What changed in this filing

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Item 1. Financial Statements

2024-05-07 compared with 2023-11-08 · 184 added, 260 removed, 473 unchanged (48% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) SEPTEMBER 30,

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) MARCH 31,

2024 DECEMBER 31,

3 unchanged sentences

80,949 84,857

Restricted cash — 3,102

Prepaid expenses and other current assets 22,732 20,393

26 unchanged sentences

Stockholders' equity

Preferred shares, $ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Common shares, $ 0.01 par value, 600,000,000 shares authorized, 160,279,919 and 159,676,150 shares issued as of September 30, 2023 and December 31, 2022, respectively;

159,848,766 and 159,525,943 shares outstanding as of September 30, 2023 and December 31, 2022, respectively

Preferred shares, $ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Common shares, $ 0.01 par value, 600,000,000 shares authorized, 160,687,886 and 160,284,901 shares issued as of March 31, 2024 and December 31, 2023, respectively;

160,191,094 and 159,848,286 shares outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,191,237 1,178,461

1 unchanged sentence

Accumulated other comprehensive loss ( 7,036 ) ( 7,593 )

Treasury stock at cost, 431,153 and 150,207 shares at September 30, 2023 and December 31, 2022, respectively

Treasury stock at cost, 496,792 and 436,615 shares at March 31, 2024 and December 31, 2023, respectively

( 10,537 ) ( 9,401 )

6 unchanged sentences

AND COMPREHENSIVE INCOME (LOSS)

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

THREE MONTHS ENDED MARCH 31,

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) 2024 2023

7 unchanged sentences

Depreciation and amortization expense 432 411

Goodwill impairment expense 46,984 — 46,984 —

Total operating expenses 58,686 48,007

8 unchanged sentences

Other comprehensive income (loss):

Foreign currency translation adjustment ( 4,658 ) ( 9,489 ) ( 242 ) ( 20,193 )

Foreign currency translation adjustment, net of tax of $ 60 , $( 182 ), respectively

Change in fair value from interest rate swap, net of tax of $ 186 , $( 588 ), respectively

564 ( 1,691 )

Total other comprehensive income (loss) ( 4,541 ) ( 4,210 ) 516 ( 14,002 )

Comprehensive loss $ ( 53,506 ) $ ( 274 ) $ ( 42,385 ) $ ( 8,445 )

Total other comprehensive income 557 910

Comprehensive income (loss) $ ( 4,126 ) $ 2,268

Net income (loss) per share attributable to common stockholders:

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SHARES AMOUNT SHARES AMOUNT

Balance as of June 30, 2022 159,991,357 $ 1,600 $ 1,136,831 $ ( 73,983 ) $ ( 13,718 ) ( 108,995 ) $ ( 2,349 ) $ 1,048,381

Equity-based compensation awards 6,804 — — 6,804

Common shares issued for share-based compensation awards and shares withheld for tax 94,091 — 1 ( 31,549 ) ( 515 ) ( 514 )

Restricted stock forfeiture ( 163,634 ) ( 1 ) 2 — — — — 1

Change in fair value from interest rate swap, net of tax 5,279 — — 5,279

Net income 3,936 — — 3,936

Foreign currency translation adjustment ( 9,489 ) — — ( 9,489 )

Balance as of September 30, 2022 159,921,814 $ 1,599 $ 1,143,638 $ ( 70,047 ) $ ( 17,928 ) ( 140,544 ) $ ( 2,864 ) $ 1,054,398

Balance as of December 31, 2022 159,676,150 $ 1,596 $ 1,150,168 $ ( 60,873 ) $ ( 8,230 ) ( 150,207 ) $ ( 3,000 ) $ 1,079,661

Equity-based compensation awards — — 23,818 — — — — 23,818

Common shares issued for share-based compensation awards and shares withheld for tax 425,400 4 ( 3 ) — — ( 139,444 ) ( 2,826 ) ( 2,825 )

Restricted stock forfeiture ( 163,634 ) ( 1 ) 2 1

Change in fair value from interest rate swap, net of tax — — — — 6,191 — — 6,191

Net income — — — 5,557 — — 5,557

Foreign currency translation adjustment — — — — ( 20,193 ) — — ( 20,193 )

Balance as of September 30, 2022 159,921,814 $ 1,599 $ 1,143,638 $ ( 70,047 ) $ ( 17,928 ) ( 140,544 ) $ ( 2,864 ) $ 1,054,398

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

CERTARA, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(IN THOUSANDS,

EXCEPT SHARE DATA) COMMON STOCK ADDITIONAL

CAPITAL ACCUMULATED

DEFICIT ACCUMULATED

COMPREHENSIVE

LOSS TREASURY STOCK TOTAL

STOCKHOLDERS'

SHARES AMOUNT SHARES AMOUNT

Balance as of June 30, 2023 160,171,493 $ 1,601 $ 1,162,317 $ ( 54,809 ) $ ( 3,173 ) ( 394,209 ) $ ( 8,762 ) $ 1,097,174

Equity-based compensation expense, net of forfeiture — — 8,543 — — — — 8,543

2 unchanged sentences

Change in fair value from interest rate swap, net of tax — — — — ( 1,691 ) — — ( 1,691 )

Net loss — — — ( 48,965 ) — — — ( 48,965 )

Net income — — — 1,358 — — — 1,358

Foreign currency translation adjustment, net of tax — — — — 2,601 — — 2,601

Balance as of September 30, 2023 160,279,919 $ 1,602 $ 1,170,960 $ ( 103,774 ) $ ( 7,714 ) ( 431,153 ) $ ( 9,323 ) $ 1,051,751

Balance as of March 31, 2023 160,218,109 $ 1,601 $ 1,158,708 $ ( 59,515 ) $ ( 7,320 ) ( 378,366 ) $ ( 8,419 ) $ 1,085,055

Balance as of December 31, 2023 160,284,901 $ 1,603 $ 1,178,461 $ ( 116,230 ) $ ( 7,593 ) ( 436,615 ) $ ( 9,401 ) $ 1,046,840

Equity-based compensation expense, net of forfeiture — — 9,073 — — — — 9,073

Common shares issued for share-based compensation awards and shares withheld for tax 805,607 8 ( 8 ) — — ( 280,946 ) ( 6,323 ) ( 6,323 )

Restricted stock forfeiture* ( 201,838 ) ( 2 ) 2 — — — — —

Common stock withheld for tax liabilities — — — — — ( 60,177 ) ( 1,136 ) ( 1,136 )

Common shares issued for employee share-based compensation 188,293 2 ( 2 ) — — — — —

Common shares issued for contingent consideration 214,692 2 3,705 — — — — 3,707

Change in fair value from interest rate swap, net of tax — — — — 564 — — 564

1 unchanged sentence

Foreign currency translation adjustment, net of tax — — — — ( 7 ) — — ( 7 )

Balance as of September 30, 2023 160,279,919 $ 1,602 $ 1,170,960 $ ( 103,774 ) $ ( 7,714 ) ( 431,153 ) $ ( 9,323 ) $ 1,051,751

• Legal forfeiture 66,220 shares occurred in Q1 2023;

and the accounting forfeiture occurred in Q3 2022.

Balance as of March 31, 2024 160,687,886 $ 1,607 $ 1,191,237 $ ( 120,913 ) $ ( 7,036 ) ( 496,792 ) $ ( 10,537 ) $ 1,054,358

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30,

THREE MONTHS ENDED MARCH 31,

(IN THOUSANDS) 2024 2023

5 unchanged sentences

Amortization of debt issuance costs 380 383

Provision for credit losses 52 468

(Recovery of) provision for credit losses 59 ( 168 )

Loss on retirement of assets — 4

1 unchanged sentence

Change in fair value of contingent considerations 2,878 1,261

Goodwill impairment 46,984 —

Lease abandonment expense 29 —

3 unchanged sentences

Prepaid expenses and other assets ( 578 ) 559

Accounts payable and accrued expenses ( 1,558 ) ( 3,404 )

Deferred revenue ( 6,978 ) ( 1,727 )

Other liabilities ( 293 ) ( 1,299 )

Accounts payable, accrued expenses, and other liabilities ( 14,825 ) ( 13,596 )

Deferred revenues ( 3,271 ) ( 1,034 )

Net cash provided by operating activities 4,296 9,957

1 unchanged sentence

Capital expenditures ( 619 ) ( 317 )

Capitalized development costs ( 10,000 ) ( 8,106 )

Capitalized software development costs ( 2,959 ) ( 2,360 )

Investment in intangible assets — ( 54 )

Business acquisitions, net of cash acquired ( 7,550 ) ( 5,883 )

Net cash used in investing activities ( 3,578 ) ( 2,731 )

1 unchanged sentence

Payments on long-term debt and finance lease obligations ( 755 ) ( 780 )

Payments on financing component of interest rate swap — ( 1,085 )

Payments for business acquisition related contingent consideration ( 8,649 ) —

Payment of taxes on shares withheld for employee taxes ( 943 ) ( 70 )

1 unchanged sentence

Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash ( 546 ) 1,174

Net increase in cash and cash equivalents, and restricted cash 32,624 27,159

Net (decrease) increase in cash and cash equivalents, and restricted cash ( 10,175 ) 7,550

Cash and cash equivalents, and restricted cash, at beginning of period 234,951 239,688

3 unchanged sentences

Cash paid for taxes $ 3,640 $ 517

Supplemental schedule of non-cash investing and financing activities

Contingent liabilities established in connection with business acquisition $ 790 $ —

Supplemental schedule of noncash investing and financing activities

Issuance of common stock for business acquisition related contingent consideration $ 3,707 $ —

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

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When combined, these solutions allow the Company to offer customers end-to-end support across the entire product life cycle.

The Company has operations in the United States, Australia, Canada, China, France, Germany, India, Italy, Japan, Luxembourg, Netherlands, Philippines, Poland, Portugal, Spain, Switzerland, Egypt, and the United Kingdom.

The Company has operations in the United States, Australia, Brazil, Canada, China, Egypt, France, Germany, India, Italy, Japan, Korea, Luxembourg, Netherlands, Philippines, Poland, Portugal, Spain, Switzerland, and the United Kingdom.

Summary of Significant Accounting Policies

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(a) Basis of Presentation and Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

The preparation of condensed consolidated financial statements in conformity with U.S.

generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

2 unchanged sentences

(b) Unaudited Interim Financial Statements

The accompanying condensed consolidated balance sheet as of September 30, 2023, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023 and 2022, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022, and the related interim disclosures are unaudited.

The accompanying condensed consolidated balance sheet as of March 31, 2024, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2024 and 2023, the condensed consolidated statements of stockholders’ equity for the three months ended March 31,

2024 and 2023, the condensed consolidated statements of cash flows for the three months ended March 31, 2024 and 2023, and the related interim disclosures are unaudited.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S.

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In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, “Common Control Arrangements (Topic 842),” which provide private companies and not-for-profit organizations that are not conduit bond obligors with a practical expedient to use the written terms and conditions of a common control arrangement to determine whether a lease exists and, if so, the classification of and accounting for that lease.

In addition, the ASU requires all entities including public companies to amortize leasehold improvements associated with common control leases over the useful life to the common control group.

This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The Company is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” The ASU requires an enhanced disclosure of significant segment expenses on an annual and interim basis.

This ASU will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this ASU on the disclosures in our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures".

The ASU requires disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions.

The ASU will be effective for public business entities for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact of this ASU on the disclosures in our consolidated financial statements.

(d) Principles of Consolidation

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These techniques incorporate Level 1 and Level 2 inputs.

The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s

term, notional amount, discount rate and credit risk.

The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s term, notional amount, discount rate and credit risk.

Significant inputs to the derivative instrument valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy.

Contingent liabilities related to acquisitions are measured at fair value using Level 3 unobservable inputs.

The Company's estimates of fair value are based upon assumptions believed to be reasonable, but that are uncertain and involve significant judgments by management.

The Company's estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments by management.

Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss).

To estimate the fair value of the contingent consideration liability for Vyasa Analytics, LLC ( " Vyasa"), management utilized a Monte Carlo simulation model to value the earn-outs based on the likelihood of reaching certain eligible revenue thresholds.

To measure the fair value of the contingent consideration liability for the Drug Interaction Database ("DIDB"), management initially utilized present value discounted based on a multiple of eligible revenue over two separate measurement periods.

Significant inputs used in the fair value measurement of contingent consideration is the amount and timing of the acquired entity’s eligible revenue over certain periods subsequent to the acquisition date.

At the acquisition date, the fair value of the contingent consideration liabilities was $ 19,813 and $ 790 for the Vyasa acquisition and DIDB, respectively.

The following table sets forth the assets and liabilities that were measured at fair value on a recurring basis by their levels in the fair value hierarchy at September 30, 2023:

The Company utilizes Monte Carlo or a series of Black-Scholes-Merton options models to estimate the fair value of the contingent consideration liabilities of business acquisitions.

Significant inputs used in the fair value measurement of contingent consideration include:

expected eligible revenue for the acquired businesses over the relevant measurement periods, the risk-profile of the expected eligible revenue for the acquired businesses, the uncertainty regarding the expected eligible revenue for the acquired businesses, the risk-free rate of return, the expected timing at which settlement of the contingent liabilities may occur, and the credit-adjusted discount rate associated with the risk of the Company’s future liability payments.

The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at March 31, 2024:

LEVEL 1 LEVEL2 LEVEL 3 TOTAL

5 unchanged sentences

Total liabilities $ — $ — $ 44,982 $ 44,982

The following table sets forth the assets and liabilities that were measured at fair value on a recurring basis by their levels in the fair value hierarchy at December 31, 2022:

The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2023:

LEVEL 1 LEVEL2 LEVEL 3 TOTAL

5 unchanged sentences

Total liabilities $ — $ — $ 54,457 $ 54,457

For the period ended September 30, 2023, there were no transfers between the levels within the fair value hierarchy.

The Company’s Level 3 liabilities that were measured at fair value on a recurring basis are acquisition related contingent consideration liabilities.

For the period ended March 31, 2024, there were no transfers between the levels within the fair value hierarchy.

The Company’s Level 3 liabilities are acquisition related contingent consideration liabilities.

The following table summarizes the Level 3 activity of the changes in the contingent consideration liability.

SEPTEMBER 30,

(In thousands)

Beginning balance at December 31, 2023

Additions 790

Change in fair value 11,316

Ending balance at September 30, 2023

Non-Recurring Fair Value Measurements:

Certain assets are measured at fair value on a non-recurring basis.

These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments when events or circumstances indicate a significant adverse effect on the fair value of the asset.

During the third quarter of 2023, the Company performed an interim goodwill impairment test for its Regulatory and Writing business reporting unit.

It was determined that the fair value of the reporting unit was less than its carrying value, resulting in the recording of a $ 46,984 goodwill impairment charge and a corresponding reduction in the goodwill carrying amount for the reporting unit.

Payments ( 12,356 )

Fair value remeasurement 2,881

Ending balance at March 31, 2024

For more information regarding fair value measurements and the fair value hierarchy, see Note 2.

“Summary of Significant Accounting Policies” in the notes to the consolidated financial statements in the Company’s 2023 Annual Report.

(f) Cash and Cash Equivalents, and Restricted Cash

(f) Cash and Cash Equivalents

Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased.

Restricted cash represents cash that is reserved for unexpended restricted grant funds and for a Company's credit card program.

The restricted cash balance was $ 0 and $ 3,102 at September 30, 2023 and December 31, 2022, respectively.

The following table provides a reconciliation of cash and cash equivalents and restricted cash to the amounts presented in the condensed consolidated statements of cash flows:

SEPTEMBER 30,

2023 DECEMBER 31,

(In thousands)

Cash and cash equivalents $ 272,312 $ 236,586

Restricted cash, current — 3,102

Total cash and cash equivalents and restricted cash $ 272,312 $ 239,688

The cash and cash equivalents was $ 224,776 and $ 234,951 at March 31, 2024 and December 31, 2023, respectively.

(g) Accounts Receivable

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Unbilled receivables relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts.

Unbilled receivables are billed and transferred to customer accounts receivable when the rights become unconditional.

Unbilled receivables are billed and

transferred to customer accounts receivable when the rights become unconditional.

The carrying amount of accounts receivable is reduced by a valuation allowance.

1 unchanged sentence

The Company generally writes off a receivable or records a specific allowance for credit losses if the Company determines that the receivable is not collectible.

Allowances for credit losses of $ 678 and $ 1,250 were provided in the accompanying condensed consolidated financial statements as of September 30, 2023 and December 31, 2022, respectively.

Allowances for credit losses of $ 1,341 and $ 1,312 were provided in the accompanying condensed consolidated financial statements as of March 31, 2024 and December 31, 2023, respectively.

Accounts receivable consists of the following:

SEPTEMBER 30,

2024 DECEMBER 31,

6 unchanged sentences

The following table presents the information regarding the allowance of accounts receivable:

SEPTEMBER 30,

2024 DECEMBER 31,

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The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements.

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

Interest rate swaps designated as cash flow hedges involve the

receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The Company entered into an interest rate swap agreement in May 2022 that pays a fixed interest rate and receives a variable interest rate to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes.

The swap agreement has a notional amount of $ 230,000 , a fixed rate of 2.8 % and a termination date of August 31, 2025.

During the quarter ended at September 30, 2023, the Company and the counter party amended the floating rate of the swap agreement from term LIBOR to term SOFR due to LIBOR cessation.

At September 30, 2023 and December 31, 2022, the interest swap had a fair value of $ 9,344 and $ 8,374 , respectively.

The fair value recognized in accumulated other comprehensive income was $ 9,344 and $ 8,374 , respectively, at September 30, 2023 and December 31, 2022.

During the quarter ended September 30, 2023, the Company and the counter party amended the floating rate of the swap agreement from term LIBOR to term SOFR due to LIBOR cessation.

At March 31, 2024 and December 31, 2023, the interest swap had a fair value of $ 6,374 and $ 5,624 , respectively;

The gross fair value recognized in accumulated other comprehensive income was $ 6,374 and $ 5,624 , respectively, at March 31, 2024 and December 31, 2023.

The Company uses derivatives to manage certain interest exposures and designated all the derivatives as cash flow hedges.

2 unchanged sentences

Those amounts are reclassified into interest expense in the same period during which the hedged transactions impact earnings.

The amount of derivative gains reclassified from accumulated other comprehensive income on this derivative instrument recognized in the Company’s condensed consolidated statements of operations and comprehensive income (loss) was $ 1,489 , $( 355 ), $ 3,751 , and $( 700 ) for the three and nine months ended September 30, 2023 and 2022, respectively.

The notional amounts, fair values, and classification of derivative instruments in the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 were as follows:

The amount of derivative gains reclassified from accumulated other comprehensive income on derivative instruments recognized in the Company’s condensed consolidated statements of operations and comprehensive income (loss) was $ 1,525 and $ 986 for the three months ended March 31, 2024 and 2023, respectively.

The notional amounts, fair values, and classification of derivative instruments in the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 were as follows:

Interest rate swap derivative designated as cash flow hedging instrument:

SEPTEMBER 30,

2024 DECEMBER 31,

3 unchanged sentences

Other long-term assets $ 1,341 $ 1,151

The net amount of deferred gains related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive gains into earnings over the next twelve months is $ 5,888 .

The goodwill impairment test is performed at least annually at the reporting unit level.

An interim test is performed when events or circumstances occur that may indicate that it is more likely than not that the fair value of any reporting unit may be less than its carrying value.

During the third quarter of 2023, the Company performed interim goodwill impairment tests for Regulatory Writing reporting unit.

The fair value of Regulatory Writing reporting unit was determined to be less than its carrying value, resulting in a goodwill impairment charge of $ 46,984 for the reporting unit.

The fair value of that reporting unit was estimated using a combination of the discounted cash flow method and the guideline public company method.

The decline in the fair value of the Regulatory Writing reporting unit was driven by revised revenue growth and profitability forecasts resulting from certain reductions in our financial planning assumptions.

These reductions were primarily attributable to a decrease in demand from certain customer groups for the legacy reporting unit.

The changes in the carrying amount of goodwill for the period ended September 30, 2023 are as follows.

Balance as of December 31, 2022 $ 717,743

Goodwill acquired in connection with acquisition 2,306

Foreign currency translation 94

Impairment expense ( 46,984 )

Balance as of September 30, 2023 $ 673,159

(j) Revenue Recognition

(i) Revenue Recognition

In accordance with ASC Topic 606, “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps:

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The delivery of a particular type of software and each of the user licenses would be one performance obligation.

Additionally, any training, implementation, or support and maintenance promises sold as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses.

Additionally, any training, implementation,

or support and maintenance promises sold as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses.

The payment terms in these arrangements are less than one year such that there is no significant financing component.

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The portion of deferred revenue that will be recognized within 12 months is recorded as current deferred revenue, and the remaining portion is recorded as deferred revenue in the condensed consolidated balance sheets.

Contract balances at September 30, 2023 and December 31, 2022 were as follows:

SEPTEMBER 30,

Contract balances at March 31, 2024 and December 31, 2023 were as follows:

2024 DECEMBER 31,

2 unchanged sentences

Contract liabilities 58,238 61,748

During the nine months ended at September 30, 2023, the Company recognized revenue of $ 47,230 related to contract liabilities at December 31, 2022.

The unsatisfied performance obligations as of September 30, 2023, were approximately $ 118,704 .

During the three months ended March 31, 2024, the Company recognized revenue of $ 29,351 related to contract liabilities at December 31, 2023.

The unsatisfied performance obligations as of March 31, 2024 were approximately $ 115,418 .

We expect to recognize approximately $ 102,229 or 88.6 % of this revenue over the next 12 months and the remainder thereafter.

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Amortization of capitalized costs is included in sales and marketing expenses in our condensed consolidated statements of operations and comprehensive income (loss).

Capitalized contract acquisition costs were $ 654 and $ 981 as of September 30, 2023 , and December 31, 2022, respectively, and were included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

Capitalized contract acquisition costs were $ 597 and $ 655 as of March 31, 2024 and December 31, 2023, respectively, and were included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

Grant Revenue

6 unchanged sentences

The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows:

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

2023 2022 2023 2022

(In thousands)

THREE MONTHS ENDED MARCH 31,

Software licenses transferred at a point in time $ 15,380 $ 14,498

2 unchanged sentences

Total $ 96,654 $ 90,301

(k) Earnings per Share

(j) Earnings per Share

Basic earnings per common share is computed by dividing the net earnings by the weighted-average number of shares outstanding during the reporting period, without consideration for potentially dilutive securities.

Diluted earnings per share

is computed by dividing the net earnings attributable to stockholders by the weighted-average number of shares and dilutive securities outstanding during the period.

Public Offerings and Other significant Shareholder Transactions

On December 11, 2020, the Company completed its initial public offering (“IPO”), pursuant to which the Company issued and sold 14,630,000 shares of common stock and certain selling stockholders, including former controlling shareholder, EQT AB (“EQT”), sold 18,783,250 shares of our common stock (representing the full exercise of the underwriters’ option to purchase additional shares), at a public offering price of $ 23.00 per share.

The Company received net proceeds of $ 316,301 , after deducting underwriters’ discounts and commissions.

In addition, $ 4,408 of legal, accounting and other offering costs, net of the tax effect of $ 259 , were incurred in connection with the sale of the Company's common stock in the IPO, were capitalized and offset against the proceeds received in the IPO.

The Company was party to a registration rights agreement with EQT and its affiliates, Arsenal Capital Partners (“Arsenal”), and certain other stockholders, dated December 8, 2020.

That agreement was terminated following the sale of all of EQT’s 29,954,521 common shares in the Company to Arsenal on December 8, 2022 (the “Arsenal Transaction”).

Arsenal and the Company entered into a new registration rights agreement, dated November 3, 2022 (the “Registration Rights Agreement”), which contains provisions that entitle Arsenal to certain rights to have their securities registered by the Company under the Securities Act.

While the Registration Rights Agreement is in effect, Arsenal is entitled to (i) four “demand” registrations, (ii) one underwritten offering in any consecutive 90-day period, and (iii) two underwritten offerings in any consecutive 360-day period, subject in each case to certain limitations.

In addition, the Registration Rights Agreement provides that the Company will share certain expenses of Arsenal relating to such registrations and indemnify Arsenal against certain liabilities that may arise under the Securities Act.

In connection with the Arsenal Transaction, the Company also entered into a letter agreement, effective December 8, 2022, with Arsenal providing that, subject to certain exceptions, Arsenal is prohibited from transferring the shares from EQT until December 8, 2024.

Also in connection with the Arsenal Transaction, the Company entered into a stockholders agreement with Arsenal, effective December 8, 2022, which, among other things, grants certain conditional rights to Arsenal to nominate up to two directors to our Board.

On August 11, 2022, the Company completed a secondary public offering in which certain selling stockholders, including EQT, sold 7,000,000 shares of the Company’s common stock.

The Company did not offer any common stock in this transaction and did not receive any proceeds from the sale of the shares of common stock by the selling stockholders.

The Company incurred costs of $ 596 , recorded in general and administrative expenses, in relation to the secondary public offering.

Diluted shares are calculated under the treasury stock method.

Diluted earnings per share is calculated by dividing the net earnings attributable to stockholders by the weighted-average number of shares and dilutive securities outstanding during the period.

Concentrations of Credit Risk

1 unchanged sentence

The Company invests available cash in bank deposits, investment-grade securities, and short-term interest-producing investments, including government obligations and other money market instruments.

At September 30, 2023 and December 31, 2022, the investments were bank deposits, overnight sweep accounts, and money market funds.

At March 31, 2024 and December 31, 2023, the investments were bank deposits, overnight sweep accounts, and money market funds.

The Company has adopted credit policies and standards to evaluate the risk associated with sales that require collateral, such as letters of credit or bank guarantees, whenever deemed necessary.

Management believes that any risk of loss is significantly reduced due to the nature of the customers and distributors with which the Company does business..

As of September 30, 2023 and December 31, 2022, no single customer accounted for more than 10% of the Company’s accounts receivable.

No single customer accounted for more than 10% of the Company’s revenues during the nine months ended September 30, 2023 and 2022.

Acquisitions have been accounted for by using the acquisition method of accounting pursuant to FASB ASC 805, “Business Combinations.” Amounts allocated to the purchased assets and liabilities assumed are based upon the total purchase price and the estimated fair values of such assets and liabilities on the effective date of the purchase as determined

by an independent third party.

The results of operations have been included in the Company’s results of operations prospectively from the date of acquisition.

Since its inception, and as of September 30, 2023, the Company has completed 18 acquisitions, of which 13 have included software or technology.

As of March 31, 2024 and December 31, 2023, no single customer accounted for more than 10% of the Company’s accounts receivable.

No single customer accounted for more than 10% of the Company’s revenues during the three months ended March 31, 2024 and 2023.

Business Combinations

The results of operations for the acquisitions have been included in the Company’s results of operations prospectively from the date of acquisition.

Since 2013, and as of March 31, 2024, the Company has completed 20 acquisitions, of which 13 have included software or technology.

Details of acquisitions that have closed since the beginning of fiscal year 2023 are provided below.

Integrated Nonclinical Development Solutions, Inc.

On January 3, 2022, the Company completed the acquisition of Integrated Nonclinical Development Solutions, Inc.

(“INDS”), a company that provides the SEND Explorer software and drug development consulting for a total consideration of $ 8,048 .

The business combination was not significant to the Company’s condensed consolidated financial statements.

Based on the Company’s purchase price allocation, approximately $ 2,380 , $ 1,040 , $ 100 , and $ 2,910 of the purchase price were assigned to customer relationships, developed technology, non-compete agreements, and goodwill, respectively.

Vyasa Analytics, LLC (“Vyasa”)

On December 28, 2022, the Company completed the acquisition of Vyasa, a company that provides an artificial intelligence (" AI") powered, scalable deep learning software and analytics platform for organizations within healthcare and life sciences for a total consideration of $ 29,276 .

The business combination was not significant to the Company’s condensed consolidated financial statements.

Based on the Company’s purchase price allocation, approximately $ 11,400 , $ 1,500 , $ 120 , $ 80 and $ 16,589 of the purchase price were assigned to developed technology, customer relationships, trademarks, non-compete agreements and goodwill, respectively.

The total estimated consideration includes a portion of contingent consideration that is payable over the next three years in a combination of 70 % cash and 30 % common stock of the Company.

Future payments of contingent consideration are based on achieving certain eligible revenue thresholds for each of the twelve-month periods ended at December 31, 2023, 2024, and 2025.

Potential payments range from $ 0 to $ 60,000 over the three-year period.

The fair value of the contingent consideration was estimated to be $ 19,813 as of the acquisition date.

The contingent consideration was classified as a liability and included in other long term liabilities on the Company’s condensed consolidated balance sheet, which is remeasured on a recurring basis at fair value for each reporting period.

Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss).

At September 30, 2023, the contingent consideration was remeasured to $ 31,512 , resulting in a fair value adjustment of $ 11,699 and recorded in general and administrative (“G&A”) on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

Drug Interaction Solutions, University of Washington ("DIDB")

On June 20, 2023, the Company entered into an asset purchase agreement with the University of Washington and completed the acquisition of DIDB, including the Drug Interaction Database and related products, from The University of Washington for a total estimated consideration of $ 8,340 .

The business combination was not significant to the Company’s condensed consolidated financial statements.

The business combination was not significant to the Company’s consolidated financial statements.

The total estimated consideration includes a portion of contingent consideration that is payable over the next two years in cash, not to exceed $ 2,000 .

1 unchanged sentence

The fair value of the contingent consideration was estimated to be $ 790 as of the acquisition date.

At September 30, 2023, the contingent consideration was remeasured to $ 407 , resulting in a negative fair value adjustment of $ 383 and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

The current purchase price allocation is preliminary.

The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, and residual goodwill.

The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition date during the measurement period.

At March 31, 2024, the contingent consideration was remeasured to $ 136 , resulting in a fair value adjustment of $ 4 and recorded in general and administrative expenses (“G&A”) on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

Based on the Company’s purchase price allocation, approximately $ 330 , $ 5,600 , $ 360 , and $ 2,289 of the purchase price were assigned to trademarks, database content/technology, customer relationships and goodwill, respectively.

The Company expects goodwill to be fully deductible for U.S.

federal income tax purposes due to the fact the acquisition was treated as an asset acquisition under the relevant sections of the Internal Revenue Code (“IRC”).

Formedix Limited ("Formedix")

On October 10, 2023, the Company completed the acquisition of Formedix, a provider of clinical metadata repository and clinical trial automation software, for total estimated consideration of $ 41,389 .

The business combination was not material to the Company’s consolidated financial statements.

The total estimated consideration includes a portion of contingent consideration that is payable over the next two years in cash, not to exceed $ 9,000 .

The fair value of the contingent consideration related to revenue threshold was estimated to be $ 4,380 as of the acquisition date.

Future payments of contingent consideration are based on achieving certain eligible revenue targets for each of the twelve-month periods ended December 31, 2023 and 2024, respectively.

Additionally, the Company agreed to further contingent consideration based on the resolution of certain tax contingencies.

In total, the fair value of the contingent consideration was estimated to be $ 5,161 as of the acquisition date.

At March 31, 2024, the contingent consideration related to eligible revenue was remeasured to $ 3,189 , resulting in a negative fair value remeasurement and adjustment of $ 507 and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

Based on the Company’s purchase price allocation, approximately $ 11,700 , $ 3,100 , and $ 25,062 of the purchase price were assigned to developed technology, customer relationships and goodwill, respectively.

The Company does not expect goodwill to be deductible due to the fact the Company treated the acquisition as a stock acquisition under the relevant sections of the IRC.

Applied BioMath, LLC ("ABM")

On December 12, 2023, the Company completed the acquisition of ABM, an industry-leader in providing model-informed drug discovery and development support to help accelerate and de-risk therapeutic research and development, for total estimated consideration of $ 36,594 .

The business combination was not material to the Company’s consolidated financial statements.

Based on the Company’s preliminary purchase price allocation, approximately $ 4,600 , $ 800 , $ 13,700 and $ 15,872 of the purchase price were assigned to developed technology, non-compete agreements, customer relationships and goodwill, respectively.

The Company expects goodwill to be fully deductible for U.S.

federal income tax purposes due to the fact the Company treated the acquisition as an asset acquisition under the relevant sections of the IRC.

The total estimated consideration includes a portion of contingent consideration that is payable over the next two years in cash, not to exceed $ 17,550 .

Future payments of contingent consideration are based on achieving certain eligible revenue targets for each of the twelve-month periods ended December 31, 2023 and 2024, respectively.

The fair value of the contingent consideration was estimated to be $ 5,357 as of the acquisition date.

At March 31, 2024, the contingent consideration was remeasured to $ 4,442 , resulting in a negative fair value adjustment of $ 938 and recorded in G&A on the accompanying condensed consolidated statement of operations and comprehensive income (loss).

The contingent considerations for all acquisitions were classified as liability and included in accrued expense and other long-term liabilities on the Company’s condensed consolidated balance sheet.

The contingent consideration related to eligible revenues that are remeasured on a recurring basis at fair value for each reporting period.

Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss).

The current purchase price allocations for the acquisitions of Formedix and ABM are preliminary.

The primary areas of the preliminary purchase price allocations that are not yet finalized that relate to the fair value of certain tangible assets and liabilities assumed, and residual goodwill.

The Company continues to gather information supporting the acquired assets and liabilities, including but not limited to the estimation of the fair value of the identifiable intangible assets, measurement of deferred revenue and corresponding impact on goodwill, during the measurement period.

Any adjustments to the preliminary purchase price allocation identified during the measurement period, which will not exceed one year from the acquisition date, will be accounted for prospectively.

Based on the Company’s preliminary purchase price allocation, approximately $ 330 , $ 5,600 , $ 360 , and $ 2,316 of the purchase price were assigned to trademarks, database content/technology, customer relationships and goodwill, respectively.

The condensed consolidated financial statements include the operating results of each acquisition from the date of acquisition.

The results of operations of the acquired businesses and the fair value of the acquired assets and liabilities assumed are included in the Company’s consolidated financial statements with effect from the date of the acquisitions.

Prepaid Expenses and Other Current Assets and Other Long-Term Assets

SEPTEMBER 30,

Prepaid expense and other current assets at March 31, 2024 and December 31, 2023 consist of the following:

2024 DECEMBER 31,

6 unchanged sentences

Prepaid expenses and other current assets $ 22,732 $ 20,393

Other long-term assets consisted of the following:

SEPTEMBER 30,

Other long-term assets at March 31, 2024 and December 31, 2023 consisted of the following:

2024 DECEMBER 31,

10 unchanged sentences

assets and stock pledges for the non-U.S.

subsidiaries and contains various financial and nonfinancial covenants.

As of September 30, 2023 and December 31, 2022, available borrowings under the revolving lines of credit were $ 100,000 .

Available borrowings under the revolving lines of credit as of September 30, 2023 and December 31, 2022 were reduced by $ 120 and $ 120 , respectively, of standby letters of credit issued to a landlord in lieu of a security deposit in addition to any outstanding borrowings.

Borrowings under the Credit Agreement were subject to a variable interest rate at LIBOR plus a margin.

subsidiaries and contain various financial and nonfinancial covenants.

Borrowings under the Credit Agreement are subject to a variable interest rate at LIBOR plus a margin.

The applicable margins were based on achieving certain levels of compliance with financial covenants.

Due to the cessation of LIBOR, the Company signed a LIBOR transition amendment on June 26, 2023, agreeing to replace LIBOR with the Secured Overnight Funding Rate (“SOFR”).

In order to make SOFR similar to LIBOR in terms of the overall interest rate being earned by the

lenders under the Credit Agreement, a Credit Spread Adjustment (“CSA”) is added to the SOFR.

In response to the discontinuation of LIBOR, the Company executed a LIBOR transition amendment on June 26, 2023, formalizing the replacement of LIBOR with the Secured Overnight Funding Rate (“SOFR”).

As part of this modification, a Credit Spread Adjustment (“CSA”) was introduced to align SOFR with LIBOR in terms of the overall interest rate earned by lenders under the Credit Agreement.

The CSA varied depending on the selected interest period.

The effective interest rate was 8.67 % and 4.60 % for the nine months ended September 30, 2023 and 2022 for the term loan debt.

As of March 31, 2024 and December 31, 2023, available borrowings under the revolving lines of credit were $ 100,000 .

The effective interest rate was 9.24 % and 8.03 % for the three months ended March 31, 2024 and 2023 for the term loan debt.

As discussed previously, the Company entered into interest rate swap agreements to mitigate the interest risk.

Interest incurred on the Credit Agreement with respect to the term loan amounted to $ 6,844 , $ 4,366 , $ 19,283 , and $ 10,344 for the three and nine months ended September 30, 2023 and 2022, respectively.

Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 2,340 and $ 130 at September 30, 2023 and December 31, 2022, respectively, and is included in accrued expenses.

Interest incurred on the Credit Agreement with respect to the revolving line of credit was $ 65 , $ 65 , $ 193 , and $ 193 for both the three and nine months ended September 30, 2023 and 2022, respectively.

There was $ 1 and $ 66 accrued interest payable on the revolving line of credit at September 30, 2023 and December 31, 2022, respectively.

Interest incurred on the Credit Agreement with respect to the term loan amounted to $ 6,798 and $ 5,974 for the three months ended March 31, 2024 and 2023, respectively.

Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 2,382 and $ 2,400 at March 31, 2024 and December 31, 2023, respectively, and is included in accrued expenses.

Interest incurred on the Credit Agreement with respect to the revolving line of credit was $ 63 for both the three months ended March 31, 2024 and 2023, respectively.

There was $ 2 accrued interest payable on the revolving line of credit each at March 31, 2024 and December 31, 2023, respectively.

Long-term debt consists of the following:

SEPTEMBER 30,

2024 DECEMBER 31,

6 unchanged sentences

Long-term debt, net of current portion and debt issuance costs $ 287,772 $ 288,217

The principal amount of long-term debt outstanding as of September 30, 2023 matures in the following years:

The principal amount of long-term debt outstanding as of March 31, 2024 matures in the following years:

Remainder of 2024 2025 2026 TOTAL

3 unchanged sentences

For the year ended December 31, 2023, the Company was not required to make a mandatory prepayment on the term loan.

For the Credit Agreement, the Company is required to make a quarterly principal payment of $ 755 on the term loan each quarter.

The Company is required to make a quarterly principal payment of $ 755 on the term loan.

The fair values of the Company’s variable interest term loan and revolving line of credit are not significantly different than their carrying value because the interest rates on these instruments are subject to change with market interest rates.

The Company leases certain office facilities and equipment under non-cancelable operating leases with remaining terms from one to six years .

The Company also had finance leases until the first quarter of this year.

Operating lease right-of-use (“ROU”) assets are included in other assets while finance lease ROU assets are included in "property and equipment, net" in the condensed consolidated balance sheets.

With respect to operating lease liabilities, current operating lease liabilities are included in other current liabilities and non-current operating lease liabilities are included in long-term liabilities in the condensed consolidated balance sheets.

Current finance lease liabilities are included in other current liabilities in the condensed consolidated balance sheets.

At September 30, 2023, the weighted average remaining lease terms were 3.44 years for operating leases;

the weighted average discount rate was 3.38 % for operating leases.

The Company leases certain office facilities and equipment under non-cancelable operating leases with remaining terms from less than one to ten years .

Operating lease ROU assets are included in other assets.

With respect to operating lease liabilities, current operating lease liabilities are included in current liabilities and non-current operating lease liabilities are included in long-term liabilities in the condensed consolidated balance sheets.

At March 31, 2024, the weighted average remaining lease terms were 6.09 years for operating leases and the weighted average discount rate was 5.47 % for operating leases.

For additional information on the Company's leases, see Note 14 to the condensed consolidated financial statements included in the Company’s 2023 Annual Report.

The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at September 30, 2023 and December 31, 2022:

Lease Position Balance Sheet Classification SEPTEMBER 30, 2023 DECEMBER 31, 2022

The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at March 31, 2024 and December 31, 2023:

Lease Position Balance Sheet Classification MARCH 31, 2024 DECEMBER 31, 2023

(In thousands)

Operating lease assets Operating lease right-of-use assets $ 14,292 $ 9,604

Finance lease assets Property and equipment, net — 24

Total lease assets $ 14,292 $ 9,604

Operating Other current liabilities $ 4,331 $ 4,375

Finance Other current liabilities — 25

Operating Operating lease liabilities, net of current portion 11,631 6,955

Total lease liabilities $ 15,962 $ 11,330

The following table summarizes by year the maturities of our minimum lease payments as of September 30, 2023.

The following table summarizes by year the maturities of our minimum lease payments as of March 31, 2024:

(In thousands)

4 unchanged sentences

Total $ 15,962

Lease abandonment

In the third quarter of 2023, the Company recorded a lease abandonment expense of $ 1,602 and reduced its lease ROU assets for the same amount in connection with the evaluation of the Company's office space footprint.

This expense is included within the general and administrative expenses in the Company's condensed consolidated statements of operations and comprehensive loss.

Accrued Expenses and Other Liabilities

Accrued expenses consist of the following:

SEPTEMBER 30,

2024 DECEMBER 31,

4 unchanged sentences

Income taxes payable 1,321 1,010

Short-term contingent liabilities 8,169 —

Accrued business acquisition liabilities — 700

Short-term contingent consideration liabilities 6,787 18,410

Other 2,869 2,471

1 unchanged sentence

Other long-term liabilities consist of the following:

SEPTEMBER 30,

2024 DECEMBER 31,

5 unchanged sentences

The Company’s equity-based compensation programs are intended to attract, retain and provide incentives for employees, officers and directors.

The Company has the following equity-based compensation plans and programs.

The Company has the following stock-based compensation plans and programs.

Restricted Stock

4 unchanged sentences

The fair value of the restricted stock awarded was initially based on the fair value of our common stock on the date of grant, then adjusted for time restrictions due to unregistered shares and lack of marketability.

Total grant date fair value was $ 2,762 .

The restricted stock issued in 2021 generally has a three-year vesting period except for one holder whose shares vest equally on a monthly basis for two years .

The non-vested restricted stock at March 31, 2024 issued in 2021 has a three-year vesting period.

SHARES WEIGHTED-

Non-vested restricted stock as of December 31, 2023 538,661 $ 23.18

Granted* 16,842 17.35

Vested* ( 63,041 ) 21.49

Forfeited — —

Non-vested restricted stock as of September 30, 2023 667,179 $ 23.32

Cancelled* ( 16,842 ) 23.00

Non-vested restricted stock as of March 31, 2024 475,620 $ 23.20

___________________________________

• The number of the restricted stock vested includes 5,430 shares that were withheld on behalf of employees to satisfy the statutory tax withholding requirements.

Equity-based compensation expenses (income) related to the restricted stock exchanged for performance-based Class B Units were $ 333 , $( 319 ), $ 497 , and $ 3,758 for the three and nine months ended September 30, 2023 and 2022, respectively.

At September 30, 2023, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $ 1,237 , which is expected to be recognized over a weighted-average period of 16.2 months.

Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $ 252 , $ 1,174 , $ 1,062 , and $ 2,705 for the three and nine months ended September 30, 2023 and 2022, respectively.

At September 30, 2023, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $ 1,421 , which is expected to be recognized over a weighted-average period of 19.7 months.

Equity-based employee compensation expense related to the time-based restricted stock for the Pinnacle acquisition was $ 292 , $ 292 , $ 877 , and $ 877 for the three and nine months ended September 30, 2023 and 2022, respectively.

At September 30, 2023, the total unrecognized equity-based compensation expenses related to outstanding restricted stock recognized using the straight-line attribution approach was $ 425 , which is expected to be recognized over a weighted-average period of 12 months.

* The Company did not legally authorize or issue any restricted stock during the three month period ended March 31, 2024.

During the first quarter of 2024, the Company modified an award for a recipient, resulting in 16,842 shares assumed to be granted, vested, and cancelled.

Equity-based compensation expenses related to the restricted stock exchanged for performance-based Class B Units were $ 250 and $ 655 for the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $ 637 , which is expected to be recognized over a weighted-average period of 12.5 months.

Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $ 377 and $ 498 for the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $ 888 , which is expected to be recognized over a weighted-average period of 14.8 months.

Equity-based employee compensation expense related to the time-based restricted stock for the Pinnacle acquisition was $ 106 and $ 292 for the three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, the total unrecognized equity-based compensation expenses related to outstanding restricted stock recognized using the straight-line attribution approach was $ 212 , which is expected to be recognized over a weighted-average period of 6 months.

2020 Incentive Plan

13 unchanged sentences

Forfeited ( 23,968 ) 23.83

Non-vested RSUs as of September 30, 2023 2,529,780 $ 24.18

Cancelled* ( 38,729 ) $ 23.95

Non-vested RSUs as of March 31, 2024 2,730,330 $ 23.30

___________________________________

* The majority shares granted during 2023 were issued on April 1, 2023 under the 2020 Incentive Plan.

** The number of the RSUs vested includes 275,516 shares that were withheld on behalf of employees to satisfy the statutory tax withholding requirements.

The vested shares included 9,324 shares vested but deferred in connection with our director deferral plan.

Equity-based compensation expenses related to the RSUs were $ 7,260 , $ 5,312 , $ 19,397 , and $ 14,538 for three and nine months ended September 30, 2023 and 2022, respectively.

At September 30, 2023, the total unrecognized equity-based compensation expense related to outstanding RSUs was $ 47,479 , which is expected to be recognized over a weighted-average period of 23.9 months.

* The majority of shares granted during the first quarter of 2024 were issued under the 2020 Incentive Plan.

During the first quarter of 2024, the Company modified awards for a recipient, resulting in 38,729 shares assumed to be granted, vested, and cancelled for accounting purpose.

** The number of the RSUs vested included 1,492 shares that were withheld on behalf of employees to satisfy the statutory tax withholding requirements.

Equity-based compensation expenses related to the RSUs were $ 7,705 and $ 4,798 for three months ended March 31, 2024 and 2023, respectively.

At March 31, 2024, the total unrecognized equity-based compensation expense related to outstanding RSUs was $ 35,779 , which is expected to be recognized over a weighted-average period of 21.5 months.

Performance Stock Units ("PSU")

PSUs granted in April 2021, 2022, and 2023 were issued under the 2020 Incentive Plan and represent the right to receive shares of the Company’s common stock at a specified date in the future based on the satisfaction of various service conditions and the achievement of certain performance thresholds for individual PSU plans including year over year revenue growth, unlevered free cash flow growth, annual revenue, and annual EBITDA.

The PSUs granted in 2023 also contain a market condition.

PSUs are issued under the 2020 Incentive Plan and represent the right to receive shares of the Company’s common stock at a specified date in the future based on the satisfaction of various service conditions and the achievement of certain performance thresholds including year over year revenue growth, unlevered free cash flow growth, annual revenue, and annual EBITDA.

The PSUs granted in 2023 and 2024 also contains market conditions.

Share-based compensation for the PSUs is only recognized to the extent a threshold is probable of being achieved and is recognized using the accelerated attribution approach.

The Company will continue to assess the probability of each condition being achieved at each reporting period to determine whether and when to recognize compensation cost.

A summary of the Company’s PSU activity for the period ended September 30, 2023 is as follows:

A summary of the Company’s PSU activity for the period ended March 31, 2024 is as follows:

UNITS WEIGHTED-

1 unchanged sentence

Granted* 315,814 19.08

Vested ( 18,437 ) 24.83

Forfeited — —

Non-vested PSUs as of September 30, 2023 1,026,702 $ 25.24

Equity-based compensation expenses (income) related to the PSUs were $ 506 , $ 345 , $( 1,035 ), and $ 1,940 for the three and nine months ended at September 30, 2023 and 2022, respectively.

At September 30, 2023, the total unrecognized equity-based compensation expense related to outstanding PSUs was $ 780 , which is expected to be recognized over a weighted-average period of 9.8 months.

The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) for each period presented:

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

Cancelled* ( 394,050 ) 27.09

Non-vested PSUs as of March 31, 2024 771,231 $ 21.33

___________________________________

* During the first quarter of 2024, the Company modified an award for a recipient, resulting in 6,651 shares assumed to be granted and cancelled for accounting purpose.

Equity-based compensation expenses related to the PSUs were $ 636 and $ 2,287 for the three months ended at March 31, 2024 and 2023, respectively.

At March 31, 2024, the total unrecognized equity-based compensation expense related to outstanding PSUs was $ 4,981 , which is expected to be recognized over a weighted-average period of 18.6 months.

THREE MONTHS ENDED MARCH 31,

(In thousands)

6 unchanged sentences

Contingent consideration

In connection with the Vyasa and DIDB acquisitions, the Company is required to pay additional consideration if the acquired businesses achieve certain eligible revenue thresholds for certain periods.

The maximum contingent considerations for Vyasa and DIDB to be earned are $ 60,000 and $ 2,000 , respectively.

The fair value of the contingent consideration was $ 31,919 and $ 19,813 at September 30, 2023 and December 31, 2022, respectively.

In connection with the Vyasa Analytics LLC, DIDB, Formedix, and ABM acquisitions, the Company is required to pay additional consideration if the acquired businesses achieve certain eligible revenue thresholds for certain periods.

The maximum contingent considerations related to revenue thread for Vyasa, DIDB, Formedix, and ABM to be earned are $ 60,000 , $ 2,000 , $ 9,000 , and $ 17,550 , respectively.

Additionally, the Company agreed to further contingent consideration based on the resolution of certain tax contingencies related with Formedix acquisition.

During the quarter ended March 31, 2024, the Company made a combined payment of $ 12,356 on the contingent consideration, consisting of $ 8,649 in cash and $ 3,707 in Company's stock.

The total contingent liabilities were $ 45,764 and $ 55,238 at March 31, 2024 and December 31, 2023, respectively.

The contingent liabilities are included in accrued expenses and other long-term liabilities in the Company's condensed consolidated balance sheet.

Legal proceedings

The Company does not have any pending or threatened litigation which, individually or in the aggregate, would have a material adverse effect on its condensed consolidated financial statements as of September 30, 2023.

Assurance-type warranty

7 unchanged sentences

Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.

The following table summarizes revenue by geographic area for the three and nine months ended September 30, 2023 and 2022:

The following table summarizes revenue by geographic area for the three months ended March 31, 2024 and 2023:

THREE MONTHS ENDED

SEPTEMBER 30, NINE MONTHS ENDED

SEPTEMBER 30,

2023 2022 2023 2022

(In thousands)

Americas $ 69,165 $ 67,023

5 unchanged sentences

The Company generally records its interim tax provision based upon a projection of the Company's estimated annual effective tax rate ("EAETR").

This EAETR is applied to the year-to-date consolidated pre-tax income to determine the interim provisions for income taxes before discrete items.

This EAETR is applied to the year-to-date consolidated pre-tax income to determine the interim provision for income taxes before discrete items.

The effective tax rate ("ETR") each period is impacted by a number of factors, including the relative mix of domestic and international earnings, permanent differences, adjustments to the valuation allowances, and discrete items.

The currently forecasted ETR may vary from the actual year-end due to the changes in these factors.

The Company's global ETR for the three and nine months ended September 30, 2023 and 2022 were 9 %, 54 %, ( 0.3 )%, and 63 %, respectively, including discrete tax items.

The Company's global ETR for the three and three months ended March 31, 2024 and 2023 were 14 % and 45 %, respectively, including discrete tax items.

The current year decrease in the ETR was principally due to the combined effect of the overall decrease in pre-tax book income, the impact of non-deductible items, and the tax effect of certain discrete items.

1 unchanged sentence

Basic earnings per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average common shares outstanding for the period.

Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to stockholders by the weighted-average number of shares and dilutive potential common shares during the period.

THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,

2023 2022 2023 2022

(In Thousands, Except Per Share and Share Data)

Diluted earnings per share is computed by dividing the net income (loss) attributable to stockholders by the weighted-average number of shares and dilutive potential common shares during the period.

THREE MONTHS ENDED MARCH 31,

Basic earnings per share

8 unchanged sentences

Diluted earnings per common share $ ( 0.03 ) $ 0.01

Subsequent Event

On October 10, 2023, the Company completed the acquisition of Formedix Limited ("Formedix"), a company that provides clinical metadata repository and clinical trial automation software.

The total consideration for this acquisition is up to $ 39,000 , comprising of $ 30,000 in cash, subject to customary post-closing adjustments, and a deferred purchase price of up to $ 9,000 , contingent upon the acquired business achieving certain eligible revenue thresholds for specific periods.

The Company will finalize the initial accounting for the acquisition of Formedix, including the allocation of the purchase consideration, in the fourth quarter of 2023.

__________________________________

• For the period ended March 31, 2024, the Company excluded the restricted stock and RSUs from the calculation of diluted earnings per share that could potentially dilute earnings per share in the future because of the anti-dilutive effect of the reported net loss.

• For the period ended March 31, 2023, the Company excluded certain potentially dilutive securities attributable to outstanding RSUs and restricted stocks from the computation of diluted earnings per share because the securities would have had an antidilutive effect.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements