 239,654 | 723,825 | 682,251 |
United Kingdom | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 213,567 | 191,994 | 607,305 | 551,460 |
Netherlands | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 23,889 | 30,144 | 63,000 | 82,839 |
Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 18,108 | 17,516 | 53,520 | 47,952 |
Clinical Research | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 732,126 | 719,005 | 2,125,510 | 2,087,863 |
Clinical Research | Total Americas | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 476,562 | 479,351 | 1,401,685 | 1,405,612 |
Clinical Research | United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 471,460 | 467,096 | 1,380,964 | 1,368,344 |
Clinical Research | Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 5,102 | 12,255 | 20,721 | 37,268 |
Clinical Research | Europe, Africa, and Asia-Pacific | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 255,564 | 239,654 | 723,825 | 682,251 |
Clinical Research | United Kingdom | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 213,567 | 191,994 | 607,305 | 551,460 |
Clinical Research | Netherlands | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 23,889 | 30,144 | 63,000 | 82,839 |
Clinical Research | Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 18,108 | 17,516 | 53,520 | 47,952 |
Data Solutions | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 64,181 | 61,686 | 184,397 | 178,159 |
Data Solutions | Total Americas | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 64,181 | 61,686 | 184,397 | 178,159 |
Data Solutions | United States | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 64,181 | 61,686 | 184,397 | 178,159 |
Data Solutions | Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Data Solutions | Europe, Africa, and Asia-Pacific | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Data Solutions | United Kingdom | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Data Solutions | Netherlands | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Data Solutions | Other | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Uncategorized Items - prah-2020
Label | Element | Value |
Accounting Standards Update [Extensible List] | us-gaap_AccountingStandardsUpdateExtensibleList | us-gaap:AccountingStandardsUpdate201802Member |